Annuity Marketing Under Fire: Mass Secretary of State’s Newest Complaints
Is it safe to market fixed annuities anymore? Should agents shun annuities out of the concern that they may be charged with, “dishonest and unethical marketing”, face harsh penalties, garner negative publicity or, potentially, see their careers ruined?
This morning I became aware of two recent complaints filed by the Massachusetts Secretary of State, William Galvin. The subjects of the complaints are two annuity producers operating in
The two agents utilize the CSA designation as well as sales programs such as “Piece of the Pie” to frame the value of fixed annuities to senior prospects. They also are “certified” by the National Ethics Bureau. The designation, certification and marketing tools do not curry favor with the regulators. They are termed unethical and dishonest.
Historically agents have tended to back away from presenting themselves to the buying public as “life insurance agents” or “annuity agents.” They tend to gravitate to alternative marketing identities i.e. “planners”, “advisors”, “counselors”, etc. This is unfortunate because they are backing away from an honorable identity. Within the annuity industry we must ask ourselves why this occur? How did we get here?
One reality which is under fire is the level of commissions paid on many fixed annuity contracts. The legal complaints in question characterize them negatively and as “high.”
On of the biggest drivers of agents’ gravitating toward high commission/ long surrender period annuities is that they (the agents) are typically underproductive in terms of their sales activities. There will be no solution to the problem of annuities having a bad public image until agent productivity increases. And agent productivity will not increase unless we utilize technology properly, and with the goal of helping agents earn sufficient incomes on annuity sales that provide lower than today’s typical commissions. This means putting agents in the position to reach more prospects, compliantly, and make more sales in absolute terms. In any case, the whole Boomer retirement opportunity will be “blown” by the annuity industry unless this is fixed.
It’s difficult to fight the temptation to proffer a sales pitch for transforming the annuity sales process- but I can’t help myself. That’s my passion. And that’s the true solution to helping agents and preserving their role. There will be no end to this sort of regulatory intervention unless and until industry leaders take the steps necessary to arrest it. A good friend of mine sent me an email this morning about this very issue. I don’t have his permission to quote him but I will share one or two sentences from his message:
“It is inconceivable to me that given today’s technology that can assure all advisors are not only consistently trained, but that all advisors can be assisted in communicating the appropriate messages to all clients (and that it can be documented that the appropriate message was in fact conveyed), that insurers have not been able to figure this out.”
This is a sad commentary that is, regrettably, all too accurate.
©Copyright 2007 David A. Macchia. All rights reserved.