Archive for August, 2010

Financial Planning Professional Unlearned Lessons

Tuesday, August 17th, 2010

FINANCIAL PLAN

The Financial Planning Mantra

A decade or two ago, those who sold financial products and services realized that consumers did not want to be sold stuff. Around the same time, the Internet became a significant competitor to stockbrokers and insurance agents by offering $10 stock trades and term life insurance at rock bottom prices.  So the stockbrokers and insurance agents became “financial planning professionals” as a way to reposition the value they could deliver to the client. The new mantra was to “do financial planning” and in that manner, gather assets and make more sales.  The intent of these financial plans was selling product, but the financial planning approach was the soft sell solution to paint the sales person as a professional and not as a sales person.  In fact, Ameriprise has adopted this branding as their unique selling proposition: “we have more certified financial planning professionals than any other firm.”  In fact, these financial planning professionals continue to sell Ameriprise products and serve as conduits for product distribution.

However, the purpose of this article is not to address whether all of this planning is merely window dressing and question its value, it’s to suggest that there is even a “next level” of positioning that will assist the financial planning professional in their sales efforts.

In the current paradigm, the sale of the financial plan has replaced the sale of the mutual fund or the insurance policy.  But consumers don’t want a plan either.  A plan is abstract, a body of recommendations.  For the consumer, it’s not clear that this advice for a so-called financial planning professional will have any value.  In fact, there is evidence that it will not as studies show that those potential clients behind the baby-boomers don’t think they need a financial advisor.  I had a financial planning professional admit to me last week: “over the last 10 years, my clients have earned exactly zero working with me.” What consumers want is not the plan but the potential benefits of the plan: an early retirement, more ways to financial pamper the grandchildren, the ability to take two nice trips each year, etc.  If you as the financial planning professional sell those payoffs, then you will find more consumers want the plan.  In fact, don’t even use the term “financial plan” when meeting with prospects.

Rather, you want to communicate that you are a “dream weaver.”  If you say you are a financial planner, that connotes someone who offers an activity but does not necessarily produce a result. A dream weaver makes dreams come true.  Your conversation with a prospect needs to focus on what they want i.e. What would you like your retirement to look like Mr. and Mrs. Smith? Of course, this starting question is to be followed with several other questions about how they want to spend each day, where they want to travel, how often do they want to see family, etc.   Once you know what they want, you make them an offer:

“Mr. and Mrs Smith, would it be worth $2,000 (or whatever you charge for a plan) to have solutions to how you will:
a) retire before your 65th birthday
b) have 2 trips a year as you desire
c) be able to help the grand kids with their college education?

(YES, they blurt out).

If so, I would like to study your situation, put together recommendations and specific actions on how to have what you want and meet again next Tuesday?

Instead of selling a plan, you are now a more highly perceived financial planning professional selling prospects their financial dreams come true.

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Privacy Policy

Sunday, August 15th, 2010

Privacy Policy for http://www.blog.brokerville.com/

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Cold Calling for Insurance / Financial Products

Saturday, August 7th, 2010

While this post specifically addresses cold calling financial advisors and cold calling insurance agents, it applies to most any “professional” who spends time cold calling.

Cold calling is the biggest waste of time.  I’m not saying that you won’t get clients when insurance cold calling or being a cold calling financial advisor, I am simply saying that it is the worst possible way to use your time.  It is highly inefficient and basically, diminishes the value of your time to something like $10 an hour.  Why work as an insurance agent or financial advisor when you could more easily be a gas station attendant? at the same rate of pay?

The reason that cold calling is simply stupid is as follows:

1. Anyone with any money has placed themselves on the do-not-call list.  They don’t want cold calls from insurance agents, brokers or financial advisors.  So your cold calling will reach lots of poor people. That may be fine if you sell products to poor people such a final expense life insurance, debt collection services or some other service or product suited to people with little money.  However, the majority of cold calling insurance agents or cold calling financial advisors have interest in reaching prospects with money, the more the better.

2. Cold calling substitutes marketing for the work of a “sales professional.”  Firms that don’t want to invest money on marketing will instead ask their insurance agents and financial advisors to cold call.  In other words, the firm has the following policy: “Rather than invest money on marketing, we will abuse our insurance agents and financial advisors to do grunt work because we don’t really view them as sales professionals anyway.  We will have lots of insurance cold calling and  cold calling by financial advisors to gain clients and save our money.”

Financial services marketing is what gets clients to call you. It’s what your firm or you have been unwilling to do. We have many other blog posts on the proper use of direct mail, seminars, use of telemarketers and other financial services marketing that insurance agents and financial agents can do to gain clients.  But to substitute your time for marketing is inefficient and foolish.

3. Cold calling, if done at all, should be done by a telemarketer.  Why are you doing the work of a telemarketer?  Because you don’t have any money?  You will NEVER have any money if you waste your time cold calling.  If you allow some firm to tell you how to grow a business, realize that what they tell you is for THEIR benefit.  They are happy to ride you as hard as possible and then toss you away after a year.  They recruited you and left out one very important part of gaining success:  You must invest in your business.  They unfortunately misled you to believe that if you work hard (and cold call), then you could be successful. NO WAY.

I recently met with a very articulate guy who spent 18 months working for a large insurance company.  He had done very well his first year.  explaining why he left “I had no one to sell to after I contacted and sold all of my family and friends.”  This very large insurance company taught him to insurance cold call but when he exhausted his list, he knew nothing about real marketing or client acquisition.

