Index Annuities vs. Variable Annuities

ComparisonAbout once a month an advisor asks me for “something that compares index annuities to variable annuities”.

Up to this point, I didn’t have much for direct comparison. I’ve archived a lot on both topics, but it wasn’t complete. But that changes today – because I’ve just been given a great 12 page white paper from Genworth about FIAs vs. VAs!
In the executive summary Genworth states:

Variable annuities have long been a common tool for financial professionals whose clients seek tax-deferred growth and guaranteed retirement income, with the opportunity to outperform inflation. Yet high market volatility and low interest rates continue to challenge accumulation and income objectives. That’s why some financial professionals are looking to fixed index annuities to protect portfolio value and create guaranteed income.

Nice huh? A couple key points…

Page 6 gives a great graphic you can use in appointments, seminars and a lot of other places on the “Potential Risk-Return Spectrum”. Don’t overlook this one!!!


Page 7 gives a side-by-side comparison of FIAs and VAs, showing a balanced picture. You see the words “protect”, “lock in” and “guarantees” on the FIA side with words like “upside”, “volatility” and “exposure” on the VA side.



Lastly, page 8 provides ideas around index annuities fitting into an overall plan. Client one uses index annuities to guarantee income. Client two uses index annuities to increase growth potential.

We need better information on this topic floating around our industry…
If you’re looking for a well-balanced pieces on annuities, I’ve found a great one here & I’m would love to share the full report. Just comment below and I’ll get it right out.

Advise with Passion.

Having a Business (Not a Job) — January Marketing

Two of the top financial advisors I consult are Bill Smith and Chad Slagle. They’re intense guys who I greatly respect and are the lead trainers of a training we host called Complete Advisor Boot Camp.

Bill & Chad just wrapped up another record-breaking year, gathering over $55 million in assets ($37.5M in annuities) combined! While I find other advisors starting from scratch every January, Bill and Chad never miss a beat and continue gaining market share. I’ve heard them say that while other advisors are finding their way again, they’re discovering ways to “bury the competition”.  How and why?  That’s the reason for this post, as they’re spending a couple minutes next week telling you on a live webinar!

In this can’t-miss, exclusive webinar, you’ll learn:

  • 5 proven strategies to ensure you’ve got a business – not just a job!
  • How to keep millions of dollars constantly in motion – whether you’re in the office or not!
  • How to leverage your staff to ensure you’re focused exclusively on money-making tasks!
  • How to finally get off the “revenue roller coaster” and into a predictable, continually escalating mode of profits!

My good friend Chad Slagle told me about this webinar, “If you want a job, stay right where you’re at. If you want a business, register now.”

Monday, January  16th at 11:00AM (CST)

I hope you find time to join us, it’ll be a very profitable use of your time to start 2012. Sell with passion. ~ Matt

Variable Annuity – Fee Analysis

I’m biased.

Day-in, day-out I consult a number of the top “safe money focused” advisors around the US. These are not your wire house, hot stock tip, Wall Street types. Many of these advisors view safety and contractual guarantees as top priority, growth and accumulation second. That said, their target market is an older demographic – typically 55+ looking for sleep and income insurance during their golden years.

Now here’s my beef…

Daily I hear about 55+ clients who own variable annuities. That’s not the bad part. I believe variable annuities have a viable place in financial planning (evidenced by$41 billion in 2nd quarter 2011 sales; up 16% from 2nd quarter, 2010). My problem is with how these variable annuities are sold. Over 90% of variable annuities are sold to clients based on the riders you can attach to the base policy. Guaranteed withdrawal living benefit riders, death benefit riders, etc. Then the “wrap up” part of the sale is talking about upside potential, if accumulation of the VA is even discussed at all. For example, about 96% of Prudential’s record $6.8 billion 1st quarter, 2011 variable annuity sales were policies that included a lifetime income guarantee. At MetLife, 80% of their $5.7 billion of products sold in the same quarter carried a guranteed benefit. Which raises my concern…

#1 – If variable annuities are being sold rider 1st, upside 2nd – wouldn’t clients be better served with indexed annuities? Fixed Indexed Annuities offer higher living benefit rider guarantees (think 7%, 8%, even up to 8.2% compounded growth, longer deferral guarantee periods and higher payout bands applied. All resulting in larger lifetime income checks) than VAs. Granted, the upside in a Fixed Indexed Annuity is less than variable annuities, but shouldn’t we cater the product and it’s features to how it’s being sold and what clients are asking for?

#2 – If 90% of variable annuities are being sold with riders attached, do clients understand how that fee structure effects their gains credited? Back to a couple of the hottest VA sellers in Prudential and MetLife, the annual fee of their lifetime income rider is 1.03%. That’s on top of the regular annuity fees, which average 2.51% – producing a total fee structure averaging 3.54%!!! Add a death benefit rider, return of principal guarantee or more aggressive subaccounts and clients have over a 4% annual fee. Do they realize that? I’m betting most don’t and if they did, they’d be pretty ticked off. Back to fixed indexed annuities, most have an annual income rider fee structure at 0.75% – 0.95%; one-quarter that of variable annuities. And most have a 0% fee structure for the base contract.

