WASHINGTON, Feb. 17, 2021 /PRNewswire/ — A new white paper from Greenwald Research and CANNEX analyzing research conducted in the days prior to the pandemic and a follow-up study fielded in the midst of the pandemic paints a complex picture of the effect of the COVID crisis on consumer and financial professional perceptions of guaranteed lifetime income.
The report, Diverging Attitudes About Lifetime Income in the COVID-19 Era, shows a significant overall decline in consumers’ perceived value of guaranteed income in addition to Social Security, from 71% to 63% between the fielding of Greenwald Research and CANNEX’s Sixth Annual Guaranteed Lifetime Income Study (GLIS) in February 2020 and a comprehensive follow-up study in August 2020.
Although almost half of consumers reported feeling less financially secure (46%) and close to a quarter (22%) were less comfortable with risk during the pandemic, they were also less likely to agree with the importance of people over age 50 having a strategy in place to protect their portfolio against significant investment loss.
In contrast, the new paper shows financial professionals’ perception of the value of GLI products to consumers increased significantly during the same period. Half of financial professionals considered client receptivity to GLI products had grown since the pandemic’s onset. And 25% reported an increase in clients asking about annuities that provide guaranteed lifetime income.
“The decline in consumers’ perceived value of guaranteed retirement income is counterintuitive, given in past years we have seen increased interest during periods of volatility,” said study director, Doug Kincaid of Greenwald Research. “One explanation is that, by August, many consumers experienced how quickly markets can recover and were as a result less concerned about investment loss or market volatility. Financial and general uncertainty may also strengthen the tendency to hold steady rather than change financial strategies, and lead to a greater focus on liquidity.”
For financial professionals, the appeal of GLI products in context of the interest rate environment jumped significantly from 42% to 62%, and the value of GLI products in relation to stock market conditions remained high (65% in February to 66% in August). The belief that guaranteed income helps diversify portfolios also rose among financial professionals.
“Over the six years we have been conducting the GLIS study we have seen a consistent disconnect between financial professionals and consumers, with financial professionals usually underestimating consumer demand,” said Tamiko Toland, Director, Retirement Markets at CANNEX. “Financial professionals clearly see greater value for GLI and believe that their clients are more receptive to the message. The pandemic has created a new impetus to engage with clients who—despite these unexpected results—continue to see significant value in guaranteed lifetime income.”
The white paper continues to underscore the direct connection between financial professionals discussing GLI products with clients and their ownership of these products, and the importance of these conversations to increasing ownership of these products. It highlights a need for updated education and communications to financial professionals.
Self-reported confidence among financial professionals in their knowledge of GLI products dropped from 71% stating they were highly knowledgeable in February to only 59% in August. An analysis of communications to financial professionals in the white paper found a change in both volume and focus to pandemic-related updates rather than materials to support the value of guaranteed lifetime income. The paper concludes that there is an opportunity to provide these professionals with updated information on the value of GLI to address new retirement challenges in the COVID-19 era.
The August 2020 survey data is based on an online survey of 1,034 consumers aged 55-75 with at least $100,000 in investable assets, and 200 interviews with financial professionals with at least $15 million in AUM. The February 2020 comparison data from Greenwald Research and CANNEX’s Sixth Annual Guaranteed Lifetime Income Study was based on 1,000 consumer interviews and 302 professional advisor interviews based on the same criteria.
The top 5 findings from the 2020 Guaranteed Lifetime Income Study follow-up study, the 2020 GLIS report, are available at www.greenwaldresearch.com/glis or http://www.cannex.com/index.php/2020-gli-study-u-s.
About Greenwald Research
Greenwald Research is a market research firm that specializes in subjects related to health and wealth. Greenwald Research conducts both custom proprietary work as well as thought-leadership public release studies, such as the Guaranteed Lifetime Income Study and the Retirement Confidence Survey. Founded in 1985, Greenwald Research has conducted research for well over 100 of the nation’s largest financial services companies. For more information on the firm, visit www.greenwaldresearch.com.
CANNEX Financial Exchanges Ltd. supports the exchange of pricing information for annuity and bank products in North America. The firm provides financial institutions with the ability to evaluate and compare various guarantees associated with retirement savings and retirement income products. In the U.S. this includes the evaluation of annuity guarantees (Income Annuities, Variable Annuities, Indexed Annuities, and Fixed Rate Annuities) and consulting services supporting the optimization and allocation of retirement income portfolios. For more information about CANNEX, visit www.cannex.com.
Contact: Simon Erskine Locke
SOURCE Greenwald Research and CANNEX