Financial Advisor (FA) reached out to several industry experts, including NAFA’s president and CEO Chuck DiVencenzo and board member elect Tad Fifer of Lincoln Financial Group, to weigh in on the what’s behind the current momentum of fixed annuity sales and whether we should anticipate it will continue.

December 9, 2019 

In the first three quarters of 2019, sales of fixed-indexed annuities (FIAs) jumped 13% from a year earlier, as measured by the LIMRA Secure Retirement Institute. And many annuity watchers say they’re on track for continued growth in 2020.

“There’s an increased awareness and knowledge of the value FIAs can provide,” said Tad Fifer, vice president and head of fixed annuity and RIA distribution at Lincoln Financial Distributors in Radnor, Pa.

That value, simply put, is downside protection with upside potential. Pegged to the performance of a market index such as the S&P 500, FIAs typically have a floor and a cap; that is, if the index drops you only lose so much, and if it rises you gain a percentage of the increase. So they are generally safe, reliable assets. In addition, many offer a lifetime income guarantee.

“After the downturn of 2008, everybody fled to safety,” noted Chuck DiVencenzo, president and CEO of the Washington, D.C.-based National Association for Fixed Annuities. Many haven’t forgotten that lesson in market volatility, he continued—especially those who are thinking about retirement. “They are at a stage when they’re less concerned about accumulation and no longer have the stomach for market risk,” he said. “Therefore, a product that’s able to give them some upside but also protects them on the downside becomes especially attractive.”