Regardless of whether it's a fixed, variable or indexed annuity, advisors need to view these contracts as part of a long-term plan for a client — and not as a transaction. Consider these factors when you make a recommendation.
Whether it’s fixed, variable or indexed, annuity recommendations must consider the investor’s whole portfolio, long-term goals and tax situation.
The days of an advisor selling an annuity to a client, nabbing a fat commission and never seeing him again are over.Annuities — fixed, variable or indexed — have been long a part of advisors' toolkits, offering clients the opportunity to obtain tax-deferred growth and income in retirement for a cost.
While those attributes might be enough to get pre-retirees curious about an annuity, advisors say that working these products into a client's portfolio is a long-term process. "It's more of a concierge service where you're keeping up with required minimum distributions, turning on income riders at the right time and making sure that the cash flow is there for the retiree," she said.Living benefits, including guaranteed minimum income benefit riders, helped propel variable annuity sales prior to the 2008 recession. In 2007, a total of $179.2 billion in variable annuity contracts were sold, according to Morningstar.
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