Using the ‘Happily ever after’ close


I’ve noticed many times that the difference between an A-level advisor and an A-plus advisor may come down to one simple factor: An A-level advisor gets their client to retirement; an A-plus advisor gets their client to and through retirement! 

Being an A-level advisor is like reading a novel about an incredible journey, then stopping when the travelers get to their destination. An A-plus advisor keeps reading – they want to know what happens to the travelers after they’ve arrived. If you’re selling multi-year guarantee annuities or fixed index annuities with no income riders, you may not be providing your clients with the best ending to their retirement journey story.

While your clients will do better with MYGA rates than they will with bank products, FIAs will historically perform better. If you’re using FIAs already, great! But consider this: At the end of the surrender charge period, what will your clients worlds look like? In five to seven years, will they be less or more conservative? How will market performance over that period (i.e. the inevitable market correction) impact their attitudes?

Five to seven years from now, your clients will be older and closer to or in retirement. Couple that with having gone through a likely market correction, and there’s a good possibility they’ll be more conservative. Most clients assuredly will be more concerned with locking in some degree of retirement income. 

So, where am I going with this?

A select group of FIA income riders are available to increase your clients’ payout percentages the longer they hold the contract before taking income. So by buying the rider now, they can lock in payout percentages that are guaranteed to increase.

For example, a 60-year-old who purchases a rider today could get a guaranteed payout percentage of 7 percent in five years (9 percent in 10 years). If that same 60-year-old waits five years to try and find an income rider, their payout percentage would be around 5 percent (5.5 percent in 10 years), based on current products available.

With higher guaranteed payout percentages purchased today, there’s less pressure on earnings (market correction protection) and greater potential retirement income for clients who will soon be older and possibly more conservative.

The Bottom Line: Purchasing an FIA with an income rider might just provide your clients the “Happily ever after” ending they were hoping for.


Annuities and Sports: What I learned from Coach Knight


I had the great honor of sitting at the end of the bench as a student manager for Indiana University’s 1987 NCAA Championship basketball team. There are so many great memories associated with the basketball program and my time at IU. As schools kick off their basketball season over the next few weeks with midnight madness events, I typically use the basketball season to reflect on things that I learned from Coach Bob Knight that have made me successful in sales.

Measured Results – Success happens when you understand what works most often and under which circumstances. We kept multiple pages of statistics during routine, mundane practices. We filmed each practice for coaches to review the plays. The coaching staff knew which plays, sets and players performed well against a 2-3 zone, 3-2 zone or man-to-man defense. When it came time to make adjustments during a game, the coaches made intelligent moves instead of guesses. We were “consciously competent” as a program. In sales, we have to make sure that we understand which clients have the greatest need for our products. More importantly, we have to understand their goals and how best to address the obstacles on their way to their goals.  

Willingness to Prepare – One of my favorite and lasting quotes from Coach Knight is, “Everyone has a will to win; few have a will to prepare to win.” During our tournament run, our team didn’t leave the locker room thinking we wouldn’t be coming back as a winner that day. We played Duke, LSU, UNLV, and Syracuse during the tournament. We had the same confidence throughout the season. Players and coaches worked diligently and spent extra time. We felt we had outworked every other team, and we felt we deserved to win. In preparing to meet with a client or prospect, we need to have the same level of confidence that we can help our clients optimize their retirement and protection plans.  

Play to Your Strengths – We all have strengths and weaknesses. Understanding and emphasizing our strengths maximizes our opportunity for success. Coaches taught the recognition of each of the players’ strengths. For example, passing the ball to a 7-foot center near the free throw line was a mistake. Our center would have to take several dribbles to get into his shooting range, and dribbling was not his strength due to his size. That put the center in position to fail. For me, I am not an emotional salesperson. It’s not that I don’t believe in our product – I have a deep commitment to the insurance industry and what it can do for clients. Instead, I’ve looked for clients who purchase on fact, not emotion. I’ve generated the most sales from those prospects making fact-based decisions. I’ve had to play to my strengths.  

Collaborate with Professionals – I remember giving Coach Knight messages that mentors of his were returning his calls. People like Hank Iba (Oklahoma State and U.S. Olympic coach), Pete Newell (California and U.S. Olympic coach), and Everett Dean (Indiana and Stanford coach) were asked to provide input on players, the team and strategy. As an industry, we need to collaborate more with other professionals. When I was in the field, working jointly with people in other specialties allowed me to deliver an entire team approach to my clients. The approach gave my clients the service and expertise they needed to feel confident they would have the financial success of their dreams.  

Win with Integrity – During the four decades Coach Knight was head coach, his teams never had a major violation. When a player might have been involved with illegal recruiting at another program, more often than not Coach eliminated that player from consideration at IU. Winning can be done within the rules. Understanding the rules and how to be successful within the guidelines allows success to happen.  Our industry is full of regulations and rules – increasing every year. We have to find ways to make it easier to conduct business within these new rules and make our clients confident that they are making the right decisions.  

