When building holistic plans, the right kind of annuities can be a core component. They can be a tool to mitigate market risk and offer guaranteed income in retirement, to help increase clients’ confidence, ease their fears and stay on track. Annuities can supplement other sources of retirement income such as Social Security, or help bridge an income gap before Social Security starts. And with a floor of guaranteed income in one portion of their portfolio, your clients can invest another portion of their portfolio more aggressively, for greater growth potential, to fund a retirement that can last two to three decades—or more.
Tip 3: Create Empathy By Acknowledging Client Concerns
Advisors and financial professionals top the list of trusted sources during the Covid-19 pandemic. In fact, 55% of investors say advisors and financial professionals are their number-one source for guidance during these uncertain times. But trust is hard to earn and easy to lose. So, what can you do to ensure that you build and maintain this trusted relationship?
To understand what drives clients to work with an advisor or financial professional, Nationwide studied the impact of cognitive trust, or “trust from the head,” and affective trust, or “emotional trust.” Our research shows that affective trust is a far greater predictor of what motivates an investor to work with an advisor or financial professional than cognitive trust. And the most significant driver of affective trust is empathy.
Trust and empathy are especially important right now. As a result of Covid-19, more than half of investors realize they need help managing their finances (52%), and their top three financial concerns related to the pandemic are losing their life's savings (41%), being unable to afford health care (28%) or afford to retire as planned (28%), according to our NRI survey.
How does this compare to your clients’ top concerns? When you build trust and show empathy, you can keep clients on track with their finances and develop strong, mutually beneficial relationships. Ask questions to better understand:
• How has the coronavirus impacted you? Your family? Your employment? Your finances?
• In this new normal, what are your top concerns, your financial priorities and your short-term financial goals?
• Are you concerned about the pandemic’s impact on your long-term financial goals?
• How has your comfort level with risk changed, as a result of the pandemic?
Tip 4: Harness Technology To Help Build The Human Connection
Technology is a critical, and beneficial, component of your practice—especially as the pandemic has required many of us to work remotely and change the way we interact. According to a new LIMRA Study, as Covid-19 cases spiked and social distancing guidelines were adapted, seven in 10 advisors increased their communications with their clients.
Building relationships with your clients is more important than ever in this new normal. According to the LIMRA study, nearly two-thirds of advisors and financial professionals are now working from home. Not being able to meet in person with their clients ranks as the biggest impact during the pandemic for nine in 10 advisors. By fostering one-on-one relationships through virtual meetings—such as FaceTime, Skype or Zoom—advisors and financial professional have maintained more personalized interactions similar to in-person meetings and have created stronger bonds than those who only engaged in phone calls.
It remains important that you enhance the customer experience for your clients. According to our most recent Advisor Authority study, the most important technology to add value for your clients includes interactive websites and/or client portals, mobile websites and/or mobile apps, tax optimization tools and account aggregation systems. This is extremely valuable, especially during these times of social distancing, as more clients look for digitized communication on a day-to-day basis.
Don’t Delay: Put These Tips Into Practice Today
Though we all face many more unanswered questions right now, you and your clients can succeed during this uncertain time. Clients need—and want—your help. According to our NRI survey, roughly half of investors are relying on an advisor of financial professional more than ever before. And when it comes to the impact of Covid-19 on their personal finances, those with an advisor are more likely to feel optimistic than those without.
Now more than ever, it is crucial to protect clients from emotional reactions when it comes to their retirement plans. Keep clients focused on the long term, build holistic financial plans, including the right solutions to protect their portfolios and retirement income, build empathy by acknowledging their concerns and use technology to foster and deepen your relationships. While Covid-19 has challenged clients in unforeseen ways, there are solutions to help your clients preparing for and living in retirement. Taking steps today will benefit your clients and your practice now and in the future.
Craig Hawley is head of Nationwide’s Annuity Distribution.