Beginner- Help Appreciated!

[salesgirl]

I'm an experienced health and life broker who has never sold annuities. I don't have a securities license, but I would like to be able to offer some fixed annuities through American General. But I don't know where to start!
My clients are usually seeking health insurance, I'm cross selling them term life and other ancillaries like dental, accident and critical illness, but I would like to broaden my offerings.
What kind of clients are good candidates for a fix annuity?
What's the easiest way to ease into that conversation, after discussing health insurance?
Any tips experienced sales people can offer will be much appreciated!!!

 

[DHK]

salesgirl,

I'll give you some pointers here, but I do want to help make something painfully clear: selling annuities has almost nothing in common with selling health or life insurance. The reality of selling annuities... is that annuities are simply ONE tool in the whole field of retirement planning.

Do you know much about retirement planning? (That's an honest question and not meaning to hint at any sarcasm or talking down or anything like that.)

This is an area that can be EASILY screwed up if you don't know what you're doing. There are LOTS of rules and regulations that surround retirement planning and annuities in particular - not the least of which is the new DOL ruling that will be implemented over the next year or so.

For getting started, I would stick with "Rollovers". That's the generic term, but specifically, it's called a "direct trustee-to-trustee transfer". (A Rollover is technically when the plan is CASHED OUT and the plan participant has 60 days to put the money back into a qualified plan or they will pay taxes and penalties on the balance. They can only do this once every 365 days. A direct trustee-to-trustee transfer is when the check is made payable directly to the new custodian (or annuity company) and isn't cashed by the plan participant.)

All you'd have to do is ask: "Do you have a 401(k) at a previous employer?"

When someone has a 401(k) plan balance at a previous employer, they have essentially 5 options - 4 of which is disclosed on the IRS Special Tax Notice 402f:

http://www.varetire.org/Pdf/Publications/irs-402f.pdf

Option 1: Roll it over into an IRA (which can be funded with an annuity)
Option 2: Roll it over to their CURRENT employer's 401(k). The only advantage I can see to this, is that they can borrow against this.
Option 3: Cash it out - and pay a mandatory 20% withholding for federal taxes (which may or may not be enough) + a 10% penalty prior to age 59 1/2. Don't forget that there will also be state taxes against this balance too.
Option 4: They can fund a single or joint life straight annuity (this isn't the annuities you're offering, but a lifetime income from the plan provider)
Option 5 (not disclosed): They can leave it where it is.

Please note that 401(k) plan participants that leave their employer after age 55 can access their 401(k) plan balance directly without a 10% penalty, so be careful here. They must truly not have any immediate need to access these funds. So, if someone is laid off at age 56, I wouldn't suggest that you roll over these funds until they figure out their situation. I know of a couple of engineers in this situation now.

You'll want to become familiar with IRS publications 590 and 560.

I hope you can see that this is complex, and that I'm trying to help you understand just a few of the technicalities of what you're trying to get into.

----------

Just saw this article in my LinkedIn news feed by Ed Slott regarding negligence in tax consequences in retirement advice:

FINRA Award Goes to Client After Advisor s Tax Oversight | IAG Breaking News

BTW, this was tax advice incidental to the account in question. This is something that the advisor should've realized and known up front. The recommendation to just "withdraw $30,000 from an IRA and put it in your checking account"... was just plain stupid and ignorant.

And I just looked this guy up on BrokerCheck - he'd been in the business since 2004... so I would say "no excuses" for not knowing this basic information.

 

[Tahoe Ray]

I'm an experienced health and life broker who has never sold annuities. I don't have a securities license, but I would like to be able to offer some fixed annuities through American General. But I don't know where to start!
My clients are usually seeking health insurance, I'm cross selling them term life and other ancillaries like dental, accident and critical illness, but I would like to broaden my offerings.
What kind of clients are good candidates for a fix annuity?
What's the easiest way to ease into that conversation, after discussing health insurance?
Any tips experienced sales people can offer will be much appreciated!!!

