David Stone: “Why Fiduciaries Cannot Ignore Annuities”

In David Stone’s latest article for Advisor Perspectives, he writes about RIAs who choose to ignore annuities.

He notes that, “When you consider that nearly half (48%) of Americans own or previously owned annuities, you understand that declining to offer guidance on those investments could mean that you are turning your back on a large swath of potential clients, and/or client assets.”

Sure, well-reasoned annuity protestations about commissions, cost, complexity and lack of liquidity have been launched over the years. But, as David points out, times have changed. Rapid innovation in advisory annuity offerings and the rise of outsourced insurance desks like RetireOne have expanded the availability of annuity solutions in the financial plans of RIA clients.

The reality is that insurance-backed investments, including annuities, offer unique benefits that aren’t accessible in other asset management or investment strategies, including:

  • Lifetime income guarantees that use mortality pooling, just like traditional pensions;
  • Tax deferral that allows for the advisor to actively manage their clients’ accounts or manage tax inefficient investments; and
  • Principal protection guarantees with rates that are higher than those offered through CDs and other risk-free investments.

Ignoring them out of hand could be detrimental for clients and firms.

Read the article »