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For the retail annuity market, 2026 could turn out to be a year for headlines about contingent deferred annuities.
A CDA attaches an annuity spigot to a retirement saver's existing portfolio. The assets stay under the control of the client and continue to count toward the advisor's assets under management total.
Several small insurers have tried to offer CDAs over the years. They have run up against the problem of trying to get attention for an unusual new product in a market dominated by giants that have been household names since Theodore Roosevelt was young.
Now FIDx — the manager of an annuity distribution platform — is working with Prudential Financial to offer a CDA-based "insurance overlay" program through an arrangement with Dimensional Fund Advisors.
DFA is offering the program as a way for advisors to help investors pull income from the assets on DFA's unified managed accounts platform.
Some of the CDAs are already live, according to Michael Kazanjian, the FIDx head of insurance overlays.
FIDx is now working to help more companies start to offer CDAs in 2026.
"It's definitely a new concept," Kazanjian said. "There's been a lot of pent-up demand for a solution like this."
What it means: If the FIDx CDA effort succeeds, retirement savers could get a new tool for tapping retirement nest eggs.
Even if the CDA effort peters out, marketing for the product could increase interest in retirement income product design.
The machinery: For CDA market watchers, one question has been how a CDA can cover a retirement saver's existing retirement portfolio.
Kazanjian's answer: Rules.
A CDA seller does not want the buyer to cover a portfolio dominated by Beanie Babies and Pez dispensers.
The seller does want to see the buyer come in with a relatively conventional, diversified investment portfolio.
The regulations: Regulators in more than 40 states have already approved Prudential's CDA, Kazanjian said.
Insurers often file CDAs as variable annuities, rather than as fixed annuities, but the insurers can include a fixed-income feature or rider, even with a CDA that's regulated as a variable product.
Reasons for hope: The new CDA program could do much better than earlier CDA programs, partly because the infrastructure has improved, Kazanjian said.
In the past, he said, "Technology was the missing piece."
Another obstacle was the lack of a centralized mechanism for connecting the CDA issuers with the advisors. A CDA issuer had to create separate connections for each advisor and each asset manager.
Now, Kazanjian said, information technology is more powerful than it was five or 10 years ago, and FIDx can connect many different CDA issuers to many different advisors at the same time.
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