Many consumers don’t know enough about the most common products marketed to help address their retirement savings and income needs, accentuating the challenge facing life insurance and annuities providers struggling to connect with prospects, a survey by Deloitte’s Center for Financial Services confirmed.
For example, nearly 40 percent surveyed by Deloitte don’t know anything about annuities or understand how they work, with the percentage even higher among younger respondents.
In addition, 25 percent either don’t know about non-term life insurance products — or if they are aware, don’t know what these products can do to bolster retirement savings and income.
Six in 10 either don’t know anything about target date mutual funds, or say they have heard of the product but don’t understand how it works. The percentages showing lack of awareness are consistently high across age and income segments.
Deloitte’s survey of nearly 4,500 consumers from a wide range of age and income groups found a basic lack of knowledge about retirement-related products to be one of five barriers preventing life insurers and annuity companies from more effectively reaching prospects.
Our prior articles on this survey focused on the first two barriers — conflicting financial priorities as well as a failure to communicate effectively with potential prospects, particularly via the workplace. (Additional blogs over the next two weeks will address mistrust of financial institutions and a “do-it-myself” mentality prevalent among consumers.)
The knowledge barrier
So, how might life insurers, annuities providers and their intermediaries overcome this product knowledge barrier?
While most consumers may not need to know everything about the products they invest in for retirement, some familiarity is likely necessary to increase the buyer’s comfort level to make investment decisions and commit to a plan to bolster their overall retirement security. The challenge is how financial services providers can accomplish this.
One possibility is to re-engineer or rebrand some existing products to provide greater transparency and clarity, so that consumers have a better idea how they can facilitate their retirement security — particularly for more recently introduced options.
This might help overcome the fact that of those surveyed who had been contacted by financial institutions in the last two years about retirement planning, 25 percent took no action based on these interactions because the products and services offered did not meet their needs.