Financial Professionals Underestimate Appeal of Annuities Among Consumers,
Genworth Survey Finds
RICHMOND, Va., Dec. 12, 2013
RICHMOND, Va., Dec. 12, 2013 /PRNewswire/ -- Consumers perceive annuities more
positively than financial professionals give them credit for, according to The
Future of Retirement Income, a new study released by Genworth.
To view the multimedia assets associated with this release, please click:
The study, a culmination of in-depth interviews, focus groups and quantitative
surveys with financial professionals, annuity owners and non annuity owners,
revealed that 68 percent of non annuity owners have a neutral to positive
impression of annuities. For annuity owners, it's even higher: 91 percent
neutral to positive. In addition, the majority of annuity owners are satisfied
with access to their account, fees and asset growth.
The findings also suggest that financial professionals who avoid talking to
clients about annuities are missing out on potential sales. According to the
survey, 40 percent of qualified non annuity owners who would consider
purchasing an annuity have never been presented with the opportunity by their
"Many financial professionals simply don't present annuities to their clients,
perhaps believing that these products have a bad reputation among consumers,"
said Charlie Gipple, national director of index products at Genworth. "Our
research shows that this is not universally true."
"With low interest rates, disappearing defined benefit pensions and
uncertainty about the future of Social Security, it has never been more
challenging to create a reliable income stream in retirement," said Gipple.
"With their ability to protect principal from market downturns and rising
interest rates (in the case of bond funds) and guarantee an income stream for
life, annuities offer more predictability in these unpredictable times. But
many financial professionals may be overlooking this tool due to their own
misperceptions about the product's appeal among consumers."
Best Practices of Highly Effective Fixed Index Annuity Sellers
In addition to gauging consumers' attitudes about annuities, the study also
looked at the best practices of high sellers of fixed index annuities. The
study revealed the following statistically significant findings that high
volume FIA sellers:
oAre more likely to view younger clients, age 40-49, as an ideal candidate
oReject the notion that FIAs are only for very conservative investors. In
fact, they are more likely to include those with a moderate (versus low)
risk tolerance among their ideal target for FIAs (52 percent versus 36
percent of producers that infrequently sell FIAs) than focus on
oHave clients who fund annuity purchases through a wider range of sources:
qualified retirement savings (26 percent); savings/money market accounts
(24 percent); CDs/bonds (14 percent) and 1035 exchange of another annuity
"The findings suggest that producers need to consider a broader target profile
for annuity prospects," said Gipple. "Successful sellers are recommending
annuities to younger, more risk tolerant consumers and positioning it as a
vehicle for a wider array of retirement funds."
Addressing Concerns about Annuities
The survey found that the majority of annuity owners are satisfied with their
purchase, and especially satisfied with their annuity's growth, expenses and
access to funds, refuting the top objections that producers hear most often
Access: Seventy-eight percent of those who own annuities are satisfied with
their level of access to their funds. It is important to note that while most
annuities have surrender charge periods, generally between 5 and 10 years, and
some also have a Market Value Adjustment, many allow up to 10 percent
withdrawals of contract value each year free from surrender charges and a
Market Value Adjustment.
Growth: Although 53 percent of consumers considering annuities are reluctant
about purchasing them because they would rather invest directly in the market,
financial professionals need only remind their clients about the casualties
from the last financial crisis.
"As recent years have shown, for those in or nearing retirement, the risk of
exposure to volatile markets may be too great for most seeking to grow assets
intended to provide income for life," Gipple said. "Alternatively, fixed index
annuities use interest crediting strategies linked to the performance of a
market index, which provides both upside potential and downside protection."
Expense: The majority (70 percent) of annuity owners say the fees are worth
the benefits they are receiving. Even among annuity considerers, 61 percent
said they would be willing to pay additional fees to guarantee that an
investment would never lose value in a down market while allowing it to
capture some growth in an up market, which is the hallmark of fixed
Additionally, it is important to note that fees vary by type of annuity.
Variable annuities can include fees and expenses of 200 to 400 basis points
annually. However, fixed annuities generally do not charge specific fees or
expenses as a part of the core contract. Many fixed index annuities offer an
optional guaranteed lifetime income rider, charging an annual fee, generally
of less than 100 basis points per year.
"Our survey underscores the degree to which consumers appreciate how well
annuities can help them manage today's challenging financial environment,"
Gipple said. "That's why we firmly believe that annuities will play an
important role in the future of retirement income."
Read more about the annuity opportunity and the ideal customer for the
product: "Putting Your Clients in Control of the Future."
To learn more about how fixed annuities can protect retirement money and
guarantee a lifetime income, financial professionals can visit Genworth's
Index Institute, a virtual community for producers that contains index life
insurance and index annuity training; market insights from Andrew Friedman,
one of the nation's most sought-after speakers on all things political;
presentations; product information; and cutting-edge sales ideas. Consumers
can visit Genworth's recently launched annuities solutions website, which
contains planning tools and educational videos:
Genworth can also be found online through its social media platforms:
Facebook and YouTube.
About the Study
During 2012, Genworth conducted the Retirement Income Planning study in
conjunction with Directive Analytics, a third-party research administrator.
The study consisted of several phases, including in-depth interviews, focus
groups and quantitative surveys with both consumers and financial
professionals. In October 2012, an online, quantitative survey was completed
by 1,340 retired consumers and pre-retirees between the ages of 40 and 80 with
at least $50,000 in household income. In December 2012, an online,
quantitative survey was fielded among 400 financial professionals with at
least one year of experience. Presented results represent statistically
significant findings tested at 95 percent and 90 percent confidence intervals.
Annuity guarantees are based solely on the claims paying ability of the
issuing insurance company.
Withdrawals/surrenders have the effect of reducing the contract value and
death benefit. Withdrawals/surrenders of taxable amounts are subject to
ordinary income tax and if taken prior to age 59½, an additional 10 percent
federal penalty tax.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance
holding company dedicated to helping people secure their financial lives,
families and futures. Genworth has leadership positions in offerings that
assist consumers in protecting themselves, investing for the future and
planning for retirement -- including life insurance, long term care insurance,
and financial protection coverages -- and mortgage insurance that help
consumers achieve home ownership while assisting lenders in managing their
risk and capital.
Genworth operates through three divisions: U.S. Life Insurance, which includes
life insurance, long term care insurance and fixed annuities; Global Mortgage
Insurance, containing U.S. Mortgage Insurance and International Mortgage
Insurance segments; and the Corporate and Other division, which includes the
International Protection and Runoff segments. Products and services are
offered through financial intermediaries, advisors, independent distributors
and sales specialists. Genworth, headquartered in Richmond, Virginia, traces
its roots back to 1871 and became a public company in 2004. For more
information, visit genworth.com. From time to time, Genworth releases
important information via postings on its corporate website. Accordingly,
investors and other interested parties are encouraged to enroll to receive
automatic email alerts and Really Simple Syndication (RSS) feeds regarding new
postings. Enrollment information is found under the "Investors" section of
Charlie Gipple, National Director of Index Products at Genworth
To view the multimedia assets associated with this release, please click:
SOURCE Genworth Financial, Inc.
Contact: Julie Westermann, 804-662-2423, email@example.com
Press spacebar to pause and continue. Press esc to stop.