Just fifteen years ago, I was hard-pressed to find any information about indexed annuities in the public domain. Nothing was ever found in the newspaper or at the library; not even on that confounded thing they called “the internet.” It was difficult to find any information about the products, a mere two years after the introduction of the retirement savings vehicle.
Certainly the lack of publicly available information on indexed annuities would have been resolved by the time the stock market collapsed in the year 2000…after all, the promise of principal protection on the products appealed highly to those who were risk-averse. Alas! One could find a small amount of information about these index-linked annuities on the World Wide Web at that time, but the vast majority of this information was negative and/or inaccurate. The financial giants that advertised in the Wall Street trades wanted nothing more than to squash a competing product with vast consumer appeal.
Seven years later, the media firestorm began, and indexed annuities seemed to be in the public’s eye on a daily basis. Not for good reasons, however. The Securities and Exchange Commission’s (SEC’s) attempted power-grab over the “zero is my hero” retirement savings vehicle put indexed annuities in the financial media journalists’ crosshairs. Again, most of the information that was disseminated tended to be negatively-swayed or largely inaccurate. However, a small riptide was about to become a tsunami: positive press on indexed annuities was on the verge of becoming much more commonplace.
Interestingly, this resulted in consumers asking about indexed annuities – A LOT.
“This morning I discovered your articles on the ‘Agents Sales Journal’ site. You have really given some very good information that is relevant to my situation…….considering buying an annuity. I am recently retired in March; 66 years young and trying to decide how to insure my income for another 30 years, with the inflation that I see coming down the road! I am thinking about index annuities for the following reasons: guaranteed monthly income, inflation protection in the market, and leaving something to my heirs. Is it true that this type of annuity can address these concerns?”
This email, received via AnnuitySpecs.com in 2008, gave just a hint at how consumers were taking control of their own retirements. Communications similar to this one was sent by a prospective purchaser named “Randy,” and it would only increase in frequency. Soon, American savers’ intolerance with being told to “stay the course” would create an outcry against retirement account losses.
“I saw your article about index annuities – regarding misconceptions. I am having a difficult time determining what is correct about index annuities. I have pasted a thread [in the email] below, in which one rep is pushing the annuity and another is telling me to run from them. I’ve attached the terms of the annuity. I understand that the money invested in an annuity is locked-up for 10 years with a penalty for early cash out. But this may be worth it if the annuity can promise the ‘gains can never be taken away, and that we’ll never receive a credit of less than zero’ per the advisor who likes annuities. The other advisor disputes that the annuity will guarantee anything for us. What is the truth?”
Ron, the sender of the above email, was dealing with a dilemma that many annuity prospects still wrestle with today. Their insurance agent had advised them on the benefits of indexed annuities, while their financial advisor (who doesn’t sell indexed annuities) warned against the products. This quest for factual data, on a relatively new retirement savings vehicle, hasn’t slowed down by any means.
“Sheryl – looking to purchase a fixed index annuity. I am a 44 y/o, so which would you recommend? My broker warned me against indexed, but I am tired of losing money and I won’t let him talk me out of this. Can you advise me? I have researched this, and know that an indexed annuity is what is best for me. Thanks.”
When I received the above email from Leonard, I was encouraged. I realized the insurance industry’s efforts to combat the negative press on indexed annuities were becoming successful. Our hard work of publishing numerous factual articles on these products was paying off! Finally, consumers had some small way to research indexed annuities on their own. They had access to credible and reliable information, which allowed them to make the best determination on whether or not indexed annuities were right for them. Maybe their advisors were still bullying them about indexed annuities. However, if that small voice in their gut told them that something wasn’t right, the chances of them stumbling upon the facts via public sources were tremendous.
When I started this company nearly eight years ago, we were lucky to receive one email per month from a prospective indexed annuity purchaser. Today, we receive these exact emails on nearly a daily basis. Calls have become commonplace as well. All of the articles I’ve been writing over the past decade are resulting in a flood of questions and requests for advice. I, however, cannot help these individuals.
YOU CAN THOUGH!
Help me, and help our nation, by becoming that trustworthy source of information. Write about the merits of indexed annuities in your hometown newspaper. You can blog about the products on your company website. Mail pamphlets to community members: provide an overview of the only product that can guarantee your clients an income they cannot outlive, while also promising no risk of loss as a result of market downturn. They have the ability to earn limited gains based on the stock market’s performance. One of the most basic concepts of economics is “supply and demand.” Don’t wait for someone to walk into your office, demanding an indexed annuity. Proactively supply the information your prospects need to determine whether this product is right for them. Chances are indexed annuities are PRECISELY what they are looking for in today’s climate of historical-low interest rates and market volatility.
Sheryl Moore is President and CEO of Moore Market Intelligence, an indexed product resources in Des Moines, Iowa. She has over a decade of experience working with indexed products and provides competitive intelligence, market research, product development, consulting services and insight to select financial services companies. She may be reached at firstname.lastname@example.org.