Second, annuities offer tax-deferred growth potential. You don’t pay taxes on them until you withdraw funds. Before that, the contract can appreciate in value, free of taxation. That can add up to significant savings over the years.

Third, variable annuities (VAs) can offer access to a broad spectrum of investment options. VAs allow clients to change their investment selections and trade within their contract, potentially without incurring transfer fees and deferring taxes on gains.

Finally, clients can rebalance their portfolio to keep up with current needs and market conditions, again potentially without incurring transfer fees and deferring taxes on gains1.

“With a variable annuity, you can own the same assets and have the same allocation as you might with a managed account or a mutual fund, but in a tax-deferred wrapper,” stresses Carlson. “Plus, you get guaranteed retirement income and options such as a return-of-premium death benefit so that your surviving spouse can receive back the full value you put in.2”

Of course, some advisors may not be easily convinced. There’s a tendency to lump all annuities together, to believe they are expensive with little benefit to clients. “But there are lots of different kinds of annuity products, with different purposes, appropriate for different clients at different stages of life,” says Carlson.

Indeed, not all annuities are the same. Great-West’s Smart Track® II – 5 Year Variable Annuity, for example, has several distinct advantages. First, it’s flexible. Annuitants can make changes, including turning on the income stream as needed (up to their 86th birthday). “Normally, when you buy an annuity, you have to set most or all of the terms upfront,” says Carlson. “But the client’s needs may change over time as they get older. People’s situations change. With our product, you don’t have to decide on the front end about the income, whether the contract covers one person or you and your spouse, or even what riders you want.”

To start receiving income, clients just have to get in touch with their financial advisor. They can move funds from an investment-only side to an income and distribution designation, as little or as much as they want, when they want. They can also move it back again, as desired. There are no charges or tax implications for this.3

In addition, when they start taking income they can choose single or joint lifetime withdrawals for a spouse. The same charges apply either way.4

Riders can also be added or removed at any time. “You just tell us when you need it,” says Carlson.

Another benefit is that Smart Track II allows clients to make additional contributions at any time. This can enable them to increase their income distribution. Other ways to increase income are through annual step-ups and age-based resets.5 “As clients grow into the next age band—say, from 65 to 70—the annuity potentially can give them a raise while lowering the fee,” Carlson explains.