RILAs: A Steady Course Through Volatile Markets
Barely a decade old, registered index-linked annuities (RILAs) have quickly gained popularity due to their unique blend of protection and growth potential. This makes them an appealing option for investors looking to navigate today’s unpredictable market conditions, according to Myles Lambert, Executive Vice President and Chief Distribution and Marketing Officer at Brighthouse Financial.
The Rise of RILAs
RILAs have been in the market for over 10 years, but they’ve only recently gained widespread recognition among advisors and investors. Lambert attributes their popularity to their ability to balance growth opportunities with downside protection, making them particularly attractive to those nearing retirement.
In an interview with InvestmentNews, Lambert explained that RILAs are designed to help clients achieve both protection and growth of their retirement savings. They offer participation in market growth up to a certain percentage by tracking one or more market indices, while providing some protection against market volatility.
Evolution of RILAs
While RILAs remain fundamentally the same as when they were introduced, the industry has continued to innovate and enhance these products. New indices, levels of downside protection, and crediting strategies have been introduced to better meet consumer needs. Some RILAs now offer participation rates that allow clients to capture more than 100% of the tracked index’s growth.
Recently, some RILAs have started offering clients the option to receive a reliable stream of guaranteed lifetime income through an optional income rider. This benefit helps mitigate the risk of outliving assets and provides growth opportunities by tracking equity markets.
Navigating Market Volatility
Lambert emphasized that RILAs can help investors remain invested during market downturns by guarding against some or all losses. This can lead to positive conversations between financial professionals and their clients, helping them stay the course and avoid behaviors that could cost them long-term growth potential.
Raising Awareness
As a relatively new product category, RILAs present opportunities to enhance awareness and understanding. Brighthouse Financial actively promotes RILAs through various initiatives, including advertising, social media, and educational resources for consumers and financial professionals.
Supporting Guaranteed Lifetime Income
The industry has responded to the growing demand for products that provide guaranteed income in retirement. Some RILAs now offer optional lifetime income riders, and employers are incorporating annuities into defined contribution plans to provide plan participants with guaranteed income streams for life.
By providing a balance of growth potential and downside protection, RILAs have become an attractive option for investors seeking stability in volatile markets. As the retirement landscape continues to evolve, RILAs are likely to play an increasingly important role in helping Americans achieve financial security.
