Leadership Perspectives | 10.30.19
The Industry’s Struggle to Prioritize Insurance
Whenever bank and credit union advisory unit leaders gather to compare notes, there are a few topics that always come up. Compensation schemes and recruiting are two examples. Another conversational evergreen is how to sell more life insurance.
Insurance product sales have ebbed downward in recent years, but the retirement and risk management needs of most ordinary Americans have not changed. In structuring business strategies, senior executives struggle with the issue of how to get more advisors to put greater emphasis on insurance.
Many needs-assessment conversations tend to revolve around retirement nest-egg building, thus there are some familiar components, such as IRAs, invariably taking up space on the front burner. Nevertheless, industry executives say insurance can and should sit front and center under the rubric of secure retirement income and risk management.
Making insurance sales a higher priority requires top-down commitment, codified structure, ample support, patience, education and fresh thinking.
What follows are a few key perspectives to help advisors frame discussions and game plans.
The Conversation Piece
Advisors are told again and again, “get to know your customers better!” But it isn't always so simple. Insinuating yourself into someone’s personal business requires a degree of savvy, tact, finesse – and, at a minimum, some concise, well-crafted situational sentences that can be effective in fleeting windows of opportunity.
Polite probing is usually the main way to uncover opportunities to better serve a customer through other lines of business. Better training can maximize these interactions, explained Michael Miroballi, president of The Huntington Investment Company, speaking with BISA Portfolio in 2018.
It's all about "making the bankers focus not only on what need the customer might have come into that branch with, but also asking some three or four key questions that get to the heart of knowing that customer much better," Miroballi said.
Training and support for this kind of key-query approach has been critical to gaining a deeper understanding of client needs, which is ultimately the real underlying goal, he added.
It's Not That Complicated (Anymore)
Once the subject of insurance has been broached, it need not turn into an extraordinarily onerous ordeal. Videos and plain language case study materials are available to convert math and jargon into more easily digested informational nuggets.
In the past, the underwriting process could involve urine tests, lab samples and physicals, often creating a bridge too far. But these days, the underwriting process is much more streamlined. New actuarial data science techniques allow for more efficient risk-assessment strategies. Prudential, for example, rolled out a new underwriting process for consumers applying for term and permanent life insurance products within specific eligibility criteria.
Integral Role in Retirement
Using life insurance to supplement retirement income and to diversify the sources of that income amidst tax sensitivities – while not the kind of nest-egg anchor that, say, a defined benefit plan might represent – still represents a core component of any financial plan, said Anna Dunlap, senior account manager at Lincoln Financial. Most individuals may be aware of the tax implications carried by traditional retirement vehicles, but many people may not be aware that cash flow from a properly designed life insurance policy is not considered taxable income.
"This flexibility gives the retiree more options," Dunlap said, underscoring what to underscore.
Some clients may be perfect candidates for insurance pitches if you know them well enough – for example, candidates you know have maxed out their 401(k) and want additional cash for retirement.
"Having the right kind of permanent life insurance in your portfolio at retirement is essential to any retirement plan," said Nanci Pipo, vice president and partner at Southtowns Financial Group. "It’s one of the least understood products with the most powerful impact."
Pipo said she and her team makes a point to try to educate everyone who crosses their path "to help them understand how it works and how having it affects their overall retirement plan."
Harnessing the power of data and analytics, financial institutions can dive deeper into the demographic makeup of their clients when seeking prospects of a certain age (e.g., 49) with the means and core retirement components in place to consider supplemental retirement income.
In an article for BISA Portfolio, Rob Comfort, president of CUNA Mutual Group’s broker-dealer, CUNA Brokerage Services, Inc., emphasized the need to apply analytics to a lead-generation marketing engine to target ideal clients for various services. Through data modeling, credit unions can design and implement focused marketing efforts.
"This approach is far more precise and consistent than relying on traditional branch referrals," Comfort said.
Click HERE to listen to BISA Podcast’s newest episode, “Discussing the Industry’s Million-Dollar Questions with Industry leader Rob Comfort,” in which Comfort discuss the core needs of any client and the future of the bank and credit union investment programs.