Survey: Nearly a fifth of recent annuity buyers start new relationships with financial professionals to make annuity purchase

Survey: Nearly a fifth of recent annuity buyers start new relationships with financial professionals to make annuity purchase

Consumers who are more likely to begin a new relationship with a financial professional to buy an annuity include those with fewer assets and less confidence

Columbus, OH - Sophisticated retirement savers have for years been tapping into annuities to protect their assets and generate retirement income. Now, as annuities gain in popularity, savers just discovering the product are turning to financial professionals for advice.

A recent Nationwide Annuity surveyfound that 18% of recent annuity buyers surveyed intentionally sought out or started a new financial professional relationship in order to purchase an annuity. For financial professionals, the fact that roughly a fifth of recent annuity buyers are actively seeking help for the first time reveals not only the importance of an advisor's role in the process, but a significant sales opportunity in this growing market, according to Rona Guymon, Senior Vice President of Nationwide Annuity Distribution.

"While annuities are not new, most retirement savers are still unfamiliar with them," said Guymon. "When it comes to securing guaranteed income in retirement, whether it's someone who is only a few years from retirement or decades away, savers want to be sure they have the best information available. This presents an opportunity for financial professionals to build trust and establish a long-term relationshipwith new clients."

Why annuities
As interest rates and stock market volatility increased over the last several years, annuities have become more popular among savers looking to convert their nest-eggs into guaranteed regular payments that will last throughout retirement. Among those responding to the latest Nationwide Annuity survey, 32% said that generating retirement or lifetime income was their prime motivator for purchasing an annuity, followed by principal protection (17%) and tax-deferred growth (13%).

Investors with fewer assets, less confidence
The survey reinforces the role financial professionals play in the annuity purchasing process, especially for savers who may not be as sophisticated. The survey found annuity buyers who are more likely to begin a new relationship with a financial professional, specifically to buy an annuity include those with fewer assets (26% had less than $250,000 in assets), less confidence in the eventual success of their retirement plans (23% identified as having very little or no confidence) and those who already have a pension (23% indicated they have a pension).

"While it may be a bit counter-intuitive that those with a pension are turning to annuities, this statistic likely speaks to the fact that many pensions provide inadequate benefits, and these individuals realize they need to close the income gap," Guymon said.

Personalized guidance builds trust
Financial professionals play a critical role in guiding savers through the annuity purchasing process, and it's no wonder, says Guymon.

"Planning for retirement carries so many expectations and worries with it that trust becomes absolutely crucial," Guymon said. "Savers need to feel confident they are making prudent moves, and when they feel their financial professional understands their unique needs and offers personalized guidance, they feel better about making these important decisions relating to their retirement security."

Guymon noted that it's not always financial planners that savers turn to. According to the survey, 68% of annuity buyers purchased through a financial professional, advisor or planner, while 18% bought through an insurance agent, and 13% bought directly from an annuity provider.

Interestingly, those most likely to have bought directly from an annuity provider are individuals owning multiple types of annuities (20% vs. 5% for those who own only one type) and those who bought their most recent annuity in the past five years (17% vs. 9% for those who bought 6-10 years ago).

The survey also highlights the level of ongoing engagement between annuity buyers and their financial professionals. The majority of annuity buyers (58%) discuss their annuity with their financial professional annually, while 18% engage in discussions more than once per year. Additionally, 12% discuss their annuity every two years, 7% every three or more years, and 5% never discuss their annuity with their financial professional.

"As more Americans adopt annuities, financial professionals have an important opportunity to provide updates on performance, as well as valuable guidance and support," Guymon said. "This presents a significant opportunity for those in the industry to expand their client base and build lasting relationships."

To learn more about the annuities Nationwide offers, visit https://financial.nationwide.com/products/annuities?utm_source=NWNewsroom&utm_medium=Newsroom&utm_campaign=NWNewsroom. Need to connectwith a financial professional? Nationwide has a team of specialists ready to listen and learn about your unique insurance and financial needs.

About Nationwide's Annuity Buyer Consumer Survey
The research was conducted online within the U.S. by Nationwide Mutual Insurance Company from February 6-26, 2024, among 300 consumer respondents between ages 50-74. Respondents owned one or more annuities purchased in the past 10 years, evenly split between those who bought in the past five years and those who bought six-to-10 years previously and have not started receiving income from the annuity.