ALLIANCE FOR LIFETIME INCOME ANNOUNCES NEW GUIDING PRINCIPLES FOR ANNUITY EDUCATION

Consumer Education Group Affirms Commitment to Simplicity, Clarity, and Transparency — Condemns Misinformation and Deceptive Sales Practices

WASHINGTON, D.C., January 9, 2020 — Today, the Alliance for Lifetime Income adopted five guiding principles that demonstrate its commitment to educating and empowering consumers with simple, transparent and easy-to-understand information they need to make good financial decisions when purchasing an annuity. These principles act as a framework to guide the Alliance, its members, financial professionals and other industry stakeholders on how best to educate consumers about annuities.

The principles were developed in partnership with research fellows from the Alliance’s Retirement Income Institute, including Michael Finke, professor and Frank M. Engel distinguished chair in economic security at The American College of Financial Services; Seth Harris, former acting secretary of labor and deputy secretary of labor; and Jean Chatzky, an award-winning personal finance journalist, financial editor of NBC’s “Today” show, and CEO and co-founder of HerMoney.

“The Alliance and its members started with a vision that no American, however long they live, should face the prospect of running out of money in retirement,” said Jean Statler, executive director of the Alliance. “For too long, both consumers planning for retirement and the financial planning industry have focused too heavily on accumulating savings without balancing that with income planning for retirement. We believe that, among other things, this has added to the more than 80 million American households today who are unprotected in retirement, which means they face the prospect of running out of money in their lifetime. Annuities have a unique role to play in helping cover basic expenses and ensuring that Americans face their financial future with optimism and a sense of security.

“Pensions have basically disappeared, and Social Security will cover only 40 percent of your retirement income needs. The only other way to have protected lifetime income is through an annuity. These principles come at a time when there has been a misunderstanding about annuities along with other product innovations over the past few years — all with an eye toward meeting and serving the critical retirement security needs of Americans today. They are what we believe and help guide the work that the Alliance and its members do every day,” said Statler.

The five core principles of the Alliance are:

1. Retirement Income Planning: We believe in educating Americans about solutions available to them to address potential gaps in their retirement income, spurring a movement designed to help foster our society’s long-term well-being. We are committed to ensuring every American understands the importance of retirement income planning and the role protected lifetime income from an annuity can play in providing retirement security to millions of Americans. We strive every day to arm consumers with practical guidance and information, so they know how to take action in order to protect their retirement income.

2. Protected Lifetime Income: We are committed to ensuring that consumers understand the importance of and need for protected sources of income in retirement. Americans are living longer and face longevity, market and other risks that can put their retirement income plans in jeopardy. Social Security, pensions and annuities all play an important role in protecting Americans’ retirement income for life.

3. Focus on the Consumer’s Interest: The Alliance is committed to the principle that financial professionals should put the client, including their individual goals and interests, at the center of any recommendation. Annuities can play an important role in retirement income planning by providing a source of protected lifetime income. Annuities may not be right for everyone and should be considered as part of a comprehensive retirement plan. We firmly believe that there are no place in the financial services industry for misinformation, manipulative or deceptive sales practices when recommending any investment or insurance product.

4. Transparency and Clarity: Consumers should have all relevant information when deciding whether to buy an annuity. Though we believe protected lifetime income can be an important part of the solution to retirement security, we also believe that this cannot be accomplished unless consumers have full visibility into annuity products. Therefore, we are committed to providing Americans with transparent information about annuities, including how they work, their costs, fees, benefits, provisions and requirements. Consumers achieve the best outcomes when they have a full understanding of the financial products they buy. It is important to describe annuities, like other financial products, in a clear and understandable way for consumers, regardless of their level of financial expertise. We are committed to providing Americans with “plain English” terms and explanations about annuities.

5. Educated Consumers: An educated consumer is the best consumer. We are committed to ensuring that every American who considers an annuity has access to simple, fact-based educational information and resources to understand how annuities work, how they fit within their specific needs, and what questions to ask before purchasing an annuity as part of their retirement plan. We are committed to providing consumers with reputable and unbiased academic and market-based research.

“These principles are a core part of supporting the Alliance’s important educational mission of helping consumers understand the need for protected lifetime income in retirement,” said Dr. Michael Finke, Alliance for Lifetime Income fellow and professor and Frank M. Engel distinguished chair in economic security at The American College of Financial Services. “They also send a strong message that the Alliance and its members are firmly against deceptive or misleading sales practices and that there is no room for misinformation or lack of transparency in our industry.”

To put these principles into practice, the Alliance has developed simple, fact-based educational information and resources to reduce complexity and help consumers understand how annuities work and how they might fit within their specific financial needs and plans. The Alliance also announced today two other important resources for consumers to accompany the principles, including:

• A new worksheet that recommends questions consumers should ask a financial professional to help them understand how annuities work — including their features, benefits and associated costs — and how their financial professional is compensated.
• A first-of-its-kind glossary of terms that simplifies the language of annuities and provides definitions to help consumers better understand annuities and their features as well as other financial industry language.

Download Alliance Guiding Principles

About the Alliance for Lifetime Income:

The Alliance for Lifetime Income is a nonprofit 501(c)(6) organization formed and supported by some of the nation’s leading financial services organizations to create awareness and educate Americans about the importance of protected lifetime income. The Alliance is focused on helping educate Americans on the risks of outliving their income so they can enjoy their retirement lives. The Alliance provides consumers and financial advisors with the educational resources, tools and insights they can use to build plans for protected retirement income.