When asked whether fear or greed was the stronger human motivator, famed investor Warren Buffet answered unequivocally: “There is no comparison between fear and greed. Greed is slower. Fear is instant, pervasive and intense.”
No wonder many agents use fear to close sales. And why not? Consumers should be afraid of running out of money in retirement or leaving their spouse penniless when they die. By making fear explicit, advisors help clients take needed steps to enhance their financial security.
But here’s the problem. Many agents begin spreading lies about Social Security, Medicare or FDIC insurance, including these three FDIC falsehoods advisors once used to move prospects from CDs into annuities.
Misrepresentation #1: The most a consumer can have insured is $250,000.
Fact: The $250,000 limit is per insured bank, for each account type. So consumers can have more than $250,000 protected if they have multiple account types in several banks.
Misrepresentation #2: If a bank fails, the FDIC could take up to 99 years to reimburse depositors.
Fact: Federal law requires the FDIC to remit the insured’s deposits “as soon as possible” after an insured bank fails. This usually happens within a few days, not years.
Misrepresentation #3: The FDIC only pays a fixed amount per dollar in each insured account.
Fact: Federal law requires the FDIC to pay 100 percent of insured deposits, up to the federal limit, including principal and interest.
The problem with fear mongering? It’s an anemic sales tactic and the lowest form of selling. Here’s why: Highlighting the benefits of a product makes customers really want to buy. People who buy out of fear feel they have been forced to buy. When weak agents resort to this tactic, their sales lack depth and staying power, resulting in “buyer’s remorse.”