Are you asking your partner firms these 5 questions?

Economic uncertainty and the possibility of a looming recession have investors feeling skittish. At the same time, current market conditions have called into question the strength of the financial institutions with which clients and advisors do business. As a result, both clients and advisors are seeking assurance that strategies implemented today will remain both effective and achievable in the future.

When it comes to investing, we know that inadequate risk management can have severe consequences on financial stability. This is true at the individual level and at an institutional level, including at the firms that you recommend to provide the solutions — such as insurance and annuity products — your clients need to build and sustain a financially secure retirement.

To guide your assessment of potential risks, here are five questions you and your clients should be asking financial firms now:

Does the firm have the product offerings to address different economic conditions and a range of client needs? The past few years have proven yet again that market conditions can change rapidly, and investors’ attitudes and behaviors will likely follow suit. You’ll want work with a company that not only offers a wide range of solutions to address clients’ unique circumstances as the economic landscape ebbs and flows but is also agile in the face of these market changes, developing enhanced solutions to address client needs as they evolve with the macroeconomic environment.

A firm with a diversified product and distribution strategy will be capable of adapting quickly to client needs — meaning that your client has access to more solutions tailored specifically to their unique financial situations, goals and challenges and that you’ll spend less time helping clients understand the benefits of a firm they already know well.

How does your firm handle app processing and ongoing support? 2022 was a record-breaking year in annuity sales, according to Limra, and how companies were able to respond from an onboarding perspective was rather telling. Inquire about support infrastructure and training, tenure and experience of sales and support professionals. Is the firm able to enhance its application processing when sales call for that? Does the firm provide transparency about where an application may be in the pipeline? Can the firm offer a dedicated professional who knows your business each time you call for support?

An ideal firm should have robust capabilities that ensure consistently strong customer service — especially amid influxes of new business resulting from market changes and subsequent changes in client needs.

Does your firm have the financial strength to withstand market turbulence, or a crisis such as 2008 or the recent Covid-19 pandemic? It’s important to work with companies that will be in business to fulfill the commitments they are making now, which some retirees will be relying on decades into the future. Financial strength assessments include measures of profitability, liquidity and solvency — all of which are critical components of a firm’s ability to make good on the promises they are making to you and your clients.

Ultimately, your clients come to you seeking peace of mind, whether that's related to their retirement prospects, their ability to provide financial protection for loved ones or their ability to achieve specific financial goals. The firms you recommend should have the financial strength to deliver it.

Do the firm’s values align with yours? As an advisor, you likely have certain guidelines you adhere to in order to build trust with clients, foster inclusive and equitable practices and promote cultures of transparency and accountability in your business. It’s key to ensure that the firm’s values are in line with your own to provide continuity of experience for your clients and ensure they can have the same confidence in the solutions and firms you recommend as they do in you as their advisor.

What is your firm’s reputation in the industry and at large? As advisors, you’ll want to work with well-respected companies known for being trustworthy and customer-focused. You may also want to consider whether they are considered great places to work and can attract talent, especially amid tight labor markets. Firms that treat their employees well are more likely to treat your clients well too.

While there is no "right answer" to these questions — and they may not be the only ones you want to ask depending on your clients’ goals and needs — they are a helpful starting point to determine whether a firm offering high rates or no (explicit) fees is really the best choice for you and your clients.

In today’s economic environment, it’s essential to do your due diligence about the firms you're choosing. Your clients are counting on you to make sure that the promises you and your partner firms are making today can be kept decades into the future.

Philip E. Caminiti is managing director of retail annuities at New York Life.