The Annuity Lead

No matter how the annuity lead was generated, the prospect is not dying to buy an annuity.  That’s what selling is all about.  Uncovering the prospect’s desires and matching those desires with your product or service.  You do that by asking questions, not by talking about the features and benefits of annuities.

Most agents can’t sell. They think they can.  We highly recommend you study these two books:

SPIN Selling by Neal Rackham
Question Based Selling by Tom Freese

Anytime you end a sentence without a question mark, you’re doing a poor job of selling.  The main rule of a sales conversation: the one asking the questions controls the sale.  If your presentation is to tell the prospect about your product and then wait to address their questions or concerns, you’re losing 2/3 of you sales.

Another rules of selling is that you don;t explain your product and then look for a “yes.”  Products today are too complex.  Explaining your product simply confuses your prospect in most cases. In fact, you should have the prospect agree to do business with you BEFORE you even talk about your product.  Let’s consider this hypothetical sales conversion.  Note how the agent asks questions.

You: Thank you for meeting.  May I ask what motivated you to send back the card?

Prospect:  Yes.  I have an interest in what I can do to reduce my taxes in retirement and your postcard caught my eye.

You: How much tax do you pay now?

Prospect: about $20,000 every 3 months.

You:  I can see why you want to make a change.  What has your CPA advised?

Prospect:  No much—it’s kind of frustrating.

You: what options have you heard of?

Prospect: tax free bonds, annuities and E bonds

You:  Is there a reason you have not used these options?

Prospect; I don’t know enough about them.

You: rather than get into a detailed explanation of the options, it will save you time if I can just ask you some questions about what’s important to you.  Would that be okay?

Prospect: Sure

You: of the following three items, which is most important: return of principal, tax savings and how large a return you can get

Prospect: Return of principal is of course the most important.  next would be tax savings since the taxes, I feel, are eroding my principal.  Last would be the size of the return because I don’t want to sacrifice safety.

You: If I understand you correctly, If I could show you a way to put your money to work, with a guaranteed return of principal, and a way to slash your tax bill, we would have a basis for doing business together?

Prospect: Yes we would.

In the above dialog, you have focused on THEMN and THEIR desires and THEY have agreed to work with you and you haven’t even said a word about your product.  Now that’s turning an annuity lead into a sale.

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Lists of annuity buyers/owners

No insurance company releases the names of their annuity owners.  So any list that claims to be annuity owners or buyers is really a list of people who meet a specific profile AND may be more likely to buy annuities.  We tested these lists and found no greater propensity for people on these lists to buy annuities than if you simply purchased a list of people age 60+, homeowners, household incomes $50,000+.

We tested all the lists using the same postcards and got from 1% to 1.25% response rate.  

So we asked Clarica, a demographics firm. to prepare a list of people who had the highest propensity to buy annuities. 

After  we invested the $1,000 for this sample of buyers, we sent these people seminar invitations and we sent them the postcards for an annuity booklet.  We found no greater propensity for these people to be annuity buyers than the basic demographic criteria stated above.

You can do a rigorous search of “annuity buyer” lists but let’s save you the time.  At a cost of $600, we subscribed to the on-line SRDS direct mail list catalog.  This is a listing of every list that you can rent (the catalog can be accessed for free at most MAIN libraries).  We found approximately 11 companies that advertised lists of people who were “annuity buyers.”  In all cases, the list owners was very vague about what that meant.  As best as we could tell from our questions, these annuity buyers were people who met some basic criteria (e.g. were over the age of 55 and had once completed a survey stating that thy were conservative investors) or may have responded to a phone survey asking if they had interest in a list of financial instruments.  These people likely said yes to stocks, bonds, IRAs, annuities and a host of other opportunities (the same company sells the same list as “stock buyers’). 

As good or bad as the methodology of the various companies are who advertise these annuity buyer lists, we found these annuity leads to be no better than a list of people age 60+, homeowners, household incomes $50,000+.

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People who have requested non-specific information

These are people who have completed a survey at the county fair, a mall, on line, etc in which they expressed information in “investments” or “tax savings.”  As you might guess, these people are no likely to be an annuity lead any better than your deaf grandmom, Bessy.

Yet, some companies will sell you such a list with the title “annuity buyers.”

People who have requested specific annuity information

Now, this is starting to get warm.  If the prospect has requested information about annuities, then we have someone we can classify as an interested annuity lead.  Of course, that does not mean they will buy.  It does not mean they will have more then $5,000, but at least they have indicated specific interest in knowing more about annuities.

