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HomePersonal FinanceDo Monetary Professionals Suggest Annuities? – Heart for Retirement Analysis

Do Monetary Professionals Suggest Annuities? – Heart for Retirement Analysis

The transient’s key findings are:

  • Whereas annuities provide retirees assured lifetime revenue, few folks have them.
  • A brand new survey requested monetary professionals concerning the worth of annuities for his or her purchasers.
  • The outcomes counsel that monetary professionals are involved that a lot of their purchasers might deplete their financial savings too shortly.
  • However the majority of them don’t suggest annuities to their purchasers and, once they do, many consumers don’t take the recommendation. 
  • These findings level to each the promise and limitations of reliance on monetary professionals to information purchasers to higher use of annuities.


The speed of possession of annuities in america is low, with solely about 10 p.c of older Individuals having a business annuity.  Researchers have supplied many potential rationales as to why folks approaching retirement have so little curiosity in annuities.  Nevertheless, a largely missed subject is how monetary professionals view annuities and the way their suggestions could have an effect on the acquisition of annuities amongst their purchasers.

This transient, which is predicated on a latest survey, investigates how monetary professionals understand longevity danger and the worth of annuities for his or her purchasers.  The findings counsel that almost all monetary professionals are conscious that a few of their purchasers could outlive their assets.  However, the overwhelming majority of execs not often suggest shopping for an annuity.  Therefore, monetary professionals are presently doing little to encourage folks approaching retirement to buy annuities. 

The dialogue proceeds as follows.  The primary part gives some background.  The second part describes the survey.  The third part presents the findings.  The fourth part discusses their implications.  The ultimate part concludes that monetary professionals are involved about their purchasers’ longevity danger and could also be a supply of untapped potential to extend annuity take-up.


The small marketplace for personal sector annuities in america has confounded lecturers and policymakers for many years.  Quite a few hypotheses for the low demand have been superior, all revolving across the many causes that people could not need to annuitize.  Nevertheless, latest work means that many people would purchase an annuity if the method had been easy, however are prevented from doing so by the real-world complexity of the duty. 

A lot of that complexity entails a collection of small hurdles, which collectively might stymie even a motivated potential annuity purchaser.  For instance, figuring out a product like an annuity even exists is just not trivial.  Survey proof means that even amongst comparatively rich households (over $100,000 in monetary belongings) close to or in retirement, greater than a 3rd weren’t aware of lifetime revenue merchandise, and one other 40 p.c had been solely considerably acquainted.  These estimates in all probability overstate familiarity for the inhabitants as an entire, since respondents usually dislike admitting ignorance, and these wealthier respondents usually tend to be acquainted with annuities than their much less prosperous counterparts.  

Monetary professionals might assist by explaining what annuities are, who sells them, how one can contact suppliers, and how one can put together for truly signing a contract.  All these steps might get people who want no convincing to easily take the concrete steps between a need for lifetime revenue and truly buying it.  The latest survey means that about half the inhabitants with over $100,000 in monetary belongings want to purchase a lifetime revenue product on the prevailing worth.  Moreover, professionals might clarify the worth of annuities to these with lower than $100,000 in belongings who may be on the fence.  The query is: do professionals do any of this stuff?

The Survey

The survey, carried out by Greenwald Analysis in June of 2023, questioned 400 monetary professionals concerning the matters they talk about with their purchasers and the suggestions they make.  It additionally requested them a number of questions on their purchasers’ longevity, whether or not they suggest annuities, what sort of annuities they’re most certainly to suggest, and whether or not their purchasers comply with their recommendation.  

Monetary professionals had been chosen based mostly on the next traits.  First, that they had over $30 million beneath administration.  Second, that they had greater than three years {of professional} expertise.  Third, they made suggestions themselves to their purchasers.  Fourth, over 50 p.c of their revenue got here from monetary planning, investments, life insurance coverage, and associated services with particular person purchasers, versus worker advantages or different group merchandise, medical health insurance, and property/casualty insurance coverage.  Fifth, that they had greater than 75 purchasers.

Desk 1 reveals the pattern’s abstract statistics.  The skilled members are overwhelmingly male, and their common age is 52.  Roughly half advise over 200 purchasers.

