The Investment Only Variable Annuity (or IOVA) is a financial planning tool that we use for clients where tax-deferred growth on larger sums of taxable money is a chief concern. When we can meet client investing goals on long term horizons best with the help of an IOVA, we may recommend them as part of our holistic planning approach.

These IOVA instruments do not carry commissions in keeping with our Fee Only practice. We receive no extra financial benefit from clients choosing this option over other investment options, as our fees for investment and planning advice are consistent and transparent across all platforms we advise clients on. This lack of sometimes costly commissions of Variable Annuities helps keep the cost of using this solution to a reasonable expense for our clients. The firm we work with to offer these IOVA’s, Jefferson National, charges a flat fee of $20/month for annuities versus asset-based charges. Jefferson National allows us to deduct our fee for investment management from the account itself, instead of imposing an out of pocket cost on the client.

Further lowering the cost of a Variable Annuity, the IOVA does not carry insurance components- it is simply an annuity product designed for investing purposes, not for insuring a fixed sum of payouts or principal. This feature can increase systemic market risks over other Variable Annuity options, but it can also increase the potential benefits of prudent, long-term investing, as there are no limitations placed on your share of market returns earned on your investments. The high costs and commissions that competing products carry have deterred us from using them with clients, and the IOVA is the only variety of annuity that we work with.

The wide selection of investment opportunities within Jefferson National IOVA’s allow us to construct investment approaches that are highly tailored and comparable to investments we use in taxable portfolios. Options from Dimensional Fund Advisors (DFA), Royce Funds, Vanguard, Third Avenue, First Eagle, PIMCO, T. Rowe Price, among many others, offer us the flexibility to create plans that meet and exceed our portfolio construction standards. In fact, the IOVA’s offer access to funds (such as DFA) that could have prohibitively high minimum investments for other investment portfolios. We also have access to Socially Responsible Investing options for IOVA’s.

For certain clients, the Investment Only Variable Annuity may be the only investment option suitable to the planning project at hand, and that is why we are enthusiastic to bring this planning tool into our range of solutions. We use the same process to determine whether any approach is right for you, the client:

  • We start with a in-depth fact-finding process
  • Use our planning tools & calculators to compare different approaches
  • Create a tailored plan that best achieves the goals we determine together
  • Present an Investment Policy Statement (IPS) with a comprehensive outline of the proposed investment strategies

This way, we know we are making the best decision out of the many available paths in every case. Again, we only recommend the IOVA when we are certain it is the best available option, and receive no special compensation for reaching that conclusion from Jefferson National.