Financial professionals can’t control COVID-19, interest rates, or how eager life insurers are to guarantee that a consumer will receive an attractive stream of income payments.
But financial professionals can control one important annuity sales driver: whether consumers know how annuities work.
Analysts at Greenwald & Associates and Cannex Financial Exchanges Ltd. have published some data on what annuity prospects know, or think they know, in summaries of results from a survey of about 1,000 U.S. annuity prospects, and a related survey of 302 financial professionals.
- Links to Greenwald & Associates/Cannex survey resources are available here.
- An article about annuity product drama is available here.
Cannex is a company that publishes streams of pricing information, and related information, for annuity and bank products in North America.
The consumers in the company’s survey sample were all ages 55 through 75. They reported having at least $100,000 in investable assets.
The financial professionals in the sample had at least $15 million in assets under management.
The survey team one sign that consumer understanding of annuities continues to be weaker than the consumers themselves admit: About 25% of the consumers said they are very or extremely interested in “owning annuity that guarantees a certain amount of monthly income for the rest of your life.”
About 37% of the consumers said they are very or strongly interested in “owning a financial product that guarantees a certain amount of monthly income for the rest of your life.”
In other words: about 12% of all consumers in the sample — and roughly one-third of the consumers who have a strong interest in having a guaranteed stream of retirement income — have no idea that an annuity can provide a stream of guaranteed income for life.
The survey team also asked consumers and financial professionals how hard certain aspects of buying or owning an annuity are to understanding.
Some of the answers to that question, such as answers about annuity benefits for the purchaser’s beneficiaries, might reflect dangerous ignorance about killer traps rather than actual knowledge. But, for a look at what the consumers who answered the question believe to be easy, or hard, to understand, see the data cards in the slideshow above.
— Read Most Lifetime Income Product Owners Like the Products: Cannex, on ThinkAdvisor.