In “Sidestepping Skepticism, Prudential Scores with Variable Annuities,” Matt Ackerman of Bank Investment Consultant describes how consumers’ opinions of variable annuities are changing. While many people thought variable annuities were “too expensive or too complicated”, they seem to realize the great potential of these annuity products now. Since retirement savings have gone down by 40% over the last year and a half, consumers are warming up to this product with its guaranteed income, protection against the market downside, and the ability to reap the benefits of an upswing in the markets.
Prudential Financial’s U.S. annuity business is very strong. They saw a 53.8% increase in annuity sales last year, with fourth quarter annuity sales increasing 71.4% from the year before. Their growth in the bank channel has been very substantial as well. After adding fifteen new banks to their distribution channel last year, their bank sales of variable annuities increased by 152%. Bank clients typically like to purchase fixed annuities, CDs, and other products that they deem “safer.” Since the returns in those products haven’t been quite as successful for their retirement income savings, variable annuities are garnering more interest. Prudential is sticking with this product that they believe in by introducing new products and options, and always being an innovator.