While financial advisors know the value of annuities when it comes to protecting client assets and generating retirement income, a new survey by Nationwide shows they’re discovering another benefit – 73% of financial professionals who sell annuities believe they help them retain clients.
“It’s no surprise financial professionals are leveraging annuities in client portfolios as evidenced by another record-breaking year of sales in the annuity industry,” said Rona Guymon, senior vice president of Nationwide Annuity Distribution. “What might be unexpected to some is the long-term relationship that can be built with clients as a result of an annuity purchase.”
Nationwide, which provides a full range of public and private sector retirement plans, annuities and mutual funds, conducted the Annuity Financial Professional Research survey among over 500 annuity-producing financial professionals.
“We know annuities are complex investment vehicles that sometimes require more explanation and guidance than other solutions. This presents an opportunity for financial professionals to connect with their clients on a deeper level, driving conversations to understand their long-term goals as they work together to build a holistic plan. These interactions can set the stage for a more meaningful and trusting relationship.”
While the benefits of including annuities in retirement plans is clear – protection against market volatility, guaranteed retirement income and a source of tax-deferred growth –
financial professionals are still facing challenges incorporating them into client portfolios. Although 27% of their clients own at least one annuity, financial professionals across all distribution channels say they would prefer 38% have one or more annuities in their portfolio – but are deterred from reaching this goal by a number of obstacles:
- 78% said clients have negative annuity preconceptions
- 60% clients find annuities are overwhelming
- 54% external factors, like TV, radio and podcast shows, diminish annuity appeal
“Because there is so much information out there about the benefits and drawbacks of annuities, it’s understandable why some clients might find them confusing or come into a conversation with an incorrect understanding of how they work,” Guymon said.
“It’s important to stick to fact-based messages with clients to dispel misinformation, helping to break down common myths so they can understand how annuities might fit with their specific needs and goals.”
In order to effectively sell annuities, financial professionals say they are turning to annuity carriers for help – specifically when it comes to materials they can use to educate their clients. Fifty-four percent said they are seeking client-facing materials on annuities as a source of guaranteed income, and 43% said they want more on annuities’ role in an overall financial plan.
“Financial professionals should lean on annuity providers for help educating clients on the role annuities can play in their portfolios,” Guymon said.
Financial advisors also play a crucial role in educating employers about guaranteed income solutions and making sure that plan participants have access to these useful retirement tools.
Most employers are interested in including guaranteed income options in target date funds (85% of private and 91% of public employers) or managed accounts (81% of private and 87% of public employers), representing a significant opportunity for financial professionals to help plan sponsors fill this gap for their employees, according to an earlier Nationwide Protected Retirement survey report.
“Employers and financial professionals must prioritize these solutions,” said Cathy Marasco, vice president of Protected Retirement solutions at Nationwide.
