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Flat insurance-fee VAs fit the fee-only model
Flat insurance-fee variable annuities: Designed expressly for fee-only advisors
Flat insurance-fee VAs are simple, transparent and consumer centric. They break rank with the rest of the VA industry by meeting the needs of fee-only advisors, such as NAPFA members like you, who follow a fiduciary oath and are committed to core values and a strict code of ethics.
By not paying commission, flat insurance-fee variable annuities eliminate any conflict of interest, allow for unbiased advice, and let your client invest knowing there is no question of hidden motives.
By stripping away all asset-based insurance charges, flat insurance-fee VAs allow you to provide a substantial cost savings for your client, while still earning a fee for managing the assets inside the annuity.
Flat insurance-fee VAs: Doing right by consumers
Industry watchdogs and members of the press have been quick to point out the trouble with VAs' lofty commissions, steep surrender charges and questionable sales practices.
As Jonathan Clements wrote in the Wall Street Journal on October 20, 2004, "Variable annuities are a favorite with unscrupulous investment advisers, who can collect ridiculously high commissions by foisting these turkeys onto unsuspecting investors." And on August 15, 2005, Bloomberg News columnist John Wasik wrote, "Variable annuities sold on commission remind me of old cars that constantly need fixing. They are expensive to maintain and hard to unload."
Most annuity companies continue to sell VAs with expensive asset-based fees and complicated features to support their legacy of high overhead and commission-based sales culture. There's only one VA with a flat insurance fee of $20 per month, no matter how much your client invests1 or how much their annuity grows: Jefferson National's Monument Advisor.
Like other VAs, clients pay the fees of the underlying funds selected (currently ranging from 0.27% - 2.50%; except for Rydex VT Inverse Gov't Long Bond Strategy Fund which is currently 5.11%) plus the fees of any advisor hired. The range of underlying fund fees reflect the minimum and maximum charges after contractual waivers that have been committed to through at least May 1, 2007. This VA does not provide any enhanced living, guaranteed death or withdrawal benefits.
The Living Benefits Battle
When it comes to the question of retirement income, clients' fears can hit new heights. That's what helps sell living benefits. And in recent years, they've been skyrocketing: 7 in 10 variable annuities are now sold with living-benefit riders according to the National Association for Variable Annuities (NAVA).2
Your client wants protection—but at what cost? Should they pay the extra expense for a living benefit that they won't use for years—or for decades? Or should they focus on low-cost tax-deferred accumulation, to build a bigger nest egg that will create more income when they need it down the road?
Experts point out that a well-diversified portfolio and a well-structured financial plan can yield more than the minimums promised by many living benefits. "Allocate your assets properly, and have realistic expectations for withdrawals [from your overall nest egg], and you won't need this benefit," said Frank O'Connor, the variable annuity expert at Morningstar Inc. in a June 2007 Wall Street Journal article.3
It is widely believed that fees, tax treatment and asset allocation are the primary determinants of investment performance. With innovative flat-insurance fee VAs that are designed to be used like a highly efficient tax-deferred investment platform—not a costly insurance contract—the more your clients can accumulate, and the more income they can generate.
The Flat-Fee Revolution
At a time when 76 million boomers approach retirement, while pension plans decline and Social Security's future is the big unknown, Americans need better options to save more than their IRA or 401(k), as well as the means to secure a steady income stream for their retirement years. Monument Advisor is a powerful tool to accomplish both. This VA does not provide any enhanced living, guaranteed death or withdrawal benefits.
Monument Advisor has been widely acknowledged by such noteworthy sources as the Wall Street Journal, the Los Angeles Times and the Washington Post. As Bob Veres writes in the October 2005 edition of Inside Information:
"This may be the start of a revolution that changes the rules of the game for the better, for you and for consumers. I don't think this newsletter has ever recommended an insurance industry product before, but this seems like a good time and place to start." (Source: Bob Veres, "Inside Information," 10/05).
Want to help your clients grow their portfolios and save more for retirement? You can compare, track and exchange a high-cost VA using Jefferson National's MAX: Monument Advisor Xpress.4 This free service for fee-based and fee-only advisors is a comprehensive one-stop destination with three new proprietary tools plus an Advisor Dashboard to view, edit, update and send proposals, emails and alerts. Its web-based demos, tools and educational materials can help you manage and maximize business from anywhere you can access the internet.
About Jefferson National
At Jefferson National, we developed Monument Advisor because we are committed to fee-only advisors and the clients they serve. We believe that simple, flat insurance-fee variable annuities should be a part of every American's portfolio, to help them save more and secure their retirement income.
Founded in 1937, Jefferson National serves more than 60,000 customers nationwide, and is domiciled in Dallas, Texas with authority in 49 states and the District of Columbia.
The Annuity Rescue Center is powered by Jefferson National, which developed the first flat insurance fee variable annuity. For more information, visit www.jeffnat.com or call 1-866-WHY-FLAT (866-949-3528).
FORM #JNL2007CL072 04/07
1 Minimum contribution $25,000. Deposits in excess of $10 million are subject to company approval.
2 2006 Annuity Fact Book, National Association of Variable Annuities, 5th Edition.
3 Reducing the Risk of Variable Annuities, Jeff D. Opdyke, Wall Street Journal, June 6, 2007.
4 Please consult with a tax advisor for any potential tax consequences for switching from one variable annuity to another. Please note this is not an endorsement to switch from your current annuity to the Monument Advisor variable annuity. You should review your particular situation to determine which variable annuity is appropriate for your needs. Withdrawals before age 59½ may incur a 10% tax penalty.
An investor should carefully consider the investment objectives, risks, charges and expenses of the investment before investing or sending money. For a prospectus containing this and additional information, please contact your financial professional. Read it carefully before investing. The summary of product features is not intended to be all-inclusive. Restrictions may apply. The contracts have exclusions and limitations, and may not be available in all states or at all times.
Variable annuities are investments subject to market fluctuation and risk, including possible loss of principal. Your units, when you make a withdrawal or surrender, may be worth more or less than your original investment.
Variable annuities are long-term investments to help you meet retirement and other long-range goals. Withdrawal of tax-deferred accumulations are subject to ordinary income tax. Withdrawals made prior to age 59½ may incur a 10% IRS tax penalty. Jefferson National does not offer tax advice. Annuities are not deposits or obligations of, or guaranteed by any bank, nor are they FDIC insured.
Monument Advisor is issued by Jefferson National Life Insurance Company (Dallas, TX) and distributed by Jefferson National Securities Corporation, FINRA member. Policy series JNL-2300-1, JNL-2300-2.
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