According to a MarketWatch press release, Allianz Life Insurance Company of North America had a very successful first quarter this year.  Their operating profit increased 72% from the first quarter of 2011 to the first quarter of 2012.  Allianz Life’s operating profit was $126 million during the first quarter of last year, which increased to $217 million in the first quarter of this year.  They attribute much of this increase to the success in sales of their fixed indexed annuities.  The Allianz365i fixed indexed annuity was introduced last quarter to great success, according to President and CEO Walter White.  Allianz is pleased with their increasing sales of fixed indexed annuities through broker/dealers as well as growth with their fixed index universal life insurance products.

Allianz is now managing total assets of $98.5 billion, an 11% increase from the $89 billion they managed at the end of the first quarter in 2011.  Their sales volume of $2.7 billion remained unchanged from last year’s first quarter total.  Variable annuity sales were up 8% at $1.03 billion, while overall fixed annuity sales were down 6% at $1.5 billion.  Allianz Life’s life insurance sales increased by 283% from $6 million to $17 million between the first quarters of the two years.  President and CEO White says that the dedication and hard work of their employees is the main reason that Allianz is doing so well given the tough economic conditions.  Allianz Life was named one of the “100 Best Companies to Work For” this January by Fortune magazine.

Written by Rachel Summit

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The Wall Street Journal just published an interesting article asking “Are variable annuities good investments?”  Ellie Lowder and Lewis Altfest have different answers to this investment debate that has been around as long as variable annuities themselves.  Variable annuities are worth a look as pensions become less common and Social Security questions arise.  Most investors are trying to balance wanting a return on their investments with wanting to protect their money against market downturns that have reared their ugly head in the past decade.  Variable annuities have tax advantages and allow you to invest in the markets, with the option of receiving guaranteed income over your lifetime.  These investments have many proponents and opponents as you’ll see.

Retirement plan consultant Ellie Lowder says that yes, variable annuities are a good investment.  Uncertainty in the markets has made it so that people are more worried about keeping the money that they have rather than getting a return on that money.  With a variable annuity, you can protect your money and have some exposure and potential to get a return on your money.  She says that you can’t find the combination of investments offered by variable annuities anywhere else.  You also have the option to choose from many guarantees, including death benefits and guaranteed minimum lifetime withdrawals.  While these options cost more in fees, variable annuities are the only investments that give you these benefits along with the potential of gaining returns in a good market.  They give you the safety to take some risks in the stock market.

Dr. Lewis Altfest is a CIO and associate professor who doesn’t think that variable annuities are good investments.  He says they have the potential for yearly fees of 4% and doesn’t think these fees are worthwhile, even for the benefits received.  He also believes that while variable annuities have good tax benefits, qualified pension plans and mutual funds have a greater tax savings overall.  Some annuities are quite complex, and it takes a lot of research to understand all of their working parts.  While this is a valid concern, any reputable annuity expert should be able to assist you with all of the fine print.

Ms. Lowder recommends the use of variable annuities within the big picture of your retirement plan to offer you guarantees with market exposure.  Dr. Altfest dismisses the use of variable annuities altogether and recommends using a diversified investment portfolio.  It seems that variable annuities can be a helpful piece in the diversified investment portfolio, just a piece, but still an important one.

Written by Rachel Summit

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Lesson learned for Robert Joseph Kennedy III, a financial advisor in New York.  Don’t break the rules when it comes to selling annuities, even if it seems like a minor infraction or your firm says it will be fine.  FINRA works hard to make sure that financial advisors are meeting standards and following rules when it comes to the financial industry, so just follow the rules and your business will run smoothly.  According to Bill Singer’s Forbes article, “FINRA Rejects A New York State of Mind When it Comes to New Jersey Annuity Signatures,” Kennedy settled with FINRA at the end of last month.

Since 1984, Kennedy has been a member of FINRA.  His firm, Walnut Street Securities, Inc. is also a FINRA member.  The settlement says that 6 annuities were sold by Kennedy between August and December of 2004 through Walnut Street.  While the annuities were documented as being signed in New Jersey, they were actually signed in the state of New York, where Kennedy and Walnut Street operate.  This is significant because these particular annuities were not authorized to be sold in New York state.

Because of the infraction, Kennedy will pay a $5,000 fine to FINRA, be suspended for 2 months from any FINRA related activities, and have to take his Series 7 over again within 60 days of his suspension.  This serves all advisors as a lesson to be learned.  Follow FINRA’s rules when selling annuities and do right by your clients and the industry in general.

Written by Rachel Summit

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The Times Union published a press release from Penn Mutual about their new line of variable annuities.  “Penn Mutual’s New Smart Foundation Variable Annuities Aim to Grow and Protect Retirement Funds from the Threat of Longevity and Market Volatility.”  The Smart Foundation Variable Annuities offer three different products from which to choose as well as multiple benefits that can be added as optional riders.  Penn Mutual has been around for 165 years and has a long commitment to annuities and the financial strength to back them up.  They believe these new variable annuities will help alleviate stress in retirement by protecting their clients’ savings against longevity risk and market fluctuations.

