Q & A For Annuity Producers In Uncertain Times

Q: When you say, “clients should diversify their portfolio,” what does that mean?

A: All products have a meaning and reason for being in a portfolio. For instance, I use VAs for long-term growth and protection, and stocks and mutual funds for growth and liquidity. I also urge clients to use asset allocation and rebalancing plans, and to stick to their plans unless needs change.

–Ann Fenwick, Baltimore, Md.

Q: What if my client tells me he cant sleep at night, even though weve done the needs analysis, risk assessment, asset allocation, portfolio diversification, and related planning? What can I say to this client?

A: I tell these clients that “if you cant sleep at night, we might want to change things, because your holdings may have become too risky for you.” But I also explain the pros and cons of making changes.

–Gregory Skrabonja, Franklin Lakes, N.J.

Q: Which types of surrender charges do you recommend for this periodlong-term (10 years and up) or shorter?

A: I look for policies with surrender charges in the five- to nine-year range and no longer. People in uncertain times want to know how they can get to their money, so the shorter surrender charge period is important to them. We always talk about how they can get to their money, and about the tax rules involved.

–Stuart H. Leaverton, Katy, Tx.

Q: How much attention should I place on the deferred annuity death benefit during presentations in periods of unrest?

A: I hope no one buys an annuity because of the death benefit. Its a nice protection feature, but I think producers should be suggesting clients buy deferred annuities for growth. Right now, the products offering guaranteed rates are good for this purpose, but VAs will come back into favor once people regain confidence in putting money into the stock market.

–Michael Sause, Baton Rouge, La.

Q: Why should I risk upsetting my annuity clients by calling them when the economy shows a sharp downturn?

A: The producers job is to bring value to the client, in good times and bad. If you dont step up and earn your keepin this case, by offering reassurance and answers to questionsyoull be in trouble. If you do a good job of managing expectations regarding the annuity, up front, your call should go well.

–Michael MacDonald, Pleasant Hill, Ca.


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 8, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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