In addition, Nationwide is increasing its presence in this space. It plans to release a variety of fee-based VAs with living benefits (such as lifetime income guarantees), single premium immediate annuities and other products. “We’re focused on expanding our offerings for all stages of the financial life cycle—from accumulation through income and legacy planning,” says Hawley. “Research indicates strong demand for new, properly structured and properly priced annuity products targeting the RIA and fee-based advisor market. These can help solve guaranteed income and longevity needs, while de-risking the portfolio.”

Not All No-Loads Are The Same

But savvy advisors should realize that not all products billed as “no-load” or “fee-based” are alike. Fink, at Ameritas, cautions advisors to “examine all of the charges applicable to a policy, not just the product expense. For example, these products may include 12b-1 [an annual marketing or distribution fee], fund facilitation or other fees charged on the investment option platform.”

The fiduciary standard, of course, requires full transparency of the fee structure. Within that, there is a degree of latitude. “Compensation methods vary among investment advisor firms,” says Fink. “Advisors may charge a retainer, a flat planning fee, a subscription fee, an asset-based fee or a combination of these.” But, he adds, “the fiduciary responsibilities of the advisor would require the advisor to be vigilant and not accept compensation from any other source.”

There are other factors that may distinguish one purported no-load product from another. “It’s so important for advisors to understand that many companies are taking an existing insurance product, stripping out the commission and calling it fee-based,” says Nationwide’s Hawley. They are not “investing the time and the resources to truly understand the mind set of RIAs and fee-based advisors, to understand their challenges, to understand what matters most, and then re-engineer a solution from the ground up to meet their unique needs. It has to be simple, it has to be transparent, it has to offer more choice, and it has to create real value for their clients.”

In short, a true commission-free product must fit the way fee-based advisors work on every level. “It starts with allowing advisors to maintain control of the client relationship and their assets,” Hawley notes. The product must support the way advisors manage client portfolios, in part by integrating with their technology and operating systems “to provide an end-to-end advisor experience that’s embedded directly into their work stations and the platforms they’re already using,” he says.

The Model Makes Sense

Another leading provider of no-load products is Charlotte, N.C.-based TIAA-CREF Life Insurance Co. Dennis Rupp, director of insurance wholesaling there, explains the carrier’s devotion to this market: “Most advisors are moving to fee-based or fee-only structures. As such, advisors are looking for products to recommend that don’t have the conflicts that might come with commission-based products. Fee-only or fee-based products align with how most financial advisors work with their other lines of business, so the model makes sense.”

Though TIAA’s no-load insurance products are already available in all 50 states, Rupp expects that business to keep expanding. After all, he points out, these products can be “an important part of a comprehensive financial plan. As fee-based and fee-only advisors continue to expand their offerings, this life [insurance] and annuity business will continue to grow. In order to compete and add value, advisors are moving toward holistic planning, and life insurance and annuities can help address holistic planning needs.”

This may sound like a natural match, an advisory slam dunk. So why isn’t everybody on board yet? “The challenge in the marketplace is twofold,” stresses Lau. “Getting the advisors to recognize and be open to the value of fee-only, no-load products, and getting insurers to understand that there is actually a terrific market out there despite their lack of success in the past, which has been more about approach and delivery than lack of demand.”