What do Walmart, Wells Fargo, major wirehouses and Tony Robbins
all have in common? They’re all part of
a growing stampede to sell Fixed Indexed Annuities. 2014 will end up as the year where Fixed
Indexed Annuity sales were up over 36% from the previous year, a new record
high for FIA sales.
Financial commentators of all stripes tend to harp on high
profile cases where consumers were sold annuities ill-suited to their
needs. These commentators also claim annuities
are too complicated, expensive and have inflexible terms, making them
unattractive to changing needs. Many advisors believe annuities offer clients
little more than 3 to 4% interest. We believe the public is not getting a balanced
picture and the time has come to set the record straight and give consumers the
truth about fixed indexed annuities.
It’s crucial to disseminate
accurate information to clients about what fixed indexed annuities (FIAs)
do and why they should be considered as part of a retirement portfolio. A
fundamental problem is that many advisors simply dismiss FIAs products as
having no real value. New marketplace voices,
i.e., Tony Robbins, should be a wake-up call to our industry and help advisors
realize that clients do in fact value what FIAs offer and they want the
benefits of an FIA. Robbins even stated
there is a major unfilled need for products that protect consumers from market
risk and simultaneously produce tremendous streams of guaranteed income.
FIAs are designed to guarantee income, offer peace of mind
and provide protection and that’s why nearly 90% of annuity owners buy them –
they protect contract holders from losing money.
It’s important for advisors to
keep their story simple and this is where someone like Tony Robbins excels,
keeping his story short, sweet and attractive to consumers which can threaten
your relationship with your clients. But
why consumers find the story so appealing?
Years ago, workers could count on monthly income from corporate
defined benefit retirement plans and retail buyers had little contact with
annuities. Most hadn’t even heard of annuities,
which tended to be the purview of institutional money managers. With Baby Boomers retiring in droves and searching
for guaranteed income, annuities enter into the lexicon more frequently. FIAs
have emerged out of the shadows and whether from lawmakers on Capitol Hill mulling
the merits of the Security Throughout Retirement Act or Treasury Department
experts issuing the final version of the Qualified Longevity Annuity Contract over the summer, it’s clear that FIAs are capturing
public attention and gaining a larger market share.
For the first half of 2014, FIA deposits were at record levels
and will close out with another record-setting year. Why the record growth:
·
Deposits remain entirely in your control - you
are not giving up access to your
cash.
·
FIAs offer the potential for significantly
higher annual returns than other “safe money” solutions such as CDs or bonds.
·
Your principal is 100% guaranteed – you can’t
lose money.
·
FIA growth is tax-deferred, maximizing compound
growth of your retirement income fund.
·
You get income insurance or guaranteed income
for life when you select an optional income rider.
So what is the truth?
It’s really all about Income, Income, Income.
As powerful a tool as FIAs can be for safe money return,
what makes them so attractive is their ability to protect principle and simultaneously
provide a guaranteed lifetime income stream, not to mention tax efficiency and
upside potential without the downside risk.
No other financial product in the marketplace today does all of these
things as efficiently as a fixed indexed annuity.
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