Trending in 2017: Firms Launch More Fee-Based and Structured Annuities

by on Dec 12, 2017

As 2017 comes to an end, we’re looking back at some of the year’s financial industry trends. This post is part of a series examining notable patterns and highlights.

LIMRA reported a 10% drop in overall annuity sales but strong growth for both fee-based and structured annuities for the first half of the year. In 2017, Annuity Monitor reported on 27 new products released from 13 firms in our coverage group, more than doubling the 12 products launched in 2016. Variable annuity product releases were the most common, followed closely by fixed indexed annuities. Almost half of product launches (41%) were fee-based, marking a yearlong trend of firms responding to the Department of Labor’s fiduciary rule. A notable second trend emerged in annuity product launches as well, with six new structured annuity products entering the market, two of which are fee-based. 

Fee-Based Annuities

When fully implemented, the DOL’s fiduciary rule will allow the sales of commission-based products only if they are in the best interest of their clients, requiring more oversight and paperwork and leading many firms to promote fee-based annuities as an alternative. Despite the delay of full implementation of the rule, firms prepared with a significant increase of both fee-based variable and fixed indexed annuities product launches in 2017. At the time of the launch of its fee-based Elite Access Advisory annuity, Jackson published a press release promoting the product, which is otherwise identical to the commission-based Elite Access annuity, as a response to market demand for fee-based products following the DOL rule.

Structured Annuities

Structured annuities, also known as hybrid or buffer annuities, are investments in which the investor has the option to allocate funds to both a fixed and variable annuities. Firms promote the typically complex annuities for flexibility as they offer conservative and aggressive investment options and the specific features of multiple annuities at once. This year, AXA and Allianz released variations of their existing structured annuities while Brighthouse entered the market with its Shield Annuities product suite. Both Brighthouse and Allianz offer fee-based versions of their structured annuities, highlighting the previously mentioned trend in response to the DOL rule. We expect to see more structured annuity product launches in the upcoming year, with Voya and Lincoln advertising 2018 launches.

Brighthouse Financial Public Site Shield Annuities Page

Corporate Insight’s Annuity Monitor service tracks leading firms and comments on industry trends. For more about this year’s trends, check out the previous trends blog post about life insurance rewards.