Time was when Tema Steele, a Cherry Hill, N.J., agent with New York Life, did not sell income annuities.
She does now. A lot of them, she says.
What happened? In late 2004, Steele says she heard a presentation about how immediate annuities address client concerns about outliving their money. She listened to how ownership of the annuities can make it easier for retired clients to relax and enjoy life, knowing they have guaranteed monthly income for life.
Then she went out and "ran with it."
The story underscores findings from a recent National Underwriter/New York Life telephone survey, pointing to greater need for agent education on immediate annuities.
In the survey, 48% of the advisors gave their peers a grade of "C," when asked how well the advisors do in explaining annuities to clients. Only 27% gave their peers a "B."
Furthermore, even though 65% believe the number of people who need to spend their nest egg in retirement will grow, and even though 49% predict their use of annuities for generating lifetime income will increase, only 19% rated annuities "an essential holding" in an income plan.
"If advisors understood more about immediate annuities, more of them would describe the products as 'essential,'" suggests Paul Pasteris, senior vice president-retirement income at New York Life Insurance Company, New York.
Over half the polled advisors (53%) said they would sell more annuities for retirement income if the product had "better performance." Also, 47% said they would do so if annuities had "better press," and 44% said the same if annuities had "better pricing" and "greater awareness among investors."
However, Chris Blunt, executive vice president, New York Life Investment Management, New York, believes greater advisor education on retirement income needs and solutions would make the most difference. Advisors will then be able to educate clients, he says, noting that a NU/NYL consumer survey, conducted as a companion to the NU/NYL advisor survey, found many consumers are ill-informed in this area. They will be "screaming for help" when retirement comes, Blunt predicts.
[This is one reason why New York Life developed and now hosts two informational websites on retirement income. One is for advisors (www.guaranteesmatteradv.com) and the other is for consumers (www.guaranteesmatter.com).]
Greater advisor education on retirement income issues, strategies and products results in greater revenues, notes Ted Mathas, executive vice president, New York Life Insurance Company, New York. "For instance, our agents' income annuity business in the past two years basically tripled as we initiated training for the retirement income market as a discrete discipline."
The NU/NYL survey shows advisors do understand that clients want retirement income guarantees, Blunt stresses. For instance, 96% of advisors said clients would be "very" or "somewhat" interested in a $100,000 immediate annuity bought at age 65 that pays $7,100 per year for life and that guarantees, if death occurs before all principal is paid, the remaining principal will be paid to heirs.
"This is a big opportunity for advisors," Blunt stresses, reiterating that advisors need more education so they can tap into it.
Steele agrees. Before she started working with immediate annuities, she says she was "aware" of them but did not know how they fit into her clients' portfolio or lives, nor did she know how to present them.
Getting educated on the product "was essential to my being able to offer immediate annuities," she says.
Today, Steele not only sells immediate annuities; she also helps train other agents on the issues and products. For instance, in a video sales presentation for agents, shown on a New York Life portal, she demonstrates how to present an income plan that includes immediate annuities. Agents tell her it is "extremely helpful," because they, too, have been confused about where the product fits and how to present it.
"They need it explained to them," Blunt concurs. "The vast majority of advisors have never had an income annuity explained to them."
