Life insurer alters strategy after study’s findings
A major life insurance company is changing its strategy after coming up with some surprising findings in a new study that it commissioned.
Allianz Life’s survey found that when it comes to big choices over the course of their lives, many Americans are full of regrets, but longer life spans are giving them hope that they can have a second chance. Those results are leading the company to encourage the financial professionals through whom it sells life insurance and other financial products to advise their clients to plan for midterm financial goals, rather than focusing solely on retirement or death benefits.
That’s a template that some financial planners have already adopted, particularly when advising Millennials who often want to invest in intermediate experiences and not just save for their senior years.
“I think it might help with the U.S. savings rate if people can think about saving for midterm and short-term goals that are a little bit closer to what they might experience, rather than something that’s 35 years away,’’ says Katie Libbe, Allianz Life’s vice president of consumer insights.
The U.S. Bureau of Economic Analysis says the percentage of income being set aside in savings averaged 5.4% in March 2016, higher than the 3.8% being put away a decade ago but lower than the 6% that was typical in 1996.
The Allianz report found that 32% of those polled regretted a significant decision, such as the career path they chose or their college pick. Yet 93% felt positive about the possibility of living an extra three decades compared to life expectancies a century ago, according to the Stanford Center on Longevity — and potentially carving out new, more gratifying opportunities.
Allianz plans to use that information to create tools for advisers to motivate their clients to not only save for retirement but to put aside money for more near-term desires, like having one parent stay home while the children are young.
“We thought this could be a good resource that would help advisers tell that story and bring that to their clients,’’ Libbe says. “Every adviser is trying to find a way to make themselves more valuable, and I think that’s what we’re hoping to do with some of the research and some of the videos and tools. ’’
Pamela Sandy, a Clevelandbased certified financial planner and national president of the Financial Planning Association, says many in her industry have long focused clients on planning for shorter-term as well as longterm goals. But “non-traditional” planning that may focus more on experiences “has stepped up ( because) this next generation is pushing the envelope.”
“I don’t even use the term ‘retirement plan’ with my clients,” Sandy says, noting that she prefers “lifestyle plan” instead.
Millennials, she says, are “a lot more aware that money is not the end game. It’s a tool to create the life you want to live.’’
Millennials are “a lot more aware that money is not the end game. It’s a tool to create the life you want to live.’’ Pamela Sandy, national president of the Financial Planning Association