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Life Health > Annuities > Variable Annuities

Do you have broker block?

By Michael Ham

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Agents and reps, young or old, newbie or veteran all get it, eventually. But you need to get over it. What is it? Broker block. It’s the condition where you decide (in your own mind) that current product offerings come with cap rates or participation rates ridiculously too low for you to ever recommend to your clients, prospects and suspects.

Get over it already; you may be missing the bigger picture here. A recent client survey by Wells Fargo clearly indicated that the populace we serve does not care as much about rates and caps as we may think. In fact, turns out they care very little; their largest concern is still safety and predictability. When asked where they would invest a free gift of $5,000, almost seven out of 10 would not consider the stock market as a secure place for their newfound money.

Further, almost half of them said they would still buy a CD (certificate of deposit) even though most one-year CDs pay less than 0.5 percent. Ergo, it’s not yield that attracts your clients away from the product(s) you offer. Most point-to-point cap rates on equity index annuities will still be nearer 2 percent (or better) and as of September 1st, offer State Guaranty Fund backing of up to $250,000 (increased from the previous level of just $100,000). And it gets even better than that.

A happy surprise

The “fixed account” in most equity indexed annuities currently yield near 1.75 percent or more and many variable annuities offer fixed accounts yielding at least 1 percent. And in the case of variable annuities, you are able to recommend a Registered Investment Advisor (RIA) share class that will offer no surrender charges after the first year for your client and come with no management fee levied on the fixed account portion. This can provide a safe, secure “parking place” for your client who wants the “real” uncapped upside potential of an equity market or sector but prefers to wait out the volatility, while still earning the annual bonus in the living benefit (many VAs have at least 5 percent living benefit riders and some offer as high as 8 percent annually).

So even though in “your proverbial professional opinion,” the yields in annuities aren’t as great as they once were, even from just a couple of years ago, your clients and prospects likely will be happily surprised to learn of something that beats CDs. Oh, and then tack on tax deferral, creditor and predator protection (in most states), tax free exchanges between fund or index choices and probate free transfer…well, you get the idea. Now go tell a few of your clients and prospects the good news and watch your credibility and practice grow.

Michael Ham is the founder of the revolutionary and successful coaching sales system found at www.TheSalesTalk.com.

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