Survey Finds Vast Majority of Financial Professionals Expect Continued Indexed Annuities Sales Growth in the Next Year

More than half of financial professionals expect double digit growth of indexed annuities sales

According to a recent survey conducted by Saybrus Partners, Inc., a vast majority of financial professionals (83%) expect an increase in indexed annuities sales in the next 12 months. Also, of those polled, more than half (52%) expect sales growth of more than 10% in the next year. The survey polled financial professionals at the 2016 BISA Annual Convention held in Hollywood, Florida, March 17-18, 2016.

Saybrus’ survey findings mirror industry data recently released by LIMRA Secure Retirement Institute, which reported 13% growth in fixed indexed annuity (FIA) sales in 2015 to a record high of $54.4 billion.

“Products with inexpensive fee structures and flexible benefits, like indexed annuities, are surfacing as a more attractive option for advisors to recommend to clients,” said Ed Friderici, managing director for Saybrus Partners. “Given the strong consumer value afforded by these offerings, we are not surprised that our survey respondents reported both strong recent growth and high expectations for indexed annuities sales in the next year.”

When respondents were asked what product type has grown the most by sales volume in the past year, 43% cited indexed annuities and 20% cited life insurance, compared to managed accounts (16%), advisory services/actively managed portfolios (11%), variable annuities (7%), and mutual funds (2%).

Additionally, according to the LIMRA Secure Retirement Institute, banks were among the fastest growing channels for FIAs, with a 30% increase in sales in 2015.

Friderici continued, “With the recent growth in the bank channels, there is an even greater opportunity to educate financial advisors. As product variations continue to emerge and market conditions change, bank channel advisors need to be familiar with all types of products and riders to ensure they are having meaningful conversations with clients and can address various types of retirement needs.”

Index Annuities Are Favored During a Downturn

The survey found that over half of financial professionals (54%) think indexed annuities are the most important product to offer clients in a correction or bear market, far more than advisory services/actively managed portfolios (16%), life insurance (12%), variable annuities (8%), managed accounts (7%) and mutual funds (2%).

“It’s essential to recommend products that offer both potential for upside as well as principal protection in any market conditions,” said Friderici. “While clients’ portfolios may do well in a favorable economic environment, having diverse products that include protection against losses, income guarantees and enhanced benefits for extended care provide clients with confidence that they will be adequately prepared to address key retirement risks no matter how long they live or how the market is performing.”

Closing the Sale

When financial professionals were asked what things could enhance sales growth of indexed annuities at their organization, almost a fifth (19%) said “better point-of-sale support.” Other responses included multi-solution products (17%), better technology (16%) better carrier education (15%) and better wholesaling support (15%).

“This data indicates that financial professionals are mostly satisfied with the indexed annuities available in the marketplace but are looking for enhanced sales support, whether behind the scenes or directly with clients. We know this to be particularly true for advisors who are new to indexed annuities,” said Friderici.

When looking at utilization rates of riders on indexed annuities which, according to LIMRA Secure Retirement Institute, are dramatically lower in banks versus other channels, the survey found that over one third (37%) of financial professionals said that increasing wholesaler/advisor education on rider benefits would raise utilization rates. Other options included: decrease fees on riders (18%), point-of-sale support (16%), client focused awareness campaigns (13%) and better illustrative tools (13%).

“Indexed annuities clearly have a strong value proposition for today’s retirees or soon-to-be retirees, and advisors have an opportunity to address multiple needs by expanding the conversation with consumers. ” said Friderici. “The good news is that today’s offerings continue to evolve and can provide a full range of benefits with one product, including accumulation and protection for income, family and personal care. This can be particularly meaningful for clients who may not have the financial wherewithal to effectively address their needs with multiple offerings.”

NOTES TO EDITORS

The survey of 104 financial professionals, including bank executives/program managers, professionals affiliated with an insurance company, professionals affiliated with an independent broker/dealer, registered investment advisors (RIAs), bank financial advisors and professionals affiliated with a national wirehouse, was conducted by Saybrus Partners at the 2016 BISA Annual Convention held in Hollywood, Florida, March 17-18. LIMRA Secure Retirement Institute data is quoted with permission from their “Quarterly Sales Survey.” copyright 2015.

ABOUT SAYBRUS PARTNERS

Saybrus Partners, Inc. is an insurance partnership firm that helps financial professionals address clients' needs with insurance solutions for basic protection as well as income, estate, and business planning. Its partner firms include institutional financial advisories, insurance retailers, banks and broker/dealers. With customized services to best fit its partners' businesses, its capabilities range from traditional wholesaling to consultation with client meeting support.

Saybrus Partners is a subsidiary of The Phoenix Companies, Inc. (NYSE: PNX) with corporate headquarters in Hartford, Connecticut and consulting representatives located across the United States. Saybrus does not provide tax or legal advice. In California dba Saybrus Partners Insurance Agency, CA license #0G81229. Saybrus Partners is an insurance agency affiliate of Saybrus Equity Services, Inc., Member FINRA.

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Prosek PartnersGabrielle Simon, 203-254-1300 [e-mail] Partners/PhoenixAlice S. Ericson, [e-mail]