Annuity conversations can be tricky to start, not because annuities lack value (quite the opposite), but because the conversation can start to feel “salesy” when you’re focused on a specific product.
We know the prospects who come into our offices each day don’t want a product pitch. They want strategies that connect to their real concerns – running out of money, managing funds throughout retirement, creating more certainty.
So how do we share the value of an annuity with a client who’s weary of product pitches?
The Modern Annuity Sale Isn’t About Product Features
It’s easy to approach annuity sales from the perspective of features and benefits. And truthfully, benefit riders, guarantees, and other product value points do matter to your client. They just don’t matter up front, when you’re trying to uncover your client’s pain point and offer a solution.
The modern annuity sale leads requires two “ah-ha” moments from your client:
First, you need numbers that cause your client to wake up and pay attention.cause your client to wake up and pay attention . Quantifying the impact of a 30% market drop in year two of retirement Calculating the market growth required to meet their income needs. Evaluating the assets needed to make that income last to age 90 and beyond. and
Second, you need to show them the challenge of meeting those numbers in their current approach – for example, keeping their funds in a managed account. What would it take in their managed account to generate the level of income they want for the amount of time they need it to last?
That’s it. Two simple “ah-ha” moments that drive modern annuity sales.
Of course, the real challenge is getting to those “ah-ha” moments quickly and effectively. And that’s what this guide covers.
Modern annuity selling: Lead with the problem, show the math, let the prospect choose the solution.
3 Reasons the Old Annuity Sales Pitch Doesn’t Work Anymore
Your Prospects Have Already Googled Everything
Before they sit across from you, your prospect has spent 30 minutes on Google reading about annuities. They’ve seen the criticism. They know someone’s aunt who had a bad experience. They understand that annuities come with surrender periods and caps.
What they don’t know is whether an annuity makes sense for their specific situation. And whether an annuity can deliver more than their current approach. That’s the conversation worth having.
The ‘I Can Do Better in the Market’ Objection Kills Sales
You’ve heard it a thousand times: ‘I’ve been beating the market for 20 years. Why would I lock up my money in an annuity?’ This objection kills more annuity sales than every other reason combined..
Your prospect believes in their own market timing ability. They believe 7% average returns are achievable. They believe their discipline will save them when volatility hits. Proving them wrong with a spreadsheet they don’t trust won’t change their mind.
Trust Deficit in the Annuity Industry
Annuities have a trust problem. Surrender charges are misunderstood. Commission structures are perceived as greedy. The industry reputation for high-pressure sales tactics lingers even though most advisors don’t operate that way.
So What’s a Better Approach?
As a financial professional, your goal isn’t to defend the industry or convince prospects that annuities are good. Your goal is to present the math clearly and let it speak for itself. When your prospect sees their own numbers, they build trust in your guidance and make informed decisions. Here’s what today’s most effective independent financial advisors are doing today when presenting annuities to their clients.
The New Approach: Quantify the Problem, Compare the Solutions
Start with an Income Gap Analysis
If your clients don’t come to you with a set number in mind for the income they need to generate in retirement, you’ll want to run an Income Gap Analysis. ‘Tell me about your retirement income plan. How much guaranteed income do you have from Social Security and pensions?’ They might tell you: ‘Our Social Security will be around $58,000,000. No pension.’ Then you ask: ‘And how much total income do you need each year in retirement?’ They say: ‘Maybe $110,000,000.’ Now you have the gap: $52,000 per year that needs to come from their portfolio.
Show Sequence-of-Returns Risk in Action
Most savers think about average returns. They know the market averaged maybe 9% over the past two decades. What they don’t think about sequence.
It’s not their fault. Sequence of Returns Risk doesn’t matter very much when you’re saving. But it matters a lot while you’re spending. For example, if a saver had $500,000 in an index tied to the S&P 500(R) from 2000 to 2025, and needed to withdraw $30,000 a year for income, they would have run out of money by 2017. But if that same saver had experienced the returns of the S&P 500(R) from 2000-2025 in reverse (with 2025’s return coming in 2000, and 2024’s returns coming in 2001, etc.), not only would they not run out of money, but they would have more than $2 million left for the rest of their retirement.
Yahoo Finance GSPC Historical Prices, accessed 02/01/26. Please note, it is not possible to invest directly into the S&P 500® Index; this measure is provided solely as a gauge of overall market performance. This is a hypothetical example for illustrative purposes only. This example does not reflect any specific production or investment, nor does it reflect the deduction of fees or taxes.
This is the moment your client understands why wealthy retirees might care about guarantees.
It’s not about fear. It’s about math.
Show the Prospect How their Current Approach Would Need to Perform
We know if a client needs to generate $11,000 of annual retirement income, there are two common approaches they might take: withdraw the funds directly from their IRA each year and manage their portfolios to ensure enough funds are there to make it last, or buy an annuity with the funds to guarantee that income amount over their lifetime.
