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Cerulli: More Advisors Using Guaranteed Income Streams

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More advisors are embracing the use of guaranteed income streams, according to new research from Cerulli Associates Inc.

Almost 30% of advisors increased their use of guaranteed income streams in 2009, according to researchers at Cerulli, Boston.

Fee-based advisors and those using a fee-and-commission mix are most likely to recommend living benefits features as a means of generating income from a variable annuity, researchers say.

But advisors who derive less than half of their revenue from fees are more likely to rely on systematic withdrawals for their qualified VA business, they add.

Still, advisors remain reluctant to embrace holistic retirement planning, containing elements such as guaranteed income streams and budget analysis, according to John Hsu, who helped conduct the research. “Responses to the market crisis (reducing risk in client portfolios and reducing withdrawal rates) have been simplistic at best,” he says.

But, because interest is increasing in insured retirement income methods, advisors will need improved education on methods available to generate income from VAs, says Lisa Plotnick, head of Cerulli’s annuity practice, a study co-author.

Other findings:

- 57% of advisors surveyed in third quarter 2009 said they would consider using both immediate and deferred annuities for IRA rollover dollars, up from 41% in 2005.

- VA product manufacturers are beginning to consider the value of simplified product offerings, especially for the registered investment adviser channel where VA adoption has traditionally been extremely feeble.

- VA carriers are continuing to restrict the investment menu for clients that select a living benefit rider on their contracts.


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