Annuities: Focusing on the big picture

Imagine going shopping for a new car. The car you own is worn out and tired, and you are tired of it. It long ago lost that new car smell. You are excited about the possibilities of what you might drive next, and so, armed with lots of information that you have read online about the car that you would like to buy, you go off to the dealership.

Upon arrival, you immediately spy the car that you are there to see, and you can already imagine yourself behind the wheel. Out of the corner of your eye, you see a smiling salesman coming toward you, wearing the standard short-sleeve dress shirt and a tie with a soup stain in the middle of it. He hurriedly gets in front of you, mere feet away from the car that you already own in your mind. You are greeted with an overly firm handshake and coffee breath.

Now, imagine that as the salesman begins to “help” you, he starts by taking the owner’s manual out of the glove compartment and regaling you with a dramatic reading of page after boring page. When he is blessedly finished, you ask him to please just let you get in the car. All you want is to feel the wheel beneath your hands, to breathe in the smell of the new leather interior, to start it up and feel the rumble of the engine.

But, no. The salesman tells you he has something more important in mind, which is to show you an article from an engineering journal that explains all of the particulars of the whatchamacallit and the thingamabob in your car’s engine. Finally, exhausted and frustrated, you leave … in your old car.

Sadly, that is a metaphor for how annuities are often sold today. Clients are interested in the big picture of what we can offer them. The “smell of new leather” for them is the sense that they can have a comfortable retirement, one in which they can live the way they want to live, provide for those they love, travel and spend time with their grandkids, and have confidence that their money will live as long as they do so that they can make all of that happen.

But what do we often do when they come to our office? We drag them away from the compelling big picture dream of retirement that they came in with and into the arcane details and nuances of annuities that so fascinate us. In the process, we end up boring them to tears.

Don’t get me wrong. The details do matter, but if the big picture is not compelling for your clients, then everything we say becomes just background noise.

When I explain what I do to clients, I always begin with the big picture. I often use this story from my own life to do so: