Annuity sales are at their highest levels in years, but they could be even better.
So says Fixed Annuity Brandscape, a just-released Market Strategies International/Cogent report that looks at the reasons given by insurance agents and financial advisors for not selling fixed and fixed indexed annuities.
More than half of all insurance agents and roughly one-quarter of financial advisors sell fixed and fixed indexed annuities, according to the report.
Why don’t more?
Well, according to the report, agents who don’t sell annuities tend to be newer to the job, and thus more often cite a lack of knowledge about fixed annuities (37 percent) or fixed indexed annuities (27 percent).
They are also likely to say that a bar on selling them by a broker-dealer (26 percent for fixed annuities, 33 percent for fixed indexed annuities) is the reason.
Financial advisors, on the other hand, point to a low interest rate environment that they say limits product benefits (59 percent), or a limit on growth potential (29 percent).
Both advisors and agents also say that fixed annuity sales offer a lower income stream than other products, with more advisors (42 percent) saying so than agents (20 percent).
When it comes to fixed indexed annuities, 27 percent of agents say they don’t have enough knowledge of how they work. Nearly a third of agents and advisors (29 percent in both cases) say that they’re too complex for clients to understand.
As a result, the report suggests that educating agents will be easier for providers to do than trying to change advisor perceptions about annuities.
According to Beacon Research and Morningstar Inc. data, fixed annuity sales hit $24.3 billion in the second quarter, bolstered by fixed indexed annuities, while variable annuity sales totaled $35.6 billion.