Financial Planning Approach to Selling Executive Benefits

By Bernard Audet

Many producers who work in executive benefits focus exclusively on the market. But a comprehensive approach that includes estate planning, financial planning and executive benefits can bolster an advisor’s bottom-line and help them to better serve their clients.

My success is closely tied to my approach. When I meet with employers I offer to conduct an extensive study of their benefits program and provide them feedback on how their key employees view and value their benefits. I also offer to provide financial planning for their executives. The employers are more receptive to a benefits review, analysis and financial planning program than they are to a simple suggestion that they consider providing their executives a benefits upgrade.

Many business owners don’t know enough about executive benefits to make an informed decision. They are too busy running their company. If they do not know the terminology or have a clear understanding of what you are offering, they will immediately say no. Many, due to experiences with other producers, also mistake executive benefits as simply an insurance program and miss the big picture. I’ve found that it is best to appeal to the business owner or benefits manager from their comfort level.

While they may not understand all of the nuances of qualified plans versus nonqualified plans, or know that there is great flexibility in how these plans can be designed, in this competitive environment, businesses do understand the importance of recruiting, rewarding and retaining top talent. And they know salary is not always enough to build the right team. Executives value their benefits offerings especially when they are tailored to their concerns and needs. Employers want to make sure that they are offering competitive benefits and know how their employees, especially their key talent, view their packages.

Essentially I provide four services:

? Comprehensive review of executive benefits package

? Analysis of qualified plans

? Nonqualified executive benefits sales

? Financial planning for executives

The employers understand that I am helping them to compete by evaluating how their programs stack-up. More than half of my employer clients are interested in offering financial planning to their executives. The employees appreciate that the employer is providing financial planning services. And the planning process often reveals what the employees like about their benefits, as well as areas of weakness or concern.

The approach required for the executive benefits market is different then that of the general market. With the general market, I usually help my clients understand a problem that they do not know they have. A couple may be completely unaware that they are underinsured for disability or life insurance, they don’t always understand that one of the greatest risks in retirement is longevity or that their assets may be vulnerable if they don’t have long-term care insurance.

In the executive benefits arena, most of my clients know that they have problems, but they are not sure about how to solve their issues. More often than not, they are unaware of the flexibility and range of case designs available that can resolve the challenges they face. They are unsure of what they can and cannot do, and the uncertainty often leads to inaction. A big part of my work is helping them to explore the different ways that their needs can be satisfied.

Benefits of Working with this Market

Executive benefits is not a solo arena. Before you break into the executive benefits market it is important to work with a seasoned advisor and learn the ropes. Veteran advisors will take you under their wing because they need the support of a solid team. Back office support is also critical to a strong practice. In addition to the staff that I have trained, I also have access to a contingent of lawyers and other professionals who help me to develop customized solutions for my clients and stay abreast of the ever changing laws, regulatory environment and tax codes.

Despite the challenges of working in the executive benefits market there are many rewards. Most noticeable is the fact that compensation on products is paid out over a longer period of time so that it is easier for established producers to build consistent income. Renewals represent about 30% of my executive benefits commissions whereas renewals are usually in the 8 to 10% range for my general market business.

Opportunities are very consistent in executive benefits and it is a largely untapped market. According to MetLife’s Employee Benefits Trend Study (2004) most employers (61%) do not currently offer executive benefits.

Many of the companies that I work with are in growth mode. They add executives on a regular basis. My business grows with their business.

It is truly rewarding to help people build their business by helping them to invest in their most important asset, their top talent.

Bernard Audet is President and CEO of Executive Solutions, an affiliate of the Creative Financial Group, an office of New England Financial. You may e-mail him at baudet@cfg.nef.com.