B/Ds Embracing Fixed Indexed Annuities

Fixed indexed annuity sales increased 24% in 2014 to $48 billion.

Broker/dealers (B/Ds) are increasingly embracing fixed indexed annuities (FIAs), according to a survey by the Insured Retirement Institute (IRI). Sales of fixed indexed annuities rose 14% in 2013 to $38.7 billion and 24% in 2014 to $48 billion—or about 21% of all annuity sales. Since 2012, fixed indexed annuities have outsold traditional fixed annuities, IRI says.

Seventy-nine percent of B/Ds say that 11% or more of their financial professionals sell fixed indexed annuities, and 29% say that more than 50% of their financial professionals sell these products. Sixty percent say that annuities comprise 10% to 25% of their total sales, and 20% say they comprise 26% to 50% of their total sales.

However, variable annuities (VAs) with guaranteed lifetime withdrawal benefits capture 48% of all annuities sales, followed by variable annuities without guaranteed income (22%) and fixed indexed annuities (10%). Nearly four out of 10 B/Ds (39%) say that their sales of FIAs are growing significantly, and 31% expect sales to grow significantly in the future. Forty-three percent of B/Ds (29%) say that their financial professionals are either extremely or very receptive to RIAs with lifetime income.

“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 advisers and consumers,” the survey concludes. “They can provide principal protection, some upside potential and guaranteed income benefits comparable to those currently available on VA products. Advisers and consumer value these attributes, as evidenced by their receptivity to FIAs, particularly when guaranteed lifetime income benefits are offered.”

IRI based its findings on a survey of 15 member distributor firms between January and March 2015. The full report can be downloaded here.