More and more Americans are counting on financial advisors to help them prepare for a secure retirement. But what if they’re not up to the task?

Mitch Politzer, senior VP of Lincoln, Nebraska-based Ameritas Advisor Services, had a suspicion that might be the case, so he teamed up with Chicago-based market research firm Spectrem Group and put together a survey aimed at testing advisor know-how and opinion on the kinds of investment products available on the market today. “The results of the survey showed that most financial advisors are really very skilled at investing for their clients, as they’re driven by equity markets (and to a lesser degree bond markets) and a desire to outperform industry benchmarks,” Politzer says. “This works for the accumulation phase of a client’s life, yet advisors are less skilled when they have to shift gears for the phase of a client’s life when they’re interested in income and sustaining their assets.”

Most advisors, Politzer says, seem to have dated beliefs about various retirement products, are slow to innovate, and most are gun-shy when it comes to annuities. According to the survey, 70% of advisors are concerned about locking their clients into a long-term retirement income product, and if they do, they would prefer the product not be an annuity.

The debate about annuities–an asset class that for many years had more negative headlines than positive associated with it–is an ongoing one, and even if there has been a sea change in these instruments (particularly with respect to their transparency) and the way in which they’re marketed, it is still taking a while for financial advisors to appreciate their use. This is normal, Politzer says, since “most advisors formed their beliefs when annuities didn’t have the features they have now.”

Indeed, the annuities of yore were expensive and inflexible, Politzer says. They were not the easiest of products to understand or use, and they certainly lacked transparency. Today, they’re low cost, they can provide guaranteed income and they don’t require a client to annuitize in order to get a benefit because they don’t have fees associated with them. Today’s annuities also don’t have any withdrawal charges associated with them, Politzer says, so advisors have greater flexibility than they had before.

According to the Spectrem survey, a majority of financial advisors expressed some level of interest in receiving more assistance to better serve their clients regarding retirement income planning. And as financial services companies continue to come out with new annuity products, consumers are going to be asking their advisors for help in figuring them out and using them, Politzer says, so advisors are going to have to change their way of thinking. “The demographics of what we’re talking about here is inexorable,” he says.

The most sound retirement strategy an advisor can formulate for a client, according to Politzer, is to put 15% to 20% of a client’s portfolio in an annuity, get the guaranteed income and then seek alpha elsewhere. However, only 43% of the advisors that took the Spectrem survey actually do this. When they do include annuities as part of the retirement income strategy, advisors choose no-load annuities, the survey showed. It also showed that 67% of advisors using annuities are not receiving commissions for selling them.

The survey, Politzer says, underscores the fact that it is high time both advisors and providers of investment products reassess how investors can and must stretch their investments to last through a lifetime. According to the survey, fewer than 20% of 401(k) participants are familiar with even the four most common approaches for providing retirement income: structured bond portfolios, laddered CDs, immediate pay annuities, and systematic withdrawals. The onus, then, of educating people on the value of more innovative products such as no-load annuities–products that should feature increasingly as mainstays in retirement income portfolios–falls to financial advisors, Politzer says.

“We’re going to have to do a lot of work in educating advisors about annuities, and even if advisors were justified at the time many of them formed the opinions they have about annuities, the time has come to change,” he says.

The Spectrem survey was carried out through an e-blast, to which over 100 advisors responded, Politzer says.