Being part of a winning program led by a Hall of Fame coach provided me the foundation for business success. If our industry used some of the success principles of high-quality sports programs, I think we would perform differently. We would have the innovation like Google and Apple; we would have a focus on getting more people insured instead of protecting our distribution; and financial advisors would prepare their clients for catastrophes of life through the sale of insurance products. In order to change, we must adopt the attitude of preparation, understanding where we have success, playing to our strengths and seeking open collaboration. Let’s make this basketball season a season of change for our business. 

Two-Thirds Right


When financial markets become more volatile, as they have over the past few months, clients tend to seek safety. After all, increasing volatility was the first indicator of the tech bubble in 2000-03 and the financial crisis in 2008. It’s no wonder conservative clients are anxious to avoid another potentially significant retreat in the stock market.

Clients are afraid of doing the wrong thing at the wrong time – that’s why there are trillions of dollars still sitting on the sidelines. As their financial advisor, you can assuage those fears by positioning index annuities as a significant percentage of their portfolio. With the two-thirds strategy, they can take advantage of any market conditions.  

Here’s how it works: First, your clients position one-third of their assets in mutual funds, variable annuities or other managed equity investments. Then, they position one-third of their assets into fixed annuities and one-third into index annuities. Once this positioning is complete, your clients have two-thirds of their assets positioned to take advantage of any market eventuality.

If the stock market turns negative, the one-third in fixed annuities would be earning the stated interest rate, while the index annuity would at worst be unchanged by the sinking market. In fact, if the index annuity has an annual reset crediting method, the starting point for the subsequent year would be lower, making it more likely for a positive return.  

If the stock market stays positive and continues to set all-time highs, your clients will still have two-thirds positioned to take advantage. The one-third in mutual funds or variable annuities will grow along with the market, and the one-third positioned in the index annuities will also be earning competitive returns based on the crediting method. 

With this strategy, your clients can feel comfortable that they will always have two-thirds of their assets positioned to take advantage of market conditions. For more conservative clients, you might want to use the same concept, but raise the level to three-quarters or even four-fifths.


  • 25% Fixed Annuities
  • 50% Index Annuities
  • 25% Mutual Funds/Variable Annuities


  • 20% Fixed Annuities
  • 60% Index Annuities
  • 20% Mutual Funds/Variable Annuities

You can change the allocation based upon the ages and risk tolerances of your clients. If nothing else, the discussion of the above strategies will open up a dialog of the features and benefits of fixed and indexed annuities, as well as other equity investments.  

Start the “two-thirds” conversation with your clients – you’ll be glad you did!


How Quickly It Goes…


During the recent market volatility, it’s hard to comprehend how much wealth was unnecessarily lost or how quickly. Through our complacency as advisors, our clients lost an astonishing amount of wealth that currently makes 2014 a nearly lost year. Due to inaction, we chose (yes, it was a choice not to have the conversations with our clients) to take them back to January 2014, when the S&P 500 was in a similar position.  

Without a doubt, risks exist with equity investments. Up until the third quarter, investors were rewarded with better-than-average returns. However, we spoke earlier this year about the potential for a correction, or at least volatility. Once again, we failed to take gains off the table and protect our wealth. 

Making clients aware of their options is paramount during bull markets. They never know how much risk to take … until they’ve taken too much. We run the risk of repeating the mistakes and greed associated with the financial crisis of 2008-09.

In the 22 trading days since Sept. 18 – when the S&P 500 saw an all-time high of 2,011.36 – $787.3 billion of wealth has been lost. The U.S. Treasury’s interest expense for debt payments was only $415 billion for all of 2013. In other words, we failed to protect more than 1.8 times the interest payment of the U.S. government. 

Our clients should be appalled and question what they could have done differently. This time, let’s have meaningful conversations about mechanisms that protect clients and minimize risk. An optimized retirement income isn’t always dependent on the highest return or best asset allocation. An optimized retirement maximizes after-tax income, makes sure there are guarantees in place and places emphasis on protecting what we earn. Let’s have the right conversations in the next bull market.

The Bottom Line: In the last month, clients lost more than a year’s worth of national interest debt payments. In the future, we need to place more emphasis on protecting wealth. 


Goldilocks and the Split Ticket: A Retirement Tale


Goldilocks tried three different porridge bowls before finding one that was, “Just right.” 

When choosing where to draw income during retirement, the markets offer similar options: too hot, too cold and just right. 

If your client chooses just one annuity – variable or fixed index – market performance can make their selection either too hot or too cold. However, by positioning your clients with a split ticket – a combination of the two annuities – you give them options for withdrawing income from one or the other. Depending on market performance, they’ll be able to use the option that’s just right!

Here’s how it works: 

If the equity markets are performing well, the last thing an investor should do is drain their “bowl.” Variable annuities with guaranteed income riders can ratchet up their income base with each market advancement. Therefore, income should be taken from fixed index annuities.

If the markets are breakeven or declining, it’s not likely that the account value will ever push the income base higher than the guaranteed growth of the index annuity (especially with the internal costs of a variable annuity being around 4 percent). In this situation, income should absolutely be taken from the variable annuity.

The concept of a split ticket has probably been around as long as “Goldilocks and the Three Bears.” With the movement of Baby Boomers into retirement, this concept should definitely be re-visited.