The Annuities Opportunity: 
Why now is the time to (re)consider annuities

Recent innovations in the annuities space are changing the entire process of how annuities are bought, sold, and managed.
 
Product innovation

As the wealth management industry made significant shifts toward fee-based and fee-only models over the past decade, insurance carriers responded by introducing fee-based annuities that would be compatible with this approach. By eliminating commissions from products, insurance carriers were able to make many products more competitive while allowing better integration with the RIA business model and ethos. Many fee-based products have no explicit fees — a massive shift away from the high-commission products of the ‘80s and ‘90s – while still allowing advisors to easily incorporate them into a fee-earning portfolio.

Alongside an overall shift towards fee-based products, carriers increasingly developed annuities that more clearly fit the needs of modern RIAs, often prioritizing clearer objectives over features that increased complexity. These changes have increasingly made the “financial products” themselves attractive to fiduciary advisors.

To take just one example: The idea for Flourish Annuities took shape when a major, national RIA expressed interest in accessing multi-year guaranteed annuities (MYGAs). They had come to the conclusion that MYGAs offered stronger risk-adjusted returns than many of the products they currently used in their fixed income portfolios and would offer a material benefit to clients. The firm needed a partner to help overcome the operational, technical, and licensing barriers and offer access to these annuity products.

Product range

MYGAs are just one of the newer fee-based products that have emerged on the market. Flourish Annuities’ current suite of offerings represents all major fee-based annuity types and showcases the broad range of today’s options.^††

• Multi-year guaranteed annuities (MYGAs) are a simple, secure fixed income solution with competitive rates and guaranteed returns. 
• Registered index-linked annuities (RILAs) provide capped upside potential with defined risk and some downside protection. 
• Fixed index annuities (FIAs) offer predictable, capped growth with some downside protection, including complete principal protection. 
• Investment only variable annuities (IOVAs) have uncapped upside potential with flexibility. Returns are linked to various investment options and fees apply. IOVAs are considered securities and are subject to investment risks, including possible principal loss. 
• Income annuities with a guaranteed lifetime withdrawal benefits (GLWB) give clients the option of a predictable stream of income for life.

Ultimately, fiduciary advisors are always looking for the best tools to optimize client portfolios. These annuities offer versatility and can fill gaps in the current toolkit to better serve the needs of each client.
 
Compatibility with the RIA model

Advancements in the annuities space didn’t end with the expansion of fee-based products. The underlying structure and technology that power the industry are also changing. While those shifts won’t be visible to clients, they will have an outsized impact on the ease of accessing annuities and, by extension, create the opportunity for a better client experience.

The first major adaptation comes in the form of outsourced insurance desks (OIDs). OIDs hold the requisite insurance licenses and provide RIAs direct access to annuities. An OID, like Flourish Annuities, also brings its deep product knowledge and industry expertise to advisors, evaluating client portfolios, reviewing existing annuity contracts, and providing product recommendations — allowing advisors without insurance licenses to ensure that their clients have access to the best products.

Unlike players in the traditional annuity space, technology is central to modern OIDs, which can offer a fully integrated, digital-first solution. With Flourish Annuities, advisors can submit an application or replacement inquiry online in as little as five minutes.

The technological advancements aren’t limited to the application process. Flourish Annuities integrates with major CRM, planning, and reporting software, allowing annuities to be included in client portfolios as a billable asset and seamlessly incorporated into the holistic plan.^^

How do these changes work in practice? Consider the example of a client who is nearing retirement and has a disproportionate amount of their portfolio invested in CDs and bonds. To maintain their lifestyle and keep pace with inflation, they must increase the yield in their investments, but may be concerned with market risk. A RILA or a FIA, which offer upside potential based on an external index while providing some downside protection, might be a good fit for this individual. An advisor might work with Flourish Annuities and the client to move funds from a CD into a RILA or FIA. The end result can help the client increase expected results while managing downside risk. On the advisor’s side, they can increase billable AUM while enhancing planning conversations.
  
A more secure future with annuities

Volatility is a part of investing. As clients approach and enter retirement, they may be eager to find solutions that give them a stronger sense of financial security and help protect against downside risk.

Annuities address these common concerns, and innovations in the space have opened the door for advisors to seamlessly connect each client with best-fit, fee-based annuities.

In the next article in our series, we’ll take a closer look at the potential benefits for both advisors and clients who seize the annuity opportunity.