Newbie Questions!

[insurancesc]

I am new to insurance. I have been looking at the different options to specialize in and I have come to no real conclusion as to which is best for me(if it is even possible to know without first trying). I have several questions concerning annuities. How difficult is it to get started selling annuities? What is a typical day like? It seems to me that you have to have a lot of contact with people who have six figures to move just to make a decent living. I live in Columbia, SC. Is it possible to find 20-30 people every year with $100,000+ to invest and then convince them to invest that money with a newbie in a city of approximately 200,000 people. And where is the best source of info when it comes to learning the ins and outs of the annuities business?

I know these are basic elementary questions and I apologize if this is not the place to ask them, but any help you can give is greatly appreciated.

 

[iceco1d]

When you say "selling annuities" do you mean fixed and fixed indexed annuities, or are you securities licensed and going to be selling variable annuities also?

Either way, it is absolutely possible to sell 20 - 30 six-figure contracts per year. But don't discount the smaller tickets (especially on fixed/indexed annuities)! They are usually easy to service, and can add up over time.

 

[Norwayguy]

You would be surprised how often helping to move $10,000 for a client comes back to reward you with referrals to larger tickets or that the client did not tell you about that other 401K account sitting at XYZ for 100,000 or more.

 

[xrac]

There are a lot of people interested in no market risk. The are prime candidates for FIAs and FAs.

 

[insurancesc]

Initially I will be selling fixed and fixed indexed annuities. I am thinking about getting a securities license but servicing these accounts is a concern. It seems you will spend a lot of time watching over these accounts or hire a team to help you when/if my client list grows.

I am not discounting smaller accounts since that is probably where I will have to begin. I just don't know how many of the larger accounts you could expect each year.

I appreciate everyone's comments and I find them encouraging.

What do you guys know about hybrid annuities? Are they just a version of fixed indexed with different riders applied?

 

[Norwayguy]

Initially I will be selling fixed and fixed indexed annuities. I am thinking about getting a securities license but servicing these accounts is a concern. It seems you will spend a lot of time watching over these accounts or hire a team to help you when/if my client list grows.

I am not discounting smaller accounts since that is probably where I will have to begin. I just don't know how many of the larger accounts you could expect each year.

I appreciate everyone's comments and I find them encouraging.

What do you guys know about hybrid annuities? Are they just a version of fixed indexed with different riders applied?

Be careful if you do decide to become a registered rep. Most B/Ds require Index Annuities to be run through their grid for commissions (I could live with that) but most also limit your selection and something to realize is the product you use today will not be the product or even carrier you use in 7 months. Carriers turn on and off the spigot by changing caps, pars interest rates etc. So limiting yourself as a Registered Rep can hurt you. On the other side its sounds nice to be able to handle all of a clients needs.

But something to think about is the marketing for fixed annuities and Variable Annuities is different. When you are selling a security you are selling blue sky the positive of what could happen. While on the fixed side you sell guarantees the two a diametrically opposed. I U5'ed my Registrations will be 2 years on Dec 31st and my income has increased by focusing on one area ie safety.

I will say this about small tickets they are easier to find ( they sometimes take as much work or even more work than larger tickets, it might be all of a clients savings). But you benefit by writing more and learning the tricks of the trade when it comes to moving money. Let me tell you you don't want to miss your mortgage payment because the annuity you assumed would issue in time didn't because XYZ is playing dirty and you need to go back to your client just to be able to do a 3 way call to find out what the hold up is because the carrier won't release the information to you a third party. If you had this happen before you would have learned that sometimes adding a letter of instruction instructing the carrier to put them on the their DNC list and instructing them to provide you what information you need.

Retirement money is all around you...The problem with many Private business with a 401K is if you don't have the 401K you can't do anything with a prospect until they turn 59 1/2 or leave the employer...Look at public schools and learn about the 403(b) market most schools have a list of approved providers and you may be able to do contract exchanges while the teachers are still employed.

 

[insurancesc]

Thanks for your reply Norwayguy. I am leaning more towards focusing on safety. Securities seems like a lot of maintenance as well as a steep learning curve.

Looking at 403(b)s. Are you saying that schools have a list of approved companies that their employees can use and if I can get appointed to one or more of them, then I can possibly move some of these accounts? I am sorry if I don't fully understand this part of your comment but I am new to this.

 

[Norwayguy]

Thanks for your reply Norwayguy. I am leaning more towards focusing on safety. Securities seems like a lot of maintenance as well as a steep learning curve.

Looking at 403(b)s. Are you saying that schools have a list of approved companies that their employees can use and if I can get appointed to one or more of them, then I can possibly move some of these accounts? I am sorry if I don't fully understand this part of your comment but I am new to this.

Yes Tell me your state and local school district and I can probably get you some information. But the simple fact is there are companies that deal with independents such as ING Reliastar, Gafri Great American/Annuity Investors, VALIC (have to find the right IMO) HoraceMann (State Specific), Life of the Southwest, Midland National, North American and many more that may or may not be approved in your district.

