How to sell FIAs in a low interest rate environment: BLOG
March 13, 2015 by Matt Tarkenton
We recently had a great turnout to hear Denny Southern speak in a webinar about how to sell fixed index annuities (FIAs) in a low interest rate environment.
Denny touched on the history of the 10-year treasury, which drives FIA pricing and is at an all-time low (around 1.75 percent). While we don’t know if interest rates will go lower or higher, we know that “competing” products (like CDs, which average just 0.16 percent for a six-month CD) don’t offer the income guarantees or the interest-crediting potential (think of an 8 percent upfront bonus as an alternative) of FIAs.
Denny also explained volatility controls, a feature found in the indexing of several new FIA products. Most importantly, he covered how you can explain these to your clients. After 20 years of impressive growth (from just $130 million in sales in 1995 to over $47 billion in 2014), we and many others believe that FIAs still offer the best option of stability of principal and guaranteed income in retirement — and that is what you’re selling, especially in this low interest rate environment.