The Fall of the Life Insurance Professional

You have probably heard me discuss that I started in this industry as a Financial Advisor with Prudential in 2009. At that time I was taught to look at a clients’ financial life like a house. The foundation of that house being insurance. Just like a house that has a strong foundation, a viable financial plan requires a good core of insurance products to help weather unexpected and expected life events.

Outside of agency training sessions, I learned about old products and competitors products by going on client meetings, seeing what they had purchased, and dissecting what was being illustrated to them by other advisors. In some cases, I would have multiple appointments where the client was feeling out several advisors from different agencies to make the best decision possible for their family.

Not every appointment I went to involved competition with at least one other advisor, but I would venture to say it was over one third of them. My mentors at the time would tell all of us newer advisors how there was so much more competition back in the 80’s and 90’s.

Nowadays, the number of competitive appointments has dropped even more. While it is true that the number of advisors has been dwindling, the main culprit – I believe – is the lack of true Insurance Professionals. Today, everyone wants to be a “wealth manager”. The problem is that most “advisors” are not wealth managers, they are asset gatherers.

An advisor is a wealth manager if:

  • Their client’s families/businesses would be financially secure in the event of their death
    Their client’s families/businesses would be financially secure in the event they become disabled
    Their client’s families/businesses would be financially secure in the event they get sued
    Their clients would be financially secure in the event the market underperforms original assumptions
    They have discussed distribution of assets with their clients

An advisor is an asset gatherer if:

  • They have not reviewed and/or discussed Life Insurance planning with their clients
    They have not reviewed and/or discussed Extended Care Planning with their clients
    They have not reviewed and/or discussed Liability Insurance with their clients
    Their client’s financial viabilities are solely tied to market performance
    They only discuss the accumulation of assets with their clients

One cannot effectively manage someone’s wealth without effectively managing their risks. At best, the only hazard asset allocation can mitigate is that a theoretical 60/40 portfolio should not decline as much as one with greater equity exposure would in a down market.

There is no asset allocation that protects against a judgement in which the defendant did not have an appropriate liability policy.

If you have been paying close attention, there is very important and actionable news embedded in this post.

If you are an advisor and utilize Insurance Planning as part of your practice, you have very little competition right now. You can walk into a prospect’s home, lead with insurance planning, and feel more confident than ever that you are not in competition. You do not need to sell them insurance on the spot, you can just perform a simple review. If your client happens to be a millennial there is over a 50% chance that they have no Life Insurance coverage. ZERO. Because no one is talking to them about it and every study shows that due to this, they over-estimate the cost by up to 5 times.

If you are an advisor that does not feel comfortable having the insurance discussion yet, that is ok, you do not have to be the best concrete pourer to build the strongest foundation. All you need to do is be the best contractor for your client, bring Algren Associates in to help lay the foundation, it is what we do best.