The simplest thing to do is call your local school district business office and ask the person who answers the phone who handles the 403(b) program questions and ask the right person who is on their approved list it is public information (some districts have the info on the website). I will say since the regulation changes more districts refuse to release the info or only tell you who they deal with for a TPA (Third Party Adminstrator) and the TPA a lot of times will not tell you anything unless authorized by a client. I have been lucky as I have a large pool of clients in districts and can get the info I need.

The next step is getting appointments, you can ask to be a speaker at new teacher workshops at the beginning of the school year (little late for that this year). You can get mailbox stuffers from some carriers and try and stuff school mailboxes.

School Mailbox stuffing can be easy but many schools are now stopping the practice. I have always just gone to the school office walk up to the secretary and said the following while holding out the stuffer ("I'm just here to stuff the mail boxes again") as simple as that. I get the following responses.
We do not allow that
Is this approved (I answer we (the carrier) is on the approved list
Leave them for me and I will do it (I ask how many they need)
Fine do you remember where they are?

If a district does not allow you to stuff the boxes you can buy a list that gives the name and school mailing address of the teacher or build your own list by going to the school website, you know the school mailing address just add the teacher names from the Faculty list on the website. Then you mail the stuffer to the teacher at school in a plain white envelope. A couple things to know. The school has no legal obligation to put your USPS mailed stuffer in the teachers mailbox (I know it sucks) so I recommend you don't mail your entire list in 1 day. I drip the mailers in 1 or 2 names per school building per day depending on the size of the school I am mailing to.

The days of sitting in the teachers lounges is pretty much over with school safety concerns.

Now once you get an appointment the teacher may not have an account for you to roll over many of the carrier in this market have a flexible premium annuity that will accept anywhere from $10 per month to $100 per month minimum in premuim and many of the carrier that work this market advance commission kind of like life insurance business on 403(b) accounts. Take Midland I think they offer a contract with no production requirement that offers an 8% commission say the teacher does $100 per pay period most schools are bi-weekly so 26 pays per year or $2600 in annualized premium and it affects the teachers take home pay by somewhere in the neighborhood of 64% to 80% of the amount put away depending on Federal and State tax brackets and you walk away with $208 in commission probably not what you really want but when I started and there was fewer friggin pieces of paper required on an appointment I was in and out in 15 minutes with a completed app. I will admit I require much closer to an hour these days to complete all the paperwork but what can you do.

 

[insurancesc]

Great info! I live in Columbia, SC. We have Richland School Districts 1 & 2, Lexington School District 1 & 2 and Lexington Richland School District 5. Are there any residuals on these contracts and what about rollovers?

 

[Norwayguy]

Great info! I live in Columbia, SC. We have Richland School Districts 1 & 2, Lexington School District 1 & 2 and Lexington Richland School District 5. Are there any residuals on these contracts and what about rollovers?

I was going to use Great Americans Plan finder...I haven't used it in a while since I'm already in all my districts but it is no longer a live instant response. I am supposedly going to get a listing of plans in your zip code.

Having said that you might have trouble in your area. I went to Richlands school district and found the employee handbook online and it mentions a state 401K and 457.

SC Deferred Compensation 401 (k) and 457 Plans
■ State contracted agency
■ Payroll deduction for contributions
■ EEE and I Series Savings Bonds
For a complete listing of 403(b) retirement offerings contact PenServ (803-791-4903). Other private insurance
carriers are available. For a complete list, contact the benefits office.

But when I went to page 26 its does list what I put above. And what I'm posting below comes from the Lexington employee handbook.

• 403(b) Tax-Deferred Annuity Plan: This voluntary
program allows employees to participate in a 403(b)
retirement plan in addition to one of the mandatory
plans (SCRS or ORP). 403(b) plans are meant to
encourage long-term retirement saving, so income
taxes are paid at withdrawal when an employee may
be in a lower tax bracket. If withdrawn before age
59½, an employee may be subject to federarestrictions and a 10% tax penalty. The district’s
approved vendors are:
ƒ Ameriprise Financial Services, Inc.
ƒ AXA Equitable
ƒ Horace Mann
ƒ ING Financial Advisors, LLC
ƒ MassMutual Financial Group
ƒ MetLife Resources
ƒ VALIC
• Future Scholl

I know I listed VALIC and Horace Mann as carrier you might be able to use but it is unlikely with a list like this and other than MassMutual most of these others won't allow you to participate in a 403(b) program let alone appoint you...I know Mass offers broker contracts I do not know if they offer fixed or index annuities in the 403(b) market (I am finding more and more carrier are withdrawing fixed products and only offering Variable annuities in this market)

It appears in your state your teachers are required to contribute to a state run 401K or optional retirement program run by TIAA-Cref, Horace Mann Valic and others.

What you need to find out is if teachers in your state contribute to social security or not because this mandatory 401K or optional program take 7% of thier pay so if they contribute to social security plus this other program it would be hard to advocate a 403(b) as well. But if they are like my state and 7% makes me think they don't contribute to social security you might be able to make the case...either way you might want to read the employee handbooks you can easily find them on the school district website under human resources.

Teachers tell you they have life insurance from work but if you read the handbook you will find they get $3000 and can elect additional group coverage in 10K increments up to 3 times salary which is woefully underinsured... I like your state my state doesn't put out this detailed employee handbook on the school website and I have to juggle books from the state to benefits the school may or may not allow.