In spite of several insurers fleeing the annuity business, Guardian is increasing its business in the market.
“We look at the annuity market in a holistic way,” Doug Dubitsky, head of the life insurance company’s annuities division, told AdvisorOne on Wednesday. “We’re increasing our focus on income solutions and we’re not tied to any one product or any one feature or rider.”
One of the biggest flaws to the annuity industry overall, Dubitsky said, is that the very concept of annuities is confusing to clients. Of the myriad options available, many have a proper place in a client’s portfolio. Add to that the existence of some disreputable products. “In the public mind, all of these get wrapped together around that one word, ‘annuity,’” Dubitsky said.
“We’ve run away from the word ‘annuity’ and ‘annuitization’ as something that’s bad. Annuitization in the right circumstances and with the right products is very beneficial.”
Another problem with annuities is that they’ve become too complicated, Dubitsky (left) said. In an effort to have them be all things to all people, “we started bolting on too many bells, too many whistles.” Dubitsky and Guardian are working toward simplifying annuities and responding to clients’ needs with specific products.
“Not every product has to solve every need. If we have multiple solutions and we have multiple forms of guaranteed income in retirement, as an advisor, I can understand your problem and I can figure out what works best for you. Then I can turn and say, ‘Here are my options. Let’s figure out the one that fits your needs the best.’”
For example, Dubitsky said, investors could choose a “variable annuity with a living benefit rider for somebody who wants equity market growth, potential to take advantage of an up market and at the same time have a guaranteed floor and lifetime income. There are single-premium immediate annuities for someone who wants what I call pure income: needs the money today, wants predictable, steady income, and wants the most guarantees from the product.”
The biggest trend in annuities and the common thread among annuity purchasers is that they all need guaranteed income. Regardless of income level, clients don’t want to have to change their lifestyle after they retire, Dubitsky said. From the mass affluent to the very high-net-worth, clients want to maintain their lifestyle.