The Covid-19 pandemic has placed a spotlight on nearly every aspect of our lives, forcing us to take stock of many things we can sometimes take for granted—our physical and mental health, relationships with family and friends, and even our budgets and financial plans. While the laundry list of “life’s responsibilities” looks different for everyone, it’s refreshing to know several of these items are within our control, even when the world around us is changing dramatically. With so much on our plates right now, this is one takeaway I’ve kept at the forefront during the last few months—it’s important to take the time to step back, and truly understand and focus our energy on the things we can control, now more than ever.
In the financial services industry, we talk about control a lot. While the markets can be volatile and at times unpredictable, there are many aspects of financial planning that we can be in charge of. The fate of clients’ financial futures doesn’t have to be as erratic as the latest movements in the markets, but sometimes consumers need a little help when it comes to creating their financial plan, and more importantly, sticking to it.
Recently, Jackson partnered with the Insured Retirement Institute (IRI) to survey financial professionals about how the pandemic is impacting their clients’ retirement readiness and conversations about annuities. More than half (55%) of financial professionals believe 25% or more of their client base is at risk of running out of money during retirement. Conversely, a mere 4% report none of their clients are at risk, illustrating the vast majority of financial professionals feel at least one or more of their clients are in danger of exhausting their retirement savings (Source: (Jackson & Insured Retirement Institute, April 2020, COVID-19 Shines a Light on Retirement Readiness).
When we asked the same question before the pandemic, 38% of financial professionals stated a quarter or more of their clients may deplete their retirement savings (Source: Jackson & Insured Retirement Institute, August 2019, The Language of Retirement 2020). The 17% jump (to 55%) is significant, although not surprising as COVID-19 continues to upend our day to day.
Amid this chaotic time, we found annuity conversations are increasing as investors continue to brace for the financial impact—nearly two thirds (64%) of financial professionals indicate they are discussing annuities more frequently with clients during the pandemic, and 35% say they are talking about annuities much more frequently. A whopping 77% of financial professionals report their clients are very or somewhat receptive to discussions about annuities (Source: Jackson & Insured Retirement Institute, April 2020, COVID-19 Shines a Light on Retirement Readiness).
This represents a huge opportunity to have more conversations with clients about annuities during such an uncertain time. In fact, a recent Guaranteed Lifetime Income Survey further reinforces this opportunity. Conducted by Greenwald & Associates and Cannex, the survey found advisors may be prone to underestimating client interest in annuities. The research noted only 14% of advisors believe their average client is very interested in guaranteed lifetime income annuities, while 42% of consumers say they are interested or already own the product (Source: Greenwald & Associates and Cannex, May 2020, Guaranteed Lifetime Income Survey).
In a similar vein, it appears COVID-19 may be driving a dramatic shift in risk tolerance and changing retirement investing behavior for the long term. Through their second wave of Retirement Reset research, the Alliance for Lifetime Income recently found one in four Americans say they have a lower risk tolerance for future retirement investments because of the pandemic. Of those concerned about the impact of COVID-19 on retirement investments, 54% say their concern is due to future unpredictability. Moreover, three out of four respondents are concerned about the pandemic’s impact on retirement investments (Source: Alliance for Lifetime Income, April 2020, COVID-19 Retirement Reset Tracker Survey).
So, what do we do with all this risk and uncertainty? We need to focus on what we can control!
It’s no secret COVID-19 has upended financial professionals’ business models and made it harder to meet with clients face to face. However, even if the interactions have changed, the need for them has not—it’s more important than ever to find ways to connect with clients who are planning for their financial futures.
As our world transitions to a “new normal” (whatever that may look like), the need for income protection when planning for—and living in—retirement is clear. Clients will thank you for scheduling that Zoom meeting during the pandemic, and encouraging them to build a financial plan that doesn’t have to stay six feet away.
Marc Socol is executive vice president and national sales manager at Jackson National Life Distributors LLC.