The Annuity Lead

I get a dozen emails a week offering me “free leads.” Most of these advertisements are bait to get agents to sign on with a particular insurance wholesaler as they attempt to add value by providing agents tools that will help make sales. But let’s take a closer look at what the industry calls a “annuity lead” as this word is used inconsistently. The agent needs to know what’s being offered.

Cold lead—this is worthless—it’s a name form a mailing list broker. The person may meet certain criteria—e.g., age, income or household value. Above that, it’s just a name, like a name from a phone book. When I was a young financial advisor, the mutual fund wholesalers brought me 1000 “leads” like this. When they left the office, I threw these in the trash. Right—I’m going to waste my time cold calling strangers.

Warm annuity lead—the person has requested information by completing a card, an Internet form or expressed interest with no coaxing. Your best prospects will always be the ones that take action on their own, with no one convincing, no coaxing, no call from a telemarketer. This annuity lead has value as the prospect has made a request and expressed interest.

Telemarketed lead. This is supposedly a warm lead with interest in meeting—they tell you that the prospect is waiting for your call. I doubt it. Poor people have time and inclination to talk to telemarketers and sales people on the phone. Rich people, the people you want to talk to, put their name on the “do not call list,” hang up on telemarketers and run away from sales people. Telemarketed prospects did not take action on their own. Someone called and pitched them and convinced them to take the next step. By the time you contact this prospect, the “convincing” has worn off and you basically have a cold annuity lead. These are weak leads as opposed quality prospects who see an advertisement, a piece of direct mail or other offer and act on their own. ,

Set appointment—this can be a very valuable annuity lead but ask how the appointment was made. Did the prospect first call from an ad or direct mail offer and then a telemarketer set an appointment? That’s good because this prospect took the initiative. Or, did the lead company call this person cold and talk them into an appointment? This is like the “tin man” lead—the firm that calls people at random stating that a representative will be in their neighborhood installing aluminum siding on a neighbor’s home and could stop by and show them how they too can increase their home’s value. This type of annuity lead is weak and usually is not at home 30% of the time when you arrive for the appointment.

When you consider an annuity lead of any type, ask the critical questions:

How is this person qualified for my product or service—what criteria do they meet?
Were they cold called and convinced to be a “lead?”
Or did they act on their own, essentially raising their own hand to say “I’m interested!”

It’s this third type of lead that you desire. At minimum, 10% of these people will become clients. This allows you to quantify the value of your annuity lead as follows:

If you earn $2500 from a new client and are content with paying 10% to get that client ($250), then you would be willing to pay $25 per lead for 10 annuity leads that resulted in at least one new client.

To maximize the value of your annuity leads, make sure you have the sales skills. Sales skills do not come through experience—they come through training. So before you spend significant time and resources to buy annuity leads and make presentations, gain the ability to close prospects. Get professional sales training from schools like Dale Carnegie, Sandler Institute or Huthwaite. If you don’t, you’ll waste your career earning a mediocre living and working harder than necessary.

More here on annuity leads.

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A private annuity is very different from the annuities that are sold by insurance companies. A private annuity is an agreement between two parties in which one party (annuitant) transfers the assets to another party (obligor) for which the annuitant receives unsecured payments for the rest of their life. Neither of the parties in this transaction should be a commercial annuity seller. The major benefit of a private annuity transaction is the tax benefits that are gained by the transactions. This form of asset transfer is mostly used to transfer assets to a family member. If not done in a private annuity transaction the asset transfer would incur potential gift taxes.  A private annuity transaction is generally a sale transaction thus safeguarding the parties from gift taxes.

The interest rate for the unsecured payments is calculated using the IRS 7520 rates.  The rates once fixed for a private annuity cannot be changed. The annuities are generally parked in a trust to defer the tax liabilities. Private Annuity is a mechanism that is used by High Net Worth individuals in most cases who want to transfer their properties to their family members without high tax implications. This is considered as a popular mechanism to transfer assets.  A private annuity trust implements certain rules. Let us see the rules that govern a private annuity trust. 

