Annuity Reviews

Amid a shifting annuity marketplace, advisors are wise to act now to uncover opportunity

Interest rate changes have created a shake-up in the annuity marketplace over the last several months, as carriers have repriced their products to align with larger market trends. Advisors have recognized the opportunity this shift presents. In fact, the latest sales data from LIMRA reported a 26% year-over-year increase in total sales in the second quarter of 2024.

?

While the market has moved past its recent historical peaks, we still see an incredible opportunity for advisors and investors to capitalize on the current market environment before more drastic changes take hold. But the time to act is now.

?

For most advisors, the best place to start is by reviewing your clients’ current portfolio. We have spoken with many of our advisor partners in recent months about conducting these annuity reviews as part of our larger ongoing review process, which we discussed in a recent post. It is a core component of our commitment to help advisors uncover opportunities and optimize client positioning.

?

Creativity around annuity reviews

Annuities should be reviewed regularly, just as you would your client’s entire financial life. Many clients who own annuities are holding onto products purchased years ago—often under completely different life circumstances. These annuities may no longer align with their current financial goals or needs.? A review and replacement – in today’s elevated interest rate environment – usually provides enhancements

?

For example, we frequently see clients holding variable annuities that may not serve their current needs. Consider the following scenario our team navigated recently: An advisor came to us to brainstorm around a client’s annuity. This client purchased a variable annuity over a decade ago but has since accumulated significant wealth. The annuity, likely once suitable, no longer fits the client’s financial picture. The advisor initially presented two options: surrender the contract and reallocate the funds into investable assets or transfer the annuity into a fee-only option.

?

The advisor’s initial thought process seems like a reasonable solution, but there is more opportunity beneath the surface. We reviewed the whole situation and quickly recognized neither option was ideal for the client. Surrendering the contract would trigger an unnecessary taxable event, and transferring the annuity wouldn’t reflect the client’s long-term goals.

?

Through our review process, we were able to uncover alternative strategies that better served the client’s needs, demonstrating the importance of thinking outside the box. Partnering with the right experts allows advisors to explore innovative solutions that protect clients’ interests and optimize their financial plans.

?

Why a planning mentality matters

It’s more important than ever to review your clients’ full financial picture, including annuities, with a future-focused mindset. Look at the numbers, consider the big picture, and make planning a priority. Our team approaches every advisor discussion with a planning-first mentality. It is a philosophy that guides our every interaction and is core to who we are as professionals. We recognize that each advisor, each client, and each situation is different. We examine every scenario independently, focusing on long-term planning rather than quick fixes.

?

We bring the talent, resources, and technology needed to conduct comprehensive reviews of client situations and develop the best forward-looking strategies. For advisors, having a trusted partner in CBS Brokerage empowers them to think bigger and act more strategically on behalf of their clients. This planning-centric approach ensures that clients are always in the best position to achieve their goals, even as market conditions shift.