In the annuities world, where the talk can be inscrutably complex, the buzz on new products and trends for 2019 seems dominated by a single word: simplicity.

Kent Sluyter, president of Prudential Annuities in Newark, N.J., anticipates “a continued demand for transparency and simplicity.” Craig Hawley, head of Nationwide Advisory Solutions (formerly Jefferson National), says, “The right kind of simplified, low-fee insurance products can be a real differentiator.”

This wave of simplification comes even after an appellate court officially “vacated” the Department of Labor’s fiduciary rule last June. Intended to protect consumers by, in part, providing transparency of fees, the ruling would have required greater simplicity in products and distribution. It’s as if a button were pushed, and once carriers began creating more straightforward fee-based annuities—as opposed to the traditional commission-based products—they couldn’t stop. Full disclosure and the elimination of even potential conflicts of interest kept gaining traction.

“You’re going to see the industry continue to move toward overcoming complexities,” says Sluyter.

More Low-Fee Products Likely

The move toward transparency in fees also created a demand that those fees go lower. Stripped-down annuities will likely keep gaining market share. One example: Nationwide's "Monument Advisor", an “investment-only variable annuity” (IOVA) with no bells and whistles—and therefore lower fees. “Ours remains the only flat-fee IOVA built expressly for RIAs and fee-based advisors,” insists Hawley.

At Lincoln, Neb.-based Ameritas Life Insurance Corp., a pioneer in the fee-based annuities market, Thomas Fink, vice president of institutional business, points out that roughly half of the 80-some fee-based annuities on the market today “were created in the past four years.” Plainly, this stemmed from rising demand. Annuity providers “desire to offer consumers choices in how they pay for services and receive financial advice,” Fink says. “Companies are trying to capitalize on this trend.”

Carriers Target Advisors’ Needs

Of course, just saying something is made for RIAs and fee-based advisors doesn’t necessarily make it the best choice. It’s become almost a trendy kind of label. “As more advisors begin moving to a fee-based or fee-only advice model, the decisions to be made go beyond just offering products labeled as fee-based,” cautions Fink.

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