Annuities are changing the game for advisors

A recent webinar brought together advisors and experts to talk about fee-based annuities.

As it turns out, annuities have grown and are helping RIAs to meet demands.

“Annuities have proven to be a more efficient means of generated income,” said Sam Dittberner, vice president and RIA relationship manager at Allianz. “When you utilize them correctly, they can be a powerful tool for RIAs to address those key retirement risks that other investment solutions simply cannot.”

Recent research on annuities suggests that advisors aren’t familiar with annuities or how to use them — and as a result, are less likely to recommend them to their clients.

David Lau, founder and CEO of DPL Financial Partners, said that resources are stronger today than they have been in the past.

“It’s super interesting because not a lot of advisors are aware,” Lau said. “I would tell you the commission-free annuity marketplace has evolved so fast because of carriers like Allianz who’ve really dedicated a lot of resources to product development and support of the RIA channel. It’s night and day between what it is today and what it was seven years ago.”

The InvestmentNews RIA LABS webinar, Fee-based Insurance & Annuities, included Lau and Dittberner, moderator Chuck Failla, founder and CEO of Sovereign Financial Group, and Wade Pfau, founder of RISA and director of retirement research at McLean Asset Management.

Lau went on to highlight all the different products that are available to advisors, including those in the RIA world.

“If you’re an RIA, the impetus for you as a fiduciary is to learn about the products so that you can use them within your practice. It’s not just [investment-only variable annuities] anymore, it’s not just commissioned products. There’s a whole marketplace of free annuities that work in your practice,” he said.

One of the main attractions of the webinar was Pfau’s RISA tool, which helps advisors and their clients with retirement financial planning.

“RISA is a questionnaire assessment tool,” Pfau explained. “The basic RISA can be determined with 12 questions. The advisor sends a link to their client or prospect, the individual takes it and then you get the report on their style.”

Lau holds the RISA tool in high regard, and DPL offers it free to its advisors.

“I’m a huge believer in it,” he said. “The advisors who use it report great things back to us because it’s a conversation they never had with their client before. Rather than trying to sell them an investments-only strategy during retirement, it’s great as a fiduciary to ask your client, ‘How would you like it?’ … It’s been a great tool and it’s a great way to align strategies with your client. You have much happier clients.”

The panelist agreed that annuities bring powerful benefits to everyone, from the firm down to the client. Dittberner said that once RIAs take the time to educate themselves and set aside their misconceptions of old annuities, they realize what they can do for them and for their business.

“The business owners see it as a way to enhance their advice and grow revenue,” he said. “Financial planning teams at firms that are now able to actually model these solutions and see the benefits, see this as a way to deliver more powerful advice for their client operations.”