“If what you know to be true, turned out not to be true, when would you want to know?”

This is a pretty profound question to ask someone on an appointment, but it is a great way to get into the truth and maybe some of the deception behind rates of return. Basically, it’s a very nice way to say to a person, “Something you have been told is simply not true.”

Of course, most people will answer “well, I’d want to know right away.” Nobody wants to admit they stick their head in the sand. Yet I ask you this, “Can the truth itself be deceiving at the same time?” The answer, regrettably, is yes.

There are two calculations that a company might use when referring to rates of return. There is the Average Rate of Return and the Real Rate of Return.  What’s the difference, you ask, and how can one be seen as misleading where the other is not? Let me show you an example.

Your client puts \$100,000 in an investment and in year 1 it increases to \$200,000 – a 100% return. Now let’s say in year 2, it loses 50%. The value is back down at \$100,000.

If you wanted to show an average rate of return over the two years, you would take the 100% return minus the 50% loss (which leaves you with 50%) and divide by two (since we are looking at a 2-year period) which leaves you with a 25% average rate of return, which sounds very impressive and desirable. However the real rate of return was actually 0% because you started at \$100,000 and you still have only \$100,000 after a 2-year period.

This cunning twist of mathematical averaging makes the company look like a hero, when, literally, they were a zero. This is deceptive to say the least.

My top advisors are now reframing their language when speaking to their clients. Rather than focusing on the potential return scenarios, they are charging forward with pure straight talk on what they can guarantee, regardless of market volatility. In fact, the majority of the business my advisors send in, was framed to the client literally in a worst case scenario—illustrated with a 0% return.

By emphasizing the guaranteed platform on indexed annuities, my advisors have changed the conversation from “who knows if you will hit this number?” type of projections to “what can be guaranteed to the client?”, whether it’s income for life, wealth transfer and/or both.

The net result for the advisors I work with has been nothing short of remarkable. People will respond to a message framed as a worst case scenario, as long as they can see that their needs have been addressed. The advisor finds himself in a win/win situation as they have found the right solution that is 100% guaranteed.

If anything, they have under-promised and over-delivered. Think about this, even if the client get’s a 1% return through their accumulation, it is more than what was illustrated and promised. With a brutally honest approach to returns, you are sure to win the trust of your clients and prospects and at the end of that day, isn’t that what really pays dividends?

Wendy Swanson has been working with and coaching insurance agents and advisors for nearly 15 years. As a marketing coordinator for Senior Market Sales, Inc., she coaches advisors on practical marketing tips and sales approaches for annuities and life insurance. She can be reached at wendy@seniormarketsales.com.