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Retirement Planning > Retirement Investing > Annuity Investing

Claim the obvious benefit

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Bayer Aspirin advertises they have an ingredient that will help protect people from heart attacks. The ingredient is called aspirin and at my local drugstore they charge me 8 cents a tablet for Bayer’s brand.

The drugstore also sells generic aspirin at less than 1 cent a tablet. Bayer sold over half a billion dollars last year of a product that was available in generic form that provided the same identical benefit for heart attacks for a fraction of the cost. But the benefit claimed is Bayer helps to prevent heart attacks.

Once a stockbroker friend called me to lament that he had lost a $100,000 sale. He said the client didn’t want stocks and so he had discussed bonds and fixed annuities with her and then went on vacation with the understanding they’d do something when he returned. When he got back the $100,000 was gone from the account and so he called the client. The client said she’d bought a fixed annuity from another person. When my friend responded he could have sold her the annuity the client responded, “But this agent guaranteed I would earn a minimum return every year.”

Everyone in sales tries to gain a competitive advantage wherein a benefit can be touted that is unique to the seller. However, the advantage is not gained through actual benefit exclusivity but through the perception of exclusivity, and this can be accomplished by loudly and frequently claiming the obvious benefit as ones own.

For example, all deferred annuities offer tax-deferral of compounding interest, and this is often stated as a benefit of owning an annuity. This does not mean a seller cannot run a full page ad stating, “My company gives you FREE Tax-Deferral of compounding interest.

Or, there is nothing to stop a producer from saying about the annuities represented that “My annuities will pay out your annuity death benefit directly to your beneficiary giving you the ability to avoid probate at no additional charge.
A feature common to all annuities is the ability to annuitize to receive a life income, but this could also be expressed as “My company will put it in writing that you can have an income for as long as you live.” While another annuity benefit that can be claimed is “THIS ANNUITY protects principal from stock market loss” with a strong emphasis on “THIS.”

The benefit claimed does not even need to be directly associated with the product as long as claiming it creates a positive perception. Saying “Every one of our company’s employees has a mother” or “My company does not club baby seals” sounds silly, but then you start to wonder about why other companies are not making these claims.

Claiming benefits is by no means a unique idea; the marketing world is full of attempts at branding the obvious, because it works. Annuity carriers and producers can be more effective by talking about what “MY ANNUITY offers…” and claiming these benefits.

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