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Retirement Planning > Retirement Investing

NAFA: Offer Retirement Savers Product Neutral Information

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Financial advisors should give defined contribution retirement plan participants “product-neutral information” about retirement planning and planning options, according to the National Association for Fixed Annuities.

NAFA, Milwaukee, talks about the value of all fixed annuities, including indexed annuities, in retirement income planning in a response to a request for information issued by the U.S. Treasury Department and the U.S. Labor Department.

Federal regulators asked for advice about use of annuitization and other mechanisms for converting retirement savings into lifetime income streams.

“Most investment advisors are biased toward a standard balanced (diversified) investment portfolio with a systematic withdrawal of a fixed income stream during the retirement period,” NAFA says in its RFI response.

Individuals who rely solely on asset diversification to protect their assets may exhaust their savings while they are still alive, NAFA says.

But putting too many limits on retirement planning and plan options also could hurt the sustainability of retirement income, NAFA says.

“An open and competitive plan that provides choice of product (both retail and institutional), professional planners, and product providers will benefit all involved, but most importantly the retiree,” NAFA says. “It is also important that plan participation is voluntary and not mandated by converting 401(k) funds or through enrollment in new government programs.”

To ensure that plan participants know enough to make intelligent use of their options, federal agencies must require that participants have access to “educational tools and calculators, and that all product providers and advisors develop product-neutral information through all available and accessible media,” NAFA says.

Participants also “need to be provided unbiased and product-neutral information about all their options,” NAFA says.


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