Fidelity Investments Life Insurance has started to offer independent advisors its tax-deferred variable annuity product through FundQuest, the two companies announced today. The agreement proffers a new, low-cost option to advisors who use the FundQuest platform and are hesitant to sell traditional variable annuities to clients.

FundQuest has integrated the Fidelity Personal Retirement Annuity (FRPA) into its Wealth Architect offering, which is a back-office and investment management platform for advisors. Advisory firms use Wealth Architect to offer fee-based mutual fund models, unified managed accounts (UMAs), income portfolios, and active and passive investment portfolios.

The FRPA carries an annual charge of 35 basis points, compared the industry average of 1.37% for similar contracts as of Dec. 31, 2008, according to Morningstar information provided by Fidelity. It was originally offered directly to consumers in 2005 as a simple, low-cost option for tax-deferral. The cost structure was an important part of getting more advisors to consider recommending variable annuities to their clients, according to Joan Bloom, an executive vice president at Fidelity Life Insurance Co. “Traditional insurance products have high commissions, a lot of riders, so advisors think they are complicated,” Bloom said. The main focus of the FPRA, however, is its tax-deferred feature. Otherwise, it is a very simple, low-cost product with no riders. Because the product is bundled on the TAMP, advisors don’t have to worry about a commission structure, Bloom said.

The move is also a strategic shift for Fidelity Investments Insurance, which had not operated in the turnkey asset management channel previously. At least 40 RIAs have begun using it via FundQuest within the last month, according to Fidelity. “We had been primarily focused on direct distribution,” Bloom said. “But in terms of long-range planning, this seemed like an excellent fit.”