The Case Design Process | 7 Figure Annuity Sales Podcast | Ep. 252

Case design is the process of determining what types of products, carriers and individual products best solve the client's needs and improve their overall financial position. Today I'm going to talk about how Chad and I personally do case design. It's actually one of my favorite things to do. It's something that I do on a daily basis. And the biggest thing you need to bear in mind is that good case design starts with good fact finding. You can have great fact finding and still have poor case design, but you cannot have good case design without good fact finding. My name is Caleb North, VP of Agent Development here at Retirement Realized Financial. I'm excited for another episode of Seven Figure Annuity Sales podcast. And as you already know, we are talking about case design. I want to make a note about that. Good fact finding is getting all of the pertinent information about their financial situation, their goals and their needs. And bear in mind, they might have a need that you find that they didn't even realize they had. And that's even better than if they already realized that they did. If you can find needs that clients have and problems to be solved that they didn't even realize they already had, you're positioning yourself as the expert to actually be able to solve those, opening their eyes to new opportunities and things that they didn't realize were potential issues with roadblocks in their retirement down the road. So that's good. I want to also make a note about fact finding that it's not just taking the lead form as it is. When you get leads come through, right? And then maybe they pop up in your email, whatever that may be. However they're delivered to you, when they come through, you're going to see some different pieces of information on there. You're going to have age, you're going to have contact info, you're going to have premium amounts and all these types of things. One of the areas that agents hurt themselves in the case design process and in the fact finding process is that they often assume that whatever's on the lead is inherently true. And I can tell you from observing Chad's process for a little while that he just kind of disregards what's on the lead in the first place. When he's making his calls and he's going through what we call the mini fact finder, it's as if there's not any information on that lead other than a name. And so you're reaffirming what their age is, what their, what their retirement date is, what their investable amounts are, what Their retirement accounts look like what their emergency funds and savings, all those different financial pieces in the fact finding process that you're incorporating in your sales process need to be there. And don't just take the lead form as it is. If you do, you're gonna see a particularly low average case size. You'll probably end up promoting a product to a client that you think is in their best interest. But if you actually did good fact finding, you'd realize, oh, wait, maybe it's actually a different type of product that we need. So you may not be doing what's best for them. It opens the door for opportunities for free. Look, chargebacks surrenders in the first year. All these types of things that don't bode well for you as the agent can arise if you don't have their full picture in mind when you're doing case design. So I hope that is abundantly clear that good case design starts with with better fact finding. Make sure you're doing it, otherwise you won't know the direction for the case design. Another note about good case design is that it always starts with the end in mind. So the first step, obviously assessing the facts of the case and then determining what is the purpose of the money? This is something you hear Chad and I talk about quite often. What is the purpose of the money? When you're looking at retirement accounts, quite honestly, any chunk of money that a retiree has, either it's going to be used to live on during their retirement or it's going to be passed on. There's not really any other alternative there. So the two overarching categories for purpose of the money is income or just accumulation and beneficiaries and passing it on to heirs. You need to know what each individual retirement account, what that purpose is. For one thing you need to also keep in mind is if they've got an employer plan or an IRA or something out there like that, perhaps they've invested in real estate for the sake of having some kind of retirement nest egg. You need to consider that that was set aside and built and developed and funded for the purpose of retirement. So the question becomes, in their retirement, right when you're meeting with them, what piece of this is designed for the retirement income aspect, and what piece of this is designed for just legacy planning, passing it on to heirs and beneficiaries. And when you know that you can properly plan the certain buckets of those different retirement accounts or where they should go and what products best solve the problems that they have, once you know the pro or the purpose of the money, excuse me, you start looking into specific individual products that actually fit the need. Okay, so when oftentimes case design gets synonymized with just running an illustration or gathering materials or whatever, that's not the case. Case design is being able to look at the full picture of the client's retirement.

Situation. Right. And actually determine is there anything that's wrong and needed? If there is, what is that? What individual products solve that or multiple products solve that? How do those products need to be set up and structured to actually do it? That's case design. A lot of times agents want to jump to a product or they get a lead and they already have a product in mind. They haven't done any fact finding or any.

