A new report offers advisors the opportunity to compare the features and funds of variable annuity (VA) living benefits. Strategic Insight, a research firm for the mutual fund and wealth management industry, announced the release of “Variable Annuity Living Benefits and Eligible Funds” on Friday.
The report, says the company, offers “comprehensive coverage of 23 living benefits from 17 insurance companies, . . . detailed and concise summaries on each feature’s unique characteristics.” This coverage, it says, allows the reader to:
- Monitor competing living benefit options
- Identify investment limitations associated with key living benefits
- Identify equity exposure on the investment options associated with living benefits
- Compare living benefits and investment options across VA providers
- Compare fund performance and fund composition of the eligible investment options.
Carina Diamond, managing director and securities principal partner at SS&G Wealth Management in Akron, Ohio, said in a phone interview that such a guide is “a fantastic idea, because the complexity has just exploded. Variable annuities were complicated before, and now there are so many sources and companies that change them frequently; it makes it difficult.”
Diamond, who was on a panel at the Retirement Income Symposium on Nov. 8, said that such a guide should focus on suitability: “Why would this rider be suitable for a client, and why not?” Annuities offer both living benefits and death benefits, she explained, and there’s “a lot of variability” in the living benefits.
“When you become a student of VAs,” she continued, “you learn that there’s a big difference in the two main phases of owning [one]. The first is accumulation, and the second is withdrawal—or decumulation, if there is such a word. There’s a big difference in how the riders work. Depending on what you’re looking for, you may want a more aggressive product up front, or [one that’s] more aggressive on withdrawal.” It depends, she said, on how fast the income base is growing, and on the investment criteria.