Uncle Sam wants your clients to put annuities in their retirement plans: How this benefits youArticle added by Ryan Parker on June 21, 2012
Ryan Parker

Ryan Parker

St. Petersburg , FL

Joined: April 04, 2011

Independent annuity agents and advisors should find reason to take heart in the strange new alliance between the Treasury Department and the Department of Labor in their inclusion of annuities in employer-sponsored retirement plans.

Both the Treasury Department and the Department of Labor have proposed new initiatives regarding the inclusion of annuities in employer-sponsored retirement plans. There are pros and cons to what is effectively slapping a federal seal of approval on annuities as a retirement planning tool, but no matter how you look at the situation, independent annuity agents and advisors can still find reason to take heart in this strange new alliance.

It's only natural for advisors to be wary of the feds — especially when it comes to their motives regarding annuities (the painful memory of the defunct Rule 151A is still raw for many) — so more than a few agents are concerned. While some advisors may worry about ulterior regulatory motives, others are more concerned that these federal annuity initiatives will foster increased competition from other advisors such as money managers and group sales specialists, create an unequal playing field, increase licensing requirements, or add more work to making a suitable sale of this product. While these are all valid concerns, no further negative regulatory issues affecting these concerns have yet been proposed, so why not fix your focus on what you can gain from these federal initiatives to put annuities in Americans' portfolios?

These measures amount to a federal endorsement of the lifetime income features that annuity products offer, and their encouragement to add annuities to retirement portfolios will only serve to spread awareness of the benefits of annuities, as well as pique the interest of a broader group of prospects. This means more than enough opportunity to benefit annuity salespeople of all types.

It wasn't so long ago that annuities seemed to get nothing but bad press, so an unprecedented federal endorsement like this could reinvigorate annuity interest in your clients. While those working in institutional environments will get the low-hanging fruit, there are still plenty of opportunities for individual advisors who can use this federal seal of approval to open discussions about adding annuities to their clients' portfolios.
Even if your clients are considering buying an annuity through their employer, many may want a second opinion, which opens up a whole new market niche for advisors willing to position themselves as the experts who can help make these difficult planning decisions. More options often means more confusion for the average consumer, so the potential to educate clients on the benefits of these products has never been better. You may well end up selling independent annuities to individuals who still maintain a 401(k) or pension plan, yet choose not to participate in the plan's annuity offering. What's more, as an independent advisor, you can also present options not available in an employer-sponsored plan.

Furthermore, the Labor Department's planned rules on fee and cost transparency will serve consumers and advisors alike because consumers and advisors will have access to this objective information. Having access to this information will make it easier for advisors to evaluate whether participating in the company-sponsored plan annuity is in their clients' best interests — a capability that makes your expertise invaluable to your clients.

Whether you're an institutional or independent advisor, now is the time to reintroduce the topic of annuities when discussing your clients' retirement plans, savings and options.

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