Annuities

How to Double Your Clients and Double Your Business


Annuities

Everyone always asks my sales team if we support marketing initiatives like seminars, client events and mailing lists. We do in certain situations, but I’ve found those tactics to have limited upside and they are costly, even with sponsorship. 

 

To be honest, I think there’s a more effective way to grow your business – by capturing the next generation of your current clients. 

 

According to LIMRA, there are more than $489 billion of in-force annuity assets on the books of insurance carriers. These policies are not being annuitized for income and largely not being used for income rider usage. Many have accumulated for years and contain built-up gains that will be taxed at the beneficiary’s ordinary tax rate. We call that the ticking tax bomb. 

 

Defuse the Situation

You could wait for the IRS to strike as soon as your client is gone. Or you could take action to help their beneficiaries before it’s too late. 

 

One solution is to turn on tax-advantaged income for your clients who own these “untapped” annuities. The income stream is small and includes a return of basis, making part of their payment tax-free. When your client dies, the remaining cost basis may be stripped from the annuity in a lump sum or through payments. This allows their beneficiaries immediate access to tax-free cash. 

 

The remaining inheritance can be stretched over a beneficiary’s lifetime, which reduces the affect of taxation. Otherwise, a beneficiary would have to claim 100 percent of the remaining gain in the year of receipt or over five years from the date of the annuitant’s death. 

 

By putting the IRS in the back of the line, you will gain trust with your next generation of clients. This is a great way to grow your business. I encourage you to not only conduct regular reviews of your clients’ beneficiary designations, but also look at planning for the beneficiary’s inheritance. How they receive the money is equally important as the dollar amount. 

 

Winning Strategy

Double your business by doubling your clients through annuity reviews. If you look at how the distribution will affect the beneficiary and add value to their distribution, you will gain their trust and earn their business.

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon.

Retirement Planning Annuities In-Force Review Tax Planning Generational Planning