(New York)

Most investors don’t fully understand the differences and benefits between fixed annuities, variable annuities, and fixed index annuities, so it is only natural that most clients would not even begin to understand deferred annuities and their benefits. Deferred annuities work just like other types of annuities except they explicitly defer any payouts for a set number of years. It is essentially a lump sum that gets invested, with no planned withdrawals for, say, 20 years. In many ways that makes them like an IRA. These can be very useful for clients who have are conservative in their outlook, have a nest egg to buy an annuity, and don’t need income right away.

FINSUM: In our view this is a perfect product for Millennials and Gen X who are 15 years or more from retirement. It is like a self-funded IRA and completely fits with Millennials’ bearish view of markets and the economy. It may also be a good choice for clients who tend to overspend, as this can do a good job protecting them from themselves.

(New York)

Momentum funds often get bad press. While they have obvious utility, a lot of people say they feed bubbles and are subject to very big losses from market corrections. That said, some funds have started to do an excellent job at both hedging and outperforming to the upside. While that might sound impossible, it is not as hard as it sounds. The key is to follow the market’s movement, but not try to predict it. In other words, in strongly upward markets, you position yourself very bullish (e.g. 200% exposure). In downward markets, you take an inverse or short exposure to profit from losses. In a decent market you simply stay at 100% long exposure. By using this approach you can participate it more of the upside and lose less on the downside.

FINSUM: This is a smart strategy and one that some momentum funds are using to outperform the market right now. It can be employed either by buying funds or with an options strategy.

(Washington)

Biden has officially made his new SEC pick—Gary Gensler. And while the nomination has not gotten much press, what comes next may. Many fiduciary advocates and those on the left are making a big push for a change to Reg BI, and not just in terms of its actual content, but the name itself. “New suitability standard” is a name that has been floated for example. One industry lawyer, Brian Hamburger, put it this way, “Brokers, as they are registered as brokers, are representative of products; they derive their powers by way of a selling agreement between product manufacturers or investment products; and the dealer component, where they have an obligation to distribute that as appropriate to customers … That is a far cry from having to act in a client’s best interest”.

FINSUM: Most readers here are probably thinking “who cares what it is called”, but that is not the root of the matter. Rather, the name may be a symbolic first step of a major overhaul and the creation of a true fiduciary standard by the SEC.

(New York)

If there is a product that looks like it has a great ten-year horizon ahead of it, it might just be annuities. Just like eSports and electric vehicles seem to have a great demographic trend behind them, annuities will ride a wave of retirees into great success. However, that is not the only tailwind. The other is ultra-low interest rates, which have completely upended the role of bonds in a portfolio. They yield very little and have a great deal of risk. Understanding that, annuities have a very interesting role to play, as between the three major types: fixed, variable, and fixed index, they offer a range of options that can help replace bonds. Fixed annuities offer set guaranteed income, variable give banded income but offer some upside, and fixed index work as a hybrid between the two.

FINSUM: Annuities have gotten a bad reputation over the years because of some high fees and bad actors, but product suites have gotten better. They can really round out a client’s need for low volatility income.

(New York)

Imagine you are an advisor at a big brand name broker-dealer or wirehouse. As much as you might gripe about your ever-changing compensation plan or the structures the firm puts in place, one thing you really like is that the logo on your business helps you win clients. Naturally then, losing that logo is a big challenge, both in terms of marketing, but also in terms you one’s own psychology. Therefore, when going independent it is critical to consider the marketing support you may receive. Many RIAs have next to none, or at least not much more than off-the-shelf options. However, some RIAs differentiate themselves through branding and marketing, such as leading investment concepts or customized marketing that empowers each advisor.

FINSUM: This might sound silly, but when considering whether to join an RIA google their name and check the Google News tab. Find key terms on their site (e.g. do they have any trademarked words?) and do the same. The firm’s marketing prowess will quickly become clear.