If you research annuity products online, you’re going to find a plethora of information that both support these financial tools and caution against them. With so much controversy surrounding them, many companies are still skeptical about selling annuities, but one in particular is taking a huge leap in favor of them. New Jersey-based Prudential has committed to not only create new products, but also to change the conversation about them.
“Innovation is less about a core income solution engine, but how do we make that more reachable to advisors and consumers?” said Kent Sluyter, president of Prudential Annuities, in a recent InsuranceNewsNet article. “We have to find simpler ways to offer these solutions and how we describe these solutions.”
On the contrary, other companies, like Voya and The Hartford, have announced that they had completed their respective sales of annuity blocks of business in search of higher profits.
According to Sluyter, the in-force block at Prudential is performing well. First-quarter sales of fixed and variable annuities increased 21% to $1.7 billion over the same period last year. This was a result of a significant bump from independent financial planners. Annuities, in general, were given another boost with the launch of a 24-company consortium, the Alliance for Lifetime Income. The group, which includes Prudential, is operating with a goal to educate advisors and consumers about the benefits of annuities by restructuring the dialogue toward income protection.
Instead of being consumed with product features when selling annuities, the Alliance is woking to help insurers ask registered investment advisors how and where annuities show up in the RIA world, Sluyter said. “Are annuities simple? Are they accessible? Can annuity fee structures be worked into an RIA’s book of business? Do annuities solve a need? Are distributors talking to RIAs about protecting income?”
“There’s an integration element to this and that speaks to simplification there, but it’s more than just product simplification,” Sluyter added.
Many industry experts believe that the future of annuities depends on a broader discussion of income protection. Prudential is focused on this goal with the introduction of two new products. In February, they released their first indexed annuity with PruSecure, an annuity distributed through broker-dealer Prudential Advisors, independent broker-dealers, banks and wirehouses. They are also considering adding independent marketing organizations to the lineup. In March, Prudential rolled out the GIFT deferred income annuity. Only available through employers and digital distribution, it is touted as the simplest product ever launched by the company. Sluyter claimed that employees who would not otherwise be talking to an advisor about annuities are now likely to do so.
Additionally, with the death of the Department of Labor’s fiduciary rule, distributors are seeming more optimistic about annuity products. Sluyter said that annuities aren’t “out of the woods yet.”
“We’re hopeful that we’ll land in a place of uniformity and appropriate regulation and we believe annuities can coexist in a fiduciary world,” he stated.
It’s important to note that Prudential’s new emphasis on annuities should not be taken as a sign that the company is moving away from life insurance.
“Protection needs are greater than ever and the same elements that are making annuity solutions easier and simpler for advisors and consumers apply to buying life insurance,” Sluyter said. “You’ll see us continue to focus on life insurance as a critical dimension.”
Written by Rachel Summit