Models Used To Sell Fixed-Indexed Annuities Are Often Misleading, Morningstar Says
August 23, 2023 by Tracey Longo
Fixed-indexed annuities may be the darling of the moment, but some of the illustrations detailing the way they are likely to perform in the future are misleading, Spencer Look, associate director for The Morningstar Center for Retirement & Policy Studies, says in a new research report.
Financial professionals selling fixed-indexed annuities (FIAs)—a type of annuity where the rate of return is based on the movement in a market index such as the S&P 500—typically provide potential buyers with an illustration that details how the annuity might perform under different circumstances, Look says in his report.
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Wink’s Moore on the Market: “…some of the illustrations detailing the way [indexed annuities] are likely to perform in the future are misleading…”
YOU THINK?!?
Spencer Look, FSA– like you, “I do think the National Association of Insurance Commissioners should rethink indexed annuity illustration guidance.”
How can we get behind this, Doug Ommen? Some indexed annuity illustrations are projecting more than 17% annual returns, on a linear basis.
Best article all week, Tracey Longo. Thanks for publishing this in Financial Advisor Magazine this morning. -sjm
