Helping executives from Fortune 100 to small, closely held companies understand what they have and what they have to lose can be daunting for any financial services professional. Although these may be highly educated people who have worked hard to earn their “executive privileges,” they may not understand how to address gaps in their current employee benefits coverage.
After all, many have a lot more to protect than even a few years ago. So, what’s the best way to help them overcome the mindset that the task is too overwhelming to tackle? It’s all in the approach you take.
The new 401(k)?
To us, disability income (DI), life and long term care (LTC) insurance are some of the best products for executives because they are often the weak links in the executives’ otherwise growth-oriented financial plans. Integrating this protection into financial planning is what we do and why we believe in these products.
Employers often view these products as key to staying competitive. And yet, these products are no longer about being competitive. They function as essential elements in a financial plan. In fact, we see them becoming as important and commonplace as the 401(k) in the executive benefits mix.
Think about it. If you’re an executive looking at a firm that doesn’t have a 401(k), you may wonder if it lacks comprehensiveness in other areas.
Why now-and why in the workplace?
For executive employees, there is every reason to choose the coverage, based on two key motivators: price and service. Purchasing these products through employer-provided programs brings significant discounts. No matter your income, when given the option to pay full price vs. discounted, guess which wins every time?
Executives can purchase coverage on their own or get it at a discount at work. For example, certain carriers offer spousal discounts on DI insurance and family member discounts on LTC insurance.
Secondly, the level of support they will receive and maintain is a key driver in the decision process since both the carrier and the financial services professional implementing the program have been brought to these executives by a trusted professional–their HR manager.
Overcoming Financial Paralysis
Highly compensated individuals, like the rest of the population, want to build security into their financial plan. Trouble is, even though they know they need to extend their DI insurance coverage and boost their life insurance, they become paralyzed by the enormity of the task. Researching coverage goes into the “tomorrow” pile, which never seems to become the “today” pile.
For financial services professionals, the value proposition is less about the product than about the approach and services. It’s the difference between taking the time to work individually with each executive–mapping out individual packages–rather than doing a “data dump” of materials and brochures that most never read.
Employees appreciate the individual attention to their questions rather than having to review reams of documents looking for answers.
By offering executives individual attention and online solutions that streamline the processing and support of their financial plans, advisors gain a competitive edge with human resource directors who are keen to dispense with this administrative burden and to encourage higher enrollment in such plans. We call this “the power of ease.”
A great example of overcoming the process lethargy is a company we’ve worked with for the past 10 years. During the early years of the relationship, we delivered enormous packages with information, forms and marketing materials that were almost two inches thick. We found that at least 90% of the recipients would do nothing until the day before the application process ended.
The result would be a rush of calls to the human resource executive during the last week with expectations he or she could provide financial planning advice. Obviously, the success rate for this process was poor.
This taught us valuable lessons. Today, we try to meet all senior executives one-on-one, while also providing online educational and application services. This individual attention and simplified processes have resulted in application rates that are triple the norm.
Nurturing the relationship
Now that you’ve formed excellent relationships, it’s up to you to nurture them. Lay the groundwork by showing how all of the pieces work together and prove how your relationship is supported by a team of experts who can provide competent back-end support.
Also, don’t think that the relationships and the products you sell are a one-hit wonder. Both are portable and executives’ needs may change often. If executive clients form a new company, for example, they may request your services. Or, if they join a new company, they know what to look for in their employee benefits packages.
Once you’ve helped your clients recognize the importance of life, disability income and long term care insurance, and the relationships that make these products work, you’re on a path to helping them maintain and grow the assets they worked so hard to gain.
Thomas Henske, CFP, is a partner with Lenox Advisors and can be reached by e-mail at email@example.com.
Disability income, life and long term care insurance are some of the best products for executives because they are often the weak links in the executives’ otherwise growth-oriented financial plans