Why I Disagree with Stan, The Annuity Man

A recent post by annuity industry leader, Sheryl J. Moore linked to a ThinkAdvisor interview of Stan Haithcock, known professionally as Stan The Annuity Man. It's a good interview that spans a number of annuity-related topics. I want to focus on the headline, "Wrap Fees on Indexed Annuities Are ‘Ridiculous,’ Stan the Annuity Man Says."

RIAs charging wrap fees on indexed annuities? Or even other types of annuities? Bring it on! Look, my concern is for the health and growth of the annuity industry. Before I die, I'd like to see annuities move from niche to mainstream products, sought after protection products with genuine consumer demand. I absolutely believe this is possible, and when it happens, it will substantially benefit consumers as well as every annuity industry participant.

Remember when ETFs were niche products? I remember when index funds were niche products? Look at what happened as both became consumer-demanded, mainstream products. It should be exactly the same for annuities.

Stan claims to be the largest producer of annuities in the U.S. I don't doubt his claim. But I bet he would love to triple his sales. This is where his views on RIA compensation and mine collide.

Today, we have a loony situation where most RIAs reflexively eschew annuities. This is tragic, and it places RIAs in a vulnerable position in terms of retaining clients' assets long-term. Honestly, if advisors ignore their clients' longevity risk, they deserve to lose their assets.

I'm on the record in two dozen articles asserting this. I even coined the term "Longevicide" to describe the loss of assets due to RIA's failure to address longevity. I've also taken a strong public position that failure to recommend annuities to Constrained Investors is breach of the RIA's fiduciary duty.

For me, what matters most is what is practical and in the best interests of consumers. In-fighting over how various categories of "advisors" are paid is inside baseball stuff that wastes our time. While we argue about whose compensation scheme is "best," the neglected patient is dying on the operating table. Which statement is more important?

• RIAs finally addressing longevity and other risks that imperil their clients'' retirement security?

or...

• Criticizing RIAs for charging wrap fees on annuities?

I believe that all advisors must be paid for their recommendations and services. Frankly, I don't care how they charge. In a perfect world, with a sane and fair regulatory framework, a single, agreed-upon compensation scheme might evolve. But we are a long way from that. In the meantime, all annuity industry participants shou be rooting for wide adoption of annuities in the RIA channel.

Why root for this? Because when RIAs move to embrace annuities, the consumer press will follow. When that happens, we will see the ignition of true consumer demand, as the process of annuities becoming mainstream unfolds. The dawning of a beautiful new world.

ETFs and index funds show the way.

Stan Haithcock , if you read this and disagree with me, please comment.