Why Fiduciaries Cannot Ignore Annuities

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Imagine a sore tooth in the back of your mouth. The dull, aching pain nags, but lights up your jaw when you chew something the wrong way. It's unbearable, and you call your dentist seeking relief.

What if on that visit your dentist doesn't offer you the full breadth of options for your dental care, would you still want to stick with them? If your dentist says she doesn't "believe" in local anesthesia, for instance, would you start looking around for a dentist who’s more in line with your preferences for care?

As a financial advisor, ignoring annuities out of hand may force your clients to see you in the same light – or force them down the street to a new advisor – especially those clients who come to you with annuities they've owned from prior relationships. An annuity may be the best solution for a particular client. In some cases, they are not.

Insurance-backed investments, including annuities, offer unique benefits not available in other asset management or investment strategies, including:

  1. Lifetime income guarantees that use mortality pooling, just like traditional pensions;
  1. Tax deferral that allows for the advisor to actively manage their clients’ accounts or manage tax inefficient investments; and
  1. Principal protection guarantees with rates that are higher than those offered through CDs and other risk-free investments.

Regardless of the need, it is imperative to know how to best serve your client.