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Retirement Planning > Social Security

The Annuity Gateway

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It’s a refrain that field marketing executives like William E. Kauffman, Jr., CLU, ChFC, hear more frequently these days from agents and advisors seeking to better serve their clients while boosting their own revenue.

Whether it’s a fixed or variable contract, an immediate or deferred product, annuities can indeed add a new dimension to an advisory practice. But as sales and marketing experts like Kauffman, vice president of financial products at Senior Market Sales in Omaha, Neb., know from extensive experience in the field, a robust annuity book of business isn’t handed to you. Rather, it’s built through preparation, dedication and resourcefulness.

These 10 strategic suggestions should help get you where you want to go.

1. Get educated
Advisors who do best in the annuity market know their products and their providers inside and out, says Bob Affronti, CEO of FSD Financial, a Tarzana, Calif.-based independent annuity and insurance wholesaler and marketing organization. “You should know which companies to go to and which products to use for each and every situation.

Matching clients to the best product depends on a whole lot of factors–age, sex and the types of features and benefits they want or need. It all starts with education.” IMOs such as Kauffman’s and Affronti’s can serve as good educational resources for agents and advisors, as can your peers, along with insurance carriers that offer annuity products.

2. Get securities licensed
The broader the array of annuity products an advisor offers, the better positioned he or she will be to provide clients with suitable solutions. So the investment of time and money to get a Series 6 and/or Series 7 license to sell variable annuities can pay big dividends.

3. Offer solutions to income and longevity concerns
No matter how diverse their circumstances and how differing their mindsets, says Kauffman, “just about all your clients who are thinking about or are in retirement have a need for [retirement] income planning.”
“I’d say 75 percent to 90 percent of advisors have clients who need longevity insurance–an income that’s guaranteed to last a lifetime,” Affronti adds. A single-premium immediate annuity can be the vehicle to provide that income, as can a variable annuity or a fixed index annuity with some type of guaranteed withdrawal or guaranteed income benefit.

Having allocated assets into the annuity to address the retirement income concern, notes Kauffman, “you can set aside other assets for continued accumulation. Given how long people are living these days, they need to continue building assets through retirement. People can’t just shift entirely from accumulation to distribution anymore when they retire.”

4. Mine your existing book of business
“Open up your file drawer,” Kauffman says, “and you will find all those clients you’ve sold health insurance or life insurance to probably need your help [with other aspects of their retirement portfolio]. They’re looking for fresh ideas, and you can be the one to supply them.”

5. Dig deep to unearth cross-selling opportunities
Maybe it’s a life insurance policy funded by an immediate annuity. Maybe it’s health insurance or Medicare supplemental insurance. When you’re discussing one product with a client or prospect, be alert for openings to talk about others. Cross-selling opportunities involving annuities abound.

An advisor’s job is to expose or recognize them by asking the right questions to “drill down a little deeper,” Kauffman says. “It’s often just a matter of asking a couple more questions: ‘Have you looked at what your income needs are for retirement? Do you have any low- or non-performing assets?’
Those kinds of questions.”

6. Offer free beneficiary reviews
To open a dialogue with clients and prospects, Kauffman suggests that advisors offer a no-charge review of beneficiary designations for retirement plans, annuity contracts, life insurance policies, etc. “They could need updating or have been done incorrectly,” he explains, “in which case you might catch a problem and in doing so, create an opportunity to expose a need for a product like an annuity.”

7. Provide an RMD Rx
Plenty of clients who are approaching or have already reached the age at which they must take required minimum distributions (RMDs) from their retirement accounts may be better served using that income to purchase some kind of annuity to leverage those dollars for wealth transfer/legacy planning purposes, according to Kauffman.

8. Since we’re talking about asset-protection and long term care
The reality is, many seniors for whom long-term care insurance makes sense as an asset-protection tool may not want, qualify for or have the means to afford a stand-alone LTCI policy. In those cases, one of a new breed of combination or hybrid annuity contracts with a long-term care living benefit rider can make sense. The benefits associated with such a rider aren’t as robust as most stand-alone LTCI policies, but some coverage is better than none. What’s more, underwriting isn’t usually an issue. And funds drawn from one of these hybrid contracts to cover long-term care costs get favorable tax treatment.

9. Show seminar savvy
Seminars remain a viable prospecting tool for annuity producers, as long as they’re done right. The key, says Kauffman, is providing people with a service–solid, actionable advice and information–minus the sales pressure. Advisors who pick compelling topics and execute their events skillfully are apt to get consistently good yield from their seminar investment.

10. Leverage the Social Security issue
One of the hottest seminar topics today, Kauffman says, is Social Security–chiefly, how individuals and couples can maximize the program’s benefits. “I spoke with an advisor recently who told me he’s not just filling up rooms but has long waiting lists for seminars about Social Security. There’s that much interest in Social Security planning among seniors.”

Being able to provide people with situation-specific Social Security solutions–Kauffman’s firm has designed its own Social Security benefits calculator for just such a purpose–”opens doors and opens the file to everything they have,” he says. “Once you’ve explained the Social Security stuff to them, the next thing you’re likely to hear is, ‘Can you also take a look at this for us…?’ “

Then it’s time to put that annuity product know-how to work.