Scott McCarthy, Regional Vice President, Sales & Distribution, Ameritas Life Insurance Corp.
Managing and understanding risk is not a strength for many people. It’s also why financial professionals need to be effective at helping clients make changes that address long-term financial needs.
Changing the conversation
In discussions with colleagues, I frequently comment on the need to change our client conversations. I feel that we need to recognize there is a gap between what people do or think based on their feelings versus what people do or think when operating based on critical thinking. The following examples can help us understand what we’re up against and how that can help us have better conversations.
Example one
There’s an anxiety and fear for many people when taking commercial flights. Whether the flight is short or long, there is a deep concern about safety. Many statistics show travel by car on public roads is far more dangerous both in terms of injury and death, yet the fear of flying is greater.
Example two
In the financial world, if we asked working individuals with a retirement account or investments for a basic axiom of investing, the phrase “buy low, sell high” would likely be a popular response. It is understood that it’s best to take advantage of dips in the market to buy assets when prices are at their lowest and acquire a profit by selling when prices are at their peak. But time and time again, when faced with rising markets the population’s appetite to get in on the gains means buying high. Market drops are met with selloffs instead of investments as people try to get out before prices hit bottom. Common knowledge goes out the window.
Approaching clients about insurance products can be some of the most challenging conversations. The main enemy is inertia. Often these conversations are addressed with a client who does not feel a need for life or disability insurance partially because they’ve lived without it up until now and, in most cases, without giving a single thought about either product.
The only way to effectively move clients from the “it’s all good” mindset is to disrupt their understanding and then educate. There are different ways to go about this, but the process begins with making the client aware that you can help them address problems they haven’t yet thought of – problems that could disrupt their future and the future of their family. With life insurance, it’s a little easier since the idea of having life insurance when you start a family has moved into the realm of common knowledge for many.
I know many financial professionals who effectively have conversations positioning life insurance as a valuable piece of a financial plan. As someone who spends most of their time working with disability insurance, I find this much like addressing someone’s fear of flying while not dealing with the risks of getting in a car for the morning commute. The chances of individuals passing away during their working years are much less than their chances of suffering health issues which can interrupt their ability to work.
Seeing the need before you need it
Clients need to understand a health issue can disrupt their ability to work because once it happens, it’s too late to address it with an effective solution. A key to attaining individual disability income insurance is being healthy enough to qualify. This syncs with our second example. If individuals feel fantastic and their health is at its peak, it can appear to be the worst time to pursue coverage for their health. It’s like asking them to “sell high” in a sense. On the flip side, there have been many times I’ve had to inform producers their clients were ineligible for coverage due to an ongoing health issue. When their health is at its worst, the conversation about protection is easy. I think this understanding is important as we prepare to talk about how disability insurance can help improve clients’ futures.
The education we share with healthy satisfied clients when addressing a need that doesn’t feel urgent should be focused on the risk they carry and the benefit they gain. Many clients are not thinking an unexpected change in their health could interrupt their ability to work and negatively impact the future they were planning for.
Many Americans today rely on self-funded retirement plans like 401(k), 403(b) or other tax advantaged investments to build money for the future. Once the short-term savings are gone, the next set of funds available during an income disruption is going to be the retirement fund(s). Clients are not likely thinking of this but need to be aware of this before discussing the solution an individual disability income policy can help provide. Individual disability income insurance is unparalleled as an efficient way to provide a stream of income to help maintain a current lifestyle without having to deplete assets.
The tipping point
The ability to protect the retirement assets in an unexpected challenging time is a potential tipping point and well-informed clients are likely to take the next step to work with a financial professional to build a plan that includes a disability income insurance policy, if they want to shield their retirement. There will still be those willing to bet on their continued good health but all we can do is continue to educate and bring awareness at future client meetings or annual reviews.
It’s tough to ask people to go against their gut instincts without an appeal to reason. Taking the time to inform and educate clients so they can see the problem and want to fix it is a good approach to help them move past their first instinct. From there, a strategy can be crafted and put in place.
I had a glass paperweight that I kept on my desk but have since lost over the years. The message etched on it frequently comes to mind and summarizes in simple terms my message above, “seek first to understand then to be understood.”
