I had a great conversation with a Morgan Stanley broker the other day. We were discussing the equity markets and that lead into a discussion on utilizing Life Insurance as an alternative investment strategy.
He then told me one of the hardest to believe statics I have heard in a while. He said that Morgan Stanley cannot get greater than a 7% Life Insurance penetration of their clientele.
I had a very hard time believing him, so I asked him that was possible. He explained it quite succinctly.
“Our advisors are not planners.”
As we went deeper he said something else to me that I found quite profound.
“Selling investments is a science, selling insurance is an art.”
These two insights he gave me have had me thinking long and hard about the industry and advisors the past few days. I have two questions that I am trying to figure out good answers for that can help our advisors and their clients. Here is what I have this far.
How do we help advisors mature into planners?
A while back I started advocating that “If you fail to plan, you plan to Go Fund Me” this seemed to work and a few advisors that were not selling a lot of insurance saw an uptick. I believe a part of the maturation process is to illustrate the alternative plans to insurance – and if you hit a guilty nerve or two and it works, you still did the right thing for the client.
How do we teach advisors the art of insurance?
This is much tougher. Many advisors think their clients just want to see numbers. What is the premium? What is the cash value? What is the internal rate of return?
Most of the time, this is not the case. Clients are not necessarily looking for the cheapest policy and unless there is a lot of competition, they will not likely be comparing the cash values and Rates of Returns.
To be a planner, advisors need to remember that the need for insurance is the most important selling point. Life Insurance can be used as an investment, but at the end of the day it is basically an Auto Policy that only pays a claim when there is a Total Loss. Clients are not banging down the doors of their P&C agents asking about the IRR on their umbrella policies.
I think there are many great advisors who care about their clients and have the science down to a T. However, to be a great planner takes more than just caring, it takes an artist.