Duley posits that because consumers are looking for solutions to mitigate the risk of a reduction in their retirement income, that creates a new paradigm shift with financial advisors to say, “Look, I can help navigate this (reduction). For the first time ever, we have a solution that we can consider,” he said.
Some financial advisors, Duley noted, are not keen on annuities. But once they learn about this new breed of annuity, he maintains they agree that it is something that they absolutely have to have as part of their financial planning. “We feel if we could empower financial advisors with a new tool to be able to say, ‘We have an answer for that,’ that’s going to change the way financial planning happens.”
He added that the product was developed around data that showed half of the U.S. population would buy Social Security gap insurance if it were available to them because they have little trust that the system will be fixed.
Duley also noted that some software companies that advisors engage with are already changing their software to build in the potential of future retirement benefit cuts.
According to the Social Security Administration, its retirement program cash reserves will be partially depleted in 2035, triggering a 24% reduction in benefits. And the elimination of the payroll tax, as President Donald Trump has threatened, could deplete the reserves by 2023, Social Security chief actuary Stephen Goss said recently. Furthermore, the impact of the pandemic on the trust fund is unclear but many expect it to trigger a spike in the number of Americans claiming Social Security at 62 or thereabouts..
Tim Ash, CEO of Fort Wayne, Ind.-based Ash Brokerage, the largest privately held insurance brokerage in the U.S., has also endorsed the product. Ash said the annuity industry has had little product innovation in decades, and PlanGap is addressing one of the most important assets of America’s retirees: Social Security. “PlanGap is retirement Insurance and is a much-needed new category of product the vast majority of Americans could benefit from,” he said in an email exchange.
Like Duley, Ash believes that financial advisors need should educate their clients and make them aware of PlanGap Annuity. “With 90+% of Americans dependent on maintaining their Social Security benefits, it’s my belief advisors have a duty to educate their clients on financial matters that could affect their lifestyle in the event of a reduction in benefits. It’s as simple as downloading your social security statement at ssa.gov and start the conversation,” he added.
Duley said the product is available in 18 states and the District of Columbia. He expects it will be available in 48 states this time next year, he said. “We will be offering this, kind of in the spirit that this is the new story, the new innovation to start talking about,” he said.