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For years, many sophisticated financial advisors and others have taken a very dim view of insured investment products, like variable annuities. The high internal fees, combined with juicy commissions and complex withdrawal rules, have spawned a relentless series of articles in the consumer press castigating VAs as bad investments.

Yet in the wake of last year’s market meltdown, clients are searching for guaranteed investment products that protect principal as never before. An article in the Wall Street Journal on July 22 noted many variable annuity investors received increases of 6% or more in their accounts, while holders of equities and mutual funds typically realized losses ranging from 30% to 50%.

The article quoted a retired Dallas accountant and variable annuity investor as saying she felt bad discussing investments with her friends and neighbors who had seen their account balances vaporize.

It is always said that variable annuities, like most insurance products, are sold, not bought. But even if that retired Dallas accountant kept her annuity results quiet, many investors are finding out about these returns.

A survey being released by Financial Research Corp. (FRC) reveals that in the past six months, 36% of advisors (broadly defined) said more than half their clients had asked them about guarantees. Fully another 58% said up to half their client base had inquired about them.

It shouldn’t be surprising that 84% of all advisor respondents indicated the subject of guarantees was being discussed more than it was a year ago.

When FRC asked what clients were looking for in a guarantee, guaranteed principal preservation topped the list, dwarfing other attributes like guaranteed income level in dollars and guaranteed rate of return in growth. Surprise, surprise.

Breaking it down by advisor channel, 60% of independent RIAs cited guaranteed principal preservation as the dominant attribute perking up client interest in the product. For advisors affiliated with independent brokerages, that figure was 57%; at wirehouses, it was 56%; at regional brokerages, it reached 61%; at banks it was 75%.

The surging interest in guarantees creates a dilemma for advisors who now need to decide whether they want to consider a product that they still may think is uncertain. That's because several insurers were forced to seek TARP fund relief and other forms of outside capital to maintain their guarantees after they promised more than they could deliver. Also, this near-death experience is prompting many insurers to change the terms of the guarantees they offer in ways that make them less favorable to the wave of investors suddenly interested in them.