Insurable Interest Canadian Insurance Blog

When searching for a new solution, advisors hear a common pitch from software providers: “Our technology frees you to focus on what you do best, managing relationships and growing your business.” Many players in the fintech ecosystem tout the ease, simplicity and scalability of their technologies, allowing advisors to spend less time wrangling data and more time serving existing clients and looking for new ones. But for advisors serving ultra-high-net-worth families, the promise of an easy button to manage the complex needs of multi-generational, taxable investors rings hollow. Despite the incredible growth of sophisticated fintech software-as-a-service solutions, advisors are still commonly doing complex and custom work for UHNW families in Microsoft Excel, which was released in 1985.  When we launched Callan Family Office, which serves more than 40 multi-generational families with an average portfolio of $100 million, we recognized that we had an opportunity to bridge  the ultra-high-net-worth technology gap.  From a tech perspective, ultra-high-net-worth families are different from affluent or high-net-worth investors in two important ways. First, they have ownership structures that span multiple generations, multiple investment managers and multiple custodians. Second, they require individualized advice and implementation to ensure that investment and financial plans are coordinated to maximize...

RILAs have grown in popularity in recent years, with sales more than tripling in the past five years, reaching about $41 billion in 2022, the SEC said. “Investors’ returns in RILAs are connected, in part, to the performance of a market index, such as the S&P 500,” Gensler said. “RILAs, though, are complex products. … Investor returns often are subject to caps and floors set by the insurance company. Further, features such as these caps and floors may change over time, and investors can experience losses if they withdraw money early.” Given these products’ complexity and growing popularity, “it is important that investors receive the information they need — in plain English — to make informed investment decisions,” Gensler added. The proposal would require that RILAs be registered with the SEC “using an amended version of Form N-4, which is the form currently used for most variable annuity products,” Jason Berkowitz, chief legal and regulatory affairs officer at the Insured Retirement Institute, said in a statement. The amendments, Berkowitz said, “are intended to specifically address the features and risks associated with RILAs. Notably, we are encouraged that under the proposal, RILA issuers would appear to be eligible for a limited...

Americans are feeling downbeat these days, worried about a possible recession and how their retirement income will fare if taxes should increase in the future, according to the third-quarter market perceptions study from Allianz Life Insurance Company of North America. The good news: Advisors can do much to lessen their clients’ worries. The bad news: They are likely to get fired if they don’t. Specifically, nearly three-fourths of respondents said they would look for another advisor if theirs did not help them manage taxes in retirement. “A change in taxes can significantly affect a portfolio if the investor has not incorporated tax strategies into a financial plan and diversified across tax categories, according to Kelly LaVigne, vice president of consumer insights at Allianz Life.  “For a goal like retirement, you want to diversify your assets across a spectrum of long-term capital gains, regular income and non-taxable income,” LaVigne said in a statement. “This strategy, along with incorporating strategic tax deferral will help achieve some control over the amount or timing of taxes you will pay.” For its study, Allianz Life conducted an online survey in August 2023 with a nationally representative sample of 1,005 adult respondents. 

What You Need to Know Each year in mid-October, the IRS publishes its annual inflation adjustments for the next year’s retirement account contribution limits. Retirement savers enjoyed big increases for 2023, but despite persistent inflation, smaller limit increases are expected for 2024. With a smaller Social Security COLA also projected for next year, retirement savers are feeling the sting of inflation. Unless a federal government shutdown derails the normal course of business, the Internal Revenue Service will announce 2024’s 401(k) plan and individual retirement account contribution limits in less than a month’s time. Despite the persistence of high inflation, tax experts anticipate that 2024’s increase will fall significantly below the sizable limit hike of $2,000 enjoyed by retirement savers for 2023. That increase pushed the 2023 contribution limit to $22,500 for 401(k), 4013(b) and 457 plans, although savers over 50 can use catch-up contributions to sock away up to $30,000 this year. According to projections from Bloomberg Tax and Milliman, the defined contribution plan deferral increase for 2024 is likely to be in the range of $500, or only about one quarter of the 2023 increase. A similar boost is projected for contributions going to both traditional and Roth individual...