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Financial Planning > Behavioral Finance

Closing Sales The Right Way

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All of us have made purchases that continue to be treasured for many years. It’s the cozy home that has hosted fond family memories. It’s the desk whose beauty and function served you well or a computer that you rely upon every day to keep your business running smoothly.

Other purchases have left a sour taste in our mouths and resentment toward the salesperson and the manufacturer. That’s like the automobile that constantly needed repairs; the mortgage that contained hidden fees; or the cell phone plan that resulted in outrageous bills.

As we think about our businesses, we want our customers to feel great about their purchases and about us as the agent who serviced them, long after the sale is done. As their financial needs change, we want those customers to seek us out and to recommend us to others.

It really comes back to the golden rule: We should treat our customers as we would want to be treated. By keeping that in mind, and drawing from our own experiences, you can come up with best practices for your business.

In the sale of annuities and life insurance, here’s how that looks.

Make sure your clients understand how the recommended product meets their needs. The first step in doing this is to gather information about their financial situation and experience. Ask them questions to confirm that you and they really understand their financial preferences. A good fact-finder will allow you to make a recommendation that reflects their needs and preferences.

Annuities, for example, typically offer excellent safety features. Happy annuity customers value safety and are willing to give up some growth and liquidity to achieve that. Where you run into trouble is if you sold them an annuity, but they actually value maximum growth potential or maximum liquidity more.

Make sure the client understands how the purchased product works. Clients who understand what they have purchased will be more likely to remain satisfied, regardless of what they hear otherwise. Those who don’t understand the product they own will easily lose faith in the agent who sold the product.

Ask clients questions to ensure they understand the important aspects of their product. Materials provided by the carrier can help with this process and become a strategic part of your sales process. Also, compare the insurer’s product to other products the client has owned before and determine whether the new purchase is within their understanding.

Make sure there is no pain incurred in the purchase. When we are selling a product, we naturally stress the solution’s positive aspects. We should not forget that for our clients, there may be negative aspects as well. For example, if a client is closing an old account, we are asking our customer to break a relationship.

Sometimes, there are additional consequences of moving money. Perhaps liquidating a position in a financial product will cause taxable income to be realized, or the customer may incur a charge from the provider. We need to anticipate that, help our customer understand it, and make sure our customer still wants to proceed.

Make sure the client understands liquidity restrictions. Most annuity and life insurance products that have a cash accumulation feature have liquidity restrictions. We always want to present a balanced picture, wherein we describe the liquidity as limited, and where we indicate the benefits to be received by long-term policyholders as a result of those liquidity restrictions. But we always want to make sure that our clients understand the liquidity restrictions. Clients tend to be more concerned about liquidity after the sale than they are at the point of sale.

Make sure the client understands all the scenarios that could result in a loss of money. This is necessary to have clients who are happy and confident they can avoid those scenarios.

Pre-address common criticisms. Clients receive financial advice from many sources, such as friends, newspaper articles, and competing financial professionals. Therefore, we should assume they will eventually hear many of the common criticisms of the product we have sold. And, we should assume that sometimes the criticism will come from sources the client views as credible.

Make sure to review all of the common criticisms with your clients. Help them understand the elements of truth in these criticisms, but also the elements that are unfair and false. If they hear it from you first they may not be alarmed when hearing criticisms later.

Documentation. If you have completed the above activities with your clients, they will not only be pleased with their purchases at the time of sale, but also for many years later. However, we all know that customers can be fickle. That’s why you should prepare as if every client will one day file a complaint against you.

For many years, carriers have required customers to sign disclosures that describe the product and protect the carrier. As agents, we should keep detailed client files that include copies of these disclosures and requests and correspondence concerning the policies we’ve sold.

This activity not only protects us; it protects our customers. It helps us to assure that they truly understand the products they are purchasing. And it gives us the opportunity to fill in the gaps of their knowledge. An educated customer is always good for you, the agent.

John Branton, CLU, ChFC, is the president and co-founder of Safe Harbor Financial, Inc., Philadelphia, Pa. He can be reached at [email protected]


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