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Life Health > Annuities

Survey Says: More Transparency, Innovation for Annuities

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As you wind down 2011 and begin mapping out your goals for 2012, where do you see your annuity business going? I’ve been asking that question to advisors a lot these days and most have been giving the annuity business a big thumbs-up.

Last week, the Financial Planning Association (FPA) released a research paper that mostly discussed overall retirement plans, but delved into annuities as well. We reported on the findings last week, revealing that “most clients of financial planners did not make significant changes to their retirement plans or lifestyles during the past year.”

However, I took another look at the paper and wanted to share more of the annuity findings with you and see how they match up with your own thoughts on annuities and how they impact your practice moving forward.

First off, of the 595 planners surveyed, the majority of them expect to see an increase in revenue as clients make the transition from accumulation to decumulation. This stat jumped out at me: 39.7 percent of those surveyed said they “expect to sell more annuities,” based on the move to decumulation. Is that what you’re seeing as well?

Another key fact that I want to run past you and get your thoughts: Advisors said there are three key ways to help them improve their retirement income planning services. Guess what? Two of them related to annuities:

  • More transparent and affordable annuities—advisors say they want more annuities with no fees, no commissions and low expenses;
  • More innovative LTCI/annuity products—advisors are looking for hybrids that offer enhanced payments for terminal illnesses and tax advantages typically associated with LTCI.

Another finding dealt with innovative products. As we’ve been reporting on recently, innovation will be a key in the annuity universe, but most of the planners surveyed continue to use or recommend the “usual suspects” (i.e., bond funds, 78 percent, and equity mutual funds, 75 percent). The FPA study, which was sponsored by Thornburg Securities Corp., listed 22 product types advisors could use or recommend to clients for retirement income generation. Below, we’ve listed those items most pertinent to the annuity sector and the percentage of advisors recommending them:

  • 46 percent: Variable annuities with guaranteed living benefits
  • 39 percent: Immediate annuities
  • 26.2 percent: Fixed deferred annuities
  • 10.4 percent: Long-term care annuities
  • 5.5 percent: Other variable annuities
  • 2.9 percent: Advanced life deferred annuities

How does this mix fit with your own business model? Weigh in and tell us how you plan to have annuities impact your business in 2012.


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