We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • FIAs to take a hit next year, courtesy of DOL fiduciary rule

    August 19, 2016 by Nick Thornton

     Sales of fixed indexed annuities hit $16.2 billion in the second quarter of 2016, a 30 percent increase over the same period last year and an all-time quarterly record, according to LIMRA Secure Retirement Institute.

    For the first half to 2016, Fixed indexed annuity sales were $31.9 billion, a 32 percent increase of the first half of 2015. LIMRA is projecting fisales to exceed $60 billion for 2016.

    The lawsuit by the National Association for Fixed Annuities challenges the DOL fiduciary rule on six counts — but the…

    If that holds true, it will mark the eighth consecutive year of strong growth in fixed indexed annuity sales.

    Todd Giesing, assistant research director for LIMRA’s Secure Retirement Institute, said low interest rates have continued to benefit fixed index annuities as consumers seek “safe yield.”

    “The indexed market is extremely competitive at this time as indexed products remain an attractive alternative to variable annuity products,” said Giesing.

    As fixed indexed annuity sales have surged for most of the past decade, variable annuities have taken a hit.

    Sales of variable products were down 25 percent in the second quarter of 2016, totaling $26.9 billion. For the first half of 2016, variable product sales were $53.5 billion, the worst performing first half of the year since 1998, and the first time sales of variable annuities have been below $30 billion for consecutive quarters since 2002, according to LIMRA.

    Sales of FIAs expected to slow

    The U.S. Department of Labor’s fiduciary rule is scheduled to have a two-tier phase in period.

    Beginning April 10, 2017, all advisors to IRAs and defined contribution plans with less than $50 million in assets will be required to act as fiduciaries.

    Full compliance with the rule will be phased in Jan. 1, 2018, when advisors recommending fixed indexed and variable annuities will have to comply with the rule’s Best Interest Contract Exemption, a legally binding contract between broker-dealers, insurance companies, advisory firms and investors that guarantees advisors are serving clients’ best interests when they recommend both fixed indexed and variable annuities.

    Complying with the Best Interest Contract Exemption is expected to slow the surging sales of fixed indexed annuities. LIMRA is projecting a 30 to 35 percent decline in fixed indexed annuity sales in 2017, which would lower sales to 2013 levels, or around $40 billion.

    In 2015, about two thirds of fixed indexed annuity sales were through IRAs or rollovers from defined contribution accounts. Once the Labor Department rule is fully implemented, advisors will have to operate under the Best Interest Contract Exemption when recommending fixed indexed annuities and variable annuities, to assure recommendations of the products are in retirement investors’ best interests.

    The “challenges” of complying with the Best Interest Contract Exemption will be the main source negatively impacting sales of fixed indexed annuities in 2017, said Giesing in a release.

    Fee-based FIAs

    Until recently, fixed indexed annuities have been exclusively sold on a commission basis.

    That changed in December 2015, when Midland National began offering Prosper 5, which at the time was the only fee-based indexed annuity. The insurer is exclusively distributing Prosper 5 through broker-dealer Raymond James, according to information provided by Wink Inc., a third-party market research firm specializing in annuity and life insurance markets.

    Last week, Great American Life announced a new fee-based fixed indexed annuity, the Index Protector 7, which the insurer said will be distributed through registered investment advisors who, as fiduciaries, already operate off of fee-based compensation models.

    While the Labor Department rule does not ban the sale of commission-based investment, the preponderance of industry analysis has said the rule’s design strongly favors fee-based compensation models.

    In a statement accompanying the launch of Index Protector 7, which is slated for August 22, 2016, Joe Maringer, a vice president at Great American Life, said the fee-based design is in direct response to the Labor Department’s fiduciary rule.

    “A product that fits into an advisory model based on fees rather than commissions is a relatively new development in the fixed-indexed annuity marketplace,” said Maringer.

    “Due to the persistently low interest rate environment, advisors are seeking alternatives to the traditional fixed income portion of clients’ investment portfolios,” he added.

    A request for comment from Great American Life on what the fee on the Index Protector 7 annuity will be was not returned.

    But analysis provided by Wink said fee-based indexed annuities will take fees from the total assets under management of an investor’s advisory account, and not directly from the annuity.

    Because insurers are not paying commissions directly to advisors, brokers, and insurance agents, the fee-based model will give insurers more latitude in product design, like building lower surrender chargers into the products, according to Wink’s analysis.

    This summer, Voya Financial Inc. rolled out a new series of fixed indexed annuities featuring lower surrender fees, and the option to choose from a five, seven, or 10-year surrender contract schedule.

    The new Voya Quest series is not being offered on a fee basis, but according to Wink, Voya, along with Allianz, Lincoln Financial Group and Symetra have confirmed to other media sources they are working on fee-based fixed indexed annuities as well. Lincoln Financial has said its product will be distributed through the registered investment advisors, according to Wink.

    Will fee-based FIAs stanch projected declines?

    A representative from LIMRA said the institute’s economists accounted for potential product innovation when they projected next year’s 30 to 35 percent decline in fixed indexed annuity sales.

    While next year will be tough for fixed indexed annuity sales, LIMRA is expecting a rebound in 2018. “With such substantial disruption to the market, our historical research shows there is always a transition window as manufacturers and distribution adapts,” according to representative from LIMRA.

    In the run long, analysts at Wink expect sales of fixed indexed annuities to be strong. A company representative noted that commissions on fixed indexed annuities have been steadily dropping “for years,” as sales of fixed indexed annuities have hit new highs.

    The Wink representative called the insurance industry “imaginative,” and noted that annuity providers have previously evolved in the face of a regulatory environment that “continues to hit our industry hard.”

    Originally Posted at BenefitsPro on August 18, 2016 by Nick Thornton.

    Categories: Wink's Articles
    currency