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April 01, 2007 at 08:00 PM
If a customer walks into my favorite fast food eatery, In-N-Out Burger, and says “I’m hungry,” the counterperson would offer a hamburger with fries or a cheeseburger with fries. Problem solved.
If the fast food eatery acted like the financial services world, the counterperson would grab each customer as they walked in and make them sit through a 98-slide presentation featuring the process by which cows become burgers; potatoes are planted, tended and harvested; and how the restaurant was constructed. When the slideshow was finished the customer would be led on a tour of the kitchen to show how the burger was cooked, placed in a bun and wrapped in paper. At this stage, the few remaining customers that hadn’t starved to death would be allowed to order their burger and fries.
All too often a customer walks into the office of an annuity producer saying, “I want more interest,” or “I want safety.” Instead of being offered a stated rate annuity with a yield of X percent or an index-linked annuity with the potential for a Y-percent interest rate, the poor consumer is treated to a lecture on comparative safety of CDs and legal reserves, the power of tax deferral, avoidance of probate, and – if an index annuity is involved – how options are used to provide index-linked interest. The problem is the customer wants to be treated like a smart consumer, but is often treated as an annuity analyst.
This insistence on answering all questions never asked is not limited to the annuity world. It has been my experience that stockbrokers, planners and advisors also often insist that everything they know be demonstrated to the customer. I don’t know what causes this phenomenon, but it gets in the way of solving the problem.
