Certified Annuity Specialist - Curriculum
Module I – Fixed-Rate and Variable Annuities
Annuities are steeped in tradition that has evolved into a wide range of products with features not found elsewhere. The array of just fixed-rate options has now become specialized and sophisticated. Features and benefits of variable contracts can play an integral part of the overall portfolio.

  • An asset management system, annuities vs. life insurance, and product history
  • Fixed vs. variable accumulation, deferred liquidity options, and premium taxes
  • Traditional, interest-indexed, equity-indexed, and certificate annuities
  • Stepped-rate guaranteed, market value, bonus rate, and two-tiered annuities
  • Variable annuities: features, benefits, guarantees, and types of subaccounts

Module II – Income Vehicles, Benefits, Taxation, Ownership, and Management
Frequently, annuitization is not the answer. Payment taxation and guarantees must be weighed against other income alternatives. The history of annuities appeals to safety-conscious advisors and clients. Suitability remains a major consideration.

  • Income options, taxation of payments, and alternatives to annuitization
  • Structured settlements, industry safety, liquidity, and fees
  • Annuity tax legislation and taxation rules plus Section 1035 exchanges
  • Variable annuitization, deciding to annuitize, and probate avoidance
  • Cash flow characteristics and asset/liability matching
  • Avoiding social security taxation, balance sheet positioning, and suitability

Module III – Contract Structure, Estate Considerations, and Features Comparison
Close to a third of all annuity contracts are not titled properly. The potential lawsuit and tax fallout from such a shortcoming is enormous. Understanding the ramifications of party matching can affect generations to come. Determining how income should be distributed presents its own set of strategies.

  • Interested parties, contract owner, annuitant, and beneficiary
  • Death prior to annuitization and death after the annuity date
  • Spousal election, trusts, contract gifts, plus joint owners and/or annuitants
  • Lifetime distributions, non-natural person ownership, and RMDs

Module IV – Reasons to Like Annuities, Mutual Fund Comparisons, and Living Benefits
Despite what the financial press writes, there are several dozen reasons to embrace annuities. Comparisons with other packaged products is rarely accurate or appropriate. Practitioners often fail to see the far-reaching planning opportunities and protection. The use of lifetime benefits means the portfolio can take on more risk due to the safety net of minimum guarantees—results the living can immediately enjoy.

  • Comparing costs and performance, increased future income, and actual liability
  • The "break-even point," savings for large estates, and ordinary vs. capital losses
  • Possible creditor protection, financial aid and Medicaid qualification, and IRC 1011
  • Death benefit angles, using life insurance losses, and annuities vs. bank CDs
  • Reinvestment risk, investor psychology, and predicting interest rates
  • Annuities vs. mutual funds: costs, returns, market caps, turnover, and standard deviation
  • Living benefits: minimum guaranteed withdrawals, income, and accumulation
  • Reasons to be more aggressive, long-term strategies, and properly using hypotheticals

Module V – Equity-Indexed Annuities
Coupled with large commissions and difficult-to-understand provisions, the equity-indexed annuity (EIA) has become the focus of regulators and lawsuits. No two EIA contracts are alike; choosing the right crediting method often involves making stock market pattern predictions. Once basic questions are answered about costs, participation, methodology, liquidity, and penalties, product comparison becomes straightforward.

  • Registered vs. non-registered EIAs plus client profiles
  • Defining indexing, benefits of indexing, and why the S&P 500 is frequently used
  • EIAs terminology, interest rate mechanics, carrier considerations, plus cap rates and floors
  • Determining the participation rate, liquidity analysis, downside protection, and performance
  • Product design elements, how investor behavior affects returns, and risk tolerance
  • Suitability issues, practitioner responsibilities, and contract evaluation

Module VI – Subaccount Management, Selection, and Allocation
Whether the annuity is the portfolio focal point or ancillary security, understanding modern portfolio theory provides better risk-adjusted returns. Historical returns and correlations are considerations that are often incorrectly projected into the future. Efficient and successful asset structuring does not have to be a complex process.

  • Portfolio management, manager ownership, and looking at costs
  • Advantages of small and large portfolios plus active vs. passive management
  • Risk measurement: alpha, beta, duration, R-squared, standard deviation, and Sharpe
  • Asset allocation basics, probability, data time periods, and projecting returns
  • The core approach, plus short- and intermediate-term goals
  • Simple model behavior, multiple-asset portfolios, and exponential considerations
  • The "sweet spot," risk dilution, small cap foreign stocks, and linked markets
  • So-called "experts," correlation and serial correlations, and profiting from inefficiencies
  • Special risk considerations, value investing, and behavioral finance
  • Core-satellite strategies, case studies and benefits plus fiduciary concerns