“I Don’t Want an Annuity…”

“I heard annuities are bad investments, and with everything I’ve seen, I DON’T WANT ONE!”

Ever heard something like that before? I’m sure you’ve worked with clients that walk into your office or seminar with this mindset. Can you blame them? Popular media has plastered negative bias about annuities everywhere you look. Check out some recent drivel:

“Here’s a puzzle for you – the answer to which could make or break your financial future. What kind of business takes your money, gives you a guaranteed minimum return and then invests the money in a complex derivative of securities or crummy real estate investments? Wait, there’s more. What kind of business takes your money and gives you a guaranteed level of performance, a stop out, plus some upside in the S&P 500, and then not only fails to hedge but invests in the very same crummy, toxic properties? If you guessed the annuities market, go to the front of the line. Unfortunately, these days, the front of the line in the annuities market heads right off a cliff.”

Guess which popular media figure made that statement?
Jim Cramer, CNBC host of “Mad Money.” For many Americans, Jim Cramer is viewed as a notable financial analyst who “understands” investments. If he is claims annuities are bad investments, then it has to be correct, right?

As far as truth is concerned, you and I both know much of what’s published in the media is biased half-truth. Fact remain that in the consumer arena, perception is 90% of reality. So what should you be doing to convert resulting annuity skeptics into annuity buyers?

For starters, remember that Advisors Excel is taking this bull by the horns for your benefit. In January this year, we hired one of the top financial services public relations firms in the nation and began an aggressive, six-figure public relations campaign! Our positive annuity blitz promotes the virtues of indexed annuities in major media publications. While we’ve strongly supported the efforts of insurance carriers and various trade organizations to combat the rampant misinformation surrounding annuities (FIAs in particular), we haven’t been excited about the results, so we took the task on ourselves.

Our goal is to leverage Advisors Excel producers to get major media outlets educated about and promote the benefits of indexed annuities. We’ve already had tremendous success with this effort, with several of our advisors gaining national media exposure while extolling the virtues of the products we sell. These positive stories lend you added support and help consumers make informed decisions. As we continue to build momentum in the major media outlets, you’ll be the first to know about these positive stories as another perk of partnering with me.

In addition, there are a number of well-rounded resources which shed positive light on traditional and fixed index annuities. Everyone’s heard the saying, “It takes ten positive things to erase one negative.” If you already keep a library of positive articles, I suggest adding the following pieces to your menu.  If you don’t currently have a library, these three resources would be a great start:

When it comes to combating negative press, don’t forget to adequately acknowledge your clients’ intellect. Rather than simply taking a “point-counterpoint” approach to media bias (often resulting in a non-productive, frustrating tennis match), help them understand why such press exists in the first place. Truth be told, there is a war raging over the American retiree’s dollar – a war fought between banks, insurance companies and Wall Street. Of those three financial outlets, which has the biggest influence on popular media?

And much like medicines, financial products are developed with very specific uses in mind. Thus, blanket criticism of an annuity, mutual fund, stock or CD is much like blanket criticism of penicillin or ibuprofen. In the wrong hands, used for the wrong purpose, any medicine can be abused.  However, when used to treat the needs for which they were designed, today’s prescriptions and financial vehicles can be just what the doctor ordered. They can be just what clients like Eleanor (below) rely on throughout their retirement years..

To discuss additional strategies that top producers use to overcome media negativity and position the true value of annuities, call me anytime.


Worn Out Presentations [3 Items]

The retirement landscape (and marketing into it) is evolving at breakneck speed. One of the top producers I consult always says “If you’re not evolving, you’re dying.” So ask yourself:

  • Am I currently showing clients materials that are timely and relevant today?
  • Or am I using sales materials that are 12-24 months (or even longer…) old?!?
  • Do my handouts, supporting docs and videos feel a little worn out?

Not after today…

My simplistic role in the retirement landscape is to empower. Empower financial advisors to efficient marketing, additional clients and a larger bottom line. Do all that while putting more American retirees in a safe and secure retirement environment. To support that cause, below are 3 incredible client pieces. All 3 were shared by your financial advisor peer group and are already being used successfully in the field.
Steal at your leisure and refresh your support materials ASAP!

Sales Support Item #1
Barron’s “Best Annuity” Article – June, 2011

This 2 page article provides a fair view of annuities & their value proposition. Given how well-respected Barron’s remains for financial news, this should be an article you immediately put in front of clients & prospects.

Sales Support Item #2
PBS NewsHour Video – Is Your Pension Safe? – June, 2011

9:38 video produced by PBS (non-polarizing to most people) about the 50 state pension crunch. This video lays the groundwork to prompt taking action. Don’t rely on the government, your employer or your state to bail you out. Take responsibility for your own retirement security now!

Sales Support Item #3
Insured Retirement Institute’s 2011 Fact Book – June, 2011

190-page fact book with updated details, stats and trends in retirement income planning! You can never say you’re at a loss for information with this in hand. There is more seminar content, presentation ideas and client letter statistics than you could ever use (embarrassment of riches)!!!

Push strong into this summer and I’m a phone call/email/post away to help with anything.

