Annuity Agents Alliance Blog

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Annuity Leads and Marketing - Client Drip System

Bill Broich: Hot News, Iowa draws "Line in the sand" for Advisors, annuity article, Mortgage debt relief, Barron's annuity article, Bloomberg negative variable annuity article, ERMS testimonial, Bond article, The Other Side of the Table: A lesson of independence.

Anthony Owen: Editorial: Annuity leads and marketing.

Mike Davis Jr. & Sr.: Big Truck Sale Tip: Selling through an annuity client drip system.

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

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Retirement Income Funds: A Wolf in Sheep's Clothing?

It never ceases to amaze me how securities firms spend so much time designing products to try and mimic the lifetime income benefits of fixed indexed annuities and lifetime income benefit riders.  So much wasted energy is spent designing investment strategies when the solution is right in front of their faces.  You have to wonder if these guys ever climb out of their box to find out what we already know.

Why do they do this?  Heard of the saying, “Don’t step over a dollar to pick up a dime”?  In this case, they are definitely not stepping over a dollar.  Fees are always the motivation when the securities industry tries to mimic a guaranteed product with a risk product.

Study your competition so you are prepared when these products, that pretend to provide lifetime income solutions, are pitched to our clients.  For more information read the article linked below:

Retirement Income Funds

Annuity Compliance and Suitability

Bill Broich: Editorial: Annuity compliance and suitability, Crew Share, Hot News, covered bonds,, Look who is scamming seniors, Quarterly sales of FIA's plummet, The Other Side of the Table: Annuity presentation design case study, Annuity complaints down, Boston College Research Paper on Investments.

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

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Key Components to Running a Successful Annuity Business

How do you sell millions in annuities?  How do you grow your business?

Annuity sales is not a sprint, it’s a marathon.  Establish a marketing budget and increase it constantly.  Even if you start out modestly, say $1,500 per month, and increased your budget by $100 per month your annuity lead budget would more than double in two years to over $3,900.  That budget, in most cases, would be enough money to run a Safe Money Radio show and buy six Pre-Qualified Leads or two Lead orders.

The point is to always grow your annuity marketing and reinvest your capital to buy annuity leads.  Marketing capitalization works just like compound interest; a small increase in your annuity marketing dollars can have a huge impact on your gross revenues.  If you look at 2009 to 2010 (see data below) you will see only a .6 increase in Chad Owen's (co-founder of Annuity Agents Alliance) annuity lead count.  This would have been even higher except for the lack of leads in 2010 but regardless, Chad's sales increased by over 5 million.  In 2011 his lead count increased by 3 leads per week and he is on track to grow his volume by at least another 5 million.  If I went back to 2008, 2007, and 2006 the trend would continue; less leads and less sales.

You will also notice that we are constantly adjusting our lead marketing to get maintain our lead counts.  The most expensive lead is the one you don’t have.  We look at your business constantly and shift and/or increase our marketing dollars for what brings the highest return on investment but more importantly brings us a consistent flow of annuity leads.

Growth is an exponential formula made up of the following components:

  • Consistency: Never turn off your annuity leads.

  • Incremental Marketing Increases: Too little annuity leads is better than nothing.  To many and your will blow your budget.  The key is to always be increasing your marketing until you are consistently receiving a slight annuity leads surplus (in other words, a few more leads than you can get to).

  • Reinvestment: Pay your your business first.  Strip every luxury out of your life, if needed, and feed your business with marketing dollars.

  • Faith: The annuity business is not for cowards.  All successful businessmen are risk takers.  You need to spend money on marketing and trust in your abilities to convert your annuity leads.

  • Data: If you don't know the numbers of your business you don't know where you have been or where you are going.  At the very least keep track of the number of annuity leads you receive, now much you spent on your leads, and how much revenue they produced.

  • Effort: Show me your calendar!  If your calendar has as many annuity appointments as our calendars, watch out, success is around the corner.  There is no such thing as a 9-5 business when you are the owner.

  • Time: Success doesn't happen overnight but if you follow these suggestions you will be amazed how quickly success will come. 

  • Education: If you are an annuity salesman then you are in college for life.  Always be studying products, strategies, sales concepts, etc., etc.  The amount of TV you watch for entertainment purposes has a direct correlation to how much money you are not going to make.  Leaders are readers.

