Cerulli Predicts Growth And Obstacles for VAs
May 18, 2008
Individual annuity assets could reach $2.9 trillion in 2012, up from $2.1 trillion today, according to a new report from Cerulli Associates. Yet annuity providers still face the challenge that few people use annuities for retirement income and few advisers recommend them.
Asset managers and insurance companies are optimistic about sales of qualified variable annuities, the report said, but noted that positioning them as tax deferral tools may undermine their appeal for clients with IRAs and 401(k) rollovers. Emphasizing variable annuities’ guaranteed income benefits could mitigate this objection.
Insurers should avoid specific product pitches when marketing to advisers and focus instead on how products can be used to solve problems. Insurers must also explain variable annuity expenses better.
Cerulli’s analysts believe that hybrid products such as mutual funds with guaranteed living benefits can be used alongside income annuities in retirement portfolios. Mutual funds with GLBs were favored by 57% of the industry executives Cerulli surveyed.
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