It was a very busy year in financial services. Our website visits grew by 72 percent to 5 million as we brought you comprehensive coverage of the industry. This week, we will bring you our top five most popular 2017 stories in life insurance, annuities, finance, politics, health insurance and the Department of Labor fiduciary rule.
The year in annuities was a roller-coaster ride of regulation, sales dips and new product innovation.
It seems like all of that disruption can be traced back to the Department of Labor fiduciary rule. While we have a separate category for DOL rule stories, one of them shows up here as it directly addresses an annuity impact.
Otherwise, we had a couple of opinion pieces on the polarizing Ken Fisher and both were very well read. Fisher continues to use questionable tactics to degrade annuities, and our readers took note.
When the DOL rule partially took effect, Fisher was there with a new marketing campaign repeating a familiar warning about annuities. Our Kim O'Brien explained how annuity sales are bad for Fisher Investments' bottom line.
According to the 2014 Gallup Study, most annuity consumers who buy annuities keep their money in annuities.
Once an 18-month delay in implementing key parts of the DOL rule became effective in November, insurance company executives rejoiced.
While the initial requirements of the fiduciary rule took effect June 9 -- requiring a best-interest standard with no misleading statements and only reasonable compensation -- insurance company executives most feared the second phase of rules. Those rules deal with the exemptions that cover annuity sales, specifically variable and fixed indexed annuities.
The 18-month delay moves compliance with the second phase of the DOL rule to July 1, 2019. Many experts expect the DOL to rework those rules in the interim.
LIMRA Secure Retirement Institute revised its annuity sales forecast upward in light of the rule delay. New sales of individual fixed and variable annuities are forecast to grow 5 percent in 2018 due to the 18-month delay, LIMRA reported.
In the spring, LIMRA forecast a 5 percent drop in overall annuity sales in 2018.
Most planners are familiar with the 4 percent withdrawal rate research laid down more than 20 years ago by now-retired advisor Bill Bengen.
The Bengen Rule, a rule of thumb to establish a retirement income floor, is based on a 30-year time horizon. With Americans living longer and longer, many experts question whether the 4 percent rule even applies any longer.
One product that does address a 40- or 50-year retirement is annuities. Many advisors favor annuitizing at least a portion of a retirement income portfolio to cover “grocery money,” essential or nondiscretionary expenses.
As the DOL rule moved down the road to adoption, companies began developing products that would meet the new standards. That means fee-based annuities.
This February story explored how manufacturers were trying to be prepared in case DOL rule challenges fell short.
Turns out, recasting commission-based fixed indexed annuities into fee-based siblings isn’t difficult, said Ron Grensteiner, president of American Equity Investment Life Insurance, a top seller of fixed indexed annuities.
“We have a couple of products on the shelf that is just a matter of stripping off the commissions and leaving the surrender charges and the other features intact, and then increasing caps and participation rates on those products and put them out there,” he said
In this July commentary, O'Brien reminded agents that, while the first part of the DOL rule had taken effect, they were still in business.
In particular, the only license required to roll over qualified money into an annuity or a life insurance product is an insurance license from a state insurance department.
The Series 65 license is required by anyone intending to provide any kind of financial advice or service on a non-commission basis.
O'Brien proceeded to cover all the important fine print on what the DOL rule requirements mean for selling insurance products in different situations.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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