Ten thousand hours or get a mentor -- you decide
By Karlan Tucker
Closing the annuity sale is where all the money is made. Early in my career, I realized that a qualified prospect and a great presentation didn't earn me any money, because it's not very often a prospect says, "Where do I sign?" I have to initiate the process of closing the sale, and so do you. The most common obstacles are an objection of one kind or another or the fact that you may not personally own an annuity.
After sitting face-to-face across kitchen and conference room tables with my prospects for more than 10,000 hours (5,000+ interviews), I no longer hear objections that I haven't heard before.
There is no magic in what I do. I simply use common sense, logic and emotion to get my prospects to take action now. Although it took me 10,000 hours to acquire the high closing ratios I currently enjoy, it doesn't have to take you nearly as long. Your shortcut can come by reading about what has made others successful, being mentored by someone who is experiencing great results, and then practicing it and applying the same techniques to your own practice.
Let me tell you how to overcome the most common objections that stand in the way of closing the sale and potentially earning a dramatically higher income for yourself and your family.
The most common objections are:
1. The market is at the bottom.
2. My losses are too great to move.
3. I don't want to tie my money up.
4. How do I know your company is safe?
I ask, "How do you know the market is at the bottom?" They say their broker tells them this. I'll respond by saying, "If your broker knows this is the bottom, then he would have also known that on October 9, 2007, the market was at the top. Did he get you out of the market and spare you a 50-percent loss? You and I both know the answer to that. He didn't know October 2007 was the top anymore than he can know this is the bottom. I think we should act upon what we do know. We know you still have a nest egg worth protecting. We know you want to stop the losses and begin your recovery now. We also know that I have a powerful solution to your problems. My indexed annuity will provide a bonus to start your recovery. It will stop the losses, and through the fixed account, bond indices and income accounts, it will provide you with returns so you can rebuild your nest egg or start income now or in the future. I am most comfortable and confident when I act upon facts. What would you like me to do?"
Objection No. 2: My losses are too great to move.
My response to this is that it would only be true if the only way to recover was by staying in the market, owning exactly what you currently own. Let me propose an alternative to "hoping things will work out." My indexed annuity credits interest to your account as a result of the S&P 500's rising. The S&P 500 represents 75 percent of the market value of the U.S. stock market. It's likely that for you to recover in your current accounts, the S&P 500 would have to go up. You see, we both benefit by the rise of the index. The difference is that when we get an annual gain, we keep it, even when the market goes down again. And if the market drops further before it has a sustained recovery, you will not experience any further losses. Additionally, we credit a 10-percent bonus to your account the day we open the account. You can start your recovery right now, even if the market continues to drop for the next year or more.
Objection No. 3: I don't want to tie my money up.
I completely understand this concern. My annuity does not tie your money up; but for the sake of argument, let's say that it does. Where can we put your money that it is not tied up? I suggest money market accounts, savings, checking and maybe under your mattress. May I ask where your money is now? [I'm in the market.] Have you experienced losses? [Yes, but so has everybody.] Actually, not everybody has; and I believe you are violating your own policy. By being in the market, you are tied up. [How so? I can sell any day I choose.] Yes, I agree; so, today you call your broker and say, "sell," and he sends you $50,000. When you receive it, you call thank him and then ask him how long it will be before you get the other $50,000. He informs you that if you ever want to see the other $50,000, you have to send the first $50,000 back; otherwise, you will never see it. It appears you may have no liquidity if you want a realistic opportunity to get back to your high point.
In the January 2000 issue of Reader's Digest, Warren Buffett said, "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes." All the way back in 2000, Warren warned us that our money could be tied up in the market for 10 years or longer. A few days ago, an article appeared in USA Today that said if the market were to rise from this point forward with no further losses, and if the average returns were to be 5 percent, it would take until 2025 -- 16 years -- to be made whole from its high point in October 2007. Five percent may not sound like much, but as it turns out, that is the annual compounded return of the Dow Jones for the past 100 years -- from 1900 to 2000. If you don't want to tie up your money, you can't be in the stock market.
My annuity offers 10-percent liquidity per year, which means that in approximately 10 years, you may spend all or most of the original investment. Do you have a plan in place to spend all your nest egg over the next 10 years? I'm not proposing you put it all here; I'm just saying that if it were here, there's more liquidity than you are voluntarily willing to take.
Objection No. 4: How do I know your company is safe?
I can't promise you there will never be any problems, but I will show you why it's unlikely that you would ever experience a loss.
First, let me say that the safest place I can think of to place your money is in government bonds. Backed by the full faith and credit of the U.S. government, it doesn't get any safer. Today's yield on a 10-year government bond is 2.5 percent; and on 30-year maturities, it is 3.7 percent. It's clear we can have safety, but at what price? You are not likely to ever recover from your losses at this rate of return. You would be unable to fight the inflation that is likely to rise down the road, and how do you create sufficient income to maintain your standard of living?
The safest place I know of where you can enjoy safety and the opportunity necessary to solve the above problems is in an indexed annuity. The safety comes from three factors: First, you have the strength of a conservative bond portfolio; second, you have the claims-paying ability of the insurance company; and third, since they promise to pay you an income stream you cannot outlive, they take the fees generated by the income account and use them to re-insure the risk in the event you outlive life expectancy tables.
Many folks are purchasing bond portfolios in a flight to safety. Consider this: The world's largest bond fund manager is PIMCO Bond Funds, managed by Bill Gross. If you bought bonds through PIMCO and they defaulted, PIMCO doesn't have any obligation to cover your losses. However, if you participated in conservative bonds inside an indexed annuity offered by a company such as Allianz (the 14th largest company in the world and the 3rd largest money manager), you now have the strength of Allianz' claims-paying ability backing the bonds. If the bonds default, they default on Allianz; and since your guarantees are written on Allianz paper, you haven't suffered a loss. As an aside, Allianz actually owns PIMCO. Personally, I would rather participate in bonds backed by PIMCO's parent than to own them outright at PIMCO.
But let me ask you, what would you be most comfortable doing?
The reason not personally owning an annuity will get in the way of your success is that people care more about your confidence than they do your competence. When you don't own an indexed annuity yourself, it sabotages your ability to be convincing, persuasive and to confidently recommend that it is in your clients' best interest. It only takes $5,000 to open an account with American Equity. I believe strongly that if you're serious about being successful in the annuity business, you have to own one yourself. I own many, and you won't convince me it's not good for me. You also won't be able to convince me -- if I believe the product is suitable for you after having done my due diligence -- that you shouldn't own one as well.
Indexed annuities provide safety and opportunity on the same dollar at the same time in the middle of a recession. They can generate an income now or in the future that you cannot outlive, and capture gains on autopilot annually without triggering a taxable event -- no market risk; instead, it's peace of mind, growth and income. It's not perfect, but it is appropriate for many and offers a real solution to the volatile world in which we live.
I wish you great selling!
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