Annuity Bucketing Plan – Where Guaranteed is Key

You know the #1 concern of Baby Boomers is running out of money in retirement. Many of the advisors I consult – including nearly every top producer – had turned to annuity laddering (typically using a four bucket approach) as their primary solution to this concern. Traditional laddering would include a 5 year certain SPIA in the first bucket, followed by a second bucket deferring for 5 years before being annuitized for the second 5-year period. The final two buckets would grow for 10 years and 15 years respectively and then also payout for 5 years each, giving clients a 20 year income plan for retirement.

This approach generally works very well, except when it comes to truly guaranteeing the payouts a client can expect in the deferred buckets of the strategy.  Unless you are using the extremely low minimum growth rates (currently hovering around 1% in an indexed or traditional fixed annuity), there really aren’t many other options to truly show a guaranteed payout. The old way of bucketing/laddering isn’t good enough anymore…

Below an illustration link from the Advisors Excel Case Design team on a new bucketing strategy many advisors have started implementing recently. You’ll see an illustration displaying the true worst case scenario (truly guaranteed) income plan for clients who desperately need these guarantees and a competitive rate of return. The combination of products used in our newest sample would not only cover a guaranteed stream of income for life – but better than that – even kick out a guaranteed 6% income stream, while allowing for a 1.5% Cost of Living Adjustment!

Here’s How To Do It:

  • Bucket #1:  Cash Account for first year of income
  • Bucket #2: Fixed Annuity paying a one-year guaranteed rate and then being annuitized for 5 years (after the first year…1×5)
  • Bucket #3: 6-year Multi-Year Guaranteed Annuity growing at a guaranteed 4.0% (rate only available until June 15th…6×5)
  • Bucket #4:  Security Benefit’s Secure Income Annuity (FIA) with an optional income rider featuring a Benefit Base that grows at 8.2% compounded annually (11 year deferral, then lifetime income). This proprietary product is exclusively available to you through Advisors Excel.

CLICK HERE for a sample illustration!

Remember, my firm’s case design professionals are here to complete these illustrations for you! Over 100 of these designs leave our office everyday! If you’re not taking advantage of this incredible valued-added service I’m providing – do your practice a favor and try it.
Don’t hesitate to call with your next case and run a similar illustration for that next client needing guaranteed income!

Implement, thrive and be sure to let me know if you need anything additional this week!


3 Retirement Income Options

When your clients retire and need income, they essentially have three options to choose from. These options are explained very well in the book The Great Wall Street Retirement Scam by Rick Bueter. In his best-seller, Mr. Bueter goes into detail about the pros and cons of each option. We covered this at a training event last week and I received numerous requests for the presentation.  So without further ado, here’s a summary for you to use right away!

3 Retirement Income Options:

1. “The Bank’s Way” to Retirement

Lose your money safely – According to www.bankrate.com (as of May 2, 2011), the average 1 year CD is currently paying 1.16%. According to www.inflationdata.com (as of May 2, 2011) the current inflation is 2.68%. This is what we call a “moonwalk account” – one of Michael Jackson’s claims to fame in which he looked like he was walking forward but was actually moving backward!
Deal with the emotional stress of volatilityCLICK HERE for a chart showing the volatility of CD interest rates over the past 50 years.
Guaranteed income – While there is no guarantee of income for the rest of a retiree’s life using bank vehicles, if using a conservative withdrawal rate based on historical returns, clients with $1,000,000 could hopefully take between $10,000-$30,000 annually and be safely positioned for at least 25 years.

2. “The Wall Street Way” to Retirement
Emotional stress of volatilityCLICK HERE for a chart showing the volatility of the Dow Jones. You’ll notice that the market typically moves in cycles, with the shortest “down cycle” lasting 17 years. Note that we are only 11 years into our current downturn.
Assume the responsibility of a pension manager – What if we have another 2008 and clients lose 30%, 40% or even 50% of their retirement savings? The popular Wall Street myth about earning a 10% average return if you buy and hold goes out the window if retirees are taking withdrawals and depending on their money for income.
(EMAIL ME for a free report by Mike Reese entitled “10% Market Lie.”)
• AARP recommends retirees’ withdrawal rates generally not exceed 4%. (CLICK HERE for the entire article.)
Guaranteed Income– There is no guarantee of income for life using “The Wall Street Way” to retirement, but according to AARP (http://www.aarpfinancial.com as of May 2, 2011 ), $1,000,000 may get clients roughly $40,000 for a period of 25 years.

3. “The Insurance Way” to Retirement
Utilize guaranteed income options – Annuities are the only vehicle which can guarantee income for the rest of a person’s life.
Eliminate the emotional stress of volatility – Retirees can lock in a payment they can depend on – no matter what happens to interest rates, the economy, etc.
Transfer the responsibility of pension management – Insurance companies have been managing pension style incomes for over a century.
Guarantee retirement income – Using an example of $1,000,000 and a guaranteed income distribution of 6%-8% annually, clients could be guaranteed an income of $60,000 to $80,000 – potentially 50% more income than the “Bank” or “Wall Street Way.”

In summary, when it comes to income for retirement, it’s pretty clear that leveraging insured retirement income solutions can rid retirees of the stress of the market by not only guaranteeing income for life but getting MORE income while they’re at it!

For a real life example, last week we prepared the casework for a client who was 62 years old and he wanted income at age 65 for the rest of his life. He had 500k in an IRA to fund it with. 
This client was able to get a guaranteed income of $38,318 for the rest of his life. NOT BY ANNUITIZATION OR GIVING UP ANY CONTROL OF HIS MONEY!

Have a great week!