When it comes to retirement planning, selling annuity products is an important part of every financial planner’s arsenal. Whether it’s because annuities offer stability or because a leveraged annuity strategy is a proven way to build wealth, demand for annuities is large and it is bound to grow in light of recent market turmoil. Since annuities are like hybrids between bonds and insurance policies, selling annuities is really not more complicated than either of these, and often the client will be more receptive upon hearing that principle is protected.
Annuities function a lot like insurance contracts insofar as they will often take into account the clients’ age when a determination about payments is made; but they are also a lot like bond inasmuch as they provide fractional payments of interest against principle – often a fixed payment (in a fixed annuity) but other times variable, based on the performance of underlying assets. Leveraged annuities are truly unique because they allow business owners with significant cash flow from operations to leverage an initial principle investment with borrowed money, the cost of which is covered by the underlying asset’s interest yield or else by the buyer of the annuity through additional contributions; but they are as neatly packaged as any other variable or fixed-rate annuities and as easy sellable.
Selling annuity products has radically changed the lives of the planners and brokers who provide them to the clients, in addition to improving the lives of clients who buy them by offering stability and a real shot at growing wealth. As insurance-like products, annuities offer salespeople the opportunity to earn significant commissions as a percentage of principle. Since many annuity buyers will invest 50% or more of their net worth into structured products like annuities, principle amounts commonly exceed $500k and $1m in higher net worth categories, providing significant earning potential to motivated salespeople.
Annuities have existed for a long time and will continue to proliferate because they are a unique solution to the problem of balancing income, stability, and growth. For receiving all three of these, clients can of course expect to pay a premium; and by gaining access to leverage through their own businesses’ working capital, they can also expect to reap benefits from the wealth created by nearly risk-free interest payments compounding over time. For giving clients peace of mind and a shot at building wealth with lower risk than other assets, sellers of annuities can also expect to receive great satisfaction, handsome commissions, and repeat business.
