Annuity Searches on Internet Increase Due to Financial Industry Skepticism

Baby Boomers are very skeptical of the financial industry right now, so advisors have an uphill climb when it comes to working with them in their retirement.  In “How to Woo Skeptical Boomers,” Financial Planning’s John Shinal says that advisors need to focus on their customer service and marketing efforts to work with the massive number of Baby Boomers entering retirement over the next two decades.  When you look at the net worth of households in the U.S., we are down $4 trillion in the past five years.  This fact, coupled with disastrous financial crises throughout the industry in the same time frame, is making it difficult for Baby Boomers to turn to financial advisors in some instances.  Sadly, the financial industry is just behind the tobacco industry and the government when it comes to trust from consumers.

Many consumers are trying to go it alone and manage their finances on their own because of this distrust.  According to LIMRA, 60% more individuals are using the internet to look for annuity and insurance products than they were six years ago.  Paula Aven Gladych of the Credit Union Times talked about LIMRA’s study and the fact that 61% of consumers are searching online for annuities and insurance.  But somewhat contrary to what Financial Planning’s article says, LIMRA found that 69% of consumers are contacting advisers, agents, and brokers.  They say that consumers do find them to have valuable information that influences their decisions.  It seems that even though trust in the industry overall is lacking, consumers do find agents to be helpful.  I assume they are working hard to find a trustworthy agent on which they can rely.

The characteristics of those searching the internet most are male, young, higher education, no kids, and higher levels of income.  When it comes to Generation Y, 73% of them are looking for financial information online compared to 61% of those in Generation X and 56% of Baby Boomers.  Since more than half of Baby Boomers are individually searching the internet for their annuity information, advisors have some work to do to make sure they can help this big group of retirees.  When retiring, Baby Boomers typically sell their business if they have one, buy a smaller home or condo, and transfer their 401k money into an annuity or an IRA.  This 401k transfer is a huge opportunity for advisors, one that will remain large for decades of Baby Boomers retiring.

Aggressive and smart marketing along with excellent customer service are crucial for advisors and financial companies to obtain business from Baby Boomers.  More than half of consumers would easily change their financial service provider if they were unhappy with the customer service they were receiving.  By using their marketing to inform, most advisors are confident that they will keep obtaining clients.  Consumers desire information, so providing them with important financial information that is readily available will be crucial.  Baby Boomers want their annuities and financial accounts to be transparent and visible.  They do not want the paternalistic approach to financial management from the past.  By combining these things with technology, advisors and Baby Boomers can achieve financial success.

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