Perhaps no other financial product has stirred up as much bad press, confusion or consumer prejudice as the annuity. The irreversible nature of the buying decision and non-liquidity of funds coupled with media attention surrounding unscrupulous salespeople in recent years has made some clients understandably wary about annuities. Yet the product’s unique benefits often make it a highly appropriate component in a senior’s portfolio. The key to selling annuities is thorough education about the variety of products and complexity of options, a clear understanding of the customer’s financial picture, and usually, good old-fashioned listening skills. Here’s what some top advisors have to say about selling annuities in today’s market.
The big picture
Jesse P. Cunningham IV, a sales veteran with more than 20 years’ experience who represents Senior Benefit Services in Belair, Md., says, “God gave us two ears and one mouth for a reason: We should listen. We need to slow down and take our time during customer meetings. I also always tell my senior clients, ‘If you want to bring your son or daughter along, that would be great.’”
“My job as a financial advisor is to fit my clients into the financial products that best suit their needs,” says Scott Stewart, principal of Stewart Advisory Group in Draper, Utah. “I accomplish that by listening intently with the sole purpose of uncovering a prospect’s ‘real’ needs and wants, and fitting the right product to meet that need. It’s a win-win approach to selling.”
The first meeting
“We initially ask open-ended questions, and take notes about our clients’ desires, fears and goals for their estate today and tomorrow,” says Robert Fedigan, CEP, RFC of Reliance Resources, LLC in Tucson, Ariz. “We’ll ask, ‘What are some of your major concerns and fears since you’ve retired? Do you feel that you have enough assets to support future issues like long term care or income replacement for your spouse? How do you feel about the way your current funds are performing and the safety they bring to your family? What are your short-term and long-term concerns with the liquidity of your funds, and do you have enough funds in an emergency account to cover any immediate needs should they arise?’”
The financial picture
Elmer D. Bontrager, CLU, ChFC, of Bontrager Insurance and Investments in Sarasota, Fla., conducts what he calls a ‘Fact Finder’ to determine where his clients’ money is located. “I’ll ask questions like, ‘What is the money in each account designated for?’” Bontrager says. “‘Do you have children, and if so, can they be trusted with significant assets? Do you have any large purchases such as a new car, remodeling, gifts or trips planned in the next two to three years? How much ready cash do you need for your comfort level in a money market or short-term CD? Are your expenses in line with your income, and do you need additional income from any of these accounts?’”
“After these questions are identified and answered, we start talking about the benefits and features of a deferred annuity,” Bontrager says. “This process usually eliminates most of the concerns of a long-term commitment.”
Raymond Yakaitis, Jr. of Scranton Financial Group in Westbrook, Conn., adds, “We review tax returns, insurance products and investment statements. These documents all leave valuable trails that provide us with dollar values of portfolios, performance, fees, and so forth.”
Cunningham agrees on the importance of asking good questions during initial discussions. “If I discover, for instance, that my client doesn’t have an emergency fund, I generally won’t recommend an annuity. I also ask about their debt structure, and whether they have large future expenses on the horizon; will they be providing college assistance for a grandchild? Does the house need a new roof? Those personal details don’t come out without good conversations and listening.”
The client’s financial personality
“We go through a discovery process to determine our prospects’ risk tolerance,” Yakaitis says. “We ask customers if they consider themselves aggressive or conservative investors, patiently waiting for separate answers when both spouses are present. Since most of our prospects are age 55 and over, most emphatically admit they used to be aggressive, but are now conservative.