We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,343)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (427)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (809)
  • Wink's Articles (354)
  • Wink's Inside Story (276)
  • Wink's Press Releases (123)
  • Blog Archives

  • May 2024
  • April 2024
  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Barron’s Top 50 Annuities for 2016

    June 25, 2016 by Karen Hube

    Annuities are about to get a makeover with new rules, low interest rates, and longer lives. Our annual ranking will point you to the best choices.

    By KAREN HUBE
    June 25, 2016

    Illo: Michael Sloan for Barron’s

    America’s 50 Best Annuities: Guaranteed Income for Life

    The $2.7 trillion annuity industry’s latest golden child is the fixed-indexed annuity—but don’t be fooled by its luster. Concerns about misleading sales pitches for these and other commission-based products have prompted new regulations to protect investors. But keep your guard up: The new rules aren’t fully effective until 2018, and the industry is fighting them mightily.

    Fixed-indexed annuities protect principal and guarantee a minimum interest rate, about 1%. Bigger payouts can be had if the performance of the index the annuity is tied to (such as the Standard & Poor’s 500) rises enough. But while fixed-indexed annuities are often billed as investments with market-like returns, the reality is that they are alternatives to certificates of deposit, bonds, or other fixed-income products, with returns whose upside potential these days is capped at 3% or 4%.
    The upside potential for the person selling the annuity is huge, however. Commissions can be as high as 14%, and incentives such as island getaways, tickets to sporting events, and other gifts are the norm. “Some agents pick the one that if they sell enough of it, they’re going to go to Bora Bora to drink for free,” says Stan Haithcock, an annuity sales agent based in Ponte Vedra Beach, Fla., who analyzes annuities for financial-advisory firms. “It’s tragic. This is a good product that’s being sold improperly.”

    A new Labor Department rule aims to fix that. The rule requires anyone selling fixed-indexed and variable annuities in a retirement account to assume a fiduciary role—in other words, they need to act in a client’s best interest.  Right now, “if you want to sell a fixed-indexed annuity, you can take a crash course on Thursday, pass it on Friday, have a chicken-dinner seminar on Saturday, and make your first sale on Monday,” says Haithcock.

    WITH SUCH HAZARDS IN MIND, Barron’s compiled a list of 50 of the most competitive, top-rated annuities as of the start of this month. We looked for products with high payouts or rates and reasonable fees, based on assumptions about age, amount invested, and time periods. It’s important to note that annuities are extremely fickle products, and a change in assumptions can produce very different results. Insurers also change their offerings frequently.

    Fees aside, the annuities landscape is being driven by other factors—such as interest rates and longevity projections.

    Annuities have two basic functions: to accumulate assets on a tax-deferred basis (as with an individual retirement account, you can’t tap the assets without penalty until age 59½), or to turn a lump sum into a guaranteed lifelong income stream. They can have variable or fixed rates of return, principal protections, income guarantees, liquidity options, income for long-term care needs, and varying death benefits, along with other cogs and levers that impact their function and cost.

    This year’s list reflects higher interest rates paid by fixed annuities, which invest premiums in bonds and guarantee interest rates for certain periods, much like certificates of deposit. The five- and seven-year guaranteed rates are slightly ahead of last year’s. For example, Midland National recently offered a 2.9% five-year rate on its Guarantee Ultimate 5 fixed annuity, compared with the best five-year rate a year ago of 2.6%. In contrast, the best rate on a five-year CD is 2%, according to Bankrate.com.

    “When the Fed raised rates in December, most banks kept it for themselves, but some insurance carriers offered more-competitive rates,” says Jamie Cox, managing partner of Harris Financial Group. Given that the rates are still quite low, though, advisors recommend “laddering” annuities—as products mature, reinvesting the money into annuities with higher payouts.

    For annuities paying guaranteed income, however, payouts have declined somewhat. Because insurers invest in bonds, “the single biggest raw ingredient that goes into what we can offer is interest rates,” says Dan Guilbert, executive vice president of the retirement division at Symetra Financial. With the 10-year Treasury down to 1.6% from 2.4% a year ago, the climate is bleak.

