Will Fixed Annuity Sales Continue On A Roll?

By John Hilton InsuranceNewsNet

WASHINGTON -- The sales shift to fixed and fixed indexed annuities might not be a temporary thing.

A panel of industry experts discussed everything related to fixed annuity products during a Thursday morning session at the Insured Retirement Institute's Action2019 conference.

Whether fixed and fixed indexed annuities maintain their sales roll depends in part on the industry itself, said Kevin Mechtley, assistant vice president, legal, and director of government affairs for Sammons Financial Group.

"I think there's a ton of tailwind for this product," Mechtley said. "You cannot get what this product provides for anywhere else."

But "there's still a lot of education that needs to be done," he added. "That is on us to do better."

Fixed annuity products are producing eye-popping sales numbers.

Traditional fixed annuity sales in the fourth quarter 2018, for example, were $1.1 billion, up 15.9% compared with the previous quarter, and up more than 56.8% compared with fourth quarter 2017.

LIMRA projects that sales of indexed annuities will rise to $96 billion by the end of 2023. That's a 38% increase, $26.4 billion more than last year's total.

Regulation efforts will continue to drive chain-reaction changes up and down the sales process, panelists said. For example, better technology will help make it easier for traditional advisors to offer fixed annuity products on their platforms, said Dale Fuller, senior director, Allianz Life.

Making it easier for advisors to incorporate annuities into a client's financial plan will open up new channels for annuity distribution.

"I don't know that the fee-based FIA has taken off the way some thought it would. That's a tough nut to crack," Mechtley said. "Those sales in the RIA channel are the wide blue ocean. There's a lot of sales to be gained there."

More distributors are taking the trail commission option, panelists said, a possible by-product of the Department of Labor fiduciary rule being tossed out by a federal appeals court.

It takes firms of a certain size to forgo the large upfront payment in favor of recurring trails, said David Wolfe, general counsel for Advisors Excel. There were some questions after Ohio National stopped paying trail commissions on its existing contracts in December, Wolfe added.

"But that hasn't dissuaded them from taking the trail option," he said.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.