How is a producer to deal with the hardest of prospects: those know-it-alls, do-it-yourselfers or independent thinkers who believe they can do without the expertise of a professional advisor? Answer: Probe their arguments for weaknesses and for a willingness to delegate responsibility. Then, if those efforts prove fruitless, cut and run.

This seems to be the consensus among producers contacted by National Underwriter, who say an explosion of financial information available via the Internet and other media is fueling a burgeoning class of these individuals. Buoying their confidence are the numerous do-it-yourself audio tapes, books and seminars on personal finance topics.

I call it financial pornography, says Paul Karasik, president of the Business Institute, Los Angeles, Calif. All this information artificially stimulates them to believe they can make rational, correct financial decisions. That’s ridiculous.

Adds Nigel Taylor, president of Taylor & Associates, Santa Monica, Calif: Theyre buying into a lot of hype.

The solution to dealing with such individuals, say advisors, is to probe them for weakness or blind spots in their thinking and to take the fear out of delegating responsibility for investment and long-term financial planning decisions.

Wilma Anderson, president of the LTC Coach, Littleton, Colo., says that approach works with the 20% to 25% of her prospects who fall into the know-it-all category. A key tactic for winning them over, she says, is to pose questions aimed at identifying hot button issues that might be sources of tension.

These include, for example, inquiring whether the prospect had previously had a bad experience with an agent and why; or, if the individual is determined to pursue a particular strategy, then to ask whether he or she has considered certain implications of, or alternatives to, that strategy.

Especially effective, says Anderson, is to applaud prospects’ research efforts, then to hand them a list of questions they can pose to other long term care advisors.

They often reply, I never thought about asking these questions, says Anderson. All of a sudden, the lion has turned into a lamb.

Other advisors say highly educated prospects are often not so easily assuagedor worth the effort.

“Personally, I would avoid them like the plague,” says Karasik. “If they’ve never delegated authority before, then I would say ?run. Truth is, whatever people have done in the past, they’re likely to do in the future.”

Taylor agrees, adding that price-conscious prospects who spend hours comparing products on the Web are mainly interested in receiving “a bill of goods,” negating the value he brings as an advisor.

Not all financially-savvy prospects are of a go-it-alone frame of mind, however. Jim Quandt, a senior partner at Fortune Financial, Minnetonka, Minn., says most of his clients corporate executives who prepare 401(k) and profit-sharing plans for their companies’ employees also willingly tap him for personal financial planning.

Quandt welcomes the opportunity to work with such informed buyers because he needn’t devote time educating them on the pros and cons of various financial principles and products. That lets him apply his selling skills and build a customized package that meets the prospect’s objectives.

“Most of my clients can do what I do, but they don?t have the time and resources to find a competitive solution,” he says. “That’s where I can add value.”

The best prospects, producers agree, are those who are willing to turn to a professional advisor for assistance with at least part of the financial planning process. Ed Tippetts, vice president for development at Northwestern Mutual Life, Milwaukee, Wis., subdivides this group into 2 categories: “advice seekers” and “delegators.”

The first, he says, have educated themselves about various products but need help weighing their relative merits and making an informed choice. Delegators, by contrast, rely on advisors both for their professional opinions and for management of their financial portfolios.

Of the 2 groups, Northwestern does best with advice seekers, who constitute approximately 50% of the company’s business. Delegators and “independent thinkers” account for 30% and 20%, respectively. Many clients, says Tippetts, move from one category to another.

“The more wealthy people become, and the older they get, the more they fall into the advice and delegative categories,” Tippetts says. “The classic independent investor is the 28-year-old lawyer who has full command of the universe with his extensive knowledge.

“By the time he reaches age 45, he will have been burned [by the market] 4 or 5 times and decide, Maybe I should just manage my law practice and take advice on financial matters.?”


Reproduced from National Underwriter Edition, May 21, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.