The increase in both market volatility and interest from the baby boomers in generating retirement income should be a slam-dunk for variable annuities. And unlike mutual funds and ETFs, sales of the products are near their pre-market crash levels.
But the recent uptick in risk aversion highlights the paradoxical dilemma of these complex instruments: right at the time risk-shy advisors and investors are most interested, the product providers pull back because of the risks involved. In protecting themselves, they limit the options within the contracts, or increase the cost of riders.