    Another dark cloud: For the first time since 2000, the Society of Actuaries adjusted mortality tables in 2012, requiring insurers to put the new data into effect last year.

    “The tables are used by regulators to determine what level of reserves a company should have,” says Dylan Huang, senior managing director and head of retail annuities at New York Life. “When the new tables were implemented, the annuity amounts decreased—the longer the life expectancy, the longer the insurer has to pay.”

    Investors looking for guaranteed income have three main choices: an income annuity—the most basic option—or either a fixed-indexed or variable annuity with a lifetime income rider.

    A variable annuity lets investors choose investments that are similar to mutual funds. These can be useful tools for tax-deferred investing when fees are low and contracts give you plenty of investment options (see the accompanying chart for competitive contracts). There’s no downside protection, though. Some come with guaranteed income riders, which should be sized up carefully.

    These days, riders on fixed-indexed annuities appear more competitive than riders on variable annuities or income annuities. But a simple comparison of guaranteed income can be misleading—taxes must be considered. For all annuities funded with after-tax dollars, gains are taxed as income when they are withdrawn; principal is withdrawn tax-free. All the income from a rider on fixed-indexed or variable annuities is considered gain, until all gains have been paid out. But income annuities have a tax advantage: A large portion of the income is considered to be principal, and only a portion—exactly how much depends on your life expectancy and other factors—is taxable gain. All the income from a rider on fixed-indexed or variable annuities is considered gain, until all gains have been paid out.

    “Income annuities do generally provide greater income; however, they do a bad job of balancing other objectives or investor desires,” says Judson Forner, director of investment marketing of ValMark Securities. With an income annuity, the insurer swallows your principal permanently, and your liquidity options are limited. Investors who want more liquidity should consider a lower after-tax income guarantee in a fixed-indexed or variable annuity.

    Variable annuities with an income rider may be best for investors who believe that stocks will give them the biggest bang over the long term, but are willing to give up some upside in exchange for guaranteed income. Consider Jackson’s Perspective II variable annuity: Its Lifeguard Freedom 6 Net rider guarantees a minimum annual income of $16,000, which pales in comparison with the $21,500 annual income offered by Athene’s fixed-income annuity rider, Ascent 10 Bonus 2.0. In years of strong market performance, the Jackson rider will pay up to a more-comparable $20,268, while the underlying assets see bigger gains because they can be fully invested in stocks.

    Guaranteed-income riders for fixed-indexed annuities are competitive, but tougher to parse. Investors are often led to believe that the internal rate used by the insurer to compute future income—which can be as high as 10%—is what they’re earning on their account value, says Andrew Murdoch, president of Somerset Wealth Strategies. These fuzzy details “lure people into a commission-based sale,” he says. “No insurance company is going to pay you 10% when Treasuries are yielding around 2%.”

    ANOTHER TRADE-OFF that investors have to consider is whether to go with an annuity that pays the same level of income each year or one that guarantees rising payments. It isn’t the no-brainer it seems to be: It can take a decade before those rising payouts begin to pay off.

    Consider the Allianz 222 fixed-indexed annuity, the industry’s top seller. For a 55-year-old investor who plans to draw income at age 65, a $200,000 initial investment will pay a total of $767,249 in income by age 95, more than $120,000 more than the top-paying contract whose payouts are unchanging.

    But the payouts of the Allianz annuity start out much lower than the level-paying products. Allianz’s first-year payout is $16,127, compared with the $21,500 guaranteed per year by Athene’s Ascent 10 Bonus 2.0. It takes until age 85 for the Allianz rising-income product to catch up to Athene’s in terms of the total income paid out.

    For investors with a genetic predisposition for longevity, this may make sense. For those who want higher income earlier in retirement, a level-paying product may be better.

    It’s this kind of balancing of investor needs that the Labor Department rule requires annuity sellers to consider, Forner says. Annuities can have a place in a portfolio, but the work must be done to find the right fit.

    Originally Posted at Barron's on June 25, 2016 by Karen Hube.

    Categories: Industry Articles
    currency