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TRACKING ADVISOR SENTIMENT ON WEALTH PROTECTIONSurvey Results, Wave 1 – 4Q 2014

Market Research and Producer Intelligence

January 2015

SURVEY DATA

Research conducted by Lincoln Financial Group and Hanover Research

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• Making sure clients have enough income for retirement is the most challenging topic advisors address with their clients.

• Risks to retirement security that are most difficult to manage in a client’s portfolio include healthcare costs, long-term care costs, market volatility, and longevity.

• Advisors note that clients ask about a variety of key planning topics but tend to overlook several critical issues.– Clients are most likely to ask about the value of their investments, planning for retirement, stock market

volatility, and paying for children’s education.– Advisors believe more clients should ask about the consequences of inflation, long-term care expenses, and job

security/loss of income in relation to their financial plans.

• Advisors attribute a great deal of importance to wealth protection, but many are not yet offering holistic planning around this topic.– Although almost all advisors recognize the importance of wealth protection to their practice (94% say it is important)

and the opportunity to address growing demand for these solutions (76% expect opportunity to grow), wealth protection planning and related services like LTC, tax and estate planning are not yet universally offered.

• Lincoln’s Wealth Protection Expertise and product offerings are well-positioned to meet the needs of a growing market for secure outcomes– A majority of respondents (86%) find that they are at least somewhat satisfied with the solutions available for wealth

protection and outcomes security, but only 27% are totally satisfied, indicating room for improvement.– Advisors are most likely to rely on product experts (specialists and wholesalers), marketing materials and thought

leadership pieces if offered by a carrier.

KEY FINDINGS: WEALTH PROTECTION

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SETTING REALISTIC RETIREMENT EXPECTATIONS AND MANAGING RETIREMENT RISKS ARE TOP-OF-MIND CHALLENGES FOR ADVISORS

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What are the most difficult conversations or topics you address with your clients?

“Keeping them focused on their true goals and tuning out all of the noise out there.”

“Their retirement lifestyle expectation based on the value of their estate.”

“Volatility, rising rates, geopolitical issues and how they may affect their portfolio [and] long term care needs…”

“How to seek diversification with seemly unstable markets on the horizon.”

“Addressing unmet/unachievable financial goals.”

“Realistic expectations.”

“Risk with markets being at all-time highs: longevity, geopolitical, and interest rate risks…”

“The need for disability insurance and the proper start date and structure for covering long-term care costs.”

“To explain all of the investment options available, especially those clients with preconceived notions of certain investments.”

“Saving enough and not spending too much.”

Sample advisor verbatim responses:

Base = 404; all respondents

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• The most difficult risks to manage include healthcare costs, long-term care, market volatility, and longevity.

HEALTHCARE COSTS RANK AS MOST DIFFICULT RISK TO MANAGE IN CLIENT PORTFOLIO

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Base = 404; all respondents

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• Advisors agree that an overwhelming number of clients seek advice on the value of their investments, planning for retirement, and stock market volatility.

• Advisors believe that clients should ask more about the consequences of inflation, long-term care expenses, and job security or loss of income stream.

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NOT ENOUGH CLIENTS ASKING ABOUT INFLATION, LONG-TERM CARE, AND JOB SECURITY

What are the top issues that your clients seek advice on/ask about/ or don’t ask about, but should?

(% advisors)

Base = 404, All respondents

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WEALTH PROTECTION PLANNING IS VIEWED AS MOST IMPORTANT

How important are the following planning activities to your practice?(% top 2 box, extremely/very important)

• Advisors across the board believe the most important planning activity is to protect their clients’ wealth. This is followed closely by managing investment risks and income planning, which advisors see as invaluable.

Essential

Base = 404; all respondents. Please note that some tables and charts do not add up to 100% due to rounding.

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WEALTH PROTECTION IS JUST AS IMPORTANT AS ACCUMULATION

To what extent do you agree or disagree with the following statements?

74%

73%80%

90%

• 9 in 10 advisors believe that protecting their clients’ assets is just as important as accumulating wealth.

Base = 404; all respondents

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CLIENTS VALUE WEALTH PROTECTION MORE THAN ASSET GROWTH

Thinking about your typical client, which is most important?(% advisors)

How likely are you to use the following products to protect wealth and secure outcomes?*(% top 2 box, extremely/very likely)

• Nearly two-thirds of advisors believe that protecting their clients’ wealth is more important than growing their assets.

• Savings in retirement plans is the solution that most advisors use to protect their client’s wealth and secure outcomes.

Base = 404; all respondents. Please note that some tables and charts do not add up to 100% due to rounding.

*Base = 404; varies across products listed. Question asked only to respondents who have used the solution in the past 12 months.

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…BUT ADVISORS ARE NOT YET OFFERING COMPREHENSIVE WEALTH PROTECTION SERVICES

Which of the following do you expect to offer to your clients in the future?(% advisors)

Which of the following services do you currently offer to your clients?(% advisors)

Base = 191; Lincoln FinancialBase = 201; prospects

• Advisors are not yet offering comprehensive planning around wealth protection.• However, advisors expect to offer more of these services in the future including elder care, health/LTC ,

wealth protection, tax, and estate planning.

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ADVISORS EXPECT DEMAND FOR WEALTH PROTECTION SOLUTIONS TO GROW

How satisfied are you with the solutions that are available to protect wealth and secure outcomes?

(% advisors)

Over the next 3 years, what do you expect of the opportunity to provide solutions and secure outcomes?

(% advisors)

• Although a majority of respondents find that they are at least somewhat satisfied with the solutions available for wealth protection and outcomes securities, only 27% indicate they are totally satisfied with current solutions.

• Over three quarters of advisors expect their industry to grow over the next three years.

86%

Base = 404; all respondents

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Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.

Affiliates are separately responsible for their own financial and contractual obligations.

IMPORTANT INFORMATION

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