The owner of the asset establishes an irrevocable trust with a “seed gift”. The seller of the assets then sells the asset to the trust in exchange of the private annuity at a pre-agreed rate.  The returns from the private annuity are given to the seller over the entire lifetime. As we see here, private annuity is quite different from an immediate annuity or a deferred annuity that are offered by insurance companies. With the private annuity there is no involvement of a legitimate financial institution as the issuer of the annuity. The next question that one may ask is whether private annuities are a safe investment. The private annuity is safe guarded by a legal framework. The trust and the seller are bound by legal agreements and if there is any deviation either can contest in a court of law. However, if the assets are not re-invested judiciously there is a chance that the committed deferred annuity payments over the lifetime of the individual may suffer. 

It is important for both parties to have the legal aspects of the deed agreement scrutinized by lawyers. In many cases private annuities deeds are signed between known entities who are known to each other. There is a certain amount of trust that governs the decision of either parties, just as with any financial contract. However it is always suggested that the legal framework should be firmly in place to ensure the deal does not go sour at a later stage. So, if you are planning to sell your assets the private annuity way, it is surely a good option.   

After October 2006 the PAT is no longer a method to defer capital gains taxes per an IRS ruling. Allstate Insurance developed the Structured Sale which utilizes a structured annuity. The Structured Sale has generally considered to be a much superior tax deferral method to the private annuity. However, some attorneys contend that the Private Annuity Trust is superior to the Structured Sale both in terms of the tax benefits to the beneficiary and client.  Note that even without the capital gains deferral, the private annuity trust still provides the following benefits:

• Eliminates Estate Taxes on assets in the trust
• Creates an Income Stream for Life or Joint Lives
• Eliminates  Property Management
• Offers an estate planning alternative
• Maximizes Medicaid Benefits by Protecting Family Assets from Recovery of Past Nursing Home Expenditures
• Provides Asset Protection
• Avoids Probate

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There are potentially millions of people who may want to purchase annuities, from the recently retired to the fortunately wealthy, and with such a lucrative market it is important to remember that nothing is set in stone; there are a number of different proven ways of selling annuities and many that should be considered. Let’s look at some of the more popular, and how they work.

Lead generation

There are numerous telemarketing companies that can help in finding you potential customers by providing a professional lead generating service. They look at the service you are providing, deduce the clients most likely to be interested in your product, and send them a message offering the service that you provide – in this case annuities.

This is a simple and effective method of generating annuity leads, and leads are essentially potential sales waiting to happen. Look on the web for telemarketing organizations, and you will find a cost effective and simple method of marketing your product.

Direct Mail

Direct mail works by targeting potentially interested parties, and not just to addresses at random, by using lists generated by direct mail specialists.

These lists contain only people or organizations that will be interested in particular products or services – in this case, annuities.  Your best demographic is females, age 60+.

Selling annuities in this way is a proven method of generating leads, and with companies out there that focus on direct mail campaigns, you can be sure to find a campaign supplied by a company that will not only mail your offer to the chosen clients, but design and process the entire project.

Direct mail is a long way from the ‘junk mail’ that it once was considered as, and is now a technologically advanced method of selecting the right potential client for the right service. However, if you don’t want to do it that way, you can buy lists of potential clients from companies that generate and supply them, run your own direct mail campaign.

Drip marketing  - the repetitive sending of direct mail Or email) to the same prospects, making sure your mail drop is high quality, and targeting the same addresses over and over again – is an effective way of hammering the message home.

Each time they receive the message – and for the best effects it must be five or more – it will subliminally be taken on board, even if the card is simply thrown away or email deleted. The repetition element is important in cementing the image, and once the mail drop has been done it is important to remember to follow up your campaign; a quick telephone call to each of those on the mail drop list, making sure they received the card and asking if they are interested will elicit a response in some cases that may not have been forthcoming otherwise.  The same can be accomplished dripping with an insurance newsletter.

The above are just some of the methods of selling annuities, and with time and experience you will be sure to develop many more of your own using these guidelines and ideas.

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Annuity companies offer a wide range of products for investors in different age groups and taking into consideration various other parameters. Selling an annuity product to an investor takes a great deal of effort on part of the company and the representative. Companies use various kinds of strategies to sell their annuity products. While some use the concept of hard selling to sell their products, others use marketing strategies to create a pull. Let us see some of the strategies that are adopted by companies to package an annuity product, sell annuities to the investor and how they service the product once it is sold.

