Recent sales figures don't lie -- variable annuities are a tougher sell today than they were a year or two ago (for obvious reasons.) Here's how several VA experts see savvy advisors raising the variable annuity subject with suitable clients who are now skittish about the product:
- They're as concerned (or more concerned) about the health of the company offering the living benefit as they are about the benefit itself. Prudential's Bob O'Donnell senses a change is afoot, where "the financial advisor community is much more interested in the financial strength of the [insurance] underwriter and the techniques used by the underwriter to manage risk."
- In shopping for an annuity, suggests Scott DeMonte of Financial Research Corp., look for an issuing company with a track record of pricing and product stability across its platform, ask about risk management policies and about recent product adjustments, and look at its credit ratings. Due diligence is an ally, particularly in times like these.
- They're reinforcing the value proposition of the VA chassis and the income guarantees available with it. A "what-if" illustration that shows how a person's assets might have fared had they resided in a VA with an income, withdrawal or accumulation guarantee can be a real attention-grabber.
- They're keeping abreast of product changes. In the living benefits space, fees are increasing, guarantees are decreasing and features are being added at a rapid pace.
- They're using VA products from at least a few different highly rated companies for the sake of variety and risk management.