STOP Feeding the Frenzy with Comparisons to Market Gains

If you are an insurance agent selling indexed annuities and you use any references to compare them to the market, I am suggesting that you stop that practice immediately. When you use phrases such as: market-like returns, similar to mutual funds but with no downside risk, hybrid product, or any other terminology that compares indexed annuities to market products, not only could you be violating securities laws, but you are adding fuel to the fire of attacks currently being waged against indexed annuities. Part of the blame, for the negative attention currently given indexed annuities, has come from these inappropriate connections to the market, made by the very agents trying to promote the product. Agents, who believe, that, when they are selling indexed annuities, they are competing with mutual funds, stocks, and bonds, will likely feel compelled to make the insurance product “look” as much like their competition as possible, but with all the negative aspects removed. As you are attempting to explain indexed annuities, and your approach is to take your prospect from a point of reference with securities products, where they have familiarity, then this person’s thinking will become “locked in” to this comparison, and will erroneously carry over to the annuity, many of the expectations and negative characteristics they have experienced in the market. You have no control over which of these implications about annuities they may incorrectly attach, so you have, in essence, lost control of your client by using this sales approach. Instead, consider beginning with a full and detailed explanation of all the positive and unique aspects about the guarantees of annuities, and that not only do those guarantees outperform most bank products, but the POTENTIAL is built into indexed annuities to earn a much higher yield, by way of the link to some outside index. Don’t let the fact that this link is a market measure, confuse the issue and take you back to your old habits of market comparisons. For your product, the index is merely a measuring tool. You could have just as easily linked the potential interest to some other measure, such as the increase in the number of days you have this year without rain, over the previous year. The indexes serve as no more than a trigger for the “extra” interest credits. Don’t aid the NASD any longer by negative and defensive selling techniques. Establish the need and suitability of your client, and then sell these insurance products proudly, because they are an excellent way to safeguard your client’s money in a product that can provide them with security and benefits which they cannot find elsewhere.