Strategies to apply to suitable annuity sales, Pt. 2

By Ryan Parker

Bankers Annuity Brokerage


Selling annuities to seniors has always been a delicate transaction and now, after seeing how a casually sold annuity product to an elderly individual can destroy a producer’s life and livelihood, many advisors have implemented new strategies or standards when it comes to selling annuity products to Americans older than 65.

In part one, we discussed how taking extra considerations when selling annuities to older people as well as recording annuity sales transactions can mitigate the odds of the same thing happening to you. Now, we’ll address a few more strategies advisors are using to protect themselves.

Ask clients to bring a trusted family member or friend along

It’s always a good idea to ask your clients to bring a responsible child or other close relative to meetings at which you discuss the option of an annuity sale. Not only should this person attend the closing session, but ideally, he or she would also accompany your clients to at least one overview meeting prior to making the sale.

Annuities are complicated products and remembering all the details can be daunting for any one person, so having a close family member present to help keep track of the details will also help to relax clients. As a protective measure, many advisors already insist that a family member sit in whenever they work with a senior client. This prevents the family from later accusing advisors of misguiding an older relative or selling them a product they didn’t fully understand.

Wait until clear regulatory guidelines are established

One of the biggest problems the Neasham case illuminated is how advisors are expected to know that their client is suffering from dementia. Very few advisors also have an M.D., and as symptoms of these types of diseases can wax and wane or even be disguised in seniors, many annuity producers would rather forgo making annuity sales to people of retirement age until the NAIC sets forth clear guidelines on how advisors can suitably sell these products without facing reprisal in the form of a lawsuit. Some insiders think the industry may go as far as to add controls such as a requirement for a third-party certification of the client’s mental competency.

Avoid selling to clients older than 65

If you want to insulate yourself completely from litigation surrounding annuity sales, you could simply choose not to sell to anyone older than 65 and focus your practice on serving people between the ages of 50 and 65. Of course, you can’t just abandon clients once they turn 65; instead, you explain that there are certain products you would no longer feel comfortable selling once they reach a particular age, and that includes annuities. If they reach that age and would still like to pursue products you no longer sell, refer them to other advisors whom you trust.

In the end

You may be the most honest advisor in the industry with nothing but the best intentions, but in the hard light of day, the reality is that we live in a litigious society and your profession puts you in greater peril than many of your contemporaries. Start taking the measures now to ensure all your annuity sales are nothing short of stellar from a suitability perspective, and prevent future misunderstandings and potential lawsuits.