3 Ways to Capitalize on Annuities’ Surging Popularity: Cerulli
February 22, 2023 by Dinah Wisenberg Brin
With annuity sales surging amid higher interest rates, the industry should consider various steps to further expand the market, including developing new product concepts such as long-term care hybrids and pushing for more annuities in employer retirement plans, a new report from Cerulli Associates suggests.
If fixed annuity rates remain high enough, advisors and clients will likely continue to opt for a predictable return with full principal protection versus annuities that offer upside potential while risking principal, according to the firm, which released the latest edition of Cerulli Edge on Thursday.
Click HERE to read the full story via ThinkAdvisor
Wink’s Note: I don’t necessarily compete with this market research firm, but we definitely both give thought leadership in the same space.
That said, this article from Dinah Wisenberg Brin at ThinkAdvisor had me scratching my head.
Structured annuities/RILAs have NOT “led all other annuity types in sales for several years.” In fact, according to “Wink’s Sales & Market Report,” multi-year guaranteed annuities (MYGAs) sell more than any other type of deferred annuity, with 37.8% market share of the deferred annuity market. Indexed annuities come in second, with 29.0% market share. Variable annuities contribute another 18.5% to overall deferred annuity sales. And THEN comes structured annuities/RILAs, which only make-up 14.1% of all deferred annuity sales.
The projections for annuity market shares under the “Looking Ahead” header are way off, assuming interest rates and market volatility continue. MYGAs will continue to outsell all other types of deferred annuities as long as CD rates and annuity rates persist. Indexed annuities already account for more market share than what was projected here. Structured annuities/RILAs likely won’t fare as well as projected, assuming the volatility in the markets continues.
The suggestion that those “that remain committed to the variable annuity marketplace should expand their focus on guaranteed lifetime withdrawal benefits (GLWBs)” is borderline ludicrous. More than three quarters of all VA sales are already electing a GLWB. What more would you suggest the carriers do?
I am interested in this firm’s statistic that “just 17% of households own a fixed annuity and just 10% own a variable annuity,” but the other data in the article concerns me enough to dismiss this.
I think it is time this firm go back to the drawing board. -sjm
