What’s Behind the War on Variable Annuities?
January 22, 2019 by Jon Henschen
After the market carnage of 2008-2009, a number of advisors shared stories with me about clients who would literally kiss them in adoration, so grateful for the fact that their nest egg suffered no losses during this market turbulence because they were invested in variable annuities with living benefits.
Clients like to make money. More importantly, they don’t want to lose money. Advisors who market principle protection often fulfill these objectives with variable annuities and fixed index annuities, which provide underlying guarantees.
During the last two years, however, the regulatory environment has become increasingly hostile toward advisors that largely focus on variable annuities and fixed-index annuities, as broker-dealers urge advisors to do more fee-based business.
From the representatives’ perspective, many would love to do advisory work, but it lacks guarantees from losses. They frequently feel that their broker-dealer is pushing advisory platforms on them in order to boost the firm’s own profit center. This results in an underlying mistrust when it comes to broker-dealer recommendations, which some advisors see as self-serving rather than benefiting the client.
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