An expert south of the border suggests millennials will drive future industry growth but the same can’t – and should not -- be said about Canadians.
An industry expert south of the border suggests millennials will drive future growth but the same can’t be said here in Canada.
“We’ve done surveys showing the millennials and Generation X want annuities,” says Jack Marrion, CEO of the consulting firm Advantage Compendium. “They like the protection and the media occasionally says something nice about annuities. In a lot of respects, this is the golden age of annuities.”
That might be the case in the U.S. but when LHP spoke to B.C.-based annuity veteran John Beaton of Canadian Annuity Broker Services, he was clear to point out that the markets are completely different and doesn’t believe millennials have much interest in owning this type of product.
“I will never have somebody who’s young coming to me wanting to buy an annuity,” says Beaton. “I have more young people phoning me and saying ‘how can I get out of this annuity that my grandfather or mother bought for me because I want the lump sum.’ They know that person can’t handle money and that’s why they got the annuity in the first place.”
Still Beaton is suggests there are cases where a term-certain annuity makes sense for a young person.
“If I did a survey of people on somebody, say in their 50s, there would be some companies that would say ‘no you’re too young, we won’t even quote,” says Beaton. “But that’s for a life annuity. If we did a term-certain annuity which means you’re buying a lump-sum of payments for a specific number of years; you might have $100,000 and you want to buy some sort of bridge income for your child who’s going to university you could buy five or ten years of income, have all of the capital expended, and the child would be taxed in their name.”
But he’s quick to point out that this doesn’t mean annuity growth in Canada will be spurred on by millennials.
Well, millennials might be responsible for a lot of growth in financial services – robo-advisors and other fintech – but annuities aren’t likely part of this growth in Beaton’s estimation.
“Their market [U.S.] is completely different than ours.”
“We’ve done surveys showing the millennials and Generation X want annuities,” says Jack Marrion, CEO of the consulting firm Advantage Compendium. “They like the protection and the media occasionally says something nice about annuities. In a lot of respects, this is the golden age of annuities.”
That might be the case in the U.S. but when LHP spoke to B.C.-based annuity veteran John Beaton of Canadian Annuity Broker Services, he was clear to point out that the markets are completely different and doesn’t believe millennials have much interest in owning this type of product.
“I will never have somebody who’s young coming to me wanting to buy an annuity,” says Beaton. “I have more young people phoning me and saying ‘how can I get out of this annuity that my grandfather or mother bought for me because I want the lump sum.’ They know that person can’t handle money and that’s why they got the annuity in the first place.”
Still Beaton is suggests there are cases where a term-certain annuity makes sense for a young person.
“If I did a survey of people on somebody, say in their 50s, there would be some companies that would say ‘no you’re too young, we won’t even quote,” says Beaton. “But that’s for a life annuity. If we did a term-certain annuity which means you’re buying a lump-sum of payments for a specific number of years; you might have $100,000 and you want to buy some sort of bridge income for your child who’s going to university you could buy five or ten years of income, have all of the capital expended, and the child would be taxed in their name.”
But he’s quick to point out that this doesn’t mean annuity growth in Canada will be spurred on by millennials.
Well, millennials might be responsible for a lot of growth in financial services – robo-advisors and other fintech – but annuities aren’t likely part of this growth in Beaton’s estimation.
“Their market [U.S.] is completely different than ours.”
