While I’m thrilled for my dad, I’m not suggesting annuities are the right solution for every client. But I do believe the rationale for using them as instruments to generate retirement income is so compelling that for advisors to ignore them as an option is a disservice to their clients and inefficient for their business.
My Annuity Challenge For RIAs
So, my challenge to RIAs is to explore—with an open mind—an annuity as a possible solution for generating retirement income for a client nearing or in retirement. Present it as an option to your client with the support of an improved Monte Carlo score. Let your clients know that the annuity is low-cost, commission-free and aligns with the values of your practice. Discuss the academic support for using annuities in a retirement portfolio. Give them the peace of mind that comes with knowing their essential living expenses can be guaranteed for life. I think you’ll be surprised by their grateful reaction.
Bottom line: Your client hired you to be their general contractor, not build every part of their house. You’ve already outsourced the carpentry and foundation to mutual funds and ETFs. You’re using bonds for the roofing. You’ve purchased technology as the plumbing. Don’t do the electrical work yourself—use an annuity. Do it yourself and you’re bound to get zapped a few times in the process, and if the wiring isn’t good enough, your client’s entire house may burn down.
David Lau is founder and CEO of DPL Financial Partners, a firm focused on the distribution of financial services products geared toward the RIA and fee-based advisor channel.