Giving Annuities the Edge

When clients turn to other vehicles,  make sure they understand what they really want

As an advisor, you probably don’t sell annuities to people who can’t benefit from them. You also have many choices when it comes to matching the right client with the right annuity. As for clients preferring other retirement savings vehicles to annuities, you’ll probably find that salespeople hear this statement more than advisors — yet it’s still a challenge that 19 percent of agents named as one of their biggest when selling annuities, according to the 2011 Annuity Market Study by NAFA and Agent Media Data.

To do a proper job, you can’t be in the mindset of, “What will I sell them?” Instead, you must think, “I am here to offer solutions to any problems or weaknesses they may have with their current plan.” Make sure you fully understand the dynamics of your client’s situation and are able to draft a plan based on what they want to achieve. We don’t know what’s best for our clients unless we know their situation. There isn’t one company or product with a solution for every need, and yet many annuity salespeople sell only one or two products — not nearly enough to benefit a wide range of situations.

The Fact Finder:  Building 

The first step to building a relationship is discovering your prospect’s wants, needs, desires, and goals through an in-depth fact finder. Ask questions to find out what they like best about their current portfolio and savings accounts and what they like least. Find out the worst investment they ever made, as well as the one they liked the best. These questions can tell you their risk tolerances and offer insight into how to make a presentation.

Ask your client, “How much of your money can you do without for an extended period of time to allow the markets to come back if there was another crash tomorrow?” They’ll usually say, “None of it.”

Next, find out whether they expect any large expenses within the next two, five, and 10 years. If they are of retirement age or older, you need to know what kind of catastrophic protection or insurance they have in place, such as Medicare supplements and long term care insurance. You can then develop a plan around these needs.

Now you can ask them, “If you could describe a perfect location to place your money, what would that look like?” They will almost always describe an annuity — in particular, an indexed annuity.

Never match a client with a product on the first visit. They need to feel comfortable with you and your services, which you can’t accomplish in one meeting. Look through your list of tools to find the one that will best fix their problem and meet their needs. Often, you may find the best fit as soon as they tell you their needs and concerns, but don’t get excited and jump ahead.

Once you’ve finished gathering information, ask them if they would like to get together in about a week to go over your thoughts on their situation and see if you can come up with a plan that will meet their desired outcome. They’ll almost always say yes, because you haven’t tried to sell them anything at this point.

The follow-up: closing

On the next visit, go over what your prospect told you during the first meeting before you share your findings. You can do this in a presentation that you print out for your prospect. This lets the prospect know that you were listening, and also reminds them of what they said.
Go over the plan you created, along with annuity concepts that you think will meet their goals, but don’t suggest any specific solutions until later. Once your prospect understands the plan, and if the concept matches their desired outcome, then you can explain proposed solutions.

Of course, if your prospect says that they like other vehicles or that they don’t like annuities, you need to be able to understand the pros and cons of what they tell you. In most cases, however, they will look to understand your proposal — not to say no. 

Kevin Bock is president/founder of Integrity Estate Advisors; he has worked with annuities since 1991.

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