Data & Research September 27, 2021

Plan Sponsors Want More Information on Guaranteed Lifetime Income Solutions

Most employers say they are waiting for their financial advisers or consultants to counsel them on the benefit.

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As more employers and their employees prioritize financial wellness, a new study finds both groups are also increasingly interested in guaranteed lifetime income investment options.

Nationwide Retirement Institute’s “2021 In-Plan Lifetime Income” survey found nearly nine in 10 plan sponsors and participants (88%) agree that income in retirement is vital to financial security. And eight in 10 retirement plan sponsors say participants want guaranteed lifetime income investment options.

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The growing interest may be tied to a lack of financial confidence for many participants, Nationwide says. Half of the participants surveyed stated that they have concerns about managing expenses and lifestyle choices in retirement, and 48% are concerned about outliving their income.

The study found that employers are looking to solve this need for their employees, as four in 10 (41%) say that they do not currently offer guaranteed lifetime income options but are considering them for the future. However, 60% of plan advisers say they don’t believe their clients are looking to explore lifetime income options, which the firm says could be a missed opportunity.

Nationwide’s study also showed participants are interested in guaranteed income, as 79% said they would be at least somewhat likely to roll over a portion of their current retirement savings into a lifetime option. For those age 45 to 54, this rose to 87% of participants.

“For many Americans, understanding how their employer-sponsored retirement plan savings translates to retirement income will soon come into greater focus,” Eric Stevenson, president of Nationwide Retirement Solutions, said in a statement. “New lifetime income illustrations will begin appearing on participant statements over the next year, based on a new requirement created by the 2019 SECURE [Setting Every Community Up for Retirement Enhancement] Act, with some participants seeing this as soon as this month. For some, it will be a wake-up call that they haven’t saved enough, and we believe this visibility will lead to even greater interest from plan sponsors for new investment options that help their plan participants address their lifetime income needs.”

Plan sponsors that haven’t yet implemented guaranteed lifetime income say they are waiting for their financial advisers or consultants to counsel them on choosing the right benefit for their company’s retirement plan. Nine in 10 plan sponsors say they trust their advisers or consultants to counsel them on choosing benefits that fit the retirement plan and consider them to be the primary source in learning more about guaranteed lifetime income investment options.

But advisers and consultants might not even realize it’s the appropriate time to talk through these benefits with their clients. While the survey showed seven in 10 employers plan to analyze their retirement plans within the following six months, 82% of advisers and consultants anticipate only a few or even none of their plan sponsor clients will evaluate their plan in that time frame.

“There is an immediate business opportunity for advisers and consultants to initiate conversations with plan sponsors about adding guaranteed lifetime income investment options,” Stevenson says. “Plan sponsors are telling us they’re hungry for more guidance and advisers and consultants are in prime position to help by exploring these solutions with their clients today.”

Data & Research September 27, 2021

Americans Comfortable Engaging With Financial Advisers via Mobile Tools

However, 20% say they expect to connect via mobile apps and over the phone less when the pandemic is over.

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Social media is influencing how some Americans make financial decisions, according to the “2021 TIAA Digital Engagement Survey.”

While financial services providers’ online tools are the most trusted resource for information (63%), 20% of the 1,000 adults surveyed say social media content is also a go-to resource. One-third say they trust social media content to help them make financial decisions, and 32% say they trust social media influencers and celebrities’ financial advice.

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The survey also finds Americans are open to using new devices to manage their finances. Respondents say they feel comfortable using home voice assistants (42%), smartwatches (43%), or a chatbot on a financial provider’s website (44%) to manage their finances. One-third of respondents say they already use digital tools from their financial provider to track financial information across accounts.

However, 39% indicate they still prefer to use desktop computers to manage their finances, including their bank account balances and retirement plans, despite being open and comfortable with using new technologies.

About half of respondents say they are OK with opening—or already have opened—accounts without speaking to a person first. This includes checking accounts (36%), retirement savings accounts (19%), or brokerage accounts (9%).

For those who work with a financial adviser, half prefer to continue interacting over the phone to using video calls (25%). One in five respondents also say they don’t anticipate connecting with their financial provider as often via mobile app or over the phone following the end of the pandemic unless they need to address an account or investment concern.

Of any age group, Millennials—and especially male Millennials—are spending the most time managing their finances. Although half of Americans spend less than one hour a week on their finances, 39% of Millennials say they spend four or more hours a week managing theirs, compared with just 25% of Generation Z respondents and only 7% of Baby Boomers. Men are nearly twice as likely as women to spend four hours or more a week on their personal finances (30% vs. 16%).

In addition, younger generations are more apt to get financial wellness checkups. Two-thirds have never had a financial checkup with a provider. However, more than half of respondents younger than 65 say they are interested in a financial wellness checkup, compared with just 30% of those older than 65. The most preferred method of meeting for a financial wellness checkup is in person (26%).

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