I was hoping that I wouldn’t have to write this article, but I’m starting to receive “fear selling” email messages from some of the carriers, distributors, and many agents promoting annuities during these Coronavirus times. I’m sure the TV ads, radio ads, and direct mailers aren’t far behind.
In full disclosure, I sell annuities. That’s how I make my living. 100% commission. I’m licensed in all 50 states, have thousands of valued clients, and am known as Stan The Annuity Man and “America’s Annuity Agent” for my brutally factual approach to this controversial category. In addition to publishing 7 books on the subject, I am also fortunate to be a contributor on this platform to educate consumers about all things annuity.
Over the years, the annuity industry has unfortunately earned its bad reputation because of a few bad actors, too many bad chicken/steak dinner seminars, and no cohesive and consistent brand message to the consumer. Annuities do have their place in some portfolios and to solve specific contractual goals, but any pro-active messaging or advertising needs to take an immediate back-seat to the health of our nation...and the world.
The Coronavirus global chaos is providing the annuity industry a once in a lifetime opportunity to take the sales high road, and to hopefully stay there forever.
Annuity Industry Plea
With that being said, I’m asking the annuity industry, distributors, and selling agents/advisors to “stand down” during these serious times concerning the Coronavirus pandemic. No blast emails for new business. No over-hyped and misleading TV or radio ads promoting market returns with principal protection. People are legitimately scared to death and have lost a lot of money in the recent stock market cliff dive. Who knows when all of this will end. It might be a while. Let’s give the consumer time to breathe, and hopefully regain some of their historic market losses.
To use current verbiage, this is the time to “quarantine” all pro-active advertisements and promotions for new business. This is not the time to aggressively be preying on people’s personal and financial fears. I know that’s a contrarian approach to everyone’s capitalistic instincts, but the annuity industry needs to keep its aggressive marketing powder dry until we all come out of our collective houses. A misguided politician once said to never let a serious crisis go to waste. I'm begging the annuity industry to let this Coronavirus crisis go by untouched from a sales messaging standpoint.
If people proactively want and ask for annuity information, then provide that. If current annuity clients want to discuss what they have, then have those conversations. But don’t sell into this Coronavirus fear by saying annuities, or a specific type of annuity, are the answer. Right now, nothing is the answer...except hope, faith, and a possible cure.
For the financial consumer not knowing what to do and what the future holds, my advice would be not to overreact and be scared or pressured into an annuity buying decision.
*If an advertisement or someone pitches “market upside with no downside,” you have to be smart enough and disciplined enough not to fall for the indexed annuity sales bait.
*If an advertisement or agent says that you are going to get an “upfront bonus” that can help make up for recent market losses, be wise enough to realize that there is no such thing as “free money.” There are no philanthropists running annuity companies.
*If an advertisement or advisor promises a very high interest rate annuity return that reminds you of the Jimmy Carter yield years, know that it’s not real interest and can only be used to calculate an income payment. It's called an Income Rider, and can't be cashed in or have interest peeled off.
Most of these aggressive sales pitches will be attached to Fixed Index Annuities (FIAs). FIAs are fixed annuities, life insurance products, and are not securities. There is no “market upside or market participation with no downside” regardless of what you are told or shown. FIAs were introduced in 1995 to provide CD or a little bit better than CD returns, and that’s exactly what they have historically and contractually delivered...which is a good thing. When used properly, FIAs can have a place in a portfolio and because they are fixed annuities, the principal is fully protected. But they certainly are not a financial cure-all during these uncertain times, and not a reason to make a rash or pressured buying decision at these current market lows.
The bottom line is if it sounds too good to be true, then it is...every single time...without exception when it comes to annuity transfer of risk contracts. My advice is if you are interested in some type of annuity strategy, this is a very good time to do your homework and full research on that product. There’s never an urgency to buy an annuity, the only urgency is for you to fully understand the contract before signing the application.
Agent and Advisor Advice
For all of the annuity and advisor salespeople out there, this is a good time to reconnect with your family and friends. Focus on your health, enhance the technology aspects of your business, and connect with your current clients if needed. It’s not time to take credit, or blame and attack other advisors that you are competing against. Humble yourself to the fragility of our day to day lives, and plan on coming back strong after our country and the world eventually wins this war against the Coronavirus pandemic.
And by all means, resist the urge to sell into this Coronavirus fear. Whatever sales profits you might make are not worth it, unless you are a true sociopath. If that's the case, then there are bigger issues that need addressed.
The 9/11 Rule
No normal person in their right mind would have promoted anything during the 9/11 tragedy. The same rule should apply to the Coronavirus pandemic as well. What happened during and after 9/11 is what is going to happen now. Our perceived politically divided country is going to come together like the United States has always done during times of crises. We are not the States of America, we are the United States of America.
Things in life seem to happen for a reason. It’s hard to see that when the bullets are flying like they are today. For the current retirees and the over 10,000 baby boomers reaching retirement age every single day, that annuity sales pitch you are considering has to take a back seat to what’s really important.
As the self-appointed spokesperson for the annuity industry, we are in that arm-in-arm fight with you and every other American to defeat this virus. After we win the war, then let’s talk about annuities. Those unique transfer of risk strategies will still be available to you. I can contractually guarantee that.