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.
© 2018 Ash Brokerage LLC.