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POST-DOL IGNITION COVER STORY
nnuities have been stumbling after years of accelerating growth, but Jack Marrion has a simple reason why that pace might pick up again — agents and advisors are getting back to selling. “A number of agents I spoke to said last year that they weren’t selling as hard, they weren’t working as hard and they weren’t meeting with people as much as they used to because of their confusion and uncertainty over what might happen with the DOL,” said Marrion, president of Advantage Compendium, a consultant to the insurance industry. “Agents have heard that all-clear siren. Trouble is fading away. You can come out of the shelter and do business again.” The biggest all-clear sign has been the pushing back of the Department of Labor’s fiduciary rule, particularly the wholesale rejection of the rule on March 15 by the Fifth Circuit Court of Appeals in New Orleans. That is opening the door for what the industry expects will be fairer rules from the Securities and Exchange Commission. Annuity sales should spike, starting in the second half of 2018 Regulation rulemaking was the main culprit for the slump, but economic and market factors contributed. Distribution channels were disrupted, and agents shied away from annuities. Positive news for annuities falls into two general trends:
“Agents have heard that all-clear siren. Trouble is fading away. You can come out of the shelter and do business again.”
» General market conditions. Simply stated, the conditions for selling annuities vastly improved. The court’s decision to kill the DOL rule is one example.
» The RIA potential. Annuity companies have long aspired to break into the registered investment advisor market. The timing might be right for it to finally happen, analysts say.
Convergence
Due to a variety of pressures, annuities have struggled lately to maintain their foothold even in the insurance world. In 2017, total annuity sales were $203.5 billion, a decline of 8 percent from the prior year, according to LIMRA Secure Retirement Institute. The lingering threat of regulation is the most significant factor, but the threat might be dissipating. The DOL fiduciary rule took partial effect in June 2017 but was tossed out by a New Orleans appeals court March 15. The federal government did not appeal by the May 1 deadline, and the Fifth Circuit denied separate appeals by AARP and three states (New York, California and Oregon). Barring an unlikely last-minute reversal by either the court or the government, the DOL rule is dead. “It wasn’t that the customers went away last year. It’s that the agents did,” Marrion explained. “They stayed hunkered down until all this business with the DOL either got resolved or went away. But it looks like it might have gone away.” June 2018 » InsuranceNewsNet Magazine
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