Many annuity agents believe that compliance is a barrier to sales, and a few bad apples have led carriers and regulators to insist that agents follow strict guidelines to protect consumers during the annuity sales process. But don't consider compliance a negative -- instead, approach it as an opportunity to show clients that you take their business seriously. If you follow these practical tips to overcoming annuity compliance challenges, you'll be on your way to a successful and compliant sale.
Suitability
The first step is to assess your client's overall financial situation. Many insurance carriers offer forms to help guide you through this process. Find one that is either required by the carrier or works for you and incorporate it into your business practice.
Next, build a portfolio that includes a range of products -- multi-year guaranteed, fixed, index, and, if you're securities-licensed, variable annuities. This ensures that you will likely have an annuity that is suitable for your client. Finally, look for products that offer a choice of surrender charge terms, crediting rate options, and riders. This expands the options available to your clients.
Marketing materials
You must ensure that your clients understand the benefits, features, and limitations of the annuity that you offer them. Producer-developed client materials -- ads, presentations, brochures, snail mail, and email -- are often a source of compliance woes, especially because it's difficult to keep up with the ever-changing compliance landscape. But carriers are aware of what is required at any given time. Most carriers offer a variety of client materials that are both compliant and effective in selling the product and explaining its features and benefits to your clients. So, in general, leave client materials to your carrier
or wholesaler.
Tax advice
Tax implications surrounding the sale of an annuity are particularly challenging and, if you are not a CPA or tax attorney, you must be extremely careful when discussing taxes and penalties. You've heard this advice before: Refer your client to a tax advisor for questions related to taxes.
Gretchen Barry is director of communications for Legacy Marketing Group. She can be reached at gretchen.barry@legacynet.com.
