Retirement is a market, not a product. It involves not just a product but multiple products. And it is more than income planning–and more than retirement planning.
That is the position of Bruce Parker, president and chief executive officer of Old Mutual Financial Network, Baltimore, Md.
What lies ahead is treating retirement as part of “lifetime planning,” he told National Underwriter separately.
Equity index annuities will be part of that world, he said in his speech, explaining that they are among many products that older consumers will use to meet their needs and address their risks. In fact, EIAs are coming on the retirement community “like a wave,” and people are going to them “in droves.”
The keynoter here for the annual Producers’ Forum & Expo sponsored by National Association for Fixed Annuities, Milwaukee, Wis., Parker noted that the age 65 and up population is growing so fast that by year 2030, 20% of the population is projected to be in this age group.
“You get to be pioneers,” he said to the audience of fixed annuity professionals. “That group needs your product.”
But problems exist. Many people may have a false sense of security regarding money built up in their qualified savings plans, Parker noted. “They have not yet paid taxes on that money,” he explained.
Also, people may be relying on selling their big homes and getting into smaller houses. “That may be hard to do, considering the price of housing today.”
The “old tried and true ways” of financing retirement need to change, he maintained. For instance, if one relies on taking periodic withdrawal from investments for income purposes, the “withdrawal rate might be too high or the market performance too low.”
The agents themselves need to change, Parker said. They need to move from transactional selling to consultant selling. In the pre-retirement years, they should focus on protection and accumulation, he continued, and in the retirement and post-retirement years, on payout and care.
Speaking to the care solutions, Parker predicted that the industry will need to come up with designs that “take the fear out of care.”