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Presumably, when an annuity is sold, both the advisor and the client benefit, but transaction doesn’t mark the end of annuity equation.
That’s something to keep in mind at a time when annuities are soaring in popularity with data suggesting 2023 was a banner year for sales of these products. Additionally, all that talk about cash “sitting on the sidelines” (money markets) highlights the increasing viability of annuities for a broad swath of clients.
Add it all up and it’s safe to say that annuities are highly relevant to many clients and advisors are pertinent in that equation and that extends well beyond simply getting the client into the annuity. Data confirm clients are apt to be inquisitive about annuities even after purchase. According to a recent Nationwide Annuity survey, 84% of those queried said they turn to advisors with questions.
Think about that. More than eight of every 10 annuity holders seek advice from an advisor AFTER they become an annuity owner. It’s encouraging that clients are willing to open about their need for annuity assistance because those requests open the door for the advisor to provide elevated levels of service, potentially increasing client satisfaction in the process.
Annuities Points of Emphasis
For advisors, it’s essential to understand why a client has interest in annuities. A lot of that interest is derived from the decline of defined benefit pensions in the private sector.
“Our recent survey of annuity owners found that motivations for annuity purchase reflect annuity benefits that are similar to those of a pension. Annuities offer several pension-like features such as steady, reliable income and opportunities to capture growth from investments in the financial markets. These were the most popular motivations among annuity owners when deciding to purchase an annuity,” according to Nationwide.
That’s an understandable motivation and one advisors need to be aware if the bulk of their client bases are comprised of folks that worked in the private sector.
Obviously, satisfaction has to be central to annuities evaluation, the actual purchase and the advisor’s ability to answer questions/alleviate concerns post-transactions. The encouraging news is that many clients are upbeat about advisor responsiveness after the annuity is purchased.
“The majority of annuity owners (68%) bought their annuity through a financial professional, highlighting the important role that guidance from a financial professional plays in a client’s annuity purchase decision,” adds Nationwide. “But guidance often goes beyond finalizing the annuity contract; over half of clients (58%) engage with their financial professional at least annually to review their annuity. Another 18% said they discuss their purchase with their financial professional more frequently than once a year.
Annuities Equal Opportunity
For advisors, annuities represent opportunity and that extends beyond the scope of the financial side of the sale. A lot of annuity buyers join forces with an advisor specifically for that purpose, but as noted above, they have plenty of reasons to stick with the advisor after that purchase and that paves the way for the relationship to expand into other areas and services, including estate planning and retirement planning.
“This insight shows there’s growing awareness and interest among investors in general in the benefits annuities bring to their financial plans. Marketing your knowledge and experience with annuities can help attract these buyers to your practice, and potentially establish new client relationships that can contribute to your business growth,” concludes Nationwide.
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