“Discover what the clients need and then sell them the solution.” If ever there were a piece of frequently repeated advice, that phrase would qualify. There’s a reason successful advisors claim that that approach underlies their work with clients and prospects: It works. It’s possible to build a senior-market business by always attempting to sell your favorite product, but it’s not a reliable method for developing sustainable, long-term relationships. Life policies that don’t genuinely satisfy buyers’ needs are at risk of being replaced by an advisor who takes the time to match the client with the right solution. There’s also the problem of client loyalty; if clients see you as a product-pusher, instead of a trusted advisor who understands them, they’re less likely to expand their relationship with you.
Of course, understanding clients’ needs isn’t quite as simple as it sounds. In many cases, clients don’t recognize their own needs, and even if they do, they might not be able to articulate them. Furthermore, rarely do clients make an immediate connection between need and potential solution. For example, when was the last time prospects expressed concern over the outlook for estate taxes and asked what you thought of buying survivor insurance through an irrevocable trust to provide estate liquidity? In most cases, clients require guidance to see their needs and understand how your proposed solution solves their problem.
So how do you uncover clients’ needs and convert that knowledge into a sale? We asked four experienced advisors for their insights. All are long-term members of the Million Dollar Round Table, an international organization that restricts membership to the most successful life insurance agents and financial services representatives.
Working the Process
“It is a rare case where a client recognizes the need when we first meet,” says J. George Reilly, a financial advisor with Reilly Financial Group, an office of MetLife in Piscataway, N.J. “I find that the way I am able to connect with clients is through conversation, by finding commonality. A prospect will not care how much you know until you show him or her how much you care. I need to make certain they understand I care about them before I even consider a recommendation. Once that rapport is established, I lead the client down the road that ends with the recommendation by asking questions. In this way, they discover the need themselves and I just add the solution.”
It’s important to follow a well-designed plan for interviewing clients. If you don’t follow a plan, you risk overlooking critical information.
Greg Gagne, ChFC, is the managing member of Affinity Investment Group in Exeter, N.H. He stresses the need to be an active listener when meeting with prospects and clients. “If you go into a meeting with the attitude of fact-finding and trying to understand by asking a lot of questions and listening to the answers before offering solutions, you will go a lot further in helping your clients to help themselves,” he says.
Richard Sawyer, a principal with Norton Financial Services in Portland, Maine, expresses a similar view. Several years ago Sawyer attended a MDRT meeting at which Jon and Eileen Gallo, of Gallo Consulting LLC, talked about the psychology of estate planning. During a focus session, the Gallos discussed the need for advisors to help clients uncover what is important to them. That session motivated Sawyer to refine his fact-finding process. “As a result of that focus session, I developed a one-page list of questions in which I asked clients to simply answer the questions without necessarily thinking a lot about the questions,” he says. “That helps me better uncover what’s important to them, where their priorities are, what their values are. I use the questionnaire in such a way as to have both spouses answer the questions. To me that tool is very, very helpful at simply getting a dialogue going. It’s a way to get the questions started.”
Tom Spencer, CLU, ChFC and president of Spencer Financial LLC in Sudbury, Mass., says his work with clients involves a three-part process. The first stage, evaluation, involves in-depth fact-finding so Spencer and his associates can get a complete understanding of the clients’ finances. Using that information, the firm creates a financial model for the second part of the evaluation stage. “The financial model takes into account when they hope to retire or if they have already retired, how much income they want to live on,” says Spencer. “It takes into account very personal things like will you have to pay for your daughter’s wedding, do you want to buy a vacation home, or do you plan to downsize.”
Seeing the Numbers
As clients review the model, their needs become clearer. Spencer cites an example in which someone has accumulated significant cash value in a life insurance policy, but the policy does not make that cash value conveniently available as a retirement-income source. It’s likely the client would not have recognized that problem without seeing the financial model; in turn, that recognition creates the motivation to make changes. “Then there are very often opportunities to reposition their life insurance with a product that is efficient at generating retirement income,” says Spencer. “All of this comes from the creation of the financial model.”
Gagne has worked with clients whose net worth was sufficient to create estate-tax exposure. In those cases, the fact-finding process illustrates that they have included the Internal Revenue Service as an unintended “extra beneficiary” in their estate plans. He says that clients often initially reply that they don’t care if they leave money to the government, but once he shows them the actual dollar amounts, they become more open to suggestions to mitigate the problem. And the solutions often involve life insurance.
Gathering information on the clients’ family situation also gives Gagne insights into potential complications. He encounters numerous cases in which one or both spouses had prior marriages and entered the new marriage with disparate net worths. For example, a client might be retired with a higher net worth and adequate retirement income while the spouse is still working or has fewer resources. “Many times the balance sheets are not balanced coming into the marriage,” he says. “But they want to try to have equitable treatment for the entire family, and one of the ways to solve that problem is through the creative use of life insurance.”
Beyond the Numbers
Clients’ financial data tell only part of the story, so a thorough fact-finding process goes beyond dollars and cents. Understanding the clients’ non-quantitative goals is critical because that knowledge provides insights into what clients hope to accomplish with their wealth. Reilly says hard data comes in a distant second in solving client problems. It’s important, of course, but it’s far more crucial to establish an open, honest and sincere relationship with his clients. “Spreadsheets can’t convey concerns, dreams, ideas,” he says. “Only people can do that.” Gagne asks a significant number of personal, qualitative questions as well as financial fact-finding questions. The qualitative questions help him recognize the concerns that don’t show up in their financial data. “Based on our discussion, the issues start to bubble to the surface, even if they’re not realizing at the time they’re bubbling up,” he says.
Sawyer notes that many clients aren’t accustomed to articulating and prioritizing their goals. In his experience, getting that information can require indirect questions. “I ask them: What does money mean to you? What did you learn from your parents about money? What did you learn from past experiences about life insurance and other risk-based products that we might want to be talking about? You have to ask the questions that will stimulate their reflections on their own lessons learned.”
Clients frequently use personal stories to answer these questions, Sawyer says, and those stories provide valuable insights. “When you ask them about their stories, about their upbringing, about their families, about the things that are important to them, you uncover a lot of information that ultimately will help you make a recommendation on a solution,” he says. “Ideally, you reach a point where you begin to understand what’s really important to them.”
A thorough fact-finding process can also uncover unrecognized potential conflicts between spouses and partners. Spencer gives an example of a case in which the wife had anticipated that the couple would maintain their preretirement spending of $200,000 per year after retirement. In contrast, her husband was envisioning a much simpler lifestyle where a $100,000 annual income would suffice. They had never discussed their underlying assumptions until Spencer raised the issue. “No one had ever asked them to address those questions,” he says. “By focusing on this process, it surfaced those questions and got them to not necessarily agree but to realize that they disagreed.”
Being a successful advisor involves coaching clients regarding their financial choices. But, before you can do that, you must understand the clients and help the clients understand themselves.