Risk analysis or any goals analysis, needs analysis, they haven't done anything, they haven't asked any questions and they already start thinking about what product they're wanting to sell. That's problematic. And we sometimes call that product pushing. When they go out and they don't really know what the needs are, but they're going to try and sell this individual product anyways. Don't do that. Let the needs of the case, the facts that you found, the purpose of the money, drive the individual product that you sell. And that's where we are right now. Once you know the purpose of the money, you can start looking into the products that actually fill that need. I want to make a note here too that this is where a lot of time and experience come into play. This is also where you would typically use third party sources and systems and softwares as tools to try to help you navigate the product selection piece of the case design.

There are for me, at least in the way that Chad and I both do case design, really four overarching areas that, that we're looking at when we're navigating product. The product selection piece of the case design, the four big areas, financial stability of the company, benefits in the product, customer service of the company, and then if it's for income, right, that's the purpose of the money, then what's the payout? Is it, are we needing the highest payout or are we looking for increasing income opportunity? Or if it's just for protection and accumulation, then what product out there is looking like it's going to offer the best growth opportunities with the rates and indices available at the time and obviously rate integrity and renewal rates come into play there. Those are the four big overarching areas. Now I want to jump into them individually. First you have financial stability, oftentimes agents will look at an AM Best rating and think that that's a complete picture of financial stability. It's not. There are actually numerous different credit rating agencies like AM Best. You have Fitch, you have Standard and Pores, you have Moody's. I encourage you to look at as many of these as possible. And some carriers that have numerous of these credit rating agencies, if they have a rating from them, sometimes they'll have even a Comdex, which is great to examine as well. Point is, that's not actually the end all, be all of financial stability. Another big player you're going to want to look at is the surplus ratio. Essentially what do they have in assets compared to what do they have in liabilities. And in examining the two of those, you end up with a percentage of surplus of assets to liabilities. The larger that number, theoretically, the stronger the financial stability of that individual carrier. This is listed first, right when we look at the four kind of criteria or areas that Chad and I are examining when we're doing the product selection piece. But that doesn't mean that rating should be the end all, be all. And it doesn't mean that you should only sell products from the highest rated carriers. The point of financial stability being listed as number one on the list of four is because it's the first thing that should nix an otherwise qualified product. Okay, so what I mean is if you have one individual product that could actually meet the needs of the client, you should nix the product on the basis of the carrier's financial stability if it's not there. So not even bothering to look at products from financially less stable. Or perhaps there's a AM Best rating or some other rating agencies, one of their credit ratings that you don't want to go below, that's something you want to consider. And if they do, then just nix that carrier altogether, which ultimately will nix their products as well. And make sure that you're only selling carriers that are financially stable. There are some tools that you can use to actually get an idea for what a carrier's credit rating is and even sometimes their surplus ratio. And there's other things you can look at tsr, you can look at a bunch of different financials, There are different weighted investment classes. All kinds of stuff go into play here. But typically carriers publish this information themselves. So calling them, if you're appointed with them and asking for that information is great. A lot of times you can find PDF pieces in the agent portals that have this information on them. But for me, one of the things I like to do is if I need just a quick search of a carrier that maybe I haven't seen much of or I'm not doing a ton of business with, it's going to take me a little while to get into their portal and actually pull something up. Sometimes I'll just use what's called annuityadvantage.com and you can search a carrier and, and it will give you overarching information about that insurance company, pretty accurate financial numbers and then the ratings with the different credit rating agencies that they've been rated by. So have that in your back pocket just in case. Again, don't let third party systems, websites, softwares be your end all, be all that's dangerous. Make sure the information that you're promoting as truth is coming straight from the carriers themselves. But if you do need a quick and easy painless search for a rating, definitely check out annuityadvantage.com the second piece of the four that I mentioned was benefits. Okay, now you need to consider what benefits are. The assumption is that the end product is solving the problem, it's meeting the needs that the client has. Benefits are added little features and things that go above and beyond what's necessary to meet the needs and the goals and solve the problems that the client has. A couple of these you could consider. Okay, penalty free withdrawal percentages. Some have ten, some have five. What is that? Oftentimes percent penalty free withdrawal percentages aren't necessarily needed. But the more that's available, the more benefit there is to the client. That could be an added benefit. Waivers of surrender, nursing home care waivers, terminal illness waivers, things like that, long term care waivers, any of those types of things where the surrender charge would go away in effect if they had a qualifying event that's an added benefit. Again, when you sell the policy, there's no anticipation of that benefit being exercised or used. But if it were to be needed, having that benefit makes the product more beneficial to the client. Is it RMD friendly? Does it have an income multiplier? If it's an income product, does it have a multiplier for long term care, how soon can income be activated? If there's a rider being used, is there enhanced death benefit? Are there bonuses? What are rates and rate integrity? All these things. Now some of those you could argue are essential and I would actually argue that they are essential to the product, actually solving the problems and being the best fit for a client. But others, there are definitely more on the benefit side of the spectrum. The reason that it's number two is that again doesn't mean you're only selling the products that have the most benefits. It's just saying that if there are benefits that you could foresee as necessary to a client's case, then don't sell a product that doesn't have it. Let that be the next thing that nixes a product out of the product product selection process.

