Buoyed by stabilizing sales, continued product innovation and ongoing consumer demand, the annuities business is poised for growth in 2014, according to the Insured Retirement Institute.
Indeed, recently released results from an IRI poll of 302 financial advisors conducted in April, which asked advisors to forecast their annuity business for the next 12 months, found that 44% of advisors polled anticipate growing their annuity business in 2014, while half expect to maintain their current level of business.
IRI said that the following results from its advisor survey show that the annuity industry is on “strong footing” and that the future remains promising:
- Nine out of 10 (87%) financial professionals sold a variable annuity in the past year;
- Three quarters of financial advisors report that their clients are receptive to annuities. Clients’ attraction to annuities is accounted for by product features including guaranteed income in retirement (90%) and principle protection (84%)
Variable annuity net assets reached a new all-time high in 2013, hitting nearly $1.79 trillion at the end of the third quarter.
Industry-wide annuity sales reached their highest point in two years during the third quarter of 2013, and fixed annuity sales surged to their highest levels since 2009.
While changes in interest rates, equity markets and other economic factors will influence sales in 2014, IRI forecasts that the demand for annuities will remain “strong” given investor desire for guaranteed income, an aging population, increased longevity, increased interest rates and market volatility.
The supply of annuities has increased as companies are developing new products and features to attract to a wider range of clients. Specifically, the industry has seen an increase in the number of companies offering deferred income annuities, growth-oriented VAs, structured VAs and living benefits with higher payout rates.