  • Relaxation: Smell the roses along the way.  Schedule mandatory vacation even if you can only afford a low cost break.  You need to recharge if you are working as hard as we do.

  • Small Things: Don't make the mistake of stepping over a dollar to pick up a dime.  I have partners that don't have their Retire Village website set up or don't use the Safe Money Book or Kit.  Are you serious?

How to Write a Letter of Suitability Explanation

Bill Broich: Real world Fixed Indexed Annuity returns, Editorial: I smell a rat, Crew Share, Hot News, NY Times annuity article, IL SEC going after annuity agents, US Treasury yields drop, Top ten FIA misconceptions, What is a hybrid annuity, The Other Side of the Table: Annuity case study.

Anthony Owen: How to write a letter of explanation for annuity suitability.

Chad Owen: Big Truck Sale Tip: The Matrix, the power of the lifetime income annuity virtual account, Is my money real or not? cont...., No more fairy tales.

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

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Suitability: Replacing Variable Annuities with Fixed or Fixed Indexed Annuities

See the article linked below and pay special attention to the text, “... those clients received $107,350.97 in bonuses and paid $122,630.24 in surrender penalties, according to the order.”

Illinois Securities Regulators Treat Indexed Annuities as Securities

There are many components to the question of suitability but for this post we will limit our discussion to the issue of variable annuity replacement.  When it comes to replacing variable annuities, suitability must include the evaluation of surrender fees, death benefits, income benefits, and loss of liquidity (We will cover liquidity issues in another post).

Surrender Fees and Bonuses: Bonus Dollars Must Exceed Surrender Fees

Comparing surrender fees to bonuses is not a percentage vs. percentage comparison.  Just because a variable annuity has a 7% surrender fee and a fixed annuity has an 8% bonus, does not mean the replacement is suitable.  The reason you cannot make a percentage vs. percentage comparison is because the surrender fee on the variable annuity is based on the account value and the bonus for the fixed annuity is calculated off of the variable annuity surrender value (which will be lower than the account value).  You must compare the dollar amount of the surrender fee to the dollar amount of the bonus.  The easiest way to make this calculation is to compare the current account value of the variable annuity to the account value of the fixed annuity upon issue.  The account value of the fixed annuity must be greater than or equal to the account value on the variable annuity.

Death Benefits: Avoid Reducing the Benefit of Death

As a general rule you should avoid reducing your client's death benefit when replacing a variable annuity.  This can be a real challenge during a period of market loss.  It is not uncommon for market losses and fees to erode the account value of a variable annuity, but due to contractual guarantees the death benefit may greater than or equal to the original premium and possibly much greater than the current account value.  Our primary demographic, the middle market, rarely buys a variable annuity for the death benefit.  Their primary concern is preservation of principle, growth, and guaranteed income.  That being said, just because the client doesn't care about the death benefit that does not mean it can be ignored.  Review what other life insurance the client has, how significant the death benefit is that they are giving up, and what death benefits they need.  If necessary, offer the client the opportunity to purchase life insurance to replace what they are giving up.  If the client understands and desires to give up the death benefit associated with their variable annuity, then have the client sign a letter of explanation (see below).

Income Benefits: Avoid Reducing the Benefit of Lifetime Income

Just like death benefits on a variable annuity, living benefits can also maintain or increase in value even if the account value is going down.  Most fixed annuity lifetime income benefit riders require a one year deferral so an immediate comparison is impossible.  To make sure you are not decreasing your client's lifetime income benefits, compare the lifetime income options on the fixed annuity based on the date the client will first become eligible to receive them.  Use the same date, if possible for the variable annuity. For the variable annuity you must look at the lifetime annuitization option (even if the client would not want to annuitize) as well as any income benefit rider options.  The lifetime income payout options on the fixed annuity should exceed the payout options that are available on the variable annuity.

Letter of Explanation:

The issue of suitability is not always black and white.  One complicating factor is that sometimes what the client wants would not be considered suitable by regulators or insurance carriers.  In the process of serving your client to meet their objectives you must also protect yourself and the insurance company you represent.  Client's needs and wants change over time and what they say when they buy an annuity might not be what they say about the annuity replacement ten years from now.

