Swiss Army knife (Image: Thinkstock)

Fifteen years ago, many financial professionals tried to meet clients’ needs with variable annuity contracts that could do everything.

Advisors dreamed of annuities that could help clients save for retirement, collect income in retirement, pay long-term care bills, pass estates on to heirs, and, possibly, hammer nails, cut wires and open wine bottles.

Today, the variable annuity multi-tool strategy is out. A modular, Lego model is in.

(Related: Welcome to the 21st Century YOYO Retirement Plan)

Annuity distribution specialists talked about that shift Monday, in New York, at an annuity session at LIMRA’s annual meeting.

John Galvin of Capital Management Group said the best way to sell annuities is by helping clients analyze their cash-flow needs, then by showing how annuities and other products can help clients meet those needs.

“It’s not the product that makes the sale,” Galvin said. “It’s the financial planning framework.”

Galvin suggested that, these days, clients may need several different annuities, with different strategies, to meet different types of income needs, and other financial needs, at different stages of their lives.

Joe Toledano, a managing director at Morgan Stanley’s wealth management unit, said that, in the past, variable annuities were built as financial Swiss Army knives.

“Today,” Toledano said, “it seems to be moving toward a separately packed approach.”

In the past, Toledano said, compensation for sales and distribution players was often bundled in a way that made mixing and matching different products difficult, Toledano said.

Today, Toledano said, the move toward fee-based products is making it easier to snap different products together, and new technology could strengthen that trend.

In some cases, Toledano said, a customer could even combine variable components from one company with product guarantee features from another company.

Galvin said one key is to help clients understand that the term “annuity” can refer to a wide range of products, just as the word “car” can refer to either a Ferrari or a Ford Escort.

— Read Help Clients Use Every Tool In The Variable Toolboxon ThinkAdvisor.

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