​Annuities and the American economyBlog added by Ryan Parker on February 5, 2013
Ryan Parker

Ryan Parker

St. Petersburg , FL

Joined: April 04, 2011

One of the toughest parts of marketing yourself as a financial advisor in the wake of a global economic meltdown is convincing your clients — and yourself — that the future is still full of good opportunities for devoted investors.

Variable annuities have found themselves hit hardest recently, to the point where many advisors and companies are wondering if they should offer them at all. But if you're looking over your variable annuity offerings or general investment advice in the wake of the recent economic troubles, there may be some good news on the horizon: Investors and commentators alike are noting a remarkably sharp positive shift in the American economy.

As Richard Bernstein argues in a November 2012 piece for the Financial Times, “America is not the next Greece," American investors have been reacting to reinvesting with a lot more anxiety than is necessarily warranted by the current economic climate. Rather than following a path of gradual decline into insolvency, Bernstein notes that the American economy is “one of the few economies that is actually improving.”

He points out that overall, the U.S. has remained resilient in spite of a seemingly overwhelming tide of bad news for investors; he states that “total U.S. debt […] as a percentage of GDP peaked in 2008 at 359 per cent. The current figure is about 329 per cent […] this decrease is unprecedented since 1970.” Therefore, not only is the American economy recovering, but it's doing so at a remarkably fast pace. The only thing keeping investors away from the market is their own (likely misplaced) cautiousness.

What does this mean for variable annuities, which only a year ago seemed all but completely unreasonable? Quite simply, they're becoming an attractive option again and will continue to improve as the economy continues along its track of recovery. With the recent government sale of the vast majority of AIG's stock, it's clear to see that the economy is on the right path, and it's important to educate your clients on how variable annuities can provide them with additional benefits in a future that is looking decidedly more bright by the day.

It's important to understand and address your clients' misgivings appropriately and respectfully, but don't let them be too put off by politics when they could be taking advantage of the economic upturn. Without proper education, this viable opportunity could be easily missed.
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