I am sure you have all noticed the changes to EIA’s offered by the carriers. Margins are up, caps are down, but the newest wrinkle is that commissions are down also. In order to stay "competitive" many carriers have reduced commissions on EIA’s (and also on traditional fixed products.) I generally do not like products with an earnings cap, but in this market they represent the lesser evil. By this I refer to the fact that products, which use a monthly average with a spread or margin may generate very low return in an up market. Consider an S&P rise of say, 20%. The average rise might be 10%, subtract a 6 or 7% margin and the client gets 3-4% equal to the minimum guarantee.

In light of this I feel that the key to EIA’s today is being able to show a client in a 2% taxable CD that he can earn 3% tax deferred with some upside potential. Remember, EIA investors are looking to minimize the risk not maximize their yield. The 2 best products today (in concept at least) are the Index Rewards from F&G and the Secure Index from USG (ING). Both offer annual resets and annual lock-ins, non-averaging methodology and reasonable caps and commissions. As market conditions change these products can raise their caps. Both products also guarantee 3% minimum return on the entire investment. 3% tax deferred with upside potential. Clients like to hear about that. Please call us for more information.

The National Retirement Planning Coalition (NRPC) study reveals limited awareness of retirement needs. Please visit www.fsdfinancial.com for the key findings of this study. See why FSD believes in immediate annuities to guarantee an income that can’t be outlived.