More than 70% of RIAs and Fee-Based Advisors Say Tax-Deferred Investing Essential to Managing Volatility and Rising Taxes

LOUISVILLE, Ky., Oct. 15, 2013 /PRNewswire/ -- Registered Investment Advisors (RIAs) and fee-based advisors continue grappling with ongoing volatility in a time of rising taxes, and they see alternative investments, tactical management and the power of tax deferral as key to navigating the current market, according to a new survey conducted by Jefferson National.

"As concerns over the budget stalemate have become the latest catalyst for ongoing volatility, our research shows that advisors are increasing their use of alternative investments and tactical management—and when using these tax-inefficient strategies to add ballast to portfolios they recognize that tax deferral is more important than ever," said Laurence Greenberg, President, Jefferson National. "Advisors understand how the power of tax deferral can help manage the impact of taxes and help clients accumulate more."

According to Jefferson National's latest survey, nearly two-thirds of advisors (64%) have increased their use of alternative investments over the past five years, and 55% see their allocation to alternatives continuing to increase further over the next 5 years. Likewise, the use of tactical management remains strong. Nearly two-thirds of advisors (61%) are more likely to employ tactical strategies in the current market while only 39% would choose a buy and hold strategy.

When asked why they use alternative investments, roughly three-fourths of advisors (73%) indicate "managing volatility." Often alternatives are tax-inefficient, generating ordinary income or short term capital gains which are taxed at higher rates, and 76% of advisors said they would consider increasing their use of alternatives if they could access them in a low-cost tax-deferred account. Research has shown that a low-cost tax-deferred vehicle can help alternative investments, tactical strategies and other tax-inefficient assets improve performance potential by an average of 100 bps—without increasing risk—to help clients accumulate more.¹

The demand for tax deferral remains urgent as households are forced to grapple with rising taxes, and the nation's tax bill has been forecast to escalate by $500 billion, or an average of roughly $3,500 per household, according to the nonpartisan Tax Policy Center. More than 90% of all respondents said that their clients are concerned about the rise in capital gains tax. To mitigate the impact of increased capital gains taxes, which can systematically erode long term accumulation, 71% of respondents are considering using a low-cost tax-deferred account.

Roughly 400 responses from RIAs and fee-based advisors were recorded in an online survey, which was conducted from September 18, 2013 through October 3, 2013. These most recent results are in line with previous findings from Jefferson National's series of ongoing surveys addressing the issues that RIAs and fee-based advisors care about most. The margin of error in this survey was +/-5%. 

For more information, please contact Chris Moon at 973-850-7304 or [email protected] or Deborah Newman at 502-587-3858 or [email protected].

About Jefferson National Financial Corp.
Jefferson National  is a recognized innovator of tax-advantaged investing solutions for RIAs, fee-based advisors and the clients they serve. Jefferson National's flat-fee VA² offers the industry's largest selection of nearly 400 funds, including more than 75 alternative investment options, and the most subaccounts with the 5- and 4-star Morningstar Rating™ for five consecutive years.³  Utilizing a highly flexible technology platform, an innovative distribution strategy, and cost-effective servicing capabilities, the firm is a winner of more than 30 industry awards including the DMA 2010 Financial Services Company of the Year.⁴ Serving a network of 2,000 RIAs and fee-based advisors nationwide, the Company is based in Louisville, Ky., with authority in 49 states and the District of Columbia. To reach our advisor support desk, please call 1-866-WHY-FLAT (1-866-949-3528). To learn more, please visit www.jeffnat.com.

Important Disclosures:
An investor should carefully consider the investment objectives, risks, charges and expenses of the investment before investing or sending money. The contract prospectus and underlying fund prospectuses contain this information. For a prospectus containing this and additional information, please contact your financial professional. Read it carefully before investing. The summary of product features is not intended to be all-inclusive. Restrictions may apply. The contracts have exclusions and limitations, and may not be available in all states or at all times.

Variable annuities are investments subject to market fluctuation and risk, including possible loss of principal. Your units, when you make a withdrawal or surrender, may be worth more or less than your original investment.

Variable annuities are long-term investments to help you meet retirement and other long-range goals. Withdrawal of tax-deferred accumulations are subject to ordinary income tax. Withdrawals made prior to age 59 1/2 may incur a 10% IRS tax penalty. Jefferson National does not offer tax advice. Annuities are not deposits or obligations of, or guaranteed by any bank, nor are they FDIC insured.

Monument Advisor is issued by Jefferson National Life Insurance Company (Dallas, TX) and distributed by Jefferson National Securities Corporation, FINRA member. Policy series JNL-2300-1, JNL-2300-2, JNL-2300-3.

¹The Tax-Efficient Frontier: Improving the Efficient Frontier with the Power of Tax Deferral, by David Lau, published by Jefferson National, June 2010.

²Jefferson National's Monument Advisor has a $20 monthly flat insurance fee. Additional fees ranging from $19.99-$49.99 will be assessed for investors wishing to purchase shares of ultra low-cost funds. See the prospectus for details.

³Morningstar data as of 08/15/13

⁴Jefferson National was reviewed by the Direct Marketing Association, including a panel of independent judges and industry peers, and won for re-engineering the traditional commission-based distribution model and replacing it with an unprecedented web-based direct marketing approach.

SOURCE Jefferson National Financial Corp.