Independent and insurance brokers/dealers are the strongest sales channels for variable annuities, according to a report from the Insured Retirement Institute.

But generating income throughout a client’s retirement doesn’t come without challenges. IRI's “2011 Portfolio Construction Dynamics” report — in partnership with Cerulli Associates — explores these challenges and offers insight on how to grow adviser acceptance of variable annuities as a retirement income solution.

“IRI research shows that the number one retirement savings concern among Boomers is that they will outlive the funds they have accumulated for retirement,” said IRI President and CEO Cathy Weatherford. “Insured retirement strategies can help provide the security Boomers are looking to—dependable, guaranteed income throughout their retirement. And based on the findings of this recent report, advisers looking to diversify their clients’ portfolios should consider variable annuities as a baseline income investment in their clients’ retirement plan. As a portfolio foundation, insured retirement strategies can provide advisers flexibility to meet the unique needs of their clients.”

The report recognizes the growth of the fee-based pricing model used by independent brokers/dealers and adviser account managers. As of 2003, only 46% of advisers reported receiving a majority of their revenue from advisory fees. By 2010, that level increased to 66%. Moves to fee-based advisory accounts generally serve to streamline an adviser’s practice as technology solutions have simplified ongoing fee-account management.

The report also suggests that because variable annuities remain a transactional product, largely priced on a commission basis, the positioning of this product will have to significantly evolve if insurance companies wish to have success selling through RIAs. Even asset managers that have had success in the RIA channel report that traditional wholesaling techniques are ineffective with RIAs. Success with RIAs requires a softer, more consultative sale, and strong sales personalities can be a turnoff for these advisers, the reports states.

-- This article first appeared on Insurance Networking News.