Fee-based Annuities

compare annuitiesFee-based annuities are by no means new to the annuity industry.  However, they are usually only associated with variable annuities versus fixed, fixed indexed, and multi-year guarantee annuities.  Back in 2010, many of the larger annuity carriers such as New York Life, Allianz, and MetLife all launched huge efforts to capitalize on what they thought would be an ever growing business.  After the 2008 financial crisis, there was a huge focus towards managing retirement income and guarantees backed by large insurance companies.  The carriers believed that in order to capitalize on this growing trend, they would have to appeal to financial advisors who are used to receiving fee-based commission trails. Overall, the fee-based trail annuities have been well received on the variable annuity side, however, not very popular on the fixed annuity side that accounts for approximately $65 billion of the $300 billion total annuity sales this year.


Fast forward to today, and more pressure it being put on all annuities to move to a fee-based platform.  The most recent Limra conference (Oct 2012) was riddled with talks of moving the annuity industry to more of a fee-based platform.  Of course, this urging was mostly by regulators that believe a fee-based annuity will take some of the incentives away from the advisors to sell certain products that might pay high commissions.  The regulators are fighting to shape the fiduciary standard and claim that consumers will not get the financial protection that they need if there isn’t a uniform fee-based annuity.


However, history shows that regulators and governments intervening in private transactions have usually not been in the best interest of the consumer.  Many of the annuity advocates believe the regulators actions will have the opposite effect on helping consumers by eliminating any education and advice by advisors.  Only time will tell…



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