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Indexed Annuity Sales on Track to Beat Those in Variable Annuities

By Alex Padalka December 14, 2018

Financial advisors interested in selling annuities to their clients may soon see a rise in the number of available structured annuity products, according to a recent report. But sales growth in the product overall isn’t likely to match the pace a decade ago.

Sales in fixed-indexed annuities and structured annuities are expected to grow in the next few years, according to a recent report from research firm Cerulli Associates. Only 22% of providers polled currently offer structured products, the company says.

Furthermore, fixed-indexed annuities sales could eclipse the sales of traditional variable annuities by the end of 2021, according to Cerulli.

Insurers keep rolling out FIAs as products that offer benefits in various market conditions, the company says. Insurers can raise crediting rates on the product if interest rates rise, and if rates stay low, clients have downside protection, according to the report.

The Department of Labor’s fiduciary rule, which purported to require retirement account advisors to put clients’ interests first and went into partial effect last year, squeezed annuity sales in 2017, Cerulli says. But with the rule vacated in an appeals court earlier this year, overall annuity sales are on a rebound, the report found.

Nonetheless, fiduciary rule initiatives at the state level could certainly affect sales of the product, according to Cerulli. And sales in annuities overall aren’t likely to come back to the 2007 or 2008 levels “any time soon,” Donnie Ethier, director at Cerulli, says in a press release accompanying the report.