Retirement Expert Rants on Annuity Sales Pitches

Hi, my name is Stan The Annuity Man, America's Annuity Agent. I've got to rant about something today. I've done this in the past and received both positive and negative comments about it.

People often ask, "Why do you wear the shades?" Number one, I don't want you to see the anger in my eyes. Number two, in one of my past rants, I got really emotional because I was upset about what was going on.

A Step Away from Education to Address a Bigger Issue

There are times when I step away from my usual educational blogs to talk about something that I think needs to be addressed. I believe it should be solved, and the consumer and those who stumble upon me need to understand the annuity world. Today's rant is about the annuity sales pitch.

Why Annuities Are a Curse Word in the Financial World

I've been doing this for a long time and am upset about how annuities have been portrayed. There's a reason annuities are a curse word in the financial world. There's a reason people get away with running "I hate annuity" ads, and the public doesn't say anything. That's ludicrous.

The Problem with Some Annuity Agents

The reason for this is because some annuity agents push the limits to make a sale. The majority of annuity agents are good people who are trying to do the right thing. But many are focused on their own interests, not the clients'. So, let me walk through some things that upset me.

A Calm Approach (No Promises)

I'm going to try to remain calm here. In my last couple of rants, I literally almost blew a vein while yelling at the computer screen. I'll try not to do that this time—but no promises.

The Hidden Sales Tactics: No Mention of Annuities

Let's discuss a few things in the annuity sales pitch world that must be cleaned up. The first issue is the people running TV or radio ads who never mention the word "annuity." They talk about benefits, pie-in-the-sky non-guaranteed returns, and scenarios that sound too good to be true, but they never use the word "annuity." It's a bait and switch.

Honesty in the Annuity Industry

I don't think there should ever be a bait and switch in the annuity industry. The sales pitches should be transparent. We need to tell people that annuities are contracts—transfer risk contracts that can help people. They're not for everyone, and there's no one-size-fits-all. If you're selling annuities, then sell them honestly. Why not start with the truth? Let's stop sugarcoating things. Let's present both the benefits and the limitations.

The Problem with Bad Chicken Dinner Seminars

This leads me to the bad chicken dinner seminar circuit. But let's be clear: if you're doing seminars, say upfront that you're going to sell annuities. Don't use fear tactics like "fear of the markets" or scare people with volatility. Don't sell with fear and greed. Annuities are contracts, not fear-mongering products.

The Issue with Back-Tested Returns

I really wish that all the hypothetical, back-tested, projected return scenarios would go away. I hear people say, "I got a 7% annuity," when the 10-year treasury rate is below 1%. That's not yield. That's growth inside an annuity, and it can only be used for income—it can't be cashed in or transferred. But every day, people call me saying they bought an annuity with a 7% or 8% return, and they're misled.

The Reality of Bonus Offers

Here's something else I hate about a lot of these sales pitches: the upfront bonuses. There are no philanthropists at annuity companies handing out free money. Upfront bonuses are just candy for the gullible. You cannot be that naïve to think that there's free money being given away. The bonus is simply part of the contractual guarantee, end of story.

The Problem with Made-Up Words

Another issue is the use of made-up words like "hybrid." A hybrid is a car, a plant, or even a mattress, but not an annuity. Let's stop renaming annuities. In the annuity world, these are commodity products. All of us agents get the same quotes. I try to represent every carrier, but annuities are commodity products—let's not rename them.

Honesty in Describing Annuity Products

Let's be honest about what annuities are. For instance, Indexed Annuities were designed in 1995 to provide CD-like returns. Don't market them as market return products. If we want to do that, they should be regulated as securities by the SEC and FINRA. Using the word "market" in connection with annuities is misleading, especially in times of fear like the current pandemic. Please, stop selling fear.

The Need for Straightforward Sales

The annuity industry could really change if we just focused on telling the truth. As my grandfather used to say in Stanley, North Carolina, "When you tell the truth, you don't have to remember anything." It's that simple. We need to stop pushing pie-in-the-sky returns and stop misleading consumers with back-tested numbers.

A Missed Opportunity for the Annuity Industry

We have 10,000 baby boomers hitting retirement age every day, yet annuities are still seen as a curse word. Annuities have a monopoly on lifetime income, so why aren't we aligning annuities with lifetime income in people's minds? How have we dropped the ball from a marketing perspective?

The Wild West of Annuity Sales

For consumers out there, I want you to understand that it's the Wild, Wild West of sales. Don't believe the agent. I may be the top agent in the country, licensed in every state, but you don't have to believe me either. Believe the contract. That's what you're buying.

Protect Yourself: Request a Specimen Policy

When you're considering an annuity, request a specimen policy from the agent. See precisely what you're buying. Annuities also have a unique benefit: a free look provision. This means you can test drive the product. If you don't like it, you can get your money back.

Understanding Free Look Periods and State Guaranty Funds

Every commercial annuity comes with a free look period. Every state has a free look policy. If you don't like the policy, you can return it and get your money back. It's one of the best features of annuities. Also, it's illegal to use state guaranty funds in the sales process. Fixed Annuities are backed by state guaranty funds, but agents cannot use that in their sales pitch.

Call for Industry Reform

I'm begging the annuity industry to clamp down on misleading sales messages. This is our opportunity to pivot as an industry and focus on the contractual guarantees that people want. Baby boomers are looking for these guarantees, and we need to meet that demand.

The Bottom Line

The bottom line is that consumers need to protect themselves. Do your homework, take your time, and make your decision on your terms. To the annuity industry, it's time to focus on the truth. We need to stop selling fear and start focusing on the real benefits of annuities.

My name is Stan The Annuity Man. Let's shoot it straight and tell the truth.