A new survey conducted in the midst of the COVID-19 global pandemic discovered that more than half of financial professionals are concerned that at least 25% of their clients are at risk of running out of money during retirement. According to a recent press release, the study was released by Jackson National Life Insurance Company and the Insured Retirement Institute (IRI). The data was collected between April 8-17, 2020 in the form of an online survey. Less than 5% of participants reported that none of their clients are at risk.
A similar survey was conducted before the pandemic, and only 38% of financial professionals stated a quarter or more of their clients may run out of their retirement savings.
“The jump to 55% is significant, although not surprising as COVID-19 continues to upend many investors’ financial plans,” said Aimee DeCamillo, chief commercial officer for Jackson and president of Jackson National Life Distributors LLC. “As uncertainty and market volatility become our new normal, the need for income protection is clear. Although consumers cannot control the pandemic, they can control their financial futures. Annuities are designed to help weather this storm, as the need to ensure hard-earned savings can withstand disruption — to and through retirement — becomes more important than ever.”
The survey also found that more financial professionals are discussing annuities more frequently with clients during the pandemic. 64% of advisors said they are discussing them “more frequently” and 35% say they are talking about annuities “much more frequently.” On the other hand, only 8% stated that they were discussing annuities less frequently during this time.
As a result, Wayne Chopus, president and chief executive officer of IRI, a leading trade association for the retirement income industry, said annuities continue to change the narrative around retirement readiness.
“Not only do 68% of financial professionals report they are more likely to discuss annuities with clients in the future, but a whopping 77% report their clients are very or somewhat receptive to discussions about annuities,” Chopus said. “This represents a huge opportunity to have these conversations about protected lifetime income.”
Financial planners were also asked to rate annuity features in terms of the impact they have had for clients. The highest ranked features included lifetime income, tax deferral and principal protection. In addition, the study found 65% of advisors claim clients without annuities are more likely than annuity owners to move from stocks to less risky investments during time of volatility in the markets. This provides less opportunity for recovery in or near retirement.
Written by Rachel Summit