As of Jan. 1, 2010, several tax law changes took effect that will open up Roth IRA conversions to those with household incomes higher than $100,000. What you may not know is that this creates a huge annuity sales opportunity — thanks to annuities’ application in Roth IRAs and Roth IRA conversions.
But even if you’ve taken advantage of this opportunity to set up meetings with your existing upper-income clients and attract new clients, you may be having trouble moving clients to commitment. How, then, do you help them go from thinking about a Roth IRA conversion to actually buying an annuity? Here are four ideas that have worked for others.
#1. 2 concepts that work together or apart
At every client meeting in which you discuss Roth IRA conversion, you want to clearly present two concepts to your customers.
First, think of an annuity as chocolate. Second, think of a Roth IRA as peanut butter. Now, look at a Roth IRA conversion into an annuity as a Reese’s Peanut Butter Cup.
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Present to your clients all of the advantages of an annuity, such as the safety features; the relatively high fixed or index-based interest crediting potential; and the provisions that create reliable, lasting income. An annuity is chocolate, and it can be wonderful all by itself.
Lead your client to admit that moving money to an annuity makes sense.
Then, present all of the advantages of a Roth IRA conversion — in particular how it can insulate retirement savings from future tax increases, eliminate required minimum distribution requirements, and allow your clients to pass IRA money to heirs without an income tax. A Roth IRA is peanut butter, and it can be great all by itself, too.
But then, you can combine the two by doing a Roth IRA conversion into an annuity — the Reese’s Peanut Butter Cup.
Here’s the key point: If your client decides not to do a Roth IRA conversion because they decide the peanut butter is not for them, there still should be very compelling reasons for them to want the chocolate — that is, the annuity.