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Life Health > Running Your Business > Prospecting

When Your Prospect Says, ‘I Have No Money’

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What You Need to Know

  • Investment advisors need clients with significant lump sums.
  • Insurance agents can start with relationships based on cash flow.
  • Some clients end up turning a little cash flow into a lot of cash flow.

As an insurance professional, you are in the business of helping people. It’s often been said you sell peace of mind. How many times have you heard a prospect say, “I have no money.” Does that mean you can’t help them? Of course not!

Insurance agents have an unexpected advantage over financial advisors. You can start a relationship based on premiums or investments made from monthly cash flow.

Financial advisors are often looking for pools of money. Once people have put away a substantial amount, they can help the person invest it better.

Many financial services firms have tiered levels of service. Smaller accounts are handled by a central department by phone (or an online relationship). The local financial advisor often has a certain threshold as a minimum account size.

How can you help the prospect who says “I have no money?” How can they become a client?

1. Buying life insurance with monthly or quarterly premiums.

The first check usually starts the ball rolling. If they buy whole life insurance, they are building cash value over the long term, in addition to getting protection.

2. Buying health insurance.

Unless their employer provides it, everyone needs it. Retirees need Medicare supplemental insurance. It’s another monthly payment product.

3. Open an IRA.

Most people talk and read about the advantages of participating in your 401(k) program at work. People earning an income are allowed to put additional money aside in an individual retirement account. They are saving. They are reducing their taxable income. Growth they achieve is tax deferred.

4. Dollar cost averaging.

You’ve heard the expression, “Don’t wait to buy real estate. Buy real estate and wait.” If people want to start investing, let them know they don’t need to accumulate thousands before they can take the first step. They can invest the same amount each month. Explain why dollar cost averaging makes sense.

5. Use automatic debits.

If prospects hear they need to mail in a check or make a payment every month, they might lose interest. Tell them when carriers allow for automatic debits to their checking account. Their car payment might be billed that way, so it’s a familiar concept. Even public television promotes automatic monthly contributions during their fund drive. Unlike PBS, your debit would be to their checking account, not a credit card.

6. College savings accounts.

This is another smaller account that could grow pretty big, pretty fast. You suggest the idea to your client with a young child. They know the importance of education. Relatives often give checks for young children at the holidays. Now there’s a place that money can go! Aunts and uncles are likely to give more when they know the money is “ring fenced” for certain purposes only.

Here’s another great advantage: Some older relatives might pledge to “help with the child’s college education.” This can turn from a verbal promise into an actual commitment if there’s a restricted place that money can go now.

7. Create a fan.

Your client is likely younger, getting started in their first real job. Give them great service, even if their account is small. They have parents and grandparents. Those older relatives might have more money. Now you have an “agent on the inside” who tells your story. You might pick up the older family members as clients.

8. Access to someone bigger.

Imagine you are a younger agent or adviser. You have a friend who is the daughter of a celebrity. You met her in that exclusive private school before you both graduated. She has little money, but you invite her to be a client. You give her great service. Her parents, ever protective, want to know how she is spending her money. She tells them about you. They want to meet you. They are impressed. You can see where this is going.

9. The influencer.

There are people who might not have money yet are wired into high society. They know everyone and are well-liked. People who raise money for major nonprofits and colleges fit into this category.

You take one on as a client. You give them great service. They “talk you up.” They have a way of listening carefully and identifying needs. When it involves insurance, they bring up your name. You are a fellow donor, of course.

10. They will be a big earner someday.

Your friend is in medical school. They have years of studying and residence ahead of them, but one day they will be a high-earning doctor. You start a relationship early and keep it going over the years. Eventually they will reach their full earning potential and may become a big client.

So, clearly, there are many reasons it makes sense to take on smaller clients.