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The right fit: How to tailor your annuity solutions for each client

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If you have clients who are feeling confident about their savings and retirement plans right now, chances are they are not really paying attention. Although there are certainly some signs that our economy is starting to get its legs back after the crisis of 2008, we still have a long way to go.

The annuity seems to have fared better than many other financial products during these challenging years. It doesn’t owe that success to any new-fangled bells and whistles added to the products—although there have been some, like the development of annuity/long-term care hybrids. Instead, it’s the old-fashioned security and stability of the annuity that’s kept it relevant. In fact, some would argue that it is times like these that are the reason annuities were built in the first place.

In this producer roundtable, we get a first-hand report on the state of the annuity market from three of the top producers in the business. Sharing their thoughts on why they find the market so compelling, which type of annuity fits which type of prospect, sales approaches that really work and more are the following: Gregory B. Gagne, ChFC; John W. Homer, CLU; and Bobb A. Meckenstock, CLU, M.B.A.

In part one, the panelists discussed getting started in the annuity business. Now, they explore which annuities are best and how to find prospects.

Gregory B. Gagne, ChFC, is the founder and managing member of Affinity Investment Group, an investment advisory firm offering wealth management and distribution planning services for retirees or those planning to retire. Gagne is past president of NAIFA-New Hampshire. He was awarded the Distinguished Financial Advisor of the Year award from NAIFA-New Hampshire in 2008 and is a 13-year qualifier for the Million Dollar Round Table (MDRT), with six Court of the Table and four Top of the Table qualifications.





John W. Homer, CLU, is an independent life insurance consultant who specializes in generational planning. He works on behalf of his clientele and represents them to many different insurance companies in order to obtain the best possible coverage in light of their individual circumstances. He is president of Oxford Financial Group of Salt Lake City. Homer is also a 33-year member of the MDRT and has four Top of the Table and six Court of the Table qualifications.




Bobb A. Meckenstock, CLU, M.B.A., has been the leading annuity salesperson for multiple companies and has also built a substantial book of life insurance clients. Meckenstock has assisted clients in implementing tax-deferred strategies for accumulation and tax-free strategies for distribution. He has sold the “power of tax deferral” idea to thousands of clients over the past34 years, helping them accumulate more than $200 million in deferred assets. Meckenstock is a 32-year MDRT member and has 31 Top of the Table and three Court of the Table qualifications. He has also authored and co-authored several industry manuals and publications on annuity marketing strategies.




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Which annuities are best?

Charles K. Hirsch: There are lots of different “flavors” of annuitiesimmediate, deferred, variable, fixed, etc. Now we have annuity/long-term care hybrids. What type do you find fits your own clientele best, and why do you think that is?

John W. Homer: The strategies to which I referred earlier require a very specific prospect. I look to see if the slipper will “fit” to help them accomplish their objectives. Here is the client profile for our strategies: They are between 70 and 90 years old, insurable, have considerable liquid assets and want to accomplish one or more of the objectives I talked about in my answer to the first question.

I use SPIAs with the life-only income option along with a life insurance policy. There is a natural spread between the cash flow produced by the SPIA and the premium for the policy that will replace the SPIA upon death. At a younger age, the spread is not generally significant. Within the specified ages, it is not uncommon for us to be able to produce cash flow at levels that are simply not available through certificates of deposit, bonds or other traditional income instruments.

Bobb A. Meckenstock: At my firm, we’ve sold them all. In my opinion, we probably have the most expertise with deferred variable annuities since the traditional fixed-rate annuity has not been competitive for many years. The way the industry has manufactured a variable annuity with its income benefits resembles a deferred immediate annuity because the income benefit portion of the contract has increased the growth of the contract from 4 percent to 6 percent guaranteed, while most market values have not done that since 2000. Therefore, to reap the benefits of the contract, clients will begin withdrawing from the income benefits portion of the contract and have a monthly guaranteed income for life. This resembles the mechanics of an immediate annuity, without the total commitment of your principal in the contract. I think, given the flexibility in today’s variable annuities and our clients’ desire for a systematic, guaranteed, monthly income that they can’t outlive, this is one of the best alternatives for up to 50 percent of their retirement assets.

Gregory B. Gagne: We typically will use immediate annuity or fixed deferred annuity accounts for our clients to accomplish the cash flow plan objectives. We do not usually use the annuity with a long-term care rider because we prefer to use a life insurance hybrid with a long-term care rider for disability planning. When it comes to using an annuity, there is no “one size fits all,” and it is important to engage the client in the process of mapping out their retirement income, so they can better understand the risks and how they will receive income during their retirement years.

Finding annuity prospects

Hirsch: While on the subject of your clients, what do you find to be the most effective prospecting approach in this market? How do you uncover good prospects and what is your message or question to them that gets them to really think about how annuities can help?

Meckenstock: Coming from an established firm like mine, which began in 1937, we have marketed almost exclusively to our existing clients and the referrals they provide us. Many of these referrals turn out to be family members of satisfied clients or the heirs to deceased clients as we help them process their claims.

I do annual reviews with as many of my clients as possible, and my staff is excellent in setting up appointments when clients call. We use a system for client account aggregation, which provides me with an efficient report on my client’s holdings, complete with performance data. Clients like to see all of their accounts on one or two pages, totaled and with yield to date. Having the ability to report back to your client what their holdings have done is in itself an excellent marketing tool. An effective reporting system will also help you attract more money to existing funds or policies because it shows results to clients’ intangible investments. My clients have access to these reports whenever they schedule an appointment. My staff can crunch the data in literally minutes if it is all in our system.

We also continue to advertise our firm and services to the community, which we have done for over 75 years. I’ve tried all forms of media: newspapers, direct mail, radio, and TV. Presently, we are committed to radio and television in a big way. We create 30-second spots that I record and keep fresh in our marketplace, which has proven to be a great success.

Now that I am starting my 35th year in the business, I have experience knowing what works, what doesn’t, and what should. I still offer safe money concepts to my clients or prospects by asking them, “When does your next CD come due?” I began asking this question in the 1980s, and still, to this day, it is a great opening question.

Gagne: For my firm, it is fairly straightforward: we work with people who are either about to retire or are retired and want to stay that way. The two primary methods to attract prospects to do business with my firm are public seminars and referrals. The message we bring is one of prospect self-reflection: “Do you want to run out of money before you run out of time, or do you want to create a plan that will provide income to you for as long as you live?”

Allow the prospect to pick the answer. We think the answer is obvious, but the prospect may never have given the idea any thought before you bring it to their attention.

Homer: There has not been a single method for finding prospects for our strategies. By far the largest cases have come from accountants and attorneys. These cases have resulted not only in millions of SPIA premium, but also, at the same time, hundreds of thousands of annual life premium on many individual cases. The largest number of cases has come from sharing strategies with other agents. This sharing has resulted in numerous joint cases and has been a very significant source of new clients.

Next: Combating negative media about annuities.

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