One of the key elements of my move into structured sale annuity markets last year, upon the introduction of the product by Allstate Life Insurance, was to keep a detail diary of sales calls, inquiries and of course closed sales. One of the key elements I've determined in looking back over this first year is that some very clear trends as to the types of people interested in these tax deferral strategies are starting to take shape.
1. The typical client is over the age of 65. In almost every case that we have opened, that failed to eventually gain traction or went to a competing product, the client was under the age of 60 and still in an active investment mode as regards their real estate holdings. By that I mean they might have wanted to defer some earnings, but the fact was that they were still actively in the game and didn't want to tie up money in a guaranteed annuity installment sale such as this, feeling it restricted their ability to use their equity or assets for further real estate purchases.
2. Every valid case that is currently closed or close to being closed has a CPA or tax expert who comprehends the value of tax deferral and they are actively advocating the use of the structured sale annuity. If the CPA isn't on board, isn't comfortable with the concept or is overtly hostile to it, you have zero chance of selling the annuity and you are better off moving on to another sale at that point. It's not that the tax concepts are difficult or complex, rather it is they are new, most CPA's haven't attended CE courses outlining the product, and they are loathe to move on something they aren't absolutely confident recommending.
3. The successful case has someone who is "cashing out" of their asset, be it real estate or a small business, and want to construct guaranteed income with an absolute minimum of headaches. These are people who are very skeptical about private annuity trusts, don't want to search for a like property to do a 1031 roll over and most definitely don't want to deal with the IRS in future years on a product that might be sketchy.
In summary, with rates exceeding 5% on the interest earnings, a variety of payment options, as well as an exceptionally solid corporate backer such as Allstate, this product is tailor made for a generation that wants guarantees, certainty and isn't fixed on growth as much as they are on guaranteed income.
If you are a CPA, planner, estate expert or real estate professional and want to know more about the structured sale annuity market, be sure to contact me about our joint marketing program, or continuing education series.