DHK gave you a lot of good advice. Let me add to that...

The easiest way to start with annuities is to "beat the bank". Offering 5 year multi-year guaranteed annuities (MYGAs) is basically rate vs. rate and MYGA products normally win.

Quote rates, ask for business. There isn't a lot of planning involved here, you're just looking to gather assets. You also won't make a ton of money since the comp is relatively low on these products but you will create a deeper client relationship and have the opportunity to rewrite these clients in a short time period.

You could also look at single pay life products with return of premium. If you're dealing with people in their late 60s-80ish who are looking to pass assets, the guaranteed DB is normally very high from day 1 to 10+ years vs a MYGA or CD.

Also, why limit yourself to AG?

Just a few other options...good luck.

 

[Gulfman]

I'm an experienced health and life broker who has never sold annuities. I don't have a securities license, but I would like to be able to offer some fixed annuities through American General. But I don't know where to start!
My clients are usually seeking health insurance, I'm cross selling them term life and other ancillaries like dental, accident and critical illness, but I would like to broaden my offerings.
What kind of clients are good candidates for a fix annuity?
What's the easiest way to ease into that conversation, after discussing health insurance?
Any tips experienced sales people can offer will be much appreciated!!!

Be prepared to spend some $ too. Stats show its not cheap to market and sell annuities...

 

[LostDollar]

All you'd have to do is ask: "Do you have a 401(k) at a previous employer?"

(DHK-not trying to get in a fight here-have just had REALLY BAD experience with this)

Comment-from the other side of the desk-

When I hear this one, I immediately feel like the point man on a VietNam army patrol.

I was fired a few years ago. In the midst of that trauma, one of my concerns was how to best manage a small amount of money I had in the company 401k. I barely know what an annuity is, let alone how one might be useful to me. I tried to talk to the company's 401k investment advisor. He wanted to know my 401k balance AND every IRA I had. He wanted all my retirement dollars going into an IRA option of some kind which he had to offer me. He became almost hostile angry when I would not discuss my IRAs with him and would not provide me any education about what might be my options with my 401k money.

Round 2 was a doorknocking young man representing a large investment advisory house. He was working on building his office. When my 401k came up, it was basically the same thing-OH, you need to get that in an IRA-can we set up an appointment to talk about that?

When I get that question from someone in the investment world, my perception is that I am seen as a slot machine to be played for payoff until I am empty.

 

[DHK]

That perception may be part of it. Here's the other part: They're "pouncing" you and assuming that rolling over your 401k is what you want to (should) do.

Never pounce. Always discuss. Never assume.

I met with a client years ago when I was at an old firm, and we discussed only her 401k balance that she wanted to roll over. I still needed to get an idea of her entire picture to make appropriate recommendations and she had another 6-figure account held elsewhere.

I actually told her "let's keep that off the table for now, and just discuss 'this' money." In essence, I needed to know about it for planning purposes, but I wasn't 'pouncing' on it at all.

And that was the reason she worked with me and transferred that account over as well.

John Savage said "Don't try to be a hog. Don't try to get it all. Business will go where invited and remain where appreciated."

 

[VolAgent]

That perception may be part of it. Here's the other part: They're "pouncing" you and assuming that rolling over your 401k is what you want to (should) do.

Never pounce. Always discuss. Never assume.

I met with a client years ago when I was at an old firm, and we discussed only her 401k balance that she wanted to roll over. I still needed to get an idea of her entire picture to make appropriate recommendations and she had another 6-figure account held elsewhere.

I actually told her "let's keep that off the table for now, and just discuss 'this' money." In essence, I needed to know about it for planning purposes, but I wasn't 'pouncing' on it at all.

And that was the reason she worked with me and transferred that account over as well.

John Savage said "Don't try to be a hog. Don't try to get it all. Business will go where invited and remain where appreciated."

My first mentor put it more bluntly.

"Pigs get fed and hogs get slaughtered." I always remembered that not to be greedy and the first task was to get a client. Then everything else will follow in due time.