To provide higher upside potential without limits, a new allocation method has become popular where clients are given a portion of the market index without any caps. The majority of money deposited in annuities by the Averill family and their clients are in uncapped allocation methods tied to the S&P 500. Clients have credited over 50% net two-year returns without limits, and the historical backtesting shows that this method performs at the highest level. A variation of this method allows clients to pay a fee for an extra 20% higher return on the S&P index without any caps.

Examples:

40% participation annual on the S&P, no cap, no fee

Or

60% participation annual on the S&P with a 1.5% fee.

• If the S&P is up 10%: The no-fee contract pays 4%; the fee contract pays 6% - 1.5% or 4.5%.

• If the market is up 20%: No-fee pays 8%; Fee pays 10.5%.

• If the market is up 30%: No, fee pays 12%; Fee pays 16.5%.

The biggest advantage of this methodology is that it leverages volatility, unlike managed strategies. The problem with managed contracts is that they do not take advantage of radical volatility while avoiding losses. This is where the industry is missing the mark.

Although there is a Date Lottery effect on an annual basis, the advantage of this type of crediting is that if there is a significant market drop, you can achieve a higher return. In an annual point-to-point contract with a cap, if the market is up 30% all year but drops 50% on the day before your anniversary, you'll only get the first 10% of the bounce back. However, with this contract, there is no limit as to how much of the bounce back you can achieve.

Looking at the history of the Standard & Poor's 500, there is no comparison between taking 60% of the growth in the next three years without limit versus taking the first 10% of growth with a limit. Markets jump back after downturns, and it doesn't make sense to limit returns.

One downside of this method is that credits are issued once a year or every two years, which means you are spending out of your principal in the meantime. What you spend will not receive credit when the anniversary comes around because it is not in the account.

While this is the most effective and consistent performing index with a long-term track record, it is not as subject to the Date Lottery as other methodologies. However, people hesitate to go into a two-year uncapped participation contract because if the market is down in two years, they could be waiting up to four years before they get their first credit. This is highly unacceptable if you are spending into your principal for retirement income.

Major carriers will likely release a new product later this year, which we believe will solve the Date Lottery problem. Our fixed index annuity portfolios have outperformed the market due to the methodologies we use. Therefore, you do not need to wait for the new product to be released to benefit from our expertise - we have been utilizing a variety of products to manage portfolios for over a decade.

Traditionally, retirees have had to navigate conflicting advice from securities and insurance professionals. However, we believe working with a fiduciary who limits their earnings to a disclosed fee in their asset management services can eliminate this conflict. At no additional cost, our clients can benefit from our expertise and portfolio strategy, and we can offer low-commission products thanks to our streamlined and artificial intelligence selection capabilities. While we don't disclose our proprietary management methodologies, we're always available to guide our clients through the process.