What I hear is: “The fees are too high. They’re complicated.
There’s no transparency. There’s an insurance company involved. The back office
is a nightmare. Don’t you need a separate license?”
But just like our world has changed, so have annuities. They
have evolved at warp speed to meet marketplace demands for competitive pricing
and ease of use, and they have a clear role with measurable value when
incorporated into a household portfolio.
Annuity Leaders Are Adding To Advisors’ Tech Stack
As major tech providers integrate annuities into their
platforms and work with insurance companies to simplify the process, the
lingering reputation of annuities as a product sold on commission and based on
features and benefits is dying quickly.
Two of the top sellers of annuities, Allianz and Jackson
National, are at the forefront of a sea change. Both were among the first to
integrate their offerings with tech-enabled platforms. Each has developed a
robust toolbox of newly designed products coordinating financial planning, risk
management, tax optimization and income generation tools to support advisors
with their current tech stack and help them manage household portfolios. These
insurers have partnered with the likes of eMoney, MoneyGuidePro, LifeYield,
Morningstar, Riskalyze and others.
Such tech partnerships are vital for bringing transparency
to annuities. Both Allianz and Jackson National have created dedicated teams to
support a consultative approach where wholesalers are equipped with training
and tools to help advisors determine how to improve household portfolio
outcomes and capture more assets.
Annuity Pricing Matches Managed Money
One of the biggest changes in the thinking driving modern
annuity products is that they’re now built to fill specific needs, not as
products pushed for the sake of sales. Leading annuities are now priced to
match managed money. In the right circumstances, they are a vital tool in the
toolbox to create a better household-level investment portfolio for optimized
accumulation and income.
Their greatest strengths—their tax advantages, principal
protection and defensive nature in volatile markets—let advisors adjust the
levers to achieve improved financial outcomes for clients: to lower their
costs, manage risk, minimize taxes and maximize Social Security benefits and
Annuities Address Risk And Tax
Insurance companies faced an existential threat from the
Department of Labor’s fiduciary standard and best interest rules a few years
ago. After that, they got busy making annuities cost competitive and easier to
use, both in terms of managing risk and taxes and in the back office
experience. Fintech partnerships have played a major role in creating a more
transparent view of how annuities improve after-tax returns and maximize Social
Finally, annuity companies have worked with tech providers
to create comprehensive platforms where an insurance license may not be
required. These digital platforms are built for ease of use, offering a wide
array of product and pricing options and an increasingly seamless back office.
Investment/Annuity Platforms Now Designed For A Better
Among the leaders in this new world are platform providers
like the Envestnet Insurance Exchange, powered by FIDx, that make annuities an
integrated part of portfolio management. Other annuity and insurance platform
and support providers include SS&C, DPL Financial, RetireOne, True Choice
and Financial Independence Group. Many of the top annuity companies such as
Jackson National, Allianz, Prudential, Transamerica, Pacific Life, Global
Atlantic, Brighthouse, Nationwide, AIG and many more are participating on these
Insurance companies see fintech providers as ideal partners
to highlight the role annuities can play in creating better client outcomes.
What’s more, these partnerships can boost the efficiency and growth of advisor
firms that take advantage of them.
We’ve seen MoneyGuidePro, eMoney, Riskalyze, LifeYield,
Morningstar and others create tools that clearly highlight the appropriate
annuity allocation to an individual portfolio while maximizing accumulation and
drawdown across multiple accounts and investment products. These tools also
show advisors and clients the optimal timing to take Social Security benefits
while coordinating other income sources for tax efficiency. Advisors using
these tools report increased asset consolidation when investors easily
recognize the value of improved financial outcomes for household portfolios
that are quantified in dollars and cents.
Annuities have evolved far beyond their roots. They are now
priced, designed and tech-enabled to meet specific needs as part of a household
portfolio solution. They have been modernized to offer both improved financial
outcomes for investors and a more efficient and profitable practice for
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