Social Security Sells Annuities—Here’s How

This is about the most effective annuity sales technique you can use. We have thousands of clients using this technique and I want to be sure you’re taking advantage of it.

It is well-recognized among financial advisors that commercial annuities can help clients achieve retirement income security. Both immediate annuities and deferred annuities can supplement traditional lifetime retirement income sources such as pensions and Social Security. For advisors, understanding where annuities fit into retirement income planning is the easy part; getting clients and prospects to see this, and take action, is the hard part.

Consumers Love Lifetime Income—Cautious About Annuities

Despite what we believe, it is critical to acknowledge that annuities have a bad reputation among many consumers. The distaste for annuities is likely a result of the constant refrain heard from pundits that annuities are “bad”—that fees are excessive and annuities are commission-driven sales. There are signs, however, that things are softening a bit, as articles about the usefulness of immediate annuities for retiring baby boomers keep popping up. So now might be a better time than ever to talk about annuities.

Nevertheless, the residual effect from the long-term negative press is that many consumers are left with a vague and fuzzy notion that annuities are bad, even though there is nothing they can specifically point to or articulate. Add to this the fact that annuities are difficult for clients to understand, and it’s easy to see why annuities can be a hard sell.

How Can You Overcome This Negative Bias?

Simply put, by starting with something clients and prospects already have: Social Security. Virtually all clients and prospects are or will be covered by Social Security in some fashion, and most are likely entitled to a substantial lifetime benefit. The fact that there are so many people in this pool of prospects, coupled with the fact that they have no idea when it’s best for them to start taking Social Security, makes this a brilliant prospecting and selling strategy.

Think about this: what will the client’s or prospect’s reaction be when you point out, at the right time, that they already own an annuity – Social Security! You can show them the dictionary definition of an annuity to really drive home the point. All of a sudden annuities don’t look so bad!

Social Security retirement income will, in most cases, not be enough. And that, of course, is where annuities will eventually come into play. A few clients may be lucky enough to have acquired some pension income along the way. That’s great. But even then, most clients will have to figure out how to “monetize” their retirement savings—that is, turn their assets into income.

Clients have spent a working lifetime turning income into assets (i.e., savings), and that’s all they know: how to save. But upon retirement, clients have to reverse that process and turn assets into a lifetime of income. This turnabout is likely to be utterly alien to them, and that is where you come in.

Here’s How You Can Sell More Annuities With Social Security

The “flooring” approach to building a successful retirement income strategy has become quite popular over the last few years. Under this approach, a “floor” of income is built up, to a level defined by the client – which is enough to cover “essentials,” essentials plus some cushion, or an amount above that.

The floor is typically composed of three layers:

1. Social Security,
2. Pensions, and
3. Annuities

Social Security is the “base layer” of the floor, so that’s where the analysis should start.

Pensions are then layered on top of Social Security. Finally, annuities are added to “plug the gap” to the desired income level. This approach will make sense to clients when they come to understand that all three layers are merely different flavors of annuities.

Once the retirement income floor is in place, a complementary income strategy should be devised and implemented for remaining retirement investments or assets. Such strategies include the “bucket” approach and the 3% or 4% “withdrawal” approach.

What About Objections?

Common objections heard from prospects include “I already have an advisor,” or “I’m all set.”

We know from experience, however, that most are not “all set,” and that in many cases the advisor is merely an asset accumulator (perhaps a very good one) who has no idea how to put a retirement income plan together.

So the bottom line is that most prospects have never had a Social Security conversation. You need to have that conversation with them because it will lead to comprehensive retirement planning.

Questions To Ask

To start the conversation or overcome objections, you might use questions like these:

“Has your advisor spoken to you about when you should claim Social Security, at age 62, 66/67 or 70?”

“Has your advisor reviewed your Social Security estimated benefits statement with you?”

“Has your advisor spoken to you about the decisions you will need to make, some of which are irreversible, regarding when to claim Social Security, how to package your retirement health insurance together with Medicare, Medigap, or when you should turn your pension on?”

Now What?

Once you’ve managed to engage a client or prospect by discussing Social Security, what’s next? The answer: you’ve got to put your money where your mouth is.

The first step is for the client or prospect to obtain Social Security benefit estimates from Then it’s time to “crunch the numbers.” How should you do that?

“I’ll just use a Social Security calculator.”

There are several online calculators you could use. These have the advantage of being free. But as the old saw goes, you get what you pay for: numbers go in, and numbers come out. That’s it. Ask yourself this: does the calculator you use help you prospect with Social Security? Probably not. Does the calculator you use help you sell annuities?
Probably not.

And if you use a stand-alone calculator, you may have to run multiple scenarios to find the best strategy for the client, then take that set of numbers and input them into your planning software. That’s not efficient.

“I’ll use my planning software.”

Perhaps you, or your company, license planning software where Social Security income is taken into consideration. Ask yourself this: does this software help you prospect with Social Security? The answer is, by definition, no, because you wouldn’t be using your software to prospect: it’s way too early. So forget about that.

So, if calculators are too simplistic, and planning software is too comprehensive or inappropriate for prospecting, what can you do?

This Is Where Social Security Pro Comes In

Social Security Pro was developed to fill a prospecting need: to fill the gap between one-dimensional calculators and full-blown planning software. Social Security Pro merges the “art’ of selling with the “science” of selling.

It’s not just a calculator. Nor is it comprehensive planning software.

Social Security Pro is a prospecting tool—an engagement tool. Use it to engage prospects in a conversation about something they already have and don’t have to be sold—Social Security.

From there, you can quickly move on to more comprehensive planning, which necessarily results in the sale of appropriate products and services.

If you’re ready to leverage Social Security into a business building powerhouse, take a look at Social Security Pro now.

If you’d like a complete annuity selling solution, prospecting to closing, then try Rio.

Or, schedule a one on one demo today. Get a first hand look at what a good system can do for your business.