This attitude is exactly why the DOL proposed the rule. If revenue (and form of compensation) is the top priority, you are not acting in the best interest of the client.

Instead, we need to identify the reasons why many consumers might be best served by fixed annuities, not just accumulating assets or variable annuities. For many years, fixed indexed annuities have provided similar, if not better, income riders for clients. Due to the stability of the accumulation value, carriers can better price the income benefit for clients. When I hear annuity producers will change products because they can’t earn a commission, I become concerned about where those producers might look for solutions. In recent years, the variable annuity industry has made their products more like commodities instead of their benefit-driven solutions of the past. By transitioning to fixed indexed annuities, I fear the industry will once again relent to irrational pricing that hurts all of us in the long term.

It appears producers who are squirming for a viable solution didn’t use the variable annuity chassis for upside potential, tax deferral, and asset allocation strategies. Instead, they probably sold the product for its secondary guarantees on income. If the client needs income alone — and not the potential for cash accumulation, tax deferral and asset allocation — then they might be best served with alternative guaranteed income solutions like single premium immediate annuities or deferred income annuities.

With tax-favored distribution on nonqualified assets, the after-tax income level can be higher in these income solutions versus the typical variable annuity. We have to change our focus. It’s not about our old, antiquated business model anymore — it’s about serving the client in ways we might not have looked at previously. The industry of tomorrow requires open-mindedness, unbiased discussions with clients, and a continued willingness to learn new strategies to affect our clients’ lives. Let’s look at the fundamental shifts that the DOL wants our industry to comply with and make positive changes for our clients.

Winning Strategy: We’re already seeing financial professionals scrambling for the next best solution to earn a commission. Let’s start by dropping our biases toward solutions we are not familiar with and looking at new ways to solve client needs — even when we might not have done it before a fiduciary standard.