Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

New Fiduciary Rules Force Annuity Sales Plunge

December 6, 2019 By E.J. Smith

By fotogestoeber @ Shutterstock.com

It turns out, when brokers are forced to look out for your interests instead of their own, they end up selling you fewer annuities.

I’ve been a critic of annuities for years (decades?). Loaded with fees and backed by guarantees that are only as good as the banks behind them, annuities are hawked like a snake-oil retirement solution to unsuspecting investors.

I wrote back in 2014 that:

The issue is that annuities are sold with a full-court press on those that don’t invest for a living. They’re promised rates of return that sound good on paper but will be wiped out if the insurer goes bankrupt and the government doesn’t bail it out.

With interest rates at basically zero there is no way insurers can meet the promises they’ve made. It’s a hope and prayer. It’s why I would never put any serious money into an annuity.

In 2017 rules governing how brokers could invest in their clients’ tax advantaged retirement accounts changed to fiduciary status. Fiduciary management is something else I’ve been writing to you about for years. Is your advisor on your side? Or his own? You need to know if your manager is held to that higher standard or not. In 2016 I warned investor to be vigilant about their advisors:

If you choose to work with an investment advisor, wealth manager, financial planner, stock broker, retirement specialist, you name it, there really is only one question for you to ask up front. Are they held to a fiduciary standard or a suitability standard for all account types, not just IRAs? At Richard C. Young & Co., Ltd. we’re held to the fiduciary standard (sign up for our monthly client letter here, free even for non-clients).

The difference between the two are night and day. You would think this topic would be crystal clear.  It’s not. Most are held to a lower suitability standard. In other words: They don’t have to buy you the best, low cost product if they have one that is similar or suitable with higher fees.

Like any purchasing decision, you hire any of the above and trust that they do what’s right for you. Too often that is not what happens. If it were the case, annuities wouldn’t be the huge money making behemoth that they are. I am shocked at the product that gets stuffed into portfolios by the self-serving in this business.

You need to be vigilant and crystal clear on this subject. You want to work with a fiduciary—someone who is held to the highest standard.

Now, after the new rules on retirement accounts were put into place, annuity sales are plummeting reports Greg Iacurci at InvestmentNews:

The Department of Labor fiduciary rule and the interest-rate environment delivered a one-two punch to annuity sales last year, pushing them down for the third consecutive year.

Compared with the previous year, overall annuity sales dipped 8% in 2017, to $203.5 billion, according to the LIMRA Secure Retirement Institute, which tracks insurance data. All major product lines were in the red.

“One of the biggest impacts we saw was from the regulatory side of the business, particularly with the DOL fiduciary rule,” said Todd Giesing, director of annuity research at Limra.

The fiduciary rule, which was partially implemented in June, raises investment-advice standards in retirement accounts such as 401(k)s and IRAs. One of the goals of the Obama-era regulation was to curtail conflicts of interest that may exist when brokers sell financial products for a commission, as they predominantly do with annuities.

The fiduciary rule, major parts of which have been delayed until July 2019 and may be changed by the Trump administration pending a review, led to uncertainty among insurers and distributors such as broker-dealers, which contributed to a disruption in annuity sales, Mr. Giesing said.

Annuity sales into IRAs were down 13% in 2017, whereas those in non-qualified taxable accounts — which weren’t directly affected by the fiduciary rule — were down only 1%.

Read more here.

Originally posted on Yoursurvivalguy.com.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • New York Real Estate Sales Plunge
  • Business Boom Driving PC Sales
  • China’s Relentless Auto Sales Slowdown
  • Author
  • Recent Posts
E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com
Latest posts by E.J. Smith (see all)
  • Your Survival Guy: Clearing the Decks, Buying a Boat, Seeing the World and More - June 24, 2022
  • Here’s Why You Need a 15-Year Retirement Investment Plan - June 23, 2022
  • Kellogg Cuts Loose with Split Plan - June 22, 2022

Search Young Research

Most Popular

  • Will the Fed Stick to Its Course?
  • RECESSION? Dow 25,000, $8 Gas, Rising Interest Rates, Spell Mid-term Crack Up
  • Investing During a Recession
  • Swiss National Bank Surprises World with Rate Hike
  • Kellogg Cuts Loose with Split Plan
  • The Power of a Compound Interest Table
  • MONEY TALKS: The Best Service in Paris
  • Predictions of MEGA-SPENDING on Metaverse
  • Apple Shares Resilient in the Face of Recession
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Greetings From Paris & Le Bristol Hotel
  • The Most Controversial Restaurant in Paris?
  • Your Survival Guy: Clearing the Decks, Buying a Boat, Seeing the World and More
  • Russia’s “Unsubtle” Artillery Attacks Not Necessarily “Archaic”
  • FLORIDA DODGED A BULLET: Elected Superb DeSantis Over Unstable Gillum
  • Biden, a Job Killing Machine
  • Good News for the 2nd Amendment
  • La Fontaine De Mars: Best Sunday Paris Lunch
  • My 10 Favorite Books about France, Plus a Bonus for You
  • BREAKING: Supreme Court DISMANTLES New York’s Unconstitutional Gun Laws

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.