Annuities have enjoyed two years of skyrocketing sales, but that hasn’t always translated into high customer satisfaction. Now, according to a new study, that’s beginning to change.
The consumer research company J.D. Power has unveiled its 2023 U.S. Individual Annuity Study, and it shows a clear improvement in client experience. On average, respondents gave their annuities a score of 800 out of 1,000 — an 11% jump from last year.
“Satisfaction is up this year, but it doesn’t always work that way,” said Breanne Armstrong, director of insurance intelligence at J.D. Power. “We’re starting to see a real evolution.”
The study ranked 16 different annuity brands in terms of customer satisfaction, based on a survey of 3,579 people who purchased them. At the very top of the list was F&G, formerly known as Fidelity & Guaranty Life, with a score of 843.
The full list can be found at the end of this article.
MassMutual took the silver medal, with a score of 827, and Nationwide took home the bronze, with a score of 826. Filling out the top five were Pacific Life, which scored 824, and New York Life with 822.
How did these companies get such high marks on their annuities? Armstrong says it’s largely thanks to better websites and apps, which help customers understand what they’ve bought.
“I think some of it is the digital components — some providers have started having more digital tools available,” she said. “Even if the customers are purchasing through a financial advisor [instead of] directly through the annuity provider, we still see a positive lift from interacting digitally.”
At the bottom of the rankings was Midland National Life, which scored just 762. In their case, Armstrong said, the problem had less to do with customer service than with the products themselves.
“For Midland, a lot of that decline actually came from the product offerings piece,” she said. “There are definitely some gaps there as far as being able to explain the terms of the annuities.”
In recent years, annuities have sold at record-breaking speeds. Last year saw the products’ highest annual sales in history, according to LIMRA, an industry-funded research group — and 2023 is on track to surpass it. In the third quarter of 2023, total annuity sales reached $89.4 billion.
“We actually have to redefine what a good quarter is,” said Todd Giesing, director of annuity research at LIMRA. “It used to be that over $60 billion was a good quarter. Now it seems you’ve got to be pushing $90 billion.”
But not all financial advisors — or their clients — are comfortable with the products. Some planners say that wariness stems from an outdated view of annuities as complicated and difficult to understand.
“We view annuities as playing a role in certain clients’ retirement plans,” said Ryan Salah, a certified financial advisor and partner at Capital Financial Partners. “Annuities tend to get more bad publicity than good because they are complex, can be expensive, and there are a lot of bad annuities out there.”
According to J.D. Power, better transparency through digital channels may be helping to solve those problems. Below is the full list of the study’s rankings. (TIAA is not included because its annuities are not available to the general public, but it did earn an above-average score of 807.)
To see how all 16 annuity providers stacked up, scroll through the cardshow below: