As the industry keeps changing, it's important to know a company's "pedigree."
By Cyril Tuohy
Jackson National, a top seller of annuities, said it will extend its alternative investment educational campaign for advisors into 2014 after reaching more than 10,000 advisors last year through seminars and training programs.
Financial advisors choose alternative investments to help boost returns in the variable annuity portfolios of clients prepared to take more risk in search of higher income. For some investors and advisors, variable annuities are more attractive than fixed annuities tied to interest rates that have been at historically low levels in the past two years.
“Jackson firmly believes alternatives are an important strategy to help manage volatility and risk in a client’s portfolio,” Clifford Jack, executive vice president and head of retail for Jackson National, said in a statement.
“We also understand that advisors may not be as familiar with alternative strategies as they are with the traditional asset classes.”
Commodities, futures contracts, investments in a specific industry sector and even some mutual funds might be considered forms of alternative investments, for example. They are compared to traditional investments like stocks, bonds or cash.
For clients with long investment horizons, alternative investments may be a fit as these clients can ride out the volatility – or variability – of their annuity investments. Advisors who choose alternative investments need to be made aware of how they work and when they are appropriate for investors, Jackson said.
“We saw a great need among advisors for alternatives education in order to effectively explain alts to their clients,” said Bill Burrow, senior vice president of National Sales Development for Jackson National Life Distributors.
Jackson’s education campaign has two goals, he also said. The first is “to ensure advisors understand the value alternative investments can provide in a portfolio,” he said. The second is “to equip advisors with the tools necessary to engage their clients in a discussion about alts.”
Last year, Jackson organized more than 374 events nationwide to discuss issues surrounding alternative investments. More than 10,000 advisors attended those meetings, the company said. Its Elite Access family of variable annuities, launched in 2012, has been a success.
Investment strategies available to Elite Access annuitants include “traditional investments,” “alternative investments,” “risk management strategies,” tactically managed strategies,” “strategic opportunities,” and “guidance portfolios,” the company said on its website.
The educational campaign announcement comes on the heels of a “risk alert” issued by the Securities and Exchange Commission (SEC) regarding the due diligence of advisors. The risk alert was issued, the SEC said, in the wake of increasing demand for alternative investments.
While advisors are regulated under the Advisers Act, investment managers are sometimes hesitant to divulge too much of their investment strategies to advisors, the SEC found.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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