The challenge is many savers have never seen the amount of growth needed in their managed account to match the guarantees you can provide through an annuity.
This is exactly what led Stonewood to create our Annuity Alpha software.
Let’s say a client needs around $11,000 of annual income in retirement to fill their gap. And let’s say their savings are currently in an IRA with a 50/50 split of equities (earning 7%) and fixed income (earning 3.5%).
Let’s say for $100,000, we can get that client an annuity that will guarantee $11,000 through age 95.
If instead they kept the funds in their managed account, what would that $100,000 need to earn to generate $11,000 of income every year through age 95?
Many savers are shocked to see their numbers. It could be as much as 8.5% average growth a year – and in a 50/50 blend portfolio, that means the equities need to earn an average of 13.25% a year… every single year of retirement… for the income to be available.
Once your client understands the growth needed in their IRA to match the guarantee you can offer in an annuity, their #1 objection (“I can do better in the market”) completely disappears.
And with Annuity Alpha, with a few quick inputs you can show your clients their numbers and drive home their decision.
This approach reverses the sales dynamic entirely. You’re not selling. You’re uncovering.
Four Conversations That Close Annuity Sales
Conversation 1: ‘What If You Live to 95?’
Most retirees underestimate longevity. They look at average life expectancies – around 76 years for men and women combined -and think they don’t have to plan for that long in retirement.
Ref : Provisional Life Expectancy Estimates for 2021,”National Center for Health Statistics, Centers for Disease Control and Prevention, August 2022, Accessed 01/20/26. https://www.cdc.gov/nchs/data/vsrr/vsrr023.pdf.
But there are two major misconceptions with this thinking. First, higher-net-worth Americans live longer than average. If your clients have done a good job saving for retirement, there’s a chance they’ll live longer than their poorer peers. In fact, it could be up to 10 years longer.
The Association Between Income and Life Expectancy in the United States: Executive Summary,” Raj Chetty, Michael Stephner, et. al., Standford and Harvard Universities, April 2016, available online: http://www.equality-of-opportunity.org/assets/documents/healthineq_summary.pdf
It makes sense: with more wealth comes better access to medical care and healthy living. But most savers look at the general averages and use them as a guidepost.
The second misconception is when your clients mistake life expectancy for life span. Life expectancy is the average age Americans live to. But an average age by definition means 50% of Americans live longer. If your clients are only planning their funds to last until life expectancy, their plans will fail 50% of the time. And that’s likely a risk they didn’t realize they’re taking.
Life span is the period in which most people will no longer be living in a given demographic category. And for this measurement, age 90-95 is a much better measure.
Conversation 2: ‘How Much Income Do You Need – And Do You Want it Guaranteed
Now you’re into the solution phase. Once clients start analyzing what it would take to generate income to age 90, they see the value of an annuity’s guarantee.
This is where you show them the custom analysis of their current approach – like one from our Annuity Alpha software. Are they comfortable with the growth and risk needed to generate the level of income they need for the number of years they need to prepare for? What will it take to manage their IRA to achieve it? Would they prefer to guarantee that amount?
Conversation 3: ‘What Are You Actually Giving Up?’
Be transparent about the tradeoffs. ‘The income rider costs about x.x% annually. The annuity has a surrender period. You don’t have access to the principal.’ There’s no free lunch in the financial world, so there’s no reason to hide from the tradeoffs that make it possible for annuity carriers to guarantee those high levels of income.
In the end, the number that matters most is the guaranteed income – and if you’ve shown your client what it takes to generate that in a managed account, they’ll understand the value they get for these tradeoffs.
Conversation 4: ‘What is Math Telling You?’
This is the closest. You show them the annuity illustration that can meet the income amount they need and last as long as they need it. Now they have a choice: They know what their managed account would need to do to generate income that lasts. They know what the annuity can guarantee as income that lasts. And you’ve guided them to an informed decision based not on product features, but on the best approach to accomplish the outcome they desire.
These five conversations take 30-45 minutes. By the end, the prospect is either interested in the benefits of an annuity or they’re not either interested in the benefits of an annuity or they’re not . Either way, you’ve provided value and built trust.
How to Handle the Top 3 Annuity Objections
Objection 1: ‘I Can Do Better in the Market’
This objection is one of those common assumptions most people don’t question. “I’ve heard annuities are bad because you can do better in the market.”
They don’t ask to see math proving it true. They just assume it’s correct.
But more often than not, the math doesn’t support that claim.
With a tool like Annuity Alpha, your response is simple: ‘You might be right. Let’s run the numbers and see.’ And once they have their report in hand, you can let the math speak: ‘Based on our assumptions and these calculations, it looks like the market would need to return an average of 12.5% a year every year in retirement. How confident are you in the market’s ability to do that?’
