Insurer's VA Funds closure impacts advisors
Limitations in investment options closes best investment fund doors of the client, says representatives. Investment advisor M Kauffman was surprised to see that several fund investment options were closed when he was re-balancing one of his client’s ING variable annuities.
He further added that he doubted on the system in the beginning, and thought that the system might be malfunctioning; but the funds were reduced. When he found that fewer funds were available to use, he chose his other choices. Further he had to reallocate all his strategies altogether because of the change.
Kauffman is the principal at the Kauffman Wealth Services which manages $115 million; said that this situation was perfectly legal and a common scenario to prune funds from the insurers VA menus. He said that the theory will increase his ability to give best solution to his client’s funds, and according to him, this was the reason for the approach of advisors steering clients.
Last year, some of the major providers such as Jackson National Life Insurance, Nationwide Life Insurance ING Groep NV closed their variable annuities and many funds. Industry experts advise the vexing for their investors so that their clients have to accept the volatility of the market and cope up with it. New money is not funded in the market including all the inflation hedges.
Insurance company’s advisors say that the addition and closing of new funds is the indication of VA’s being top priority. Fourteen VA funds were chosen by Nationwide in last couple of years, out of which some funds have undergone drastic changes. Some funds lowered their outlook and the remaining funds were redundant.
Even carriers gave array of funds choices to the investors since last years. Majority of the funds were closed affecting natural resources, fixed income, emerging markets and regional markets including India and China.