It’s increasingly the one product clients demand from their life insurance advisors, so why are so many advisors failing to arrange it?
A recent survey from RBC Insurance found that Canadians aged 55 to 75 would like to have income for life yet if you ask a random sampling of 100 insurance advisors whether they’ve ever sold an annuity only a handful will say ‘yes.’
What’s stopping advisors from broaching the subject?
“During a recent seminar, the moderator asked to have a show of hands for those who had ever sold an annuity. Keep in mind that the majority of the 100 or so brokers in the room have grey or white hair. About a dozen or so hands went up,” BC annuity specialist John Beaton told LHP. “The moderator suggested that maybe the low interest stemmed from the majority of brokers not wanting to advise their clients to lock in their money and of course interest rates are low so annuity rates are low.”
Interest rates is the simple answer but not necessarily the entire explanation. For further perspective LHP asked Beaton about some of the other reasons why advisors fail to work annuities into the client discussion.
“Many life insurance people started out years ago, as I did, where they taught us about their products. I started with Metropolitan Life and they never taught me about annuities. I sold one while I was there but it was happenstance because someone walked in and asked for one. I think that’s what happens to most insurance people. These are isolated incidents,” said Beaton. “It’s not part of their business model. Their business model is to sell life insurance that has trailer fees and eventually, like I was told when I started, ‘work hard and build up a good clientele and eventually you’ll be able to retire on your residuals.’”
Times certainly have changed.
Whether it’s living off your residuals or the fact that captive sales forces are the exception, not the rule, it’s just not worth it for insurance advisors to sell annuities when segregated funds are what insurers really want sold.
“I had a conversation recently with an insurance company rep who’d come to see me to try to get me to sell their life insurance and segregated fund products. When I said ‘tell me about your annuities, is there anything new?’ He [rep] gravitated back to the segregated funds because that’s what they want us [insurance advisors] to sell,” said Beaton. “Many brokers say, ‘Why should I sell an annuity when I lock the client’s money up and I don’t get anything more? Why don’t I put them in an investment like a segregated fund and then I’ll get paid for years to come.’”
“So it’s a mindset.”
What’s stopping advisors from broaching the subject?
“During a recent seminar, the moderator asked to have a show of hands for those who had ever sold an annuity. Keep in mind that the majority of the 100 or so brokers in the room have grey or white hair. About a dozen or so hands went up,” BC annuity specialist John Beaton told LHP. “The moderator suggested that maybe the low interest stemmed from the majority of brokers not wanting to advise their clients to lock in their money and of course interest rates are low so annuity rates are low.”
Interest rates is the simple answer but not necessarily the entire explanation. For further perspective LHP asked Beaton about some of the other reasons why advisors fail to work annuities into the client discussion.
“Many life insurance people started out years ago, as I did, where they taught us about their products. I started with Metropolitan Life and they never taught me about annuities. I sold one while I was there but it was happenstance because someone walked in and asked for one. I think that’s what happens to most insurance people. These are isolated incidents,” said Beaton. “It’s not part of their business model. Their business model is to sell life insurance that has trailer fees and eventually, like I was told when I started, ‘work hard and build up a good clientele and eventually you’ll be able to retire on your residuals.’”
Times certainly have changed.
Whether it’s living off your residuals or the fact that captive sales forces are the exception, not the rule, it’s just not worth it for insurance advisors to sell annuities when segregated funds are what insurers really want sold.
“I had a conversation recently with an insurance company rep who’d come to see me to try to get me to sell their life insurance and segregated fund products. When I said ‘tell me about your annuities, is there anything new?’ He [rep] gravitated back to the segregated funds because that’s what they want us [insurance advisors] to sell,” said Beaton. “Many brokers say, ‘Why should I sell an annuity when I lock the client’s money up and I don’t get anything more? Why don’t I put them in an investment like a segregated fund and then I’ll get paid for years to come.’”
“So it’s a mindset.”
