I Hate Annuities

Have you ever had a client or prospect say, “I hate annuities?”

When I have conversations with clients about why they hate annuities, I have to do some digging to get to the answer. The first question I ask is, “what is it about annuities that you hate?” The common theme I find during these discussions is that clients don’t have a clear understanding of what an annuity truly is. In my opinion, saying, “I hate annuities” is similar to declaring, “I hate buildings” or “I hate cars.”

What, specifically, do you hate about them? Which type of annuity are you discussing? I notice that most people who "hate annuities" aren’t even aware that there are many types of annuities that work in different ways. Some financial professionals take the avoidance approach. They don't bring up the common objections to annuities and instead decide to wait for the client to mention any. But, waiting for them to encounter negative information about annuities and then trying to play defense is a bad idea.

I used to make this mistake early in my advisor career. I would cross my fingers and hope nothing would go wrong during my appointments with them. Many times nothing would; my client would come back for a follow-up meeting, and I’d make the sale. But, sometimes they’d come back with negative perspectives they'd found online or heard from an “expert” relative at a family picnic. Then I’d have to backpedal and play defense on my original recommendation. Not ideal. Appearing cagey certainly won't build a lot of trust with the client.

What worked a lot better, and what my top advisors do, is get in front of the objection.

Here are the four points they are sure to address with their clients, and you should too:

  1. You might find negative information online about annuities. 
  2. You might hear criticism of annuities from friends or relatives. 
  3. Annuities aren’t for everyone. 
  4. Annuities have restrictions and limitations. 

Then talk about why that negative information might be misleading. 

  • Outline where annuities do and don’t solve certain retirement problems. 
  • Explain there are different types of annuities and that most articles they’ll read, or comments they’ll hear, don’t even pertain to the kind of annuity you're discussing. 
  • Highlight any restrictions and limitations and explain why they might actually be to the client's benefit.

Now if, or when, the client goes out and experiences any pushback, you've already put it in context for them. You'll have more credibility because the client doesn’t believe you were trying to hide anything. This way, when the client comes back in, it’s a completely different conversation. Rather than playing defense to the objections, you've already addressed them.

So, if you’ve ever had clients come in for a second or third appointment with a bunch of negative opinions on annuities, it might be time to think about changing your sales process and handling those objections before they even come up. 

Interested in learning more about how you can avoid behavioral bias within a fixed index annuity? Download the exclusive white paper from Roger Ibbotson.

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Joe Chalifoux - National Sales Consultant

Joe Chalifoux has over 20 years of Financial Sales experience. In those 20 years, Joe has had roles as both a client-facing advisor (for over 8 years) as well as a financial product wholesaler and support person (for over 12 years). Annuity point-of-sale training and advisor support has been the main focal point of Joe’s business model during that time. Helping financial advisors grow and improve their client relationship base continues to be a passion for Joe and is what drives him to help create successful partnerships that deliver results. When Joe is not working with Advisors he enjoys music, swimming, reading, and spending time with his wife and 4 boys.

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