The relative value of annuity products has never been
greater than what insurance carriers are bringing to market today. When you
compare annuity guarantees and rates with the 10-year Treasury yield, high
levels of volatility and fears of mounting inflation, the attractiveness of
annuities is at an all-time high.
According to research released by Charles Schwab,
pre-retirees feel particularly anxious about how they’ll manage their income
and spending needs in retirement. In fact, 72% of Americans ages 55 and older
that were surveyed relayed they are worried about running out of money in
retirement, 57% of survey participants said they’re overwhelmed by determining
how much they can spend in retirement, and 60% are worried about not getting—or
the thought of not getting—a regular paycheck in retirement. This is a substantial
retirement readiness gap annuities can help close.
Annuities are designed to help savers address their current
retirement challenges with principal protection and lifetime guarantees. They
provide unique benefits that help all types of investors prepare for, and live
in, retirement, no matter their risk tolerance. Annuities also allow for a more
predictable investing experience by eliminating many unforeseen risks that are
not protected in other asset classes. Clients know exactly what they’ll receive,
which helps to inform other investment decisions.
Although the annuity vehicle can be an attractive option for
retirement savers, there is no question the adoption of the product set among
financial professionals has been hindered by an outdated investment process, as
well as misperceptions on product transparency, fees and the real value they
This marketplace has long been ripe for digitization, and
the rise of fintech is the tail wind needed to drive a revolution in the
industry that will hopefully have a long-lasting impact on how savers tackle
their retirement challenges.
Americans can benefit from exploring how guaranteed lifetime
income can help improve their retirement planning, no matter what their
objectives might be. It’s crucial for advisors to understand this and embrace
technology options that might be available to help them effectively transact in
the annuity marketplace on behalf of their clients.
Until recently, this was not an option. The annuity space
faced head winds that seemed impossible to overcome, which drove much of the
criticism it received. But through the emergence of fintech, specifically
online platforms for advisors to seamlessly access and transact in the annuity
category, a new spotlight is revealing just how easy transacting in the space
has become, as well as the real value these products bring to retirement
It was not too long ago that many annuity applications were
paper-based, and digitization of the product set was not even on the horizon.
In fact, in order to transact in the annuity space, advisors had to rely on
spreadsheet tracking of product training, run dozens of hypotheticals and
manually log into carrier websites to manage their book of business.
Today, the digitization of the annuity market ensures it is
no longer a time-consuming process. Advisors can now turn on their computers
and access objective technology platforms, like Luma, for all their annuity
needs. These digital platforms are allowing advisors to not only gain online
access to transact in a wide selection of annuity products offered by varying
carriers but also learn, compare, order, configure and track products from one
Having objective access to a wide selection of products is
important, but what’s more important is an advisor’s ability to ensure they’re
offering annuity products that are appropriate and suitable for their clients’
This is a timely focus as financial professionals have
recently had to shift their attention from preexisting suitability obligations
to learning a new standard that the SEC put into motion–Regulation Best
Interest. With Reg BI in place, acting in the client’s best interest for
retirement products now includes additional education, research and time commitments
for both compliance teams and their advisors. But with new digital features,
finding the ideal annuity product that meets suitability requirements and
aligns with a client’s best interest can be realized within minutes.
These types of cutting-edge feature bring together
innovative data modeling and third-party integrations that allow financial
professionals to instantly discover and test new products, easily review a
diverse set of annuity products and, within a few simple clicks, deliver
superior service to their clients while remaining compliant with suitability
and Reg BI requirements.
Efficient and informative features for advisors to directly
and seamlessly access, from any type of work environment, is a welcome change
that the rise of fintech is bringing to the annuity category.
The convergence of the annuity opportunity to help clients
reach their retirement goals and fintech’s ability to reduce much of the
friction that has previously hindered the transacting of the product set is the
perfect combination to drive growth in the category for important years to
come. By acting now and embracing what technology has to offer in the annuity
space, advisors can effectively address their clients’ needs for income in
retirement, as well as put them on a path to a more promising future.
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