(Barzinga) InsurMark, a leading independent distributor of retirement solutions, announced new academic research from Barclays Insurance Solutions team and renowned economist Professor Robert Shiller, "Investment Characteristics of FIAs." The research outlines an approaching crisis for Americans nearing retirement and finds a potential solution in fixed indexed annuities (FIAs).
Shiller, Sterling Professor of Economics, Professor of Finance and Fellow at the International Center for Finance at Yale University, has written on financial markets, financial innovation, and behavioral economics among other topics. Listed by Bloomberg as one of the 50 most influential people in global finance and one of the world's 100 most influential economists, Shiller and John Campbell created the CAPE ratio, a primary benchmark for many value investors worldwide.
Today, Shiller and Barclays' new research finds that a well-designed FIA can address both market risks and behavioral traps, offering a solution to the nation's retirement savings problem.
"There's lingering cynicism among investors who still bear financial and emotional scars from the Market Crash of 2008 – they're extremely averse to market exposure," the report says. "Low yields in more conservative investments give them few attractive alternatives. Innovation is needed."
The team at Barclays analyzed 10-year returns for stocks, bonds and an FIA linked to the Shiller Barclays CAPE™ US Sector USD Index, a smart beta index that incorporates Professor Shiller's value investment philosophies.1 The simulated series of returns accounts for the interest rate environment and index performance and found that:
- In every 10-year period, the FIA outperformed bonds
- The long-term nature of FIAs constrains irrational investor behaviors
- By providing a principal guarantee and market participation, FIAs offer a unique risk/reward profile
- In simulations, FIA returns were less correlated to the broader economy than stocks or bonds, offering a potential diversification benefit
"The academic validation of FIAs as part of a modern retirement portfolio continues to grow," said Don Dady, Co-founder of Annexus, a leading designer of FIAs. "This new research highlights the value of smart beta indexes like the Shiller Barclays CAPE™ US Index to reshape the profile of the FIA and provide greater long-term growth potential."
"It's great news when Professor Shiller, a leading academic, confirms the unique potential of an FIA to improve risk-adjusted returns across the entire retirement portfolio," said Annexus Co-Founder Ron Shurts. "This is another reason for advisors and clients to take a fresh look at FIAs."
InsurMark is an exclusive distributor of Annexus-designed FIAs featuring indices created by Professor Shiller. More detailed findings, as well as a full methodology, can be found in the white paper, "Investment Characteristics of FIAs." Financial professionals can request access to this research by calling InsurMark at 800-752-0207.
1 Stocks were represented by the S&P 500 Price Return Index, and bonds were represented by a generic bond fund.
About Robert Shiller
Shiller is an American economist, best-selling author and Sterling Professor of Economics, Professor of Finance and Fellow at the International Centre for Finance at Yale University. Professor Shiller is one of the world's 100 most influential economists, and Bloomberg ranks Professor Shiller as ranked one of the 50 most influential people in global finance.
About Barclays
Barclays is a transatlantic consumer and wholesale bank offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in the U.K. and the U.S. With over 325 years of history and expertise in banking, Barclays operates in over 40 countries and employs 83,500 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.
About InsurMark
InsurMark, established in 1983 and headquartered in Houston, TX, specializes in providing safe retirement and asset protection solutions through financial professionals using annuities and life insurance. As an Advisor Development Organization™, InsurMark provides solutions to meet the ever-evolving needs of financial professionals with a mission to protect and enhance the financial security of every home in America.
About Annexus
Annexus is the leading independent product development provider of fixed indexed annuities, indexed universal life insurance and index-based wealth management solutions. Annexus partners with industry thought leaders, leading insurance carriers and the world's largest investment banks to drive product innovation. A handpicked network of elite financial professionals have exclusive access to Annexus solutions that help clients take control of their retirement.
