The FIA sales pitch

The study also flags client net worth as a key determinant in the frequency of conversations about FIAs. Nearly 6 in 10 advisors with annuity premium production last year topping $1 million “almost always” have the conversation with clients whose net worth ranges between $500,000 and $999,999. By comparison, just 47 percent of these same advisors broach FIAs when interfacing with clients holding investable assets of $100,000 to $499,999 (Figure 4). 

The frequency of conversation is also a function of the advisor’s sales production. Thus, for clients whose net worth exceeds $1 million, roughly half of advisors whose premiums range from $250,000 to $1 million almost always broach the subject.

When discussing FIAs with clients, a significant majority of advisors describe as “extremely” or “somewhat” important the need to emphasize certain product features and benefits. Among these benefits: protection from loss with upside earning potential, higher potential returns than CDs, tax deferral and the lifetime income option (Figure 5).

On this question, the gender difference is noteworthy: Significantly more female than male advisors emphasize the product’s protection from loss with upside earning potential (92 percent of women vs. 85 percent of men). The percentage differences are comparable for the other aforementioned features.

Also top of mind for FIA advisors are client objections. Three of the most common are (1) lack of liquidity; (2) clients prefer direct investments in equity markets; and (3) products are too complicated and/or confusing. Sizeable majorities of advisors who sold FIAs last year — from 65 percent to 79 percent — cited these three concerns (Figure 6).  

Check back next week, when we’ll address how annuity advisors are meeting client needs.