But you would like to know a little more from the annuity lead vendor how these people came to express interest.  For example, did they see an offer in a newspaper and they called up or sent in a coupon?  This would be a good quality annuity lead as they received a passive offer and they had to take action.  The fact that they had to take action indicates a level of motivation.   

On the other hand, did the annuity prospect get telemarketed and get talked into getting some information on annuities?  Or did they get an email that said “win a Ferrari, click here” and the solicitation turned out to be a solicitation for annuities and the prospect thought by expressing interest they would also get a Ferrari? If the annuity lead is an “incentivized lead,” it is less worthwhile. 
People who have requested an appointment with an annuity agent

There’a an old saying, “investments are sold and not bought.”  The same is true about annuities. People do not ask to buy an annuity.  They end up buying an annuity after a fact finding sessions with a competent professional and the conversation leads to the purchase of an annuity. The prospect did not enter the meeting or the conversation thinking, “I hope I get an opportunity to buy an annuity today.” 

So if any service or list brokers wants to sell you annuity leads that supposed requested an appointment with an agent, don’t be stupid!  While the prospect may have been talked into an appointment and may have said they were “willing” to listen to what a professional had to say, there are no prospect that “have requested” an appointment with an insurance licensee. That would be like requesting an appointment for a colonoscopy (okay, I’m overstating here). 
People who have agreed to an appointment with an annuity agent

Typically, these people have been telemarketed.  They have been talked into an appointment and have expressed a willingness for a meeting.  We know once company that sells these leads for over $100 each and their big guarantee is that they have called the prospect, secured the appointment and that the prospect has at least $5,000 of investment capital.  Woohoo!  You’ve got an elephant there.

Seriously, in such a circumstance, if the prospect is even home when you show up for this appointment, it will be an uphill battle because:

They really don’t know

• what the meeting is about
• Why you are there
• What you do
• What your agenda is and
• They have no agenda

Annuity Leads that made the first move or leads that were called

As mentioned above, ask the annuity lead source for as much detail as possible on how the lead was generated.  If you find they are vague, then pass.  If they explain it in detail, show you the ad or the coupon, and explain the process, then you have a seller who is far more revealing then most.  Our experience is that they rarely clearly tell you how the lead was generated.

Additionally, get very clear if the annuity lead was generated by the prospect in reaction to a passive offer(e.g. an ad in the paper, a post card, an Internet ad) where the annuity prospect had to take initiative and action OR was the prospect telemarketed and talked into the offer or somehow incentivized to say “yes, I am interested in annuities.”

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Annuity Direct mail

Direct mail works no matter what someone else told you or your own experience.  Just because it did not work for you, does not mean it does not work.  If you read 25 books on the science of direct mail like we have, you can make it work also.  It’s a science and if you don’t know the science, you are wasting your money.  Most direct mail pieces are lousy and fail.

We used direct mail and consistently got responses between 1% And 2% (sometimes higher).   The economics of using direct mail to generate annuity leads are as follows:

Send 1000 postcards x 50 cents (printing and postage)  =$500
Get 1% response = 10 responses
Of the 10, get 2 immediate appointments
Make 1 sale for $100,000 x 6% = $6,000
Return on investment 12 times (1200%)

We never made a sale less than $100,000 but your area may have less affluent people.  You may also earn a higher commission than 6%.

Your clients would be very lucky to earn 1200% on the investments you recommend to them.

Internet Annuity Leads from Ads

Instead of mailing a postcard, you can place ads on the Internet.  The ads can range from very inexpensive to very expensive.  For example, you can place ads on many local senior web sites for less than $50 per month.  Try finding some local senior web sites in your area.  In Google, type in the name of your town (let’s use Columbus Ohio for this example) and a group of people that tend to buy annuities:

Columbus Ohio retirees
Columbus Ohio seniors
Columbus Ohio retired
Columbus Ohio grandmothers
Columbus Ohio grandparents

You get the idea.

While Internet ads to generate annuity leads on these sites tend to be inexpensive, these web sites don’t get a lot of traffic. If you want traffic, you need to advertise where a LOT of people see your ads.  For example, you could advertise on Investopedia.  However, it will likely cost you $7 or more per CLICK.  If only 10% of the people click on your ad complete your form, that’s $70 per annuity lead. So the problem with sites that get a lot of traffic is that the cost per annuity lead is very high.  The other problem is that many sites may not be able to cater to a small geographic area.  You may want annuity leads only within 25 miles of zip code 44046 but some of these web sites may only sell you leads by the state.