The basic features, fees, deposit minimums, and surrender schedules are the same with all three variable annuities.  However, the Smart Foundation Variable Annuity is the most basic.  It is good for clients who are beginning their retirement funding and don’t need immediate access to the money.  The Smart Foundation Flex Variable Annuity is meant for those who are retiring soon and will need their money right away.  If you are looking to rollover a large account, such as a 401k, into your annuity or consolidate more than one account, the Smart Foundation Plus Variable Annuity may be right for you.  All of the deposits in this third option get a purchase payment enhancement, giving you a greater opportunity for accumulation.

Based on your own need for income, tolerance of risk, and other needs, you can add optional riders to any of the new variable annuities.  There is a Guaranteed Growth and Income Benefit to ensure your account grows in value.  You can also opt for a Guaranteed Minimum Accumulation Benefit to protect your deposit against a volatile market.  If you’d like your heirs to receive a death benefit annuity, you can add the optional Enhanced Death Benefit.  Clients can customize their own portfolio or use one of Penn Mutual’s Lifestyle Asset Allocation funds.  There are some great new variable annuity choices out there from Penn Mutual.

Written by Rachel Summit

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According to Annuity News Journal, the best time to purchase a fixed annuity is during a recession.  In the article “Tumbling Annuity Rates,” Christi Roberts recommends locking in fixed annuity rates now because they may be going down soon.  As the financial markets recover all across the world, annuity rates are likely to change to a lower center.  It’s not like fixed annuities are offering huge returns, but Roberts says that this is the highest fixed annuity rates are likely to be as economies get more stabilized.  Many advisors are telling their clients to invest in fixed annuities and other fixed rate investments while the returns are good.

When there is a recession, investors are wary to give up control of their money for a long time, or forever as is the case with many annuities.  They are worried that they will need to access their money in case of a financial emergency like a layoff.  Because of this, banks and insurance companies have to offer the best fixed annuity rates they can so that investors are willing to turn over control of their money during difficult financial times.  During The Great Recession, interest rates were so low that everyone who qualified for a loan was nearly getting free money.  Those who used that money to invest in fixed annuities made great profits because of the difference in rates.  Now may be your best time to buy fixed annuities for awhile.

Written by Rachel Summit

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Despite the fact that annuities are the best way to finance your retirement if you don’t have a large pension from your job, which most of us don’t anymore, preconceived notions about annuities still keep many retirees from using them.  Time magazine’s Dan Kadlec gives us some annuity insight in his article “Why Annuities are the Answer: But Such a Tough Sell.”  More than half of the elderly population suffers from some form of memory loss, many with full blown dementia.  This is not the time when they need to be figuring out what investments their money should be in or transferring funds around.  The guaranteed lifetime income payments they would receive monthly from an immediate annuity would cover any concern about getting monthly retirement income.

Unfortunately, close to 70% of those recently surveyed said that they want to keep control of their assets in retirement.  Now, the survey also found that 3/4 of retirees wish that they had locked up some form of guaranteed income at retirement and more than that wish their employer had helped them find this guaranteed income stream.  What those surveyed don’t seem to realize is that you can’t get a guaranteed stream of retirement income without giving up control of some of your assets to an insurance company.

Insurance companies and even the federal government have been working hard to help Americans understand the importance of using annuity products in their retirement planning.  Some of the things that have been holding retirees back include misconceptions, while others are valid concerns that just don’t apply to all annuities.  Low interest rates makes annuity rates less attractive than they have been in the past, but they still offer value and retirement security.  Some annuity products are hard to understand and some have high fees, but this is why we recommend speaking with an annuity expert before making any purchases.  Americans need to view annuities as a good type of insurance that you actually use when something goes right rather than wrong.  You are protecting yourself in case you live a really long life, with an annuity you won’t run out of money.  Even though you give up control of the assets you use to purchase an annuity, the security you get in return is invaluable.

Written by Rachel Summit

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If you have a 401k or IRA that you are looking to turn into a lifetime stream of retirement income, an inflation-adjusted immediate annuity can help you do that.  Steve Vernon gives you tips to on purchasing an immediate annuity by using part of your 401k or IRA in the CBS MoneyWatch article, “IRA and 401(k) drawdown: Just tell me what to do for immediate annuities.”  Vernon says to use part of your 401k or IRA to purchase the immediate annuity and use the rest for managed payouts.  He recommends using an online annuity service to shop around for the best immediate annuity rates, but you could also have your financial advisor help you purchase an inflation-adjusted immediate annuity.

