The Markets March 19, 2019

Medium and Large Plans Drive Peak Pension Risk Transfer Sales in 2018

In 2018, single premium buy-out product sales peaked at $26 billion, more than 14% higher than 2017, according to LIMRA Secure Retirement Institute’s quarterly U.S. Group Annuity Risk Transfer Survey.

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U.S. single premium pension buy-out product sales exceeded $10.4 billion in the fourth quarter of 2018, nearly level with fourth quarter 2017 results.

This is only the third time fourth quarter sales have surpassed $10 billion, according to LIMRA Secure Retirement Institute’s quarterly U.S. Group Annuity Risk Transfer Survey.

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In 2018, single premium buy-out product sales peaked at $26 billion, more than 14% higher than 2017. Total single premium product sales (including buy-ins) exceeded $11.3 billion in the fourth quarter 2018. For the year, total single premium product sales were $27.3 billion.

“A big driver of the 2018 buy-out sales was a combination of mid- to large-PRT [pension risk transfer] deals,” says Eugene Noble, research analyst, LIMRA Secure Retirement Institute. “We also saw two new insurance companies enter the PRT market this year.”

Total assets of buy-out products were $135.5 billion in 2018, more than 18% higher than the prior year. Survey participants reported 29,632 contracts sold as of December 31, 2018.

Seventeen companies participated in this survey. A breakout of pension buy-out sales by quarter since 2012 is available in the LIMRA Data Bank.
Client Service March 19, 2019

Half of Americans Believe All Advisers Must Act in Their Best Interest

Many do not know if their adviser is technically a broker/dealer or an adviser, Personal Capital learned in a survey.

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Nearly half, 48%, of Americans incorrectly believe that all financial advisers have a legal obligation to act in clients’ best interests, Personal Capital learned in a survey, which it summarized in a report, “How Many Americans Are Still in the Dark About Their Financial Advice?”

In addition, 65% of investors who work with a financial adviser mistakenly believe the adviser can only make recommendations that are in a client’s best interest, up from 46% in 2017. In addition, 18% were unable to differentiate whether their adviser is a broker/dealer or fiduciary.

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Although 30% think advisers are likely to take advantage of clients, nearly all (97%) believe their adviser is trustworthy.

Only 44% of Americans know the amount of fees they pay on all their investment accounts, and 20% do not know how their adviser is compensated. Personal Capital says that fees can add up to more than $400,000 in an investor’s lifetime.

Asked who they would trust their money to, 28% said a registered investment adviser, 21% said a big bank/brokerage firm, 14% said a local advisory company, 8% said an online platform, and 33% said none of the above.

Asked whether they would follow their adviser if they joined a new firm, 80% of Millennials said yes, but this is true for only 70% of Gen Xers and 66% of Boomers.

Asked about the adoption of technology by financial services companies, 74% said it makes it more convenient to view their portfolio, 69% said it makes it easier to use and 44% said it helps them understand personal finances. However, 69% said they are concerned about cybersecurity, 46% prefer traditional financial interactions, and 36% have privacy concerns.

Personal Capital’s findings are based on a survey that Engine conducted among 2,007 adults last December.  The report can be viewed here.

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