New Tools Help Advisors Give Accurate VAs, FIAs Projections

By Cyril Tuohy InsuranceNewsNet

Advisors looking for guidance in a fiduciary world will get help with a pair of new analytical tools dedicated to variable annuities (VA) and fixed indexed annuities (FIA), the annuity pricing platform CANNEX Financial Exchanges announced Wednesday.

The comparative illustration tools – CANNEX VA Analysis and CANNEX FIA Analysis – allow independent broker-dealers (IBD), independent marketing organizations (IMO) and retail advisors to compare VAs and FIAs with income guarantees and those without.

Advisors will be able to see how VAs and FIAs perform compared with other product categories such as deferred income annuities and immediate annuities, said Gary Baker, president of CANNEX USA.

Accurate product comparisons are critical as the new fiduciary regime, which raises investment advice standards into retirement accounts, gradually takes hold.

Under the Department of Labor’s fiduciary rule, IBDs and IMOs must certify that retirement products sold by advisors affiliate with the firms are in the best interest of investors. Key aspects of the rule went into effect on June 9.

Tools help advisors sift through product permutations that best fit client needs so that advisors can point to the analysis years down the road if clients complain that the annuity isn’t performing as it was designed.

A Search for Consistency

“As the number of annuity options and riders have grown, it has become increasingly difficult to compare their benefits in a simple and transparent manner,” Baker said in a news release.

“Providing a consistent approach to calculating the economic value of an annuity transaction for individuals is key to helping advisors recommend products that meet their clients’ specific needs,” he said.

The new VA and FIA tools allow advisors to “break apart” the performance of the base annuity contract from the performance of the income riders, he said.

Financial advisors interested in a subscription to the tools should speak to their broker-dealers or to their IMO, Baker said.

CANNEX has offered analytical tools for income annuities for years.

Wednesday's announcement signals that the company is expanding into other annuity lines, and did so after requests from clients and advisors, Baker said.

The new VA and FIA tools can run as many as 10,000 scenarios through each product to test an annuity’s internal mechanics and performance, Baker said.

Eyeing Tools for Buffered VAs

Other analytical tools for a new kind of fast-selling VA called a buffered variable annuity are expected to follow.

“Buffered VAs will be added, we definitely have our eye on those,” Baker said.

Buffered variable annuities, which insure losses up to a threshold, are considered more complicated than a traditional variable annuity.

Broker-dealers or IMOs either subscribe directly through the CANNEX website, or CANNEX can feed the mathematical calculations into tools used by the broker-dealer.

“We're sticking to our knitting and focus on the quality of data and independent calculations,” Baker said. “We're in the math business, if you will, and we don't try to do more than that.”

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].