Retirement Income Remains Top Concern
To be sure, there are many other reasons to expect continued growth in annuity sales. A 2021 study by Radnor, Pa.-based Lincoln Financial Group found that 90% of investors want their retirement income plan to provide a guaranteed income payment or principal protection, said Tim Seifert, a senior vice president and head of retirement solutions distribution at Lincoln. These are characteristics that only annuities can provide.
Moreover, the aging population means more Americans than ever will "move beyond just accumulating savings and think about their actual income needs in what could be 20, 30 or more years of retirement," said Cyrus Bamji, head of communications at the Alliance for Lifetime Income in Washington, D.C.
Product Innovations
He added that product innovations have generated "new annuity solutions that better serve changing consumer needs"—and consumer awareness and understanding of what annuities can offer is on the rise.
Among the innovations are less expensive, no-load, commission-free annuities for fee-only advisors. "As guaranteed income products—particularly the commission-free ones—become more accessible to RIAs, annuities will gain popularity," said Shannon Stone, an advisor at Oakland, Calif.-based DHR Investment Counsel.
But perhaps the best reason for remaining bullish on annuities is that the market offers few viable alternatives. "With low interest rates and increasing longevity, traditional safe investments like bonds add very little value to a retirement portfolio, particularly when compared to an annuity," said David Lau, CEO of DPL Financial Partners in Louisville, Ky. "There has rarely been a more compelling time to use annuities."