Nearly two-thirds of advisors who sell annuities believe that guaranteed income options will increase in importance over the next five years, according to a new report by Cogent Research and the Insured Retirement Institute.
Advisors say that their discussions with clients have become more emotional and are heavily geared toward securing retirement income as opposed to accumulating assets, according to "The Evolution of the Annuity Industry," which outlines the opportunities and challenges with annuities through the eyes of financial advisors, investors, broker/dealer gatekeepers and insurance carriers.
"Opportunities abound for the financial services industry to not only meet the growing investor demand for insured retirement strategies, but also to develop business practices that support the continued acceptance and use of these products," the report stated.
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Eight in 10 advisors who sell annuities report they are having more discussions with clients about retirement income planning than they did five years ago.
"Increased market volatility, shrinking retirement savings, and the disappearance of pensions have investors taking a long hard look at the value of annuities in their portfolios," said Marie Rice, custom research practice director at Cogent Research.
One-third of investors (34 percent) report the main reason for purchasing an annuity is guaranteed income; and two-thirds (68 percent) of advisors report that they have received at least one client request for an annuity in the last 12 months.
According to the report, the annuity industry has seen significant growth in the past couple of years. Assets in both variable and fixed annuities reached a record high of nearly $2.2 trillion in 2010, a 10 percent increase from the previous year.
"Opportunities abound for the financial services industry to not only meet the growing investor demand for insured retirement strategies, but also to develop business practices that support the continued acceptance and use of these products," said IRI President and CEO Cathy Weatherford. "Our research has found that the most important retirement income goal, for all investors – annuity owners and non-owners alike – is to ensure they do not run out of money. With the market being ripe for insured retirement strategies, the industry is in an extraordinary position to exponentially grow."
Cogent Research provides custom research, syndicated research products and evidence-based consulting to leading organizations in the financial services, life sciences and consumer goods industries.
The Insured Retirement Institute is a not-for-profit organization that focuses on the insured retirement industry, including annuities, strategies and retirement planning.
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