After having released the first quarter sales numbers for indexed annuities, the press began acting like Chicken Little. "The sky is falling! The sky is falling! Indexed annuity sales are falling, too!"
I tend to take the more cool, calm and collected approach to these matters due to my background in market research. The sky isn't falling. Indexed annuity sales are down, yes, but they are not out.
The 44 companies that were selling indexed annuities in the first quarter sold an aggregate of $7.8 billion in sales of these retirement savings products. That is a really huge number. In fact, it is enough for everyone in the world to own a $1.10 indexed annuity. (That paycheck for life would be a pretty small amount, but you get the idea.)
However, sales are down when compared to both the previous quarter and the previous year. First, let's take a look at the most recent numbers against the previous quarter's sales (and get inside the mind of a market research analyst).
Apples to oranges
Fourth-quarter indexed annuity sales are almost always phenomenal. This is because annuity salespeople are scrambling, submitting as much business as they possibly can, in order to qualify for trips, incentives and bonuses. So, a comparison of first quarter to the previous quarter's sales is never a fair one; in fact, it is an apples-to-oranges evaluation. As a result, this quarter's 8.21 percent drop in sales is something an analyst like me would disregard.
