What do you mean by “managing FIAs?”
April 8, 2025 by Sheryl J. Moore
Someone forwarded me an article from my friend James Watkins, III JD, CFP Board Emeritus™, AWMA® this weekend.
He has an interest in in-plan annuities. I am always learning from him. Now it is my turn to drop some knowledge.
(Initial comments, here, and the remainder are in the comments.)
First- I’d like to ask if I am the “annuity advocate?” I have personally responded to all of your quandaries about annuities. Educating others about life insurance and annuities is what I do.
“… the annuity industry’s known opposition to transparency and disclosure?” Regulations require that insurance companies provide clear disclosures on annuity contracts. I would love to hear about the industry’s “known opposition to transparency.”
Whatever motivated you to suggest, “…unlikely that the annuity issuer did or would provide material information such as applicable spreads and other costs. or the risks involved with a particular type of annuity?” Insurance companies are REQUIRED to disclose this information.
Fee-based annuities (as compared with commissionable annuities) accounted for 3.37% of the $96.6 billion in deferred annuity sales during 4Q2024. I am not certain that supports your arguments on fee-based annuities?
I am shocked that you would suggest that “the annuity industry annuity marketing material to RIAs that [you] have seen seems to suggest that RIAs can recommend annuities to their clients, even if the client does not understand annuities, and then turn around and offer to manage the annuity for them, using management fees for make up for the loss of commissions.” Please share the collateral material that supports this. In my 25 years of studying annuities, I have NEVER seen this.
What do you mean by “managing FIAs?”
And why does your article only mention indexed and variable annuities? Why do you single-out these products, when they account for less than 50% of total annuity sales? No mention of multi-year guaranteed annuities? One-year fixed rate annuities? Structured annuities (a.k.a. “RILAs”)? Income annuities? Hmmmm…
Your diatribe about indexed annuities seems to focus on individual retail annuities. You have admitted that your focus is not in this arena, but in the in-plan annuity space. So, why opine on these products that you have no expertise with, in a public forum? There are only two indexed in-plan annuities on the market today. It seems that your efforts might be better-spent on something that will be more impactful?
You are quick to criticize that indexed annuity issuers can change their pars/caps/spreads. However, less than a week ago, I sent you a list of all the indexed annuities that guarantee their rates for the annuity’s surrender charge period. I see no mention of that in your diatribe. -sjm