It is important to remember that like any other product an annuity also has a sales cycle. It starts with marketing and ends with servicing the product.

As we all know there are various annuity products offered by different companies. The annuity products are categorized under two broad headings of immediate annuities and deferred annuities. Advertising products in the print and media plays a large part is the brand and product visibility. Internet marketing is also catching up in a big way. Nowadays, customers have also become much more educated about the annuity products that they buy. With information available at their fingertips, they have the option to compare a wide range of products offered by different companies. Customers use annuity tables to calculate the return that they can expect from a particular product. As a result the sales representative of the companies are also bracing themselves up to face the new generation of knowledgeable customers. 

Under the two broad categories of immediate annuities and deferred annuities, there are specialized annuity products which are sold by the Insurance companies. A proper segmentation of customer base is done before the customers are targeted. The profiling of customer base is very important before a product is targeted at the customers.  A person with a high disposable income and age on the lower side of the 40’s may be interested in a variable deferred annuity in prepration for retirement. Age, income and financial factors are taken into consideration before a product is pitched. The software applications used by various insurance companies are able to do this detailing to a great extent.

To keep their cost of selling low, insurance companies prefer to do cross selling and up-selling of various products. It is not surprising to hear a reverse mortgage agent pitching an annuity product to an existing customer.  The market for annuities has become much more competitive than what it was a decade back. Companies are offering a new range of annuity products almost everyday to keep up pace with investor’s changing financial requirements.  This trend is going to continue and more sophisticated financial products are in the offing for potential annuity buyers.

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Annuity selling is not an easy job, but with a sound marketing plan in place you can earn much more than you ever thought possible. Like all other jobs, selling annuities requires not just hard work, but being innovative, talent and an effort at out of the box thinking. Having a sound marketing plan in place is the first thing that you need to do if you want to distinguish yourself from the run of the mill annuity agent.

One very important thing to remember here is that no marketing plan should feature only a single marketing strategy. There are a number of annuity selling agents who either resort to cold calling or direct mailing to follow up with their leads. But having a single strategy greatly increases your risks of failure whereas a multi pronged strategy not only manages to reach out to your prospects at different levels, but also increases your chances of getting higher sales. So what are the marketing methods that are most effective for selling annuity? Some of the best methods for approaching your annuity leads that will yield good results are:

1. Advertising: I know you will be shocked that I said advertising! After all, that is what you do all the time and you already know what the results are. However, we are not talking about advertising what your company is providing, or the run of the mill annuity ad. Like in all things, you will have to distinguish your ads from others advertising similar products. For this, you will not only need to rework and redesign your ads, you will also have to post them at the right time. The main focus of your ad should not be just what the company is offering, but rather the benefits that buyers of that particular annuity will get. On the other hand, most people shift their investments or plan them around the beginning or end of the financial year, so advertising around this time would be more fruitful as compared to advertising during the holidays when people focus more on vacations and shopping.

2. Seminars: Seminars are one of the best ways of cashing upon and creating high quality annuity leads. Offering a free seminar in localities where your target customer resides can get you an extremely high rate of sales compared to other marketing methods.  This is because only people who have a serious interest in financial planning will attend a seminar that is focused on personal financial management, retirement planning and buying financial instruments. Covering a number of topics at your seminars, instead of just focusing on equities, will help you get a larger audience. You can tie up with other agents dealing with other products to host a full fledged informational seminar for seniors. Just make sure that you provide valuable information instead of delivering your sales presentations during your seminar. This would establish you as an expert and you will notice people coming to you to buy annuities instead of the other way round.

3. Direct Mailing: Direct mailing can be an extremely powerful marketing tool provided you know how to make your mail stand out and grab your prospects’ attention. To know more about how to do this, check out our post on creating powerful direct mailing messages.

Annuity lead generation in your local area – prospects seeking assistance now!

