Young adults have a mounting desire for retirement income products, but if it's annuities they're looking for, they're largely on their own, according to a new survey.

That's because the survey, released today by Escalent, also found a continued aversion to annuities among financial advisors, as well as a lack of platforms that allow annuity companies to sell directly to investors.

“Young, affluent investors are looking for ways to generate stable, reliable income as the foundation of their portfolio, and annuities are particularly attractive while interest rates—and savings returns—are remarkably low,” said Linda York, senior vice president of Cogent Syndicated, an arm of research firm Escalent. “However, the disconnect between these investors and their advisors is so wide that many are going to providers independently to add annuities to their portfolios.”

The online survey by Cogent found that millennials were significantly more interested in owning retirement income products than older consumers, with 82% of affluent millennials expressing a desire to own such products compared with 55% of Gen Xers.

When specifically asked about annuities, about 23% of all respondents said they were prepared to purchase annuity products within the next three months. But about 50% of this group was composed of millennials, or those born between 1982 and 2003, York said in an interview with Financial Advisor. The rest of this "ready-to-act" group was composed of Gen Xers born between 1965 and 1981 (30%), baby boomers born between 1946 and 1964 (23%) and the Silent Generation, or those born between 1924 and 1945 (7%).

The readiness of younger adults to take on annuity products with lockup periods is partly a natural byproduct of older retirees being more reluctant to put liquidity limits on their assets, she noted. But it also reflects insecurities among younger investors about the future of Social Security and Medicare.

"They're much more skepitcal of the extent to which those plans will be there for them," York said. "They're feeling like, 'I have to do something myself.'"

Meanwhile, advisor interest in annuities is trending in the opposite direction, with this group showing a decreased use of annuities between 2020 and 2021, and plans to decrease use further in 2023, according to the survey.

Advisors' reluctance to use annuities is part of an ongoing trend that partly reflects the shift of the financial advice industry to more fee-based rather than commission-based structures, she said.

Financial advisors are also putting more and more assets into products such as ETFs and model portfolios as retirement solutions for their clients.

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