The shifting attitude toward annuities

Whitepaper reveals two-thirds of investors open to talking about alternatives

The conventional wisdom around retirement planning often focuses on an investment-centric approach. It’s understandable — stocks typically outperform bonds over a long enough period of time and if someone is able to tolerate risk, it’s a sound strategy. But is it really a popular one? And in an environment defined by market volatility and rising interest rates, is the traditional 60/40 no longer the go-to asset allocation it once was?

“…annuities may be a portion
of a successful retirement income strategy…”

In a recent whitepaper, author and professor of practice in the Retirement Income Certified Professional Program, Dr. Wade Pfau, seeks to provide some answers. Specifically, he investigates how annuities may be a portion of a successful retirement income strategy and whether now is a good time for financial professionals to talk to their clients about them.

The crux of the whitepaper is the Retirement Income Style Awareness (RISA) questionnaire, which surveyed more than 2,800 Americans between the ages of 50 and 80 to learn about how they approach retirement income planning.¹ Interestingly, an investment-centric approach that excludes annuities resonated best with only one-third of respondents, which means about two-thirds of the population may find an alternative strategy more appealing.

“More financial professionals are recognizing that there are multiple ways to create sustainable retirement income, and it is important to also be open to a role for insurance-based tools such as annuities that use risk pooling to support retirement expenses,” Pfau writes. “A personalized plan can be tailored for each individual client using the appropriate combination of investment and insurance tools to make the client comfortable.”

The whitepaper is full of eye-opening insight about the different income styles, the role of annuities in mitigating risk, and how the RISA questionnaire can serve as a guide for financial professionals seeking to better understand their clients’ preferences and styles.

Download the whitepaper to get started.