Larger, more “engaged” advisors express more interest in these options. While only 46 percent of advisors overall are interested in offering an option with a DIA feature, fully 83 percent of mega advisors ($500M or more in DC assets under advisement) express interest. Still, only about a quarter of these mega advisors have actually recommended a guaranteed income option to a client.
Why aren’t advisors on board with recommending income annuity options? It seems likely that the products are just too new, too complicated, and difficult to explain, especially to consumers. It’s taking time for advisors to adapt.
Employers also remain unaware of the value inherent in these income options. LIMRA research shows only two thirds recognize the importance of offering an in-plan guaranteed income option, and only one third actually do offer the option. Employers clearly are not convinced that their employees need or want these options. Yet additional research proves that 8 out of 10 employees are very interested in having these options as part of their DC plans.
This disconnect represents an opportunity for providers. Helping advisors and employers to understand, appreciate, and embrace income options for their employees and DC clients can create a competitive advantage for providers that want to succeed in this space. As with most evolutionary change, it pays to be ahead of the curve.