Although variable annuity sales, both with and without guaranteed lifetime income benefits, far outpace total annuity sales for broker-dealers, fixed indexed annuity sales account for 10% of broker-dealers’ total annuity sales, according to a survey released Monday by the Insured Retirement Institute. Furthermore, FIAs are starting to displace sales of VAs and traditional fixed annuities.

Almost 70% of respondents said they were seeing at least some displacement among variable annuities without lifetime benefits. The same percentage said FIAs are causing at least some displacement among traditional fixed annuities, and almost half of those said they were seeing significant displacement.

Respondents were less likely to say variable annuities with lifetime benefits were being displaced by FIAs.

Monday’s FIA survey is based on a small sample: 15 firms surveyed between January and March. Six of those firms were independent BDs, two were national wirehouses, and two were regional broker-dealers. One respondent was in the bank channel. The remaining four categorized their firm as “other.”

First-quarter FIA sales in 2015 reached $11.6 billion, according to a report issued in June by IRI based on data from Morningstar and Beacon Research. First-quarter sales were up 3% over the first quarter of 2014, and down 5% from the previous quarter.

Fixed indexed annuities account for more than 55% of the total fixed annuity market, according to IRI. Despite a drop in sales of fixed annuity products, “positive sales trends continue,” according to Beacon Research President Jeremy Alexander, especially among independent broker-dealers. That channel had a “record-breaking quarter” with a 104% increase in sales of market value adjusted (MVA) products, he said in a statement. “Fixed indexed products also set a new record in the wirehouse channel with a 14.5% increase,” he said.

The firms that responded to the FIA survey were fairly optimistic about the future of the product. Nearly 40% said their FIA sales were growing modestly, and 46% expect that moderate growth to continue. Another 40% said growth was significant, with 31% saying they expect future growth to be significant as well.

Furthermore, 46% of respondents said they expected FIAs would account for a greater share of their total annuity sales going forward.

“The retirement income market continues to evolve its product offerings, developing innovative strategies to deliver guaranteed lifetime income to consumers,” Cathy Weatherford, president and CEO of IRI, said in a statement. “The evolution of fixed indexed annuities is representative of this trend, with a significant percentage of FIAs being sold with lifetime income benefits.”

The survey found 46% of respondents said more than half of the FIAs they sold had lifetime income benefits attached.

In fact, lifetime benefits, and concerns that they’ll be less generous in the future, are driving FIA sales growth, according to IRI. Those were among the top five growth factors for FIA sales, along with principal protection with upside potential and, interestingly, both high and persistent low interest rates.

“Both higher interest rates and persistent low interest rates were cited as potential sales drivers, which seems paradoxical but in fact is simply viewing the product from two different perspectives,” according to the report. “In a persistent low interest rate environment, sales are boosted by the product being an attractive alternative to low interest products such as CDs. As rates rise, index options become less expensive and FIAs are able to provide more upside potential, making the product more attractive from a growth standpoint.”

Despite the growth and apparent optimism in fixed indexed products, variable annuities are still the market leader, IRI found. VAs with guaranteed lifetime withdrawal benefits account for about half of total annuity sales. The June report found total variable annuity sales in first-quarter 2015 were nearly $32 billion, after falling 5% from the previous quarter. However, variable annuity net assets were up 1.4% to $1.95 trillion.

“New sales continue to flow into VAs, though at a slower clip than last year,” John McCarthy, senior product manager of annuity products for Morningstar, said in a statement. “Investors are showing their preference for more aggressive investment options inside variable annuities, which may indicate a loosening of the risk aversion we’ve seen in the recent past. This trend is playing out via the continued flows into ‘investment oriented’ VA contracts, which in addition to core holdings, also offer alternative and noncorrelated investment choices.”

The FIA survey asked respondents how many of their reps were using fixed indexed annuities. Twenty-nine percent of respondents said more than half of their financial professionals use FIAs for their clients; the same percentage said between a quarter and half of the reps use them. About one-fifth of respondents said fewer than 10% of their reps recommend fixed indexed annuities to their clients.

The survey found surrender charges and commissions were fairly low among the broker-dealers surveyed. Eighty percent of respondents said they don’t allow surrender charges longer than nine or 10 years, and the majority receive commissions of 5% or less. None of the distributors surveyed received more than a 7% commission.

Half of respondents said their reps were somewhat receptive to using fixed indexed annuities with lifetime income benefits, saying they were open to using them but would frequently opt for a variable annuity with the same benefit instead. However, 43% said they reps were either very or extremely receptive about using the FIA with a lifetime income benefit, with 14% saying reps actually request those products.

Regarding FIAs that don’t offer a guaranteed minimum withdrawal benefit, almost two-thirds of respondents said their reps are very receptive to using those products FIAs and frequently use them to replace CDs.

Respondents believe consumers share similar levels of enthusiasm for FIA products. Almost 40% said consumers were very receptive to fixed indexed annuities, and 31% said consumers were neutral. None of them said consumers were not at all receptive.

“Inadequate understanding of the products can create suitability and compliance risks, making it critical for distributors to provide training and support,” according to IRI. Almost two-thirds of respondents cover fixed index products in their broader annuity training, and 29% have specific FIA training. Almost 60% of respondents have suitability reviews and sales approval processes that cover all annuities, and 21% have a specific FIA process.

“While variable annuities capture the lion’s share of premium dollars in third-party distribution channels, sales of FIAs are growing, reflecting the appeal of the product to both advisors and consumers,” according to IRI.

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