CANNEX Financial Exchanges Brings Greater Transparency to the U.S. Annuity Market with Evaluation Tool

Standardized Approach to Determining the Economic Suitability of Annuity Transactions
Allows Comparison of Variable and Fixed Indexed Annuity Products Across Providers
Approach Helps Advisors Meet Regulatory Requirements of both FINRA and DOL

NEW YORK/TORONTO, November 30, 2016 – Drawing upon almost four decades of comparative pricing, illustration and valuation expertise, CANNEX will launch its new deferred annuity benefit comparison tools in the first quarter of 2017. The new service, currently being tested by clients, provides an independent and objective way to determine the economic suitability of variable annuity and fixed indexed annuity transactions and helps fiduciary advisors act in the best interest of their clients.

“Variable and fixed indexed annuities are bundled products with a variety of rules and benefit combinations that can make them difficult to compare,” said Gary Baker, President, CANNEX USA. “Our approach allows advisors to evaluate the insured performance of these products to assist them in making the appropriate selection to meet clients’ financial planning objectives. As we implement this service, we will provide advisors and their firms the support they need to help them meet the transaction requirements of FINRA, as well as their obligations as a fiduciary advisor under the Department of Labor’s Best Interest Standard of Care when selecting a product.”

The new tools evaluate the embedded guarantees of deferred annuities to determine the economic benefit of each product specific to the profile of the client. The methodology allows advisors and clients to enhance their current qualitative analysis of products, and implement an independent and objective approach to reviewing, assessing and recommending an annuity based on financial and actuarial models. To ensure consistency from a quantitative and actuarial perspective, CANNEX is leveraging its existing platforms which permit the comparison and evaluation of income annuity products at a transactional level.

“I have been an advocate of using objective analytic techniques to determine economic suitability for all annuity transactions and have been writing about how to do this conceptually for almost 15 years – well before the DOL raised the issue,” said Moshe A. Milevsky, author, speaker and finance professor. Milevsky, who founded fintech company QWeMA Group – purchased by CANNEX Financial in early 2013 – serves on the CANNEX board of directors. He added, “CANNEX has finally put this theory into practice with the development of a tool to evaluate these sophisticated products.”

CANNEX’s new methodology can support the evaluation of new deferred annuity purchases as well as exchanges or replacements between two annuities. The approach also provides the ability to compare the performance of benefits across all categories of annuities including SPIAs, DIAs and QLACs. The methodology is patent pending and has been reviewed by experts in the industry. CANNEX has received a formal ERISA opinion of counsel from the Wagner Law Group validating that the methodology is consistent with the DOL BICE’s requirement for firms to adopt compliance measures that are reasonably and prudently designed to prevent conflicts.

“This innovation brings greater transparency to the annuity market,” said Baker. With the engagement and support of the financial services industry, our tools offer a firm foundation for annuity providers to continue to deliver the value these products provide for retirees.”

More information about CANNEX’s annuity evaluation methodology is available in the following white paper: Determining the Economic Suitability of a Variable Annuity Transaction.

Established in 1984, CANNEX Financial Exchanges is a leading provider of comparative pricing, illustration and valuation services for annuity and bank products in North America.