Is it Time to Change Our Outlook on Annuities?

Retirement Income

Historically, annuities have been underutilized by advisors even though they trace their origin to the Roman Empire. At the Pershing’s annual Insite conference, panelists told attendees that that could change.

According to Hans Schemmel, Director of Retirement at Pershing, the unpopularity of annuities in the wealth management industry stems from compliance concerns and their required extent of processing.

“The important question to ask is whether or not these products can be the right ones for your clients,’’ said Schemmel.

Issuers are contributing to the increase in annuity sales. They are doing this by reframing their appeal to customers. What we have witnessed is the variable annuity industry that has perfected at telling a story.

Repass added that the information that all clients need to hear is that annuities are one of the products that guarantee lifetime income after retirement. Many retiring clients will find themselves in a crisis, especially in replacing their income. This is due to the oncoming generational wealth transfer. Previous generations can rely on Social Security and pensions, but current clients will have a hard time.

“We can guarantee an outcome through an insurance company that won’t be possible with any other entity. It gives assurance to your clients that they can’t outlive their income if they have chosen to purchase this,” continued Repass.


According to panelist Jason Berkowitz, chief legal and regulatory affairs officer at the Insured Retirement Institute, changes at the legal and regulatory levels would have to be made for annuities’ popularity to continue increasing. Currently, the tie the product has to insurance companies can be a cause of concern to clients.

Given the state of flux surrounding SEC and DoL rules, advisors may not be willing to advise clients to take up annuities. The SEC’s Regulation Best Interest and the DoL’s fiduciary standard have made strides to ensure the protection of clients, but they aren’t perfect. Neither are they in effect.

Streamlining Ahead

The advisors that are considering continuing to suggest annuities to their clients, or adding them to their investment menu, should know that insurance companies and broker-dealers are striving to make the annuity experience a good one, both for them and their customers. On the business side, some commission payments on annuities have an 8-week processing time. On other platforms, the processing time is one day.

Schemmel also said that clients want to be able to see the status of their retirement benefits on one platform. This is where asset consolidation is helping.

Repass said he understood why most advisors couldn’t suggest annuities to their clients. “We were operating under the vernacular of if we build it, you are going to come,” he added.

Annuities Retirement

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