he survey reveals that Investment Advisor Representatives (IARs) of Registered Investment Advisory firms (RIAs) understand that clients are increasingly worried about their retirement prospects, grappling with questions of when and how they will be able to retire and the level of financial security they can achieve during their golden years.

“We’re only months away from the year in which the greatest cohort of Americans will turn 65 in our nation’s history,” said Corey Walther, President, Allianz Life Financial Services, LLC. “Given the ongoing risks to a retirement income strategy like inflation and market volatility, it is not surprising that so many respondents say their clients are asking about how to protect their income in retirement.”

Key Findings

• Growing Concerns about Inflation and Retirement Benefits: Ninety-seven percent of respondents cite client concerns about the impact of inflation on retirement portfolios. Eighty-five percent also note that their clients expressed concern about the adequacy of their Social Security benefits. Additionally, 63 percent of respondents believe their clients worry that employer-provided retirement benefits may be insufficient.
• Lower return expectations present planning headwinds: Forty-eight percent of respondents expect long-term US equity returns to be two – four percentage points off historical averages, and seven in ten predict the same for fixed income. This general pessimism may account for the more than a third of respondents who think the safe withdrawal rate is actually less than the four percent established in William Bengen’s research.
• Two ways RIAs utilize annuities for decumulation: Fifty-nine percent of IAR respondents allocate at least a portion of client portfolios to annuities for decumulation both for lifetime income or as a substitute for fixed income. One IAR responded, “We use primarily FIAs (fixed index annuities) as a ‘bond portion’ alternative and have for 15-20 years.”
• Advisory Annuities are Misunderstood: A majority of respondents are likely to recommend or refer advisory annuities to clients, but nearly a fifth of respondents are reluctant to do so. Advisors who are reluctant to use annuities are concerned about fees, liquidity, opacity, and complexity. Given that advisory solutions have largely addressed these objections, it would appear that awareness is low: three in ten respondents report that they are unaware that there are fee-only annuities today that, in some cases, do not have any surrender charges and are much lower in fees compared to their commissionable peers.

Actionable Insights for RIAs

• Embrace Outsourced Insurance Desks (OIDs): The survey highlights that four in ten respondents may not know that utilizing advisory annuities doesn’t require an insurance license (when partnering with an OID). This presents a particular growth opportunity for transitioning advisors to partner with OIDs in moving annuities and protecting client relationships.
• Utilize Advisory Solutions via OIDs: Nearly half of IARs who recommend annuities appear to maintain insurance licenses presumably to write commissioned annuities for clients. They may not be aware that they can partner with OIDs to provide advisory solutions, bill on those assets and simplify their firm structures, while boosting AUM and firm valuation.
• Reevaluate Planning Software Failure Rates: Lower capital market assumptions may present challenges for retirement income plans. Protected accumulation and income solutions can improve failure rates and boost clients’ confidence in their retirement plans. IARs who are likely to recommend/refer annuities for clients report that guaranteed lifetime income gives their clients the courage to spend confidently in retirement (88 percent), lets their clients sleep easier at night (93 percent), and generally makes their clients happy (89 percent).
• Consider advisory FIAs and RILAs for income: Advisory Fixed Index Annuities (FIAs) and Registered Index Linked Annuities (RILAs) historically benefit from high interest rates, offering improved potential gains, loss protection, and more cost-effective income generation. Some withdrawal benefits can also facilitate increasing income to address client inflation concerns. Guarantees are subject to the claims paying ability of the issuing insurance company.

“Rising interest rates have been challenging for investors,” said David Stone, founder and CEO of RetireOne. “The upside is that annuity guarantees, and payout percentages have also risen which, in turn, brings down the cost of creating lifetime income streams.”

About the Survey:

The joint 2023 RIA Protected Accumulation + Retirement Income Survey was conducted by Allianz and RetireOne in May 2023. Responses were fielded from 200 IARs of RIAs. The annual survey provides insights into the concerns and planning strategies of RIAs and their clients regarding retirement income planning and portfolio protection.

For more details on the survey findings and insights, visit RetireOne’s website.

About RetireOne

Serving over 1,100 RIAs and fee-based advisors since 2011, RetireOne® is the leading, independent platform for fee-based insurance solutions. With offerings from multiple “A” rated companies, RIAs may access this fiduciary marketplace at no additional cost to them or their clients. Currently servicing over $1.4 billion of retirement savings and income investments, RetireOne continues to grow in its mission to provide advisors and their clients’ valuable retirement solutions that are simple to use, easy to understand, and delivered with outstanding service. Learn more at RetireOne.com and follow us on Twitter @RetireOne and LinkedIn.

About Allianz Life Insurance Company of North America

Allianz Life Insurance Company of North America one of the Ethisphere World’s Most Ethical Companies^®, has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products. In 2022, Allianz Life provided additional value to its policyholders via distributions of more than $7.7 billion. As a leading provider of fixed index annuities, registered index-linked annuities, and fixed index universal life insurance, Allianz Life is part of Allianz SE, a global leader in the financial services industry with approximately 150,000 employees in more than 70 countries. Allianz Life is a proud sponsor of Allianz Field^® in St. Paul, Minnesota, home of Major League Soccer’s Minnesota United.

Securities offered through EF Legacy Securities, LLC (EFLS). EFLS is a member of FINRA/SIPC, registered in all 50 states and is a licensed insurance agency (resident KY license no. DOI-896601). In CA, EFLS is doing business as EF Legacy Insurance Agency LLC (nonresident license no. 0L01472).

Non-registered insurance products are sold by RetireOne, Inc. (RetireOne), a licensed insurance agency (resident KY license no. DOI-778494). In CA and AR, RetireOne is doing business as R1 Insurance Solutions, Inc., (nonresident license no. 0H44773 and 100107906, respectively).

FOR INSTITUTIONAL USE ONLY. NOT INTENDED FOR CONSUMER SOLICITATION PURPOSES.

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