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Five Annuity Trends For Advisors To Watch in 2019
By Doug Wolff, President of Security Benefit Life Insurance Company


The annuity industry is evolving to address client retirement income needs. Between rising interest rates, more demand for impact investing and strained defined benefit plans, it is important for financial professionals to stay on top of the latest annuity trends that are in motion or on the horizon. Here’s a look at five trends financial professionals should be watching in 2019. 


View this article in WealthManagement.com


1. Qualified Plans with Retirement Guarantees

Retirement income guarantees are starting to surface in the qualified plan space. Only 5% of 401(k) plans offer a retirement income guarantee, however, according to the Plan Sponsor Council of America’s 59th Survey of Profit Sharing and 401(k) Plans, so this trend is in its infancy. 401(k) plans appear to be proceeding with caution, but financial professionals should stay on top of this emerging trend. Making it easier for a plan sponsors to add annuities that provide these important guarantees to their 401(k) plan line-ups seems to be one of the few items that receives bi-partisan approval in Washington DC lately.


2. Hybrid Products Addressing Multiple Needs

Leading up to retirement, it is important for retirees to have all of their income needs met, and that typically leads retirees to purchase multiple products. To solve this problem, hybrid products are being created that address several needs, making it easier and cheaper for the retiree. A few examples of this include annuities with living benefit riders that incorporate increased payouts for long-term / assisted care, life insurance with new and improved accelerated benefit riders, or even products that help with guaranteed retirement income and the costs of retiree health care.


3. Shift From Defined Benefit to Defined Contribution Plans

Defined benefit plans are few and far between in the private sector these days. In the public sector, a number of factors are fueling the decline in defined benefit plans, including strained governmental budgets, low rates, declining worker-to-retiree ratios and longer retirements. As a result, new entrants are getting weaker target income prospects. With private pension plans practically non-existent and public pension plans on the decline, it’s important for financial professionals to keep in mind that annuities can provide retirees post-retirement guaranteed income – similar to what a defined benefit plan might have offered.


4. Protecting Clients From Market and Macro Events

It’s no secret the market has been volatile in 2018, partly due to rising interest rates. This has made financial professionals’ jobs even harder. While there is no magic bullet for protecting your clients from external forces that can deflate their portfolios, some annuity products are built to strategically take advantage of rising interest rates. Financial professionals should understand these products to develop the most resilient client portfolios possible.


5. ESG Solutions on the Rise

ESG (environmental, social, governance) investing continues to gain steam, and annuity providers are taking notice. Some consumers are demanding that their portfolios help benefit social good. Some fixed index annuities may offer ESG-related index accounts and some variable annuities may offer ESG-related mutual funds or variable insurance trusts as allocation choices, and we expect this trend will see an upward trajectory to meet consumer demand.


The annuity world is undergoing constant change. No matter the package, financial professionals should keep a pulse on these products to help their clients enjoy a secure retirement. Financial professionals who are well prepared are likely to emerge successful, and so are their clients.