L-Share annuities

InvestmentNews has reported that brokerage firm Voya Financial Advisors (Voya) changed its variable annuity selling policies by restricting the sale of contracts known as “L share” annuity contracts if the contract include riders. The change comes due to increasing pressure from regulators concerned about the products’ suitability for investors. The firm has 2,200 brokers that would be effected by the new policy.

Voya stated in the article that “We feel strongly that it is in the best interests of our advisers and their clients to make this change to Voya Financial Advisors’ suitability policy.” The firm stated that the product has been scraped “in order to best serve the retirement readiness and long-term planning needs of our customers.”

L-shares charged higher ongoing fees in exchange for a shorter time frame for withdraw penalties, known as surrender charges. However, the L-shares when combined with riders that come with even extra costs that make the product even more expensive. The riders are added for a variety of reasons including to reduce market risk or modify death benefits.