In today’s shaken financial services industry, the one phrase that should be on your mind is: “Trust is money.” The financial crisis left a lot of investors with deep wounds and empty pockets. But as the market shows signs of recovery, a major roadblock will be investors’ unease with putting their faith — or dollars — back in your hands. If gaining investors’ trust isn’t hard enough, convincing them to invest in an annuity presents even greater challenges.
Annuities involve complex contracts and have developed a stigma due to abuses perpetrated in the past by a small group of producers. Consequently, even if you have an annuity that guarantees income for the life of an investor with little risk to principal, you might have an uphill battle making the sale. Your challenge is to turn a complicated investment product into a simple one and a skeptical buyer into a trusting one — not an easy task.
So what can you do to sell a product so complex that most buyers start feeling nervous when they even hear the word “annuity?”
Put the Client First
Try starting a conversation on the subject of annuities, and you’ll see potential investors run for the door. In order to make an annuity sale, you must put the clients first by asking what their needs are. Build rapport by learning what is important to them. What do they like to do? What are their hobbies? Avoid delivering a sales monologue by beginning a two-way conversation with your clients: Ask when they would like to retire. How much income do they need? Do they have any long term care issues? These are questions that will make clients much more comfortable with you, as well as allow you to make appropriate judgments about which product to recommend.
Remember, the client’s risk tolerance is a particularly important area to understand. We’ve all endured the market volatility over the past few years, coupled with exploding federal deficits and a deep recession. How have your clients reacted to these events? Has it impacted their lifestyle? Do they need “sleep insurance”? If so, then you’ve created the perfect segue into a discussion about annuities.
Assessing a client’s risk tolerance essentially comes down to two elements: what their actual needs are regarding income and expenses, and how comfortable they are with the risk. One easy way to determine this is by showing a client various portfolios with hypothetical returns and asking which ones they are most comfortable with.
Know Your Topic
It’s impossible to make buyers feel comfortable about investing in annuities if you don’t feel comfortable with the material. Would you buy a car if the salesperson couldn’t tell you how many miles per gallon it gets or how long the warranty lasts? The same is true of annuities, so you must put in some time to learn the details. There are a variety of income options, investments and riders in the annuity market, so the more confidence the client has in your knowledge of the product, the better the chance you have of making the sale.
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