Displaying items by tag: retirement

Monday, 21 March 2022 20:06

Annuities Starting a Post-Covid Comeback

There has been a serious increase in interest in annuities during the pandemic, but overall the product suffered as retirements got put on hold. Bond market disruption has increased that excitement and Legal and General, a British provider, is expecting a big turn around with the pandemic in the rear view. They have already seen a 5% uptick in since the onset of the pandemic. A full recovery is underway and retirement is back on the agenda for many investors, which makes annuities attractive again. Additionally data around savings rates and flows are trending positive for annuities as well.


Finsum: Annuities are just the better alternative for many retirees when the interest rates and inflation are in the position they are now.

Published in Wealth Management
Monday, 14 March 2022 20:45

The LIFE Act is Going to Boost Annuities

The 2019 Secure Act was THE critical piece of legislation for annuities in the 21st century, but that could change with the upcoming LIFE Act which is working its way to voting. Where the secure act made legal production of annuities easier and allowed them to be a part of retirement plans, the LIFE Act will allow annuities to be a 50% asset allocation by default from employers. Currently, the LIFE Act has strong bipartisan and posts a strong potential of passing, this would allow investors to double their baseline investment in annuities where it was previously capped at 25%.


Finsum: The ultra low rate environment has many investors more interested in turning to annuities for income than almost any other time before.

Published in Wealth Management
Thursday, 17 February 2022 17:50

Annuity Buyback Bonanza

Annuities have had rapidly growing interest in the post covid era, and this has been especially true for variable annuities. What makes variable annuities attractive is inflation and interest rate risk which will elevate their value, however, for annuities providers and insurers, this is represented as risk. In an action to mitigate those risks Aegon, the parent company to Transamerica, engaged in a buyout program that ended in January. In total 18% of annuity holders capitalized on buybacks to settle their portfolio. Transamerica also expanded its hedging strategies to ensure against interest rate and equity risk for the remaining balance of its variable annuity portfolio.


Finsum: Recent legal changes have drastically affected the insurance and annuity industry which has been key to their growing demand, in addition to the covid-19 pandemic and rising subsequent unemployment.

Published in Wealth Management
Tuesday, 15 February 2022 19:13

Biggest Threats to Annuities

Annuities are one of the safest financial securities that exist, but that doesn't mean they are without some risk. Sure one of the biggest risks to an annuity is dying early, but there are other external risks like liquidity. Annuities are among the most illiquid contracts and often come with heavy penalty fees in withdrawals. Additionally, if an annuity company goes bankrupt they aren’t regulated by FINRA, and state and local insurance agencies only cover between $250,000-500,000 in losses. In the current environment, inflation growth is a substantial risk to annuities because it devalues the future payment stream in a fixed rate annuity, and even if the Fed raises rates to curb inflation this will only make it a less attractive yield in comparison to the market.


Finsum: Overall, annuities look like one of the safest securities and variable rate annuities may mitigate interest rate risk.

Published in Eq: Dividends
Monday, 07 February 2022 20:20

The SEC is Eyeing ESG

2021 was, without a doubt, the year of ESG Investing, but 2022 could shape up much differently as the SEC is turning its attention to ESG. There has been a wide amount of attention being given ‘greenwashing’ where companies get favorable ESG ratings despite subpar ESG performance. This is an area the SEC is warning investors about; conflicts of interest could incentivize better scores than are necessarily deserving. These issues were core to the 2008 financial crisis and are at play once again. Also, the SEC is concerned that the following ESG factors may cause a divergence from traditional methods which coil weaken the overall financial system.


FINSUM: A crackdown by the SEC might be enough to spoil the ESG party and could reveal it as the next financial bubble.

Published in Eq: Tech
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