Look at any other business.  Do they cold call or do they invest in their business?  Does Coke invest money on TV ads?  Does the Ford dealership invest money in newspaper ads?  Does the laundry invest money in direct mail coupons?  The reason these firms invest in marketing is because that is the efficient way to gain clients/customers and build a business.

If you want to grow a successful business, you will need to invest in it.  If you are unwilling to invest or unable to borrow funds (like most businesses do to grow), then get a job with a salary and get out of the insurance or financial sales business.

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Insurance Prospecting – Not for Insurance Professionals

Friday, August 6th, 2010

young professionalThis article on prospecting applies to any type of financial sale.

Your first boss told you that insurance prospecting is the life blood of your business.  We say don’t do it. Insurance prospecting is the activity of a sales laborer and not an insurance sales professional.  As an insurance sales professional, your time is far too valuable for this administrative, clerical activity.

Know that insurance prospecting is the boring activity of separating the insurance prospects (those people with an interest and with money) from suspects, e.g. names on a list or often called insurance leads.  Imagine you had a list of all residents in Beverly Hills zip code 90210; you can reasonably assume that most of these people have money.  However, most are not interested in your product or service.  How do you locate the few that are viable insurance prospects?  You let a sales laborer do the insurance prospecting.

Here are four scenarios:

1. You delegate insurance prospecting to an outside firm that will design and print a mailer for you.  That company and the post office employees become your sales laborers to deliver your thousands of pieces of insurance direct mail. The few recipients that respond ( say 100 people) are “insurance prospects” and these are the individuals you should speak to now that the insurance prospecting has been done.

2.  You hire a telemarketer or telemarketing firm to call those Beverly Hill residents with your offer (might be an invitation to a workshop, offer for a white paper, etc).  You only talk to the people who express interest, the insurance prospects.

3.  You place an ad in the Beverly Hills section of the LA Times offering your report “The Six Things Agents Never Tell you About Insurance.”  You talk to the 50 individuals that order your report.  The newspaper becomes your sales laborer to locate insurance prospects.

4. You hire an insurance lead generation company to run ads for you on the Internet and find insurance prospects that meet your criteria. You pay the insurance lead provider per Internet lead.

All of these tactics cost money.  They are all an investment. If you prefer not to invest in your insurance agency, then find a position as an employee working for an insurance company or another insurance agent, as clearly you’re not cut out to own a business.  You can be a sales laborer for someone else and do their insurance prospecting and let them make most of the money.

Sure, insurance prospecting is the lifeblood of any insurance practice but you, the sales professional, shouldn’t be doing it.

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Selling Financial Products–Why You Lose Most Sales

Thursday, August 5th, 2010

If honest with yourself, you’ll admit that you have lost more investment or insurance sales over your career than you have closed.  While at first this may not seem true because your brain likes to interpret the past to your benefit, most prospects don’t do business with you.  What do you have–300, maybe 400 clients?  And over the years you have spoken to 3000, maybe 4000 prospects?  Most of them have said “I’ll think about it and disappeared. Your financial sales efforts have been largely wasted. It’s a conceptually simple matter to improve your financial sales batting average.  Selling financial products successfully is dependent on your explaining the financial product from the prospect’s point of view, not your point of view.

Let’s take the following example of selling annuities.  When I ask insurance agents why prospects resist buying annuities,  I am told, “they don’t want to lock their money up.”   HUH?  Every annuity I have ever seen is perfectly liquid–the policy owner can cash it in at any time.  There is no locking the money up.  When I make this statement, the agents then tell me that the annuity funds are locked up by the surrender charge.  “No,” I say, “the money is perfectly liquid” and if the prospect thinks it’s locked up, that idea got into their mind only one way–you put it there.  Because YOU view the surrender charge as locking up the prospect’s money, that’s what you communicate and you lose the sale.

These two issues are distinct:

1. having perfectly liquidity (as every annuity does, can be cashed in at any time)
2. the owner paying for that liquidity feature, let’s call it an “impatience penalty”

So we see that the money is NOT locked up, its just an issue of the prospect being sufficiently patient to take advantage of what annuities offer.  In fact, I sell annuities from a different aspect.

Once I present the benefits of the annuity, I tell the prospect “but this is not for you unless you are a patient investor because only patient investors can get these benefits.”

Prospect: I’m patient, really, this is for me (interesting how people want what is being taken away from them)
Me: You better be because it costs you if you’re not.  Look what happens (as I show them the schedule of impatience penalties).  If you’re not patient and you want to take your money out in the first year, it costs you 6% of your balance, so this is not for you unless you’re patient.”
Prospect: No problem, once I make a decision, I stick with it.

Now, the prospect is trying to convince me his is patient and won’t incur the “impatience penalty.”  Of course, because you’ve been selling financial products from your point of view, you’ve been calling this a surrender charge because that’s what the insurance company told you to call it (you’ve been brainwashed to think like the financial products tell you to think).  You tell me which phrase has more meaning to the prospect: “surrender charge” or “impatience penalty.”  And which would you rather do–convince prospects as you have been that the surrender charge is no big deal as you try to twist their arm to buy OR have the prospect convince you that they are indeed patient enough for your financial product?

It takes some hard thought in a quiet place to determine how your prospects view the world and how you can best sell financial products and services to them.  I can assure that without making this effort, you will continue to lose most financial sales opportunities because prospects don’t share your point of view.

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