Averaging methods were the industry's first attempt to eliminate the Date Lottery. However, this type of allocation has waned in its usage, as it has a number of Date Lottery-driven issues.

Despite the intention of producing a win-win scenario, averaging crediting methods turned out to be a situation where averaging mitigates already mitigated returns. They were typically incredibly complicated, built to mitigate risk, and had a tendency to deliver average returns. Furthermore, they often showed a moderate return in years when other annuities showed no gain. Although this may seem beneficial, it encouraged people to stay in averaging, resulting in disappointing returns.

Averaging methods were the most complicated and costly to build into our backtesting. Our agents are so skilled at averaging that when clients asked us to do permutation tests on averaging we provide a couple of scenarios of extreme growth, providing ridiculously low returns, utilizing that formula, and an example of the same, showing a moderate return during a down market, and it usually clears it up for the client.

We will always consider any new averaging method that presents itself as a competitor in this market place. However, it will be thoroughly backtested against the actual point values of the indices it's based on. This will help us determine if based upon historical data whether this approach is likely to be effective or not.

While averaging methods have some advantages, such as paying moderate returns during down markets when other annuities don't, they are complicated and convoluted, and already protect your principal against market downturns. It's also virtually impossible to track them on a daily basis, and they often underperform the fixed interest rate they were supposed to improve upon. Moreover, to the extent that they solve the Date Lottery, which is mitigated, that benefit is lost many times over by the limit to the upside in typical markets.

The Averill family portfolio does not use averaging methods. Averill agents do not currently utilize, advertise, or recommend any averaging methods to any client.