Advantage Compendium Publishes GLWB Study
August 3, 2008
A comprehensive study of the guaranteed living withdrawal benefits (GLWBs) currently available as riders on variable annuities, fixed annuities, index annuities, as well as on mutual funds and managed accounts, has been published by Advantage Compendium Ltd., a St. Louis-based research and consulting firm.
Excerpts from the $575 report are available at indexannuity.org.
The report provides “individual product specifications and costs, compares the payouts of products at different ages and product performance, discusses the risks to the carriers, reviews compliance and suitability concerns, examines the psychological economic behavior elements affecting retirement decisions and contrasts current retirement income alternatives to GLWBs.”
According to a release, the study asks: What are the risks to the carrier relating to anti-selection and hedging? What is the single biggest potential compliance problem? Do VA GLWBs make fixed annuities obsolete? Do GLWB fees offset the benefits?
“In three years we have gone from ‘a variable annuity is a mutual fund in a tax-deferred wrapper’, to a ‘variable annuity offers income guarantees the mutual fund cannot match’ to ‘fixed annuities offer stronger income guarantees with potential growth’ to ‘mutual funds offer income guarantees and professional money management at lower fees than variable annuities’,” said Jack Marrion, the study’s author. “I am led to the conclusion that the GLWB revolution may permit one to both eat their retirement cake and have it to pass to their heirs.”
Advantage Compendium publishes the Index Compendium newsletter, the consumer education materials of Safe Money Places and the Annuity Regulatory Compendium that is received by all state insurance and security departments.
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