Why Do We Suck at Life Insurance?
It started as a joke. “Why do we suck at life insurance?” said a participant at a recent Stathis-Mittel Industry forum. A sincere question asked in a joking manner. Why do we struggle so much with providing life insurance solutions to financial institution clients? It’s been a nagging issue that has plagued the bank investment services industry since its inception.
We all know, in theory, the answers to this question, don’t we? Selling insurance is not conducive to the culture of bank or financial advisors. Insurance is hard to sell, and advisors don’t make enough money from it. Discussions around insurance are difficult for advisors to have with their clients due to the emotional ramifications. Advisors are intimidated by the insurance discovery and sales process. Closing a sale and getting paid takes too long. On and on…
Clearly, these aren’t good reasons. They’re simply excuses. We know this since not all programs or advisors suck at selling insurance. There are brilliant examples of financial institutions that have cracked the code and provide blueprints for success. One example is a bank that has a turn-key process for completing annual insurance reviews for all clients. Another bank that has added enforceable goals to their scorecard. Another that levelized compensation across products including insurance. And yet, another that is producing big numbers by having upper-tier advisors focus on providing solutions to business banking and high-net-worth clients. Obviously, there are more elements to their success with insurance sales. These initiatives are the tip of the spear.
Here are some of the basic, as well as loftier, client needs that necessitate insurance: debt, cash flow, income generation, college, retirement, health care, freedom from worry, taking care of loved ones, and leaving a legacy. Do any of your institution’s clients have those needs? They obviously do.
Here are some things you can do to start institutionalizing the servicing of the insurance need.
- Establish a minimum service level for advisors that focuses on enforcing a documented process where all six core needs (savings, credit, income now, income later, protection, and legacy) are discussed in the discovery phase before account opening.
- Provide an institutionalized question-based “Discovery Discussion Template.”
- Capture and centralize the data gathered in this discovery process.
- Be proactive with using the data to market to the protection needs uncovered in the discovery data to force the hand of the advisors.
- Include servicing the protection need on the incentive compensation scorecard.
- Most importantly, establish a corporate culture that expects client’s assets to be protected by the institution.
Here is a stance that should be institutionalized and used by every advisor.
Protection is a need that is often neglected but is very important. We help our clients protect their families and assets against loss of income streams in the event of the head of household's death. This type of protection includes coverage of personal risk exposures like repayment of debts after death, providing for a surviving spouse and children, continuing the ability to fulfill other economic goals and responsibilities (such as paying the mortgage and college tuition), paying for funeral expenses, etc. This is also important if you are a business owner or a key person in someone else's business, where your death (or your partner's death) might wreak financial havoc. Other types of protection include protecting against disability, high long-term care costs, personal property, etc.
And here are some simple questions your advisors should be asking all of their clients.
- What is the current approximate total of the monthly expenses your household is obligated to paying, including staples like food?
- What percentage of that total comes from your income?
- How would your family handle those obligations if the primary income earner passed away?
- Are your children in college or do they plan on attending?
- Do you plan on leaving your children any money?
Enough with the excuses which lead to underserving our clients. Providing protection for our client’s assets is not difficult. All it takes is professional commitment and some strategic leverage, including smart utilization of the available financial planning and insurance processing technology. Most insurance carriers have streamlined their processes so cases that once took months are now processed in just days to few weeks. Process streamlining will continue to improve as more companies leverage ongoing technological advancements.
We need to stop enabling the “insurance is hard” myths. We need to stop enabling high producing financial advisors that do not engage in insurance discussions with clients since these “top performers” are not doing their jobs – they are leaving their clients exposed.
Let’s do the tough work of assessing the organization’s goals, priorities and culture. Let’s take a deep dive into what is already working in our industry to significantly increase client satisfaction and revenue.
For too long, banks have produced a measly one-to 3% of investment services revenue from life insurance. This is not acceptable, especially when bank programs exist that are generating 20% of their revenues from insurance. It’s time to raise the bar. If you are not one of these successful programs, why don’t you initially shoot for 6% of revenue from insurance, then eventually raise it to 10%? Once you’re off and running, it will become much easier to leverage momentum and keep growing. Then, maybe we won’t suck at all as a channel. No more excuses. Let’s do this. The time is now!