“Its impossible to read and digest all the stuff I get about new policy features and riders,” declares Gary Pendleton.
The owner of Preferred Planning and Insurance Inc., in Raleigh, N.C., Pendleton is a personal producing general agent who has contracts with roughly 70 insurers.
But, every month, he says, “I get mailings, e-mails, faxes, CDs, and VHS tapes from, Id say, 300 companiesfrom the ones I do business with and from the ones that want to get in here.”
He is not alone. Over the past decade, the wildfire growth in insurance product features and riders has produced acres of promotional materials–the likes of which veteran producers have never seen.
In some shops, these acres of materials have become the playing grounds for so-called product-jockeys–i.e., producers who like selling sizzle or the hottest new feature in town.
But elsewhere, it has propelled producers to develop disciplined strategies for taming the multi-rider beast. They say they like having so many options at their disposal, but, as Pendleton puts it, “it would take me two hours every day to read, view, and listen to everything that comes in here.”
So producers in all linesfrom life, disability, annuities and moreare coming up with ways of incorporating new riders into their practice without losing precious sales and service time.
Kenneth Martin, president of First Protective-Insurance Designers in Raleigh, N.C., says he always starts with a fact-and-feelings-finding interview with the client.
Thats essential, Martin says. “Dont approach the client with riders or policy features on your mind. Those things are of tremendous value, but it is incumbent on the agent first to listen very closely to the client in order to determine the clients objectives and financial planning needs.”
Only after that does he look for products and riders that can meet those needs.
“I go to the office, reflect, explore some of the options, look at my portfolio, and ask myself what I can do to solve this clients problem,” Martin says.
What if an agent finds a rider that might help, but that he or she doesnt know much about? “Study up on it first before ever making a recommendation to the client,” Martin says.
Some clients dont know what they need when they first come in, Martin says. “In fact, thats more the norm than the exception.”
But thats still no reason to offer a laundry list of riders, he explains. Rather, if the client doesnt know what he or she needs, “listen and draw it out.” Thats the agents purpose, he insists. “Its our value-added. The Internet cant do that.”
Martin likens this studied approach to what a doctor does when patients have vague complaints. “The doctor doesnt respond with a list of medications. The doctor first looks at whats going on, and then finds the best remedy.”
In insurance, the productsand the riders that customize themprovide the solution, he stresses. “But to find the right solution, we first need to find out what the need is.”
In assessing the options, “I always try to stay objective,” says Terrell Sachman, an associate at AXA Advisors LLC, Northbrook, Ill.
“Clients pay for objectivity, not subjectivity,” he explains.
In practical terms, this entails a continuing process of elimination. Only certain riders and features apply to any type of plan, Sachman explains, so, “once you decide on the general plan, that automatically eliminates certain riders” and keeps others in the running.
Then, when setting up the actual plan design, you eliminate certain other riders in favor of ones that best help implement the plan, he says.
But rider selection is not just a matter of which type fits the situation, Sachman stresses. “Some are standard and offered at no cost. Others are offered for an additional cost. And the at-cost riders might be similar in some respects but different in others.”
These factors affect which type of product and features to recommend. For instance, Sachman says that at his firm, “we do an apples-to-apples comparison–on the type (built-in or not), cost, provisions, benefits, and so on. In the end, its usually not the rider thats the tail wagging the dog. Usually, its the policy and the cost.”
In particular, he says he aims to offer riders that directly impact the policy in substantive ways. For instance, in a second-to-die case, a policy split option rider might make a critical difference to the clients; or in a split-dollar case, it might be important to offer a first-to-die rider as part of the exit strategy.
Certain other optionssuch as waiver of premiumare nice to have, Sachman maintains. “But they are considered features, not riders, and typically they are not purchased with larger policies.”