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Kelli Hueler

Retirement Planning > Retirement Investing > Annuity Investing

What the Future of Annuities Means for Advisors

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What You Need to Know

  • Advisors have an opportunity to inform retirement plan providers and annuity product manufacturers about what their clients want and need as it pertains to income solutions.
  • Providers are realizing the importance of creating meaningful competition and pricing transparency at the point of annuity purchase.
  • As advisors work with their clients on income planning, they need to keep in mind that there is a lot of emotion involved in these decisions.

While many in the financial planning world are still studying up on the best ways to communicate about and deliver annuities to retirement planning clients, Kelli Hueler, CEO and founder of Hueler Cos., has been working on the challenge for many years.

Hueler founded her firm in 1987, and today Hueler Cos. is recognized as an innovative technology and research provider offering resources for the analysis, selection and implementation of stable value and lifetime income annuity products.

Hueler spoke this week with ThinkAdvisor to mark the forthcoming launch by Fidelity of Guaranteed Income Direct, a platform designed to support individuals as they convert a portion of their 401(k) or 403(b) savings into a guaranteed annuity. According to Hueler, the push by Fidelity and other firms to deliver “in-plan” lifetime annuities marks an important milestone in the development of the U.S. retirement planning landscape.

Fidelity alone has some 8 million workers utilizing its workplace savings platform who are nearing retirement. As Hueler notes, beyond Fidelity’s book of business, many millions more people in the U.S. are expressing a growing interest in guaranteed income annuity options that are connected to their company’s retirement savings plan or delivered via relationships with their fiduciary financial advisors.

As recounted in the Q&A dialog below, Hueler sees the U.S. as still being in the “early innings of retirement income,” but she is more encouraged than ever about the spirit of innovation and collaboration shared by annuity product manufacturers, financial advisors and retirement plan providers.

THINKADVISOR: Given your background working on annuity distribution issues, how do you reflect on this moment in the U.S. financial services industry? Is ‘income’ finally getting the attention it deserves?

Kelli Hueler: The answer is yes, finally. There were a lot of days in the past when we felt like we were painfully ahead of our time, given our focus on annuity distribution. For many years, it was really hard to get people to sit down with us and have discussions about lifetime income.

Today, things are a lot different, and you can see that in Fidelity’s announcement.

In the past few years, the financial advisor community has really helped to inform some of the retirement plan providers and annuity product manufacturers about what their clients want and need as it pertains to income solutions.

Our point of view at Hueler Cos. is that we need to all work together to create meaningful competition at the point of annuity purchase, whether we are talking about annuities being purchased inside or outside of retirement plans.

We are gratified to see the fact that providers like Fidelity are embracing the notion that proprietary, closed-architecture solutions are not going to solve the income challenge. In Fidelity’s case, the annuities come with institutional pricing and are offered by a significant variety of insurers.

The open architecture style is the future of income, and it’s very exciting from where we sit.

How important, or not, is the discussion of in-plan versus out-of-plan annuity purchases? What should wealth advisors know about the in-plan annuity landscape?

Honestly, I see the in-plan versus out-of-plan discussion as a pretty big distraction. Our technology can support solutions that are implemented either way, and both are important. We are agnostic.

The bigger thing to emphasize, as I noted, is the need to have some competition and pricing transparency at the point of purchase. In our conversations with plan advisors and wealth managers, they emphasize this point, because they are either working in a fiduciary capacity for their clients or their clients are in the position of being retirement plan fiduciaries themselves.

No matter how good an annuity product manufacturer is, no single provider can offer the best solution in every situation, and so choice and competition are such important elements to consider.

Can you speak directly to the work you are doing alongside wealth advisors who are not necessarily working in the retirement plan context?

This last five years have seen a big shift in terms of who we are serving. When wealth advisors use our program, as you can imagine, their individual clients tend to have more resources than what we would generally see within a given 401(k) plan.

The client needs do look different for wealth advisors. Anecdotally, I can tell you that many clients with substantial assets still fear their longevity risk, and so they may view annuities as that backstop, in case they live even longer than anticipated. This is especially prevalent, I think, among women who are working with wealth advisors.

Other clients might have market volatility as a primary concern, and so they seek to protect portions of their assets from potential market losses via annuitization.

As advisors work with their clients on income planning, they need to keep in mind that there is a lot of emotion involved in these decisions. Ultimately, building an income plan is all about going from an accumulation-based lifestyle to one based on decumulation, and that is a difficult psychological transition to make.

What is one common misconception or issue you see when it comes to discussions about annuities?

Every day, people ask us the question: How much should I annuitize? Well, it is impossible to say without a detailed analysis of your situation.

Answering that question is what a great advisor can help you do. At Hueler Cos., we aren’t advisors. We are guidance counselors who can teach you about what an annuity is and what it can possibly do for you. We run quotes and do the kinds of things that people don’t quite know how to do on their own.

The determination of how much to annuitize is a critical decision and one that must be carefully considered for each client. There is no simple answer to the question of how much to annuitize.

Are you optimistic about the progress that is being made in this field?

Yes, we are so optimistic about what comes next and the opportunity to collaborate with advisors and product providers across the board.

The greatest part for us, now, is to see how the marketplace has become so much more open minded relative to collaboration. There are still a few firms that are still insular. Their point of view is that they aren’t interested in anything they haven’t built themselves. They still believe everything needs to be an in-house, proprietary solution.

That mindset is, thankfully, in the minority right now. When we started this program, and up until five years ago, that proprietary mindset was the norm. Every asset manager or retirement plan recordkeeper had their own view, and many of them believed the qualified longevity annuity contract vehicle was the only possible way to deliver income in this setting.

Today, we have moved beyond this point of view. The industry, I believe, sees the importance of giving people standardized, clear and easily comparable annuity choices.

Now, when asset managers come to the table to speak with us, they really get it. If people want to dig in and stay proprietary, they are looking in the rear view mirror.


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