Guaranteed Income Is a “Must Have” for Annuity Sales

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A Recent Survey Attempts to Forecast Important Annuity Market Trends

By Annuity Outlook Staff

Several factors are contributing to a positive outlook for our industry. Listen to insights on this topic in this brief audio interview with Mark Fitzgerald, National Sales Manager for Saybrus Partners, a distribution subsidiary of the Phoenix Companies.

The link to the audio file: http://adrec.us/magazine/images/library/IndustryOutlookwithMarkFitzgerald.mp3

Guaranteed income in retirement has been, and continues to be, a top priority for financial consumers and the insurance professionals who advise them, according to a recent survey of over a hundred industry-leading annuity professionals. Responding professionals say consumers will want a choice of combination benefits and simpler products.

The study was prompted by the rapidly evolving nature of the insurance marketplace over the past several years and was designed to get a better understanding of where the market is going, Mark Fitzgerald told Annuity Outlook Magazine in a recent interview. He is the national sales manager for Saybrus Partners, Phoenix’s distribution subsidiary.

When asked to look back over the past 12 months, nearly 70 percent of the surveyed annuity professionals said that guaranteed lifetime withdrawal benefits were a “must have” feature for annuity sales. No other feature came close. A “choice of combination benefits” and “principal preservation income riders” trailed in second and third places with 11 percent and 6 percent, respectively, saying they were an essential feature.

Respondents also predicted guaranteed lifetime withdrawal benefits (GLWBs) would continue to be popular in the next 12 months. going further, 37 percent said that GLWBs alone will be a “must have.”

While GLWBs were still the top choice, respondents predicted other features would gain in popularity and become vital in the coming year, including a “choice of combination benefits” (25 percent), “alternate index strategies or indices” (11 percent) and “principal preservation income riders” (10 percent).

Almost two-thirds of respondents said the “need for guaranteed income in retirement” is the primary goal that is driving these necessary features for today’s annuities.

Market changes are showing that reality is setting in for financial consumers, Fitzgerald told Annuity Outlook Magazine. “Once they get their arms around guarantees of income in retirement, they want to know what other options are out there to address concerns like their need for health care and death benefits…that is good for our industry,” he said. “[Annuity professionals] can help navigate these concerns and provide guarantees including income, chronic care and wealth transfer.”

However, despite the interest the responding annuity professionals showed in products that offer a “choice of combination benefits,” 44 percent said they would like annuity manufacturers to focus on developing “less complex product designs” in the next 12 months.

“It’s a catch-22 – the more features offered, the more complex the product,” Fitzgerald said. “I think the solution for that is more in the presentation of how it works.” Products will become more complex, but more advanced technology will offer agents more education and customer presentation tools to make sales simpler, he said. “Better illustration tools” and “improved mobile application tools” were each selected by 18 percent of respondents as an area of focus for annuity manufacturers in the next year. Another 13 percent selected “multi-product platform solutions.”

Editor’s note: The mentioned data are results from 102 independent marketing organization professionals, carriers, independent agents and vendors surveyed by The Phoenix Companies, Inc., at the National Association for Fixed Annuities’ 2013 NAFA IMO Summit in Aspen, Colo., which was held Oct. 16-18, 2013.

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