The Value Proposition in Repositioning

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1 The Value Proposition in Repositioning LIFE INSURANCE in Your Firm By Rob Hagg, Senior VP, Life Sales and Integrated Financial Services Successful advisors make purposeful actions that align with powerful strategies. In contrast with other advisors in their markets, it s not product that determines one advisor s success versus another, it s the strategy behind the core offerings and services which attract clients and breeds success. Although the services of a firm today can be attributed to success, that may not remain so over time. Continually honing your strategy is a necessity to build and maintain a competitive edge and form a protective fence around your best clients to preclude competitive poaching. This does not necessarily require adding products to the core offering, although any advisor or firm can. This whitepaper is a strategic exploration of how to optimize and reorganize your existing people structure and custom client solutions to maximize the payoff, grow your firm s assets under management (AUM), and guard your growing market share. This strategy will have the greatest impact on firms with $200 million or more in AUM. Just like the fastest of cars, they are manned by the most skilled drivers and jointly win a race. This too, can be the same for the best advisors; they re needed to drive the strategy to the winning finish line for the firm. If you re in search of a competitive advantage, read on. It all begins with a review by an independent consultant skilled and experienced in optimizing and revamping existing firms to leverage new opportunities without disrupting the business cycle and at no cost to the firm. This independent consultant should bring: Advice on proven but innovative methods to grow market share: from acquiring and developing key talent to positioning for a competitive advantage and implementing marketing strategies The means to develop growth strategies to better position the firm, including organic and acquisition growth Innovative offerings to augment the firm s infrastructure and expand resources, such as access to proven and proprietary systems and customized plans to develop internal, external or hybrid models Advice and training on cultivating key talent into solutions-based selling experts Access to networking opportunities with elite like-minded firms In addition, this new strategy requires a change in key advisor positioning within your firm and mindset on how familiar and existing products can be used in new, differentiating and highly profitable ways. Outside consultation should have the experience and resources to outline a plan based on market proven techniques and not just theory or conjecture. Since these are the resources needed to meet your firm s goals, only one source is equipped to help you achieve this new strategy: CreativeOne. Differentiate your firm with a new twist on insurance Life insurance. Despite being a bit of a former albatross with all its moving parts and cumbersome cycle, there are now ways to streamline the 1

2 entire process. Reduce an advisor s time to research and develop side-by-side client solutions in a product agnostic manner through a silent business partner. The weight is lifted and the advisor is free to focus on recommending appropriate measures to the client, presenting life insurance not only as risk management but as an asset class and in other beneficial ways that can be used as inflation, market volatility and tax hedges. Here are five key areas where insurance can largely impact clients: Hedge against and minimize the impact of taxes by crafting asset protection strategies utilizing trusts and life insurance Provide business clients a full-suite of tools by offering greater retirement income benefits for owners and employees Combat market volatility and inflation by using holistic planning approaches Design estate plans for family endowments, foundations, long-term care protection and to avoid family conflicts Create a steady income during retirement by providing clients with tax deferred sources of income with minimum guarantees With the income and estate taxation for higher net worth clients projected to climb, the tax advantages and benefits of life insurance become increasingly more valuable. Because of the built-in advantages of life insurance, it is becoming the tool to execute a larger portion of estate plans and utilized as a tax hedge within a comprehensive portfolio. Firms taking advantage of this early on by adding a new primary insurance advisor to counsel clients on how to best use life insurance naturally shutout the competition. By providing deliberate and comprehensive insurance services rarely found in wealth advisory firms, you will naturally gain market share. In this new twist on insurance, one advisor is selected as the firm s authority on the uses of life insurance, including the non-traditional application. This key employee becomes the go-to-insurance person for all the other advisors. This 52% of elite advisors are not successful at selling life insurance 2 person can be utilized in new client orientation as well as those who need and want these unique hedges and wish to benefit from profitable uses of insurance in a portfolio play. This point person focused on life insurance can effectively increase the entire firm s revenue by moving life insurance from a transactional encounter to a wealth management consultative strategy and thereby increasing the business booked with existing clientele. Further, this unique wealth management strategy becomes a magnet for new business, which in turn helps the firm expand through differentiation of services. Repositioning how insurance is seen and presented this way can result in as much as $2 million annually or more uptick in revenue from this one employee alone. Basically, you move a product class from an underperforming state to a profitable one. Why does life insurance consistently 37% of responding elite advisors said the variety of different types of policies and riders and how they fit specific client needs are the most troublesome and complex parts for them

