Edward Jones has taken a contrarian stance on indexed annuities, declining to allow its brokers to sell the annuity products even though its peers are doing so and the products are increasingly popular industrywide.
The St. Louis-based brokerage, which has 17,500 advisers and brokers, is the lone company among the full-service national brokerages — such as Merrill Lynch, Morgan Stanley Wealth Management,
Wells Fargo Advisors,
UBS Wealth Management Americas and
Raymond James Financial Inc. — not to sell indexed annuities, experts say.
Steve Rueschhoff, principal for insurance and annuity products at
Edward Jones, said the firm's decision not to offer indexed annuities is in line with its philosophy of keeping its investment products "relatively straightforward" for clients and advisers.
Part of that philosophy involves not cluttering up its investment platform with too many choices, Mr. Rueschhoff said. While other broker-dealers partner with 20 to 30 insurance carriers,
Edward Jones partners with just six providers.
The annuities
Edward Jones does offer — variable, single-premium immediate, deferred-income and multiyear guarantee annuities, as well as fixed annuities with income riders — already provide clients "ample" value and choice, Mr. Rueschhoff said.
Indexed annuities
notched record sales last year. The $69.6 billion in sales shattered the previous record, set in 2016, by $9 billion, largely a result of market volatility toward year-end and rising interest rates. The Limra Secure Retirement Institute, an insurance industry group,
projects sales will rise to $96 billion by the end of 2023 — a 38% increase.
Distribution
grew noticeably in the broker-dealer channel last year. Independent B-D sales jumped 43% to $10.6 billion, while those among full-service national brokerage houses grew 53% to $3.9 billion, according to Limra.
Wade Dokken, the president of WealthVest, which designs and distributes indexed annuities, said higher sales among brokerage firms partly reflect increasingly consumer-friendly products coming to market that offer shorter surrender periods and better interest rates for investors.
"I think every major firm is reevaluating [indexed annuities], and if they are small with them they're looking to make them bigger," Mr. Dokken said.
Sheryl Moore, president and CEO of consulting firm Moore Market Intelligence, questions whether Edward Jones is acting in its clients' best interests by not offering the products, arguing that indexed annuities offer more competitive rates than other types of fixed annuities.
However, Mr. Rueschhoff, who oversees Edward Jones' annuity platform, believes clients can accomplish their goals with the firm's current offerings.
Indexed annuities aren't an outlier, he added — there are several other financial products, such as options, commodities, hedge funds and indexed universal life insurance, that the wirehouse brokerages offer and Edward Jones doesn't.
"With all these financial products we don't offer, just because we don't offer them today doesn't mean we never will," Mr. Rueschhoff said.
As of right now, the firm doesn't plan to add indexed annuities, he said.
