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The FIA sales pitch

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One would surmise that advisors have conversations about fixed indexed annuities more frequently with clients as they edge closer to retirement age. A recent study produced by National Underwriter Life & Health, in conjuncion with Athene, illustrates this expectation.

“Fixed Indexed Annuities: A Producer’s Point of View” says that when interfacing with clients in their 60s, about 8 in 10 advisors “almost always” or “occasionally” broach the subject. The proportion dips to 53 percent for clients in their 40s and to 25 percent for those in their 30s (Figure 3).


In respect to the most important of the target markets — clients in their 60s who are closest to retirement — the FIA discussions are more prevalent among advisors with an insurance focus (83 percent) than among those with an investment focus (73 percent).

The percentage difference between these two groups is also apparent when comparing: (1) advisors engaged with clients in their 40s (56 percent of advisors with an insurance orientation as compared to 40 percent with an investment focus); and (2) advisors interfacing with clients in their 30s (28 percent versus 11 percent, respectively).

Notable differences in the frequency of conversations are also evident among the subset of producers who say they almost always discuss FIAs with clients. A solid majority (65 percent) of advisors who sold $1 million-plus in annuity premium last year almost always broached the topic with clients aged 60-plus. That’s significantly more than the 56 percent of advisors who, interfacing with the same demographic group, generated between $250,000 and $1 million in premiums.

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.  


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