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Want to go RIA with annuities? Here’s where to start

Josh Welsh
May 02, 2024

As more and more advisors consider breaking away to go independent, and with RIAs expected to control one-third of intermediary asset market shares, the question remains: what about those who have an annuity-based book of business?

For advisors who have grown their book of business through annuity-based sales, the fear of losing that revenue could make-or-break their decision to remain where they are, halting their independent aspirations. However, several experts say that might not be the case as annuities can still be kept in the books when making the transition.

Annuities and insurance products serve a purpose that other investments can’t, says Adam Handler, vice president of product management at Axtella. “Having the backing of insurance allows for things like complete principal protection guarantees and riders and benefits that, otherwise, you’d have to try and create with portfolios that would assume risk.”

While annuities are known for having a bit of risk in the past, that’s certainly changed over the last decade. Handler argues that even though the commissions associated with annuities can still be seen as expensive compared to other investment portfolios, the benefits that come with annuities make it a lot more feasible to have.

“Today, those commissions have come down significantly,” he said. “They’re no longer 10 or 12 percent, you’re seeing maybe a maximum of 7 percent. It’s still pretty high but when you look at the overall structure of what the annuity is doing for the client, if they have that need, then the purpose that it serves is welcome. I don’t think they’re really being seen as a negative anymore.”