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Seniors and pre-retirees generally form a major percentage of people who buy annuities. This is so because people start thinking about earning a constant income post retirement at this age. On the other hand, at this seniority, most people also have enough money to invest in annuities and other financial products. There is a huge debate among agent and financial circles regarding the ethics of selling equity indexed annuities to seniors.

Many insurance agents themselves feel that selling indexed annuities with long lock-in periods and low caps to seniors is a little unethical. The high commissions that you get with equity indexed annuities further add to this belief. Your decision to sell indexed annuities to seniors is all your own, but you also need to know and make your prospects aware about some of the main benefits of indexed annuities. While fixed annuities are a good product any day, equity indexed annuities could be the right choice for seniors who have concerns related to:

Inflation:  Investing in equities can go a long way in offsetting the effects of inflation. By advising seniors to invest in indexed annuities with asset allocation portfolios matched with their risk bearing capabilities, you let them put their assets in equities without their having to get directly involved with trading them.  However, it is important to tell your prospects about the amount of risk involved without exaggerating the results that could be expected.

Taxation: Most clients who have enough money to invest are out looking for options to save on tax. By investing in tax deferred index annuities, your client might be able to save a lot of money that would otherwise have gone as tax on mutual funds, stocks, deposits and savings. In spite of the fact that processing fees and charges related with equity indexed annuities are high and that the risk involved is much larger than that with other financial products, equity indexed annuities can provide an ultimate yield that will be much larger than other fixed and variable annuities. Along with telling your leads about the tax benefits that they can get with a particular indexed annuity, you should also make it a point to inform them about the conditions where taxes are applicable like withdrawals and income generation from annuity assets.

High Profits: Since the stock markets are going through a very lean phase right now, it might be the perfect time to invest in a stock index annuity because in the long run, the prices of stocks are bound to go up. Index annuity buyers who are ready to wait for at least five to ten years can expect unprecedented profits by investing in equity indexed annuities when they are at an all time low.

Outliving Annuity Payments: Many equity indexed annuities nowadays come with a guaranteed living withdrawal benefit clause. This can be a very lucrative option for seniors who want to invest in an annuity that lasts throughout their life time, no matter how long it is. You can sell such index annuities to seniors who worry about outliving their annuities.

Before you sell the annuity, ask yourself this.  If this same annuity were sold to your mother, would you be happy she made the investment?

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If you want to sell a lot of your product and do it ethically, you must be an expert.  You cannot and should not sell annuities that you don’t understand. Unfortunately, the majority of agents selling equity index annuities don’t understand the basic math of compounding.

Let me illustrate (refer to table below). The compounded return of an equity index annuity over 33 years with a 12% cap is 6.98% (this assumes a 100% participation–a hypothetical feature that is far more generous than anything offered on the market).  The return of the S&P 500 over the same period is 10.98%.  Therefore, it seems safe to conclude that an investor choosing an equity indexed annuity will earn 63% (6.98/10.98) of the market return and get principal protection.  One could assume that an accurate statement to a client is that they will have 1/3 less by investing in the EIA as opposed to investing in the market. But that ignores compounding.  Because if we start with $10,000 in year 1 in the equity indexed annuity and $10,000 in the market, we end up 33 years later with $311,407 in our market account 92,592 in our equity indexed annuity. We have 70% less in the equity indexed annuity because of compounding.  That’s not to say there is anything wrong with equity indexed annuities other than wholesalers and agents should understand the math of what they sell so that they make accurate statements to prospect and clients.  In 2008, you cannot be a salesman.  You are forced to be an informed retirement advisor.

This provides some insight into how the SEC got involved–lots of agents misrepresenting the product and what returns can be obtained, not intentionally, just of of ignorance of the annuity products they sell and how the math works.  Don’t sell what you don’t understand.

Related to this issue is agents failure to understand the stock market and how to invest in stocks.  This leads them to believe stocks are risky relative to fixed annuities and that stocks should be sold by seniors.  This point of view again, is ignorant because it ignores how the world REALLY works.

