In the first half of 2012, tons of cash flowed out of non-qualified annuities, according to the Depository Trust & Clearing Corp.
"Net cash flows were negative in every month, January through June," Andrew Blumberg, business manager, analytic reporting, for the Depository Trust & Clearing Corporation (DTCC), told Financial Planning. "More money is coming out than is going into these annuities." Net outflows topped $200 million each month and exceeded $400 million in both January and May.
At the same time, DTCC data show net annuity inflows each month this year. "More money is going into qualified annuities," Blumberg said, meaning that annuities increasingly are purchased for company retirement plans and IRAs. DTCC data from 108 insurance companies and 116 broker-dealers show that 24 million annuity transactions totaling nearly $79 billion were processed in the first half of this year. Approximately 60% of annuity inflows have been going into qualified accounts while non-qualified accounts attract about 40% of inflows.
In June 2012, total annuity inflows were just under $7 billion while net flows were nearly $1.2 billion. Of the six distribution channels tracked by DTCC, independent broker-dealers led by a comfortable margin, with a 28% share of inflows. Wirehouses accounted for 17% of inflows, regional B-Ds had 15%, bank B-Ds had 13%, insurance B-Ds had 9%, and "other" B-Ds had 19% of inflows. "We've been tracking the data since early 2010," Blumberg said, "and independent broker-dealers have consistently reported the most inflows."
Blumberg also told Financial Planning that DTCC's "Analytic Reporting for Annuities" online information service will expand soon. "Later in 2012," he said, "we'll have a new feature that allows analysis of annuity activity by zip code. Thus, planners can get information about which areas might be good territories for annuity sales." Blumberg said that subscribers to this service include broker-dealers, so planners can ask their B-D for helpful information regarding annuity sales.
Donald Jay Korn writes for Financial Planning.