In cases that are borderline, where the client is very motivated to get out of the variable annuity despite the loss of some benefits, (i.e. The death benefit on the variable annuity is higher than the death benefit on the fixed annuity) you need to get a letter of explanation.  A letter of explanation is a letter from the client agreeing and acknowledging what they are giving up.

For Example: Mr. and Mrs. Jones own a variable annuity with a $400,000 account value.  Their death benefit is $425,000 and there is no income rider.  They have $500,000 in life insurance and another $500,000 in other variable liquid investments. The surrender fee is $37,000 which means that the premium that would transfer to the fixed indexed annuity you are recommending is $363,000.  Your product has a 10% bonus and an income rider with an 8% roll up.  After applying the bonus the fixed indexed annuity account value would be $399,300 as would the death benefit.  In this case Mr. and Mrs. Jones account value would be $700 less then with their current variable annuity and they would also lose $25,700 in death benefit at the time of transfer.  Mr. and Mrs. Jones have expressed that their primary objective is preservation of principle and lifetime income after a 8 year deferral period.  You have helped Mr. and Mrs. Jones compare the two products and they have determined that the fixed indexed annuity will better suit their future need for guaranteed lifetime income.

The letter of explanation would read something like this:

To ______________ (name of FIA carrier and agent):

I, Mr. and Mrs. Jones, do hereby acknowledge and are fully aware that by purchasing the ______________ (name of the FIA annuity contract) we will be losing $700 in account value and $25,700 in death benefit at the time the ______________ (name of FIA annuity contract) is issued.  It is our desire to forego these benefits in our _______________ (name of VA annuity contract) so that we will receive income rider benefits under our contract with __________________ (name of FIA annuity contract) as outlined in the __________________ (name of the FIA annuity contract brochure and disclosure).  Our primary concern is preservation of principle and guaranteed growth for the purpose of a lifetime of income.  It is our assessment that the death benefit of the ________________ (name of FIA contract), our life insurance, and our other assets is and will be adequate for us and our beneficiaries.

We have read all product brochures and disclosures pertaining to ______________ (name of FIA annuity contract) fully understand their content.  Based on the contract benefits mentioned in the _________________ (name of FIA annuity contract brochure and disclosure) we have decided that it is in our best interest to purchase the __________________ (name of FIA annuity) with funds surrendered from _____________________ (name of VA annuity contract).


Name of clients



The Definition of Selling Annuities: Eliminating Questions

How would you define the process of selling annuities?

One of the ways I define it is as, "The process of eliminating question marks."

Are you credible?  Yes, I work in association with and I am the host of Safe Money Radio in Denver, Colorado? (Use whatever credibility you have as long as it is legitimate.  No fake designations.)

Do you have a website?  Yes, it’s *** (Electronic Response Marketing System) and as my client I will give you privileged access to information that will enhanced our relationship and your retirement planning.  What is your email address so I can service you?

Is my money safe?  Yes, my business and my relationship with you is committed to three core values.  I will provide you one or all of the following depending on your financial goals; protection of principle, guaranteed growth, and/or a lifetime of income you can never outlive.  Your money will never be at risk to market losses if you are my client!

Can I trust you? Can you help me understand this? How is what you are offering better than what I have been presented or understand? How does this benefit me? Etc., etc., etc.

What happens when you don’t answer all the questions?  You don’t make a sale, or if you do make a sale it’s on shaky ground.

As an annuity salesperson you should look at your business, your marketing, and your presentation and ask yourself, “Is what I am doing answering all of the questions for my prospects so they can become my clients?”

Eliminate question marks and you will have success in your annuity business and very happy clients.

Lifetime Income Benefit Riders are Real Money for Those Needed Income!

Bill Broich: SEC boosts fee threshold, Editorial: Variable Annuity Sales, Hot News, Testimonials: The power of our electronic annuity drip systems, Baby boom numbers, Banks sued for selling unsecured notes, Annuity taxation, DReaMS: Direct Response Annuity Marketing System, TIPS: Treasury Inflation Protected Securities, LIMRA: Life insurance sales are up, Your 401K: Leave it or roll it.

Jerry Baxter: Retooling your annuity business to support fixed indexed annuities.

Chad Owen: Big Truck Sale Tip: The Matrix, the power of the virtual annuity lifetime income account, Is my money real or not?

Andrew Rafal: The Other Side of the Table: American Equity annuity case design.

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

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