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With variable annuity net assets exceeding $2 trillion at the end of the fourth quarter, there is very good chance that by simply improving a single factor in your replacement methodology, you could easily generate several hundred thousand dollars of additional annuity premium and AUM. What would happen if you could improve every aspect of evaluating and comparing variable annuity contracts?

Using the process we are going to be teaching in this post, you will be able to quickly take control of any discussion that involves variable annuities. Once you learn how to connect the dots, you will begin operating at a whole new level, professionally and financially.

A little background

Three years ago, an advisor asked me to review several sizable variable annuities belonging to one of his prospects. After reviewing the statements and policies, We calculated that his contract had in excess of 4% combined fees along with enough confusing jargon to choke a horse. After many hours of calculations, we estimated that this particular client will be paying over $629,000 of fees during his remaining life expectancy. The agent that I was working with presented the findings using spreadsheets over multiple client meetings. In between meetings, he (the client) would take what we said and go back to his current advisor for rebuttals. After several weeks of this game, confused, the prospect decided to stay with his variable annuity. Six months later he finally figured out his VA was not in his best interest and moved 1.4 million into an FIA… with the original advisor who sold him the VA with 4% of fees!

“That which hurts instructs” – Ben Franklin


1: We didn’t have a process to show him his previous results

2: We didn’t have a way to show him the impact of his previous fees

3: We didn’t have a way to project his past returns into the future

4: We didn’t have a way to evaluate his income rider performance

5: We didn’t have a way to run a numerical side-by-side showing his options

Frustrated, I resolved to never be involved in another “bloodbath” as a result of not being able to quickly assess a situation based on the facts.

Step 1: Current Returns. You need to be able to join the conversation that is already occurring in your client’s mind. This means you need to determine the real rate of return they have earned since issue. If there have been no withdrawals since the issue date, you can quickly get a snapshot of the internal rate of return using an HP 12-c financial calculator available at OfficeMax for less than $100. Even though I have a software that does this in several seconds, it is valuable to be able to do this calculation by hand at any time.

Steps with HP 12-C:

To calculate the compound annual growth rate when the beginning and ending values are known, follow these steps:

1. Press 0, then PMT.

2. Key in the beginning value, press CHS, and then PV.

3. Key in the ending value, and press FV.

4. Key in the number of periods between the beginning and ending values, and then press n.

5. Press i to calculate the compound annual growth rate.

Step 2: Calculate Fees and Charges. Show the real fees and calculate the impact in a manner that creates instant clarity. The fee and rider charge percentages can be determined with a statement and prospectus. You can then calculate how much is being paid each year in fees. AnnuityCheck™ recently launched Annuity Snapshot, giving you instant access to the fee data on any variable annuity contract in less than 30-seconds. We can determine the gross rate of return, fee percentage, fee dollar amount. 

Step 3: Show fees as a percentage of growth. Showing the fees as a percentage of growth provides a sobering analysis of where most of the growth is being funneled. nd provide the

Step 4: Determine the net IRR. Provide the net return after all expenses and withdrawals. Also, lost opportunity costs as a result of the fees can be calculated.

Step 5: Future Pace. Illustrate the value of their current annuity if the current and past performance continue going forward.  AnnuityCheck allows you, with a single click, to send the snapshot results forward into the illustration tool. This enables you to show the client how well his investment will perform going forward based on results calculated through his current statement date.

Step 6: Compare. Now you can run various scenarios using FIA, other VA or AUM strategies and click our compare button to show the results side-by-side.

you will instantly deliver you and or your prospects three concept pages, using their numbers, that fully illuminate the lethal effect that excess fees have on an individual’s retirement income.

With over 209,953 lines of code and over 440,000 data points, in a few minutes, you can be running client scenario’s on what I consider to be the “Holy Grail” of Variable Annuity fee reversal based marketing and see how to easily convert variable annuity owners into new clients in scale, consistently and reliably.

While many calculations can be completed manually, time is money and time spent running advanced numbers could be better spent communicating with your clients.


Our new Annuity Snapshot makes it easier than ever to generate real-time results using easily available statement information, creating a whole that’s greater than the sum of the parts.