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Post-Conference Meanderings


Last week I attended this year’s Insured Retirement Institute (IRI) Annual Conference in Washington, DC – the first in-person conference since the pandemic – so today I figured I would jot down a few impressions of the event. I learned quite a few things, not all of which I’ll be able to share in this post, but I will make sure to weave some of my “takeaways” into future writings.

Certainly, the registered index-linked annuity (RILA) was foremost on the minds of attendees as sales of the product have been sizzling. Something I was not so up on was how just a few insurers sell RILAs in New York, which is due to pushback from regulators in that state. It seems that three insurers got their products in before fresh regulations emerged that effectively curtailed the offering of them. I think this issue bears watching over the near term.

Environmental, Social and Governance (ESG) investing was, as one speaker put it, a “topic du jour” and questions remain as to which funds fall under the ESG category and which don’t. On a related note, I would say that the prevalence of variable fund conversions to ESG leaves open the charge of “green washing” (that is, artificially adding the designation without implementing serious changes to policy). That said, an executive at an asset manager I spoke to admitted it’s much easier to add ESG to an existing portfolio that already has assets, rather than start from scratch.

I attended a breakout session on defined outcome portfolios, and learned that, in the eyes of companies offering them, the fact they can be traded into and out of – even during the outcome period – is a selling point, and contrasts with RILAs, in which the client must stay in the strategy for the stated duration. Speakers on that panel also hinted at future product development – dare I say that they may one day sport high participation rates like we see on FIA “next-generation” indices?

The conference also got me up to speed on regulatory issues. At present the Department of Labor is looking at making Prohibited Transaction Exemption (PTE) 84-24, which is relied on more by the industry when selling annuities in qualified plans or IRAs, with the more recently devised PTE 2020-02; if that happens it would not be good news for the industry because, put very simply, PTE 2020-02 is more stringent and catches more advisors in what might be called the “fiduciary web” than is the case with 84-24 at present.

The DOL is also looking at a new fiduciary rule – reminiscent of the one championed by the Obama Administration – which would be tough on advisors, however panelists in a session devoted to legislative issues thought that, given that we’re in a busy mid-term election cycle, a new rule won’t emerge until next year at the earliest.

The SECURE Act and proposed Version 2.0 were covered in multiple sessions, and unfortunately there seems to be a consensus that sponsors are still reluctant to offer in-plan annuities; some are even waiting for litigation to occur to gauge whether offering annuities is worth the effort. Participants are also wary about the annuity: during a panel discussion one speaker said that for them, buying an annuity is a personal matter and they seem more likely to buy one on their own rather than take what’s on the plan menu.

Speakers at a session on interest rates thought the current environment is favorable to the industry, due to the two hikes the Federal Reserve has made so far this year. However, one warned that “fast and furious” rate hikes during a time when the economy is in recession and the stock market is volatile could prove to be “disastrous.”

I could offer up more thoughts from the event but in the interest of brevity I will close matters here and quickly note that soon I will publish two issues of The Soleares Report – as I did not come out with one last week – and then take a break for Memorial Day. I hope everyone is having a nice spring and are gearing up well for summer!


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