Annuities have an image problem. Multiple surveys say consumers want a retirement income that is guaranteed not to go down and will last a lifetime. Many consumers say they are willing to give up some growth if you take away market risk of loss. And yet many of these same consumers say they would never buy an annuity. The academics say this is due to consumers having difficulty in assessing the value of annuities or the marginal utility of the opportunity cost consequence. I think it’s because consumers don’t feel an emotional connection to what annuities are—but one can created.
The insurance industry often does a good job of creating emotional connections. Leaving your widow with funeral expenses and other debts may cause anxiety that you’re not a good provider, but low death benefit life insurance soothes that guilt and your widow will brag about the life insurance policy when the neighbors come over for coffee. Short-term disability insurance may be a good concept, but contemplating having an accident is not a happy topic; enter the Aflac duck. The Aflac duck shows the potential problem, that Aflac has the solution, and does it in a friendly, non-threatening way. Fixed annuities need to make an emotional connection and should also create a symbol.
This idea occurred to me last week when I was having breakfast at the neighborhood diner. I then decided to conduct a survey asking the other eight people in the diner two questions–Which animal is the friendliest? and Which animal would most likely protect you? In response to the first question, four people said a dog was the friendliest and one person each said cat and panda. To the second question all six said a dog would do the best job of protecting them (the other two patrons declined to participate). Science has spoken! A dog should be used as the symbol for fixed annuities. But which breed?
Rottweilers, dobermans and pit bulls rank high as symbols of protection, but are not regarded by all as friendly. Poodles and dachshunds may be friendly, but are not usually thought of as protectors. Then I had it. The fixed annuity symbol should be a collie. Not only are collies a friendly breed, but they were trained to protect the herd. In addition, every baby boomer in America watched Lassie on TV as a child and that television show’s values can easily be adapted to annuities–“What’s that Lassie? The bear market has caused Timmy’s retirement income to fall into a well? Lassie, go save Timmy’s retirement!”
Picture the collie growling at the snake that is market risk and forcing the snake to retreat. Envision a glowing hearth with the owner and collie both smiling as they review the fixed annuity contract with the blizzard raging outside the window. Watch as the collie pulls the couple out of financial quicksand using a fixed annuity income safety line. The possibilities are endless, and all serve to reinforce the idea that annuities are something familiar, easy to understand, friendly and will protect you at all times.
I admit it is possible that another symbol might be better than a collie, but the industry needs to pick the right symbol—there are 9,000 likes (or hates to be accurate) on the Facebook page “I Hate Flo”. It’s hard to hate Lassie.
