About half of all financial advisors in the United States are serving the needs of clients who are either retired or about to retire. Why don’t more of them recommend guaranteed income products?
A study conducted by the LIMRA Secure Retirement Institute has found that 50% of financial advisors in the US do most of their business in the pre-retiree and retiree markets. This is almost 40% higher than in 2011, when the survey was last conducted.
The research shows that American advisors have expanded their income planning services significantly. Five years ago just 33% of advisors said they offered clients help claiming government retirement benefits, but this number has now increased to 70%. The number of intermediaries who help clients plan for required minimum distributions from their retirement savings plans has seen double-digit growth, as have the number who offer assistance with long term care, the timing of withdrawals, and claiming from defined benefit pensions.
Despite their focus on creating a steady stream of income for their clients, many of the advisors who participated in the survey said they were reluctant to offer guaranteed products.
Guaranteed lifetime income products
"On average, advisors recommend their clients invest one quarter to one third of their portfolio into guaranteed lifetime income products," reads the report. "Yet while 9 in 10 advisors agree that guaranteed lifetime income products provide clients ‘peace of mind’ in retirement and feel it is important to own them, there is also substantial resistance not to use the products in a clients’ portfolio because these products offer less flexibility: Nearly 4 in 10 advisors say that guaranteed lifetime income products compromise their ability to manage a clients’ portfolio as circumstances change."
“We are also concerned that the new DOL fiduciary rule may have a negative effect on advisors’ willingness to recommend guaranteed lifetime income products to their middle income clients,” comments Jafor Iqbal, assistant vice president at the LIMRA Secure Retirement Institute.