Independent RIAs, Clients' Annuities and Fiduciary Control

What You Need to Know

If you are an insurance agent or have a broker-dealer affiliation, you have solved this problem.
If you are a pure, fee-based RIA, you might be handing annuity assets off to another firm.
An outsourced insurance desk could help you keep the assets where you can keep a watchful eye on them.

The growth of the fee-based advice model has led to a sea change in how financial advisors do business.

It’s no longer enough to possess working knowledge of stocks, bonds, and relationship-building skills.

Today, there is more pressure on advisors to justify their fees by demonstrating value for clients, which goes beyond asset allocation and portfolio management.

Holistic, long-term financial planning offers an opportunity to create portfolios with investment products and strategies that can help clients and their families secure their financial futures.

And in recent years, fee-based annuities have become much more accessible to the independent advisory channel — enabling advisors to differentiate themselves for clients by consolidating held-away assets into their portfolios and growing their practice assets under management.

The Guaranteed Income Opportunity

Annuities can offer individuals guaranteed income over the long term — and provide defined outcomes — to help them save more for retirement, which benefits them and their families.

Understandably, these products continue to increase in popularity among retirement-savers.

According to LIMRA, sales of annuities reached $254.6 billion in 2021, a 16% year-over-year increase.

Also, in 2021, annual and fourth-quarter sales of registered index-linked annuities, known for providing income protection and growth, reached all-time highs.

The demand for annuity products presents a tremendous opportunity for independent RIAs to deliver greater value for their clients by helping them find the right annuities to meet their goals.

However, if RIAs do not hold insurance licenses, or affiliations with broker-dealers, recommending and purchasing annuities can be challenging and risky.

Unlicensed, fee-based financial professionals have historically had to outsource the recommendation and transaction of annuities and life insurance to third parties, requiring them to give up control and management of client assets to those partners acting as fiduciaries for those assets.

The Fiduciary Control Challenge

In today’s marketplace, modern technology has created another option for RIAs without insurance licenses or broker-dealer affiliations to partner with others to recommend and transact annuities while maintaining fiduciary control over the assets.