For many life insurance professionals, referrals from other advisors are key
When the wealthy business owner or corporate executive needs a life insurance professional, he or she is likely to turn to one of a team of advisors in securing the contact. So, it stands to reason that winning over the affluent hinges on cultivating relationships with these all-important professionals.
That’s truer than ever, observe experts interviewed by National Underwriter, who say that a blurring of lines among once-distinct professions is heightening competition for the affluent client’s business to a fever pitch.
“Because so many advisors across professions are licensed now to sell life insurance, the opportunity to cater to the affluent has put many more people in competition with one another,” says Russ Alan Prince, president of Prince & Associates, Redding, Conn. “Advisors have to position themselves with a halo going in; that is, a referral. To get to the wealthy on a consistent basis, you have to work through other advisors.”
Those other advisors include professionals with whom life insurance agents typically collaborate on client cases: CPAs and attorneys. But Prince observes that producers increasingly are partnering with bank trust officers and securities professionals, such as registered representatives and investment managers.
Contrast this heightened focus with a decade ago. In “Marketing to the Affluent: A Toolkit for Life Insurance Professionals,” a publication that Prince co-wrote with Karen Maru File for The National Underwriter Company in 1995, the authors noted that trust officers and investment managers provided far fewer referrals to affluent clients than their counterparts in the accounting and legal professions.
Of the 1,219 advisors surveyed for the book, only 12% and 5.1% of trust officers and investment managers, respectively, indicated they refer clients to life insurance professionals. This compared with 36% of accountants and 27.8% of attorneys.
Similarly, 13% of accountants and 16.9% of attorneys provided from 1 to 5 referrals during the prior 12 months. Among trust officers and investment managers, the percentages were just 7.7% and 4%.
Even today, observers say, the latter two advisor communities can be difficult to crack. That’s especially true in cases where the referring advisor works for a large institution that has in-house insurance professionals who are more likely to get the business.
“Almost all the large banks have private client services that sell life insurance,” says Renno Peterson, a co-director of the Estate & Wealth Strategies Institute at Michigan State University, East Lansing, Mich. “So, if you go to one of their trust officers, they already have processes for facilitating [the insurance sale] internally. It’s just not going to happen.”
Life insurance professionals are likelier to achieve success, adds Peterson, approaching colleagues who work for small trust companies and banks. And if they have a formalized marketing program to facilitate such alliances, so much the better.
Example: Financial Diligence Partners, which plans to tap within the next quarter an initiative of Jefferson Pilot Financial Annuities, Greensboro, N.C. The program, dubbed Professional Analysis Review (PAR), leverages software that can identify problems with life insurance policies held in trust (e.g., contracts with underperforming or under funded assets; or “orphaned” policies that no longer have an overseeing life insurance agent).
Mark Chandik, a managing partner of Financial Diligence Partners, says his firm will charge about $200 per policy for the reviews, which pays for staff time and running insurance data through the software.
“Institutional trust officers have a high degree of fiduciary responsibility, but most are not experts in life insurance,” says Chandik. “One surprise they don’t want is to receive a notice stating that a policy they oversee will soon lapse unless their client coughs up more money.”
The PAR services-for-fee program is one among several tools that Financial Diligence Partners plans to leverage (or is now using) to secure referrals to affluent clients.
Chandik adds that his broker-dealer is now finalizing a relationship with the Newport Beach, Calif.-based office of Mellon Asset Management that will enable him to share fees and commissions with partnering investment managers employed by the Mellon affiliate. Similarly, he uses Jefferson Pilot’s CPA Security Program to split compensation with accountants who refer business to him.
He additionally hosts joint-marketing seminars on exit planning for entrepreneurs with allied CPAs and attorneys, each of whom brings clients to the educational sessions. With still other advisors, Chandik trades referrals, albeit informally.