Help Grow Your Client’s Retirement Assets with This Simple Strategy!

Despite some tossing and turning, the global and American economies appear to be on the upslope. For many Americans, this current economy is the best chance they’ve had in years to quickly grow their retirement funds. Yet the risk of market slowdowns still exists, and there remains a great and justified hesitation to reenter the stock market, especially when it comes to individuals who lost a significant portion of their retirement investments in the stock market during the Great Recession.

So how can agents intervene, giving Americans the financial products they need to meet retirement goals or guarantee income for retirement without the market risk of investing in the stock market directly? One answer is through fixed and fixed index annuities(1). Unfortunately, consumers (in any age group) generally aren’t looking for annuities. However, according to a survey just released by the Indexed Annuity Leadership Council the nation's youngest group of retirement savers, including postcollege aged millennials, are more interested than any other age group in the investing strategy that drives modern annuities. A majority 52% of survey respondents said they were interested in contributing to a product in return for receiving guaranteed payouts that would not be subject to stock market fluctuations. The potential, if this interest could be converted into real sales of annuities to riskadverse millennials, is encouraging. Unfortunately, many of those same respondents had never heard the term ‘annuity’ and current purchase rates for young people remain extremely low.

What does this mean for agents? Well there are simple strategies for recommending fixed and fixed indexed annuities to a younger audience:

1. Overcome Stigma. The term ‘annuity’ is often categorized as old fashioned and gets lumped into boring financial terminology. Busy Americans are often unwilling to learn about the advantages and risks of new product innovations related to annuities and how such products have become a sophisticated compliment to a retirement portfolio. So, instead of marketing the product as ‘just an annuity’ focus on the innovations and product flexibility options that are ever-changing to meet the needs of clients old and new.1 Fixed index annuities have a multitude of diverse crediting methods and a variety of income payout options. Many fixed index annuities now have riders or product features that can help account for other insurance or retirement planning needs. Multi-year guaranteed rate annuities can provide tax advantages that some comparable products cannot.
2. Discuss Crediting Methods. When marketing and discussing general fixed and fixed index annuity characteristics, agents should discuss how the interest crediting works and the related fact that the principle investment and any credited interest is guaranteed by the claims paying ability of the underlying insurance company. This will naturally include an explanation that the investors’ money is not subject to market risk because these kinds of annuities are not directly invested in the stock market.(1)
3. Highlight the Risk-Reward of Annuities. Fixed and fixed index annuities provides a complex balance of guarantees, asset liquidity issues, and potential rate of return. These annuity products generally have a higher rate of return than bank savings accounts and short term certificates of deposit but the rate of return is in exchange for the longer holding period and the difference in perceived safety of an insurance carrier guarantee versus FDIC coverage. On the other hand, fixed and fixed index annuities provide a safer alternative to direct securities investments such as stocks and mutual funds, but the investor gives up some potential for higher returns over time. Generally, annuities are not the recommended option for young people, but if the investor has a need to complement their retirement portfolio, has liquidity outside the annuity purchase, and is risk averse or cannot stomach market fluctuations, fixed or fixed indexed annuities can be a great match.

The time to innovate is now. The financial landscape is optimistic and individuals are searching for new

solutions for retirement—and many of them have little to no knowledge of how to do so. This presents a fantastic opportunity for agents to educate, sell, and innovate, experimenting with new products and sales pitches for new demographics.

For more information on how you and your team can better present and sell annuities in the current financial market, contact Imeriti Financial Network today and ask about the proprietary tools, training, and consulting opportunities available to our partners.

(1) Annuities are designed to meet long-term needs for retirement income. They provide guarantees of principal and credited interest, subject to surrender charges, and a death benefit for beneficiaries.