Annuity sellers and distributors -- including banks, credit unions and securities firms -- equipped with detailed information about their prospective customers are better able to distinguish those clients most receptive to buying annuities, according to a new survey released today by Kehrer Saltzman and Associates.
Entitled Who Buys Annuities and Who is Likely to Buy Them?, the study proposes that annuity marketers equipped with profiles of the characteristics of annuity buyers and prospective buyers can increase their chances of reaching consumer households open to buying an annuity.
"Households with incomes from $75,000 to $200,000, for example, are the heart of the annuity market," said Paul Field, study co-author and senior associate of Kehrer Saltzman. "They represent 51 percent of annuity buyers and likely buyers compared to only 30 percent of all U.S. households."
The study also found that while annuity-disposed buyers are more likely to be white, black and Hispanic consumers also expressed a strong interest in purchasing annuities. "This points to a marketing opportunity in these ethnic segments which have been under penetrated," Field said.
In terms of financial assets, the study reports that annuity buyers and likely buyers are almost three times more prevalent in the $75,000 to $100,000 in assets segment (14 percent) compared to only 5 percent of the U.S. population as a whole. Forty-three percent of annuity-disposed households are in the $100,000 to $1 million in assets segment -- sometimes viewed as the "mass affluent" market -- compared with only 29 percent of all U.S. households. Another 14 percent of annuity buyers and likely buyers are in the $1 million to $5 million segment, versus less than 5 percent of U.S. households.
"Data on consumer attitudes indicate a significant interest in and orientation toward financial planning among annuity buyers and likely buyers," said Kenneth Kehrer, Ph.D, study co-author and principal at Kehrer Saltzman. "This trend surfaces repeatedly in questions that probe the preferences of these consumers and represents a significant opportunity that can be exploited by annuity marketers."
Steve Saltzman, study co-author and principal of Kehrer Saltzman says the study found particular industry insights for banks and credit unions marketing annuities.
Published by Kehrer Saltzman & Associates in association with Consumer Financial Decisions of Princeton, N.J., and sponsored by Western National Life Insurance and Lincoln Financial Distributors, the study analyzed data from the MacroMonitor Survey, a national survey of 4,374 households with an oversample of 1,500 affluent households. The study reviewed a variety of demographic factors, attitudes and financial product use characteristics of U.S. households that reported purchasing a fixed or variable annuity in the past two years, or who indicated they were likely to buy an annuity in the next twelve months.
Kehrer Saltzman & Associates, LLC is a strategic management consulting firm that provides financial advisors industry analysis based on a mix of institutional and consumer research.
The MacroMonitor Survey is produced by Consumer Financial Decisions (CFD) since 1978. The MacroMonitor marketing database is used for measuring, analyzing and interpreting consumer behaviors, attitudes and motivations toward purchasing retail financial services.
- Jim McConville