Many news sources are saying that the Fiduciary Rule has caused a decline in annuity sales, is that correct?
Indexed annuities are increasing in market share in the annuity world, while variable annuities have shrank. Some in the industry believe these two factors are related but there are other dynamics at play. For example, while many point to the Fiduciary Rule as a primary reason for the decline in variable annuity sales, it is important to note that variable annuity sales have been in a steady since 2011. These declines make sense on a macro level because the annuity industry’s response to the 2007-2009 financial crisis was to scale back on any generous benefit feature, for both payouts while a holder was living and the death benefits to her estate after passing.
One other thing that the annuity industry did during and right after the financial crises that appears to be impacting variable annuity returns and participation currently were the measures taken to reduce exposure to benefit payouts that leaders felt were too high. Among these measures were buyouts, denying any additional deposits, reducing investment options.
For more on the Fiduciary Rule’s impact of annuities, see our new article coming this Thursday.