Advisors have always debated these questions among themselves and with their clients: What type of annuity is better? Should a client purchase a fixed annuity? A variable annuity? Well, the answers are, “yes,” “no,” and “maybe.”

Several years ago, many clients were asking advisors to find them the best VA. Whether the sale involved deferred or immediate annuities, they wanted to take advantage of the tremendous growth going on in the stock market. In some cases, they hedged their bets by buying protection in the form of guaranteed minimum death benefits or guaranteed minimum income benefits.

Now, many of those same clients, especially the ones who need to take income from their VAs and who didn’t buy guarantees, may be asking their advisors to find them the best fixed annuity.

It no surprise that FA sales are doing better than VA sales right now, even with guaranteed interest rates on FAs trending downward. After all, clients believe that some return is better than none or even a loss. The problem is that annuities, especially VAs, have a lot in common with other financial products.

The key to finding the right annuity for the client is the client, not the product.

It doesn’t really matter what the current economic climate is or what the markets are doing. When trying to help a client find the right annuity, an advisor should focus on investment fundamentals. Asking clients a few questions will help advisors find the right product for the client. For instance:

What part will the annuity play in the client’s portfolio? A client who is purchasing an annuity to leave something to heirs may feel comfortable with the fluctuation in value of a VA.

Does the client need an immediate guaranteed income stream or a product to accumulate tax-deferred savings? It may be more cost effective to find a FA for someone who needs a guaranteed income stream. On the other hand, a client with a long time-frame can accumulate more with a VA.

Is the client risk-tolerant or risk-averse? VAs are definitely not for clients who avoid risk. However, younger clients who avoid risk may still be better served by a VA because they face the risk of not accumulating enough savings.

How old is the client? For older clients, who don’t have the time to wait out down markets, FAs may be best, even if a client has a high tolerance for risk.

In an uncertain economic environment, it’s easy for clients to forget that there are tried and true guidelines for investing their money. That is especially true when those clients who, having seen the value of their savings plummet, are now panicking.

Perhaps most beneficial to clients is an advisor who doesn’t panic along with them.

The most important thing for advisors to remember is that the answer to whether a client is best-served by a VA or a FA depends on the client, not on current market or economic conditions. Spending time with clients, getting to know them, and asking them a few questions should make it easier for advisors to find the right product, even in these difficult times.

Kristen Falk, FLMI, FFSI, AAPA, ACS, AIAA, AIRC, ARA, is a senior writer with LOMA in Atlanta, Ga., specializing in annuities. Her e-mail is falk@loma.org