Overall takeaway: buffer strategies offer more risk, but greater potential for returns.
September 19, 2023 by Sheryl J. Moore
My one and only
PGIM homey-
David Blanchett,
is all over my LinkedIn!
This time, he is discussing structured annuities (a.k.a. RILAs). Click HERE to read RILAs: Buffers are still much better than floors
Now remember- with a structured annuity that has a floor on losses, “the downside is limited to a stated percentage, such as 10%. For example, if the floor is 10%…you can’t lose more than 10% regardless of the return of the underlying index.”
Alternatively, on a structured annuity with a buffer, “the first amount of loss is absorbed by the product, based on the buffer level; but the investor would suffer any loss beyond that point. For example, if the buffer is 10% and the return of the underlier was -40%, the investor would lose 30%. If the return of the underlier is negative but greater than the noted buffer, the return would be 0%.”
Shout it from the rooftops-
David says that buffer strategies perform better than those with a floor!
(SN: Anyone think this conversation is reminiscent of the discussion on which indexing method is “best” on an indexed annuity? I’m feeling a little bit of deja vu.)
The question now is- will sales of these allocations trend with David’s research?
Well, LUCKILY, I have that data point!
Wink, Inc.‘s “Wink’s Sales and Market Report” shows that 88.8% of structured annuity premiums are allocated to a buffer strategy.
Overall takeaway: buffer strategies offer more risk, but greater potential for returns. -sjm