Having retirees get out of stocks is advice sure to bankrupt your clients.  The Trinity Study tracked various portfolios using actual year by year returns from 1926 to 1995. Here were the results:

The conclusion is that for a retiree withdrawing 7% of their nest egg annually, the probability of that net egg lasting for 30 years is 88% with a portfolio of 75% stocks and 25% bonds.  But if we get more conservative and reduce the exposure to the market to only 25% stocks with 75% bonds (you can substitute “annuities” for “bonds” in the preceding paragraph), the chance of their portfolio lasting falls to just 32%. In other words, stocks have helped portfolios retain a competitive return and have helped protect retirees from running out of money. 

But look at current events you say–people in stocks have lost a big chunk of their nest egg!  Retirees can’t afford that! This is only true of people who don’t understand that in retirement, risk assets are to be placed in buckets using the strategy explained in the Graangard Strategy (read this book) or in this article http://www.davidmacchia.com/Articles_Feb2005.html.  The point is, a retiree should have little if any exposure to the stock market for assets they will use in the next 10 years.  That way, markets like 2008 won’t have any impact on their lifestyle.  As long as the market recovers in 10 years, the 2008 drop is a non-event.

There is no such thing as a “good”  or “bad” investment or type of insurance.  It’s a matter of what is appropriate for the client’s situations and an accurate understanding and representation by the advisor.  This of course requires that the advisor understands the products they sell and doe not merely repeat what they have been told.  Unfortunately, issues like the above are not covered on securities exams or insurance exams so much self education is needed to be a valuable advisor with fundamental understanding.

Meet prospects interested in annuities.

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Annuity selling has come a long way from the times when all it involved was cold calling, appointments and mailers. New concepts in annuity lead generation and follow up are turning around the fortunes of hundreds of annuity selling personnel around the world and you can also utilize the same concepts for generating annuity leads that have an extremely high rate of conversion.

Using lead generators is one of the best ideas ever to hit the annuity sales industry. And we are talking about actual lead generators that get valuable and interested leads and not the ones that force people to provide personal information and contact details at fairs and exhibitions without their being interested. The best way of getting high end leads is to first target an audience that has the inclination and the will to buy annuity (e.g. people age 60+, homeowners, household income $50,000+). And you can locate and identify these groups by providing lead generators like informational booklets and seminars.

Seminars are one of the best places for not just getting high quality annuity leads, but also for closing sales. The trick to getting great annuity leads at seminars is to market yourself as a financial advisor or consultant instead of being an annuity salesperson. By doing this you will address people’s concerns—which are not buying financial products or annuities—but rather saving on taxes, investing wisely, getting good returns and securing their future financially. When you act as a consultant and provide them with solutions (which may include buying annuities), then you help them make an informed and wise decision (all by themselves) instead of forcing your sales pitch or products on them!

Don’t have our seminar be about annuities.  Have it be about solutions–saving taxes, gaining financial security.  If your seminar is product-focused, attendees will turn off.  if it’s solution-focused, attendees will become clients.

You can get a large audience at your seminar if you offer them valuable, fresh and required information without putting them through your sales pitch. If you have already given them a hint of your breadth of knowledge through educational mailers, booklets or articles, then your chances of getting an interested audience increases even further because you will have already established yourself as an expert and people will flock to get free advice from an expert.

Please do keep in mind that a lot of such “experts” lose all their credibility in these seminars because the salesman in them starts showing through. If you feel that you also will not be able to hold the salesman in you back, then please do not waste your time and effort in conducting the seminar.

A good trick to identify people who are the best annuity sales leads is to ask your audience about the kind of investments that they have already made. People with CDs are prime prospects for selling annuities to and by providing them detailed and unbiased comparison between annuities and CDs, you might end up having a number of converts who will invest their CD money to buy annuities.

Letting your annuity leads know that annuities provide much better rates of return due to tax deferred compounding of interest and allow for withdrawals without penalties might gain you a few customers then and there. To cash in more on CD owners, make sure that you organize your seminars near the end of the financial year, since this is when CDs come up for renewal.
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The market for selling annuities is massive and, potentially, extremely lucrative. Consider the millions of people who retire each year, and have surplus funds that they want to invest, or those that become wealthy early and want to make sure their funds are used to grow, not decline in value.

But the methods of selling annuities is not set in stone, there are a number of different proven ways of selling annuities and many that should be considered. Let’s look at some of the more popular, and how they work.