3 underperform? Consider that a recent survey* of elite advisors found 52% are not successful at selling life and 44% of respondents reported no more than 10% of their clients had proactively asked them about approaches to life insurance. Only 14% said that more than half of their clients had proactively inquired about life insurance. 70% said they offer life insurance when appropriate, which usually equates in practice to somewhere between rarely and never. Often reasons behind the slow or minimal update are equated to struggles with tackling the most complex client needs due to lack of resources, expertise, lacking fluidity in the process, how to approach clients or how to utilize life insurance for uses other than protection to heirs and income. Add to that the current obstacles for advisors in selling life insurance, obstacles that this new strategy will eliminate. But first, let s look at the most complex parts in selling insurance as reported by advisors in the elite producer survey. When all is said and done, you can clearly see why life insurance consistently underperforms as it is sold and managed in most RIAs and firms. 37% of responding elite advisors said the variety of different types of policies and riders and how they fit specific client needs are the most troublesome and complex parts for them. 25% said the abundance of paperwork required to sell and issue a policy was too complex and cumbersome. 13% said frequent product development changes made it hard to stay abreast of options and advantages in life insurance. Nine percent said understanding combination products that address multiple needs were just too perplexing. Advisors who Offer Insurance to Clients No more than 10% of advisor s clients proactively ask about life insurance Percentage of advisors who offered life insurance when appropriate Further, 8% said leveraging polices for uses other than protection of heirs/ income, i.e. succession, planning for business owners, etc., was 0% 20% 40% 60% 80% Obstacles for Elite Advisors to Sell Insurance Abundance of paperwork required to sell and issue a policy were too complex and cumbersome Frequent product development changes made it hard to stay abreast of options and advantages in life insurance Understanding combination products that address multiple needs were too perplexing 0% 10% 20% 30% 40% complex and beyond their immediate understanding. 49% percent of the 30% of advisors who do not regularly provide life insurance said selling life insurance distracts from their practice and one out of five said life insurance was too complicated. Despite all of those potential setbacks, 42% of financial advisors said they d be willing to work with a life insurance professional for their clients. Bingo! There s your strategy. 3

4 And it will work, not only because this strategy quickly results in across the board upsells, but because it also becomes a brand differentiator for the firm. Remember that advisors in other firms encounter these same drawbacks and are not presenting life insurance as a wealth management tool either. They have no strategy with which to compete with you on this front. If the Insurance Director follows the standard product selection and sales processes, your new initiative will fall short. For this strategy to work, much of those processes are outsourced to a group highly knowledgeable insurance professionals, but brand and product agnostic in their research and recommendations. In other words: The firm s advisors focuses on the understanding of the client s financial goals or objectives: The wealth/portfolio advisor focuses on managing the client s wealth. The insurance director works in tandem to marry insurance solutions when appropriate. A silent business partner works with the Insurance Director to develop customized solutions which achieve the client s strategy. Rather than a research quagmire insurance has previously been, this outside partner helps design solutions at no cost to the firm. Your Insurance Director must become as proficient in these new wealth management uses of life insurance as he or she would be with any other investment vehicle. But those particulars can be taught in a relatively short learning curve. The far more important ingredient in your chosen advisor is his or her best sales game and people skills. The rest can be taught or provided by the outsourced back-up crew. Be sure to read the sister paper to this one How to Choose the Right Person to be Your Insurance Director to learn more about what you need to look for in candidates for this highly prized position in your firm. Increase client loyalty and firm revenue with life insurance Once your person is chosen, trained by a seasoned and experienced team and armed with the right tools, he or she can begin to immediately increase business internally and attract new business to the firm. Specifically, here are four ways your new superstar talent can increase firm revenues and protect the client base from poaching using this strategy. 1 Increase client wallet share. This strategy increases revenues from your existing client base by adding a unique layer of wealth management that the client has never seen before but is easily attracted to. This strategy contains none of the risks that are commonly attached to new investment vehicles. Indeed, it s just the opposite. Life insurance is first and foremost a risk management tool and a known quantity. Clients are therefore commonly comfortable with leveraging life insurance for new wealth management benefits too. 2 Increase client attraction and retention. The most sought after quality in a firm is breadth and strength in reliable strategies and the depth of your bench. Sure, investors are comfortable to varying degrees with the notion of risk but they all look for firms known to have solid strategies and more in-depth knowledge of all the options. A new, superstar Insurance Director puts you well ahead of competitors in providing such a service and quickly becomes a solid brand differentiator. Further, clients become even less inclined to switch advisors or firms for fear they ll miss this big play and the next one to emerge too! 4

