News Flash: The big investment houses on Wall Street and the mega no-load investment shops are all rapidly jumping into your pool of insurance products (namely, index annuities) and quickly adapting their proposals to include products with living income benefits.
Paul Revere I am not, but the Red Coats are coming!
With annual point to point cap rates on index annuities hovering near 2.5 percent and fixed annuity yields not any better, it's time to step up, lead the pack and put your money where your mouth is. Meager returns on fixed and indexed annuities are leading investors to have a wider perspective of alternative places to invest. Hopefully, you are not solely recommending index annuities primarily as a place to stash cash or hoard money…but instead as an investment for future retirees, (baby boomers, Gen X and Y) to conservatively grow their assets to produce a future income stream.
Advisors and agents who have relied solely upon insured or guaranteed products also need to adapt a broader perspective of the investment spectrum and offer up to their clients and prospects an unbiased, professional long-term strategy and advice on how to build their portfolio.
Obviously, the "world" has realized what insurance professionals have known all alongnot going backwards in one's investments is a superb way to amass wealth. Offering these insurance-based products is a path to generating a nice living and career. Although the "win by not losing" mantra has worked well the past 12 years, pragmatism is the key to longevity and uber-success in this business.
An intelligent agent or advisor wouldn't recommend an annuity issued from a subpar, non-profitable carrier. And looking at the past few tumultuous years in the financial industry, those insurance carriers that have survived and prospered are emerging stronger than before. Ergo, if you love the insurance carriers' products and your clients love their products…you and your clients should own a piece of the carrier, right?
As I write this article, Aviva PLC (NYSE Symbol: AVyes, the Aviva that is a leader in the annuity and life industry) pays a dividend on their common stock that yields near 8 percent annually. Wow, that will turn a few heads. Is the dividend insured? No. Is stock ownership "safe?" Who knows? They're certainly not as "stable" or predictable in the short term as an annuity. But, what better way of proving your commitment and smarts to your clients (and those pesky Wall Street gurus who think insurance folks are sophomoric and unsophisticated in their asset allocations and investment acumen) than to own a piece of the rock (so to speak).
