Wells Fargo latest to offer fee-based VAs

Wells Fargo Advisors LLC has added fee-based variable annuities to its product platform, ushering in products from four major carriers. Pacific Life Insurance Co., Lincoln National Corp. and Nationwide Life and Annuity Insurance Co. will add their products to the firm's fee-based program. Allianz Life Insurance Co. of North America will join the roster in the third quarter. In all, the firm has 12 insurers selling annuities on its platform. Wells Fargo officially launched the product on Monday, but made the announcement on Wednesday afternoon. These fee-based variable annuities will be integrated into Asset Advisor, Wells Fargo's investment advisory fee-based program. “We have a big focus on the fee-based business,” said Karen H. Wimbish, executive vice president and director of retail retirement at Wells Fargo. She met with InvestmentNews last week for an interview. “Variable annuities have always been commission-only products, and it's very disruptive to have them if your business is fee-based,” Ms. Wimbish added. These fee-based VAs won't come with a contingent deferred sales charge, so the products have immediate liquidity. The client can negotiate his or her advisory fee that's tied to the Asset Advisor account. This way, the variable annuity is neutral to both the client and the adviser, Ms. Wimbish said. She had noted that in the past, fee-based variable annuities were more costly for the clients, as they paid not only the costs of the product but also a flat advisory fee. Indeed, the mortality-and-expense fee for the Pacific Life fee-based product is around 40 basis points, and that for the Nationwide product is 100 basis points, lower in comparison to fees in traditional variable annuities. This is exclusive of fund fees. The typical B-share variable annuity, meanwhile, has an M&E fee of about 1.3%. Ms. Wimbish noted that there will be workshops in the late summer and early fall to train advisers on how to incorporate fee-based variable annuities into their practices. Going back to last year, broker-dealers have been broadening their selection of fee-based variable annuities. Firms that have done so include LPL Financial LLC, Commonwealth Financial Network, Royal Alliance Associates Inc., SagePoint Financial Inc., FSC Securities Corp., Cambridge Investment Research Inc. and ValMark Securities Inc.