Due to current low interest rates, fixed annuity sales may not be getting any easier but that doesn’t mean the product doesn’t have value for the right clients. Have you changed your approach so your clients can utilize the benefits of a fixed annuity when planning for their retirement? If not, you should. It’s a must to making the sell. Read on…
I won’t waste your time talking about how annuity sales used to work. You got that, right? The problem is those outdated methods don’t work today. Clients are not going to jump up and down and yell “sign me up now!” if you talk with them only about the current rate they will get. The conversation needs to be longer, more thorough and focus on the benefits of a fixed annuity. They are there, they are important and they are worth talking about. Actually, they always have been, but now they are what will make the difference.
Here’s a refresher if you haven’t thought about it in a while. Start by asking your clients one of these simple questions:
- “Do you have CDs that are renewing at a lower rate than you would like or had before?”
- “Would you be interested in seeing how a fixed annuity may be better for you than a CD for your personal long-term goals?”
- “Would you like to be able to decrease the amount of taxes you are paying each year?”
- “Are you worried about saving enough for retirement and if what you have saved will be enough?”
Sure, you may have a few clients who don’t respond in a “move the conversation forward” way, but I seriously doubt it will be the majority especially if the clients you ask are age 50 and over. With the opening these types of questions will create you can then move the conversation to discussing how you can help them to:
- Obtain a higher rate than their renewing CD. Annuities still do that.
- Receive guaranteed growth, guaranteed minimum interest rates and if they so choose guaranteed lifetime benefits. Our current environment has made guarantee a very comforting word.
- Defer taxes. Annuities permit your clients to defer taxes on earnings until retirement years when typically they are in a lower tax bracket.
- Diversify their portfolio market risk. Our current financial environment has made risk a very discomforting word.
Even after talking through these four key points could they still be resistant? They might. In today’s environment clients may also be concerned about access to their funds and what happens if they “tie” their money up in a lower-rate product for a number of years and during that time rates go up.
Valid concerns and questions that today you must address as well.
The fact is even their CDs are “tied” up for a period of time with no access to the funds without penalty. Annuities, if understood, do provide flexibility and control. You can offer your clients’ products that provide surrender-free withdrawal features all the way up to 10 percent annually in most contracts. They won’t get that from their CD.
Several carriers today also offer flexible premium products in either fixed or indexed annuities. Flexible premium products allow for additional payments into the annuity on a regular basis. These additional payments (amount and timeframe) vary by product but can include a bonus on the additional money and no new surrender charge period on the new money added. As a retirement savings alternative, they can make routine contributions into the contract, and have the flexibility to adjust the amount of additional payments up or down if financial circumstances change. There is also the potential for future income growth–if/when rates go up they will receive the higher rate on new money at that time.
Unfortunately, our world has become, in many ways, harder to understand. So, too, have the products we work with for the benefit of our clients. The fact is they take more time to explain and the problems our clients have are harder to fix. That doesn’t let us off the hook though. We have an obligation to the clients we serve to understand all of the benefits products offer and how those benefits help them today. It’s what we signed up to do. Now, pick up the phone, call them and answer the questions they might not even know to ask. You will both end the day feeling better.
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