A suite of income annuity analysis tools, slated to be the first in a planned series from CANNEX, includes a personalized video that uses a client’s profile data and choices, such as the type of income annuity contract being considered.
The tools were designed to be simple, easy to understand and customizable for each client, according to Lowell Aronoff, chief executive of CANNEX. The goal is to help advisers make income annuities more understandable to consumers.
“Each tool addresses a common question that consumers have about income annuities, which advisers often have difficulty explaining,” Aronoff said. “By drawing on longevity statistics that are specific to the individual consumer and using real time market data, these tools eliminate guesswork and provide advisers with the ability to explain how income annuities often can help optimize their clients’ retirement income portfolios.”
Many consumers and even some advisers find choosing the right annuity to be a confusing process, according to Moshe A. Milevsky, chief executive of the QWeMA Group, which specializes in retirement income planning. Research from the QWeMA Group will be used to power some of the CANNEX tools.
The questions the tools can answer are:
- Should I buy an annuity? This tool shows the benefits and tradeoffs of including an income annuity in a portfolio.
- When should I buy an annuity? Using a concept called the Implied Longevity Yield, this tool measures the yield a client would need from an alternative investment over time to equal the income generated by an annuity. This can help clients determine if they should buy an annuity now or wait.
- What is my return with an annuity? This tool uses a graph to help advisers explain the rate of return from an income annuity over time by relating it to an actuarial estimate of a client's longevity.
- What type of annuity is right for me? This tool examines the trade-off between the type of beneficiary guarantee selected for an income annuity and the amount of income generated, helping advisers and clients decide how much of a guarantee they need.
In addition to customized illustrations on paper and education materials, the CANNEX system creates a video that incorporates a client’s profile and product choices. The video uses graphics to help explain the advantages and tradeoffs of the client’s selections in easily understood terms.
The video and other materials speak to a client’s particular situation, said Alex Melvin, president of CANNEX. “This is an extremely innovative and effective way for advisers to provide answers to their clients’ most pressing and complicated questions,” Melvin said.
The suite of tools will significantly help advisers educate their clients about how their portfolio needs change once they retire, said Gary Baker, president of CANNEX USA.
The tools are available to advisers through CANNEX Retirement Income Product Exchange (RIPE), which allows advisers to compare hundreds of fixed deferred and income annuity products, sorting by price and feature. It is available to more than 200,000 advisers in the U.S. and Canada.
CANNEX Financial Exchanges Ltd. is an independent provider of data and information services to the financial services industry in the U.S. and Canada.
More information is available here.