A recent LIMRA reporton annuity sales confirms what insiders have known for years: Registered representatives who work with independent broker-dealers (IBDs) continue to focus on variable annuities (VA), largely passing on selling fixed indexed annuities (FIAs).
These advisors clearly are the channel sales leaders for variable annuities, with 2012 continuing the momentum; they accounted for 33 percent of the market share for the first quarter of 2012, bringing in $12 billion in VA annuity sales. Complete data on total sales of fixed indexed annuities by IBD advisors is harder to come by due to the fact that many FIAs are marketed through third-party distribution rather than directly though carriers. While 86 percent of FIA sales in the first quarter were generated by independent agents (many of whom are affiliated with IBDs), it’s clear that VA sales still outnumber FIA sales by a substantial amount.
It is important to note that that variable annuity year-over-year sales declined in Q1 to $36.8 billion, down 7 percent, compared to the first quarter of 20111. Given the persistent market volatility and low interest rates, this environment has led many annuity carriers to scale back benefits. At the same time, the demand for guaranteed income has never been greater.
Time to pick a new fruit in the orchard
Retirees and the soon-to-be-retiring baby boomer generation are more aggressively planning for retirement, and continue to consider more conservative options to help improve portfolio stability. This creates a tremendous opportunity for financial advisors within IBDs to add FIAs to provide their clients with another form of accumulation potential and the creation of future guaranteed income.