Nearly eight in 10 financial professionals have changed their approach to retirement planning this year in the wake of inflation and recession anxieties, according to the third edition of the Protected Retirement Income and Planning Study, released today from the Alliance for Lifetime Income and CANNEX.
The corollary study of consumers and financial professionals revealed registered investment advisors and broker-dealers are even more concerned than consumers about inflation, market volatility and chances of a recession—and how this impacts Americans’ retirement income.
Their chief concerns include:
- Increasing inflation reducing retirees spending power (92% of financial professionals vs. 81% of consumers)
- Stock and bond market trends reducing retirees’ potential retirement income (87% vs. 68% of consumers)
- Recession driving the economy down and impacting retirement income (84% vs. 79% of consumers)
“The chasm between consumers and financial professionals when it comes to protecting and spending money in retirement continues to confound in this latest survey,” said Jean Statler, CEO of the Alliance for Lifetime Income. “Against the backdrop of record inflation, a bear market and global economic uncertainty, the misalignment in what financial professionals are relying on to create retirement income, and what clients are looking for, is a problem.”
“Against the backdrop of record inflation, a bear market and global economic uncertainty, the misalignment in what financial professionals are relying on to create retirement income, and what clients are looking for, is a problem.”
Jean Statler, The Alliance for Lifetime Income
Statler said it’s good that many financial professionals have changed their retirement planning approach this past year. “But for those financial professionals who tell their clients to simply ride out the risks and are not considering protected income options like annuities, don’t be surprised if you find them going elsewhere for advice,” she said.
The study found nearly four out of five financial professionals (78%) have changed their approach to retirement planning in the last year. This significant shift is largely in response to inflation—cited by 82% as a factor in the decision to make a change, compared to roughly half who cited other top factors, including bond returns (52%) and interest rates (48%).
“Last year’s study saw nearly two-thirds of financial professionals (65%) changing their approach to retirement planning,” added Gary Baker, President of CANNEX USA. “Fast forward to today and we see that this trend has accelerated, with a third of financial professionals more likely to recommend an annuity due to the current climate of rising interest rates, inflation and growing anxiety. Our data shows that clients are searching for an alternative to traditional asset allocation strategies, and we’re encouraged to see advisors responding to that demand.”
Only 8% of financial professionals said they were less likely to recommend an annuity based on the current climate while 59% said the likelihood hasn’t changed.
As high inflation persists into the second half of the year, the study found most Americans ages 45 to 75 are worried about the dual risks of high inflation reducing spending power in retirement (81%) or a recession driving the economy down and impacting retirement income (79%). That anxiety is manifesting in real-world behavior as six out of 10 consumers (60%) reported reducing their spending because of inflation.
The primary focus of the study is to identify how a range of protected retirement solutions fit with approaches to retirement planning, and how often consumers and financial professionals consider or use annuities in addressing different income approaches and needs.
SEE ALSO:
• Inflation Impacting Short-Term Financial Decisions, But Not Retirement Contributions
• New Study Contradicts Traditional 60/40 Retirement Portfolio Asset Allocation
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
