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When it comes to purchasing the right annuity, every client wants and needs something different.

One thing most clients have in common, however, is the desire to make meaningful choices. With so many different annuities out there, it can be difficult for clients to know every option that is available to help them reach their financial goals. That means it falls to you, their trusted resource, to help them find the best options to make those choices.

(Related: Your Clients May Be Missing Out on a Great Way to Grow Money)

Thankfully, there are a variety of new market options available that now allow for greater choice, helping you to tailor solutions to your clients’ financial goals accordingly. So, what new options are out there? And which ones will lead your clients to financial success in retirement?

The following four tips are all-important when it comes to helping clients choose an annuity that works for them.

1. Consider a back-to-the-future approach with index annuities.

For a time, it seemed like annuities were growing further and further from the simple, straightforward designs that made them so popular. However, a resurgence in index annuities shows that they are a great approach that makes sense to clients; especially as today’s versions include different ways to reap the benefits of index rate increases, including rate cap, participation rate or fixed interest crediting options.

In my experience, I have found that clients prefer not to have a hard-capped limit on how much interest crediting they can receive and are becoming more comfortable with the way participation-rate crediting works. Index annuities that base their growth on well-known indices, like the S&P 500, without providing a capped limit to a client’s earning potential are especially popular, as they offer a risk-free way to earn higher interest crediting during a bull market year.

2. Empower your clients by putting information in their hands.

In addition to their other popular qualities, index annuities can credit interest based on figures that are widely reported in the financial news, which many clients are familiar with and understand. This, in turn, helps make sales easier for brokers, as clients will know how their annuity is performing by keeping up on market trends.

3. Discuss the flexibilities of new surrender charge periods and issue ages.

In the past, clients have had to make difficult decisions regarding surrender charge periods, since the most attractive index annuities tended to have surrender charge periods of 10 years or longer. And it is true that most of the time, when people agree to a longer surrender charge period, they have higher cap limits and participation rates as a reward for committing to a substantial period of time.

But, with the flattening of the yield curve this year, index annuities with shorter surrender charge periods of five or seven years now often have similar cap and participation rates as annuities with longer surrender charge periods.

This has created greater flexibility in issue ages as well. Before, clients who put money in an annuity in their 60s and 70s and moved to a new provider in their 80s were often left with few options. However, five-year surrender charge periods mean certain carriers have increased their issue ages to clients in their 80s and even 90s, giving older clients a viable option for further interest crediting and, potentially, eventual wealth transfer.

4. Feel good about selling an annuity that makes sense.

In the end, the last thing you want to do is sell a product that your client does not understand. Index annuities based on indices like the S&P 500 with understandable credit rate options and higher issue ages are popular with customers for a reason — they make sense. Unlike complex annuities based on exotic indices, simple index annuities will make you feel good about helping your client make a sound financial decision that they feel confident about.

While clients are often resistant to finding alternatives to choices they have already made, many are willing to reconsider their strategy when presented with simple, straightforward options that put them on the right financial path. That is the power of these new annuity options: Nobody loses when the customer is satisfied with a sensible sale.

— Read 3 Ways Fixed Annuities Can Outperform Bond Mutual Fundson ThinkAdvisor.


Chris Conklin

Chris Conklin is vice president of individual annuities at The Standard. He is a Fellow of the Society of Actuaries and a licensed agent. He also co-owned a national marketing organization.