Direct Mail

Direct mail works by targeting potentially interested parties, and not just to addresses at random, by using lists generated by direct mail specialists.

These lists contain only people or organisations that will be interested in particular products or services – in this case, annuities.

Selling annuities in this way is a proven method of generating leads, and with companies out there that focus on direct mail campaigns, you can be sure to find a campaign supplied by a company that will not only mail your offer to the chosen clients, but design and process the entire project.

Direct mail is a long way from the ‘junk mail’ days of old, with modern technology allowing the most sophisticated selection techniques, but if you don’t want to do it that way, you can buy lists of potential clients from companies that generate and supply them, run your own direct mail campaign.

Drip marketing

Increasing the intensity of the direct mail marketing method can also increase the success, and this becomes known as ‘drip marketing’. Drip marketing is a the repetitive sending of direct mail to the same clients; make sure your mail drop is high quality, and target the same addresses over and over again with a series of cards. Each time they receive the message – and it must be done at least three times – it will subliminally be taken on board, and even if the card is simply thrown away, the repetition element is important in cementing the image.  A great tool is a monthly insurance newsletter with annuity articles.

Once the mail drop has been done it is important to remember to follow up your campaign; a quick telephone call to each of those on the mail drop list, making sure they received the card and asking if they are interested will elicit a response in some cases that may not have been forthcoming otherwise.

Lead generation

In the field of generating leads there are a number of organisations on the net that specialise in this area, and a web search will give you a list of the more popular of these, and most likely one that can offer potential annuity clients.

Telemarketing professionals know what they are doing, and they don’t offer a miracle but a proven method of attracting leads, and of reaching the potential client that you need to find.

The method is simple to use, and picking up your potential leads is as simple as retrieving a message on the cell phone. It’s also an efficient method, too, as the leads generated are sure to be interested in what you have to sell.

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Annuity sales by insurance companies are a big revenue generator for all insurers across the country. Insurance agents sell various kinds of annuities like variable annuities, retirement annuity or a deferred annuity. The sales are made to individuals are based upon their requirements. However, it is important to follow the guidelines set by the National Association of Insurance Commissioners (NAIC) which creates a healthy annuity sales environment. Let us see how best we can sell annuity and benefit the investor to get the best returns after retirement.

It is very important for annuity sellers to educate the customers about the product that they are selling. The annuity sales person should explain the rates and the fallout of the change in rates for the investor. They should also explain to the investor how they can access their money and also outline the fees for a pre-mature withdrawal. It needs to be understood that an investor invests in annuity to ensure that there are long term benefits to them. If the objectives of the investment are not achieved it may have serious repercussions on the investor’s finances.

All insurance companies and annuity sellers should adopt and implement the NAIC Suitability in Annuity Transactions Model Regulation to ensure transparency in all annuity transactions. This model sets standards which ensure that customers are buying annuities which suit their financial needs. Till date half of the states across the country have adopted this model. The sellers of annuity products should have professional designations and certifications. This will ensure that they are qualified enough to make the annuity sale and give the investors correct information of the product that they are selling. The insurance companies need to make all efforts to ensure that the guidelines for selling annuities are implemented at all of their operations across the country. It has been long since the Government allowed banks to sell annuity products. This has increased the number of annuity sellers manifold and also the challenge of upholding the transparency of a annuity sales transaction.

From an investor’s perspective, it is important to know the products that they are buying. This is especially true for people who are close to their retirement. There are some common signs of deceptive sales practice.  A high-pressure sales pitch should be taken with a pinch of salt. Beware of “limited-time” deals especially from a caller who is calling-up very often. A scam artist may try to play on the investor’s time fear by trying to convince the investor to change coverage quickly. Investors have to do adequate research on the product that they buy. If an annuity sales person is not able to prove their credibility, they may never be able to do it.

Waysto improve your credibility prior to meeting:

1. send educational material
2. send details about yourself, your experience and your credentials
3. If you have willing clients, get their written testimonials about working with you and provide it to prospects
4. during your annuity sales presentation, use third party evidence–articles form the Wall Street Journal, Business Week or other well known publications
5. show a copy of the NAIC model on annuity sales and state how you comply with it

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