Annuity FYI Blog

No-load annuities are annuity products where investors are not charged commission fees because the investor controls the account.  During this tough economic climate there is an increased interest in these no load annuities.  Annuity FYI has added a section on these no-load variable annuities to the Compare Annuities section on its website explaining the product and listing the most competitive options out there for investors.  No-load variable annuities are usually sold to investors directly but can sometimes be purchased through brokers as well.  There are some fees associated with the product, but those fees are significantly less than load annuities and some load annuity fees are nonexistent with the no-load annuities.

One benefit that investors really like about no-load annuities is that they do not have surrender charges if you need to withdraw some money unexpectedly.  Of course you can still have penalties associated with the age you withdraw and tax gains.  The best no-load annuities have the same Guaranteed Income Benefit and Death Benefit options as loaded annuities.  One of Annuity FYI’s favorite products right now is Ohio National’s ONcore Wrap No Load Annuity.  It has both of those riders included.  No-load annuities are not right for every investor.  Since you are not paying commission to a broker, you are not getting the one on one advice and support associated with loaded annuities.  The products are best for investors that know how to monitor their own annuities and choose to do that in order to lower fees.

In “Back to Basics: Safe, boring, vanilla. This is the new world of wealth management,” Charles Passy of the Wall Street Journal describes a popular trend of going back to simpler and safer investments.  Wealth managers have always looked for the radical money-making idea.  They are now using old-fashioned techniques in more of a money-saving strategy, techniques which could be considered radical in their own way.  Some wealth managers have been suggesting that their clients put money into bank deposits.  Nothing flashy or exciting, but safe in an economic climate where investors are scared.  From fixed annuities to dividend-paying stocks to bank deposits, the mantra of the times appears to be principal protection with modest growth.

Financial professionals are spending more one on one time with their clients and really assessing their risk tolerance.  There are more workshops promoting clear and concise client education meant to help “calm down” portfolios.  While the conservative approach is not exciting or colorful, it is the best way to go for many investors.  Annuities are growing in popularity, especially for retired clients and those rear retirement.  The lifetime of guaranteed income is a safe sell.  And while these safe investments offer a lot of security, they are not foolproof and are subject to downsides.  The seemingly constant advice of diversifying rings true even in the vanilla world.  Don’t put all of your eggs in one basket.

Fidelity Investments Life Insurance Co.’s variable annuities have been added to FundQuest’s offerings, according to “FundQuest adds Fidelity VA to platform” by Jessica Toonkel Marquez of Investment News.  The Personal Retirement Annuity from Fidelity is the first Fidelity variable annuity to be offered to fee-based advisers through FundQuest, or any managed-account provider.  Andrew Stavaridis, FundQuest’s VP of national accounts, says that FundQuest has two other annuity products on its platform.  He also points out that Fidelity’s Personal Retirement Annuity costs the least of the three annuities.

The total expenses fee is just .35%, low compared to the 1.37% industry average.  There is not a commission structure associated with these variable annuities either, so Fidelity believes that the product is a good fit for fee-based advisers who do not operate business commission-based.  Fee-based advisers are less likely to show interest in variable annuities, so Fidelity is working hard to educate the advisers on the benefits of variable annuities.  They have several white papers in the works, including one to explain the tax efficiency benefits relative to a managed-account setting.  Fidelity is interested in getting the annuity into more managed-account platforms as well.

The Financial Industry Regulatory Authority (FINRA) released a news story titled “FINRA Wins Okay for Major Expansion of BrokerCheck, Will Permanently Disclose Disciplinary Actions Against Former Brokers.”  The SEC approval of FINRA having a permanent record of any broker misdeeds really helps investors get the best protection.  The previous system absolved a broker’s record two years after they left the securities industry, making it no longer available to the public or under FINRA’s jurisdiction.  But as of the 30th of November, former brokers records are available on BrokerCheck, FINRA’s free online system that allows investors to research the employment history, qualifications, and past disciplinary action of brokers.

While you may think that if a broker is no longer in the securities industry, investors would have no need to see their previous disciplinary history, that is not the case.  Brokers that FINRA has barred in the past have been found committing fraud in other sectors of the financial industry, costing millions of dollars to investors.  Investors looking to compare annuities and other investment products want a reputable broker.  By using FINRA’s BrokerCheck system, investors are much more protected against the small percentage of fraudulent brokers out there.  Last year alone there were over 11.6 million broker reviews done through the system.  Not only can BrokerCheck disclose negative hits on a broker, it also helps investors find brokers with high qualifications and certifications.  The system is meant solely for investor protection.