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Positioning FIAs: Ask the Right Questions

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When it comes to positioning fixed indexed annuities (FIAs) in a client’s portfolio, sometimes the best approach is not to educate clients about the product, but ask questions.

In a 2015 webinar from insurance marketing organization, Jon Summers, Marketing Coordinator, Annuities at Senior Market Sales, says that it’s essential to ask clients the right questions when positioning annuities. “I still believe that telling is selling and asking is advocating and we should all be advocating for our clients,” he explains, adding that advisors need the right questions that elicit the answers from the client.

Two positioning strategies – guaranteed income and accumulation and safety – resonate retirees and pre-retirees, says Summers. Here are some questions to ask clients to get the conversation going.

Guaranteed income

Guaranteed lifetime income is one of the characteristics that has helped FIAs grow over the past several years. Guaranteed, pension-like income can supplement assets and income from other sources to ensure that the client’s financial needs in retirement are covered 100 percent. The income guarantee is a big reason for the growth in FIAs, and explains why variable annuities sales have been dropping.

“When it comes to the annuity, FIAs present a very unique opportunity to provide some much needed guarantees and certainty in our clients’ portfolios,” says Summers. “What else [could you offer] with no interest rate risk, no market risk and no credit risk, with some liquidity features built in?”

“Income” and “flexibility” are probably the two most important words to use with clients, Summer points out. “Income is extremely important, obviously, but we also want flexibility for when and if life happens,” he says. “I would suggest that the cash value of the annuity is what gives you flexibility in retirement.”

Summers recommends asking clients the following questions when highlighting the guaranteed income benefit of FIAs:

  • What if I could provide you with an insured solution that would provide you and your spouse with a paycheck for life regardless of market performance?
  • If interest rates stay in the 2 to 3 percent range and the stock market provides level or even negative returns, how will you build a successful retirement income?
  • Would it be a relief if your Social Security check covered 100 percent of your fixed income expenses in retirement?
  • Do you have enough confidence in your current advisor to get a second opinion?

Accumulation and safety

FIAs offer two very distinct and appealing benefits: Accumulation strategies that are designed to provide conservative, consistent returns, and guarantee of principal so clients are not exposed to downturns in the market.

The ability to accumulate without risk will be an up-and-coming feature on indexed annuities, Summer points out. “This will be a very efficient bond alternative for our clients who may want to get more conservative as they enter into retirement. So what options do they have? I’m advocating that an indexed annuity is a very good option for the more conservative clients entering into retirement,” Summers points out.

Summers advises stressing the guarantee of principal, with zero downside risk from market volatility, conservative, consistent returns between 2-9 percent, and potential bonuses, confinement benefits and spousal options.

Ask clients the following questions:

  • Are you happy with the safety of a CD but uncomfortable with the low rates that your bank is offering?
  • Do you believe there will be another significant downturn in the market?
  • Would you like this information before or after the next downturn in the market?
  • Do you understand the power of tax-deferred growth?
  • What if I could show you a way to effectively capture a percentage of the growth from the market while guaranteeing protection from market losses?


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