Annuity sales will decrease this year, in part because of the Department of Labor's fiduciary rule for retirement accounts that goes into effect in April, the LIMRA Secure Retirement Institute predicts.
Annuity sales will see a 10 percent to 15 percent decline in sales, the institute says. However, the annuity market will stabilize during 2018.
“There is little doubt that the DOL fiduciary rule will disrupt the existing financial services’ business structure,” says the institute in its report, The DOL Fiduciary Rule: Retail Annuity Manufacturers’ Perspective.”
The disruption in the market will spur some annuity manufacturers to develop new products to offer the public so that the fiduciary standard is met, LIMRA says.
“Forty-five percent of annuity manufacturers have or will introduce new annuity products. Moreover, at least 25 percent of variable annuity writers and one-third of fixed indexed annuity companies expect to be more innovative with their product design in 2017,” the report says.
“Much of this innovation has to do with the way advisors are compensated for selling annuities. Three out of four annuity manufacturers either have or plan to build fee-based annuities,” according to the report.