J.G. Wentworth Forecast:Consumers Expected to Increase Sales of Annuities They Hold in 2006, Continuing 3-Year Trend in Personal Finance
Bryn Mawr, PA, December 5, 2005 – American consumers are
expected to more than double the sales of existing tax-deferred
annuities they hold in 2006, as the economy moves into what
appears to be a transition phase in which liquidity will be
valued over illiquid holdings, according to J.G. Wentworth. As a
result, the company said, sales by consumers of existing
annuities are likely to hit a three-year high next year even as
the annuities market itself continues to grow. “Based on the
public data we’ve seen as well as proprietary information from
agents and brokers active in this market, 2006 is likely to be a
watershed year for sales by consumers of annuities they
purchased, often in very different economic environments,” said
Michael B. Vaughan, managing director of the J.G. Wentworth
Annuity Purchase Program™. “There are, according to industry
estimates, more than $1.6 trillion of assets backing annuities
in the U.S. alone. We estimate that 5-10%, or $80-160 billion,
of those annuities are in the hands of consumers who would sell,
in any given year, if they could.” Vaughan pointed to the
following five factors as supporting J.G. Wentworth’s
— Liquidity matters in a changing economy. Consumer confidence,
and optimism about more liquid investments like stocks and real
estate, remains high.
— Investment needs change. Changes in investment strategy or
goals, or even just life changes like illness or divorce, often
force hard reviews of existing assets and investment decisions.
Unexpected medical problems can also be a factor.
— Buyer’s remorse is real. In fact, according to a 2003 survey
of immediate annuity owners by the American Council of Life
Insurers (ACLI), more than a quarter of respondents (27%) were
“concerned they may be unable to sell their annuity if they want
the money for something else” and 4% believe the decision to
purchase an annuity was a poor one.
— Annuity ownership can complicate estate planning and wealth
transfer. The inheritance of an annuity, where there is
significant divergence between the financial objectives of the
original annuitant and the heir, can create issues.
— Even the “experts” don’t advise annuity ownership for all.
The Motley Fool, a leading personal finance media company, said,
“Annuities by and large: are too expensive, offer mediocre
insurance coverage, restrict the owner’s investment choices to
so-so, ho-hum, quasi-mutual fund subaccounts…and lack
liquidity.” Vaughan added, “Tax-deferred annuities have been a
valuable personal finance tool for many consumers and offer the
benefits of stable, secure and guaranteed income.
Unfortunately, annuities can also become a very inflexible
solution for many consumers when they face the need to review
estate planning or investment goals, or simply realize that
their life circumstances have changed.”
About J.G. Wentworth J.G. Wentworth, the sponsor of the Annuity
Purchase Program™, is the nation’s oldest, largest and most
respected buyer of annuities. For more than 14 years, J. G.
Wentworth has been purchasing annuities as well as other
deferred payment streams. During this time, the company has
purchased over $2 billion of future payment obligations. The
company’s annuity-backed notes are rated AAA by Standard &
Poor’s and AAA by Moody’s and sold to institutional investors.
J.G. Wentworth is based in Bryn Mawr, PA. For more information
about J.G. Wentworth and the Annuity Purchase Program, go to www.jgwfunding.com/annuities.asp. # # #
About the author:
This article submitted by DMi Partners, the itneractive
marketing agency representing JG Wentworth.