Insurance is part of everyone’s lives. Obamacare — as the Patient Protection and Affordable Care Act (PPACA) has been dubbed by mainstream media — is about providing health insurance for as many Americans as possible.

According to BestLifeRates.org, however, roughly 43 percent of Americans have no life insurance. Logically this tells us 57 percent own it and are familiar with the product while 54 percent of Americans are invested in the stock market.

As an agent or advisor, you provide a service your friends use. You are a known quantity. So why aren’t they approaching you and asking to become clients?

Interviews and surveys of financial advisors and high net-worth investors highlighted 10 reasons.

1. Confidentiality: They assume you talk about your clients because many businesses highlight famous personalities who use their product. They don’t know you cannot talk about your clients.

How to Explain: “We’ve known each other for years. We travel in the same circles. Some mutual friends might even be clients. You’ve never heard me name drop. I’m not going to start now.”

2. Understanding: Do they really know what you do? People make assumptions. Lawyers are ambulance chasers. Everyone in the police force eat donuts. Agents sell insurance.

How to Explain: Admit you have preconceptions. Mention what you know about them. Ask what they actually do. They will likely draw you out. If not you can guide the conversation afterwards.

3. Risk to Friendship: If I become a client and it doesn’t work out, how can I unwind the business relationship without losing a friend as well?

How to Explain: “When people become clients, I explain that they will receive quarterly portfolio reviews. It’s like a report card; If I’m doing a lousy job, they should be able to fire me.”

4. Have They Been Asked: Everyone should have the opportunity to say no. Don’t make the decision for them.

How to Explain: “You are my friend. We’ve never discussed business because I’ve always assumed you work with someone else who takes great care of you. I thought we might spend a few minutes talking about what it is I do. You may know someone…”

5. Do They Know You Are Adding Clients? If you are busy and successful, they may assume your practice is full. Some of their doctors aren’t accepting new patients.

How to Explain: In the course of answering “How’s business?” mention the new client you recently took on that was referred by a teacher or fellow parishioner. Don’t mention names.

6. What’s Your Minimum? High net worth sounds like “More money than you’ve got.” No one wants to be told “You are too small.”

How to Explain: Provide a range. It’s inclusive. “I work with about 200 individuals and families. The average relationship is about $500,000. The largest is near $10 million and the smallest is $200,000, but the average is about $500,000.”

7. Do They Have Money Now? It’s not always the right time. Treasuries mature on certain dates. Bonuses are paid on a schedule.

How to Explain: Acknowledge this point. You realize decisions are made as money becomes available. When is the right time to talk?

8. New at the Job? They may not be comfortable with your experience. 

How to Explain: Position the firm or your team. Explain you bring the firm’s resources into their office or home.

9. I Already Have an Advisor: They have one spouse, mechanic, accountant and barber. Having one advisor makes sense, doesn’t it?

How to Explain:  “I expected that. Successful people often have multiple advisors. You are successful. How many do you work with currently?”

10. They Don’t Like You: We’ve heard about “frenemies”. Maybe you married into the family. You are tolerated, not liked.

How to Explain: You can’t. It’s a recipe for disaster if something goes wrong. Walk away. If you must work together, choose investments with few moving parts like U.S. Treasury Bills or Certificates of Deposit.

There are many reasons friends hesitate to do business with people they know. Most can be overcome. One cannot.

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