This month, we’re all about retirement planning sales strategies. In previous posts, we offered a sales kit, talked about maximizing your client’s pension, and taking advantage of optional benefit riders. But there’s a key part of the retirement planning puzzle we haven’t talked about yet—annuities.

The Problem

Your clients don’t know what an annuity is, and they’re not anxious to listen. The minute you say something about “the Government Accountability Office recommends,” they stop listening. The ones who do know something about annuities have probably only heard negative things. Truth be told, you haven’t kept up on the new products and specs, so you’re not sure what to recommend even if a client was interested.

The Solution

You don’t need to talk about products and specs until the client understands what annuities can do, so let us worry about that part (see “Next Steps” below). Instead, work on educating your clients about what annuities can do. For example:

  • Longevity annuities solve the problem of outliving assets.
  • They can be set up to provide for a spouse, offer death benefits, and include annual cost of living increases.
  • They remove the burden of scheduling withdrawals or figuring out how much money to withdraw per year. The insurer does that all for them.
  • They may already be available within your client’s 401(k) or IRA. The IRS approved the use of qualified longevity annuity contracts (QLACs) within 401(k)s and IRAs on July 1, 2014. However, current rules limit your client’s participation to $125,000 or 25% of their qualified retirement account (whichever is lesser). But the fact that longevity annuities are becoming more mainstream and readily available means consumer familiarity is growing—and longevity annuities can also be used outside of your client’s 401(k) or IRA.

For your clients who do want a third party opinion, here’s an interesting sales tip. In March of 2015, Harold Evensky, the chairman of Evensky & Katz/Foldes Financial, changed his position on annuities. With around 800 clients and a total of $1.5 billion under management, Evensky has been called the “father of financial planning.” Although he used to say annuities weren’t a good solution, he now says that immediate annuities are just about the only way to maintain standard of living during retirement. Between longevity (deferred) annuities becoming more common within 401(k)s and IRAs and a major industry figure declaring support for immediate annuities, it’s time to rethink annuities.

Next Steps

Take a look through your book of business. Who is retiring soon? Who might have a lump sum that could easily be turned into an immediate annuity? Get in touch with Max, our annuity specialist. Let him get you the quotes and illustrations you need, then set up a quick call or send a short email to your client asking if they’re interested in guaranteed income for life. You’ll have the paperwork you need to answer their questions if interested. If not, we did the legwork to prepare the illustration and you get the brownie points for thinking proactively about your client’s secure retirement.

For help with annuities, contact our annuity specialist at 800-823-4852 or email us at [email protected].

Want more ways to help your clients plan for retirement? Download our FREE Retirement Planning Sales Kit!

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