Joe Marullo Insurance & Retirement Services
16818 Doverwood Way
Houston, Texas 77058
It seems odd to me when I speak to someone I sold an annuity to 20 years ago now, and their memory of exactly how they can use the benefits seems fuzzy. But 20 years ago was a long time, especially when they were then 60 and now 80; time has a way of adding confusion and cluttering our memories. For me, transparency is the key to a long and successful career, especially if you have chosen an older target market.
Transparency isn’t just for our clients and prospects; it is for us as agents also. Being completely honest and transparent makes us better agents. It allows us to make the recommendation that makes sense and stand up against a future family or legal challenge.
Transparency can have no limits, but some lines should be drawn; for example, I oppose the sharing of compensation I earn when I sell an annuity. Not that I care if the prospect knows, but because it conflicts with the process, any sale focused on a substantial fact finder and based on the benefits that the prospect can enjoy should be sufficient. But my view will be in the minority because sooner or later compensation transparencies will be part of our business. In reality, it is ok with me; I just see no real value for it.
Whether it starts in 2017 or a few years later, it will happen. Maybe compensation will pour over into other financial arenas. Also, an example is the mortgage business. I have a family member who runs a large mortgage business, and he has shown me how compensation works, and it is pretty staggering. I wonder if disclosure in their field would stop folks from applying for a mortgage.
Annuity surrender charges: If an annuity you are suggesting carries a surrender charge, that contractual section needs to be fully disclosed in many different ways. Being transparent here is essential. But revealing it also allows you to explain the options to avoid surrender penalties, such as how a prospect can access their funds and under what rules.
Remember the rule: If you want to enjoy the benefits this annuity provides, you must allow the insurance company to hold your funds.
Bonus money for choosing an annuity: A bonus does add to your account value but only under specific rules. Be very transparent about how a bonus works and how it can add to the benefits they can enjoy if held long term. Bonuses are not free; they are earned via vesting, years the contract is kept in force. Explain exactly how the vesting works and make sure your prospect signs a form stating they fully understand it. Hopefully, as new products come to market, insurance companies will simplify this highly complex system of earning the bonus. Transparency by both the insurance company and the agent is once again essential.
Yield calculation: Probably nothing is quite as confusing as to how the yield is calculated on a Fixed Indexed Annuity (FIA). But things are getting better, and insurance companies are streamlining the actual information process. But we as agents must make sure our prospects and clients understand caps, participation rates, and the “fine” print.
Transparency is vitally important, and agents and insurance companies should embrace it, and our consuming public should demand it. Transparency will make us better agents and insurance companies better product providers. Transparency will strengthen the bond with those who will enjoy these marvelous products' benefits.
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