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Sell annuities? Here are 3 ‘silver bullets’ every advisor must know.

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As annuity experts we have one of the most privileged positions in the retirement planning world. With the main focus on educating ourselves and then our prospects, we can find the right annuity for each client.

But your clients will have questions. When asked, these three “silver bullets” can help prevent much discomfort during the education process and ensure our clients and their families don’t experience disappointment years later.

Silver bullet #1

Ratings aren’t always “The Key”

When buying an indexed annuity, the rating of the company is often presented as the cure-all for any worry the consumer may have. When educating our clients and looking at potential annuities and the companies offering them, it is good to look at the rating of the company. But despite popular belief, an “A” rating might not bring all the security we might assume. As trusted advisors it’s our job to make sure our clients are in the best solution, and we’re there to educate them beyond the brochure. What is the company’s investment mix when we give them our client’s money? What has their average return looked like including the years of 2008 and 2009? How much do they have in reserves? Do we know where to get this type of information on the companies we are offering? We should be educated enough about these issues to discuss them with the consumers who rely on us.

Silver bullet #2

Know the terms

When looking at any type of indexed annuity, you must know the terms and clearly explain the options the consumer has, even if it’s unlikely they’ll take advantage of some of them. A 10-year annuity might not seem that long, but if for some reason a client needs the money earlier, how will their overall retirement investment strategy be affected? Depending on what annuity we have given them, they may or may not be able to access their account. What if our client is looking for supplemental income in retirement in say, six years? So it may not be as simple as offering them the largest income bonus or the one with the highest income roll-up. We need to walk them through the process of what amount and guaranteed withdrawal percentage they’ll be able to access for their income. By taking the time to educate them through this process we might find that waiting one more year could increase their supplemental income greatly or that they might be able to access these funds sooner than original thought. Knowing these terms and others can help us better serve the families that so heavily rely on our expertise.

Silver Bullet #3

Ask the “Why”

When helping a consumer decide if an indexed annuity fits for them it’s important to ask the “why.” Although many agents feel like indexed annuities are for everyone, they are not. As hard as this is for some to hear, some people shouldn’t have an indexed annuity in their portfolio. But how do we determine who should have them to make sure were doing the best job we can? We must do our very best to get the truth of what our clients are trying to accomplish, their “why.” Always seek out the why. Sometimes the things that are said about annuities or what people may think about them might contradict what the indexed annuity is or is not capable of. We can’t be afraid to tell the truth about these tools: what they do and what they don’t. Do they want a temporary holding place to wait out the market? In that case, a long-term indexed annuity may not be what they’re really looking for. Are they hoping to beat CD interest rates and have no need to access these funds? An indexed annuity might be the right option to balance their portfolio. If we get to the “why,” we’ll know exactly what the consumer is trying to accomplish and the best tools to help them accomplish their goals.

As the trusted advisors in our communities we must also be the most educated in order to keep our consumers educated. If we follow these three “silver bullets,” we’ll separate ourselves from the rest of the advisor community.

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