Internet ads do work but you will need to test many different sites to find those that work for you at a realistic cost per annuity lead.

Print ads

We used print ads for several years with good results.  The daily newspaper is too expensive but many neighborhood newspapers and senior papers have costs that will produce annuity leads for  reasonable price. Here’s an example

Cost of ad = $250
Responses = 10
Yo get 2 immediate appointments and make 1 sale for $6,000

Not bad .  That’s a 23 times return on your investment (2300%).

Note that not every publication will work.  We have tested some publications where the ad cost $400 and we did not get one call.  Another publication costs only $200 and we got 20 calls.  So you need to test many publications to find those that will work.  Of course, you better have a killer ad which means you either get a successful and talented copywriter to compose your ad OR you read 20 books on copy writing and compose your own ads.

Annuity Seminars

Seminars work and it does not matter what others have told you or your own experience.  Like direct mail or advertisements, there is a science for success.  If you have not uncovered that science, then its likely you wont have success with seminars.

We have had over 200 seminars and typical results were as follows:

3000 invitations mailed = $2200
room rental and refreshments  $450
Buying units attending 20
Appointments secured 10
New clients
Total revenue 5 x $100,000 x 6% = $30,000

Note—we never sold JUST annuities and if you do, cut the above results in half.  We offered everything so no matter the propect’s interest, we could supply it.  But even if you sold JUST annuities and generated $15,000 in commission for a $2700 investment, that’s a 500%+ return on your investment.  Not too shabby.

Referrals

You likely wont generate too many annuity leads from professional referrals. I don’t know many attorneys or CPAs who will refer clients to you so that you can sell them a product.  If you are an advisor and annuities or just one of your tools, then yes, professional referrals can fill your appointment calendar.

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If you have read the previous posts on generating annuity leadsand buying annuity lead lists, you now know what to ask before buying someone’s annuity lead system:

1. how are the leads generated
2. did the prospects get talked into it or did they respond of their own initiative
3. what offer did they respond to—was it specific about annuities or general
4. what will be the cost per lead

If the answers above sound okay, then do the math.  Assume you will need to generate 10 leads to have one new client.  What will your return on investment be?  Now cut it in half.  Are the numbers still compelling?  If so, this is an annuity lead system worth trying. 

Word or caution—don’t try it for 3 days.  Very few things work in 3 days.  We have found one big difference between annuity agents selling annuities that never make it and those that make millions.  Those that don’t make it try something and if they don’t get a payoff fast, they toss it and move on.  They leave behind them a strong of systems and tactics and trials that did not work (because they were not given enough time).

The big producer will NOT give up on a system or a method until they have tried 190 ways to make it work.  Only when they have exhausted all of the alternatives, will they try something else.  In other words, if you give up fast, you’ll be out of the business fast.

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Now, more than ever before, people are looking for security when they may financial decisions.  For some people, this involves seeking out the advice of a qualified financial advisor to assist in making the tough decisions about how their money is invested.  Obviously, you want to be this person that customers flock to with their assets, but how can you position yourself as a trusted advisor in the financial field?  How can you sell annuities and also serve people well? The key is in building a relationship with your clients.

Think about it – would you rather do business with a slick person who swoops in with glossy brochures and polished sales messages, or with someone who sits down with you to discuss your financial options and genuinely seems to care about your financial well being?  This distinction becomes especially apparent when dealing with senior citizens, who may be especially wary of dealing with anyone who comes off as too professional and impersonal.  There are several steps you can take to build this relationship with your existing clients and in the process sell annuities to them and their referrals:

• Try to get a full understanding of their financial situations

It isn’t enough to find out how much money a client has sitting in bank accounts and retirement investments.  Take the time to sit down with a client to understand the whole picture.  Where do they owe money and in what amounts?  What are their biggest fears about money?  When do they plan to retire and what type of lifestyle would they like to lead at this time?  When a client feels that you truly care about finding the best solution for them – whether or not it’s your product – they’ll be much more likely to work with you resulting in more annuity sales.

