Lining Your Client Up for the Retirement Savings Field Goal

The COVID-19 pandemic has brought about extraordinary uncertainty. With unemployment surging, the markets taking a roller coaster ride off of the economy’s tracks, and little clarity about when and how to reopen our shutdown world, many Americans are having a hard time predicting what will happen in the next 30 days — never mind what their retirement years will look like — and are concerned about the damage that this downturn will have on their planning efforts.

During these difficult times, the job of the agent/advisor is to act as a coach — a knowledgeable voice that understands the ins and outs of the money sport and how to give clients the tools they need to build financial stability. Perhaps the one thing that agents can anticipate with certainty is that when it comes to financial planning, there’s no way to know what challenges will pop up for their clients as they work their way through the game.

However, guaranteed income products like annuities can act as field goals — reliable ways to ensure that clients can still put points on the board towards a more secure financial future, even when the economy makes it harder to move towards the end zone.

(Related: Tell Clients About Sequence of Returns Risk)

 Here’re three things agents need to do to line clients up for the punt.

1. Condition clients before the kick.

Clients’ appetite for annuities had been steadily rising over the past year, and the COVID-19 crisis has triggered a more targeted spike in demand. According to LIMRA, total annuity sales were up 3% in 2019 from 2018, and products featuring downside protection options soared between Q1 2019 and Q1 2020 as anxiety grew about the late-cycle bull market and the pandemic’s onset in the U.S. Among these, registered registered index-linked annuities saw a sales increase of 44% year-over-year.

The uptick in awareness of these products is certainly encouraging — but before making a recommendation to clients, it is crucial for agents to help them understand their needs and desires and to only present product options accordingly. What are they trying to achieve by purchasing an annuity? What type of risk are they willing to take on? Where are the existing weaknesses in their financial plan — loans, lack of emergency savings, not enough in a 401(k) or IRA? In addition, annuities are very complex products; agents must gauge their clients’ sophistication level and make sure they have the education they need to make smart choices.

Agents need to keep these driving missions at the forefront of their conversations and use them to help clients work through their own fears, blind spots and pain points along the way. A values-based approach is not only essential to make an effective coach, but for clients to prepare to be in the best position to score.

2. Recognize that a quieter stadium can be a good thing.

Annuities are poised to have a moment in the sun right now, but because the current financial landscape is creating an uphill battle with costs for insurers, some are opting to pull a few of their annuity offerings from the shelves. With market volatility and lower interest rates driving a need for more conservative cost allocation, insurers are streamlining by taking products that aren’t getting traction out of the marketplace in order to cut down on spending.