Financial Advisor Magazine describes its audience as financial planners, registered investment advisors, and independent broker/dealers serving affluent, high-net worth clients. As you would expect, this magazine typically focuses on the merits of very complex investment strategies designed to impress wealthy clients. Fixed annuities are rarely mentioned.
Thus, it was interesting to read an article in their October 2009 issue entitled “Annuities for the Middle Class?” The popularity of annuities with the middle class seemed to surprise the author of the article, Senior Editor Eric Rasmussen.
Here are some excerpts. The highlighting was added by us:
Since the market collapse last year, more investors have been turning to annuities – the ultimate chastity belt at a time when wild volatility in the stock market has reined in more promiscuous behavior and risk. Given the widespread fear in the Great Recession, it’s no surprise annuity sales have skyrocketed over the last year.
As you can see, annuities are remarkably popular with the middle class, particularly in the absence of other products that offer their appealing combination of safety, tax deferral, and attractive interest rates.
What this magazine did not publish, but which nonetheless was found by the survey, was that over 90% of annuity owners believe they have done a very good job of saving for retirement, and they think their annuities contribute to a great extent to this preparedness. Also, 79% think that annuities are an important source of retirement security and make them feel more comfortable in times of financial uncertainty.