• Explain the terms of your annuities fully

A lot of annuity agents get a bad rap for glossing over the terms of annuity surrender periods and the fees associated with early withdrawals, leaving participants unaware of the risks associated with the investments.  And although these tactics may have helped them to make sales, the deception eventually catches up – many of these brokers are now being investigated by the SEC and may be subject to harsh fines and criminal sentences.  Instead, take the time to make sure your clients understand both the benefits and risks of annuities fully.  You don’t need to define every technical term in the fine print, just be sure that your clients are clear on what’s involved in the annuity. You’re likely to make more annuity sales to referrals when your clients feel they are fully informed.

• It’s the little things that matter

Sure, it may sound cheesy, but send that birthday card or Christmas card to clients that have purchased annuities with you.  They’ll appreciate your thoughtfulness and keep you in mind if they’re thinking about making further investments.  Also, take the time to make a follow-up phone call or two once a client has purchased an annuity to make sure that everything’s going according to plan and to see if they have any further questions.  Your clients will see you going the extra mile and feel more confident in the annuities they’ve purchased from you.  This is what leads to repeat annuity sales and referral annuity sales.

The real payoff from building a relationship with your client comes in the form of referrals and additional business.  People talk, and if they’ve had a positive experience with you, they’ll be much more likely to recommend you to other people they know that are looking for financial assistance and investment opportunities.

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Despite the growing number of people who are using the Internet for everything from information gathering to buying everyday items, most annuity agents tend to grumble and grown about how putting together and maintaining an annuity website is a waste of time and effort.  And to some degree, it’s true – if you put up a bare-bones annuity website with just your picture and contact information, you aren’t likely to see big returns.  However, there are a number of things you can do to turn your website into a powerful selling tool that will bring in new prospects with little effort on your part.

• Help the search engines find you

When a person goes to Yahoo.com or Google.com and types in “financial advisor + your area”, you want your website to be one of the first that comes up in the search engine results.  To determine which results to pull, the search engines scan web sites to see which words appear most frequently on the site.  They record this information so that when a user searches for a specific term like “financial advisor”, they know to display the sites that have the most relevant content.

To help the search engines recognize your annuity website and pull it up for relevant searches, include your name and business address several times on the site, as well as informative content about the annuity products you sell.  Also, be sure that this information is included in text on your site – if your site uses text that’s embedded in graphics or fancy flash introductions, the search engines won’t be able to read it.

• Utilize customer follow-up tools

When a customer comes to your annuity website, they have three options – they can leave without contacting you, bookmark your site to revisit later, or contact you immediately.  You can dramatically increase the number of people who contact you by collecting a customer’s name and email address (or more personal information if you prefer).  Typically, you’ll need to offer something free to persuade a customer to part with their information, like a free report on annuities or discounts on future services.

Most people who collect visitor’s email addresses use an email marketing program like Constant Contact.com or Aweber.com to create follow up messages.  These program are easy to use, and usually only involve adding a small snippet of code to your annuity web site.  Once a customer submits their email address, it is stored in the program, which you can then use to send out follow-up messages, promotions, or newsletters about your services.

• Pay for traffic to your site

If you aren’t getting enough traffic from the search engines to make your annuity website a valuable tool, consider pay-per-click advertising to boost your results.  All of the major search engines offer programs that allow you to pay to have your website appear in the sponsored link sections that appear when a person searches for a specific term.  The major benefits of pay-per-click advertising is that you’ll only pay when a user clicks on your ad, unlike traditional magazine and radio ads that charge regardless of who sees your ad.

Many annuity agents have grown their empires using the traffic that comes to their annuity websites.  But if this all sounds like too much work for you, consider outsourcing your annuity website creation and management to a freelancer.  You might be surprised at how little this costs – you can have a simple website created for a few hundred dollars and management fees can be as little as $20-30 a month.  So don’t dismiss the idea of having a website for your business as too time consuming or expensive – for a small investment, your annuity website can be a powerful tool in building your business.

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The conventional wisdom in the annuity sales world is to bend over backwards, doing everything you can to please any customer that comes knocking at your door.  But in reality, trying to be everything to everyone can make you seem disjointed and disorganized to prospective customers.  In the third installment of the guerilla annuity sales principles series, we’ll explore why it’s better to establish yourself as the big fish in a small pond than one of the many fishes swimming in the big sea.

We’ve already talked about the benefits of establishing yourself as an expert in the annuity sales field, and to some degree, the idea of carving out a niche for yourself takes this a step further.  Instead of presenting yourself as a general annuities expert, consider creating your image as an expert in a specific type of annuities – variable, equity-indexed, or retirement – or for a specific target market, such as senior citizens, wealthy individuals, or families.

