Annuities Gain Momentum with New, Unexpected Audience—Young, Affluent Investors

March 1, 2022

New Cogent Syndicated study finds highly underserved market and unique opportunity for providers

The annuities market is poised for unique and exceptional growth in the coming months, buoyed by interest from an unexpected group—young, affluent investors looking to secure  stable retirement income. However, aging and outdated sales models mean most providers are not ready to tap into this rising demand. Those who get ahead of the curve and offer products young investors want will take a significant lead in this critical segment.

Those are some of the findings of the new Cogent Syndicated Annuity Brandscape™ report from Escalent, a top human behavior and analytics advisory firm. The study found significant growth in interest for annuities among young, affluent investors. More than eight in ten (82%) Millennial affluent investors indicate strong interest in owning retirement income products, significantly more than their older Gen X counterparts (55%).

“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 at 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.”

Despite increased demand from a key investor group, advisors showed a significant decrease in the use of annuities between 2020 and 2021, and are planning to further decrease use through 2023. As a result, one-third (34%) of ready-to-act affluent investors are considering ways to purchase annuities independent of their traditional advisor. In most cases, what they’ve found are providers ill-equipped to satisfy their demand.

“Because providers seldom offer annuities directly to investors, the infrastructure to harness their interest just doesn’t exist,” added York. “So, not only are their advisors letting them down, but the annuity industry is not ready for them, either. That’s a huge opportunity for providers who can figure out a strong value proposition and ease of access in short order.”

While the door is wide open for annuities providers to address growing demand, doing so will require new thinking to win with an increasingly competitive investor segment—from new approaches to marketing, advertising and sales to showing value compared to ETFs and other investment vehicles.

To learn more about the Cogent Syndicated Annuity Brandscape™ by Escalent, visit our website.

About Annuity Brandscape™

Cogent Syndicated conducted an online survey with 469 financial advisors and 3,054 affluent investors in August of 2021. In order to qualify, financial advisors were required to have an active book of business of at least $5 million, and investors were required to have $100,000 or more in investable assets. Cogent sets quota targets and weights the data to be representative of the overall advisor universe using the Discovery Data Financial Services Industry database as a sample source. Escalent will supply the exact wording of any survey questions upon request.

Click below to learn more about the study.

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