How to Explain Annuity Basics
Once you know what the overall goal is, you can determine what type of annuity is best for them.
Let’s say you have an older client who is looking for an investment that avoids risk. They want to let their savings increase until they’re withdrawing money from the account.
A fixed annuity would be the best option for them, as they’ll have a particular interest rate for a certain period.
Once you find a specific annuity that directly correlates to your client’s long-term goals, you can increase your credibility as an advisor with their best interest in mind.
Another example is if you have a younger client who currently has a CD savings account, yet they aren’t interested in purchasing an annuity. This is a good opportunity to explain how, unlike with a CD, they will never pay taxes on an annuity until they are actively spending the money in the account, rather than just depositing.
Also, sharing examples of well-known annuities, like Social Security payments, can help clients feel more confident when discussing their investment options.
Help clients expand their portfolio with your ability to teach clients about the full range of investment options.
When you’re able to effectively communicate both the benefits and the risks of annuities, your clients will feel more secure about discussing their annuity investment options.
The more they know, the more they’re willing to trust your expertise.
Heather Lindsley, LUTCF, RICP, LACP, is a financial advisor with Guided Path Financial Services and Retirement Planning in Green Bay, Wisconsin. Lindsley is a nine-year member of the Million Dollar Round Table.
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