7 Ways RIAs Say Annuities Have Boosted Their Business

A new survey published by DPL Financial Partners may give registered investment advisors who normally shun annuities a reason to pause and reconsider.

According to the results, which were shared this week during a webcast hosted by David Lau, founder and CEO of DPL Financial Partners, and David Blanchett, managing director and head of retirement research at PGIM DC Solutions, advisors’ use of annuity products can boost both client outcomes and firm performance.

As Lau emphasized, understanding the affects of annuity use on client behaviors and financial outcomes was a top goal of the survey, which involved nearly 400 advisors who use DPL’s commission-free annuity platform — 91% of whom were independent RIAs.

As the duo explained, advisors who recommend annuities have experienced positive effects on firm revenue and expected long-term value, so much so that simply ignoring the annuity marketplace is seen as a surefire means of losing relevance in an increasingly competitive advisory environment.

The wealth management profession is increasingly focused on more holistic planning, Blanchett said, and this evolution requires financial advisors to become familiar with an array of products and strategies.

However, as Lau and Blanchett noted, annuities enjoy notably different interest and use among financial advisors. Some love annuities and some hate them, while many believe they need to learn more about them to better understand their potential role.

A variety of explanations account for this: a dizzying mix of product structures, varying levels of product quality, as well as the long-established commissioned arrangement, to name a few, Blanchett said. At their core, though, annuities have the potential to provide something a more traditional portfolio cannot: income that is protected for life.

Traditionally, annuity products have been commission-based, and fee-only advisors, who don’t accept commissions, could not use them. In the past few years, a growing number of commission-free products have come to market, enabling fee-only advisors to use the products, particularly the income benefits, in clients’ retirement plans.

See the accompanying slideshow for seven key findings from the new DPL survey.