Fortunately for RIAs and their clients, there are many no-load annuities now available in the market—variable annuities with guarantees, fixed-indexed annuities, fixed annuities, SPIAs, DIAs, buffers and more. Designed, built and priced for the RIA market, these products enable RIA clients to enjoy the many benefits of annuities, while enabling RIAs to address the retirement paycheck problem with a solution that more efficiently generates income, simplifies the “paycheck” process, and mitigates longevity and sequence of returns risk.
Perhaps because I am very familiar with the academic research around the benefits of annuities and have seen the powerful benefits they can deliver in a financial plan, I have been an advocate of no-load annuities for many years (and a basher of traditional annuities because of commissions).
It reminds me of my consulting days when I was often hired by a firm to explore and asses their processes. Frequently, I’d find a very inefficient process that had been employed for so long that the business had gotten used to its shortcomings and the inordinate amount of effort it required.
Sometimes you need an outside voice to say, “You know, there is a much better way of doing that…”
Spend your time building your practice, engaging with your clients, and otherwise adding value. Stop the madness of trying to replicate an annuity!
My Personal Experience With The Power of Annuities
While I am not a financial advisor and do not have clients that rely upon me to generate retirement paychecks, I do have two sets of older parents in my life—my own and my wife’s—who are very concerned about this topic. I don’t insert myself into their finances but am happy to provide insight when asked. I see the emotional toll the subject exacts.
My in-laws, an upper middle-class couple in their early 70s who are retired in Naples, Fla., fret the market…daily. There is not a conversation I have with them where they are not asking me about where the market is headed. They are keenly aware of every fluctuation and its impact on their income both today and in the future. They live in fear of outliving their money. Their financial advisor is an RIA that I respect but has consistently advised against annuities. And so they fixate on the market and worry ceaselessly if they’ll be okay.
My parents are wealthy. My father literally is a rocket scientist who once worked for NASA and has had a very successful career in business. To say he understands the math around investing and probabilities is like saying Ted Williams knew how to hit. Yet, he was emotionally unable to retire. Until recently.
My father’s advisor was a very successful RIA that I referred him to years ago. They discussed methods for generating a paycheck in retirement. For years my family just assumed my father had not retired because he enjoyed working. Recently he told me the reason he hadn’t retired was because of the uncertainty and unpredictability of his retirement income. We showed him an annuity and the effect it had on his financial plan. He got a new financial advisor and retired on Dec. 31.