Whether it’s from friends, family or co-workers, we’ve all heard the saying before: the only constant is change. This is especially true in the new year, as producers nationwide are reflecting on past results and adapting their sales strategies. As you settle into 2019, consider altering your sales approach based on the current economic climate.
With the market fluctuating wildly and talks of recession on the horizon, 2019 may be an unpredictable year. Despite these uncertainties, one thing is clear — we’re entering unstable times. With so much up in the air, the best-selling strategies may revolve around financial products that offer stability and concrete gains.
Here are four reasons why recommending annuities is a solid tactic that will simultaneously satisfy clients and grow your business.
1. Annuities are safe when the market isn’t.
It’s no secret that the market is entering a new period of unpredictability. With a steadily escalating trade dispute, rising international tariffs and increasing interest rates, investors are trading more conservatively — which is having a demonstrable impact on the market. At the same time, the economy is still prospering, with a 3.9% unemployment rate and an additional 312,000 jobs added in December, according to the U.S. Bureau of Labor Statistics.
The ongoing market volatility is of particular importance to producers and clients alike. For years, the stock market has been steadily increasing alongside a strong American economy, and investors have faced very little uncertainty. However, in the past few months alone, the stock market has swung wildly in both directions, with pre-holiday trading at a year-end low and new-year markets seeing record highs.
This calls the notion of asset allocation into question — how much money can clients with market-based investments afford to put at risk? How much must they absolutely protect? These economic uncertainties may cause wary clients to think twice about mutual funds. After all, while these funds are often a good investment for those looking to base their growth on market trends, they can lead to sluggish gains or even losses during periods of market volatility. Since fixed and indexed annuities are not directly tied to the stock market, they aren’t susceptible to loss when the market is down.
2. Interest rates are important.
While bond mutual funds, money market funds and annuities are all traditionally considered safe financial vehicles, there is one reason why people choose annuities over other options: interest rates. With rising interest rates, annuities deliver the safety clients seek along with a solid interest rate. Money market funds generally can’t keep up with annuity interest rates, and while bond mutual funds offer sufficient interest rates, they don’t provide ample financial protection in case of a market downturn.
3. Annuities offer ease of use.
An often-overlooked aspect of annuities is their simplicity in the face of more complex financial options. While certain clients are perfectly happy watching markets and shifting money from account to account, annuities offer an easier choice. Instead of playing markets to receive the greatest gains, annuities lock in growth without constant upkeep.
This is especially important with older clients who are looking for simple, safe options for their savings that don’t require dedicated maintenance. An annuity is one of the best ways to bolster a portfolio that requires safety and stability.
4. Stability can be good for your own peace of mind.
As a producer, your job is to offer options that provide growth during economic upswings and during periods of volatility. Whether the market will trend upward or downward remains to be seen, but annuities are a strong choice that can satisfy clients regardless of market conditions. As we enter a period of uncertainty in the new year, the best advice you can give your clients during these unpredictable times is the tried-and-true adage: The only constant is change.
— Read 3 Ways Fixed Annuities Can Outperform Bond Mutual Funds, on ThinkAdvisor.
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.