Financial Advisors Face a Variety of Challenges in 2012

Posted by adaniels in Blog on December 30, 2011

A significant number of financial advisors are increasingly concerned about the stability of some of the insurance products that they sell to clients, RegisteredRep.com reports.  A study by LIMRA reveals that financial advisors are worried on several fronts, including some insurance companies’ “exposure to the stock market via product principal guarantees,” RegisteredRep.com says, as well as interest rates being low.

LIMRA found that of the financial advisors surveyed, 26 percent of them value an insurer’s “financial strength” as being one of the top two factors in picking an insurance product in 2011, a huge increase from the 16 percent surveyed on this same issue in 2008 and 2003.

In addition, RegisteredRep.com talked with Stephen Irwin, a vice president for A.M. Best in the Life/Health division. He said that A.M. Best is thinking about changing its rating for the industry from a stable rating to a negative one due to all the financial crises going on around the world, as well as the continued economic doldrums in this country. However, he did acknowledge that “the financial strength of the life-health industry has been steady despite many macroeconomic challenges.”

Another survey, this one by Conning Research & Consulting, found that the life settlement industry, where investors purchase other people’s life insurance policies, is sinking like a stone, due to the inability to get premium financing. The article says that life settlement sales went down approximately 50 percent in 2010, to about $3.8 billion in value, the third year in a row that sales dropped.

Written by Lisa Swan

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