Signs are pointing towards an expanding fixed indexed annuities market.
Finally, the SEC has decided that they want to treat fixed indexed annuities like equity-type investments, instead of insurance products. For decades, the SEC and Department of Labor went back on forth on how to treat FIAs, but after a federal appeals court struck down a DOL rule in 2018, FIAs are now finally looking like equity investments.
Following the removal of the DOL rule, FIA sales shot up, with sales hitting $20 billion in the second quarter, according to LIMRA. That’s the highest quarterly sales in their history. Furthermore, fee-based FIA sales reached $193 million in the second quarter, up 188% from the prior year. An encouraging growth for what may become a larger part of the FIA market in the future.
The Secure Act, meanwhile, may also boost FIA sales. The act passed the House in June and is expected to get through the house before the end of the year. One of the provisions within the act, will allow plans like 401(k)s to add annuities as investment options inside the plan. That should certainly help sales down the line, if not immediately.
Thanks in many ways due to regulators finally relaxing, positive changes to federal laws, and a quickly growing market, fixed income annuities seem to be ready to take off. And with the market in turmoil as it has been over the last year, it seems only likely that investors will look for a more secure place to stash their cash.