Now, you might be asking yourself, “Won’t I be giving up some sales if I specialize in a specific type of annuity sales or target market?”  To be fair, if you work in a smaller community or rural area, you may have to work as a generalist in order to find enough customers to stay in business.  However, if you live in a larger community, carving out a niche for yourself can have some surprising benefits:

• Less time weeding out unqualified prospects

When prospective customers know that you focus on providing specific investments for certain groups of people, they’ll only contact you if they themselves fit into your chosen niche.  In addition, separating yourself from the pack by choosing a specialty makes the process of earning referrals even easier.  People tend to hang out with others who are like them – if you prove that you’re the best qualified to serve one member of your target group, they’ll likely refer you to other people who might be interested in your services.

• Set yourself apart from the annuity sales competition

In metropolitan areas, there may be dozens of annuity sales agents and brokers all marketing the same annuities to the same groups of people.  In these situations, it can be difficult to prove that you’re the best choice for potential customers when they’re seeing similar advertisements from all the other agents as well.  However, if you set yourself apart by focusing on specific annuity types or target groups, you can advertise this fact to prospective.  When they come across your advertisements proclaiming your specialization, they’ll respond more positively if they fit into your target annuity sales category.

So how can you tell if specializing in a certain niche is right for you?  Take a look at the list of your past clients.  Do you see any patterns?  Are most of your clients in a certain age range or income level?  Do you tend to sell more of one annuity product than another, or are your commissions generally higher from the sales of one type of annuity over another?  You may be surprised to find that narrowing down your prospects to a certain target market or annuity type won’t cut into your existing client base at all!

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As an annuity agent, you need to know who to believe and listen to. You want the skill to develop when someone is telling you things for their benefit (e.g. an insurance company or marketing organization) and if that differs from what is true. Your ultimate legal and ethical responsibility is to the client for accurate and appropriate recommendations.  Therefore, your annuity training is critical.

If you’ve been around the annuity field for long, you’ve probably heard the conflicting information on a program called Annuity University – hailed as the largest annuity training resource of its kind.  According to the program’s website, the class is “the #1 rated annuity and senior market training course of its kind,” although critics of the class cite examples of the highly-manipulative training tactics as evidence of fraud and abuse.

The Facts

Annuity University has been in business since 1993 with self-proclaimed “annuity sensation” Tyrone Clark at the helm.  Since it’s opening in Denver, CO, the program has educated over 7,000 agents in sales and marketing strategies for selling annuities.  The program takes place over two days, and costs roughly $375 to attend.  Of course, the company’s main business is recruitment and sales of annuities.  Always be clear of the annuity training sponsor’s agenda when taking any annuity education.

The Criticism

In 2002, the Wall Street Journal published a report on the program that criticized some of the sales tactics emphasized in the course, especially those related to selling to seniors.  In the article, they quote program organizer Clark as saying, “Treat them like they’re blind 12-year-olds,” (in reference to senior citizens) and “They thrive on fear, anger and greed.  Show them their finances are all screwed up so that they think, ‘Oh, no, I’ve done it all wrong.’ This will make you money,” in his course.

The Global Action on Aging organization also condemns the program, citing the following excerpts from the course’s training manual:

“You’ll waste time if you think you can impress them with charts, graphs, printouts or use sophisticated words.  They buy based upon emotions! Emotions of fear, anger and greed.”

“Toss hand grenades into the advice to disturb the seniors.  You’re there to solve their problems, but you have to create those problems first. No problem, no sale. So at the seminars, you’re creating problems, and you tease them with the solutions”

Mr. Clark’s Responses about his Annuity Training

According to Clark, many of these quotes are taken out of context or blown out of proportion in order to paint him in a bad light.  In fact, he considers annuities to be one of the best possible investment vehicles for senior citizens.
 
In addition, Clark responds to criticisms with the fact that he requires agents that attend his annuity training to sign a code of conduct designed to enforce ethical marketing to seniors, but admits, “The problem is agents take the classes and abuse the information everyday. And I have no control over that. These [agents] are independent and want to pitch high-commission products, and we can’t stop them.”

Despite numerous criticisms and an investigation by the SEC, this annuity training runs today and is as popular as ever.  Although I can’t offer specific recommendations on whether or not the program is worth attending – having never gone myself – I can only say this: If you choose to attend Annuity University or any other annuity training, take everything you hear in the context of ethical and legal behavior and treating prospects with dignity and respect.

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