Recently, there have been some very informative articles on LifeHealthPro addressing a newly created category of annuities called “hybrid.” If you have a computer and Google the word annuity, you already know that the hybrid craze has already infected the web. I was asked to weigh in on the “hybrid hype,” but in my quest to reveal my thoughts on this supposed exciting new line of products, it suddenly hit me how off base this new sizzle word is.
Hybrid is a car. Hybrid is a plant. Hybrid is not an annuity in my opinion, and Webster’s. I know, it’s too late. This hybrid thing is here to stay, and this will go down as one of the classic branding mistakes of all time. It would not surprise me if universities teach classes on this marketing debacle in the very near future.
I grudgingly admit that the horse has already left the barn on this hybrid re-branding, but didn’t the fixed indexed annuity (FIA) world just go through this name dispute with the never-to-be-mentioned-again description “equity indexed annuities?” I’m already getting tons of calls from consumers every month asking about hybrid annuities that are usually generated from agents and Internet promoters. My answer is the same each time: “Which one?”
As for FIAs being called hybrids, what’s wrong with fixed…indexed….annuity. It’s fixed. Returns are based off of an index. And it’s an annuity. Riders are voluntary attachments, as we all know, so we can’t assume those benefits will be in place. Why all of a sudden is an FIA referred to by an army of lockstep agents as “hybrid?” Is it just the next “shiny thing?” Is it the next “rider?”
There were two very good LifeHealthPro articles recently written about the hybrid subject, but also proved my point in the process. There is total confusion amongst agents (and especially consumers) on what actually is a hybrid annuity. This is a colossal messaging mistake. We as an industry might get it conceptually, but the consumer is going to be totally confused. Is that our goal as an industry?
In David Port’s very informative LifeHealthPro article, “2013: The year of the hybrid,” he gave examples of many types of products attaching themselves to the hybrid moniker. Deferred income annuities, annuities with long-term care, hybrid dual-sleeve annuities, hybrid hedge fund annuities were mentioned along with life insurance/long term-care hybrid strategies. Huh? So we have a bunch of different hybrids? Now that’s a great marketing strategy for our industry. What an absurdly unclear and muddled message we have somehow adopted.
When someone asks an agent the typical uninformed question, “What’s the best hybrid?” How in the world can you answer that? Unless you are a “one-size-fits-all” agent, you can’t.
According to Christopher Raham and James Collingwood in their very good LifeHealthPro article, “Hybrid annuities: Good for clients, good for advisors?” they point out that AXA was the first insurer to offer hybrid products back in 2010. That’s probably a shock to the Internet “hybrid annuity evangelists” that have been slinging around the word hybrid for a while now (usually promoting one-size-fits-all FIAs). As a side note, there’s also an ongoing ridiculous argument of who was the first to use the words hybrid and annuity together. Attention all web display ad/Internet video hypesters, it was AXA according to Mr. Raham and Mr. Collingwood. Case closed.
Let me try to clear up this confusing “semantic hybrid hell” that the annuity industry unfortunately finds itself now stuck in. Remember, at the end of the day, this is all about the consumer. It’s all about them fully understanding not only what they are buying, but what they are initially looking for before they buy it.
Here’s how simple this is: All annuities have multiple benefits. Yes, all annuities.
Annuities = Multiple Benefits
Wouldn’t it be great if the public associated annuities with multiple benefits, instead of a car? I would love for the annuity category to equate benefits in people’s minds. Here’s the phone call that we should be getting, “I know that annuities offer multiple benefits. What annuity would you recommend to solve for (fill in the blank)?” One can dream, I guess. Ask the next retiree that you see to explain the words “hybrid” and “benefit” and you will hear firsthand which one is the winner from a branding standpoint.
If finding the perfect generic word was the goal, I wish the industry would have chosen to use the word “organic” instead of “hybrid.” At least people would think that an organic annuity was somehow better for them without knowing if it was or not. At least “organic” would have meant fresh, new, natural, and automatically good for you. But no, we chose the word hybrid. Great, what address does Toyota want the royalty checks sent to?
So my advice is to start getting used to saying, “What hybrid are you referring to sir?” or “There are many types of hybrid annuities, which one do you mean?” or “I know that the agent told you were told it was a hybrid, but that’s really not the hybrid you need to solve your specific problem.” All of this nonsense could have been prevented.
Multiple benefit annuities are fantastic for the annuity industry. I’m all for them. I can’t wait to see the new design strategies and new product solutions in the future that will probably and unfortunately be introduced under the hybrid flag. With each addition to the hybrid category, there will be a correlating and rising level of consumer confusion.
Educating the public about annuities, and how great these transfer of risk strategies are, is a long-term endeavor. There is no silver bullet or quick fix, and anytime you try to take a short cut to success, it normally doesn’t work out too well. The magic bullet word “hybrid” is going to do more harm than good, and is already creating unneeded confusion.
The good news is that the annuity franchise will be successful regardless of this major marketing snafu because the value of the annuity multiple benefit strategies will overcome this horrible generic hybrid tag. In the end, value wins. Maybe we can implement dual marketing strategies with Toyota…then again, maybe not.
All I can say is get ready to embrace the coming hybrid confusion. It’s here to stay.
For more from Stan Haithcock, see: