Annuity interest is steadily increasing in 2024, as more investors look to protect long-term assets. Financial advisors could serve as a key bridge in this relationship, finds Nationwide Annuity.
A recent survey from the firm fielded responses from 300 annuity owners, finding that 82% credit the opinion of a financial professional for their decision to buy a guaranteed lifetime income product. An advisor’s outlook on annuities was even more valued than the performance of the product itself (76%), market performance (70%), and interest rate changes (67%).
Nationwide Annuity experts say the findings underline the value of understanding how annuity products could impact an investor’s long-term needs. “More than any other source out there, investors trust their financial professional to guide them toward the right solution to ensure a protected retirement, which is why it’s so important for advisors to ensure their clients have a good understanding of how different vehicles perform in different environments,” said Rona Guymon, senior vice president of Nationwide Annuity Distribution, in a statement.
It’s likely investors trust their advisor because of the financial education they provide.
Nationwide’s findings show that while over 90% of investors say they are confident in their decision to purchase an annuity, having knowledge over the product made them feel even more assured (54%), compared to those who had a lesser understanding (36%).
Investors may also be looking to their advisor as a source of information given the lack of information online, reports Nationwide. More than two-thirds (69%) of investors said annuity information available online tends to be very basic and lacking detail, and 65% said annuities are harder to research online than other investment topics.
“To help investors feel more confident about their annuity purchase, financial professionals have an opportunity to tailor the product knowledge they offer their clients based on their unique needs, financial acumen and the type of annuity they own or are considering,” Guymon said.
Driven by market worries and an interest in downside protection, annuities have gained heavy traction in recent years. An April report by LIMRA found that total U.S. annuity sales were $113.5 billion in the first quarter of 2024, up 21% compared to last year. LIMRA’s research also found workers want to invest in an annuity within their employer-sponsored retirement plans.
Nationwide’s survey reports similar findings. Sixty-seven percent of investors in the research said their main goal in purchasing an annuity was funding their retirement, while 41% did so to generate a “personal pension” that could provide a reliable income stream in later years.
The research was conducted online within the U.S. by Nationwide Mutual Insurance Company, among consumer respondents between ages 50-74. Respondents owned one or more annuities purchased in the past 10 years, evenly split between those who bought in the past 5 years and those who bought 6 to 10 years previously and have not started receiving income from the annuity.
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