Research from LIMRA suggests that advisors in the United States are reluctant to recommend income annuity options to their clients.

LIMRA notes that there are new income features that can be made available as investment options in defined contribution (DC) pension plans which allow clients to draw regular income, either through an annuity-like guarantee or via a non-guaranteed managed account or payout fund.

Game changer

"The very existence of these new options is a game changer," says LIMRA. However, the research organisation notes that only 10% of advisors have recommended a guaranteed income option to their clients. While LIMRA found that 83% of advisors with $500 million or more in DC assets under advisement did express interest in guaranteed income options, only about a quarter of them have actually recommended one to a client.

"It seems likely that the products are just too new, too complicated, and difficult to explain, especially to consumers. It’s taking time for advisors to adapt," says LIMRA.

Unaware of the value

Employers appear to be largely unaware of the value of offering income options. LIMRA research shows that only about a third of employers currently provide an income option, despite the fact that 8 out of 10 employees say they would be very interested in having them as part of their DC plans.

"This disconnect represents an opportunity for providers," concludes LIMRA. "Helping advisors and employers to understand, appreciate, and embrace income options for their employees and DC clients can create a competitive advantage for providers that want to succeed in this space. As with most evolutionary change, it pays to be ahead of the curve."