On October 2nd, financial advisors and industry professionals across the globe are celebrating World Financial Planning Day. On this day, we come together as a global community to raise awareness and reinforce the importance of working with clients to develop a financial plan to help them reach their short-term and long-term financial goals.
In light of this noteworthy event, it’s important to address one of the biggest financial planning challenges facing our country today. The retirement income challenge is real and growing, as pension plans disappear, the solvency of Social Security is coming into question, and more Americans are undersaved at the same time they are living decades longer.
Our annual Advisor Authority study of roughly 1,600 RIAs, fee-based advisors and individual investors found that saving enough for retirement and generating reliable income during retirement are among investors’ top 10 financial concerns. That’s where advisors like you are stepping up, to help investors prepare for and live in retirement.
Retirement Income Creates Greater Confidence
According to Advisor Authority, the number one reason investors work with an advisor is to feel more confident in their financial future. Clients feel more confident and are more satisfied when their advisor develops a formal financial plan—especially a plan for retirement income. In fact, the Nationwide Retirement Institute found that 40% of clients with a formal retirement income plan give their advisors a perfect 10 in satisfaction—three times more than clients without a plan. What’s more, 56% of people 11 to 15 years away from retirement would consider switching to a new advisor who developed a written retirement income plan for them.
As investors work with you to plan for a retirement that could last 20 to 30 years, or more, their concerns about outliving retirement savings—and finding a source of guaranteed income they can’t outlive—rise to the forefront. To address these concerns, nearly nine-in-ten (87%) RIAs and fee-based advisors have a strategy in place to protect clients against outliving their savings.
As you know, a strategy to protect your clients against outliving their savings should start early, and it requires the right solutions at every stage of their financial lifecycle, from accumulation to retirement income to legacy planning. But what many RIAs and fee-based advisors may not know, is an entirely new solution for more holistic retirement income planning is here—and growing.
Now, there is a new category of fee-based insurance and annuities that are built to fit the way you work. This means greater simplicity, transparency and choice, as well as more seamless capabilities for technology integration, fee-management capabilities and licensing. As this category continues to expand, and new types of products emerge, you can now use insurance and annuities in ways you might not have considered—as a tax management tool, as a way to manage legacy planning and charitable giving, and as a boon to retirement income planning.
Fee-Based Annuities For Guaranteed Retirement Income
Where your client falls in the financial lifecycle will impact what annuity you use—from variable to fixed, immediate to deferred—to meet their retirement income needs now or in the future. For example, for clients that need income now, a fee-based single premium immediate annuity (SPIAs) typically provides an income stream immediately after the client makes an initial lump sum investment. For clients who need an income stream that starts in the future, fee-based variable annuities (VAs) may be an option after they max-out qualified plans.