Independent advisors have a lot to look forward to in 2024. The growth in advisors going it alone continues, as the opportunities for enhanced commissions and serving clients without corporate limitations prove worthy of the risk—particularly when supported by experienced IMO’s.
Interest rates are likely to remain high and the consensus is that the Fed will look to stick rather than twist in the short term. Inflationary pressures will continue to give the economy headwinds, but inflation can make for an advantageous playing field for producers working in annuities.
2024 is likely to be another bumper year for annuity sales. The stratospheric YoY growth of the last two years might not be sustainable—we may be past peak in this cycle—but FIAs, MYGAs and income annuities will remain popular with prospects close to retirement.
Carriers will continue to service the market with innovative and easier to understand products to fit numerous market niches. Consumer demand for dependable income in retirement will persist, and the (gradual!) improved customer understanding of annuities give agents even more opportunities for writing business.
At the other end of the generations market, younger investors are moving away from big firms: the trust gap from the banking crisis persists, with younger millennials and Gen Z demanding a more personal and individualized service. The trend relies on a combination of independent investment technology tools available for their financial and retirement planning—and independent advisors.
This is a huge window of opportunity, but it is essential advisors meet this market on their terms—both literally and figuratively. This means engaging via text and social media as well as referrals. We are also on the verge of the great wealth transfer to those generations of Americans, so making connections with younger professionals now will pay off even if immediate sales and commissions are relatively modest.
There will be challenges. Technology will continue to shape our industry and it is critical that advisors stay informed and integrate digital platforms into marketing, communications and processes.
AI is not going to take your job—but someone else harnessing its power might if you are not looking how you can expedite your back-office procedures and customer communications. Current AI software is in its infancy, and any outputs require editing and proof-reading by a human.
AI will inevitably develop at a rapid pace. The challenge will be parsing the threats that may loom from the opportunities the technology offers.
Customer service is that area where advisors can adopt AI with minimal risk. Client communication and marketing outreach can be streamlined and expedite business processes, giving advisors more time to focus on clients and sales. The overall advice with AI remains to approach with caution, and always be aware of state regulation and compliance.
Perhaps the potential biggest bump in the road for advisors will be the Department of Labor’s proposal to impose a fiduciary standard for 401K rollovers. Under the proposal, advisors would be restricted from collecting commission when converting a client’s employer-sponsored retirement vehicle to an annuity.
The timeline—and outcome—are uncertain, but the mood music is that the government is in a hurry to impose the restriction before the 2024 election.
The proposed limitation of access and choice for consumers assumes advisors and annuity carriers are the bad guys. The rule hurts the very people it is looking to protect. We will wait and see with interest….
2024 presents us with a challenging landscape, but one with tremendous opportunities. Navigating through high interest rates, evolving technology, and shifting investor preferences, advisors must continue to adapt and innovate to service increasingly financially literate consumers.