Chris Eberly of the Novarica insurance IT consultancy has expressed an optimistic outlook on the future of the annuities business, claiming advisors and agents can look forward to simpler structures, faster delivery to market, more fee-based products and fewer riders and income guarantees. The days of "complex, tough-to-understand annuity products" are coming to an end, he said.
Only 26% of people who took an American College of Financial Services retirement-income quiz got a passing score, and only 5% got at least 80% of the questions right. Respondents showed a particular lack of knowledge about annuities, with only 29% answering correctly that annuities cost less for older people.
Firms have been forced to move 10.2 million accounts and $900 billion in assets from commission-based brokerage models to fee-based advisory accounts since the Department of Labor's fiduciary rule went into effect on June 9, according to a Securities Industry and Financial Markets Association study. The move to advisory accounts will cost investors more money, the study found, with firms disclosing that the average annual cost of fee-based accounts is 64 basis points higher than the cost of brokerage accounts.
Oregon launched a program this summer requiring businesses without retirement plans to automatically enroll employees in state-run individual retirement accounts invested in mutual funds. Eight additional states are working on such initiatives, which are expected to face legal scrutiny as opponents argue they violate federal pension laws.
Morningstar executive Aron Szapiro says data auditing could be the key to enforcing the fiduciary rule's controversial best-interest contract exemption. He outlines a scenario in which a neutral third party would compile data on clients' portfolios, scoring them on factors such as quality and cost of investments, asset allocations and the extent of personalized advice given, then provide an automated decision on whether they are constructed in the clients' best interest.
Advisor management coach Angie Herbers writes that offering a better compensation package does not inevitably make workers more productive, punctual, cooperative and helpful, and can prove counterproductive. She argues that the motivational effect of a pay raise wears off over time and can set an unhelpful precedent.
Angela Pecoraro, CEO of financial planning software consulting firm Advicent, says interest from advisors in the company's products is growing, as more firms are seeing the need to embrace technology. "Traditionally we've been operating within the wealth management divisions of the firm or a small niche department, and now they're expanding their planning desires across their entire organization," Pecoraro states.
The Summer 2017 edition of IRI Insight examines the best states for retirement, advisor and consumer knowledge and attitudes toward retirement planning and annuities, behavioral aspects of retirement preparation, and methods for maximizing income and retiring sooner.
Marking its 16th year in publication, the IRI Fact Book continues to be a reliable, trusted source for information regarding the insured retirement industry. Building on the redesign and renaming that commenced with the 10th edition in 2011, we strive to improve content each year, while keeping the focus on practical information that can help financial professionals better understand and serve their clients, including through the exploration and analysis of retirement topics beyond annuities. Readers will find practice management tips and information, the latest consumer and advisor research regarding retirement planning, current retirement market statistics, and much more. As IRI continues to grow to serve the diverse needs of the people and organizations that we are proud to represent, this publication will also evolve as a resource for the entire insured retirement industry and the consumers that invest in our strategies.