Longevity And Spending Habits
We believe the popularity of IVA-type products will continue to grow as more consumers seek the balance IVAs provide and other needs this new type of annuity can address. Financial professionals will find value in understanding solutions that offer a middle ground for their client’s portfolios as they manage competing needs such as timeline to retirement, accumulation goal and risk tolerance.
We know that different people have different types of challenges in preparing for retirement. With more Americans moving into retirement without a company pension, identifying products that offer income your clients cannot outlive becomes increasingly important. Other retirees are challenged to stay within ordinary spending limits and for them, evaluating annuities that offer increasing income opportunities is more significant. If you have a more nervous client who needs to accumulate assets but has fewer than 10 years until retirement, the IVA could be an appropriate solution for them. In these situations, an IVA-type product can offer both higher growth potential and a necessary level of protection.
However, if you have a younger client who has time on their side and is more focused on asset accumulation, an IVA may not be an appropriate product for them. An equity-based investment, or even a traditional variable product may be a better fit since there is the potential for more upside growth and they have time to weather any market volatility.
As financial professionals, it’s our responsibility to understand our clients’ needs and respond with options to help address both their risk tolerance and long-term financial needs. If you’re working with clients still feeling stung by the 2008 crash and unready to jump back into the deep end of the investing pool, we should explore potential balanced solutions that help clients get engaged and feel more prepared for retirement.
Robert DeChellis is the president of Allianz Life Financial Services, LLC and is responsible for the sale and distribution of the company’s products through broker/dealers and various financial institutions.