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The Alliance for Lifetime Income is telling the federal regulators, state regulators, and regulator groups trying to set financial services sales standards, “Hold my beer.”

The Washington-based group — which represents big annuity issuers, big annuity distributors, and other big annuity industry players — has adopted its own set of five retirement education guiding principles.

Resources

Jean Statler, the executive director of the alliance, said the guiding principles document will help members shape how they move toward their vision of eliminating the risk that Americans will run out of money in retirement.

“For too long, both consumers planning for retirement and the financial planning industry have focused too heavily on accumulating savings without balancing that with income planning for retirement,” Statler said in a comment about the new principles that came out with the principles announcement. “We believe that, among other things, this has added to the more than 80 million American households today who are unprotected in retirement, meaning they face the prospect of running out of money in their lifetime. Annuities have a unique role to play in helping cover basic expenses and ensuring that Americans face their financial future with optimism and a sense of security.”

The alliance says in the guiding principles document that it believes in:

  1. Promoting retirement income planning.
  2. Educating consumers about sources of protected lifetime income, such as Social Security, pensions and annuities.
  3. Focusing on consumers’ interests, and putting clients goals and interests at the center of any recommendations.
  4. Striving for transparency and clarity, and putting terms and explanations about annuities in “plain English,” with full disclosure of annuity costs, fees, benefits, provisions and requirements.
  5. Making sure that every consumer who considers an annuity has access to simple, fact-based educational information and resources.

New Challenges to Capitalism

The alliance is releasing the guiding principles document as a democratic socialist is one of the top contenders for the Democratic presidential nomination, and as many young people are filling social media serves with comments questioning the ability of for-profit businesses to meet people’s needs.

Statler said in an interview that the financial services company chief executive officers who belong to the Alliance for Lifetime Income believe that life insurance companies provide an important social good.

“We fundamentally believe there’s a need for protected income beyond Social Security,” Statler said.

Social Security is a critical social insurance program, but the level of benefits it provides is limited, and public awareness of those limits is lacking, Statler said.

Annuity Understanding Gap

Statler said the alliance has also found widespread lack of understanding of how private retirement savings products can already help people prepare for the future.

“We find a very big lack of understanding of what an annuity is,” Statler said.

When the alliance came to life and began conducting consumer surveys, organizers thought the main problems the alliance would face were attacks on annuities, and consumers’ hostility toward annuities.

Instead, Statler said, the alliance found that lack of familiarity with annuities was much more common than hostility toward annuities.

The alliance is now focusing on reaching out to people ages 45 through 72, with $75,000 to $2 million in investable assets. If it had more money, it would use the money to broaden the target audience, Statler said.

“Consumers are starting from zero,” she said. Because of their lack of familiarity with annuities and income planning basics, any outreach efforts at all can help, she said.

Statler said one great, effective alliance campaign was the alliance sponsorship of the recent Rolling Stones tour, because the concert attendees were exactly in the alliance’s target audience.

— Read Companies Make Big Push for Lifetime Income Awareness, on ThinkAdvisor.

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