Security Benefit releases new benchmark study exploring RIA sentiment around 2024’s most galvanizing issues
May 22 2024 - 9:02AM
Business Wire
Nearly half of RIAs believe volatility will be
the same as market stressors continue
Security Benefit today released its Registered Investment
Advisor (RIA) Benchmark Study, a detailed look into the
perspectives of RIAs regarding client practices, economic
sentiment, product diversification, the upcoming 2024 U.S.
Presidential election’s impact on the markets, and more. The survey
follows the launch of Security Benefit’s RIA Economic Outlook
Index, which established a benchmark measurement of 58 (on a scale
of 0 to 100) regarding RIAs’ current level of optimism with respect
to economic conditions.
Expanding on the findings of the Index, Security Benefit’s new
research – conducted in partnership with Greenwald Research and DPL
Financial Partners – uncovered the following key findings:
- RIAs’ views are largely mixed on the impact of upcoming U.S.
elections on the investment climate: As volatility remains a
constant for RIAs and their clients, the study found that 41% of
RIAs predict a neutral impact, with a similar number (39%)
foreseeing a net negative impact, and 20% expecting a net positive
impact.
- Perceived investment satisfaction is high as RIAs shift
allocations: A strong majority of RIAs (87%) believe their
clients are satisfied (50%) or very satisfied (37%) with their
investments. Only 13% of RIAs cited that their clients are very or
extremely concerned about a major equity downturn. Equity
allocations are on the rise more so than any other product
allocation, with 51% of RIAs allocating more to equities in the
last 12 months. Allocations to long duration fixed instruments
(47%) and short duration fixed instruments (45%) also saw strong
increases.
- RIAs are allocating at least 40% or more of retirees’ assets
to fixed income products, with annuities gaining prevalence.
Over half of respondents (55%) noted that they are using fixed
annuities or plan to use them in the next six months, and 45% noted
the same for fixed index annuities.
- RIAs see an opportunity to attract client money currently in
bank savings products: Half of RIAs (52%) say that a quarter of
their clients have at least $100,000 in a bank savings account, and
82% of these RIAs believe they would be able to attract a
significant portion of that money if they were able to offer an
innovative investment with competitive interest rates for a
guaranteed period.
“An anticipated decline in interest rates coupled with the
election in the latter half of the year may keep volatility high,
however, RIAs are considering solutions with guarantees to weather
this storm of uncertainty and build confidence among clients,” said
Mike Reidy, National Sales Manager, RIA Channel at Security
Benefit.
Allocations to annuities are increasing among RIAs
As the U.S. Federal Reserve has pushed back expected interest
rate cuts, RIAs are eyeing multi-year guaranteed annuities (MYGAs)
to lock in current rates. These products offer attractive
accumulation potential for clients by delivering a guaranteed
interest rate that is non-correlated with equities. Many RIAs in
the study agree, with 25% indicating that they have increased
exposure to fixed annuities like MYGAs in the last 12 months.
“In today’s environment, many fiduciary advisors are turning to
protection products like FIAs and fixed annuities to offset risk in
client portfolios,” said David Lau, founder & CEO at DPL
Financial Partners. “Even among advisors who haven’t historically
used annuities, these products are gaining traction because they
offer competitive interest rates while limiting the risk of loss.
And clients value having a portion of their portfolio in products
that offer downside protection. The psychological benefits of
protection can be significant for clients who worry about the
potential impact of a market downturn on their savings and future
income.”
According to the survey, almost one in four RIAs (23%) have
increased usage of fixed index annuities (FIAs) in the last 12
months. FIAs offer downside protection and a range of indices,
allowing RIAs multiple ways to position client portfolios ahead of
a potential equity downturn. FIAs provide accumulation in the form
of interest credits that are not linked to current rates, but
instead the performance of financial indices. While 30% of RIAs do
not use FIAs in their practice, one-third (34%) of RIAs actively
use them and another 11% noted they are familiar and intend to use
them in the next six months.
Growth Strategies Remain Unchanged for RIAs
While many RIAs were quick to adapt their practices to changing
client needs during the COVID-19 pandemic, some things have largely
stayed the same, including how RIAs attract new clients.
Asking for referrals remains the most important strategy to
attract new clients according to 52% of respondents, with
networking following at 19%, and specialized marketing to a
specific niche client at 9%. Additionally, in-person meetings have
returned, with two-thirds of client meetings occurring in-person
versus 40% of meetings held virtually.
Methodology
In February 2024, Greenwald Research surveyed 201 registered
investment advisors from across the United States, each managing
significant assets and directly interacting with clients. The
online questionnaire collected crucial data on RIAs’ business
practices, economic outlook, financial product usage, and client
demographics. This method blended quantitative and qualitative
insights, capturing key trends within the financial advisory
industry.
About Security Benefit
Security Benefit Life Holdings (“Security Benefit”), through its
subsidiary Security Benefit Life Insurance Company (SBLIC), a
Kansas-domiciled insurance company that has been in business for
more than 132 years, is a leader in the U.S. retirement market.
Security Benefit together with its affiliates offers products in a
full range of retirement markets and wealth segments for employers
and individuals and held $51.6 billion in assets under management
as of December 31, 2023. Security Benefit, an Eldridge business,
continues its mission of helping Americans To and Through
Retirement®. Learn more at www.securitybenefit.com and follow
us on LinkedIn, Facebook, or X
(formerly Twitter).
About Greenwald Research
Greenwald Research is a leading independent research and
consulting partner to the health and wealth industries that applies
quantitative and qualitative research methods to produce insights
that help companies stay competitive and navigate industry change.
Leveraging deep subject matter expertise and a trusted consultative
approach since 1985, Greenwald offers comprehensive services to
answer strategic business questions.
About DPL Financial
Partners
DPL Financial Partners is the leading insurance marketplace
bringing best-in-class solutions from the nation's top carriers to
registered investment advisors (RIAs), their clients and consumers.
DPL's products, proprietary tools and embedded technology enable
RIAs to incorporate insurance and annuities into their practices to
more holistically serve their clients. Clients benefit from
products that offer competitive pricing and transparent, fiduciary
implementation to meet a range of needs in the financial plan.
www.dplfp.com
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version on businesswire.com: https://www.businesswire.com/news/home/20240522125813/en/
Media Michael Castino,
michael.castino@securitybenefit.com Grant Waldvogel,
gwaldvogel@prosek.com