Annuities can be a complex topic, especially given the near-constant changes in retirement strategies, market conditions, the economy and technology. Fortunately, there’s a podcast for that!
The aptly named “That Annuity Show” explores the benefits and trends seen in annuities, all in an effort to help independent financial professionals find success with their clients. The hosts provide seasoned perspectives and insights that listeners can reflect on as they build their business and expand their annuity offerings.
David Hanzlik, TruStage™ Vice President of Annuity and Retirement Solutions, recently joined hosts Paul Tyler and Ramsey Smith to discuss the changes in annuities we saw in 2023, as well as what to expect in 2024 with the potential for growth in niche markets and what impacts artificial intelligence (AI) might have on the industry.
Listen to “That Annuity Show” episode 208: Improving the #AnnuityUX in 2024 with David Hanzlik
Episode transcript
Opening & Introductions
Paul Tyler
Hi, this is Paul Tyler, and welcome to another episode of “That Annuity Show.” Ramsey, good morning.
Ramsey Smith
Good morning to you. Great to be here as always.
Paul Tyler
It is, and we've got a great guest, a returning guest, Mr. Dave Hanzlik, Vice President, Annuity and Retirement Solutions at TruStage, formerly known as CUNA Mutual Group. Dave, welcome back.
David Hanzlik
Hey, thanks, guys. It's great to be back.
2023 Recap (01:44)
Paul Tyler
We actually had a chance to catch up in person at the LIMRA Annual Conference, which was great. But, listen, it's hard at the beginning of the year not to look back and then look forward. Looking back to 2023, it was a big year in the annuity industry and also a big year for your company. Do you want to talk about the changes and the new name?
David Hanzlik
2023, as you mentioned, TruStage — we went to market and changed our name and brand in 2023. If anyone’s done this before that's listening, they know this is a lot of work and wonderful, wonderful dedication from a bunch of talented folks. We had a family of brands and we recognize that we want to, over time, really connect across all the life stages of our customers, the financial services solutions that we can bring in. A huge part of that is our annuity and retirement solutions that help people as they're getting to and living through retirement. So I'm very excited about it and happy that we're through the first phase of it.
Ramsey Smith
Fantastic. So look, we're coming off, to Paul's point, a great year in annuities. A lot of that's been driven by the rate profile. And so, curious to hear your thoughts — one on sort of what segments you saw doing well and why you think they did well in 2023. And then we can sort of shift gears — 2024, what that's like, what that's probably going to look like based on what could be higher rates for longer, or maybe things sort of pull back a little bit. So tell us a little bit about 2023 for starters.
David Hanzlik
First of all, as we entered into 2023, we're coming off a historic year for the annuity business in general — over $300 billion sales in 2022. And we're probably going to end 2023 over $350 billion in sales. So another 20-plus percent year-over-year growth number. Ramsey and Paul, we heard this — the rate environment is a big, big mover of this. And I think it's a couple of things we've seen. Like one is, it's helped recapture the imagination of advisors recognizing where annuities can help their clients. And in particular, we've seen the fixed annuity space, the MYGA multi-year guarantee annuity space, has done extremely well. And fixed index annuities did really well. And those are, I think, a lot of that was driven by interest rates and advisors identifying that the value proposition was really hard to ignore for their customers.
What I saw in 2023 was a continuation of growth and a number of other categories as well. The registered index linked annuity space had another year that is over 10% growth. And probably going to reach $50 billion of sales in 2023.
Initial 2024 Outlook (07:41)
Ramsey Smith
So one of the things you and I talked about a bit, Dave, independently, was some other areas that have seen growth that have been sort of smaller markets. Is that an area that you think will continue to see growth and attention? I can say that certainly, I've received inbound calls on them in a way that I hadn't in the past. So I'm curious if you're seeing any of that in your business profile and if you think that might be part of the future as well.
David Hanzlik
Yeah, I do think Ramsey, as we move into 2024… Advisors and clients are going to take a renewed interest and look at annuities in general, not just MYGAs or fixed index annuities. They recognize, well, there's value here and that the higher rate environment has kind of been an impetus for looking at, for example, deferred income annuities. I think part of it was look, because of the rate environment, this could actually just help people identify that there's a deal here. And there's something that we haven't been able to tap into for a few years because of how low rates have been.
I think just generally, though, income has been something that in 2022 and 2023, a lot of people weren't focusing on. But I think at the latter parts of 2023, we started to see more interest in it from an industry perspective. And I think you can continue to see that. And if you look at industry data, it hasn't really gone away. It's just the accumulation side has just exploded, right?
Ramsey Smith
100%, yeah.
David Hanzlik
And the need's still there, right? Part of it is a number of discussions, plenty of these discussions in 2023 where people are like, well, rates are so great. This is the time we should… There's a deal here. And for me, part of it's, well, this is part of what annuities are supposed to help people with, which is help them not get swayed by ups and downs in markets.
So that is something I think, as we move into 2024 again, looking at, “How are people looking at plans,” their long-term plans, and I think a crisis can help people re-examine what their long-term goals are. Someone feels like they could be all in equities and then markets drop 30%. Maybe they really can't be. But I think that's something that will be a really interesting topic and item to kind of navigate in 2024.
