Data and Research

Nearly Half—48%—of Investors Own an Annuity

And nearly two-thirds, 63%, of advisers recommend annuities to clients who need income.

By Lee Barney editors@strategic-i.com | October 17, 2017
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The acceptance and use of annuities—and the tremendous appetite for the guaranteed income that they offer—are more widely accepted than many retirement plan advisers and investors realize, Jackson National Life found in a study conducted for the Insured Retirement Institute (IRI), “The Language of Retirement 2017: Advisor and Consumer Attitudes Toward Income in Retirement.”

According to the study, based on a survey of 400 advisers and 1,300 investors—300 of whom own an annuity and/or work with an adviser—35% of consumers are familiar with annuities and believe they are useful, and another 37% are open to learning more about them—a combined 72%. A combined 48% of investors either currently own (42%) or previously owned (6%) an annuity.

By comparison, fewer investors own or used to own two very popular investment options: exchange-traded funds (ETFs) (31%) or target-date funds (TDFs) (21%).

When investors are asked about the attributes of annuities—but not the products by name—90% said they are receptive to the idea of guaranteed lifetime income, even if it means relinquishing control of the principle or paying higher costs, Jackson learned—suggesting that there is a great disconnect between what investors think they know about annuities and what advisers can teach them about them. For example, only 46% of consumers know that an annuity can provide guaranteed lifetime income.

In the report, Jackson says: “It turns out many consumers believe guaranteed lifetime income is worth the trade-offs of lower liquidity and higher cost, and they often express a higher preference for such a solution than for other, non-guaranteed approaches. This is a clear opportunity for financial professionals to educate consumers [about annuities]. Such strong consumer interest in guaranteed lifetime income should help advisers feel confident in recommending annuity-based solutions to their clients. In fact, 63% of advisers say they recommend annuities to their clients who need income.”

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