Web-based retirement scenario platform RetireUp has expanded its modeling capabilities to include illustrations of fixed index annuities (FIAs) from Allianz Life Insurance Company of North America, including Allianz 222 and Allianz Core Income 7 annuities, directly within its client retirement income models.
RetireUp’s computer-based modeling system allows financial professionals to present a more complete visual presentation of their clients’ retirement income strategies using defined income (Social Security, variable annuities, fixed index annuities, pensions) and other assets.
With increasing interest in FIAs--not just among individuals looking for sources of lifetime income, advisors advocating annuities as a means of obtaining that income, companies that provide annuities, and even regulators—a tool that can model how specific products will work in a specific situation could add to FIAs’ allure—particularly in the wake of a working paper last year finding that immediate annuities may not be getting enough attention from plan sponsors and participants.
In addition, no less an authority than the Department of Labor’s Employee Benefits Security Administration published a field assistance bulletin last summer that attempted to clarify 401(k) plan sponsors' fiduciary obligations in selecting and monitoring lifetime income products offered to 401(k) participants.
And that followed a 2014 move by the Department of the Treasury and the IRS, which issued guidance “designed to expand the use of income annuities in 401(k) plans,” according to a release Treasury issued at the time.
That guidance clarified that plan sponsors can include deferred income annuities in certain target-date funds used as qualified default investment alternatives.
Although not everyone is a fan of fixed annuities as a means of ensuring retirement income, many are—even fee-only advisors who can’t accept commissions for selling such products.
In fact, their appeal could lead to a conflict of interest for fee-only RIAs, according to Harold Evensky, chair of Evensky, Katz and Foldes Financial, a fee-only wealth management firm, particularly with regard to the DOL’s fiduciary rule.
Evensky said last year that under the rule, recommendation of annuities when appropriate could actually be a fiduciary duty of fee-only advisors, who would be unable to accept commissions for such recommendations but nonetheless would be obligated to present them—especially immediate annuities—as in the clients’ best interests.
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