RETIREMENT
Lau , founder and CEO of DPL Financial Partners in Louisville , Ky .
But it isn ’ t necessarily “ incumbent on the industry to provide comparison tools ,” he contends . “ Others can do that .” ( His own firm , DPL , provides tools for advisors and consumers to select the best annuities for their needs .)
Comparison Tools
Advisors say there is software that can help . “ A number of platforms have arisen to meet this need and provide annuity comparison tools that zero in on the unique benefits of various products that may fit particular client needs ,” says Mike Reidy , a vice president at Security Benefit in New York City .
But others grumble that these software platforms only go so far . “ Most advisors research annuity offerings across providers on their own ,” says Suzanne Norman ,
“ There is no middle ground . You need to have a certain level of expertise to be an ‘ annuity expert ,’ or you can ’ t be involved in annuities at all .”
— Robert Powell
a Boston-based education fellow for the Alliance for Lifetime Income .
Fitting With Financial Planning Software There is , she says , often a mismatch between annuities and financial planning applications . “ Popular programs like eMoney Advisor and MoneyGuidePro give advisors the ability to incorporate annuities , but there are extra input steps involved ,” she explains . “ An advisor ’ s understanding , insights and inputs are crucial .”
If an advisor is modeling future income , for example , she says it ’ s critical that they ’ re precise as possible with the many annuity income features and options available .
It can be incredibly difficult to include annuities — especially anything more complex than a basic fixed annuity — in most popular financial plan- ning progams , says David Blanchett , the Lexington , Ky . -based head of retirement research at PGIM , the investment management group of Prudential . If , for instance , the annuity has any kind of market-linked component to the benefits it pays out , it should be reflected in a client ’ s retirement plan .
“ But it ’ s just not possible with almost all the tools that exist today ,” says Blanchett . “ This has to change .”
Advisor Education And Licensing
It ’ s understandable if an advisor isn ’ t up to the task of comparing , servicing , presenting or otherwise including annuities in a client ’ s retirement plan . There are legal hurdles , too . To offer annuities , advisors are “ required to have the proper licensing and training to effectively understand and explain them to clients ,” says Robert Powell , vice president of wealth management sales at iPipeline , a financial services software provider in Exton , Pa . “ There is no middle ground . You need to have a certain level of expertise to be an ‘ annuity expert ,’ or you can ’ t be involved in annuities at all .”
A single purchase request might produce more than 5,000 available annuity products , he says , each with its own characteristics .
“ Advisors must thoroughly understand the nuances of each product they offer to clients , which requires ongoing training and education to stay current with the evolving landscape of annuity offerings ,” he cautions .
The Problem With Commissions Yet another concern involves how advisors are compensated .
Historically , all annuities were sold on commission . Fee-only advisors could not touch them . If their clients owned annuities that carried commissions , the annuities could not be handled by their advisors . In fact , advisors who took them on could find their status as “ feeonly ” in jeopardy .
A similar limitation exists for advisors who have recently converted to fee-only .
52 | FINANCIAL ADVISOR MAGAZINE | NOVEMBER 2023 WWW . FA-MAG . COM