Annuities

Don’t talk yourself out of annuity sales


Annuities

I would challenge every advisor in this business to ask yourself the following question: Are YOU talking yourself out of fixed or fixed index annuity sales because YOU think they’re not a good value for your customers?

In my travels, I often come across new advisors who cannot believe that fixed and fixed indexed annuity sales are having a record year. They actually seem to feel sorry for me until I explain now is a great time to be in the business. 

Right now, clients are looking for ways to get better yields without risk. There has NEVER been a better time to sell these products since other low-risk alternatives are at all-time lows for returns. I always compare the value of an annuity against a five-year CD. Back in 2008, you could find a fixed annuity rate at 5 percent, with indexed annuity caps around 8 percent. Five-year CDs were also at about 5 percent. So the leverage between the CD and the fixed annuity was nothing, and the index cap came out a little ahead.

Today’s rates are a different story. Five-year CDs are at 1 percent, with a five-year fixed annuity at about 2 percent and index caps about 5 percent. The leverage for the fixed annuity is now two times the CD, and the index cap five times! So I would argue that now’s a much better time to sell these products than five years ago, not to mention we also now have very innovative income riders available.  

Don’t talk yourself out of annuity sales – the public is starving for them!

 

Don’t forget this solution for businesses


Annuities

We all know annuities are a great solution for retirement. But have you ever considered annuities as a retirement solution for businesses? If you’re working with business owners and executive-level clients, ask if their company has a defined benefit pension plan. 

Why? Traditional pension plans have become a thing of past as 401(k) and other contributory plans have overtaken the retirement landscape. As a result, many businesses have decided to do two things: 

  • Freeze and eventually terminate an existing defined benefit pension plan
  • Shift all or a portion of their plan benefit obligations to a third party

Here’s how it works: Businesses with a defined benefit pension plan can remove plan liabilities from their books by transferring the risk to a group annuity issued by a top-rated insurance company. This transfer allows the company to eliminate premiums paid to the Pension Benefit Guaranty Corporation along with significant cost savings in the plan administration. These cost savings can be reinvested in their business. Most importantly, the transfer allows the company to make good on the benefit promises made to their employees.

Plan participants benefit from the transfer because it ensures payment of the plan benefits promised to them at retirement that may include guaranteed income, the ability to provide ongoing income for a joint annuitant, and options such as payment frequency or cost-of-living adjustments.

You don’t have to be an expert to help your business clients execute this unique solution – Ash Brokerage has a dedicated team who can do it for you. You should call us – (800) 589-3000 – to learn more or to start identifying opportunities today. 

business annuities 401k retirement planning

Fact or Fiction? You Be the Judge


Annuities

We’ve heard in the past that October is the biggest CD rollover month of the year – fact or fiction?

Let’s look at some history. CDs were first sold in six-month increments (six months, 12 months, 18 months, etc.), but in October of 1983, they became deregulated.  

Tax returns were a leading factor in the October/April trend. We saw an increase of CDs being established by people receiving a refund, or they surrendered their CDs to help pay for taxes due. At one point, Bank Rate Monitor estimated that upwards of $100 billion in CDs was in transition in each of those two months.

In order to smooth out the issuing of CDs and reduce the amount in play during October and April, banks started to offer them on odd terms, such as seven or 15 months. This slowly moved the trend across the balance of the year.  

Look at today’s CD rates on Bankrate.com*:

  • 1-year national average of .98% 
  • 2-year national average of 1.17%
  • 5-year national average of 1.86%

Are CD’s the right place for your clients? Or are you still following an outdated trend? The fact is, October is no longer one of the two hottest months for CD rollovers. It’s open season throughout the year.  

If your clients are looking for … 

  • Protection of principal
  • Security from negative market fluctuation
  • Tax deferral
  • Penalty-free access to a portion of account value each year
  • Opportunity to create guaranteed income for life

... Make sure you contact a member of the annuity team at Ash Brokerage to help you with CD alternatives – annuities are also available all year long.

*As of Oct. 10, 2014 

CD Annuities Rates

Performance and Price are Irrelevant


Annuities

Too often, we become focused on the price or performance of a particular solution we offer. Whether it’s annual premium or return to the client, we allow it to dictate the conversation with price-sensitive parameters. Currently, there is a great example of how price, performance and return to the client really don’t matter in the industry. Instead, it’s about vision, leadership and perspective. 

The PIMCO Total Return Bond Fund has been an industry goliath for years.  

 

Name

1 Year

3 Year

5 Year

10 Year

PIMCO Total Return (Class A)

5.71%

3.88%

5.21%

5.65%

Barclay’s US Aggregate

5.66%

2.91%

4.48%

4.72%


Yet, $23.5 billion left the bond fund giant in September. The previous industry record outflows were $9.7 billion and $4.7 billion. So, a fund with superior performance lost $23.5 billion dollars (the majority of that happened last Friday after Bill Gross’s resignation) in one month. 

What does this tell us? Investors and clients really don’t care about price and performance. They’re seeking leadership.  

Be a strong voice in your business. Position yourself as the go-to person in your market and provide leadership to your clients. Lead them down a path of discovery to understand insurance and annuities are vital to their retirement plan.  

The Bottom Line: As the PIMCO example illustrates, it’s not about performance – it’s about belief and perception. We have to change the perception of life insurance and annuities in financial plans. We have to tell the story and get the client to believe in our leadership and ideas. 

 

When Did We Lose Our Way?


Annuities

I arrived home and picked up about three days’ worth of mail. When I picked up Insurance News Net magazine, I was shocked to see the headline, “How to add AUM Now.” And, AUM was emphasized in bright colors. While I know that this publication supports all facets of our industry, it is clearly supported by risk mitigation products. 

Sadly, I think this is indicative of our industry. We have drifted so far toward AUM, which by the way stands for assets under management, that we have lost our way. I have some questions:

When did we lose our sight of what got us into the business?

At what point did we sell our souls to accumulation and wealth building?

How did wealth management translate into just growing assets and not truly managing wealth?


As an industry, we need to get back to talking about life insurance, disability income, long-term care and longevity insurance. We can no longer talk, promote and focus on growing assets alone. In today’s economic environment, protecting assets should be more important than growing them.

We all have a responsibility to make advisors aware of the growing gap in Americans’ ownership of protection products. It begins with each one of us looking in the mirror and asking if we have the clients’ very best interest in mind when we focus on growing assets and not protecting lives. It begins with carriers focusing on new product development with ongoing commission to eliminate the exchanges of products and supporting annual reviews. It begins with a changing mindsets. 

The Bottom Line: When did we sell out to asset management as a business model versus what got us into the business?