Advisors who sell long term care insurance sometimes sound like evangelists for change who are frankly tired of crying in the wilderness.
The wilderness in this case is LTCI sales, which dropped each year since 2000, until this year. Now specialists in LTCI have the feeling that time and the tides might finally have changed in their favor.
Other trends that might yield higher LTCI sales include unprecedented longevity; Medicaid, the poster child for crumbling government entitlement programs; an industry shakeout now in the rear-view mirror; and rising corporate interest in offering LTCI as an employee benefit.
These trends also include recognition by advisors and clients alike that for many aging baby boomers the time is coming to transition from an investment and income orientation to a retirement-asset protection strategy.
The trends mean clients ought to be asking, “What can I do to hold on to my assets rather than turning them all over to a nursing home?”
One problem for LTCI sales has been that clients have not been asking this question. Advisors should be asking it for them. Or perhaps, some judges have concluded, must. “Most advisors have not been held to legal or professional account for giving bad advice about long term care,” Seattle-based Center for Long-Term Care Reform president Stephen A. Moses has written. “This safe harbor of public ignorance and judicial indifference will not continue much longer, however.”
In the meantime, building bridges with advisors and other professionals has become a preoccupation of LTCI educators, consultants and vendors, despite their low numbers. “There is only something like 8,000 of these experts in the entire country, and there are many, many, many millions of people who need to have this conversation,” says Jeremy Pincus, principal of Lexington, Mass.-based Forbes Consulting Group.
Partnership efforts, he says, so far have been “grassroots — people just trying different things without any particular master plan,” trying to grapple with “financial advisors who are basically skeptical. The subject makes them nervous.”
Phyllis Shelton, president of Hendersonville, Tenn.-based LTC Consultants, agrees that things would be different “if the investment people could understand that without LTCI they’re going to have less money because they’re going to have less assets under management. And should a client say, “?I’m going to self-insure,’ well, the investment analysts ought to have alarm bells go off,” Shelton says.
Why? Because paying full price for care is much more expensive than buying insurance. Around-the-clock care today in most parts of the country can easily cost $120,000 per year, and that is projected to triple in the next 20 years.
Shelton has studied the issue and submits a list of professionals to partner with: financial advisors, commission and fee-based; property and casualty insurance agents; health insurance agents; benefits consulting firms; accountants; LTC providers; attorneys; bank trust officers; and social workers.
Jay Grubb, president of Buford, Ga.-based asset manager Key Financial Partners, adds another to that list. “Ask your current client, ?Hey, do you mind if I call your attorney or your CPA and tell them I did a good job for you?’”
That’s a powerful way to bring in a professional partner, he says, “because if you call the CPA and say, ?Mr. Jones wanted me to give you a call to tell you that he is extremely happy with his long term care plan, which protects his assets. I would love to sit down with you for 15 to 20 minutes to see if there are any other clients you might have in mind for my services.’ That is a pretty good call right there,” Grubb adds. “It works about 75 percent of the time.”
Some advise cold-calling. Building alliances, partnerships or networks with fellow professionals is not brain surgery. After all, “Every aspect of my business comes from a referral from another professional — everything,” Grubb says.
“Let me tell you how beautiful the long term care (insurance) referral is for someone like a CPA, an attorney or another financial advisor,” Grubb continues. “It’s a very non-threatening referral. The CPA’s No. 1 concern is that they don’t want to lose that client’s trust. If they refer the client to me, I’m going in there and showing the client how to protect what they worked their whole entire life from losing.”
The LTCI expert/advisor relationship “brings value to that relationship with the CPA. He says, ?You really need to deal with this with Jay.’ In turn it makes him look like the good guy because he is looking out for his client.”
Be the specialist
Over at Bloomington, Minn.-based Newman Long Term Care, cultivating the LTCI consultant-advisor/SPA/attorney relationship is taking on more complexity. The company recently created a job titled “relationship manager,” a position that reports to sales and marketing vice president Steve Pike.
Company president Deb Newman says she realized early in her firm’s 17 years that about 60 percent of sales came from referrals from financial advisors.
Three years ago, she hired Pike as part of an effort “to figure out how to genuinely be strategic about what we do, which is, we become the long term care division of these firms’ financial planning practice.”
It seems to be working, she says. “[Newman LTC] right now is almost exploding. We’ve grown 25 percent this year when the market is up about 2 percent.”
The company has two sales distribution channels, explains Pike, one a traditional brokerage channel, the other called the Business Alliance Channel.
This is a business model in which Newman LTC specialists work on a joint basis with financial advisors, insurance agencies, CPAs, attorneys and so on. “[They decide their] technical expertise is in financial planning or life insurance or as a CPA,” says Pike. “But they do understand that their clients want to have a specialist talk to them about topics they are not knowledgeable in. So these folks bring in my specialists to provide point-of-sale at the business, and then we split the revenue with the referring agent or adviser 50/50 on the new business and on renewals.”
Pike also is always strategizing new ways to keep closer track of Newman LTC’s professional allies. “We’re working with a software company that is developing a system that tracks better how we do our business than conventional CRM technology; it will allow us to do some more regressive analysis on our relationships,” he says. “[Plus,] we will start to get a lot smarter on collecting and analyzing data.”
Make a name for yourself
Even if you use index cards, Pike says the most important first steps include finding and cultivating the center of influence, which is the CPA, the attorney or another financial advisor through a professional or charitable organization.
To do that, Shelton advises establishing yourself as an expert. “You can make yourself famous, make yourself an authority, a leading voice,” she says.
Grubb agrees. “Being involved in your community probably is probably the best way to meet somebody,” he says. “I always tell people that the more active you are in your community, the more people are going to recognize your name. So when you do bring a value proposition like this to a CPA, an attorney or another adviser, they’re going to know who you are.”
Grubb goes straight to the center of influence, the CPA or other target, through a professional organization or a charitable group.
He likes CPAs because “they have a captive book of business.” His first task is to educate them a bit about LTCI, then educate their clients. “Tell real life stories of my clients to my prospects. And I think that really helps because I people are not told the alternatives like, if you don’t do anything what are your options?” Grubb offers clients three or four LTCI options.
Trends today being what they are, Grubb says that, “In about five years long term care will probably be all there is out there. But right a lot of people are in denial.”
David Lewis is the founder and owner of Monegenix. He designs insurance-based financial plans, financial calculators and apps for business owners and professionals. For more information, please visit https://www.monegenix.com.