After near a decade of ultra-low interest rates, things are finally beginning to pick up, making it a great time to target the Baby Boomer marketplace and aged annuity leads.
A Look at Bond Investors
As Forbes makes the case, bond yields have been disappointing as far back as the 2008 financial crisis — especially in the context of watching S&P 500 investors tripling their money since 2009. Now that interest rates are finally taking off, so are bond yields.
But bond investors are weary after eight-plus years of poor performance. Those who haven’t been in the bond market might think twice about starting after looking closer. Still, the upward shift in interest rates is activating renewed interest in investing — and that’s where agents come in. Your opportunity for targeting and cold calling sales prospects is to identify those investing in bonds, or considering bonds, and sell the advantages of a well-suited annuity product.
Annuities as a Smart Alternative
Annuities are a smart alternative to more complex, more risky, and more variable investments.
A Simpler Investment
Some Boomers are savvy financial investors, but many people are not. Those that aren’t experts end up relying on financial planners. When they come out ahead, it won’t matter why, but when they lose money, they’re frustrated. Annuities have the advantage of being a much simpler product for the consumer.
Agents can explain the important points in simple terms — guaranteed income for life, minimum guaranteed gains even in a down market, insured against the risk of losing their investment, etc. Going deeper, your Baby Boomer clients can be educated about the advantage of covering both long and short positions with an annuity. Most can also understand the important fact of the market that the only guarantee there is volatility. And most Boomers would rather minimize their exposure to that volatility.
Less Risky Investing
Baby Boomers aren’t spring chickens anymore, and most don’t invest like they are after what happened in 2008. It’s generally a risky strategy for older investors to have high equity exposure in their portfolio. Much better to take a lower risk approach.
Agents can present the case that annuities are a safer investment product. Emphasize the fact that annuities have a built-in “short” selling system, such that the client’s account doesn’t participate in the downside volatility of the market. Baby Boomers will be happy to know they have a guaranteed, locked-in gain and can’t lose any of their accumulated value.
More Reliable Returns
Other investments have their advantages and their uses. But for Baby Boomers on the cusp of retirement, the variable performance of those investment strategies is risky. Certificates of Deposit have the downside of lower returns an exposure to having their value diminished by inflation. Bond yields generally depend on the interest rates moving upward but not to such an extent that inflation eats into returns.
Agents have an opportunity to educate leads about the many options. Many folks near retirement may be interested to learn about immediate annuities. Even younger Boomers may be interested in deferred annuities. Regardless, your leads will be happy to know that they can get a steady pension-like payment for life that’s simple, low risk, and tax efficient. Prospects may also enjoy knowing that they can convert their annuity account to pension income at any time. Consider emphasizing that lifetime payment options exist, as do options to include a spouse.
Annuities investments aren’t like other insurance or financial planning leads. Many prospects don’t know as much about them as they do certificates of deposit, bonds, or stocks. Annuities can also be a bit tricky since opinions can be polarized. However, if your sales conversation sticks to the primary features and benefits of annuities, contrasted with bonds, you are in a good position to add a powerful boost to your business.
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