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Vanguard, the Valley Forge, Pa.-based investment company, has launched a Web-based service
that lets individuals compare fixed immediate annuities issued by leading insurance companies.
Vanguard Annuity Access, powered by Hueler Companies’ Income Solutions platform, also
offers deferred fixed annuity quotes. Vanguard joins more than a dozen Web sites listed on
“Google” that provide immediate annuity quotes to investors. In addition, Jefferson National Life
Insurance Co.’s Web site has an online tool advisors can use to compare costs of variable
deferred annuities with guaranteed lifetime withdrawal benefits to no-load deferred variable
Jefferson National, however, does not sell annuities through its tool. By contrast, the Vanguard
site does, pocketing 2% of the annuity purchase amount on fixed immediate annuities. The fee,
says Jon Ameriks, head of Vanguard Investment Consulting and Research, is paid to Vanguard
and Hueler to cover administration costs. It is in line with fees built into insurance fees charged
by other insurance agents, and is built into the insurance quote. The annuity quotes are also net of
investment management fees, distribution fees, administrative fees and other costs associated
with fixed annuity products.
The Vanguard service is designed for individuals seeking a guaranteed stream of income in
retirement to augment their investment holdings, workplace retirement plan, and Social Security
Through the site, financial advisors can get customized real-time quotes and evaluate
competitively priced and directly comparable contracts from a number of insurance companies.
So far, eight carriers are listed on Vanguard’s annuity platform. They include: American General
Life Companies, Integrity Life Insurance Co., Lincoln National Life Insurance Co., Metropolitan
Life Insurance Co., Mutual of Omaha, Pacific Life Insurance Co., Principal Life Insurance Co.
and Western National Life Insurance Co.
“The comparability of quotes at the time they are obtained is critical in evaluating whether
contracts are competitive among their peers,” Ameriks says.
Vanguard’s new service comes amid a report in “Best Review,” an industry trade magazine
published by A.M. Best, Oldwick, N.J., that 75% of consumers research all types of insurance
It also comes as financial planners expect increased use of immediate income annuities by
those who lost money in the 2008 economic crisis. “All of a sudden over the past two
years people are absolutely interested in buying immediate annuities, “says Lance
Wallach, a Plainview, N.Y., financial planner. “They (seniors) don’t want to lose money in
the stock market. They want a guaranteed source income.”
However, there is no free lunch with this online service.
Despite investor interest, Wallach recommends that fellow advisors do their due diligence
homework. “Insurers hide the true costs,” he warns. “The no-load insurance companies
are the best because they don’t pay commissions. So the payouts are higher.”
Jane King, a Wellesley Hills, Mass., financial advisor, agrees. “In my experience, annuity products
aren’t transparent. It may be the wrong thing to do because other implications of lifetime
guaranteed income are not fully disclosed,” she says. “Do you effectively disinherit your children?
Do you really know the underlying investments of the insurance company and are they safe?”
Others, however, believe that immediate annuities make it easy for advisors who are
uncomfortable managing an income portfolio of individual securities.