The Evolution of the Annuity Industry

IRI 2012 Annual Meeting Kicks Off with Unveiling of New Research on Annuity Perceptions and Usage Trends

WASHINGTON, D.C. - The Insured Retirement Institute (IRI) and Cogent Research today announced new research results showing that during the past year, annuities have become more widely accepted as a vital part of a retirement strategy. The new survey of investors and financial advisors released at the IRI 2012 Annual Meeting found that among investors, 73 percent of annuity owners and 17 percent of non-owners agreed that annuities are an important part of one’s retirement strategy, compared to 55 percent and eight percent, respectively, in 2011.

“While we doubled the awareness of the annuity value proposition with non-annuity owners, there remains room to improve,” IRI President and CEO Cathy Weatherford said. “Despite the growing awareness and acceptance of annuity products, among non-owners only five percent identified themselves as being very or extremely knowledgeable about our products. This provides a tangible opportunity for the industry to grow its market share in a meaningful way.”

The new report also offered insights into the growing adoption of annuities. While guaranteed income, advisor recommendation, and tax deferral continue to top the list of reasons to purchase annuities, inflation is becoming an increasing concern for investors. Only one percent of investors cited inflation protection as a reason to purchase an annuity in 2011, but that increased to six percent in 2012. Furthermore, among annuity owners, 63 percent said market volatility makes them more likely to consider purchasing an annuity.

“The current economic and market volatility has resulted in more conservative investors who are increasingly searching for investment vehicles, like annuities, that can provide market growth, guaranteed income benefits, and some level of principal protection,” Cogent Research Managing Director Anthony Ferreira said. “The results indicate that while more investors and advisors are open to using annuities in a balanced portfolio, the industry must work harder to address lingering concerns regarding investor perceptions, firm stability, and overall commitment to providing future benefits.”

The survey also found that more than 70 percent of advisors using annuities reported that their clients have requested to purchase an annuity, and 84 percent of annuity producers are having more conversation on retirement income than they were five years ago.

A snapshot of this new report, The Evolution of the Annuity Industry, is available HERE.