Dissecting the Annuity Market
How did your business fare in the annuity market in 2014 compared with other annuity management providers?
According to the Financial Planning Association, 29 percent of financial planners either advised their new clients to choose fixed annuities, or have current clients in fixed annuity vehicles. Four years ago, that number was a high of 49 percent.
Seemingly, this might have been an adjustment made to offset runaway inflation and a slumbering economy.
Now that the economy appears to be recovering, at least from the perspective of the cash-rich corporations, more providers may be viewed as being comfortable with variable annuities.
What Can Your Business Do to Encourage Annuity Investment?
Annuities have traditionally been seen as complex investments that are only for financially savvy movers and shakers.
Though it is true that your clients need to enter the annuity market with their eyes wide open, it's equally true that you could woo even more suitable annuity clients if you use the right approach.
Here are some ideas for marketing your company's annuity packages:
Accentuate the Positive
Often, accentuating the positive is as easy as comparing something with another thing that is less attractive. As the following article shows, why not develop some historical financial charts that highlight the returns based on annuity rates versus the returns on other vehicles such as mutual funds, stocks or even certificates of deposit. You'll be able to shine a light on the positive aspects of annuities without compromising your ethic to offer a choice of investment options that are appropriate for your client's financial planning needs.
Related: Financial Planning 101
Emphasize the Flexibility
One of the reasons that some clients may shy away from annuities is due to their multitude of choices. But you can turn that perceived negative into a positive by emphasizing the flexibility that those choices can bring. Depending on their age and retirement needs, your clients can choose from premium protection plans, term annuities or lifetime annuities. These can be attractive options for older seniors who might be worried about not recouping their original investment. With hybrid annuities coming on the market in recent years, there are even more ways for you, as an annuity plan provider to prepare an annuity package that is especially suited to your clients' needs.
Don't Discourage Diversity
Remember, in trying to sell annuities to your clients, don't discourage diversity. Having a wide variety of investments in a financial portfolio has always been the smartest way to reach financial goals in the short term and the long term. Remind your clients that they don't have to be "all in" with an annuity. An annuity can be just one piece of an overall healthy financial portfolio. Once you explain that you're not trying to get them to put all their eggs in one basket, you'll be more likely to win over those clients who are still on the fence about annuities.
Finally, make sure you have all the recent facts and figures related to annuity investments.
Remember, your professional expertise is the best selling tool you have.
About the Author: Kate Supino writes extensively about best business practices.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.