Nationwide Launches its First Fee-Based FIA

By Cyril Tuohy

Ohio-based investment and retirement giant Nationwide Financial, seeking to offer advisors more fixed indexed annuity (FIA) choices to sell, launched its first fee-based FIA, the company announced.

Nationwide is merely the latest company to jump into the fee-based annuity pool. Many competitors have done the same over the past year with the advent of a fiduciary rule raising the bar surrounding investment advice.

The Columbus-based company is committed to helping registered investment advisors, or RIAs, and other fee-based advisors meet the needs of their clients in a low-interest-rate environment, said Eric Henderson, Nationwide senior vice president of life insurance and annuities.

“We’re excited to be on the leading edge of a new market and help shift the risk-return profile of clients’ portfolios,” he said.

Indexed annuities, in which gains are tied to a market index, are attractive to many retirement investors because of the potential for higher returns than a bank-insured savings account.

While interest rates have gone up recently, they are still low by historical standards. The stock market, meanwhile, continues to set record highs.

In 2016, indexed annuity sales rose 9.7 percent to a record $58.2 billion compared with 2015, according to Wink's Sales & Market Report.

Analysts have cast some doubts about whether FIAs can maintain their record sales streak this year with initial fiduciary rule requirements having taken effect last month.

But even if the FIA market cools, the fee-based advisor distribution channel is projected to outpace the growth rates of broker-dealers, market experts say.

Ohio Insurers in an FIA Race

To get a sense of the heated competition among insurers looking to grab their share of the billion-dollar FIA market, look further than Ohio.

Last August, Great American Life Insurance, Nationwide’s crosstown rival, launched Index Protector 7, a fee-based FIA, marking the company’s entry into the investment advisory distribution channel.

A guaranteed income rider followed shortly after the launch and in March, Great American said Index Protector 7 would be available through advisors affiliated with the Commonwealth Financial Network, an independent broker-dealer and RIA.

Nationwide’s cross-state rival, Ohio National Financial Services, entered the FIA market for the first time in March with the launch of ONdex.

A fee-based version of ONdex was planned for a later date, Ohio National executives said.

Nationwide’s new fee-based FIA will be marketed through advisors as Nationwide Summit. It is being marketed as the only fee-based FIA offering access to the J.P. Morgan MOZAIC index, a diversified index offering exposure to global markets and many asset classes.

This index has provided a compound annual return of 5.35 percent over the past 18 years, according to the Nationwide release.

Nationwide fee-based Summit is available through the Annexus network of independent distribution companies.

Annexus, based in Arizona, works with insurance and annuity companies to develop new products.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].