I’m not stating that fixed indexed annuities are the be-all, end-all for retirees investors. But in today’s economy, aren’t a lot of people looking for: Guaranteed Income 1st, Low Fees 2nd, Growth 3rd? If that’s the case, shouldn’t we match the best product to their situation?
What am I missing?!? I’m all ears.

P.S. A top “safe money focused” advisor I consult (writing $15-20 million per year into FIAs) uses a 1-page Variable Fee Analysis with clients who own one. It totals up all fees within the product, to ensure clients understand what they own. It details expenses for : (1) M&E (2) GMIB Rider (3) DB Rider (4) Administrative (5) Subaccount Funds (6) Other Riders. Next it takes that total fee percentage and applies it against the client’s account value to project out 1 yr, 5 yr, 7 yr and 10 yr total fees. If you’d like a copy and would use it – post a comment and I’ll email it to you. Happy selling.

Indexed Annuity Complaints Drop in Half!

If you haven’t seen 2010 numbers yet on FIA complaints – here they are. And the great news is in!!! FIA complaints once again dropped; to historically low levels!
This marks the 4th year in a row that complaints have dropped. And adding to that news is an amazing fact – 2010 complaints were nearly 50% of the already record low level set in 2009!


These numbers prove a couple things. (1) Consumer inspired products continue to evolve and are meeting marketplace demand. (2) Increased suitability standards are paying client (and advisor) dividends. And (3) You’re performing your job at the highest level on record.

People need the safe money vehicles your offering and they’re buying into you and your solutions to answer their concerns! Amazing work! Keep “fighting the good fight” and approach every appointment knowing those prospects desperately need you. We’ll visit soon.

P.S. To view the entire report on FIA Complaints, CLICK HERE.

Annuity – Business Tracking Sheet

Annuity – Business Tracking Sheet

How do you track the business you write?

Some producers I consult have very intricate systems to track safe money/annuity premium, life insurance, assets under management, private placements – everything! Their staffs have systematic processes of when to call, who to call and how to take notes every step of the way. It’s a well oiled machine.
And then (believe it or not) other producers I consult have literally nothing to track their pending and issued business! They’ll put pen to paper, send in an application and then call out to check on it only if it’s been an extraordinarily long time or if there’s a problem. And that system…is a problem.

So how do you track pending business?

So today I’m offering everyone access to a business tracking sheet forwarded onto me from a very successful financial advisor. It’s what he currently uses to track each case step-by-step thru the pipeline and then a second tab to total his production (by carrier) for the entire calendar year. If you want access, all you need to do is ask. No strings attached…

The more systematic you become in your business, the better (and more) you can help American retirees in their finances.

Implement and thrive.

Annuity Sales Rise in 2010

Sales of indexed annuities are on the rise…
According to recent poll results, sales of indexed annuities increased 19% from the 4th Quarter, 2009 to 4th Quarter, 2010! $8.3 billion in FIAs sold 4th Quarter, 2010.

Indexed annuities now account for 40% of the fixed annuities that are sold – proving your prospects and clients need safe solutions more than ever before!!

For the complete article from AnnuitySpecs, CLICK HERE.

Make it a successful month in March! Thanks for all you do.


Record Annuity Sales Quarter!!!

Despite historically low rates…
Despite historically high volatility rates…

In 3rd quarter, 2010indexed annuity sales set a new all-time record!!! 

More details below; but bottom line is these record sales speak to the need of today’s retirees. The first wave of boomers turn 65 next year (2011). We haven’t even seen the tip of the iceberg! Clients can’t tolerate bank rates and they can’t stomach market volatility. You’re the solution!!!

Keep these record sales top-of-mind during November and December and make it a record finish to the year! Clients need your solutions now more than ever!

Third Quarter 2010 Indexed Insurance Sales

THIRD QUARTER INDEXED ANNUITY SALES BLEW ALL PREVIOUS RECORDS OUT OF THE WATER!’s Indexed Sales & Market Report, 3rd Quarter 2010 shows third quarter 2010 indexed annuity sales were $8770 million compared with sales of $8379 million for the previous quarter. Third quarter sales were up nearly 5% when compared with the previous quarter and up almost 16% when compared with the same period one year ago. It was a record-setting quarter for indexed annuity sales.

Total 3Q2010 Indexed Annuity Sales were $8,770,313,225.

Top ten indexed annuity carriers for the third quarter:

1. Allianz Life                 

2. Aviva                                   

3. American Equity                     

4. Lincoln National Life           

5. ING                                       

6. Jackson National Life           

7. Midland National Life          

8. North American Company

9. National Life Group (LSW) 

10. GAFRI                                

Average Commission
The average agent commission was 6.50%.