Innovation. It is the key to unlocking the potential for new business. Whether it is by offering new services or products, innovation provides an opportunity to reconnect with existing clients and attract new ones. One of the primary ways that an advisor can do this is by capitalizing on popular trends.
According to the Life Insurance and Market Research Association (LIMRA), “variable annuity sales were down four percent in [Q1 2013], the sixth consecutive quarter of declines on a year-over-year basis… Total fixed annuity sales fell 11 percent compared with the prior year. This is the eighth consecutive quarter of declines.” The benefits of both products have not changed over the past two years, but their marketability may have.
In contrast, “Sales of deferred income annuities rose 147 percent from the first quarter of 2012.” While still a much smaller market, deferred income annuities offer the benefits of an old product, with the allure of a new one. Growth figures like that can help catch the attention of clients, the way a strong performance in the stock market can. Everyone wants to get in on the next big thing.
Deferred income annuities (DIAs) are not a new product, but can seem like it when you consider that sales of this product accounted for $395 million in the first quarter of 2013, compared to $51.7 billion total annuity sales (LIMRA). DIAs are just like they sound: an annuity that pays income to the owner no earlier than 13 months from their initiation date. While that prospect may not be particularly compelling to clients in or near retirement, it may be much more compelling to younger clients. DIAs could be a critical piece in selling to this submarket, as building a younger client base is one of the foremost challenges facing advisors today. For this new generation, a product with benefit characteristics that meet their needs, a market with an eye-catching growth figure and the potential to join in on a trend that their parents likely have not even heard of, deferred income annuities can be very appealing.
Young and new clients need not be the only potential beneficiaries of the rise in this annuity market. Existing clients with at least five years until retirement can also capitalize on the rewards of a DIA. By offering this product to those clients, there is a chance to reconnect with those that may have become jaded by the same old offerings. Even if there is no interest in this product, it provides yet another reason to reach out to clients for an engagement opportunity.
Sometimes the key to attracting new clients and making sales to existing clients is making the most of a growing trend. With 147% year-over-year growth and benefits to match, the deferred income annuity may be that marketable new product you’ve been looking for.
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