Retail investors trust big advisory firms less than they did four years ago and are questioning the value of the advice they receive, according to a retail investor report from Cerulli Associates, based on a survey it conducted with retail investors.

The report divides the $22.4 trillion in retail owned assets into three groups: advisor intermediated, with $13.9 trillion, direct to investor, with $4.2 trillion and other intermediated channels with $4.3 trillion.

On Wall Street, Financial Planning and Bank Investment Consultant were given a sneak peek at the survey, and this week we'll be bringing you the key findings.

Today: How will the variable annuity market change as Baby Boomers seek retirement income solutions?

The increase in both market volatility and interest from the Baby Boomers in generating retirement income should be a slam-dunk for variable annuities. And unlike mutual funds and ETFs, sales of the products are near their pre-market crash levels. But, the recent uptick in risk aversion highlights the paradoxical dilemma of these complex instruments: right at the time risk-shy advisors and investors are most interested, the product providers pull back because of the risks involved. In protecting themselves, they limit the options within the contracts, or increase the cost of riders.

What's more, variable annuities are not well understood by investors. "What people have heard about annuities in the past is generally not flattering," said Scott Smith, analyst at Cerulli. As part of its survey of retail investors, Cerulli did a sampling of opinion across all asset classes, and found that 38% of households did not even know what annuities were. For the 35% who knew what they were, but were not familiar with them, the responses were generally negative. Investors had heard from friends, on in the popular press, that the instruments were not necessary or expensive. Rarely did investors see annuities as a good way to get insurance coverage of to diversify assets. And yet, although certainly not for every client, variable annuities can, when used in concert with other products, create a diversified retirement income plan.

Smith stressed that there is no "magic bullet," or "best practice" combination of a particular annuity with a specific mutual fund or bond. Advisors must simply continue the process of trial and error, working out their own solutions on providers they've worked with in the past and are the most comfortable with. He suggested that for most clients, the answer will be "something in the middle that offers some features and benefits of an annuity product "

Smith added that even though annuities are a difficult sell that require a lot of education from the advisor, they can often provide clients a solid sense of security. Still, he said many advisors do not give enough weight to the halo of good feeling investors get from knowing they have a guaranteed income stream, and that this is short-sighted. He cited recent academic studies of investor psychology that highlighted this sense of well being. "You should understand what makes your client feel most comfortable - and it's not necessarily the mathematical solution, he said, adding that the client's feelings must be part of the equation. "Many of these Baby Boomers are quite concerned. If they've invested 100% in equities with no guarantee and the market goes down 300% - they've seen that happen twice in the last decade. They don't want that to happen again."