There are some tools you can use for this one as well. You can call the carrier, you can get product guides, you can look at brochures, learn what they have available and the different pieces within them. And then you can also use third party softwares. One in particular that we have in our agent portal for Retirement Realized Financial will actually draw what is essentially out a more extensive port product guide. Now again, third party software, there is room for human error, as there is with any third party software that's not coming straight from an insurance company, but still a solid tool to be used when you're trying to understand what kind of benefits does a product have, how does it function, how does it work? And so yeah, you can use a software tool. We've got it with Retirement Realized Financial, it's in our agent portal. If you're contracted with this, great, you already have access to it. If you don't know where to find it, reach out to me. Or if you're unhappy with your current IMO situation and you want to have a conversation with me about Retirement Realized Financial, certainly reach out to us. I'd be happy to talk to you about it. The third thing, customer service. This is huge. You've probably experienced in your own life dealing with different companies, poor customer service. And it's particularly not enjoyable when it's poor customer service.

Even though clients in a normal life cycle with these insurance companies and their policies will probably only be dealing with them on a handful of occasions, those handful of occasions can really make or break an image that they have of you as the agent, make or break potential referral opportunities that you could get. And honestly, it can sometimes so drastically impact client perception of the carrier that they end up hurting themselves financially by maybe surrendering a policy or something of the kind that could could be disadvantageous to them because of frustrations that a poor customer service experience has created. Now, it's fair to say that this is probably of the four, the most challenging thing to actually know about a carrier. As an agent. Right. Yourself, you're, you're not necessarily a front end client. Hopefully you are. Hopefully if you're selling annuities, you own annuities yourself. I think that's wise thing to have. But you're probably not as a client dealing with these carriers in their customer service department. Frequently you're calling the agent line, you're talking with your marketer, you're talking with your internal wholesaler, you're dealing with other people that from a sales perspective are trying to help you get business written and written quickly. And sometimes service there can be a little bit better than what already issued policies and clients can get on their side of the house. It does take time, it takes experience.

Thankfully, with every passing year of my tenure in the industry, I gained more and more information and insight into what carriers have good customer service and which ones don't. And thankfully, Chad being in the industry almost 20 years, he's got even more than than I do. And so we're able to really kind of put together an idea for who are these carriers that excel in this particular area of customer service and who tends to lack and really be cautious about selling those that lack because we don't want to create client frustrations on the basis of the carrier that we recommended. Now how can you try and get an idea for who has good customer service and who doesn't. Just practically develop a social media network with other agents and advisors and if you've got a question, ask, just reach out, create conversation about it and talk to people about it. Call in to the carrier's client facing customer service line and just, I mean, not necessarily pretend like you've got a policy, but just check how long are you on hold when you do finally get somebody, are they upbeat? Are they happy? Are they glad to be serving you? Are they helpful? Test the waters and see. You can look at the bbb, Better Business Bureau. Bear in mind that with those reviews, even large companies tend to not have tons of reviews. In the insurance world for some reason, some of the largest insurance companies you go to the Better Business Bureau, they don't have tons of reviews on there. And typically just another good rule of thumb to bear in mind is that it's the more frustrated people that are more likely to write reviews. So even carriers that traditionally have good customer service, you may go on the bbb. And because the number of reviews is so low, proportionately it seems like there's a lot more frustrated reviews. That's a small portion often of the total number of policies that they've issued and the total number of clients that have had great success. The other thing that you need to bear in mind is somebody that's actually gone on and read some reviews. There are frustrated instances and clients where the issue or the problem was actually on their end or the agent's side, and then the insurance company was simply doing what was instated in the policy or whatever that they purchased, whatever that might be. So they didn't read the policy well, the agent didn't explain it well. And so the frustration can be misplaced on the carrier. So if you're going to use the Better Business Bureau and their reviews, just keep that lens intact. That it's often a bit of a skewed representation of what that company's customer service actually is, or at least it can be a skewed perception of it. Check in with your clients at least once a year, right? I mean, if you've got reallocation statements, renewals, annual statements coming through and you're checking in with your clients to see how they do, what are we going to reallocate to.