Many workplaces have online annuity services that you can use to transfer your 401k, so check with your employer.  If you’d rather not opt for the inflation-adjusted annuity, you can purchase a fixed annuity that will increase 3% on a yearly basis to cover increases in costs.  The author recommends that every married person opt for a joint and survivorship annuity that will pay their spouse at least 2/3 of the monthly payments when they die.  You can even choose to continue 100% of the payments; just keep in mind that the higher percentage you choose, the lower your monthly annuity payments.  Using a 401k or IRA to purchase your annuity offers tax savings, so make sure to mention that is where the money is coming from.  As with all annuities, they are “final sales” so use the portion you know will help you with a secure retirement without using all of your savings.

Written by Rachel Summit

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Prudential Financial’s annuity business, Prudential Annuities, has added to their multitude of choices for their investments.  MarketWatch press release, “Prudential Annuities Adds New Funds to Leading Investment Lineup,” introduces the new options for Prudential’s clients.  Their two new asset portfolios are the AST New Discovery Asset Allocation Portfolio and the AST Schroders Global Tactical Portfolio.  Prudential now offers 19 portfolio choices, which cover four different strategies.  Annuity investors can choose one of these strategies or distribute their money through multiple strategies.

They are committed to growing their business and innovating for their customers, so in addition to the new asset portfolios, Prudential has also added some sub-advisors.  The AST Small Cap Growth Portfolio now has Emerald Advisers Inc. to co-manage with Eagle Asset Management.  Jennison Associates will now co-manage the AST International Growth Portfolio with William Blair and Marsico Capital Management.  Prudential Annuities’ VP of Investment Management says that these changes prove the company’s commitment to top choices, flexibility, and strong management.

These new variable annuity choices have different strategies, but both extend Prudential’s reach across the globe.  The AST New Discovery Asset Allocation Portfolio is a traditional product that gets returns from capital appreciation along with income.  The second new product, the AST Schroders Global Tactical Portfolio, is one of Prudential’s tactical products.  This uses a simple balanced fund along with a tactical asset allocation strategy.  Variable annuities can be complicated if you aren’t familiar with their lingo, so make sure to get help from an expert and see if one of these new strategies will work in your annuity portfolio.

Written by Rachel Summit

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Low interest rates are actually a good thing for many people and businesses.  Anyone selling their home or looking to buy their first home can reap benefits from low interest rates.  But according to Karen Paul of Times Argus in Vermont, “There’s a painful downside to low interest rates” as well.

Those who may be hit hardest by low interest rates are retirees using their investment returns to pay their living expenses.  Those who have money in CDs whose rates have dropped during their term will have a hard time adjusting to what can be much less in returns.  A lot of people are finding their CD and Treasury returns have gone from 4-5% all the way down to 1-2%.  With those interest rate drops and inflation combined, some retirees have dire concern over what they will do to maintain their lifestyle and pay their bills.

Those who have diversified their investments have less to worry about than those who haven’t, but low interest rates will affect everyone across the board.  The article recommends three ways to combat lower interest rates.  Now is a great time to look into annuity products.  Fixed annuity rates can still offer you a good rate of return and variable annuities even offer you the potential for growth when interest rates come back up.  Annuities offer security and predictability when retirees are worried about meeting their monthly expenses.

The article offers two other ways to use a portion of your money and diversify to get more interest.  High-yield bonds, like corporate bonds and mortgage-backed bonds that pay better yields, and stocks which pay dividends are also good options right now.  Definitely speak to your financial advisor or find a reputable one before making any of these long term purchases.  Any good financial advisor will want you to be secure in your retirement and will help you determine if these products are right for you in this low interest rate environment.

Written by Rachel Summit

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I’m really disappointed in something I recently read in the Daily Local News out of Lancaster, Pennsylvania.  In a question and answer column with columnist Bruce Williams, someone wrote in asking whether annuities would be a good idea to help them finance their remaining retirement.  Without much inquiry, he dismissed annuities as a viable investment option for the man asking about them.  It’s really important to speak with an expert about all of your financial details before ignoring a product that could bring you great financial benefits.  While the reader and his wife asking about annuities are in their 80′s and won’t likely be collecting from their annuities for as long as some people with guaranteed lifetime benefits, the right annuity product could really help them alleviate any concerns about outliving their remaining savings.

The couple wrote that they have most of their money in CDs and mutual funds and they are disappointed in the current returns they are getting.  Of course immediate annuity rates are not very high right now either, but there are annuity products and benefits that can make them worthwhile.  Variable annuities with certain guarantees might be a good option for this couple and they may find higher annuity rates than they will for CDs or mutual funds.  Although there are annuities that lose value once the holder passes away, this couple could choose to buy a death benefit annuity so that it would pay out over both of their life spans and even offer benefits to an heir after they have both passed away.  Some annuities would not be right for this couple in their 80′s, but the right annuity expert can help them determine if there might be an annuity product to help meet their needs.  Dismissing annuities as an option was too quick a judgement without more information.

Written by Rachel Summit

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