As highlighted by the fact annuities sales shattered records in consecutive years, there’s clear momentum for guaranteed income products. For advisors, knowing that is only half the battle.
Obviously, annuities are nice revenue generators for advisors because of the twofold revenue proposition: upfront commissions and asset-based fee growth. Advisors know about, too. What they should be focusing on is ensuring they’re selective with what clients they discuss annuities. Increasingly, that means Gen X.
Gen X’s intersection with annuities is compelling to advisors for numerous, including the fact that the oldest members of this generation are 60 years old today, meaning they’re nearing retirement and the earliest at age which Social Security can be claimed. Equally as important though oft-overlooked in conversations about the great wealth transfer is that by 2030, Gen X will control a staggering $45 trillion in assets.
Translation: now is the ideal time for advisors to discuss annuities with select Gen X clients. Read on to discover why that’s the case.
Gen X Faces Retirement Challenges
Not that other generations don’t – they most certainly do – but Gen X faces an array of retirement challenges, underscoring the appeal of annuities to this age group. Those headwinds include the specter of Social Security potentially running out of money in 2033. Even if that doesn’t happen, Social Security’s financial health doesn’t alter the fact that just 15% of Gen X will collect defined benefit pensions. That’s down from 38% in 1980.
Those are among the reasons why annuities are attractive. For advisors looking to strategize to that effect, a recent Nationwide survey proposes focusing the annuities conversation on Gen X clients in the $100,000 to $150,000-plus in assets range.
“They also value professional guidance. Despite their research-oriented nature, 53% say financial professionals are their primary resource for financial education,” observes Nationwide. “They're looking for trusted guides to help navigate the complexities of retirement planning.”
There are other reasons Gen X is ripe for annuities. As Nationwide points out, 46% of Gen Xers don’t have a specific retirement savings goal. Rather, they’re just saving. Another 27% said they’re planning on working part-time in retirement.
“These gaps represent meaningful opportunities to help Gen X clients gain clarity on their income needs, quantify their savings targets, and understand the role annuities can play in meeting those goals—creating pathways for deepening relationships and expanding your book of business,” adds the asset manager.
Gen X Is Annuities-Interested
Another bit of positive news for advisors is that Gen X is interested in annuities and has a positive view of these products. As Nationwide notes, 80% of this demographic holds either favorable or neutral views of annuities.
The issue is that just 17% characterize themselves as familiar with annuities, meaning there’s an obvious education opportunity for advisors. That work can pay off because once Gen X signs on the annuities dotted line, their confidence surges.
“Post-purchase confidence is exceptionally high: Among Gen X annuity buyers, more than 90% believe their annuity purchase was a good decision—strong evidence you can use when addressing questions like ‘are annuities worth it?’ or ‘are annuities a good investment?,’” concludes Nationwide.
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