Building your practice through better positioning, Pt. 3: Telling the income rider story
February 4, 2013 by Shawn Moran
Is it worth paying a fee for income predictability and reliability? In the final installment of this three-part series, I share a story I use to position income riders to my clients.
As we head into the conclusion of this series, I want to share with you a metaphor that I use when positioning income riders in my retirement planning work with clients. As I shared with you previously, adults tend to learn more from the stories that we hear than from statistics and flow charts. To build successful retirement planning practices, we need to be successful storytellers.
One of the transitions that takes place as we get older and are approaching retirement is a re-ordering of our financial priorities. For instance, when we are younger, we are more comfortable with financial projections (“What might my money be worth?”). When we are older, we tend to look for financial predictability (“What will my money be worth?”).
Similarly, the letters ROI when we are younger stand for “return on investment.” When we are older and approaching retirement, they come to represent “reliability of income.” It is simply a matter of acting our age when it comes to our money. This general principle applies to your prospects and clients.
Where annuities can fit into an overall retirement plan is in the predictability and reliability of income part of the equation. For instance, there are optional income riders available on many fixed annuities today that, for an annual fee that is typically between 0.50 percent and 1.25 percent, offer a guarantee years in advance of retirement as to how much income your annuity account could generate in retirement. In many of these annuity products, once you begin to receive retirement income, that income can be guaranteed by the insurance company to continue as long as you live.The question naturally arises: Is it worth paying a fee for income predictability and reliability?
Let me offer an analogy. Let’s say that you plan to travel across the country to attend a concert. You know that if you waited until you flew to the concert hall, you could buy the tickets at the gate for less money than if you paid a small fee to purchase them in advance. You have to decide if saving that small fee is worth it, considering the concert could be sold out when you arrive. Similarly, retirement is a long journey. If you did not have the guarantees in an annuity, you could end up being just fine in terms of meeting your income goals. The value of an annuity in an overall retirement plan is that for a fee, you purchase your ticket in advance, so to speak, securing a future retirement income that can be structured to last as long as you live.
In summary, narrative can play a critical part in helping your prospect or client establish a mental reference point in an otherwise complex discussion. Whether you find it useful to share the stories I’ve offered in this series or prefer to develop your own, I encourage you to hone your storytelling skills in 2013 and see the positive impact it can have on your closing rates.
