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RIAs On Immediate Annuities

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About 20% of registered investment advisors would consider using immediate annuities for a portion of their clients’ rollover assets, according to Cerulli Associates Inc.

In general, RIAs are not warming to the idea of using annuities, as most deferred products are inconsistent with the fee-based business model, says Cerulli, Boston.

However, in the current market environment, RIAs are giving immediate annuities a second look, the research firm reports, noting that 13% of RIAs included in Cerulli advisor surveys say immediate annuities are good choices for a portion of rollover dollars, while deferred annuities are not.

Also, 6.7% of RIAs think both immediate and deferred annuities may be good choices for a portion of rollover dollars.

By comparison, 71% of insurance advisors and 70% of independent advisors would consider both deferred and immediate annuities for rollovers, Cerulli says.

RIAs are interested in immediate annuities because the products provide a relative low-cost means of enhancing portfolios for clients in need of guaranteed income, writes Lisa Plotnick, the lead author of the report.