‘Got Guarantees?’...is the annuity industry’s ‘Got Milk?’
The Annuity Man
In 1993, a slice of pop culture was born with the iconic “Got Milk” ad campaign. Just reading those words makes most of us visualize a print ad showing some movie star with a milk mustache after taking a big gulp of milk. The ad was simple, to the point, and ridiculously effective.
As "America’s Annuity Agent," I have adopted 'Got Guarantees?' as the new mantra for the annuity industry. Of course, the big wigs in the annuity industry will not go along with me because it makes too much sense and will get the way of their “market return dreams” that are pitched with high commission products that too many agents choose to sell with one size fits all pitches.
"Got Guarantees?" should be the Nike “Just Do It” for the annuity industry. Let me explain why this is the biggest no-brainer in the history of advertising, marketing, and branding.
Unique Benefit Proposition
Annuities are contracts. Don't believe it, then buy one and you will receive a policy contract in the mail after your purchase. Annuities are also transfer of risk strategies that solve for lifetime income, principal protection, legacy, and long term care type coverage.
I’ve developed an easy to remember acronym (P.I.L.L.) to remember what annuities contractually solve for.
· P stands for Principal Protection
· I stands for Income For Life
· L stands for Legacy
· L stands for LTC/Confinement Care
If you don’t need to contractually solve for one or more of the P.I.L.L., then you don’t need an annuity. It’s really that simple in my opinion.
It's important to point out that annuities have one benefit proposition that no other financial product offers. Lifetime income. No other financial strategy on the planet will pay a guaranteed lifetime income regardless of how long you live. This separates the annuity category from all others, and should be the driving message from the annuity industry. The advertising table should be continually pounded with the 'Got Guarantees?' lifetime income message.
Selling Dreams vs. Owning Contractual Realities
Unicorns do not chase the butterflies, and annuity back-tested return proposals never come true. That doesn’t stop the vast army of agents from pushing hypothetical, theoretical, projected, hopeful return scenarios to people that believe a "too good to be true" annuity product actually exists.
Because annuities are contracts, in my opinion you should only own them for their contractual guarantees. You might be sold the annuity dream, but you will own the contractual realities. Why not start and finish there, and not be the rube at the table (Vegas reference).
Annuity commissions are “built in” and hidden from the consumer regardless of what type of annuity you buy. In other words, if you put $100,000 into an annuity…you will see $100,000 on your first statement even though the agent of record was compensated by the carrier.
Finding out what the actual commissions (and soft money) paid to the agent is almost impossible, but there is an easy way to find out if you are buying them a car in full or just helping them make payments. The more complex the annuity, the higher the commission. The longer the surrender charge time period, the higher the commission. The more simple the annuity is, the lower the commission. The shorter the surrender charge time period, the lower the commission. Common sense stuff.
Too often, commission levels drive the recommendation. This is unfortunate because the simple annuities (SPIAs, DIAs, MYAs, QLACs) are easy to understand, have no annual fees, and the built-in commissions are low. The 'Got Guarantees?' mantra would increase sales with these simplistic annuity product types, which would be good for the annuity consumer.
Demographic Tidal Wave
Every single day, over 10,000 baby boomers retire. Most of them would like to transition from shouldering the risk to transferring the risk to someone else. In other words, contractual guarantees look pretty appealing to people that are entering the next chapter of their lives.
For most, it’s all about lifestyle. What that means from a money standpoint is protecting your principal or a lifetime income stream. 'Got Guarantees?' Of course!
I rest my case for 'Got Guarantees?' to be the new tagline for the annuity industry. I’m already using it, and welcome them to join me as I continue to educate the public on the contractually guaranteed benefits of all annuity types. So the next time you gulp down that glass of milk, say 'Got Guarantees?' as you slam that empty glass on the counter!