For years, banks have eschewed indexed annuity sales, citing high commissions and long surrender periods as two obstacles that were just too big to overcome.
Now, however, in the face of lower interest rates, banks are warming up to this idea. Sales of the products through wirehouses totaled $53 million in the first half of 2011, up 400 percent from the same period in 2010, according to data from Beacon Research Publications Inc.
And more interest is on the horizon, it seems. Morgan Stanley Smith Barney expects to expand its menu of fixed indexed annuities soon, and a number of banks, including Bank of America Merrill Lynch, UBS Financial Services, and Wells Fargo Advisors are talking with Allianz Life Insurance Company of North America about selling the insurer’s indexed annuities.
Despite this growing interest, the vast majority of sales continue to come from independent agents, whose indexed annuity sales totaled $11.5 billion in the first half of the year.