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Some Thoughts for the New Year


I hope you all had a wonderful New Year's celebration and are jumping into 2014 with optimism. To my mind, there are plenty of things to be upbeat about: variable annuity players are toning down their risks, other products are gaining ground, and quite a few observers expect total sales to rise. The growing popularity of Deferred Income Annuities (DIAs) seems to be evidence that some investors have warmed up to the idea of receving traditional annuity payments in retirement.

And yet outside the industry - in the financial media in particular - I often come across negative bias, not always of the informed variety, which can be dismaying. Here are just a few headlines from the past year that are, unfortunately, all too typical:

"Variable annuities might be unsuitable for some elderly investors"

"Annuities: more cons than pros?"

"Variable annuities can be a minefield for the elderly"

"Savers steer away from pricey annuities"

In my writing I don't intend to shy away from the shortcomings of the industry. But I'm also hopeful that this year may be a time when some people with prejudices can be brought around to a new way of thinking. Work needs to be done to achieve this goal. For one thing, all companies along the distribution chain need to do their level best to nip unsuitable sales in the bud. As I noted in last week's year-in-review commentary, the Financial Industry Regulatory Authority (FINRA), will be looking closely at sales practice this year. That fact should make all players more vigilant.

I also think the industry needs to deliver more success stories. I recall years ago seeing a marketing piece that gave a real-life illustration of how a variable immediate annuity provided a client with sturdy payments over time. More examples of the strengths of annuities need to be communicated the public, to thus change hearts and minds.


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