Guaranteed Lifetime Income or A Fully Stocked Wine Cellar? Financial Advisors Believe Their Clients Favor the Former

RetireOne and Protective’s latest survey finds advisor enthusiasm for annuities growing as their clients favor guaranteed income¹; yet many advisors are ignoring client insurance needs

RetireOne®, the leading independent platform for fee-based insurance solutions, and Protective Life Corporation (Protective), a wholly owned subsidiary of Dai-ichi Life Holdings, Inc. (TSE:8750), today announced the results of the “2021 RIA Protected Accumulation + Retirement Income Survey”. Top findings the survey revealed are that registered investor advisors (RIAs) are staunch in their belief that guaranteed lifetime income delivers immense value to their clients, resistance to annuity solutions is seemingly waning, and too many investment advisory representatives (IARs) are outsourcing client life insurance needs to an insurance agent/agency or are ignoring their clients' insurance needs altogether.

Financial advisors’ clients are happy with the relief of guaranteed lifetime income.

In their joint survey of nearly 200 financial professionals, RetireOne and Protective found that 84 percent of advisors whose clients own annuities agree or strongly agree that guaranteed lifetime income is more important to them than a fully stocked wine cellar. Eighty-seven percent of advisors whose clients own annuities agree or strongly agree that guaranteed lifetime income makes their clients happy, and 89 percent agree or strongly agree that guaranteed lifetime income lets their clients sleep easier.

Despite the growing acceptance of annuities, more respondents recommend Certificates of Deposit (CDs) than fixed annuities or fixed index annuities to their clients in need of principal protection while payout rates for fixed annuities over five-year durations could triple the payout of CDs over the same time period.

Are RIAs finally giving annuities their due?

In RetireOne’s survey conducted on this topic last year, a third of respondents indicated that they wouldn't refer an annuity to a client who expressed interest in life insurance as part of their retirement portfolio. This year, perhaps due to the fears spurred by the pandemic, less than a quarter of respondents indicated they were unlikely or very unlikely to refer an annuity to clients (should their needs be addressed by the features of an annuity).

Primary objections from those who are unlikely or very unlikely to refer an annuity indicate that a lack of awareness about advisory annuity innovation of the last five to 10 years may be to blame. Of those, most cited fees, complexity and lack of liquidity as primary objections.

“Today’s insurance solutions are different from the offerings of years past that were shrouded in commissions and high fees, and we believe that the importance of educating advisors on these new advancements has never been greater,” said David Stone, Co-Founder and CEO, RetireOne. “We are ready to support advisors who are awakening to the benefits of today’s annuities. Products that are low cost and offer a guaranteed lifetime solution are the way of the future and we are more enthusiastic than ever about enabling fee-only fiduciaries to properly guide their clients into and through retirement they can enjoy.”

Missed opportunity for IARs to show their value to clients?

Half of IARs that responded either outsource client life insurance needs to an insurance agent/agency or ignore their clients' insurance needs altogether. This is a significant missed opportunity for a vast population of IARs. While 62 percent who responded are not insurance licensed, adding insurance capabilities via an outsourced insurance desk can grow their capabilities, help them reach a broader audience, deliver more complete holistic financial plans which incorporate insurance protections, and build a financial moat to thwart potential external influences who may not always have their clients' best interests in mind.

“We are thrilled to collaborate with RetireOne on the 2021 RIA Protected Accumulation + Retirement Income Survey,” said Jim Wagner, Chief Distribution Officer, Protective. “It is encouraging to see that more advisors are adopting annuities into their investment practice, and we are excited to partner with IARs to protect their clients’ retirement funds. We are focused on delivering the protection investors are seeking at a low cost with features that fit into the fee-only advisor's practice. Our survey reinforces the need to further educate IARs on solutions that can help them deliver holistic planning experiences to their clients without outsourcing insurance needs.”

Why should advisors pay more attention to life insurance solutions for their clients?

• Not your grandmother’s insurance products: Because commissions have been stripped out of advisory annuities, today's versions are lower in cost and the insurance protections have been made more valuable. Many are available without surrender penalties, and some are directly billable without impacting the living or death benefits. Advisory annuities are easier to integrate into RIA practices than ever before, and advisory annuities can be a viable alternative for advisors to consider as they construct client portfolios consistent with their fiduciary responsibilities. Data integrations with portfolio management and financial planning software solutions empower advisors to present insurance options that meet the needs of the consumer in a holistic fashion.

• Have your cake and eat it, too: Advisors who refer annuities to clients want low-cost, simplicity, quality investment options, the ability to turn on income when needed, liquidity, billability, and ESG options. Meanwhile, with more insurers bringing these solutions to the market, product development is evolving to rapidly meet the needs and expectations of RIAs and their clients. Liquidity, lower cost, less complexity, and transparency are the core benefits of modern advisory solutions built to meet the fiduciary standard of care.

• Destress your client portfolios: A lifetime withdrawal benefit can aid clients in meeting their financial goals, helping ensure they do not run out of money in retirement, but it can also lower their portfolio reliance rate. Utilizing an annuity, which typically can pay more in guaranteed income than what’s generated from other investment options, will lower a client’s reliance on decumulation strategies from their portfolio.

Dedicated to providing advisors and their clients valuable retirement solutions that are simple to use, easy to understand, and delivered with outstanding service, the teams at RetireOne and Protective developed this survey to continue their efforts in educating advisors on the value of life insurance in client portfolios. For more insights from the “2021 RIA Protected Accumulation + Retirement Income Survey”, please see the accompanying infographic and make sure to attend the Advisor Perspectives Thought Leader Summit 2021 at which RetireOne and Protective will be hosting a session to further break down the findings.

About RetireOne

Serving over 1,000 RIAs and fee-based advisors since 2011, Aria Retirement Solutions’ RetireOne^® is the leading, independent platform for fee-based insurance solutions. With offerings from multiple “A” rated companies, RIAs may access this fiduciary marketplace at no additional cost to them or their clients. Currently servicing over $1 billion of retirement savings and income investments, RetireOne continues to grow in its mission to provide advisors and their clients valuable retirement solutions that are simple to use, easy to understand, and delivered with outstanding service. Learn more at RetireOne.com and follow us on Twitter @RetireOne.

About Protective Life Corporation

Protective Life Corporation (Protective) provides financial services through the production, distribution and administration of insurance and investment products throughout the U.S. Protective traces its roots to its flagship company, Protective Life Insurance Company – founded in 1907. Protective’s growth and success can be largely attributed to its ongoing commitment to serving people and doing the right thing – for its employees, distributors, and most importantly, its customers. Protective’s headquarters is located in Birmingham, Alabama, and its 3,600+ employees work across the United States. As of December 31, 2020, Protective had assets of approximately $127 billion. Protective Life Corporation is a wholly owned subsidiary of Dai-ichi Life Holdings, Inc. (TSE:8750). For more information about Protective, please visit Protective.com.

¹Lifetime income guarantees subject to the claims paying ability of the insurance company.

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