Genworth found the advisors who sold the most fixed indexed annuities were targeting clients in their 40s with a moderate risk tolerance. Among all advisors selling fixed index annuities, most were targeting clients in their 50s with a low tolerance for risk.
“The findings suggest that producers need to consider a broader target profile for annuity prospects,” Charlie Gipple, national director of index products at Genworth, said in a statement. “Successful sellers are recommending annuities to younger, more risk tolerant consumers and positioning it as a vehicle for a wider array of retirement funds.”
However, Genworth also found many consumers aren’t being approached by their advisor to talk about annuities. Among non-owners, 40% said they would consider buying one, but their advisor has never mentioned it.
Genworth suggested advisors aren’t talking about annuities with their clients because they expect resistance, and they aren’t necessarily wrong. Almost 60% of consumers said they don’t need an annuity because they already have enough predictable income. Among people who were considering buying an annuity, 53% said they’d rather invest directly in the market.
“Many financial professionals simply don’t present annuities to their clients, perhaps believing that these products have a bad reputation among consumers,” Gipple said. “Our research shows that this is not universally true.”
Sixty percent of annuity owners and 61% of those considering buying an annuity said they would pay extra fees for products with downside protection and upside potential.
Naturally, owners of annuities that performed as they expected them to were more satisfied than other owners. Genworth stressed that advisors be very clear about what to expect with an annuity to keep clients happy.
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Now, let's delve into the key concepts addressed in the article you provided:
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Target Demographics for Fixed Indexed Annuities: The article highlights that advisors selling the most fixed indexed annuities often target clients in their 40s with a moderate risk tolerance. In contrast, the majority of advisors selling fixed index annuities focus on clients in their 50s with a low tolerance for risk. This suggests a nuanced approach to targeting demographics based on age and risk appetite.
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Broadening the Target Profile: According to Charlie Gipple, the national director of index products at Genworth, successful sellers are recommending annuities to younger, more risk-tolerant consumers. The recommendation is to position annuities as a vehicle for a wider array of retirement funds, indicating a shift in the conventional perception of the ideal annuity investor.
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Consumer Outreach and Advisor Approach: Genworth's findings indicate that a significant portion of consumers who don't own annuities would consider buying one (40%), but their advisors have never brought up the topic. This lack of communication may stem from advisors anticipating resistance from clients, with nearly 60% of consumers stating they don't need an annuity due to sufficient predictable income.
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Consumer Resistance and Investment Preferences: The article suggests that consumers might resist annuities, with 53% of those considering buying one expressing a preference to invest directly in the market. This resistance may be a contributing factor to why financial professionals hesitate to present annuities to their clients, perhaps assuming these products have a negative reputation.
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Fee Considerations and Investor Satisfaction: Genworth's research reveals that a majority of annuity owners and those considering buying an annuity are willing to pay extra fees for products offering both downside protection and upside potential (60% and 61%, respectively). Additionally, satisfied annuity owners had experiences aligned with their expectations, emphasizing the importance of clear communication from advisors about what to expect with annuities.
In conclusion, the article underscores the need for financial advisors to reassess their target demographics, broaden their approach to client outreach, and effectively communicate the benefits of fixed indexed annuities to a wider audience. It also highlights the potential misperceptions surrounding annuities and the importance of managing client expectations to ensure satisfaction.
