Ensuring Success for Your Fixed Annuity Sales in 2018

With 2017 behind you, now is a great time to focus on refreshing your approach to selling fixed annuities. This article shows you how.

WILLIAM POTTER/SHUTTERSTOCK.COM

By Rich Lane

With the DOL Fiduciary definition effective, you may be re-considering how to incorporate fixed annuities into your sales for 2018. Although a fixed annuity is considered a mainstay in the financial-services industry, many clients have low awareness of how it can help them meet their financial goals. Or, they may think there are other and better vehicles to consider for their hard-earned money.

With the sprint to the end of the year behind you, now is a great time to focus on how to refresh your sales approach. Here are a few tried-and-true sales insights and considerations you can use to help meet your clients’ financial objectives in the New Year, regardless of your tenure in the industry.

Insight 1: Sell peace of mind. Many clients have limited awareness of what an annuity is and the safety it can provide in preserving and growing assets. As part of a sale, one of the first things to bring up to a client is that an annuity can offer them lifetime income and provide peace of mind in knowing that the value will never decrease. There are very few financial instruments available today that can lay claim to these benefits and, for many clients, the thought of having a secure, stable income guaranteed for the rest of their lives, is a huge draw.

Insight 2: Draw comparisons to other products. You may typically recommend that clients place a portion of their money in assets geared to ensure protection of principal. As your clients age, they often place a higher portion of their assets into non-stock vehicles that offer increased safety to help ensure they stay on track for a secure retirement. One of those non-stock vehicles often recommended is the bond mutual fund.

An important part of the annuity sale is to make sure the purchase is a good fit for your client.

As a way to help clients weigh their options, consider how you can position a fixed annuity like a bond mutual fund, but without the downside risk. Many will gravitate to the idea that they are transferring that downside risk to an insurance company, rather than taking on that responsibility themselves.

Insight 3: Ditch the bells and whistles. An important part of the annuity sale is to make sure the purchase is a good fit for your client. This means it’s tailored to his or her financial objectives. While some clients will want an immediate stream of income from their annuity, others may not want to ever withdraw funds.

The key here is to keep it simple and avoid adding any riders to a client’s annuity that provide him or her with access to their money. The more straightforward the sale, the better the fit is for your client. That’s because, depending on a client’s financial objectives, selling an income rider could ultimately drag down his or her overall yield and accumulation potential.

Insight 4: Discuss how all returns are relative. For a fixed deferred annuity, make sure your clients know that returns—especially in the short term—are relative. It’s important not to focus on the return potential compared with the short-term returns of the next hottest security, but to consider the guarantees and downside protection of an annuity in the long run. Even in a prolonged low interest rate environment, many billions of dollars of fixed annuities are purchased by baby boomers seeking safety first with the plan of guaranteed income later.

Insight 5: Embrace change. The last two years have consisted of numerous ups and downs for the industry, with many of your peers ultimately choosing to exit the field. While it may seem counterintuitive, it’s more important than ever to embrace the added scrutiny and compliance paperwork required to serve your clients today, compared to what it was five or 10 years ago.

Your competition may have chosen to leave the industry because of the perceived “hassle” of paperwork or the inability to clearly justify their actions. This provides more opportunity for professionals who are willing to meet their client expectations and who have the communications skills to succeed.

As you consider your sales for 2018, think of how to weave in these concepts to help your clients understand the value that a fixed annuity can provide to them. Not only can it help strengthen your sales, it also can help strengthen your client relationships.

Rich Lane is the second vice president of individual annuity sales and marketing for Standard Insurance Company. He has been in the fixed annuities industry for more than 20 years, with an emphasis on product and distribution development for brokerages , banks and broker/dealers.