To earn additional income and grow businesses, many licensed financial advisors and insurance agents turn to selling annuities. Despite many products carrying excellent features and benefits, selling them to consumers can be difficult. In fact, here are the five main obstacles you will encounter:
As you begin to research how to sell your annuity payments, competition from insurance companies and agents is a major obstacle. With so many individuals and businesses competing for the same investors, it’s difficult to stand out. In fact, according to the Bureau of Labor Statics, over 320,000 agents are licensed to sell annuities and insurance.
Annuities involve investment strategies and financial planning that may not be ideal for everyone. In addition, annuities often receive negative press that exaggerates the cons and overlook the pros. Unfortunately, many reviews also do not clearly explain the differences between various types of annuities. With so many misconceptions and general confusion, an agent may find it difficult to overcome preconceived notions.
Stemming from misconceptions, many consumers are hesitant to invest in annuities even despite the number of benefits a contract offers. With so many people feeling comfortable with their existing investment planning and strategies, it can be difficult to convince them to make changes. Fortunately, agents can show consumers how annuities can provide control and steady income for years to come.
4. Internal Fees
The internal fees for many products is considerably higher than fees for alternative investments. Due to the higher fees, many people do not want to invest retirement money into an annuity. Unfortunately, an agent will have to work hard to rationalize and justify the investment. Fortunately, the task can be made easier by pointing out specific advantages offered by annuities that are not available through other retirement options.
Another type of fee that consumers are wary of is the surrender charge. The surrender charge is a fee given to the insurance carrier if the policy is canceled before a certain amount of time has elapsed. The surrender charge can claim anywhere from 4% to 12% of the owner’s money, so many consumers object to such a fee. In some cases, clients may be more inclined to invest their money in stocks than annuities. However, agents can help reassure clients by telling them that it is ultimately better to gain 50% and experience no losses than gain 100% and potentially lose 100%.
5. Market Volatility
Although many annuity products offer features that guarantee performance and protect balances against losses, many people simply don’t trust the market. To help people feel more comfortable about their growth potential, agents may want to focus on fixed or indexed annuities that provide safety and security.
Selling annuities can be a very rewarding way of earning extra income or expanding your business. By overcoming the five main hurdles and showing consumes how annuities can work for them, you can achieve success with the venture.