Table showing the demographics of financial professional surveyed


The survey means that monetary professionals know that their purchasers may dwell to very outdated ages and outlive their assets.  Roughly 76 p.c of monetary professionals talk about the possibility of dwelling to superior outdated age, akin to age 95, with their purchasers.  Relating to longevity danger, the survey signifies that greater than 90 p.c of them are not less than considerably involved that their purchasers will deplete their financial savings.

The survey additionally requested monetary professionals to estimate the proportion of their purchasers that may outlive their belongings in the event that they dwell to sure ages.  The responses present that 17 p.c of monetary professionals consider that greater than half of their purchasers will outlive their assets in the event that they dwell to age 95 (see Desk 2).  If truth be told, nationwide about 10 p.c of purchasers will dwell to 95, and face the extreme penalties of exhausting their assets.  Word, additional, that people who go to monetary professionals have considerably extra wealth than the typical American, which has offsetting implications.  On the one hand, a higher proportion will dwell to 95; then again, their increased asset ranges can function a buffer.

Table showing the share of financial professionals who say that over 50 percent of their clients will outlive their assets if they live to various ages

With respect to defending in opposition to longevity danger, the survey additionally requested the monetary professionals how usually they suggest shopping for an annuity.  Determine 1 reveals that roughly two-thirds of execs suggest an annuity to lower than half of their purchasers.  Greater than two-fifths suggest an annuity with assured lifetime revenue to lower than 1 / 4 of their purchasers.

Bar graph showing Financial Professionals’ Responses When Asked “To What Share of Your Retired Clients Have You Suggested an Annuity?”

Lastly, when monetary professionals do counsel annuities, 40 p.c consider that almost all of their purchasers comply with their options (see Determine 2).

Bar graph showing Financial Professionals’ Responses When Asked “What Share of Your Retired Clients Buy an Annuity After Your Suggestion?”


The survey means that monetary professionals are conscious of their purchasers’ longevity danger and talk about this subject with them.  Thus, the truth that most professionals don’t sometimes suggest any annuitization is shocking.  A part of the rationale could also be that the majority of purchasers don’t are likely to comply with such recommendation when given.

Therefore, the survey factors to each the promise and the restrictions of reliance on monetary professionals to information purchasers to higher use of annuities with assured lifetime revenue.  Professionals may very well be far more proactive in recommending annuitization.  A considerable minority of purchasers would comply with such recommendation if it had been supplied, significantly if the recommendation had been accompanied by steering on how one can go about buying an annuity.

Moreover, the outcomes from earlier analyses counsel that monetary professionals have untapped potential in rising annuity take-up.  Since roughly half of those that can afford to annuitize (these with over $100,000 in monetary belongings) point out they might purchase an annuity if the method had been easy, professionals can play a task in facilitating such transactions to serve each their purchasers’ wants and their wishes.


The outcomes of the survey counsel that monetary professionals are deeply involved about a lot of their purchasers’ potential to handle longevity danger.  However, nearly all of monetary professionals don’t sometimes suggest annuity merchandise to their purchasers.  Amongst those that do, many report that their purchasers don’t comply with their advice.  This discovering means that monetary professionals appear to have the flexibility to affect solely a modest portion of their purchasers. 

The outcomes additionally level to areas for additional analysis: how ought to professionals determine which purchasers can be receptive to annuities?  And would sure messaging approaches (e.g., saying “lifetime revenue” moderately than naming a selected monetary product) work higher than others to persuade these purchasers who’re on the fence?  General, nonetheless, the lowest-hanging fruit is probably going serving to the purchasers who already are open to annuities obtain their current lifetime revenue objectives.


Arapakis, Karolos and Gal Wettstein. 2023a. “Longevity Threat: An Essay.” Particular Report. Chestnut Hill, MA: Heart for Retirement Analysis at Boston Faculty.

Arapakis, Karolos and Gal Wettstein. 2023b. “How A lot Do Folks Worth Annuities and Their Added Options?” Working Paper 2023-18. Chestnut Hill, MA: Heart for Retirement Analysis at Boston Faculty.



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