Artificial intelligence is revolutionizing the way consumers plan for retirement. The changes are particularly notable for the data-rich annuities market. If you are thinking through your financial future, read more to better understand the AI tools revolutionizing annuity decisions for consumers.
Artificial intelligence (AI) is transforming the financial services industry and streamlining the decision-making process for consumers. Developments in the annuities market are particularly exciting. Increasingly sophisticated technologies are helping consumers formulate robust financial plans, assess complex risks and ultimately, pinpoint the optimal instruments in which to invest their money. All of this is occurring in a highly personalized manner, which is facilitating better outcomes across the myriad of investor profiles in the market.
Read on to learn about the top four AI tools revolutionizing the way consumers approach annuity decisions.
Chatbots
AI-powered chatbots have become a longstanding fixture in the customer service space, and the annuities industry is leveraging them in increasingly creative ways. These tools utilize natural language processing to handle complex customer queries and rapidly analyze information. The result is real-time support with education-oriented, personalized feedback. This is quickly becoming a baseline expectation for consumers, as evidenced by a recent survey from Gartner, which indicates that 75% of consumers prefer using chatbots for quick responses to their financial questions.
Financial Planning and Risk Assessment Tools
Beyond customer service, the annuities industry is leveraging AI to provide clients with more sophisticated financial planning and risk assessment tools. The most advanced tools are designed to holistically assess individual needs and characteristics, while carefully analyzing a broad range of external financial factors. These include key economic indicators, historical market performance, emerging macroeconomic trends and legal developments that could impact future outcomes.
For consumers, this dynamic process results in more robust financial plans that (1) better reflect risk tolerance and (2) support more informed decision-making. Additionally, the enhanced insights often lead to greater adoption of annuity products to address retirement income needs and ensure long-term financial security.
With massive numbers of baby boomers heading into retirement, these technological advances could not come at a better time. By helping consumers better understand their financial needs and anticipate potential risks, AI-driven tools are improving retirement outcomes and instilling confidence in people from all walks of life.
A recent study by Accenture indicates over 90% of financial advisors have taken steps to implement AI, while 55% believe AI will revolutionize the future of financial advice by 2027.
Predictive Analytics Models
AI-based tools have certainly enhanced the financial services industry’s planning capabilities, but the improvements experienced to date pale in comparison to the potential gains on the horizon. Developments relating to predictive analytics could completely transform the planning process.
AI programmers and engineers are in the process of building AI models that leverage vast datasets of medical records, genetic information, lifestyle factors and environmental factors to identify complex patterns and correlations that traditional methods of analysis are not equipped to address. For annuity providers, the expected result is a more precise means of predicting life expectancy, thereby helping consumers make more informed investment decisions and mitigate longevity risk, which is the possibility of outliving one’s savings.
Reducing this risk, even modestly, would be a massive breakthrough for retirement solution providers. It would also be an incredible confidence booster for retirees.
Annuity Recommendation Engines
The insights gleaned from the tools noted above feed another emergent AI technology – annuity recommendation engines. These platforms pull everything together and generate tailored annuity product recommendations for consumers.
They are transforming the way annuities are marketed, enhancing the customer experience and improving the relevance of product recommendations. Over time, this should lower costs, raise crediting rates and strengthen retirement plans.
However, to have the greatest possible impact, annuity providers need to do a better job of educating consumers and clearly communicating the advantages and disadvantages of the various types of annuities they market. Ultimately, annuity providers need to demystify these instruments and make them more understandable for the average consumer.
AI tools are transforming how consumers approach annuity decisions in a variety of ways. They’ve enhanced customer service and elevated financial planning capabilities. Now, they’re poised to deliver data-driven predictions and highly tailored product recommendations.This is leading to more informed decision-making and better financial outcomes for consumers. As AI technologies continue to evolve, the consumer experience will only improve, and retirement plans will become stronger.