Annuities: The Unknown Retirement Solution If I had asked people what they wanted, they would have said faster horses. Henry Ford Clients are looking for annuities they just might not know it yet. At Athene, we spend a lot of time reaching out to financial professionals and customers through surveys and market research. Through our research, central themes emerge that verify what we, as an industry, already know: People know what they want for their retirement, but the benefits of an annuity and how annuities can fit into their overall retirement plan, remain an enigma. Financial professionals play an important role in educating clients on all the available options including annuities and the benefits they can provide. I know what I want, but I m not sure I want that Although annuities date back to the Roman Empire, they have evolved significantly over time into sophisticated insurance products. Annuities sold as part of an individual retirement plan have only really become popular in the last few decades and Fixed Indexed Annuities (FIAs) just turned 20 last year a relative baby in the industry. No wonder many clients are still wary of annuities as a viable retirement planning tool. 20143 Products issued by Athene Annuity and Life Company, West Des Moines, IA (12/16)
In a recent survey of over 1,000 people, ages 40 to 80, we found that over 50% said they were either unfamiliar or very unfamiliar with fixed indexed annuities. 1 This lack of familiarity is sure to hinder the consideration of annuities in retirement planning. In fact, 38% of this same group stated that they were somewhat unlikely or very unlikely to even consider an annuity as part of their retirement portfolio. Additionally, 45% of respondents said that they would not consider an annuity because they just don t know enough about them, and that they are too complicated. However, when these same prospective clients were asked what they want from their retirement investments, they came up with the following wants, which can all be answered by an FIA: What clients want from their retirement investment The ability to pay bills / living expenses during retirement The ability to cover emergencies during retirement Ranked as important or very important 94% 92% Can an FIA help to provide this? A guaranteed steady stream of income for life 88% Enough money in case of medical confinement 87% 2 Their spouse / partner taken care of in case of their death Moderate growth in return for no direct downside market risk Tax-deferred growth 76% 66% 66% These financial considerations that are important to clients are all features that can be found in FIAs, yet FIAs were rarely considered. And, this limited knowledge around FIAs goes beyond just clients. Our study also collected responses from newly contracted Athene financial professionals. Answers revealed that nearly 25% have never written an annuity policy. When asked about the challenges of selling annuities, 5% of financial professionals surveyed said they just don t know enough about them to sell them to their clients, and another 4% said they believe FIAs are too complicated to explain.
What can I, as a financial professional, do? It s important to sell a solution not a product. Don t start off the conversation asking what product they want because, as evidence has shown, they don t know what they want. Instead, try this more holistic approach to retirement planning 1. Educate yourself first. You want to make sure the solution you recommend is not only suitable for your client, but fits into their overall view of retirement. Make sure you are up to speed on all the ins and outs of each product type. Know their features and benefits as well as the carrier s history and competitors.
2. Get yourself noticed. According to the Google search trend analytics shown below, far more people go online searching for happiness than annuities. Why not use this to your advantage? If you want your website, blog or article to be seen, post content that strikes a note with your audience for example, a list of the top ten things people enjoy doing most in retirement. September 3, 2015 3. Engage clients and find relevance. Planning for retirement is very personal. Each plan is as unique as the person creating it. Nobody wants to sit down with an advisor and feel like they are getting the pitch. Asking retirees what makes them happy is a much better conversation opener than asking them what retirement product they are looking for. You might be surprised how quickly the conversation turns towards the benefits of an annuity. Find out what your clients need as far as their emotional portfolio by asking about their hopes and dreams so you can better show them the powerful link between an annuity and their financial happiness in retirement. Then, customize a plan that works for them. 4. Educate your clients. Your clients need to understand exactly how an annuity will help them achieve their goals and how an annuity may lead them to a happy retirement. They need to understand all those bells and whistles as much as you do and feel comfortable with their buying decision.
Maybe an annuity is a good idea after all. It may sound like a pretty hard sell to get someone to buy something they don t know they want, but it s easier than you think! By satisfying the needs of a clients emotional portfolio, as well as their financial portfolio, financial professionals can help their clients understand why they want an annuity. With this holistic approach, consumers will have a much better buying experience, and annuities will practically sell themselves. Your clients will also be in a better position to not only achieve their own retirement goals and dreams, but become far more willing to pass the word along (and maybe your business card) to help others achieve theirs as well. 1 Planning for Happiness, Athene, December 2014. Participants in this study were proved through the Harris Panel, including members of its third party panel providers. 2 A fixed indexed annuity is not the same as long-term care insurance and is not a substitute for such coverage, nor should it be sold as such. Guarantees provided by annuities are backed by the financial strength and claims-paying ability of the issuing insurance company and are not guaranteed by any bank or the FDIC. Guaranteed lifetime income available through annuitization or the purchase of an optional income rider for a charge. Annuities are long-term products of the insurance industry designed for retirement income. They contain limitations and exclusions, including withdrawal charges and a market value adjustment that will affect contract values. This material has been prepared for informational and educational purposes only. This information is not sponsored or endorsed by any governmental agency. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation. Fixed indexed annuities are not stock market investments and do not directly participate in any stock or equity investments. Market Indices may not include dividends paid on the underlying stocks, and therefore may not reflect the total return of the underlying stocks; neither an Index nor any market-indexed annuity is comparable to a direct investment in the equity markets. Clients who purchase indexed annuities are not directly investing in a stock market index. Products not available in all states. This material is provided by Athene Annuity and Life Company, headquartered in West Des Moines, Iowa, which issues the product described herein. The term financial professional is not intended to imply engagement in an advisory business with compensation unrelated to sales. Financial professionals will be paid a commission on the sale of an Athene annuity. ATHENE ANNUITIES ARE PRODUCTS OF THE INSURANCE INDUSTRY AND NOT GUARANTEED BY ANY BANK NOR INSURED BY FDIC OR NCUA/NCUSIF. MAY LOSE VALUE. NO BANK/CREDIT UNION GUARANTEE. NOT A DEPOSIT. NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY. MAY ONLY BE OFFERED BY A LICENSED INSURANCE AGENT. 20143 For financial professional use only. Not to be used with the offer or sale of annuities. (12/16)