Throughout 2011, I have been writing quarterly in Agent’s Sales Journal. As I prepared to write my last piece for the year I pulled out past publications and reflected on my articles and others published about annuities in ASJ in 2011 and recent years. An interesting observation surfaced. The old saying, “The more things change the more they stay the same” really is true.
Following is a list of just 10 changes that jumped out of the pages at me:
- The frequency and degree of annuity rate changes in the past 12 to 18 months has been unprecedented.
- Most cannot remember a time when annuity rates have been this low.
- The NAIC Suitability Model has placed additional responsibilities on those who sell fixed annuities.
- Market Value Adjustment (MVA) and Non-MVA products increase flexibilityperhapsbut also increase complexity.
- An increased interest for indexed annuities by clients has caused many who previously sold only deferred or immediate annuities to become educated quickly.
- Annuities have been highlighted more than ever before in the press over the past couple of yearand not always in a positive light.
- Impact and changes to insurance carrier ratings are now vitally important to all of us.
- Concepts like split annuities, 1035 exchanges for long-term care premium, stretch IRA and longevity insurance are becoming more and more common when discussing annuities.
- Clients are more educated and involved than in years past. You can Google anything these days and clients have an increased personal responsibility for their retirement savings.
- Many Americans now believe there is a retirement crisis, and they feel they are unprepared. They fear outliving their money more than they fear death.
Obviously the above is just a sample and not a comprehensive list of changes. I fear a comprehensive list would be way too lengthy. Yes, there has been change and lots of it for all of us to keep up with. No wonder our clients are confused and stay awake at night worried about what they should do and why many of us may feel so tired.
But…I’ll say it again, “The more things change the more they stay the same.” Here’s what hasn’t changed:
- The majority of working Americans still want to retire someday.
- They will still need income during their retirement years.
- They still need help determining what the best course of action should be for them.
- Fixed annuities have always and still provide guarantees, safety, protection, tax deferral and diversification.
- Increasing life expectancies continue to create the risk of one outliving their retirement savings.
- Fixed annuities continue to be the one accumulation vehicle on the market today that offers an efficient way to supplement retirement income and provide tax-deferred growth potential.
- Cost of living continues to riseclients still need an income stream that keeps pace with the rising cost of goods and services.
- Baby boomers continue to age and more and more are realizing they are not prepared for the years ahead.
- Defined benefit (DB) plans are not making a comeback and diminished funding of Social Security is on the horizon.
- The reasons to buy a fixed annuity have not changed; rather they have increased.
I agree with many of you, the changes have not always made our lives easier. Change in itself is not easy. I do believe some changes, however, have increased our opportunity. I said it all through 2011 and I’ll say it again: Our clients have never needed our expertise, guidance and service more than they do today. Reduced sources of income, risk of longevity and market volatility keep our clients up at night. We have the “pill” to help them get back to sleep and it’s the all-natural proven fixed annuity. I wish you all the best throughout the remainder of 2011. Here’s to 2012 and beyond.