Most consumers want retirement products with lifetime income guarantees, but not all independent financial advisors recommend such solutions. That was the finding of a white paper composed by NFP Advisor Services Group, a business segment of National Financial Partners Corp., and the Aite Group.
The two firms surveyed 248 independent financial advisors, splitting them into three categories: those affiliated with an insurance broker-dealer (B/D); advisors affiliated with an independent broker-dealer; and advisors allied with an independent registered investment advisor (RIA). The Aite Group also conducted in-depth interviews with academics, industry experts and executives. The firms represented the top annuity sellers in the industry, according to LIMRA’s first-quarter sales rankings.
Overall, 65% of independent financial advisors recommend guaranteed income solutions to pre-retirees who may face longevity risks. Broken down by the aforementioned categories, the percentages were:
- Advisors affiliated with an insurance B/D recommended guaranteed income products 80% of the time
- Advisors affiliated with an independent B/D recommended them 69% of the time.
Those advisors allied with an independent RIA proposed adding a guaranteed income solution to a client’s portfolio 49% of the time.
Meanwhile, previous surveys indicate that most consumers want guaranteed income in retirement and would pay extra for it. The NFP/Aite white paper cites research from Strategic Business Insights that found that 48% of households express an interest in products that provide a guaranteed income stream for life and were willing to accept a lower rate of return for such a benefit.
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Further, research from the Insured Retirement Institute and Alliance Bernstein uncovered that consumers would “pay between 4% and 6% of assets to guarantee that they wouldn’t run out of money in retirement.”