New fixed indexed annuities hit the market
May 23, 2016 by Marlene Y. Satter
Two new fixed indexed annuities are on the market, this time from Nationwide.
The new FIAs, Nationwide Summit and Nationwide Peak, are designed to help advisors with risk-averse clients approaching retirement provide an option for some growth potential with the comfort of a principal guarantee.
The new FIAs allow advisors and clients to choose their own index allocation mix by percentage, and to choose one or multiple indices for an individualized index allocation strategy. Clients also can allocate some of their investment to the guaranteed fixed account in addition to the indices.
The release of the new FIAs comes as the new Department of Labor fiduciary rulelumps FIAs with variable annuities. That means that the distribution of FIAs could be challenged, as brokers and advisors will have to sell them under the Best Interest Contract exemption. Fixed annuities, unlike FIAs, are treated separately and do not require advisors to sign a BIC exemption for recommending them.
Worried workers concerned about having enough lifetime income have increasingly been turning to annuities to provide that income. And the trend has shown in the sales of annuities.
Last year, indexed annuities had a banner year. According to the LIMRA Secure Retirement Institute, indexed annuity sales broke quarterly and annual sales records, with fourth-quarter sales totaling $16.1 billion. That’s 32 percent higher than in 2014. For the whole of 2015, indexed sales broke another record, hitting $54.5 billion—an increase of 13 percent from sales in 2014.
Variable annuity sales, on the other hand, fell by 7 percent in the fourth quarter of 2015 to $31.7 billion. Not only is that the lowest level seen since the first quarter of 2009, but 2015 also marked the fourth consecutive year of VA sales declines. For the year, VA sales fell 5 percent year over year, to $133 billion.
