Most advisors don’t recommend annuities to the majority of their clients who are in retirement – and only 40% expect that advice to be taken to heart most of the time.
That is according to a brief this week published by the Center for Retirement Research at Boston College, which commissioned Greenwald Research to survey 400 financial professionals in June.
Despite the lack of annuity recommendations, advisors sometimes have concerns about clients outliving their assets, according to the report. Seventeen percent of clients will run out of money if they live to 95, advisors said in the survey.
“The results suggest that financial professionals are concerned that many of their clients could deplete their savings too quickly,” authors Karolos Arapakis and Gal Wettstein wrote. “But the majority of them do not recommend annuities to their clients and, when they do, many clients do not take the advice. These findings point to both the promise and limitations of reliance on financial professionals to guide clients to greater use of annuities.”
It’s hardly new information that many advisors have historically shunned annuities, largely because of the commissions on the products being incompatible with fee-based practices. The insurance industry has been working to make inroads with those advisors, and many annuities are now available without commissions. A question for those who avoided annuities in the past is whether it is incumbent on them to consider them now.
“If you liked commissions, you loved annuities because they can pay handsome ones. If you worked on AUM fees, you didn’t like them because they represented lost revenue (recommending annuities to your clients was often referred to as “annuicide” – killing your practice
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