Industry Leader Forum: American General Life Companies
A wealth of opportunity for advisors. Whether you refer to yourself as a broker, an agent, a producer or a consultant, I believe that there is no better time than the present to be a financial advisor. In case you think my prophecy is based solely upon the fact that I am sometimes viewed as an eternal optimist, a glass-half-full kind of marketing guy, let me explain why my current pair of spectacles is rose-colored.
First and foremost, as an industry, we are much stronger today. We’ve strengthened our balance sheet over the last few years and capital levels are much higher today than in 2008 when the financial crisis hit. In addition, the industry has significantly de-risked its balance sheet—from both the investment/asset side of the balance sheet as well as the product/liability side; and troubled asset classes have been written down. In addition and equally as important as our healthier balance sheet, our solutions match up with the needs of today’s consumers as never before.
A re-set to the retirement mindset. The financial uncertainty in recent years has changed America’s outlook on retirement, which was illustrated in the 2011 SunAmerica Retirement Re-Set Study* conducted by American General’s parent organization, SunAmerica Financial Group, and Age Wave, led by Dr. Ken Dychtwald. American General is leveraging useful insights from the study to help our valued distribution partners come to the aid of their clients.
Consider this: Based on study results, more adults 55 and older today have used professional financial advisors to aid with retirement planning than 10 years ago (49 versus 40 percent). Significantly, Americans who used financial advisors are 72 percent more likely to feel very financially prepared for retirement.
Additional highlights: Americans are experiencing a re-set of retirement expectations—54 percent view retirement as a new chapter in life rather than a winding down, a significant increase over the 38 percent who held a similar view in 2001. Achieving financial peace of mind has replaced wealth accumulation as Americans’ primary financial goal. People are now six times more likely to report their top financial goal is “saving enough to have financial peace of mind” (82 percent) versus “accumulating as much wealth as possible” (13 percent). The timing and purpose of retirement is changing: Respondents note that their ideal retirement age is being postponed by five years—from 64 to 69. Also, retirement no longer means the end of work: Almost two-thirds of respondents would like to remain productive and include work in retirement. And nearly half of Americans 55 and older expect to provide intergenerational support for family members, while 70 percent of those believe their adult children will need financial assistance.
Growth in secure strategies. One of the most significant trends in the Retirement Re-Set Study is the desire for protection and guarantees. People who once thrived as risk takers are employing more strategies to protect against over-exposure. At a national level, businesses are instigating mitigation strategies, and households are doing the same. The more effectively we help consumers understand how best to protect against risk and incorporate guarantees into their portfolios, the more value we provide.
Guaranteed universal life products are attractive to clients seeking secure financial products. People are looking for guaranteed cash and guaranteed flexibility, including flexible ways to take cash out, while helping assure financial security for their dependents.
Due to the uncertainty in financial markets during recent years, demand for variable life products has suffered. We believe that the documented desire for security along with accumulation will lead people to continue to seek guaranteed products as well as indexed products.
The Retirement Re-Set Study results indicate that protecting assets is now five times more important than higher-risk returns. Almost two-thirds (65 percent) of study respondents want investments that are guaranteed not to lose value, and 60 percent seek to protect their income from market loss and guarantee it for life.
American General has responded to the desire for guarantees by introducing new universal life products offering guaranteed death benefits and guaranteed cash accumulation. Among these is our global index GUL product, AG Choice Index GUL, which allows clients to select from three premium allocation choices to best meet their needs—a declared interest account, a one-year indexed account, and a five-year index account (not available in New York). In addition to guaranteed death benefit protection, these interest-crediting accounts feature the opportunity to realize growth in cash value accumulation based in part on the performance of global indices, with the ability to change the allocation instruction at any time. Additionally, our index annuity portfolio has a new optional rider that offers guaranteed lifetime income.
American General is an experienced leader with index products. We were one of the first to introduce global index life insurance, and we are in this market for the long haul. We provide consumer-friendly product disclosures, which help advisors educate clients on choices, benefits and risks.
Frequent clear communication needed. Education and simplicity are key factors for matching the right products with clients’ needs. People who never have used a financial advisor are now turning to us for guidance, and they seek clear, straightforward descriptions of products.
Wise advisors will partner with clients and ask them what they envision life to be like in retirement. Drawing on the Retirement Re-Set Study results, we found that people do not see retirement today as just working one day and not working the next. They may take temporary leaves of absence, come in and out of the workplace, or work part-time rather than just picking an age at which to retire. Overwhelmingly, when we look at their needs today, this rapidly growing group wants us to help them take a broader view in planning their retirement. Advances in technology. Just as consumers are seeking information from a variety of new sources, advisors are also changing the way they work today. As an industry, we are moving in the direction of helping agents grow their businesses by providing tools that make processes faster and more efficient. American General values innovation, and we are working to ensure our digital solutions are keeping pace with the needs of our distribution partners, making it as easy to do business with us as possible.
For example, we recently launched “AG Quick Ticket” functionality, where producers simply fill out a web-based form for their client and we’ll handle the rest—conducting the interview, completing the health information, scheduling exams and handling the necessary administrative work. We also recently introduced a smart phone-enabled (iPhone and Android) version of our Rapid Rater quoting tool.
Focused vision. I can certainly see how some lean toward pessimism in today’s uncertain financial climate. Instead, I propose we view it as our year to provide the growing number of consumers who are also struggling in the face of these challenges with the guidance to chart a secure financial future for themselves, their families and their employees.
One thing that will never change is this: Life insurance provides the foundation for financial security and is the underpinning of a sound financial plan. Life is much rosier for those who have sought our counsel and now have the peace of mind afforded by the unique solutions we offer as an industry. [EB]
*The 2011 SunAmerica Retirement Re-Set Study is a public opinion poll conducted by Harris Interactive in conjunction with Age Wave (the nation’s foremost thought leader on population aging and its profound business, social, health care, financial, workforce and cultural implications) in the second quarter of 2011 with a national sample of 1,001 adults age 55 and older who were representative of the general population by income, ethnicity, geography and gender.
January 2012 Issue of Brokerworld Magazine. Author’s Bio Erik Baden Senior Vice President & Chief Marketing Officer, American General Life Companies