Annuities more frequently associated with retirement planning

More investors and their financial planners have come to embrace annuities as part of a well-rounded retirement plan, according to research released by the Insured Retirement Institute and Cogent Research.

In numbers released at the IRI's annual meeting, the opinions - and level of support - related to the positives of annuities have drastically increased in just a year, as global economic conditions and low interest rates continue to make other investment vehicles a more challenging prospect.

The new research suggests that among investors, 73 percent of owners of annuities and 17 percent of would-be owners agreed that annuities form an important part of a retirement strategy; in 2011, only 55 percent of owners and 8 percent of non-owners said the same thing.

And annuities aren't seen as old-fashioned and one-dimensional products, as they may have been viewed in the past. But the inflation protection aspect of annuities still remains a popular draw for the financial products, more so than last year.

Some 63 percent of investors quizzed also told Cogent that they favor annuities for their insulation from market volatility, and cite that as a strong reason to buy in the future.

And there's been more interest from investors and pre-retirees in the product, as a result: more than 70 percent of financial advisors who already use annuities reported new requests from clients to purchase annuities, and 84 percent of annuity focused advisors say their client discussions now center on retirement income than they would have, five years ago.

At the same time, media reports on the long-term viability of many of the carriers sponsoring annuities have continued to raise red flags for many potential buyers, as nearly half of the investors surveyed agreed they were concerned about sponsors being able to meet their guaranteed obligations.

On the whole, investors who don't already own an annuity admitted they also knew very little about the product - less than 5 percent considered themselves very knowledgeable about annuities.

"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 Ferreria, Cogent Research's managing director.

"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."

Funding sources for annuities also tend to be heavily weighted on rollovers (69 percent), followed by new cash inputs (13 percent), 1035s (12 percent) and mutual funds (4 percent).


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