In the past year, annuities have become more widely accepted as a vital part of a retirement strategy, according to survey by the Insured Retirement Institute and Cogent Research.
Seventy-three percent of annuity owners and 17% of non-owners agreed that annuities are an important part of a retirement strategy, compared to 55% and 8%, respectively a year earlier, according to the survey of investors and financial advisors released at the IRI 2012 Annual Meeting,
"While we doubled the awareness of the annuity value proposition with non-annuity owners, there remains room to improve," said Catherine J. Weatherford, the IRI's president and CEO. "Despite the growing awareness and acceptance of annuity products, among non-owners only five percent identified themselves as being very or extremely knowledgeable about our products. This provides a tangible opportunity for the industry to grow its market share in a meaningful way."
While guaranteed income, advisor recommendation, and tax deferral continue to top the list of reasons to purchase annuities, inflation is becoming an increasing concern for investors. One percent of investors cited inflation protection as a reason to purchase an annuity that year, but that reached 6% this year.
Among annuity owners, 63% said market volatility makes them more likely to consider purchasing an annuity.
"The current economic and market volatility has resulted in more conservative investors who are increasingly searching for investment vehicles, like annuities, that can provide market growth, guaranteed income benefits, and some level of principal protection," said Anthony Ferreira, the managing director at Cogent Research. "The results indicate that while more investors and advisors are open to using annuities in a balanced portfolio, the industry must work harder to address lingering concerns regarding investor perceptions, firm stability, and overall commitment to providing future benefits."
The survey also found that more than 70% of advisors using annuities reported that their clients have requested to purchase an annuity, and 84% of annuity producers are having more conversation on retirement income than they were five years ago.