The Annuity Lead

If you don’t already know who Suze Orman is, it’s time to find out, since hundreds of thousands of people tune into her weekly show on CNN for brutally honest advice on their financial situations.  Orman is well known for her tough, but realistic advice on everything from home ownership to debt consolidation, and she’s especially popular among women viewers.  Perhaps one of her most well-known viewpoints is her aversion to annuities – something you may need to overcoming objections if your prospect is familiar with her show.

But why does Orman dislike annuities?  For the most part, her position stems from the commissions that brokers receive for selling annuities – which, in her opinion, makes them somehow less honest than other investment vehicles.  However, the truth is that annuities really do make sense in some situations, so the key to overcoming objections from Orman is to help your prospect realize that he or she falls into one of these categories.  Let’s look at some of the scenarios where annuities are a good choice:

·         If your income is high and you’ve maxed out your 401K or IRA contributions, annuities may be a good choice.

Realistically, if your prospect is at this income level, he or she probably isn’t too concerned about paying commission fees to secure the additional tax-deferred benefits of an annuity.  Despite Orman’s objections, annuities can play an important role in reducing income tax liability, just like home ownership or other retirement accounts.  There are fees associated with each of these investment vehicles, but in many cases, the costs are largely outweighed by the tax savings they provide.

·         If you prefer a hands-off approach to your finances, paying a broker a commission in exchange for advice on the best annuity for you can be worth the fees.

Many consumers are totally overwhelmed by the thought of choosing from the many investment vehicles and annuity options out there.  In this case, you’re trying to persuade the customer that the trade-off for broker fees is a reduction in the amount of time that needs to be spent managing financial accounts.  Financial advisors across the board charge for their services – if the annuities you sell your client meet their financial needs, you have every right to be compensated for your services.

·         If you need to have a guaranteed return on your money, or if you anticipate needing to withdraw your money early or take out some as a loan, annuities offer better returns and more flexible terms than other investment options.

If you’re dealing with a prospect who wants to invest for the future, but is uncomfortable with the thought of that money being tied up until a certain age – as with 401Ks and IRAs – certain annuities offer shorter surrender periods that can be very appealing.  Alternatively, if you have a client who’s wary about investing in this economy, or who has lost significant money in the stock market, they may appreciate the security of investing in annuities.  At the end of the day, it’s up to you to prove to your prospects that annuities are the best investment options for their needs, regardless of what any talking heads in the financial industry say.  If you can do this well and master overcoming objections, you’re on your way to success in the annuity business.

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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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