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Companies embracing annuities in troubled economy

10/18/11

In a sudden turn of events, wirehouses are now embracing fixed index annuities, which offer investors a guaranteed minimum return and opportunity to be involved in stock market gains, according to Investment News.

Wirehouses are companies whose different branches are linked by a communications system enabling the sharing of financial information, research and prices.

Fixed index annuities have been avoided recently because of the economic climate and the fact that they have higher commissions and longer surrender periods, which was met with criticism from regulators and plaintiff's attorneys, Investment News reported.

"In the old days, indexed annuities weren't a product you could be proud of selling," said John Mulhall, managing director at Merrill Lynch Global Wealth Management, the news reported. "You had 15 percent commissions and abusive producers who wanted to sell away from the broker-dealer. Five years ago, nobody hated that product more than me, but now I've seen the light."

According to the report, wirehouse product sales have surged to $53 million during the first half of the year, up from the $10.6 million mark recorded during the same period in 2010.

Bank of America, Merrill Lynch and Morgan Stanley are just a few of the companies that are planning to add on their respective numbers of fixed annuities soon.

According to Costa Financial, fixed income annuities are the best investment for people who are just about to exit the workforce.  

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