Many advisors and agents ask their Insurance Marketing Organization (IMO) “What's your favorite product?” I've always been perplexed by this question. What's your favorite product? Really? It's as if financial advisors and insurance agents have been conditioned to ask that question, which would lead me to believe that most IMOs are pitching products and not asking questions.
Pushing Products Doesn't Help Anyone
I know a lot of unsuccessful financial advisors and agents who try to push financial products. They don't ask questions that lead to understanding the client's objectives, goals, and concerns. Rather, they force their agenda, which is to sell a particular product. This doesn't work and doesn't help anybody.
An advisor or agent asking the IMO “What’s your favorite financial product” would be like a doctor asking a pharmacist "Which is your favorite drug?" If the pharmacist did shout out the name of a drug, their favorite drug, what might be your conclusion to their swift answer? Would you question whether there was some sort of benefit to the pharmacist and not the patient for the recommendation? Either the pharmacist gets kickbacks or thinks it's easy to sell.
The only logical answer for a question like this would be conditionally based upon the patient’s ailment. You can’t have a favorite if you don’t know what your treating.
Ask our team, “What’s your favorite financial product?” and you’ll hear only one reply. The answer to that question is quite simple: “Whichever product maximizes your client’s premium dollar for their benefit for whatever it is they're trying to achieve. That's our favorite product today!" End of story. The best financial product for clients is the one that is the best fit.
Our team takes our responsibility to our agents and advisors, and their clients, seriously. We believe that we should conduct ourselves in the same manner in which we coach advisors and agents. The patient needs our expertise, and it’s our responsibility to understand their history, and desired outcome.
Informed Product Selection
When selecting the best product options for a client, we want to know as much information about your client as we possibly can. Are you using a fact finder, or client needs analysis? Great, we want to see it. Did you get copies of their statements and a list of their assets and liabilities? Terrific share it with us. Did you get a copy of their budget showing their outgoing and incoming resources? Fantastic we're going to need that too.
We use a host of tools at our disposal to separate the wheat from the chaff. All of these tools allow us to be efficient, fast, and accurate when identifying the product(s) that will produce the most economic benefit for your client based on their needs using the premium dollars they have. We believe this is the right thing to do, and the only way to do it.
Compare the Options with Software
Our income rider comparison tool saves us time. In less than 60 seconds, we can identify the carriers and products that will produce the highest guaranteed lifetime income for a specific client, or joint clients. Regardless of premium bonuses, front-end rollup rates, or a host of other gimmicky features, the team analyzes these very useful income planning products based on the merit of how much income your client receives back for the premium dollar they put in. After all, we believe that if one product produces a higher guaranteed lifetime income, but lacks premium bonuses, high rollup rates, or other features that distract us from the end result, we want it!
If one carrier’s product will give us $.10 on every premium dollar paid as a lifetime income, and a competing product with a high bonus and high rollup rate produces $.09 on every premium dollar, we're going to recommend the one that produces $.10. Granted, there are other factors to consider. However, we begin with the economic benefit to the end user first, and then progressively work through the other considerations before making any recommendations.
We take a similar stance with regard to single premium immediate annuities or SPIAs and deferred income annuities or DIAs. Our search engine saves time, and your client’s money. It allows us to organize income annuity payouts by highest to lowest while examining exclusion ratio's if applicable, and any additional features that we might need to consider. All of this can be done within a matter of minutes.
Probability vs. Hypothetical
With products designed for accumulation, we believe that probability of success trumps potential hypothetical results. Lets face it, there are many gimmicky products being released to the marketplace today. Insurance carriers, insurance marketing organizations, and investment banks have collaborated to produce complex, hard to understand, crediting strategies and indexed products. The longer the prolonged low rate environment persists, the more creative they have become. As an industry, we’ve taken a relatively simple fixed annuity product with interest linked to an external benchmark and turned them into a magic show. Slight of hand is being leveraged to mask the historically low rate environment.
Proprietary indices, and proprietary crediting strategies can’t make a silk purse out of a sow’s ear. Index products have limitations for accumulation potential relative to the percentage of money that would be represented in the fixed account of the product. A product with a 1.5% fixed rate won’t produce a realistic average credited rate of more than 1-3% above that fixed rate.
Am I saying that I don't trust back testing on crediting strategies that were just cooked up in a back room between an insurance company and a market maker selling their derivatives? That's exactly what I'm saying. I've never seen a bad back test. You probably haven’t either. Those end up in the wastebasket.
We use our own third-party tools to determine the probability of an outcome. We prefer to put the products through a rigorous analyses process, rather than taking the insurance company's word for it. We believe this is part of our due diligence as your marketing partner. Do you want your business partner to tell you what you want to hear, or what you need to know? The advisers and agents that we work with would expect nothing else but the unvarnished truth.
Create Better Client Relationships
If you take care of your customers, and you do right by them, they will repeat business with you and refer you to others. If you sell them something, and it was sold on the premise of an outcome that is unlikely to occur, when the outcome does not meet their expectations, they will not be happy with you. If they are not happy with you, you will not be happy with us. If you're not happy with us, we won't be in business very long.
Next time you speak to a representative of an insurance marketing organization or insurance company, don't ask them what their favorite product is. That is idle conversation. Ask them: “How are you going to help my client maximize their premium dollar?” How they answer will be telling. If they answer with a question about your client, continue. If they immediately have a product recommendation for you, hang up! They're not looking out for you and your client.
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