Agents are big believers in—and users of—selling systems, including direct-mail postcards for leads, product brochures, and sales tracks. And this is great since these resources help advisors to create an efficient “sales machine” that grows their client base and builds a sustainable revenue stream.
However, many advisors forget that perhaps the most powerful selling tools aren’t tools at all but rather their personal example. In other words, conveying the impact their products have had on their own lives can be a highly effective way to persuade others to buy.
For instance, if you are trying to sell clients on the value of retaining you as a financial planner, then it’s important to mention you have a financial planner yourself and that you greatly value that person’s support.
Similarly, if you sell life insurance, make sure you have enough life insurance coverage for your family and that your beneficiary designations are current. This will help you be a good role model for your clients who are procrastinating about this purchase.
And if you offer disability insurance to protect client income in the event of illness, take steps to insure your own income and perhaps investigate the benefits of businesses-related DI such as overhead expense or key person (if you have employees).
Unfortunately, agents often fail to practice what they preach, weakening their sales effectiveness and results. Retirement planning is an excellent (or would that be unfortunate?) case in point.
According to the FPA Research and Practice Institute, 58 percent of financial advisors have no written business plan and 46 percent lack a retirement plan, despite the fact that 14 percent said they wanted to retire within 14 years. The study cites lack of time as the major reason advisors fail to complete (or start) their own retirement planning. So just as busy shoemakers allow their children to wear worn-out shoes (or so the legend goes), financial advisors fail to either build their own retirement plan or to hire someone to do it for them.
Another example of failing to lead by example are property-casualty agents who encourage businesses to purchase commercial general liability insurance yet who fail to buy errors-and-omissions insurance for themselves. Although such agents sincerely believe their E&O risk is small and that if they were to be sued, they’d easily be able to self-insure, they are often shocked at the financial realities of litigation today. Here are just several key statistics:
- According to FA Risk Management, attorneys can charge anywhere from $600 to $1000 an hour to defend a financial advisor against a client lawsuit, whether it’s justified or frivolous.
- The average case will take the attorney some 10 hours to prepare (assuming the advisor is poorly organized). This translates into $6,000 to $10,000 of legal fees and that’s even before the case enters discovery or goes before a judge.
- The E&O insurer Calsurance says the average cost for an annuity E&O claim is $20,000; for individual life insurance, $40,479; for pension products, $71,000; and for disability insurance, $149,116.
Consequently, not taking the advice you give others and opting to self-insure your E&O exposure not only increases your risk exposure, but also sends a bad message to your prospects—that you don’t take risk seriously and don’t believe enough in the products you sell to buy them yourself.
At the end of the day, practicing what you preach regarding all the products and services in your portfolio will enhance your own financial security and increase your credibility and ability to move prospects off the dime. We can’t think of a more powerful selling tool than that.
For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center at ethics.net. For information on affordable errors-and-omissions insurance for low-risk financial advisors, please visit EOforLess.com.
- Pacific Life takeover of former Genworth Lynchburg life operation helps stabilize the term market
- When technology enables sleazy marketing practices
- For first time ever, more Americans covered by employment-based life insurance than by individual
- Need for coverage on display in the stories of 2017 Life Lessons Scholarship award recipients
- MDRT appoints Pittman as its 92nd President; New York Life continues to dominate U.S. membership
- LIAM updates: Podcast debunks 5 myths about life insurance; Guardian releases educational videos
- Less than half of employed Americans have workplace group life coverage
- 3 business benefits a flexible underwriter can deliver