Annuity Sales Consultant

In today’s environment, many fiduciary advisors are turning to protection products such as fixed indexed annuities and fixed annuities to offset client portfolio risk.

That was one of the findings from Security Benefit’s Registered Investment Advisor Benchmark Study. The study looked into RIAs’ perspectives regarding client practices, economic sentiment, product diversification and the impact of the upcoming presidential election on the markets.

Security Benefit’s new research, conducted in partnership with Greenwald Research and DPL Financial Partners,  uncovered the following key findings:

  • RIAs’ views are largely mixed on the impact of upcoming elections on the investment climate.  As volatility remains a constant for RIAs and their clients, the study found that 41% of RIAs predict a neutral impact on the investment environment, with a similar number (39%) foreseeing a net negative impact, and 20% expecting a net positive impact.
  • Perceived investment satisfaction is high as RIAs shift allocations to equities and fixed instruments.  A strong majority of RIAs (87%) believe their clients are satisfied (50%) or very satisfied (37%) with their investments. Only 13% of RIAs said that their clients are very or extremely concerned about a major equity downturn.

Equity allocations are on the rise more so than any other product allocation, with 51% of RIAs allocating more to equities in the last 12 months. Allocations to long duration fixed instruments (47%) and short duration fixed instruments (45%) also saw strong increases.

  • RIAs are allocating at least 40% or more of retirees’ assets to fixed income products, with annuities gaining favor.  More than half of respondents (55%) said that they are either using fixed annuities or plan to use them in the next six months, and 45% said the same for FIAs.
  • RIAs see an opportunity to attract client money currently in bank savings products.  Half of RIAs (52%) said that a quarter of their clients have at least $100,000 in a bank savings account, and 82% of these RIAs believe they would be able to attract a significant portion of that money if they were able to offer an innovative investment with competitive interest rates for a guaranteed period.

As the U.S. Federal Reserve has pushed back expected interest rate cuts, RIAs are eyeing multi-year guaranteed annuities (MYGAs) to lock in current rates. These products offer attractive accumulation potential for clients by delivering a guaranteed interest rate that is non-correlated with equities. Many RIAs in the study agree, with 25% indicating that they have increased exposure to fixed annuities like MYGAs in the last 12 months.

According to the survey, almost one in four RIAs (23%) have increased usage of fixed index annuities (FIAs) in the last 12 months. FIAs offer downside protection and a range of indices, allowing RIAs multiple ways to position client portfolios ahead of a potential equity downturn. FIAs provide accumulation in the form of interest credits that are not linked to current rates, but instead the performance of financial indices. While 30% of RIAs do not use FIAs in their practice, one-third (34%) of RIAs actively use them and another 11% noted they are familiar with and intend to use them in the next six months.

References

Release, Press. “Nearly Half of Rias Believe Volatility Will Be the Same as Market Stressors Continue.” InsuranceNewsNet, 22 May 2024, insurancenewsnet.com/oarticle/nearly-half-of-rias-believe-volatility-will-be-the-same-as-market-stressors-continue.

Rupe, Susan. “RIAS Report Greater Interest in Fias.” InsuranceNewsNet, 24 June 2024, insurancenewsnet.com/innarticle/rias-report-greater-interest-in-fias.

“Security Benefit Releases New Benchmark Study Exploring Ria Sentiment around 2024’s Most Galvanizing Issues.” Business Wire, 22 May 2024, www.businesswire.com/news/home/20240522125813/en/Security-Benefit-releases-new-benchmark-study-exploring-RIA-sentiment-around-2024%E2%80%99s-most-galvanizing-issues.