By Cyril Tuohy
Advisors may not be doing enough to sell indexed annuities but for those who are, there are some common best-practices traits these advisors share.
Many advisors are more likely to view clients between the ages of 40 and 49 as good candidates. They buy into the notion that annuities are suitable for investors with moderate risk investment appetites, and have clients who pay for annuities through a range of sources, a new survey finds.
“The findings suggest that producers need to consider a broader target profile for annuity prospects,” said Charlie Gipple, national director of indexed products with Genworth Financial. “Successful sellers are recommending annuities to younger, more risk tolerant consumers and positioning it as a vehicle for a wider array of retirement funds.”
The findings, contained in The Future of Retirement Income survey released by Genworth Financial, reveal that high-volume IA sellers are more likely to target investors with a moderate risk tolerance than they are to chase after conservative investors.
Clients who invest in annuities also tend to do so through qualified retirement savings, money market accounts, certificates of deposit and bonds, and through exchanges of other annuities, the survey found.
Sales of indexed annuities broke through the $10 billion mark in the third quarter for the first time, an increase of 15.1 percent over the year-ago period, according to Beacon Research. The outlook for IA sales remains strong, Beacon also said in its Fixed Annuity Premium Study.
Many analysts expect interest rates to rise in 2014 as the Federal Reserve eases up on its bond-buying program. Higher interest rates mean more income for annuity investors.
The Genworth survey also revealed good news for future annuity sales. A total of 68 percent of people who don’t own annuities have a “neutral to positive” impression of the investment product, and many investors who would consider an annuity have never been presented with the opportunity to do so, the survey found.
“Many financial professionals simply don’t present annuities to their clients, perhaps believing that these products have a bad reputation among consumers,” Gipple said in a news release.
Annuities are often more difficult to understand than other investment products, and it has traditionally been difficult for investors to change their annuity investment without paying high fees.
But with Americans living longer and many not having enough assets to last them through retirement, income-producing investments are attractive for investors.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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