Competition Brings Down Cost of Annuities -- but Slowly

Variable annuities have long been the Darth Vader of investments because of their relatively high cost to consumers.

But as low-cost money managers such as Vanguard and TIAA-CREF take on the insurance companies that dominate the field, costs are inching down and annuities are slowly shedding their black helmets.

The average annuity's expense ratio is 2.09%, according to Lipper, down from 2.11% in 1997. But that small drop doesn't reflect other changes that are making annuities easier to own. ...