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May Is Disability Insurance Awareness Month

Spring baseball is here and while Mike Downing, EVP, COO and Chief Actuary at Athene, didn’t disclose who he’s cheering for this year, our conversation was peppered with baseball analogies during our Friday afternoon meet-n-greet interview. Our topic? Annuities and specifically, how annuities can be used as a critical tool in ensuring that women achieve financial security.

Mike Downing Athene“While you’re not going to hit a home run with an annuity,” stated Downing, “you will achieve guaranteed income for life.” Downing explained that annuities are particularly important for women given their longer life expectancy and the fact that they will provide an income that can serve as the base of their cash flow per year, or that can be additive to Social Security disbursements without introducing any risk due to market fluctuations.

For Athene, the typical age that annuity buying begins is in the 60s when workers begin to move from accumulation to preservation. During COVID, annuity sales dramatically rose and Downing attributes a portion of this increase to the expansion of access to financial advisors. With advisors forced into adopting new ways to meet with their clients through remote, technology-based meetings, advisors were able to actually reach more prospective clients and clients to discuss their financial portfolios and asset allocation. COVID also sped up retirement according to the U.S. Census in those aged 62-65 and Downing noted that the uptick in the popularity of annuities similarly rose as consumers look for financial vehicles that can increase their downside protection, especially in light of recent market volatility. “Stability within the portfolio becomes the aim of an advisor who wants the client to be protected for life,” stated Downing.

One of the key ways that clients should approach the consideration of adding or expanding annuities in their portfolio is by really ensuring the objectivity of their financial advisor or agent. Downing notes that it is important that consumers understand if the advisor is providing objective advice that is in the client’s best interest. Working with a NAIFA member who operates under a Code of Ethics is a key indicator to consumers that you will receive financial advice that you can trust. In fact, NAIFA members are the advisors featured on Alliance for Lifetime Income’s Find a Financial Professional directory, a go-to resource for consumers who seek information on lifetime income protection products.

Downing discussed that one of the elements that appeals to women thinking about buying annuities is that unlike home equity, stocks, or bonds whereby they have no control over the asset, annuities are guaranteed by the insurance company and enjoy the backstop of capital. In baseball terms, having this backstop means that no matter how wild the ball is being thrown at you by the pitcher, it will be contained by the protective wall behind the batter. Similarly, having annuities in their portfolios can give consumers peace of mind that no matter how crazy the world gets, their income stream will not be affected. While Downing didn’t say this, we can only surmise that having an annuity in your portfolio is equivalent to being the batter and having your perfect pitch come at you each time that you know you can hit and will get you on base.

Switching gears to address the multi-generational workforce and overall population that we now have in the United States, Downing notes that annuities are going through their own evolution. Downing explained that while he started as a pensions actuary whereby workers had guaranteed income he then watched this evolve to a 401(K) dominated workforce where workers accumulated a large chunk of cash and were left on their own to figure it out. He noted in both cases that, for the most part, workers are not financial experts and need guidance and that this is needed more now than ever as the United States sees the most varied workforce it has ever experienced. “Like with previous income protection products, annuities are also evolving and products are being created to suit an increasingly younger population.” Downing also applauds the passing of SECURE 2.0, which NAIFA supported and advocated to pass, which helps to chip away at obstacles to secure retirement savings.

According to Downing, the sandwich generation is looking for new tools in their toolkit to increase wealth and mitigate risk and several of the new types of annuities, such as fixed indexed annuities and RILAs, are increasing in popularity due to their core component of stability, but with higher upside return potential. As younger generations tend to be more financially astute due to greater access to financial education, they are often not just researching and planning for themselves, but for their parents, or grandparents, as well. Advisors would be wise to not assume that their only target client is the soon-to-be-retiree in their 60s or 70s, and may want to cast a broader net to the future caregivers of this generation who arguably almost benefit more from their older family members having guaranteed income measures in place that would not jeopardize their own financial plans.

Downing did acknowledge that there has been misinformation and bad press about annuities in favor of investments and urged consumers to look at annuities how they now stand in 2023—a shining example of a financial tool that does not require you to be wealthy to buy one and that will consistently perform. “Again, you aren’t going to hit a home run with an annuity, but you also aren’t going to outlive your income.”

While we still had a few moments with Mike Downing, we switched gears and focused on his view of the financial services industry as a whole in terms of backfilling all of the professionals that are also retiring from the profession (and possibly also fueling the purchase of annuities). We discussed this issue with Downing and asked why he thinks a career in financial services should be a top consideration for students. “The financial service sector provides an amazing social benefit as the vast majority of Americans are not financial experts and need help. Financial advisors fill that gap in providing financial education and guiding Americans to financial security is a truly noble profession.”



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