What You Need to Know
- Clients should save more, protect more and plan more.
- They get stuck in the fog.
- One way to cut through the fog: Thoughts about loved ones.
Good news: More clients than ever are having the right financial planning conversations with their loved ones.
Surprised to hear this? We were too. While conventional wisdom (and an abundance of data) has historically told us that individuals find talking about money and financial planning to be taboo — times are clearly changing.
Whether because of the impact of COVID-19, efforts to empower a younger generation of savers or something else entirely, a recent study by Haven Life found that 39% of individuals have had a conversation about necessary insurance or financial planning needs (either for themselves or a loved one) within the past three months.
When one looks further out, 58% of individuals have had insurance and financial planning conversations in the past six months.
But, where there is good news, there is often…well, less good news. Life insurance is no exception. While more people are having these types of conversations, there is still a lack of follow through.
Consider that the same Haven Life study found that just 8% of individuals said they are “very likely” to act on any financial planning conversations had over the holidays (a historically popular time to have these conversations) and just 27% said they are “likely.” That’s a total of only 35% reporting to take any action.
Understanding the Root Causes of Client Inaction
For advisors, it’s probably not that uncommon to have several conversations on a topic or recommendation with a client, only for that client to either stall or decline to take said advice.
While every client has the ultimate authority over their financial portfolios and what investments and decisions to make, understanding the root cause behind why a client does or does not want to take a specific action can be helpful for advisors.
When it comes to life insurance, the explanation is often quite simple. Historically, applying for life insurance has been a painful process for clients. From a paper-based application that often asked redundant questions and the need for a medical exam (even for the healthiest of individuals) to a months-long waiting period, buying life insurance simply wasn’t an enjoyable process. If a client could put it off, why wouldn’t they?