Why ‘mailbox money’ is crucial to retirement

Aging baby boomers represent a historic opportunity to boost the sales of income-generating investment products, according to industry leaders who kicked off the Insured Retirement Institute conference in Boston last Monday.

Tapping that market requires that investment advisers embrace variable annuities as an important asset in their clients’ portfolios. Overcoming traditional financial adviser resistance to the products is at the top of the agenda of the organization, which represents major insurers, asset managers and broker-dealers, and comprises about 500 companies and 80,000 advisers.

“Ensuring that these advisers have the tools, the information, the resources … to help investors create a holistic retirement plan will be a top priority for me, the board, this association,” Lynne Ford, chief executive of ING Individual Retirement and the new IRI chairwoman, told the audience. “Financial advisers represent a vital piece of the overall puzzle of how we meet the historic demand for retirement income security.”

IRI leaders released a poll conducted by Cogent Research LLC on behalf of the organization, showing that 60% of advisers said that the number of clients who have variable annuities in their portfolios has increased over the past five years.

The survey also illustrated increasing concern about funding golden years that have become significantly longer as age expectancy climbs; 49% of investors “indicate their top financial goal in retirement is not to run out of money,” according to a Cogent statement.

The survey involved 370 advisers and 300 investors interviewed in August and September.

“The market is ripe for our products,” Cathy Weatherford, IRI president and chief executive, said in a speech. “I call it mailbox money.”

One of the most promising avenues to boost usage of variable annuities is to make them part of rollovers for qualified employer-sponsored retirement plans, Ms. Weatherford said.

Industry leaders, however, acknowledged that there is still much work to be done to increase acceptance of annuities, which are criticized for their cost and complexity. Investors often fear losing access to the money that they sink into such products.

Email Mark Schoeff Jr. at [email protected]