Overall takeaway: buffer strategies offer more risk, but greater potential for returns.
September 19, 2023 by Sheryl J. Moore
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