Almost one third (31.82%) of advisors won’t recommend annuities, even if their clients ask about them. Those are the results of a new survey of 101 financial advisors from RetireOne and Jackson National Life Insurance Co.
The primary reasons for advisors not recommending annuities come down to value, lack of liquidity or complexity.
Nonetheless, the fact that over two thirds of advisors are now open to recommending annuities to clients is serious progress for the insurance industry, which has struggled to sell the products to advisors for years.
“Given the uncertainty around COVID-19, the coronacrash of Spring '20, and the economic climate, we hear from advisors that more and more clients are expressing interest in annuity protections for their portfolios,” noted the survey.
"We are not surprised to see that RIAs are open to recommending annuities for clients who inquire about them," said Scott Romine, President, Retirement Solutions, Jackson National Life Distributors LLC, in a press release. "While these results are encouraging, there is still an opportunity to educate a large portion of these financial professionals about next-gen annuities designed for RIAs and how they can help reduce the cost and complexity."
Almost half (45%) of the financial professionals surveyed indicated that they discuss retirement income plans during initial meetings with clients. However, over 1 in 4 say they don't begin to talk about converting defined contribution plans into retirement income until clients are within five years of retirement.
"We uncovered a missed opportunity for a pretty big swath of RIAs with this survey," said David Stone, RetireOne Founder and CEO. "Annuities in general, and lifetime income solutions specifically, are especially helpful for yielding some certainty in uncertain times. Financial professionals who wait until clients are within that 10-year retirement window to discuss income strategies may miss out. Utilizing lifetime income solutions at the right time can maximize opportunities to bridge the fragile decade, when their clients face one of the more serious headwinds to retirement security: sequence-of-returns risk."
The survey also found that nearly half of RIAs rely on solution-oriented discussions with topic experts for product selection and/or portfolio strategy, while websites (64%) and publications (59%) lead the way. Only 38% of respondents say they rely on "Thought Leaders" for guidance.
