If, in light of a boomer’s financial plan, an innovative insurance product appears suitable, how can the advisor best present it?
It takes careful analysis and research, say insurance professionals.
For instance, the advisor needs to consider whether the product is really an innovation, or just a me-too, says Keith Newcomb, a financial planner and wealth manager with Full Life Financial LLC, Nashville, Tenn.
“I’ve noticed products marketed as innovations that are actually packaged, or re-packaged, versions of financial planning solutions planners have used for years,” he says. “Others may be new for the local area but not in for other parts of the country–so is that really an innovation?”
Some may be “underutilized products” rather than innovative products, adds John Fenton, a principal at Towers Perrin in Atlanta. For example, advisors and consumers don’t always know about payout annuities or their role in a financial plan, he says, so some may think these annuities are innovative. But payout annuities are not new products at all, he says.
Advisors need to find out exactly what the product is, stresses Newcomb. Don’t just take a wholesaler’s word that the product is an innovation, he advises.
Learn as much as you can about the product before ever presenting it to a client, adds Denise Gott, a regional leader of LTC Financial Partners LLC, based in Cleveland, Ohio. “You need to understand the use of the product, and where it fits and doesn’t.”
Along with this, the advisor needs to understand what will meet the client’s needs with precision, says Newcomb. Then explore how the innovation could fit into that, if it can.
“You’ll have a better chance of knowing how it will work for a client after completing the planning process,” adds Thomas F. Streiff, managing director-insurance segment for UBS Securities, New York.
Complicating matters for the advisor is that many boomers routinely hop on the Internet to research things they buy. This makes them informed consumers, says one advisor, but it also stirs up uncertainty. Such clients are likely to ask probing questions like these: “What’s the track record? Why haven’t I heard of this before? How do you know it’s going to work? Do you have any third-party sources on that?”
“It’s really difficult for advisors to present a new product or concept when the client has suspicions, or when a client has not worked with the advisor before,” notes Streiff.
By contrast, when there is a trusted relationship between advisor and client, he says, most clients will pay attention.
Fenton agrees: “It helps to sell to customers with whom advisors have greater trust and a long-standing relationship.”
Still, when it comes to presenting the innovation itself, advisors do need to respond to client concerns, say experts.
For instance, “if the boomer says, ‘I’ve never heard of this before,’ the advisor needs to tread lightly,” says Newcomb.
“The advisor should get a feel for the clients’ frame of reference,” he explains. “You may need to help the client develop an appropriate frame of reference for reviewing the innovation.”
Also, check to see if there are gaps in the client’s foundational knowledge, he adds. “If so, you may need to bring the client more into the baseline knowledge the person needs to be able to consider the innovation.
“And keep the jargon out of it,” he says. “If you can’t do that, then define the terms you use so the boomer can understand.”