Do another fact finder and figure out if there's some more opportunity with them. All those types of things are important. But also check to see have they had any interaction with the carrier. If you're selling income products, there's going to be a point where they go to activate income. If you're selling an accumulation product, there may be a point where they go to take a withdrawal. Ask them, have they had contact with the carrier and if they have, what was that experience like? How did they enjoy it? Did they enjoy it? Was it good, was it bad? Get some insight from them specifically. Another thing you can do is actually reach out to the individual carrier and talk with your internal wholesaler, something I've done, and ask them specifically what is the front client facing customer service like? And what I've noticed in my experiences in calling these carriers and asking about it is that those particular companies where that customer service piece is an important part of their operations, meaning they value it. It's something that they strive to do well. Those wholesalers get excited. You can hear it in their voice. It's like they get excited to talk about how good their service is. Those that maybe traditionally don't value it as highly as others, you can typically hear it. They try to skirt around it, they try to beat around the bush. Oh, you know, it's pretty good. Oh, you know, it depend. They're kind of just. It gets a little shady and you can tell there's not a lot of excitement about that topic. So call them and ask them. The fourth and final thing in this product selection process is the payout or growth potential. When we talk about payout we're typically talking about guaranteed lifetime income and we're typically looking at either the highest guaranteed income that can be attained or some kind of increasing income potential. You're going to want to look at both. Now I will tell you that typically when you're looking at high guaranteed income, often because so much of the budget of that particular policy goes into creating the guarantees for that policy, oftentimes there's not quite as much budget to go into options, which affects par rates, caps, spreads accordingly. So you can for frequently see high, high, high income products tend to have pretty low rates on their index strategies. Whereas products that maybe have a little bit more increasing potential, their guaranteed starting point for income is a little bit lower. They tend to have slightly better rates on their index strategies over the long term. The index crediting is what's either going to protect the account value or allow it to get drawn down pretty quickly based on the income withdrawal. Now again, if you have to have meet a certain income amount, you have to meet a certain income amount. If the need that the client has is maximize the income stream available, we've got to maximize the income stream available. That's a necessary piece, that's solving the problem, that's doing what's best for that client. But if they can afford to take a little bit less guaranteed income, then often they'll end up with better rates on the strategies, more crediting potential, and hopefully over the long term actually protect that account value a little bit longer so that there may be a death benefit later on to pass on to heirs and beneficiaries. Definitely something to consider. Flip side of that growth potential for purely accumulation plays. I think one of the most critical and most overlooked pieces for this type of product that you're selecting is, is renewal rate integrity. When carriers issue a policy, do they issue these really nice first year rates, second year rates, Maybe there's a slight drawdown, and then year three on they're pretty terrible. Or do they tend to hold their rates? Well, this is another one of those pieces like customer service that it can be a little bit challenging to actually know how they do in this area because it's often not talked about, it's often not public published. There's not a great place to find information about this, typically unless the carrier is publishing their renewal rates. But again, most aren't doing that. So it takes experience, it takes time in the industry. And this is where having a network of other individuals that have been in the industry longer than you have and have seen things that you haven't seen can be super advantageous to you. This is where having a good marketing organization, a good marketer behind you in a good relationship with your internal wholesalers at the carriers can be super advantageous to you. So you can actually determine if I'm going to sell a product on the basis of protection and accumulation what's going to set us up for the best renewal rate integrity. Now the other piece you have to consider here is the starting rate. You don't want to have terrible starting rates that hold perfectly right because over the long term you still may end up money behind. You want to have quality starting rates with good renewal rate integrity and where you can mesh those two things together. That's where you tend to have the sweet spot. I'll say, on index strategies real quick. I think there's a couple of things that you ought to look for.

