How to Sell 3.00%
02-09-2010
With the current interest rate environment, it's our job to do more than sell a 3% rate. We have to get our clients to believe in themselves and the positive position of fixed annuities. Rates on fixed annuities are competitive and are still a good investment in comparison to other fixed alternatives. The features found in an annuity only increase their value and separate them from the pack.
We believe there's a 3-pronged approach to ensuring you are presenting annuities confidently to clients & prospects:
1. Everything is Relative
Fixed Annuities have a good return compared to the other options that a client has for parking their funds. As of Friday, the highest yielding CD in the country offered 3.10% for 5 years, and the highest yielding money market was about 1.50% (bankrate.com). Fixed Annuities are very competitive given what the market is bearing right now.
2. The Cost of Waiting
Clients are giving up a lot of money waiting for rates to go up. History tells us that rates go up gradually- They most likely won't double in 12 months. Now is the time to take advantage of higher yielding products that offer liquidity, no MVA, and possibly Return of Premium. The client's money is put to work now, and there's a hedge built-in if rates do move up quickly. Compared to the highest yielding money market account, a client is giving up $1,500 per year per $100,000 by not taking advantage of a 3% fixed annuity.
3. Use an Illustration
An illustration is a graphic way to show a client that their money in a fixed annuity is always growing. The majority of the population learns & understands by seeing something visual. The illustration re-enforces that your money is growing, and it gives an agent the ability to explain all of the features of the annuity.
Looking at it another way, say you were deciding between 2 cars to purchase. One is $35,000, and the other is $70,000. You're definitely going to be asking yourself "What am I getting for $70,000?" Clients should be looking at rate as only 1 feature of an annuity and having their agent help them answer "What am I getting for that rate?"
Fixed Annuities can be a great fit in any rate environment if you sell features, use visuals (illustration), and confidently convey how the product fits in a client's overall portfolio.
Please let us know what we can do to help!
