In 2017, insurers prepared for the U.S. Department of Labor’s fiduciary rule by rolling out many fee-based products. LIMRA reported in November, however, that fee-based products accounted for only about 0.1% of U.S. individual annuity sales in the third quarter.
Will anyone buy, or sell, the new fee-based annuity contracts in 2018?
In my opinion, as an annuities sales executive, the answer is yes.
I may be biased, however, there’s a reason many of the top fixed-indexed annuity insurers are introducing fee-based products: there’s tremendous opportunity in the Registered Investment Advisor space. This market includes more than 12,000 firms that manage $70.7 trillion for more than 35.6 million clients. (My source for that is the 2017 Evolution Revolution Report from The Investment Adviser Association and National Regulatory Services.)
Insurers must recognize that technology is key when it comes to tapping into the RIA market. These advisors require sophisticated technology platforms to ensure they are providing fiduciary advice that’s in their clients’ best interest. Integrating with these platforms is the springboard to merging the insurance and advisory worlds.
Additionally, insurers cannot overlook consumer demand. Consumers are demanding solutions with lower costs and better value proposition. They want choices. As in how they pay for services or receive financial advice.
While anything new, specifically fee-based fixed-indexed annuities, is going to be a small percentage of total sales, we have to start somewhere.