Here
are thoughts about a question that might have come into your mind this week.
By Bryce
Sanders | February 28, 2020 at 04:47 PM
Insurance
is often considered boring when compared to the stock market. “Protection” is
an industry buzzword. Then the stock market hits an air pocket. What’s an
insurance agent to do?
If your
major business with a client is homeowners or auto insurance, the client
probably doesn’t see a connection to investments and wealth management.
If your
clients own fixed annuities, variable annuities with subadvisory investment
accounts, or indexed insurance products, they should be getting a call. Bear in
mind studies show the average high-net-worth (HNW) individual has three
advisory relationships. That means a HNW client likely has a stock portfolio,
too.
What do
you talk about?
If the
clients have money with you that’s tied to the performance of the stock market,
they are likely concerned.
Of
course: Start by listening to your own compliance and investment advisors, and
the compliance teams at the financial services companies you work. Find out
what your compliance advisors and supervisors are saying, and what rules and
suggestions they have for your conversations with clients.
Then,
after taking those rules and suggestions into account, consider talking about
the following.
1. What’s happening, and why?
Your
firm’s research analysts or trusted firm partners likely have provided works of
analysis that you can share with clients. Get in touch. Sound the clients out
about their concerns and share the information the analysts have provided.
2. What the Client Owns
Years
ago, I had a client who called and said: “I’m very concerned about what’s going
on in the stock market.” I tactfully replied: “I don’t understand why. You
don’t own any stock.” His portfolio was in bonds and other fixed-income
investments. The lesson: Some of your clients might not understand what they
own. Time for a refresher.
3. Products and Features That Protect Against
Downturns
Where
do principal guarantees fit into the picture? The value in the client’s fixed
annuity grows at a certain rate. Does a client own a policy where the client
participates in the performance of the stock market to a certain extent, yet
also has principal protection? Explain how the principal protection feature
works.
4. Guarantees
This is
a “hot potato” word, popular in the industry. In the world of insurance, the
guarantee comes from the company, not the federal government. Since this is the
case, clients with guarantees will want to know whether the issuers providing
the guarantees are financially secure and stable. That’s one of the things
rating agencies rate. Tell clients about the ratings. That should put their
mind at ease.
5. Variable Annuities
If you
have sold these, there’s likely a tradeoff between the potential for capital
appreciation from stock market investments at the expense of a principal
guarantee. The clients will want to know how they are doing. Let them know. If
their money has been working for a long time, remind them where they started.
Stress the long-term nature of the investment.
6. Next Steps
You are
concerned about a client’s spouse. Would a couple like these explanations
repeated, with both spouses on the phone?
You are
concerned about the couple’s outside investments. Have they heard from their
financial advisor?
If you
handle investments and wealth management, you mention that investments and
wealth management are another part of your practice. You have experience and
knowledge here, too. You have planted a seed in your clients’ minds.
In life
we assign a high value to friends who are there when we need them. This is
often during times of emotional stress. Friends remember who stepped up and who
stood back. Clients do, too.
Bryce
Sanders is president of Perceptive Business Solutions Inc. He
provides high-net-worth client acquisition training for the financial services
industry. His book, “Captivating
the Wealthy Investor,” can be found on
Amazon.
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