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ANNUITIES

Smoking Out The Real Objections

It's a given that you want to propose the most suitable product for your prospect's needs. When she raises objectives like "guaranteed income" and "security," you know that fixed annuities may be a good option for her. But you face the challenges of complexity, outdated prejudices and inaccurate information, which can make clients suspicious or nervous about the products. It's your job to debunk, educate and empathize. You can do this by asking pointed questions-and listening to the answers. Here is what you're facing: in a 2010 Allianz Life Insurance Company of North America study titled "Reclaiming the Future: Challenging Retirement Income Perceptions," it was found that almost 54 percent of Americans aged 44-75 were uncomfortable with the word "annuity." Yet, of 3,200 people surveyed, 80 percent said they would prefer a 4 percent return with a guarantee against lost value compared to an 8 percent return that faces market risk.

Interestingly, the study found that 53 percent formed their opinions about fixed annuities as long as 20 years ago, with 64 percent of them not having researched fixed annuities since then. Only 27 percent were aware of innovations in fixed annuities in the last decade.

It's best to ask up front, "How do you feel about fixed annuities?" If she says she knows nothing, you know you need to educate her. If she says she's afraid that if she dies, the insurance company will get all the money, you can set her straight about that or any other voiced concern. Her frankness makes your job much easier.

However, if she doesn't give much away and says, "I'm pretty comfortable with them," don't be fooled; that may not be your cue to go straight to proposing a fixed annuity.

Be ready to offer a detailed-but clear-explanation of the product. A prepared, memorized script is helpful. However, I don't do all the talking. Throughout my fact finding, I ask, "Am I making sense?" With the right questions, you can draw the prospect's concerns out into the open and address them on the spot. But be prepared for mixed messages. Instead of directly expressing concerns about the market, the prospect may say, "Wow, things have really been crazy." That's your signal that you need to address that concern head-on. Also, prospects likely won't tell you they don't understand how fixed annuities work. That's why you need to be clear from the start. I will often tell the prospect that it is rare for the general public to be knowledgeable about such a complex product. You want to make sure the prospect knows that if she doesn't understand, then it's your fault and you need to do a better job of explaining. Another way I anticipate prospects emotional responses is to match my selling style with their buying style. I'm a conceptual person, but I have a client who is very analytical. So, I bring in a colleague who thinks analytically to help bring the client into his comfort zone. As you work to do a stand-up job of explaining the details of the product and anticipating worries, be prepared to tailor your answers to her circumstance. For example, you know your prospect has a 15 to 20-year time horizon until retirement and that she is financially conservative. Point out to her the features of the product and why you feel it is suitable for someone in her situation.

Point out that she has said a guaranteed income for life to cover basic needs is critical to her. Then, address how fixed annuities can meet those criteria as they offer guaranteed income contingent upon the claims-paying ability of the issuing company. If she comprehends and agrees, it will be easy for the client to understand your recommendation. Early in my career, I didn't stress enough to a prospect the features of a fixed annuity for his circumstance. He was a retiring police officer and we discussed the option of placing his police pension in a fixed annuity. He opted out of this product because of the costs involved. I failed to discuss the value behind the costs and how that value could meet his needs in a way that his company pension couldn't. The result? He missed out on a product that would have addressed his needs more completely.

So, you think you've done a great job of addressing concerns, laying out a complicated product's features in a clear, concise manner. But when you've made your closing statement, the prospect says, "Let me think about it," and you're floored. That's your signal that you haven't done as good a job as you thought you did of unearthing objections. There are still some unspoken matters, and it's time to be more direct. Here are some of the things you can ask:

• "Is there anything I've failed to explain?"

• "Do you have any nagging doubts about the product that I can do a better job of explaining?"

• Ask directly if her concern is about the product, the company, the market or you. Lack of confidence in those topics is typically the reason why a prospect will opt out of a fixed annuity.

• Also, I don't tell the prospect I'll call her next week. Instead, I ask her point blank: "What's keeping you from making your decision today? Is there something you're uncomfortable with?" • "What other concerns do you have that we need to talk about?"

If you don't ask these questions, she won't tell you what's on her mind, and she may miss out on a good option for her retirement plans. Remembering to be mindful that concerns are typically based on emotion; here is how you address concerns about: The product. People don't like to admit that they don't understand. They feel small. Be willing to admit that you may not have been as clear as you could have, and try to explain the product's features in a different way.

The company. Give a brief history of the company's security and its experience in the product. Don't overwhelm, but say enough to alleviate the prospect's fears. Bring supporting documentation with facts and figures.

You. It's tough when you ask someone, "What's keeping you from moving forward today?" and the answer is "You." Think of times when you have not returned to a hairdresser or a mechanic because you were displeased with the quality of service. You never expressed your dissatisfaction, right? It's hard for most of us to vocalize why we're unhappy with a company. But, if you are the service provider, wouldn't you like to know how you can improve?

To get to the heart of the matter, it can be helpful to ask, "Are you already working with a financial professional who you trust?"

By listening to your prospect and putting her at ease, you can overcome many concerns. That's not to say that every prospect becomes a client. There are times when you need to accept that the sale isn't going to go through and move on. But you will have more success if you have a conversation, rather than give a lecture.

You are helping to protect people's financial futures. You are making dreams possible for them and their family. That's a noble cause. You want to project confidence and empathy, and asking the right questions to uncover concerns will bring you closer to that goal.

Pamela Green, CLU, ChFC, FLMI, is the annuity specialist at Sapient Financial Group, a general agency of Massachusetts Mutual Life Insurance Co. Contact her at [email protected] [email protected].


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