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Featured Advisor

Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Variable Annuity Sales Continue to Climb

Investors want to lock in benefits before changes to into effect

Having enough money set aside to live comfortably in retirement is the key concern for the majority of Mass Affluent investors with a net worth between $500,000 and $1 million (not including primary residence. New studies are showing that investors seeking guaranteed retirement income are turning to variable annuities in unprecedented numbers.

According to the Insured Retirement Institute, variable annuity assets reached $1.6 trillion in the first quarter of 2011, the highest level ever recorded by independent investment research firm Morningstar. Variable annuity sales for the first quarter were $39.2 billion, up 4 percent from $37.6 billion in the previous quarter. Year-to-year quarterly sales of variable annuities increased significantly, up 23 percent from first quarter 2010 sales of $31.8 billion.

Variable annuity sales in the U.S. increased for the fifth straight quarter,Bloomberg also recently reported. Prudential, the top providers of this retirement product, sold $6.81 billion, a 40 percent increase from a year earlier. New York-based MetLife ranked second with $5.68 billion in sales, a 41 percent increase.

 “With the first wave of the 79 million baby boomers turning 65 this year, guaranteed retirement income strategies clearly are being relied upon in growing numbers,” IRI President and CEO Cathy Weatherford said in a statement. “Recent Iri research shows that 92 percent of boomers who own annuities have a higher confidence in the financial stability of their retirement.”

Annuities are insurance contracts that offer a steady income stream. Investors purchasing an annuity deposit a lump sum or make structured payments into an account held by the insurance company. The money is invested in subaccounts that are similar to mutual funds. This exposure allows investors to participate in market upswings and helps protect the investment from the eroding effects of inflation. 

The increase in sales for variable annuities suggests that financial advisors are becoming more educated about this comparatively little understood product, whose conditions and limitations can be confusing. But analysts also point to accelerated purchases in anticipation of scheduled changes in benefits and fees. Investors are trying to lock in guaranteed benefits such as death benefits and guaranteed annuity rates for payouts.  About 96 percent of Prudential’s variable annuity sales in the first quarter were polices that included a lifetime income guarantee, Bloomberg reported. At MetLife, 80 percent of their nearly $5.7 billion of products sold in the first quarter carried a guaranteed benefit.