In this guide, we hope to provide you with an overview of secondary market annuities (SMA)
and help you determine whether they are the right choice for you and your clients.
Secondary market annuities offer a higher yield than traditional fixed income products, such as certificates of deposit, fixed annuities or period-certain annuities
An SMA is an existing, period-certain payment stream or lump sum sold by the original annuitant at a discount. It is this sale at a discount that creates a higher yield for the buyer. The underlying insurance carriers who are obligated to make the payments are among the highest-rated insurance companies in the world. The transfer process ensures that these payments are transferred smoothly, efficiently and irrevocably.
SMAs are an ideal fixed income floor to individual accounts and can form the baseline yield to smooth out an orderly draw-down of retirement funds.
SMA payments come in a variety of categories, including immediate and deferred income streams, as well as short- and long-term lump
sums. Each SMA category offers different types of benefits to suit your clients' specific needs.
While these discounted receivables are commonly known as annuities — a financial vehicle typically associated with those approaching
retirement — they are not just for older investors. For example, long-term lump sums are attractive to younger savers who would rather not expose their retirement savings
to volatility. Other buyers are looking to supplement their immediate income or meet a mid-range income objective. As each financial situation is unique, so is each SMA. It is not hard to find an SMA that fits each client's needs perfectly.
Advisors can use the safety, quality and period-certain yield of secondary market annuities in creative ways to accomplish sophisticated financial outcomes.