I truly believe that most annuity agents have the client's or prospect's best interests in mind. I'm fortunate enough to know a lot of these professionals, and have seen and approved a lot of their proposals that I am sent to review as an objective resource. With that being said, I also see far too many annuity pitches that are dancing on the line of full disclosure and allowing the client to fill in the blanks to some very important annuity questions and current issues.
There's no need or justification for these types of bullet-point proposals or presentations because as I always say: "The contractual realities of the policy will eventually reveal themselves." We all know that this is true, so it's common sense to "go there" voluntarily because clients need to fully understand the good, the bad, and the limitations of any annuity before buying.
I am fortunate to have clients and prospects nationwide, and they cut across all demographic and cultural lines. So I have a pretty good sample base to draw some of my conclusions from. I also receive hundreds of emails and calls every month from people that have been pitched an annuity, and the one common thread that is disturbingly apparent is that too many agents are letting the prospect fill in the blank to important annuity questions that somehow go unasked.
The problem with clients and prospects filling in the blanks for themselves is that their answers (i.e., hopes) typically do not correlate with the realities of the policy. Below are some "blanks" that I feel the agent needs to proactively address and fill in with facts so that the person has enough information to make an informed buying or non-buying decision.
Income rider or yield?
This is the granddaddy of all fill-in-the-blanks when it comes to annuities. Too many annuity owners think that they own an annuity with a 7 percent or 8 percent yield, like the good old days of Jimmy Carter-interest-rate CDs. It's so important to clarify that this income rider growth percentage is not the CD-type yield that the client wants and yearns for, and can only be used for future income.
Current interest rates
I don't care what annuity you are presenting, if that person is astute at all, they are wondering how current interest rates should be considered for the annuity they are looking to purchase. Agents cannot let that person fill in the blank, or even worse, tell them what they want to hear about interest rates to get the sale. The bottom line is that no one knows where interest rates are going. That's a fact.
Inflation
This is the gorilla in the room that every single person is thinking about, so why not address it. Like interest rates, no one knows the answer and when or if inflation will hit. However, agents can address how the annuity will work or be affected by inflation or deflation so that the prospect will have realistic expectations of the proposed annuity strategy under those economic conditions.
