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Kelli Hueler

Retirement Planning > Retirement Investing > Annuity Investing

This Product Can Relieve Advisors' 'Heartburn' and Clients' Stress: Kelli Hueler

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Old habits die hard — and so do advisors’ negative attitudes about annuities. Many fail to see these insurance contracts as useful tools, even as pre-retirement clients’ No. 1 concern is outliving their money.

But complementing an investment portfolio with a low-cost annuity can be an effective financial solution and a huge stress reliever, Kelli Hueler, founder and CEO of Hueler Income Solutions, argues in an interview with ThinkAdvisor. 

“The advisors who are on their game and have crossed over into recognizing that the transfer of risk for longevity and [an annuity’s] guaranteed income component in a portfolio … will give [clients] confidence,” she says.

A former financial advisor, she founded Hueler Holdings in 1983. Serving the institutional marketplace, the platform is open to plan sponsor clients, advisors and other intermediaries. Hueler’s clients include Boeing, General Motors and Vanguard.

Annuities available are simple to understand (because they’re “stripped down,” Hueler says), have low costs and come with full disclosures, especially those addressing fees.

In the interview, she maintains that the chief cause of advisors’ annuity avoidance is insurers’ ongoing addition of features “to cover a host of concerns” that also add complexity and cost. That comingling of investment strategies and lifetime guarantee “is probably what gives advisors heartburn.”

Still, “advisors haven’t embraced the fact that they can play such a key role in providing access to important annuity types that complement an investment portfolio, rather than buying an expensive product that tries to do everything at once,” she says.

For five years in the brokerage world, Hueler was a financial planner at IDS Life and then a Kidder Peabody financial advisor. After she opened her own firm, she worked to become an authority on stable value research, and stable value analytics and reporting. In 2020, Morningstar acquired Hueler Analytics’ Stable Value Comparative Universe Data and Stable Value Index.

In the interview with Hueler, who has presented at the Wharton Pension Retirement Council and provided testimony before the U.S. Senate Special Committee on Aging, she recommends that clients dedicate a portion of their portfolio to an annuity such as those available on her platform.

Here are excerpts from our conversation:

THINKADVISOR: Why don’t so many financial advisors view annuities as a useful tool?

KELLI HUELER: A lot of it is attitudes toward annuities on the investment side. Advisors haven’t been getting the right message.

The historical attitudes are very negative. The curricula that advisors access to educate themselves should be modified and improved.

Have annuities themselves improved?

The challenge on the retail side is that there are always new [annuity] bells and whistles. That means a fair amount of complexity gets introduced: comingled investment strategies with a [lifetime] guarantee packaged into one.

And pretty soon the cost layers and the complexity become challenging.

I guess that comingling is probably what gives advisors heartburn — and it should.

Please talk more about comingling.

In many cases, [insurers] are trying to create a product that covers a host of concerns; for example, inflation protection along with stability along with growth. That layers on a lot of cost. 

The simpler and more straightforward the annuity, combined with an investment portfolio, the far more efficient. 

Advisors haven’t embraced the fact that they can play such a key role in providing access to important annuity types that complement an investment portfolio, rather than buying an expensive product that tries to do everything at once.

How is your firm trying to help?

We work with advisors all the time with low-cost simplified, straight-up, stripped-down annuities, where there is full disclosure — full fee disclosure.

Our goal is to [take] the least amount of resources out of the portfolio to increase the income as much as we can.

Many lump annuities together as being all the same. Don’t they? 

Annuities are available in lots of shapes and sizes. There are so many ways to have a cost-effective approach.

The more educated advisors can be about what’s efficient and cost effective and what makes sense to their clients, the more they [can help]. 

Don’t advisors acknowledge that annuities can be quite valuable in providing retirement income?

Advisors haven’t yet connected the reality of investors’ concern about how long they’ll live in retirement and the lack of confidence a lot of folks have about sustaining themselves in their lifestyle.

What do older people worry about most when it comes to finances?

We’ve done webinars for a variety of employers and industries asking their employees, between ages 65 and 70, a couple of key questions.

Their primary concern was outliving their resources in retirement.

The second most common concern was market volatility.

And where do annuities come in?

[Clients] should at least consider an allocation of a portion of their resources — always only a portion of their portfolio — to a personal pension [annuity] as a very simple, cost-effective tool.

It increases confidence and gives people an incredibly strong sense of relief. And then they also become much more confident investors. They stay with their investments.

They aren’t so shaken by market changes and unforeseen medical expenses when they have that baseline of stability.

What does that mean for advisors?

Their overall book of business will be healthier and stronger into the future.

Please discuss longevity risk as it relates to annuities.

The risk-transfer component of an annuity is all about having a hedge against outliving your resources. 

Longevity annuities are one type of annuity that can be paired with investment portfolios to cover an age-specific time in the future for income to kick in.

You can think of longevity annuities in two different ways. One: pegged out into the future like, “I know at age 75 I want my income to go up by a certain amount. So when I’m 65, I’m going to purchase an annuity going out 10 or 15 years.”

Then there are late-in-life longevity annuities, which are strictly for ages 80 or 85, or older.

It’s very cost efficient to buy a late-in-life annuity because the amount of time the insurance company will have at risk is much less.

An advisor can certainly play a role there.

For instance?

Let’s say a client is going to buy an annuity now and peg it to start at age 80. You can build their portfolio to pay “X” amount until that time. 

In providing testimony to the Senate’s Special Committee on Aging in 2010, you said, “Participants react negatively to the packaging and ways of delivering annuities.” Please elaborate.

Some of the things we knew when we started our program 20-plus years ago are still absolutely true to the market. 

One is that annuities tend to be complicated and opaque, very hard to understand. 

So people feel uncertain, and sometimes they end up buying things they didn’t understand.

But when an advisor is involved, they have the opportunity to really scrutinize a product and explain it and articulate the benefits, the pros and cons. 

A good advisor is aware of how simplified an annuity can be. 

The advisors who are on their game and have crossed over into recognizing that the transfer of risk for longevity and the guaranteed income component in a portfolio — which are going to help clients sustain an investment strategy throughout retirement — will give them confidence. 

What are your thoughts about variable annuities?

We don’t see where we can add a lot of value because our goal is to help the advisor who has created an investment portfolio to plug in a low-cost lifetime income benefit.

Variable annuities compete with that portfolio and layer in a lot of cost.

So we don’t put our toe in that water. We stay in our lane.


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