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Yes, Fee-Based Annuities Exist

Advocates are working to make fee-based annuities more than just a passing phase.


Annuity sales is still largely a commissions-based world, but that hasn’t stopped startups and innovators from building—and advocating for—new products that remodel the commission structure. According to a 2018 study, many advisors are frustrated by the “one-size-fits-all” approach that annuity providers are perceived to take.

But instead of bemoaning the form and payment structure of annuities, some firms are getting creative. Digital retirement-focused startup Kindur only offered an annuity on its platform after its founder met with 40 insurance companies to find one that would build the no-commission product the firm needed. DPL Financial Partners' mission to bring more RIA-friendly annuities to advisors means the firm intermediates between advisors and insurance providers to communicate the needs of advisors to product developers. Even Microsoft and BlackRock are working together to devise a new annuity for retirement savers, a reveal made this summer at the InVest conference in July.

With the start of Life Insurance Awareness Month, annuities will be getting more attention. Advisors who have previously written off those products, however, should take another look at them, said David Lau, founder and CEO of DPL. Research points to the usefulness of some types of annuities and openness by insurance companies to remodel their form has made them a tool that advisors should consider when working with clients, he said.

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