A “perfect storm” is an expression that describes an event where a rare combination of circumstances will aggravate a situation drastically. To those of us in the insurance and financial service industry, this seems to be exactly what lies ahead for our business. Understanding the impact of this “perfect storm” on our business model may be critical to not only growing but sustaining our book of business now and in the future.
Remember the S&L crisis of the early 1980s? Or the commercial banking crisis of the late 1980s (from 1988 to 1992, 905 banks failed). Or the 1997-98 Asian financial crisis, which sent South Korea, Indonesia, and other countries on a boom-bust roller coaster?
What distinguishes this crisis?
The banks and S&Ls were so weakened by previous financial crises that they lost their primacy. “Securitization” became the norm. This entailed bundling of mortgages, an increase in credit-card debt, and putting other loans into bond-like instruments that were sold to all manner of investors. “Subprime” mortgages were also made to weaker borrowers and subsequently “securitized.” Therein lays the epicenter of the current economic condition.
New and existing home sales today are at drastic lows. Consumer sentiment is extremely weak. Auto sales seem to have hit a floor not seen in decades. The unemployment rate remains close to double-digits, and higher in some areas of the country.
“Things can get worse,” said Martin Feldstein, a professor at Harvard University in Cambridge, Mass., and president emeritus of the National Bureau of Economic Research (NBER). “When the economy is moving forward at a very slow pace, very close to zero, the risk is we could slip over into the negative side of zero.”
On the other hand, “I tend to be cautiously optimistic about growth,” said Harvard professor James Stock, who is also a member of the NBER’s Business Cycle Dating Committee. “All the excesses have been corrected.” A double dip is “quite unlikely,” he added.
So what are some things we can do to survive in the “perfect storm” of the coming economic changes facing our industry?
Define the selling process in your business model
In its broadest sense selling is the process that brings about a desired change in the behavior of prospects using needs-based techniques.
The advisor’s role
Prospects have many avenues available to them to purchase insurance, from telemarketers who sell insurance over the phone to carriers who provide insurance products over the Internet.
One reason carriers have contracted agents is that it is easy for people to procrastinate when purchasing insurance. Advisors help in bringing action on the part of the prospect.
The primary function of an advisor, as it relates to selling, is to:
- Uncover sources of dissatisfaction.
- Disturb the prospect.
- Remove complacency.
- Instill a desire for changing the status quo.
- Offer an intelligent and acceptable solution.
- Effect a decision to buy – TODAY!
Learning what your prospect expects helps you create a buying experience that motivates your prospect to purchase from you.
Prospects tune in to “WIIFM” radio. Thinking from the “What’s in it for me?” perspective of your prospect allows you to uncover the information that triggers your prospect’s buying motivation.
Understanding prospects and the way they buy enables advisors to succeed in their chosen profession. However, simply understanding the prospect’s motives doesn’t accomplish anything. Successful advisors not only figure out the buying motives, but they also use these motives to make a sale.
Human relations in sales
Selling includes both objective facts and subjective impressions.
- Prospects will do business with someone they like.
- Be yourself. If you try to be someone you are not, you will be regarded as insincere.
- Know your products. This is a sales strength. It promotes confidence.
- Expect the best from your prospects.
You can’t succeed on what your “about” to do. The signs are in the marketplace: The baby boomer market is growing, as is the “echo” generation, those born after 1976, and these individuals will be better educated, have more financial resources and be more informed consumers than generations before them. We know, based on current research, that individuals who are reaching Social Security-qualified retirement age will do three things, almost without exception:
- Sign up for Social Security.
- Automatically be enrolled in Medicare.
- 80 percent will purchase some type of medical supplement plan, such as Medicare Supplement/Medicare Advantage.
They will reposition money they already have allocated in their monthly disposable income to pay for these insurance/financial products, often at a cost less than what they are currently paying. They then will reposition these excess funds into lifestyle spending. For the balance of their lives they will engage in “predictable” buying behaviors, at predictable “spending” cycles in their lives based on predictable “solutions” to their quality-of-life events. And as they engage in these “predictable” behaviors they will look to professionals for counsel, advice and direction.
So we have to look at how we self-manage our business and ensure we are prepared to offer the counsel, advice and direction that best fits our clients’ needs. Self-management begins with self-knowledge. It means examining and questioning your talents, assumptions, beliefs and values to:
- Make assessments of your strengths and weaknesses.
- Develop your positive qualities.
- Control your weak areas.
Success comes from setting and achieving personal goals on a consistent basis. Good things do not just happen. Here’s wishing you all the success your willing to work for.
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