Filed Under:Annuities, Variable

How Are Advisors Managing in a Low-Rate Environment?

Photo caption: Jeroen van Oostrom
Photo caption: Jeroen van Oostrom

The Federal Reserve last week reaffirmed its commitment to a “highly accommodative” monetary policy, maintaining a near-zero federal funds rate at least through the end of next year. While that is great news for individuals and businesses taking on more debt—such as home buyers and refinancers—low rates remain a significant challenge to retirees and their financial advisors.

A new study by the consultants Howard Schneider of Practical Perspectives and Dennis Gallant of GDC Distribution Consulting examines the challenge of low rates (and other topics) in their report Trends in Advisor Delivery of Retirement Income–2012. Schneider and Gallant presented their findings on a live webinar April 25 sponsored by the Retirement Income Industry Association.

In an interview, Schneider said that “RIAs tend to have wealthier clients who may be less concerned about generating income [and] tend to be more total-return oriented.” He added that insurance advisors who are already pre-disposed to annuity products have tended to be “very happy with annuities and riders set up over the past 10 years.”

The Trends report also looked at the issue of market volatility and risk, and found that advisors’ response to this concern has exactly matched their response to low interest rates—through increased usage of dividend-paying stocks and guaranteed solutions such as variable annuities. Once again, insurance advisors and RIAs were outliers. RIAs’ top action in response to volatility has been increasing client cash. “This likely reflects the positioning of RIAs as money managers employing a more tactical orientation to asset management,” the report finds. Insurance advisors turned first to guaranteed solutions. Bank advisors, along with RIAs, were unique in their greater willingness (25 percent of respondents) to stay the course by not responding to volatility.

Featured Video

Most Recent Videos

Prospects not listening to voice mail? Arrange a phone date

Provided by LIFEHEALTHPRO

Redesigning your phone life is more important than finding the “best words” for a voice mail in today’s culture.

Behind the scenes with Vicki Gunvalson [VIDEO]

Provided by LIFEHEALTHPRO

In this exclusive interview, Vicki Gunvalson shares how she built a $15 million a year annuity business by planning for...

Regulator: Market may need to reinvent LTCI

Provided by LIFEHEALTHPRO

Cioppa says Maine's governor wants to spur the creation of better products.

Dementia: It's more than Alzheimer's

Provided by LIFEHEALTHPRO

An association calls for policymakers to remember lesser-known neurodegenerative conditions.

Related resources

More Resources

Comments

Power your business with up-to-the-minute insurance news, analysis, and best practices from LifeHealthPro Daily eNewsletter – FREE.

Power your business with LifeHealthPro Daily eNewsletter – FREE.

Enter a valid email address.
Close
Nichole Morford

Nichole Morford
Managing Editor

Thank you for subscribing to LifeHealthPro Daily!

Check Out More eNewsletters Now! Close

Advertisement. Closing in 15 seconds.