Future Opportunities (13:23)
Paul Tyler
Dave, where do you see the biggest white space in the business? I mean, there are ones where if you look at the reports, you say, okay, well, how do we increase penetration in the RA channel? Ramsey, your topic, how do we get more annuity sales in the workplace? The numbers are low, the opportunity is big, but it's also the barriers are really high. If you think of… you're CEO of the industry. Where would you say we should be putting our bets here over the next few years?
David Hanzlik
I think those two topics, as well as if you think about the topics of income and retirement plans and the solution, that what's consistent in all of them is the complexity of trying to have a technology stack and operational stack that can fit within how those marketplaces work. Because they weren't created to accommodate the kind of guarantee solutions. And so I think that's the big challenge, all three of those are really interesting opportunities.
But if you're asking me like, next few years, where do you think the white space is? This is no surprise given what our company focuses on. I still think registered index link annuities, because it addresses the need. People are using annuities because they want downside protection. And then with RILAs, they have the upside potential that they need. And because of where rates are, does this mean RILAs aren't as important?
And you still saw double-digit growth in RILAs in 2023. And when I talk to my counterparts and other companies, everyone has a RILA or is looking at it because I think it's just a really creative solution that can bridge a gap, because people need to continue to grow their asset base, but guarantees are a wonderful way of helping them navigate risk and control their behavior risk as well as stabilize the portfolio.
Ramsey Smith
Can I just sort of extend that a little bit? Just curious, and I have a follow-up comment. So RILAs are interesting. RILAs are registered. So a potentially different type of advisor has to sell it, right? And so my question is, is there — beyond just the fact that it has practical implications for the customers — does it open up a new target audience? Has it opened up a new target audience for you in terms of advisors that you could work with?
David Hanzlik
Yeah, we've seen it in two fashions, Ramsey. One is, we found that some advisors that are registered tend to work with fixed annuities more, fixed index. We found that this has kind of helped them open up a better way of getting after upside potential with their customers, with a customer base that tends to be more conservative. So this has been able to help those advisors and have a more logical solution to help their customer base.
The other place is, advisors that just really weren't using annuities, right? Because they're very comfortable with efficient frontier optimization. And this is something we have many conversations where advisors are like, “How do you do this?” I think it could be something that could help us with the RIA space — traditionally a space that's more focused on just not using guaranteed solutions as much.
2024 Priorities (22:50)
Paul Tyler
If you had a New Year's resolution list for the industry, what would make the top of the list there to make it easier to sell products to clients?
David Hanzlik
Yeah, I think it would really be a focus on working with the distribution partners on how the solutions are seen and evaluated. And it goes back to the pattern recognition and us really working hard with our partners, where this is similar to things that they're comfortable with, and how do we fit them within that technology and operational and process stack and say, hey, look, it's not the same as what you have. It has some advantages that allow it to be another arrow in the quiver. So I think the focus on education of how this is similar and then how do we make it as easy as possible to kind of fit it within the process.
The Possibilities of Artificial Intelligence (25:12)
Paul Tyler
So I was there at LIMRA on this platform. This panel talked about AI, generative AI. Boy, great for pattern recognition, great for… What kind of role is that going to play in 2024 in our industry, do you think?
David Hanzlik
Well, I think every single company in the industry is looking at it and trying to figure out, because I think we've all seen the applications of it. Like, hey, look, it'll write a term paper in 10 seconds. It'll create a 40-slide PowerPoint for you in 10 seconds. Us and our peers are all looking at, where are some places that it can be used?
But it's one of those things that there's a host of other issues that you have to navigate, because all of our companies are handling very sensitive information. And so, part of what we need to do is make sure we're… We have it in the right spots and really understand and test through it. But I think for us again, in 2024, I think the industry will be more around how can we make operational processes more efficient and then just watching… Are there other places we can extend it and how can we fit that appropriately within privacy, security, regulatory frameworks? Because again, there's definitely sensitive stuff here that we all deal with, and rightfully so.
Closing Remarks (28:17)
Paul Tyler
Dave, it was great to have you on here. Any parting thoughts, advice for people actively selling annuities and having these conversations with clients on a daily basis?
David Hanzlik
Yeah, maybe we kind of touched on this before, but two things. One is, I do think we should always navigate through recency bias. It's been a high-rate environment, but I think a lot of the opportunities are around with annuities in particular. There's some great innovation that's happened and continuing to explore how it can help from an income perspective, accumulation perspective. That's one layer. It's just… Continue to challenge what solutions you're using and how that fits in with the longer term plan that you're working with your clients.
And then the second one is, I think this theme that we're getting after and one that we'll continue to work on and focus on is, how are we trying to make the process of working with our industry as simple as possible, and how are we looking at tools like AI to kind of make these solutions and the partners we're working with as efficient as possible to help serve clients? Those are the two things that we'll continue to zero in and focus on.
Paul Tyler
All right, Dave, hey, thanks so much. Look forward to having you back. And we'll have to catch up with you later in the year. Ramsey, thanks. And thanks to all our listeners. Join us again next week for another great episode of “That Annuity Show.”
