Should Advisors Re-Embrace Annuities?

Should Advisors Re-Embrace Annuities?

The Retirement Confidence Survey for 2018 is done and the results are in: a strong majority of clients (80%) with defined contribution plans are willing to contribute funds to products that guarantee a lifetime income after they retire.

Could it be they are interested in annuities, which have become something of a bête noire in recent years?

The Employee Benefit Research Institute and Greenwald & Associates came together to conduct the survey in January of this year. They polled slightly more than 2,000 people, both working and retired.

Annuities are not rejected universally – some advisors favor them, at least in particular circumstances and varieties. Our featured writer spoke to Harold Evensky, the chairman of Evensky & Katz/Foldes Financial Wealth Management in Florida. He thinks immediate annuities should be on the radar screens of advisors and clients alike, as he expect relatively paltry market earnings over the next decade or two.

Further, he points out that annuities are the only way to lock in a guaranteed retirement income for life. With the promise of greater longevity comes the peril of running out of money to fund it. Annuities, particularly the immediate variety, Mr. Evensky says, are a good way to resolve this dilemma.

Customers often dislike annuities because they lose control of the funds locked up in them. Advisors are inhibited in recommending them because there’s no associated revenue involved beyond the initial sale.

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Since advisors don’t like them, clients are often unaware of the potential benefits: one expert says less than 50% of customers are even aware that annuities provide a guaranteed regular payout for the entire period of their retirement. Mr. Evensky believes advisors need to change, reacquaint themselves with the plus-side of annuities and start educating their customers.

For more information, please read:
Anti-Annuity Stance Softening Among Advisors and Investors | ThinkAdvisor


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