NAVA Members Expect Consumers to Grow More Cautious
October 8, 2008
NAVA, Inc., the Association for Insured Retirement Solutions, has surveyed 300 insurance industry professionals on their beliefs about possible consumer behavior in the face of an uncertain economy.
The survey, taken at NAVA's annual meeting in Philadelphia October 6, revealed the following:
- 65% believe that investor confidence is either flat or falling.
- 99% believe that most retirement-minded Americans will react to the financial crisis by moving money into “safer” investments, becoming more risk adverse, avoiding equities, and even “stashing their savings under their mattresses.”
- 68% believe that variable annuity “living benefits,” with their specific guarantees against downside market risk, will become more popular.
- 50% believe the Troubled Asset Relief Program (TARP) will stabilize the financial markets; 46% believe it will not, and 4% had no opinion.
“A central objective of NAVA’s Annual Meeting this year was to determine how to address deteriorating consumer confidence,” said Cathy Weatherford, the recently-hired president and CEO of NAVA.
“As such, it was interesting to learn how insurance professionals are addressing their own financial situations during these turbulent times. Rather than succumbing to fear and uncertainty, the majority said they plan on maintaining their long-term retirement planning strategies rather than reduce their market exposure, indicating the confidence that the markets will eventually rebound,” she said.
Regarding their own retirement strategies, 77% of the respondents said they would stick to their long-term plans, rather than make significant adjustments. Thirty-five percent expected consumer confidence to rise over the next year, while 41% expected it to fall.
"The ‘stay the course’ strategy may not be the right move for individuals nearing or already in retirement who do not have time to ride out the market. For many of these individuals, our members said that a variable annuity can be an excellent option," Weatherford added.
"By offering valuable insurance guarantees to protect assets from market downturns, variable annuities can give Americans the confidence and peace of mind to stay invested in the market long as they need to, knowing that their principal is protected regardless of market performance,” she said.
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