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Trust before the sale

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Weary of stock market volatility and looking to protect their principal, seniors and baby boomers are prime targets for annuity sales in 2013. But a sale is not a slam-dunk unless an advisor gains the trust of a client. Those two themes emerged during a webinar held yesterday, “2013 Planning: How Annuities Fit Into Your Portfolio.” The event was sponsored by, Agent Media and Bankers Annuity Brokerage.

Moderator Daniel Williams, editor of Senior Market Advisor, kicked off the webinar by summarizing recent economic history that makes annuities an attractive investment alternative: a topsy-turvy stock market, housing bubble and a dot-com bust that has left many seniors and boomers with a severe case of financial vertigo. “Clients need some safety in their portfolios,” he said. “And annuities are a perfect fit.”

Even baby boomers who have previously hesitated investing in so-called “safe products” are warming to the notion of annuities, Williams added.

There is an estimated $10 trillion sitting on the sidelines, waiting to be invested, Williams said. However, investors, spooked by years of volatility, are reluctant to invest, he said.

Sales to rise

It is perhaps due to those economic conditions that most of the 170 listeners predicted annuities sales will rise in the coming year. With 73 percent classifying themselves as sellers of annuities, 91 percent anticipate an increase in annuity sales in 2013.

Jim Brogan, founder and president of Brogan Financial, and Senior Market Advisor’s Advisor of the Year in 2011, spoke about the attributes that make annuities viable financial tools. Investors, Brogan said, can place their money in either safe investments, like annuities, or more risk-oriented options, like bond funds. He classified safe money investments, or live-on money, as those that deliver guarantees and provide a return of principal.

“People don’t want to see big losses,” Brogan said. “They’re hungry for guarantees.”

As a safe money choice, Brogan endorsed fixed indexed annuities (FIAs) for three reasons: They provide access to funds in the event of an emergency without the policyholder having to sell other assets; a steady income; and a measure of growth. The one drawback to annuities is that they generally do not provide inflation-adjusted income, Brogan said. However, he pointed out that some FIAs offer the ability to draw higher payments in later years to counter inflation.

Jack Keeter, president, Jack Keeter & Associates and the Jack Keeter Study Group, echoed Brogan’s comments about the safety and security an annuity can provide. He separated a hypothetical portfolio into three sections by color: red for Wall Street investments; blue for alternative investments like real estate and gold; and green for protected money tucked into a vehicle like an annuity or a bank. While red and blue investments are risky, the green portion is the foundation of a portfolio, Keeter emphasized. He added that not all funds should be put into an annuity, but “they are a great tool.”

Build trust first

Williams, Keeter and Brogan further discussed the importance of building trust with clients before selling them an annuity.

Clients may not trust the financial services industry as a whole, but they will trust their personal advisor, Williams said.

People have to be “convinced” to buy an annuity, but they will do so based on the trust they have in an advisor. Keeter said. That trust is earned only after an advisor cultivates an in-depth relationship with a client. “It’s like dating,” Keeter said. “You go steady first to see if you like each other. Take it slow and build a relationship.”

Brogan added that the way to establish that trust is by proving you are an expert in the field and showing you genuinely care about your clients. Explaining financial concepts in a way they understand also helps, he said.

Keeter further detailed how advisors can build a thriving practice by seeking out their ideal clients. He suggested hosting town hall meetings on a timely topic like the “fiscal cliff” with a well-known guest speaker; partnering with other professionals that work with your ideal clients; and keeping in regular contact with your clients.

But at its heart, the client-advisor relationship is built on trust and an understanding of the client’s needs.

The most successful people, Keeter said, are empathetic and take the time to listen. “They build bridges to what is important to [the client],” he said. “People don’t need an annuity; they need good advice.”

For a replay of the webinar, go to

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