FIAs as an Asset Class (a White Paper for Fiduciaries to Consider)

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FIAs as an Asset Class WHITE PAPER, click on the following link to download:

FIAs (Fixed Indexed Annuities) as an asset class

Several times a week my team does live demos of the OnPointe Investment Risk Analyzer software (  I do a handful myself every week and over the last week I had two that really motivated me to write this newsletter.

Call #1—the first call was with a Series 7 and 65 licensed advisor. Here is the Q&A that took place about halfway into the call:

Question: Do you use FIAs with your clients?
Answer: No. I know what they are but I’ve never reviewed them in detail.

Question: Where can you get a 3-5% rate of return with no risk of loss?
Answer: Hmm. I’m not sure, bonds? No, it wouldn’t be bonds.

My next comment is to tell the advisor that the product I’m talking about is an FIA. Then I proceed to illustrate the SPY vs. 70% in the SPY with 30% in an FIA with a 5.5% cap in the OnPointe software. The numbers are as follows going back 10 years (a bull market).


Risk Score

Maximum Drawdown






70% SPY/30% FIA




Then I show him a comparison chart with numbers going back to 1993.


Risk Score

Maximum Drawdown CAGR




70% SPY/30% FIA

50 -38.56%


As you can see, even in a bull market adding 30% FIAs did little to reduce the returns, and going back to 1993 the mix with FIAs generated a higher rate of return.  FIAs are a great tool to hedge against risk.

Our discussion then continues…

Question: Do you think you should learn about FIAs?
Answer:  Yes, I’d like to learn about them.

Call #2—it was the same as call #1 but the advisor owned his own RIA and had $440 million in AUM.  This advisor also said he would like to learn more about FIAs.

FIAs as an asset class

I don’t know how anyone with a securities license can look at the previous numbers and not say, hey, you know what, FIAs are an asset class that should be considered in a client’s portfolio. From a fiduciary standpoint, I would argue that FIAs MUST be looked at as an asset class and must be considered in a client’s portfolio.

What’s your excuse? I’ve talked with hundreds of advisors over the last year alone about FIAs as an asset class. Unless I’ve got a real jack ass on the line, the typical response is that the advisor has NO good excuse for not learning about and using FIAs as an asset class in a portfolio.

I can say with some amount of confidence that a decent number of the advisors I talk with actually take steps to learn more about FIAs.

How to do I know this? Because the next question on a call after a discussion about FIAs is the advisor asking me which one(s) do I recommend?

I refer the advisor to learn about the “best FIA IMOs won’t tell advisors about” and I know that not only have many signed up to learn more, but some have even started to use them (which is great for their clients).

So again if you are a securities licensed advisor, what’s your excuse?

To learn about the best FIA IMOs won’t tell you about, click on the following link:

Roccy DeFrancesco, JD
Strategic Marketing Partners, LLC

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