An Alliance for Lifetime Income study released last week reveals key disconnects between financial planning professionals and investors when approaching protected income and annuities in retirement.
The findings, based on responses from 2,516 consumers for the firm’s 2024 Protected Retirement Income and Planning (PRIP) study, shows that while 62% of advisors say they’ve initiated conversations about annuity products, just 27% of investors agree. Similarly, when discussing retirement income planning, 98% of planners say they have talked about Social Security, pensions, and annuities, but only 69% of clients agree.
Meanwhile, even though 96% of advisors say they have discussed when clients should withdraw from certain accounts, only 66% of clients believe they have; and while 95% of planners have recalled conversations with clients about minimizing taxes, only 64% of clients concur.
“There’s a clear and concerning gap between what investors need and want versus what many financial professionals are communicating when it comes to planning for retirement,” said Jean Statler, CEO of the Alliance for Lifetime Income, in a statement. “The findings in Chapter 3 of our annual survey with consumers and advisors should serve as a wake-up call. There’s growing consumer interest and demand for protection, but we need to bridge this communication divide to ensure that all those approaching retirement, feel prepared and protected for the years ahead.”
A similar disengagement can be found in conversations around Social Security and employer-sponsored retirement plans like 401(k)s and 403(b)s, notes research from Alliance for Lifetime Income. Even as 92% of planners believe they’ve helped clients in deciding when to take Social Security, only 22% of clients say their advisors helped the most in determining when to claim. Likewise, while 81% of clients find annuities or protected income products within their employer’s plans to be very or somewhat helpful, only 68% of financial professionals recognize this interest.
A recent study by Invesco touched on similar findings between employees and their employers, adding that while 78% of plan sponsors say they have provided communications and/or education about retirement income options, 57% of employees did not recall receiving any type of messaging.
The study goes on to report that a lack of engagement could cause the disconnect between both groups. While plan sponsors and third parties could provide material to employees, most will not engage unless it’s targeted to them.