Looking At The Fixed Annuity Market: Where Did Everyone Go?

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As an independent insurance agent, specializing in selling fixed annuities, Im wondering where everybody went.

Ive been hearing for years that we were going to a “paperless” society, but I didnt know we were going “peopleless” at the same time!

Clients and agents often tell me they have tried to call a home office to transact business, but they cant find anyone to talk to. They get frustrated and mad when they cant get a problem solved through the “peopleless” phone system.

When they leave a message, no one returns their call. Whats worse, if their call is returned, the home office person doesnt know the answer, doesnt follow up to complete the request and rudeness is very common.

The problem is so widespread there isnt room in this article to list the companies where this occurs. However, Ill offer a hint: The companies with the worst renewal rates most often have the worst service.

Everyone knows there are fewer insurance companies today than there were 5 years ago. But who could have predicted that the remaining companies would get rid of so many service personnel?

It reminds me of the home office definition of apathy: “If we dont take care of our customers, maybe theyll stop bugging us.”

If you ask me, instead of going “paperless,” companies are increasing the need for more paper.

Annuity applications that used to be one page are now two pages long. Ive seen annuity applications that are 10 pages in length. More and more companies are demanding that a one- or two-page disclosure statement also be submitted with the application; this creates even more paperwork, in addition to any required replacement or transfer forms.

The sad part is that companies are requiring more lengthy forms, primarily in an effort to protect themselves from potential lawsuits caused by unethical agents.

Professional agents are forced to attend ethics classes and sign statements with companies agreeing to treat clients in an ethical manner with companies touting the IMSA logo. However, I dont know of any insurance company executive having to sign a similar document.

Ive been an insurance agent for 28 years and have met and known thousands of agents. In all that time, Ive only known of two agents who were unethical. On the other hand, Ive seen decisions made by chief executive officers that, while not criminal, were certainly unethical and harmed countless policyholders and agents.

Its especially frustrating while watching home office executive compensation levels rise as they send communiqu?s bragging about their efforts to reduce expenses by cutting administrative staff.

I also wonder where everybody went when I go to local producer meetings. Membership is down substantiallya reflection of the lower levels of new agents entering the business.

Is there any good news in the business? Yes. In the past, young people entering the financial sales arena wanted to be stockbrokers and financial planners. Today, Ive noticed that, given the choppy economic environment, even some of the old stockbrokers want to be insurance agents, selling guaranteed contracts!

Also, while there are fewer agents and companies than a decade ago, those who have established agencies are seeing business grow by leaps and bounds.

My own office has been in the same location for 24 years with the same phone number and the same name on the door. Clients continually tell me they keep coming back because they know who we are, where we are and what we do.

Im under no illusion that if we didnt offer the best annuity deals, my clients would go someplace else. Rate is always the driving force in annuity sales and the competition from other vendors is becoming ferocious.

But, for every hour spent with a client, about 10 minutes is spent concerning the “deal” and 50 minutes spent on whats happening in their life or the lives of their family.

Clients today are starved for someone to talk to and who will listen to them. So often, they feel powerless in controlling their financial situation. They want to know that someone cares about them as a person and that they are not just a “number.”

Are there companies that care? The answer is an emphatic “Yes!” There are some really great insurance companies that treat their clients and agents with dignity and respect, as the valuable assets they really are. Unfortunately, in my opinion and that of many colleagues, those companies are becoming increasingly rare.

Fixed annuity interest rates are at the lowest levels in decades and yet sales are still strong. Lots of people have taken their money “out of the market” and after looking for a safe place to put their money, are discovering that annuities pay higher rates than CDs, T-Bills, bonds, etc.

As long as fixed annuities pay higher rates than CDs, fixed annuities will continue to be sold, requiring more agents and more service staff, not less. Now if we could just cut down on the paperwork and have someone in the home office answering the phones, it would make life much easier for all of us!

, CLU, ChFC, is publisher of Fisher Annuity Index, Dallas. E-mail him at Danny@MrAnnuity.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, December 5, 2003. Copyright 2003 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.