Indie B-D reps flocking to fixed indexed annuities

Fixed indexed annuities were a hot product among independent broker-dealer reps last year as clients sought a safe-money alternative to CDs, made virtually worthless by low interest rates. Jackson National Life Insurance Co. was the top-selling indexed annuity among independent broker-dealers during the fourth quarter, according to Beacon Research Publications Inc. Sales of fixed indexed annuities in the independent broker-dealer channel totaled $752.4 million in 2011, a dramatic jump from $206 million in 2010. Fourth-quarter sales totaled $177.2 million, up from $23 million in the year-ago period. Independent broker-dealers have been turning toward fixed indexed annuities as an alternative for clients nervous about volatile equity markets and unable to find attractive fixed-income investments. The products can be used an alternative to certificates of deposit, as fixed indexed annuities offered through this channel typically come with a five- to seven-year surrender period, compared to the 10-year products often sold through independent insurance agents. Insurers have taken notice and now are working directly with broker-dealers, as opposed to having an independent marketing organization act as an intermediary, according to Judith Alexander, director of marketing for Beacon. Last spring, for example, Bank of America Merrill Lynch added Jackson National and Lincoln National Corp. to its roster of indexed annuity sellers. “Carriers are mostly still going through independent marketing organizations, but now they seem to have more direct contracts with the broker-dealers themselves,” Ms. Alexander said. This also makes things easier from a supervision point of view, she said. Companies that have been the most successful in selling indexed annuities through independent broker-dealers generally have a good reputation on the variable annuity side of the business, too, Ms. Alexander noted. Jackson, ING Groep NV and Lincoln National Corp. are the top three indexed annuity sellers through indie B-Ds. Total fixed annuity sales, including indexed, income and fixed-rate annuities, crept down 1.1% to $75.6 billion during 2011, according to Beacon.