Use it to develop trust and establish rapport with clients

By Marty Kennedy

The onslaught of attention to the sales process brought about by the National Association of Securities Dealers and other regulatory bodies has multiplied the number of education and disclosure requirements needed to complete a sale. As a result, many producers now feel challenged to overcome a mountain of paperwork. In reality, these disclosures are a wonderful opportunity to develop trust, deepen your rapport and strengthen relationships with clients.

The insurance community tends to treat disclosure as though it were specific to our industry. But disclosure is part of our culture, from the tag on the hairdryer in your hotel room that warns you not to use the device in the shower to the sticker on a baby stroller that tells you to remove the infant before folding for storage.

Disclosure permeates every element of our lives. So, when a consumer decides to give a stranger several hundred thousand dollars, he or she expects to see paperwork that ensures everyone is on the same page.

When I broke into the financial services business, I shadowed more experienced representatives. Invariably, they delivered prospectuses in an apologetic or light-hearted manner, offering suggestions such as, “Here is something to read in case you cant sleep one night” or “Here is the lawyers description of the product. Let me know if you can understand anything.”

They seemed embarrassed. Instead of apologizing, embrace disclosure.

Most broker-dealer disclosures list product characteristics that are important to the consumer. Disclosure represents an opportunity for you, the producer, to connect with clients by telling them, “It is important to me that you completely understand what youre purchasing.”

Disclosure allows you to summarize the reasons for your recommendation and to build trust. Its also much more effective than an apologetic, “My broker-dealer makes me fill out this paperwork.” Consumers interpret that to mean, “I wish I didnt have to tell you everything about what you are buying.”

The prospectus needs to be treated with respect, and the consumer should be encouraged to understand it. While some representatives find the prospectus intimidating, everyone needs to be familiar with its contents.

You should be able to point to specific information, especially points listed in the broker-dealer disclosure. All prospectuses contain sections that deal with investment objectives, strategies, risks, past performance, distribution policy, fees and expenses, and management.

Have your wholesaler walk you through the prospectus so you are comfortable with the information it contains. When the time comes, tell your client, “I would like to go over the prospectus with you because this is a critical document and its important that you understand it.” Now you easily have gained credibility as a straightforward, knowledgeable, honest representative.

Establishing this rapport with the client also opens doors to additional sales. Previously purchased products will seem better serviced by this new relationship. Some disclosures also mention other uses for the product being purchased, which can open the door to discussions outside of the current need. Most importantly, the client should be more comfortable referring you to friends and family.

Managing the new demands of disclosure and education in a positive light provides a new opportunity to create close and productive relationships with clients. It is only a burden when you make it one.

Marty Kennedy is vice presidentdirector of marketing for Jefferson Pilot Securities Corporation. He can be reached at marty.kennedy@jpfinancial.com.


Reproduced from National Underwriter Edition, April 8, 2005. Copyright 2005 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.