One-Size-Fits-All Doesn’t Apply To VA Market

PALM BEACH, Fla. - If the Department of Labor fiduciary rule helped to shrink variable annuity sales, it also pushed the industry to look at itself with fresh eyes.

The one-size-fits-all model no longer applies to the variable annuity market, Insured Retirement Institute president and CEO Cathy Weatherford said. The days of traditional variable annuities with income riders as one of the few solutions for retirement income are long gone.

Weatherford discussed the VA market with InsuranceNewsNet prior to the start of the IRI annual conference, which begins today at The Breakers.

Fee-based and structured, or buffered, variable annuities have come into the market recently, she said. These are variable annuities with lower commission structures and shorter surrender charges. In addition, products with long-term care and hardship riders also have hit the annuity scene.

Add to that the choices available on the fixed annuity side and advisors have more options than ever, Weatherford said.

“It's been difficult as companies try to figure out how to operate in this new environment, but it's been good for companies to look into themselves, take a deep dive and see what the future of their business looks like,” she said.

Weatherford added that variable annuities are not the only solution, but “very much can be the right solution” for millions of Americans approaching or in retirement.

"Both fixed and variable annuities can play an important role in designing and maintaining a sustainable, effective retirement income portfolio, and IRI fully supports the use of all products that help Americans plan for, and enjoy, a secure retirement," she said.

Holistic Approach

If advisors are going to follow a best interest standard put into action by the fiduciary rule, then more advisors will adopt a holistic approach to financial planning. Under that approach, annuities almost certainly will have a place in a retirement income portfolio.

Advisors will need as much help as they can with turning on the income switch to guide the huge march of Americans living into their 90s and even past 100.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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