They’re not the newest retirement income product by any means, but annuities may prove to be an important tool for advisors looking to build long-lasting client relationships, according to a recent survey by Nationwide.
According to the latest Nationwide Annuity Survey, 18 percent of new annuity buyers sought out or began a relationship with a financial professional specifically to make their purchase, underscoring the growing reliance on expert advice as the products continue to gain popularity.
“While annuities are not new, most retirement savers are still unfamiliar with them,” Rona Guymon, senior vice president of Nationwide Annuity Distribution, said in a post outlining the findings. “This presents an opportunity for financial professionals to build trust and establish a long-term relationship with new clients.”
The survey found that generating retirement or lifetime income was the primary motivator for 32 percent of respondents when buying an annuity, while another 17 percent prioritized principal protection and 13 percent valued tax-deferred growth.
The findings also suggest that savers with fewer assets and lower confidence in their retirement plans are more likely to turn to financial professionals for annuity guidance. Among those who reported starting a new relationship because they wanted to buy an annuity, 26 percent had less than $250,000 in assets, 23 percent expressed little to no confidence in their retirement plans, and 23 percent already had a pension.
“This statistic [on annuity buyers with pensions] likely speaks to the fact that many pensions provide inadequate benefits, and these individuals realize they need to close the income gap,” Guymon added.
The survey further revealed that annuity buyers rely on various professionals for their purchase decisions. While 68 percent bought their annuities through financial professionals, advisors, or planners, 18 percent opted for insurance agents and 13 percent purchased directly from annuity providers.
Annuities could also be a valuable source of continuing business. One key focus in the survey was ongoing engagement between annuity buyers and their financial professionals, with 58 percent discussing their annuities annually and 18 percent meeting more than once a year. Meanwhile, 12 percent review their annuities every two years, 7 percent every three or more years, and 5 percent never discuss their annuity with a professional.
“As more Americans adopt annuities, financial professionals have an important opportunity to provide updates on performance, as well as valuable guidance and support,” Guymon noted.
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