Survey: Financial professionals key to positive annuity purchase experience

Columbus, OH – Investor interest in downside protection and guaranteed retirement income is driving soaring annuity sales – a trend further fueled by the largest surge of Americans turning 65 this year than ever before. According to LIMRA, total U.S. annuity sales were $113.5 billion in the first quarter of 2024, marking the highest first quarter results since LIMRA began tracking sales in the 1980s.

With annuity demand expected to shatter records again this year, financial professionals should be prepared to discuss annuity options with their clients – especially as a recent survey from Nationwide Annuity shows they play an important role in helping investors feel confident in their annuity purchase. According to the survey of 300 annuity owners, 82% said the opinion of their financial professional made them feel more positive about their decision to buy an annuity, followed by the performance of the annuity itself (76%), market performance (70%) and interest rate changes (67%).

Additionally, the survey found investors are turning to annuities for a more secure future in retirement. 67% of investors said their top motivation for purchasing their annuity was funding their retirement, and 41% said they did so to generate a ‘personal pension’ that could provide a reliable income stream, in many cases, for life.

“More than any other source out there, investors trust their financial professional to guide them toward the right solution to ensure a protected retirement, which is why it’s so important for advisors to ensure their clients have a good understanding of how different vehicles perform in different environments,” said Rona Guymon, Senior Vice President of Nationwide Annuity Distribution. “As we mark National Annuity Awareness Month (NAAM) this June, financial professionals should seize this opportunity to engage with their clients to reinforce the value of different retirement solutions and products, including annuities, as part of a robust plan that helps them protect investments, enable growth and guarantee they won’t outlive their income.”

Annuity education driven by financial professionals increases investor satisfaction
In addition to the performance of the market and product, investors feel more confident about their purchase when they understand the complexities of annuity solutions – especially when that education comes from their financial professional.

While over 90% of investors said they were confident their annuity purchase was the right decision, having annuity knowledge made them feel even more confident (54%), compared to those who felt less knowledgeable (36%). Investors’ understanding of the annuity they purchased also varied depending on which product they bought, with investors owning registered index-linked annuities (RILAs) having the highest product comprehension (94%) of all annuity buyers, followed by those who own a fixed annuity (85%), fixed index annuity (78%) and variable annuity (70%).

“Annuity education materials and product knowledge can be provided by financial professionals as a means to engage customers,” Guymon said. “There is no real substitute for a trusted and qualified financial professional who can help clients anticipate and plan for future challenges and tailor portfolios for specific needs.”

While financial professionals are investors’ main source of annuity information (84%), 48% are also turning to websites, blogs and online articles to learn more. However, they are struggling to find high quality and neutral online information about annuities, in addition to finding the product confusing when researching on their own. More than two-thirds (69%) of investors said annuity information available online tends to be very basic and lacking detail, and 65% said annuities are harder to research online than other investment topics.

“To help investors feel more confident about their annuity purchase, financial professionals have an opportunity to tailor the product knowledge they offer their clients based on their unique needs, financial acumen and the type of annuity they own or are considering,” Guymon said. “The Nationwide Retirement Institute offers advisors access to planning tools and consultative support that can help break down topics like annuities to help them prepare their clients for their financial future.”

About Nationwide’s Annuity Buyer Consumer Survey
The research was conducted online within the U.S. by Nationwide Mutual Insurance Company from February 6-26, 2024, among 300 consumer respondents between ages 50-74. Respondents owned one or more annuities purchased in the past 10 years, evenly split between those who bought in the past 5 years and those who bought 6 to 10 years previously and have not started receiving income from the annuity.