This is the reason so many advisors call Annuity Alpha the “Ken Fisher killer.”
Objection 2: ‘Annuities Have High Fees’
Fees are real, and you need to be honest about them. ‘Fees exist in almost all financial products and accounts. In an annuity, there is an income rider charge. The income numbers I’ve shown you are, of course, net of fees. Based on what we’ve analyzed, do you feel the benefits are worth it?
Objection 3: ‘I Don’t Want to Lock Up My Money’
This objection is real for some prospects. They want liquidity. It’s important to gain agreement that the money funding an annuity is not money they need for other purposes in the immediate years ahead. This is one reason why many savers choose an annuity to cover part of their income gap, but not all of it. The annuity provides certainty on the minimum income they absolutely need, and their remaining IRA funds can provide flexibility on everything else.
They’re not locked up, they’re strategically positioned to address multiple risks. They’re strategically positioned to address multiple risks .
(It’s also worth noting some annuities have limited liquidity for a certain percentage of the account funds each year, so that alone may give your client enough comfort to handle the “what ifs”.)
Using Technology to Close More Annuity Sales
Annuity Alpha: The Closing Tool
Annuity Alpha eliminates objections with data. You model the client’s specific numbers: age, asset amount, income needs, growth assumptions, and life span. The software generates a side-by-side comparison showing FIA income versus income from a brokerage account. How long will it last? How much can you generate?
This is the moment most prospects stop objecting and start deciding. They have a real analysis with real data – data that often contradicts the objections in their head.
Side-by-Side Comparisons: Make the Math Visual
Annuity Alpha lays out the options in clear, easy to understand visuals. It highlights the key values that drive decisions.
Client-Facing Reports: Your Sales Collateral
Annuity Alpha generates a compliant report your client can take home – and you can keep on file a record of how the decision was made. It’s a win-win for clients and the advisors who serve them.
Frequently Asked Questions
Q: How do I compete against other advisors who position themselves as low-cost index investors?
A: You’re not competing. You’re solving a different problem. Index investors solve for cost. You solve for income security. Most retirees need both. You show how annuities reduce downside risk. After all, a $1.2M portfolio protected by an FIA is worth more in retirement than a $1.2M brokerage account if the market crashes in year two.
Q: When should I introduce the annuity conversation to a client?
A: This will depend on your client acquisition process. Some advisors will discuss annuities in a first meeting as the goal is ultimately serving the client with an annuity. Some advisors will bring it up in a second meeting setting, if their first meeting is focused on gathering assets and discussing multiple strategies.
Q: How do I handle the ‘I want to see what the market does first’ objection?
A: ‘You might be right. The market could go up significantly. But here’s the risk: if it goes up, it’s also likely to go down.. Many retirees who’ve experienced a major correction (like in 2000 and 2008) tell me they would have structured their income differently.’
Q: Should I use market projections in annuity sales conversations?
A: You can, as long as you and the client both know they are just projections. It’s often helpful to look at what the market returned in historical time periods to guide projections for the future.
Common time periods can include this current century (2000-today), long-term timeframes (like the past 30 or 40 years), and short-term “stress tests” of down market activity (like the “lost decade of investing” from 2000-2009).
Annuity Sales Fundamentals: The Checklist
Before every annuity conversation, make sure you have:
- Current FIA rates and income rider pricing from preferred carriers.
- A side-by-side comparison tool for the annuity and the managed account (like Annuity Alpha).
- Carrier suitability and compliance documentation templates.
- A clear explanation of your fee/commission model.
- Client case studies or testimonials showing how annuities fit into real retirement approaches
Key Takeaways for Modern Annuity Sales
Modern annuity sales work because they start with the prospect’s problem, not your product.
Show the sequence-of-returns risk.
Model the longevity scenario.
Let the prospect discover the annuity solution.
Use data to overcome market-based objections.
Build a hybrid strategy that gives clients both security and growth.
And always be honest about tradeoffs.
The advisors closing the most annuity sales aren’t the best product pitchers. They’re the best problem solvers. They ask great questions. They show clear math. They let data do the selling.
If you can do these three things, annuity sales become less about persuasion and more about consultation.
And that’s the difference between modest annuity sales, and growth that lets your practice have its best year ever – year after year after year.
Content Compliance Notes
Disclaimer: This article is educational content for financial advisors and does not constitute specific investment recommendations. All annuity sales must comply with state insurance regulations, suitability requirements, and IMO guidelines. Product features, rates, and terms vary by carrier and change frequently. Verify all information with current product documentation before client presentations.
No specific products are endorsed. Stonewood Financial develops the Annuity Alpha positioning tool for analyzing and comparing annuities, not for recommending specific products or carriers.