Number one, annual and biennial reset periods versus multi year reset periods.

I'm personally a big fan, especially in income cases, of trying to credit interest as close to as frequently as you're making withdrawals as possible. It's not always attainable. You can't always do it, but you want to try. Okay. That's where there are products out there that have income. They're designed to be income products and they have multi year resets, three, four, five year resets. And it's like you're going to be drawing income every month for three years and then not crediting any of those first two years. And then finally after the third year you get an index credit and it's like fingers crossed there's some big credit there because we have sure drawn out a lot of that account value. Whereas if you can have annual crediting on your income plays, that's a lot more advantageous, especially as the market ebbs and flows ups and downs. If you have a one year reset and you end up down now, your starting point for the following year is lower. So if the market actually has some good positive movement, you're getting an extra chunk of that because you locked in the year prior at a lower rate or I'm sorry, at a lower, at a lower value of the index. So try and use annual and biennial point to points. I personally try and avoid biennial point to points altogether unless it's purely an accumulation play. And then even then I'm typically allocating 40 to 50% of the funds to a two year and then what you can do is you can actually rotate Those through your first if you, if you issue a policy where the first year you've got 50% of the funds into an annual point to point and 50% into two year point to point. What you can do is after the first year take that first 50% that was in the annual and just move it into a new two year. And now you're just crediting every other year, half of the funds in the account would be hitting, but you're getting the better rates of a two year point to point. That's one strategy that I have implemented before with agents I know of other agents that have used it. It's historically been a pretty successful and popular strategy to use. Or alternatively, you just leave chunk of the funds in the annual point to points and you reallocate them accordingly to market movement and what the index is exposed to versus the actual economic conditions. And then you leave the other chunk in the two year point to points point. And in doing so you just have one year where every single year you're crediting, you know, typically a smaller amount. And then every other year you're trying to have that big credit. That's another way that you can, you can try and structure those index strategies. Also want to add that typically when you look at point to point versus monthly sum versus monthly average versus daily average, you typically see better returns on point to point strategies. The averaging methods don't typically perform as well. So just bear that in mind. The sum methods don't typically credit as well. It's another thing to consider.

All right, I also want to add that when you look at multi year resets, just to go back to that real quick, imagine you're losing, say it's a three year reset versus a one year reset. You have to credit in a three year reset, not just three times the annual average of the one year reset. Because with the annual reset you're getting two. Yeah, two compounding time periods there versus a three year, you don't have those. So you actually need to credit more than three times the annual to even have the same return in the three year because you're losing the compounding periods. There's just another thing to bear in mind.

I already talked about renewal rate integrity, but again that's super important. You want these companies to try to stabilize their option budget and ideally these different indices, the option costs would actually get stabilized as well. And in doing so we typically see stabilized rates. If the budget fluctuates, then ideally the carrier would adjust their budget accordingly. If the cost for the option fluctuates, which it does, it always does. But typically the carrier with good renewal rate integrity would adjust that budget a little bit to try to offset whatever that was. This is why you don't want your insurance companies having these big giant fancy buildings with tons of overhead and all these expenses. Because the more expensive it is for them to operate, typically the smaller or the wider their profit margins need to be. That's another piece you need to consider is the margin desire. If they can operate with lower expenses and smaller profit margins, then typically what they're able to put into their products is better. Flip side of that is personnel people, right? Having employees, that's a cost, that's an expense. But they're necessary for good service. So it's definitely a balance. You want to see what carriers are doing it. Well, if you need an idea and you want to have a conversation about it again, reach out to me. I'll share with you what we've been recommending lately here at Retirement Realized. I hope this was another good episode for you with seven figure annuity sales. We appreciate you tuning in every week and we hope to talk to you soon. Happy selling.

Ram.