Consumers are potentially more interested in purchasing annuities than financial professionals think they are, a Genworth Financial survey found.
The study, which included responses from more than 1,300 consumers and 300 financial professionals, found that 40 percent of qualified non-annuity owners said they would consider buying one but had never been presented the option by an advisor.
In addition, 68 percent of those who don’t own annuities said they have a positive or neutral feeling about annuities and 91 percent of annuity owners answered the same way.
“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, in a statement. “Our research shows that this is not universally true.”
Contrary to some of the arguments often made against annuities, Genworth found that annuity owners are happy with growth (most like the protection from volatile markets), expenses (70 percent said the fees are worth the benefits they receive) and access to funds (78 percent).
The study also looked at the practices of professionals that sell high volumes of fixed index annuities and found that they viewed the ideal candidate as younger (40 to 49) than what is considered the traditional target market.
More than half (52 percent) of high-volume sellers said rather than being for only conservative investors, they viewed them as ideal investments for those with moderate risk tolerance. About one-third (36 percent) said they were best for those with low-risk tolerance.
These advisors also said that their clients paid for annuities from a range of sources: retirement savings, 26 percent; savings/money market accounts, 24 percent; CDs/bonds, 14 percent; and non-taxable annuity exchange, 9 percent.
“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.”