Annuity Constraints Can Be the Client's Friend

What You Need to Know

Security Benefit generated $4.6 billion in annuity sales in the first half.
Insurers once focused on embellishing annuities with new bells and whistles.
Some bells and whistles could hurt product performance.

Keeping something like the current annuity surrender charge system could work better for many clients than trying to develop new contracts without any restrictions on what clients do with their money.

Mike Reidy, head of RIA distribution at Security Benefit, included that suggestion in a recent email interview.

One question was about the ultimate outcome of current efforts to develop contracts that lock up clients’ assets for shorter and shorter periods.

Reidy rejected the idea that the outcome would automatically mean an end to restrictions of any kind.

Advisors “need to look at whether new benefits and features increase costs for their clients, or lower their rates,” Reidy said. “In some cases, a new benefit may look good on paper, but once advisors and clients understand the details, they end up sticking with what they had.”

Reidy and David Byrnes, Security Benefit’s head of distribution, emphasized the importance of starting the annuity design process in a thoughtful way.

“The best results often come when carrier products are aligned with the goals and objectives of the advisors and clients,” Byrnes said. “We have to listen to them before we take action.”

What It Means

Insurers like Security Benefit are trying to offer products that align with what you and your clients really want, rather than just throwing ideas out and seeing what sticks.

Security Benefit

Security Benefit is a Topeka, Kansas-based life insurer that’s controlled by Eldridge Industries.

The company has been a pioneer in developing employer-sponsored retirement plans, indexed annuities and other retirement-related products and services.

It has $47 billion in assets under management.