5 3 Increase and expedite creditability with clients. Introductions to new clients and building the rapport are one of the biggest time sinks in building a funnel of new prospects. Higher net worth clients often leanon advisors for referrals for new financial services. However, by utilizing an expert life advisor in the office and making a warm and endorsing introduction part of the standard operating procedure for annual reviews and new updates, you can expedite the sales cycle and enhance the firm s revenue. The power of speaking with a client and telling them your resident, Insurance Director is down the hall, let me introduce you to our in-house expert cannot be overstated. Clients instantly become more willing to engage in valuable conversations regarding their long-term goals and legacy plans. 4 Increase clout and presence with the client s financial team and watch referrals rise. High net worth individuals and businesses typically work with a financial team that includes advisors, tax attorneys, accountants and other professionals. By using this strategy, you have a valid reason to have at least two representatives in these meetings and your firm garners additional respect from other professionals at the table for having a sensible additional approach to protecting and increasing the client s wealth. Don t be surprised when these other professionals ask for a meeting outside the client team meeting to learn more about how this new play in life insurance works. Client referrals from these professionals typically follow and what s more this referral stream tends to remain consistent over time. Leveraging Insurance Director to cross-sell and retain Typically there are no problems to battle-out compensation, by developing a compensation hierarchy with this strategy. Since insurance sales are effectively new business to the firm, it is relatively a straightforward affair to reward your new life insurance superstar accordingly. Having structured the payout grids which won t compete with the firm s existing advisors comp structure. The key is to have a support team with robust compensations structures built around your firm s organizational structure and the flexibility to account for each individual advisor s expertise and value they bring to the firm. This way the advisors and their peers will all prosper is in attracting and referring business to each other. The presence of an Insurance Director will become a brand differentiator and attract new business to the firm. In past case studies, this Super Insurance Director is the go-to guy in the local community and within the nationwide social circles of clients. This advisor can also direct business to other advisors in the firm if the needs exceed insurance. Those decisions are entirely a matter of internal firm management policies. Of course, all advisors in the firm should be urged to refer clients to the Insurance Director at least for initial introduction and assessment. 5 In both scenarios, the advisors work together to create a fluid and holistic wealth management offering for the client. Good communication between principals and advisors is essential and prevents any misunderstandings or posturing over who owns the client relationship. Selecting a resident master of strategy and solutions-based selling Whomever you choose as the Insurance Director role should be a top performer and a natural advisor who is a natural strategy and solutionsbased seller with a life insurance license. But there s really no need for much more in the way of credentials. The chosen resident Insurance

6 Director should have a proven trackrecord of developing cohesion among teams and advisor panels. Alongside collaboration skills, he or she should be a top performer, exude great sales skills, near perfect people skills and a deep understanding of wealth management overall. After all, no one but the best can become the firm s insurance superstar. Taking the next step to grow the firm by working smarter and not harder Let s say you have exactly the right person in mind and that person is currently onboard or maybe working somewhere else. How do you go about implementing this strategy in the fastest, easiest and least expensive way possible? Call CreativeOne s Integrated Financial Services Team. The organization will help you put a successful infrastructure in place or you can skip that part and simply use CreativeOne s infrastructure to buildout your new life insurance business unit. Further, CreativeOne can assist you on intricate case designs involving family endowments, foundations and corporations, as well as review cases with an in-house Chief Underwriter with more than four decades of experience to navigate medical or financial challenges of underwriting to position your client s case for the best possible underwriting outcome. CreativeOne s success in developing wealth accumulation and transfers is unparalleled. Whether you re a seasoned general agent, part of a financial planning firm or focused on comprehensive wealth management, our team will quickly get to know you and your business from top to bottom. We ll use that knowledge to help you achieve your goals and your client s goals. And what are Creative One s credentials and experience in setting up and implementing this strategy? CreativeOne sought top talent with a leading wealth firm in the country who successfully developed a life model inside their organization and grew it from $150M AUM to a billion in just four years. CreativeOne s Integrated Financial Services team has reproduced this model and improved it to fit firms on fast growth tracks or have a minimum of $200M in assets. Give us a call and we ll give you all the details including As your consultant, the company will help you eliminate the guess-work in the compensation grids, workflows, contracting, down-lines and hierarchy, and eliminate trial and error. those pertaining to our proven and successful implementation experience within your firm. You ll be surprised how quickly your firm can pivot and seize market advantage with this strategy. All you have to do is make the call to CreativeOne s elite advisor team, Integrated Financial Services. P *Source: Saybrus Partners Inc., INSITE 2013 Conference in Hollywood, Fl 2014 Creative One Marketing Corporation. FOR PRODUCER USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC. Broker-Dealer and Registered Investment Advisory services provided by Client One Securities LLC. Member FINRA/SIPC. Client One Securities LLC is a wholly owned subsidiary of CreativeOne /4/4 6