Fee-based indexed annuities offer significantly higher upside potential than commission-based products and are therefore certain to receive broad acceptance from consumers, according to Joe Maringer, national sales vice president at Great American. "We are currently seeing one-year returns that exceed 17%," he writes.
State securities regulators have authority to enforce the Labor Department's fiduciary rule, and exercising that authority is "part of the normal scope of what states ought to be doing to protect their citizens," said Joseph Borg, director of the Alabama Securities Commission and president of the North American Securities Administrators Association. When Massachusetts' securities regulator filed charges against Scottrade, including a claim the broker-dealer had violated impartial-conduct standards of the fiduciary rule, "Massachusetts was certainly within its parameters," Borg said.
The action by Massachusetts charging Scottrade with violating part of the Labor Department's fiduciary rule is without merit and demonstrates the importance of vacating the rule, lawyer Eugene Scalia told the US Court of Appeals for the 5th Circuit on Friday. The state's action "confirms Appellants' concern that the portions of the rule that took effect on June 9, 2017 will continue to impose extensive burdens and costs on Appellants' members, even while other aspects of the Rule have been postponed," Scalia wrote.
A study from the National Bureau of Economic Research explores the link between the interest-rate environment and people's attitudes toward saving, investing and retirement. Among their key findings, the authors state people generally save less in a persistently low-rate environment, and workers claim Social Security later but draw down their 401(k) accounts sooner.
While research points to good saving habits among millennials, a survey by Allianz Life Insurance Co. of North America shows 88% of respondents think social media creates a tendency to compare their lifestyles with others, and 57% say it has influenced them to spend money they had not planned to. "While every generation has experienced a need to 'keep up with the Joneses,' social media seems to have helped take it to a new level for millennials," Allianz's Paul Kelash says.
The Financial Industry Regulatory Authority has issued an investor alert that criminals are using its name and logo and the signature of its CEO in investment scams. In one advance-fee scam, prospective investors were given the false impression a FINRA guarantee backed money put into the venture.
More companies are going public with dual-class shares, and stock exchanges should consider banning the structure or insisting on a sunset provision, Securities and Exchange Commission member Robert Jackson Jr. says. "Should our public investors have to place eternal trust in corporate insiders?" he says.
Federal Reserve Chairman Jerome Powell has chosen two monetary-policy specialists -- Jon Faust, a professor of economics at Johns Hopkins University, and Antulio Bomfim, an economist in the Fed's monetary-affairs division -- to assist him as senior advisors, people familiar with the matter said. Faust is among those suggesting that the Fed reconsider its approach to targeting inflation.
Though indexed annuities sound like they have a lot in common with index mutual funds, advisors should help clients understand that the way indexed annuities work is a lot closer to a fixed-income product, industry experts say. Indexed annuities can provide a good alternative to bonds for income-seeking consumers worried about interest-rate risk, notes one expert.
IRI Insight Winter 2017-18 is now available! Annuities have had their share of detractors over the years. You may have seen disparaging advertising, but is such criticism warranted? The reality is annuities currently serve a critical purpose within millions of Americans' retirement portfolios -- adding a level of security while helping alleviate some financial worry for the future. In fact, those receiving income from an annuity report the highest satisfaction level among all investment types. Also in this issue: "My Security Blanket; A Retirement Story," "Emotional Aspects of Caregiving" and IRI's annual "Retirement by the Numbers" fact sheet. Download your copy here.
In its sixth annual State of the Insured Retirement Industry report, the Insured Retirement Institute reviews and analyzes the market environment, product development, annuity sales and distribution, and legal and regulatory developments that affected the retirement income industry in 2017, and discusses potential trends in 2018. Download the full report here.