Understanding the Consumer Experience of Buying an Annuity

Our research found that significant milestones and life events, such as approaching retirement or an unexpected bereavement, can start a consumer on the journey to buying an annuity. These moments of realization may prompt a consumer to clarify their financial goals and identify the products they would like to invest in.

What do consumers want?
At this stage, consumers are only just beginning to associate a change in their financial needs with the changes happening in their lives. In particular, those nearing retirement are often looking to secure a guaranteed income and may be interested in reducing risk but are unsure how to achieve it.

What problems do they encounter?
Many consumers feel they don’t have enough knowledge of financial matters and may be frustrated by their inability to relate their emerging goals to specific products. This can leave them feeling overwhelmed, and it’s important to help them feel prepared for a comfortable financial future.

What can you do?
Staying in regular contact with your clients will help you keep up to date with changes in their circumstances. This enables you to give them guidance at the earliest opportunity on the products they might need. For prospective clients, consider reaching out to them with educational marketing materials that relate to milestones and life events.

At this stage, many consumers will be actively researching and may even have begun to look into annuities. How much research they do depends on the individual and their prior experience. Some may talk to family and friends, search online, and become receptive to relevant content on TV and radio, but others will go straight to a financial professional, arriving with little or no research at all.

What do consumers want?
They typically want information specific to their personal situation and needs ready at their fingertips. Many consumers will base their research on prior experience of building a retirement portfolio. We found there was greater interest in lower-risk options.

What problems do they encounter?
Issues at this stage include not knowing who to trust and conflicted opinions about annuities. Lack of knowledge can make some consumers feel overwhelmed. Too much information and the unfamiliarity of financial terms are also ongoing sources of frustration.

What can you do?
Help consumers build confidence and trust by working with them to improve their knowledge of annuities. Consider recommending trustworthy independent experts and useful online resources like the Annuity Income Calculator. Seminars and fairs can also provide valuable opportunities for consumers to ask questions and exchange information.

Consumers who already have a financial professional are now reaching out to them more consistently. Consumers without a financial professional are at a crossroads where they are either looking for one, often by following up on recommendations from family and friends, or dropping out of the annuity journey.

What do consumers want?
Consumers are looking for a trustworthy financial professional who can educate them and help find a product that fits their needs. They may want to prepare for their meetings with prospective financial professionals but are not sure how. Savvier investors may be considering someone who specializes in retirement products.

What problems do they encounter?
At this stage, a consumer’s first priority is making sure they have the right financial professional. They can find the search frustrating because there is no resource guide for finding a trustworthy financial professional. Consumers don’t know who to trust and are concerned about the fees and commissions they could be charged. They may also still be struggling to understand too much information and unfamiliar financial terms.

What can you do?
Make sure your clients and potential clients are ready to discuss their options. Consider giving them guidance on how to prepare for your meetings, such as providing a checklist outlining the information they will need to bring with them. Share your credentials and be transparent about your fees and commissions, explaining what your clients would be paying for. Recommendations are often a source of referrals, so talk to your existing clients to find out if they have loved ones who could benefit from your services.

Clients are meeting with their financial professionals to discuss their financial goals and choose which annuity recommendation most closely meets their needs.

What do clients want?
They are looking to get down to specifics. They want to understand the relevance of their needs to the products they are discussing, and they want their financial professional to give them choices. They may discuss the advice they receive within their social circle and may want several meetings before making a decision.

What problems do they encounter?
A wide variety of doubts can delay or even halt a purchase at this stage. Consumers may still not fully understand how quotes, commissions, and fees are generated, and may still have conflicted opinions about annuities in addition to having concerns about the tax implications. We also found that some clients find it hard to be confident of their choice because they feel they are being “sold” the product.

What can you do?
Work with your clients to understand any issues that are influencing their decision-making. Spend time working through the details of the recommended annuity product, including the quote and fees, and consider doing this over a number of meetings so your client doesn’t feel pressured or overloaded. Clients often want to know how their product will perform over time, so you may want to visualize this for them.

Clients and financial professionals are now setting up the agreed transaction/purchase, completing applications, and going through the necessary processes to finalize the purchase.

What do clients want?
Clients typically want the transaction executed with minimum effort and inconvenience.

What problems do they encounter?
Clients likely have committed to their strategy by this stage, but they may still experience frustrations and misgivings over the length of time it takes. Many may feel they don’t understand the process and may have second thoughts about their investment.

What can you do?
Explain the process to your client and consider giving them a checklist of what they need to prepare so they have all the documents and information they will need ready to go. Check in with your client regularly to keep them informed on timings and progress, and to deal proactively with any lingering concerns.