Advisors Need Help With Income Products, NAVA Told

Only one company sent information on how annuitization could be compared to systematic withdrawal, he said.

This comes at a time when he is noticing that clients with whom he worked 10 years ago are coming back to the office, saying they are close to or already in retirement. "What can we do to get this right?" he asked.

Britton said he is convinced annuitization should be part of the plan. But right now, he said, little information about this is coming from the insurance companies.

Some wholesalers have told him they dont get paid to talk about annuitization, Britton noted, concluding, "the industry simply has put more of its resources into the accumulation side of the business."

But "I need help, and so do other account executives," he said.

Moore, whose duties at A.G. Edwards (before his retirement) included training, offered some suggestions for providing such help. For one thing, he said, consultants should focus on solving problems, not selling annuities.

Also, "position the income annuity as part of a total plan," he said. For instance, suggest putting some of the clients money into an income annuity–to pay out, perhaps, over the next five years. Then position the other money in other products, perhaps an IRA.

Also, he said, "think combinations." For instance, perhaps offer a combination of immediate annuity and life insurance, or fixed and variable annuities, or deferred and immediate annuities, or immediate annuity and some other financial assets (perhaps a long term care policy).

When broaching the subject of retirement income with clients, Moore continued, the Number One question to raise should be: "When and for what purpose do you envision using these assets?" (The answer "will help you avoid selling the wrong thing to the wrong person," he said.)

Moore also had some words of advice concerning terminology used by the income product industry. "Right now, we have horrible words in our literature. We need to overcome this."

For instance, the word "annuitize" (meaning to convert a deferred annuity into its payout stage) is "negative," Moore said. A more positive approach would be to talk about "a lifetime of dependable income," he contended.

So, too, with the term "designated period payout." He suggested a "lifetime of rising income" would be more positive. And instead of saying "10 years certain," why not say "tax-favored monthly checks"?

The industry is "big" on another term–the IIR, or internal rate of return–but that, too, is "negative," Moore said. Instead, "start talking about cash flow[Tell the customer] that you can maximize your cash flow for the number of years you choose, even for life."

It also helps to tell clients a simple story about their payments, by using a chart that shows how such products pay out money each month. Discussing life expectancy with clients helps, too, he said.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 1, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.