What’s Up with Fixed Annuities?

Sales of fixed annuities have skyrocketed. New research sheds light on why that is happening and how they help clients in volatile markets.

By Matthew DiGangi, head of annuity distribution at MassMutual Strategic Distributors

Fixed annuity sales are up again this year, notwithstanding record-breaking sales in 2021. According to LIMRA Annuity Research, 2022 Q2 Fixed Rate Annuity sales totaled $51,335 billion, up 40% over 2021. It’s likely no surprise, given the heightened uncertainty about interest-rate increases. How will these rate increases affect your clients’ retirement portfolios? How can you help mitigate negative effects?

MassMutual commissioned Greenwald Associates to conduct research among 1,011 consumers and 250 financial professionals during March and April 20221. MassMutual Strategic Distributors was able to gain a deeper understanding about attitudes and perceptions regarding fixed annuities.

I am pleased to share a few of the survey’s top-line results that may impact your thinking about fixed annuities and the opportunities they represent for you and your clients. Keep in mind the study was conducted at the same time the Federal Reserve announced its first interest rate hike in more than three years. There have now been several even more significant rate hikes, with more on the way.

At the time the study was conducted, financial professionals and consumers differed widely in their degree of concern about rising interest rates and inflation. Financial professionals were significantly more concerned about fixed investments keeping up with the challenges posed by rising interest rates than consumers. Half of the consumers surveyed didn’t know how rising interest rates impact bond values. And 40% of consumers couldn’t identify a fixed annuity.

It could be that consumers have grown used to focusing on the performance of their market investments rather than view their portfolios in their totality. During the bull market that lasted from 2009 until the start of the pandemic in 2020, consumers were more than satisfied with the high rates of return delivered by their market investments that offset their fixed investment returns. Our recent survey showed that neither financial professionals nor consumers are very satisfied with current fixed-investment returns.

Now consumers are interested in making sure their fixed investments can help mitigate the dramatic ups and downs of the market, but likely don’t know how. Earlier I mentioned that 40% of consumers in our study did not know how interest rates affect fixed investments. For most consumers, fixed investments include a variety of bonds. Given the inverse relationship between bond prices and interest rates, e.g., when interest rates rise, bond prices fall, consumers need financial professionals to help protect their clients’ fixed investments. But how?

The addition of fixed annuities can provide guaranteed, tax-deferred increases in cash value, regardless of market fluctuations. Let me be clear. I am not suggesting that financial professionals replace bonds with annuities; rather I’m suggesting that they add fixed annuities as a means of maximizing fixed-investment returns.

It may also be beneficial for financial professionals to present to their clients the benefits of fixed annuities versus Certificates of Deposit (CDs). While both products feature guaranteed interest rates, fixed annuities offer consumers compounding interest, meaning they earn interest on their investment as well as on their returns. That means they can depend on fixed annuities to achieve both their savings and income goals.

Fixed annuities have one more compelling feature. They provide tax-deferred earnings until they are withdrawn. CDs do not.

According to our survey results, I learned that financial professionals only bring up fixed annuities with 30% of clients, recommending them to only 19% of clients. I learned financial professionals believe consumer interest in fixed annuities is limited to older, risk-intolerant clients. Yet, skyrocketing fixed annuity sales suggest otherwise. I hope I’ve made the case for the role fixed annuities can play in your clients’ fixed investment portfolios.

As I mentioned earlier, there’s a real need and ample opportunity for financial professionals to educate clients about fixed annuities. Clients were more than twice as likely to be very satisfied with the quality of advice they receive from their financial professionals when they’ve discussed fixed annuities with them. Only 26% said they were very satisfied with financial professionals who have not brought fixed annuities to their attention.

Both financial professionals and clients agree that the protection of principal is the most significant advantage of fixed annuities vs. other fixed investments. In today’s current environment with rising interest rates, the addition of fixed annuities to clients’ retirement portfolios is one way to help them secure their futures.

MassMutual Strategic Distributors (MMSD) offers its distribution partners a suite of annuity products that includes both income and fixed annuities, all backed by MassMutual’s 170 years of financial strength. Click here to learn more.


1The 2022 MassMutual Fixed Annuities Survey. MassMutual Strategic Distributors is a division of MassMutual®.

MassMutual has engaged WealthVest to provide wholesaling services. WealthVest is not a subsidiary of MassMutual and wholesalers are not MassMutual employees.

Annuity products are issued by Massachusetts Mutual Life Insurance Company (MassMutual) and C.M. Life Insurance Company. C.M. Life Insurance Company, Enfield, CT 06082, is non-admitted in New York and is a subsidiary of MassMutual, Springfield, MA 01111-0001. SDP5020 MM202509-302743     

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