Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
ThinkAdvisor

Life Health > Annuities

FRC: VA Storm Opens Doors

X
Your article was successfully shared with the contacts you provided.

The upheaval in the variable annuity market may create new opportunities for insurers, a market research firm says.

Analysts at Financial Research Corp., Boston, make that argument in a commentary based partly on a survey of 268 advisors and a survey of 6 large VA manufacturers.

Investors are more willing to pay these days for protection against the possibility of loss of principal, but absolute return funds, managed-payout funds, principal-protection funds and other products will compete with VA living benefits guarantees for those investors’ assets, FRC analysts write in the commentary.

Uncertainty about the economy and the direction of federal financial services regulation could discourage many insurers from developing new products and product features over the next 18 months, the FRC analysts write.

In the long run, increases in taxes on wealthy investors could increase the appeal of VA living benefits options, the analysts predict.

The FRC analysts are suggesting that one simple way to stand out in the VA market may be to cut mortality and expense charges by reducing upfront sales commissions: 81% of the advisors surveyed said they would sell at least as many VA products if commissions were lower.

Roughly one-fifth of the advisors who said their VA sales would increase told FRC that cutting VA commissions would improve the image of the product, and 21% said they personally would feel better about the product if commissions were lower.


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.