Annuities Are Investors’ Top Unsolicited Request
Nearly 61% of advisers report annuities are the No. 1 unsolicited product request, Cerulli Associates reports.
That is followed by 59% of advisers citing Roth IRAs, 50% pointing to 529s or other education savings accounts, and 46% commodities. The interest in annuities is particularly striking given that one-third of households are unaware of annuities, Cerulli said in the report, “Annuities and Insurance 2012: Evaluating Growth Capacity, Flows, and Product Trends.”
More than 50% of advisers expect their clients will ask for a variety of retirement income solutions, including annuities, in the years ahead. However, advisers will need support from insurers and asset managers to understand and explain the intricacies of annuities, Cerulli said. Advisers might also be receptive to simplified annuity approaches, Cerulli said.
Insurers will need to create annuities based on the increasingly popular fee-based, rather than commission-based, compensation structure, Cerulli said. Fee-based advisers are also more interested in the cost structure and underlying subaccounts of annuities than they are on living benefits, Cerulli said. Jefferson National is currently the most successful and innovative fee-based variable annuity carrier, the research company said.
“We’ve seen a tremendous year-over-year increase in the number of times financial advisers receive requests from their clients for annuities—an increase of 15% in fact,” said Donnie Ether, senior analyst at Cerulli. “The product ranked sixth in 2011. Both the positive and the negative attention annuities have received in the media over the past four years has led to an overall growing awareness. This presents a unique opportunity for insurers and advisers.”
The report can be purchased from Cerrulli and Associates.