A new survey released Wednesday from the Insured Retirement Institute (IRI) and Cerulli Associates found there are several key areas for growth within the annuity industry. Across all channels, advisors overwhelmingly cite “retirement income” as the primary factor when deciding to place client assets into an annuity.

The survey claims an average of 7,000 people are turning 65 each day in 2011, and the beginning of 2012 will see 41 million Americans 65 and older, making sources of income throughout their retirement a priority.

The Baby Boomer tsunami has arrived, pushing the consumer need for retirement income to historic levels,” said IRI President and CEO Cathy Weatherford in a statement. “Our industry is primed to play a pivotal role in the retirement planning strategies of millions of Americans looking for the peace of mind that only an annuity can bring to a balanced portfolio.”

Alexandra Armstrong, a principle with Washington, D.C.-based Armstrong, Fleming & Moore, has recently begun using annuities in the wake of the financial crisis for the guarantees they offer.

“I never gave them a look [prior to 2009], because the advantage was weighted towards the company and not a good deal for the client,” Armstrong says. “I now use them for clients that don’t have pensions, and for single women of the age of 55.”

Armstrong notes she only puts a portion of the client’s portfolio towards the annuity, and has a relatively small portion of her total assets under management in annuity vehicles.  But step-up features, generous nursing home provisions and increased flexibility found in the current generation of annuities has her feeling more comfortable recommending them than in years past.

According to ICI, the survey also found that:

  • Roughly six in 10 consumers are unfamiliar (35%) with or have no opinion (29.1%) of annuities – presenting an opportunity for annuity companies to educate investors of the benefits that an annuity can provide for them.
  • The greatest challenge in marketing variable annuities is neither countering negative press coverage (5%) nor negative perceptions of insurance company solvency issues (5%), but rather attracting (28%) and educating (25%) new advisors. 
  • The most effective methods for insurers to use to gain interest of advisors new to annuity business is to demonstrate how annuities can supplement portfolios (75%) and to provide training tools to show the value of annuities (75%).
  • Half of firms (50%) require no paper to be completed when selling an annuity, while nearly 40% do not conduct any business electronically.
  • More than 70% of insurance companies are aware of IRI’s straight-through processing standards.