Annuity Agents Alliance Blog

Real Help From Real Agents

Great Emergency Money Resources for Your Annuity Clients: Best Bank Account Rates

Helping your client find liquid accounts where they can store their emergency money provides a value added service.  This will build trust and confidence with your client and prove that you are looking out for more than just their safe money income funds.

Make sure when you sell annuities that you are also selling emergency money.  That’s not to say that you are going to actually sell savings accounts, certificates of deposit, or money market accounts but it doesn't hurt to let your clients know where they can get the best rates of return on their emergency money accounts.

Here is a great resources for you clients to find out who is offering the highest rates of returns on FDIC insured accounts:

Using the Power of Suggestion to Sell Annuities

Bill Broich: Editorial: Variable Annuity sales, Crew Share, The two most important questions you can ever ask an annuity prospect, Hot News, Google vs., Fixed indexed annuity sales up 5%, New FIA product from Aviva, New IPO at ridiculous values, FIA complaints at all time low, The Other Side of the Table: Front door marketing and our new system, DReaMS.

Chad Owen: Big Truck Sales Tip: Sell annuities like a Jedi.

Open Mic archived audio is available for contracted agents.  To find out how to partner with us Click Here.

Open Mic

Fixed and Fixed Indexed Annuity Complaints Have All But Disapeared

Fixed and fixed indexed annuity complaints have all but gone away in recent years.  If you go back to 2007 one carrier that starts with an "A" had around 35 complaints in Colorado (the state I live in) and this year none.  Although not as drastic, other carriers have seen their complaints greatly decrease or disappear completely.  How is that possible with fixed and fixed indexed sales increasing?

Several reasons:

  • Suitability requirements have greatly increased.  As Bill Broach always says, "The more suitability regulations the better."

  • State required annuity continuing education courses have become commonplace, requiring agents to have more education about the products they sell.  I have always said that the barriers to entry in this business are way too small.  I believe a license requirement closer to what is required in the securities industry would be a huge improvement as long as it was state department of insurance regulated.

  • Emphasis on guarantees have become the emphasis of the indexed annuity sale. In an environment of decreasing caps agents have been forced to focus on the core benefits of fixed indexed annuities rather than pushing market participation hype.  While market participation can be significant at times, this should never be the primary purpose for purchasing a fixed indexed annuity.  Preservation of gains and/or lifetime income are the two reasons to buy an indexed annuity.

I have linked the Colorado Department of Insurance complaint list for 2010 here for your convenience. See if you can find one for your state and show your clients how few complaints there are about our products.


Annuity Sales Training: Sell Guarantees

Indexed annuity cap rates are dropping like rocks.  Most notably, North American has seen major cap reductions on their Charter Series and other products.

Do cap rates matter to indexed annuity sales?  Some agents seem to have a hard time selling indexed annuities if cap rates are "low" (See article linked below).

Marrion: Low Caps Hurting Indexed Annuity Sales

If your client is young or rich then caps might be a factor; that is if lifetime income is not.  For all of our other clients, caps have little relevance if you sell off of guarantees.  Our indexed annuity sales have steadily increased every year and we haven't experienced any slow down due to lower cap rates.  That is because we understand that income is king, not cash.

Market participation is not a meaningful benefit to our demographic, the middle market.  Any agent that sells off of market participation is going to get punished during periods of low cap rates.  Instead, focus on guarantees and your sales will never go down.

Here are three key factors that help us sell more than a million per month in indexed annuity premiums:

  • Guaranteed of Principle
  • Guarantee of Growth for the Purpose of Lifetime Income
  • Guarantee of Lifetime of Income

If your annuity lead conversions are in the tank it is probably because you are selling product, not solutions.  Most agents sell details, not ideas.  Most agents sell features, not benefits.

If you are in the idea, solution, and benefit market, then caps won’t matter.

Summertime Does Not Have to Slow Down Your Annuity Sales

Bill Broich: Editorial: Resolve and determination are not the same thing, Crew Share, Hot News, Absolute return funds, Variable Annuities vs. Fixed Indexed Annuities Lifetime Income Benefit Riders (from Anthony Owen), The Other Side of the Table: DReaMS, Direct Response Marketing System (Kris Montierth)

Chad Owen: Big Truck Sales Tip: Turning summertime blues into annuity commission green.

Open Mic archived audio is available for contracted agents.  To find out how to partner with us Click Here.

Open Mic

Variable Annuities: Not Just Risky for Policy Holders

Why are variable annuities at risk for the guaranteed benefits they provide to their policy holders?

It has to do with taking money vs. holding money.  When an insurance company sells a variable annuity they take a client's money and give it to someone else.  That "someone else" is usually a stock or bond mutual fund.  Therefore, the only way a variable annuity insurance company can make money is to charge fees on the premium as it “passes through their hands”.

A compounding problem for the variable annuity insurance company occurs in a prolonged downward market.  For example, if a client deposits $100K into a variable annuity but then that account is decreased to $50K due to market losses, the guaranteed benefits will remain the same (or may even increase) but the fees are reduced by 50%. (i.e. a 3% fee on $100K is $3,000 and a 3% fee on $50K is $1,500).

If a declining account value due to market loss wasn't a big enough problem, another problem is the fees themselves.  Fees in variable annuities can be very significant and are a major factor in eroding the account value.  In a period of loss, or little to no growth, fees will have a compounding effect on account value deterioration.  Once again, the lower the account value the lower the fee revenues for the insurance company.  It's somewhat ironic that the more a variable annuity insurance company takes from its clients via fees the less money there is to generate fee revenues.

Consequently, variable annuities can not only be risky for their policy holders but also risky for the insurance companies that sell them.

In contrast, when an insurance company sells a fixed or fixed indexed annuity not only is the principle guaranteed but the insurance company holds on to the money.  They assume the risk of investment but the principle is always “in their hands” and always available for them to invest for returns (less the interest rate credited to the account value).  For this reason they are able to provide higher guaranteed benefits with little or no fees.

Variable annuity insurance companies assume a much larger risk than fixed annuity insurance companies when offering guaranteed benefits to their policy holders.  A competitive insurance environment like we have today gives carriers even more reason to toe the line on offering variable annuity guaranteed living benefits that may be difficult to support during market downturns.  Variable annuity insurance companies depend on the account value growing or at the very least maintaining its value. Major collapses in the markets can make these product offerings a significant liability for insurance carriers as we saw in 2008 and 2009.

See the article linked below for more information on how variable annuity insurance companies are cutting back on benefits and increasing fees.

Selling Annuities to Engineers

Bill Broich: Editorial: Resolve, Crew Share, Hot News, Credentials, Retire Village - The power of repetition, Credit Shelter Trusts, How Risky is your 401k?, NAFA consumer/agent website, Debt doom and gloom, The Other Side of the Table:  An inside view into the business of a broker, Updated Wharton study: Real world returns of annuities

Chad Owen: Big Truck Sales Tip: Selling annuities to engineers.

Open Mic archived audio is available for contracted agents.  To find out how to partner with us Click Here.


Open Mic