By Cyril Tuohy
Pacific Life has introduced a new variable annuity giving investors and advisors the ability to select features and fees.
Branded as Pacific Choice, the annuity bundles popular features from three of the company’s top-selling variable annuities, allowing advisors to sell the product using only one prospectus, one sales kit and one application.
"Pacific Choice was created in response to what we've been hearing in the marketplace," Christine Tucker, vice president of marketing with Pacific Life's Retirement Solutions Division, said in a news release. "Advisors are increasingly focused on the core variable annuity benefits of tax-deferral, guaranteed income and legacy, all at a lower cost.”
As the name suggests, advisors and investors have choices with regard to withdrawal and fee options, and must choose one of the following: a five-year withdrawal charge for a 1.2 percent mortality and expense (M&E) risk administrative fee, a three-year withdrawal charge for a 1.5 percent M&E risk fee, or no withdrawal charges for a 1.6 percent M&E administrative fee, the company said.
Tucker said the new annuity represents a “simple, straightforward, and positive approach,” to serving advisors.
Investors, while drawn to variable annuities for their ability to guarantee income and for their tax deferral properties, often find them complicated to understand and expensive to manage.
“On the one hand, the desire for predictable, guaranteed income is driving investors and their advisors to products, like variable annuities, that provide income one cannot outlive,” Frank O’Connor, product manager with the Annuity Research Center at Morningstar, said in a note to investors last year. “On the other hand, concern about rising fees and increasing benefit restrictions is making them wary of guarantees perceived as too expensive and inscrutable.”
Variable annuity sales at the end of 2012 were $143.4 billion, down 6.7 percent from the end of 2011, according to Morningstar data. Despite the drop, Pacific Life bucked the trend and registered $3.9 billion in new sales in 2012, up from $3.3 billion in 2011.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].
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