Advisors are more likely to use variable annuities for retirement income planning (67%, including those advisors who reply often and always) than for other objectives. This finding aligns with the fact that most advisors (57%) typically recommend these products to their clients in their 50s. Nearly half of advisors use the products for principal protection (44%) and to generate tax-deferred growth (44%). By comparison, only a quarter of advisors (24%) use variable annuities for estate planning purposes, and just one in 10 (9%) use them to avoid the Social Security income offset. According to a financial advisor from an independent broker dealer, variable annuities “offer protection in today’s crazy market and world markets.”
Click to EnlargeWhile these preferences are fairly consistent across advisor channels, there are differences in degree. Advisors at large firms tend to recommend variable annuities more frequently than advisors at independent firms for all objectives except generating current income, where independent advisors make that recommendation more frequently. Meanwhile, advisors from insurance firms, bank brokerages and private banks (grouped under the “other firms” category) recommend variable annuities for retirement income planning and tax-deferred growth more than advisors in any other channel. As one might expect, advisors from insurance firms account for much—but not all—of this disparity.
Next Part 2 of 4: Advisors like variable annuities ... or they don't
