Contrary to widely held beliefs in the annuity and insurance industries that they are poised to cash in on the 78 million retiring Baby Boomers, a new report from Diversified Services Group finds that mutual funds are positioning themselves to do a better job of serving this market.
The findings were included in DSGs ninth annual Retirement Income Products and Solutions Study, the result of a survey of 40 providers of retirement income products and 17 in-depth interviews with senior executives at those firms.
Guaranteed lifetime benefit annuities are under serious challenge as the major product solution for producing a stream of income over a retirees lifetime, said James Sholder, a principal with DSG. The mutual fund industry is quickly developing its own set of solutions to address longevity and other primary retirement risks.
The study found that most investors prefer withdrawing money from their annuities to annuitization. In addition, a growing number of retirement income solutions providers are addressing healthcare needs with new versions of annuities and life insurance with long-term care riders. Further, mutual fund companies are doing a better job of focusing on advice for investors, than insurance firms.