In my ongoing cathartic therapy of voicing my opinion about the ridiculousness of current annuity ads and promotions, I came to the conclusion recently that the rules are never going to be enforced. The drug is too powerful, and that drug is money, which in the annuity world means premium. The sad reality is that it seems like the industry is never going to oversee and stop the lies, deceit, and “bait & switch” annuity marketing that is embarrassing and drives the majority of agents crazy.
After paying close attention to this fraudulent advertising madness, I’ve officially thrown up my hands in disgust knowing that the status quo will remain intact for the foreseeable future. If one carrier pulls the contract of a supposed “annuity cowboy,” there will be a line of other carriers salivating for that grey area premium. Greed and justification will prevent the annuity industry from protecting the annuity brand from harmful practices.
Below I have listed the agents guide to annuity riches if you don’t care at all and are striving to become the next “Annuity Idol.” You have nothing to lose (that’s been proven), so follow these proven steps below to your annuity millions.
Focus on fixed indexed annuities (FIAs)
This is the definite pick for any aspiring “Annuity Agent Idol.” Sell away! Use popular phrases like “All of the upside with no downside,” “We never charge a fee,” “Reasonable rate of return,” and my favorite fill-in-the-blank useless word of all time: “hybrid.” Heck, call it a unicorn. Everyone loves unicorns! Call it whatever you want and whatever makes that uninformed buyer/dreamer smile and nod their head.
Forget the fact that indexed annuities were actually designed to compete with CDs. Push the stock market. Sell the stock market. Make sure to sell the dream scenarios and juiced return proposals that will never mathematically happen. If you want to get fancy, blur the line between yield and future income by mentioning the 7 percent or 8 percent income rider as part of the dream. And if you want to pile on, close with the upfront bonus “free money” story by all means.
The carriers and NOLHGA have your back
This is the best part of the deal. The carriers hold the money after you have done whatever it takes to get the application signed. But it gets better, because you can always “mistakenly” promote that the state guaranty fund is just like FDIC coverage at the bank. This provides that warm, comfy blanket of false security around the client as well as justifying the recommendation of low-rated, marginal carriers that usually pay a much higher commission. It’s just beautiful.
Say and promise anything you want
We all know that anyone can pass the life-only test, and the ongoing education requirements are like jumping over a puddle. You literally can say or claim anything you want, and promise whatever it takes to get the annuity sale. You will not be held accountable for anything, and you can sizzle the pitch as much as needed. It’s like being at a bar and trying to impress someone. Facts don’t matter, just the end result.
And when a client calls to complain that the FIA didn’t do what you said it would do from a return standpoint, you can consistently answer “Stop complaining, you haven’t lost a dime.” You know that there isn’t a lawyer on the planet that is going to sue you for not losing a client’s money. It’s the perfect legal conundrum, and one more reason to go 100 miles an hour to achieve as many sales as possible.
Create an account for free looks and charge backs
It’s a numbers game, especially if you are slinging annuities to the uninformed masses. A thousand people buy your annuity of choice, so it’s logical that 200 of them will free look it or cause a problem that you can easily write a “go away quietly” check for. So you end of with 800 people who bought your pitched dream. Just chalk up the other 200 as the cost of doing business. They are nameless and faceless to you anyway, right? You can call this bank account the “grease fund” because the purpose is to keep the wheels of your annuity show greased and running so you can sell more “one size fits all” nightmares.
Choose your advertising delivery system
Pick your poison, or try them all because there is no oversight or enforcement regardless of if you implement the plan locally, regionally or nationally. Internet pop-up ads, web videos, TV and radio commercials, bad chicken dinner seminars, and direct mail all work when you can say anything you want and claim any returns you choose. Go for it!
Align yourself with a “like-minded” FMO
You won’t have to look far to find your partner here. In addition to getting more compensation, commission, bonus, overrides, perks, whatever, you can also tap into their already-in-place “FIA Army” to help sell to the masses. Take a cut of each sale, and share in the FMO back-end bounty.
Just as the Mississippi guitar player, Robert Johnson, sold his soul to the devil for musical greatness, you can make that same deal and become the next Annuity Idol. Remember that that are no repercussions, and you can get away with absolutely anything. It’s like being able to eat everything without gaining a pound, but in this case, you can make more money than a Fortune 500 CEO and get away with it, guaranteed.
You will never be held accountable. You will never have to answer for your transgressions. You will travel the world on carrier incentive trips. Just have a mean and nasty lawyer on retainer for good measure, and to aggressively attack anyone who questions your motives or marketing claims.
A true tragedy disclaimer
The sad part with this tongue-in-cheek blog is that I am a fan of indexed annuities when explained and placed properly within a portfolio. They do work in specific scenarios. Unfortunately, a few bad apples can ruin the bunch, and the indexed annuity business is a prime example of that.
Let’s hope that in 2014, the fixed annuity industry will start policing and enforcing its valuable brand. If they don’t, the ongoing negative repercussions will most likely become permanent. I’m crossing my fingers that the industry leaders will do the right thing, and the states and carriers will start enforcing the rules already in place.
For more from Stan Haithcock, see: