The new generation of risk advisers are scared of selling, and this is contributing to the increasing number of lapses experienced by Australian insurers, according to Synchron Director, Don Trapnell.
Mr Trapnell observed that one of the primary reasons for life insurance policy lapse is that clients fail to fully appreciate the emotional reasoning behind keeping a policy intact. He said the reason they do not appreciate it is because advisers are now afraid of appearing to be ‘selling’.
“Life insurance cannot be bought, it must be sold,” Mr Trapnell said. “It is an emotional rather than a logical purchase. When looked at logically, when clients purchase a life insurance policy they pay premiums for something they can never enjoy. What they are paying for is protection for their family – and that’s an emotional purchase.”
According to Mr Trapnell, political correctness has bred a new generation of risk advisers, who believe the only way to convince their clients of the need for life insurance is with facts and figures.
…in the area of risk, it is appropriate to introduce emotion into the conversation
“Although it is vital for younger advisers to have technical knowledge, they also need to be mentored by more experienced advisers who have been through a period where ‘sales’ was not a dirty word.
“Looking at RG146, there isn’t one section that teaches sales skills. There is no acknowledgment that in the area of risk, it is appropriate to introduce emotion into the conversation.”
Mr Trapnell highlighted that if a risk adviser can effectively explain to the client the emotional reasons for keeping a life insurance policy in place, that emotional tie will stay with the client long after they walk out of the meeting.
“We need newer advisers to learn those skills again. The pendulum of political correctness has swung too far and the reasoning behind the whole purpose of life insurance has swung with it.”
Never a truer word was spoken.
Look at the advisors who believe in insurance and family protection
(ie have it themselves)
and they will not have this selling problem, just the newer breed of financial planners that maybe still live at home with mum.
Very very true Don. Driven by being politically correct and the desire to be liked rather than respected. There has been a belief amongst a lot so called trainers that if you are liked people will buy from you. Not true! Unfortunately this leads to everyone being “Hail fellow and well met” and avoid controversy, emotion, raising uncomfortable ideas and thoughts, making people face the unpalatable which is often the truth. To avoid this, they are not taught to ask questions of the client eg “What would you do in this situation? How will your spouse handle this event? What is the outcome if this happens?” etc.
Instead I hear them talk fast, do not listen (how many times do they ask you something to which you have just told them the answer!), and fail to put the client first. If they really cared about the client they would ask the questions. I was taught that people do not care how much I know (facts and figures) until they know how much I care. Caring produces a focus on the person one is with, on their needs, not on “Am I coming across well!” “I hope they think I am a salesperson!”.
Good on you for raising it Don.
What Don refers to as “sales” might be referred to as bedside manner by doctors.
It is ironic that the established professions are increasingly recognising the importance of being able to engage with the client (particularly those requiring extensive education in the hard sciences) whereas for financial planning, as we try to emulate those professions, “sales” has become a pejorative term.
Advice can never be professional if it is not given fearlessly and with conviction.
The nature of insurance advice is that there is a significant emotional factor in the decision as to whether or not to proceed.
Whilst I am an advocate for lifting the professional competency standards of financial planners, all the technical competence in the world is no good if advisers do not implement the recommendations.
Advisers have a professional obligation to ensure that their clients are aware of the consequences of not proceeding. This simply cannot be done if the adviser is lacking the softer skills including sales.
Nothing happens on this planet until a sale is made !
As usual Don is on the ball.
Even employers shield their staff from receiving some practical advice.
Well said Don. I would argue that it’s actually more than just Political Correctness driving the fear into the souls of our new generation, there is also a genuine lack and reasonably thorough lack of understanding from our policy makers and legislaters which then flows equally to our Compliance overseers.
Don is right, Insurance has to be sold and when I sell it I base the sale on needs, yet no client “needs” insurance, they need the comfort that it “potentially” offers. However, by the time they know they needed this, we usually can’t give it to them, so we must sell it to them in the first place. Yet my compliance team bash me literally weekly asking why I didn’t ask how much a client can “afford to spend on their insurance” before I give the client advice and don’t understand even slightly when I say that there is no possible way for a client to make that judgement before giving them the advice on what they need and helping them to understand why they need it.
I believe that it’s a systemic problem that needs more than adviser training to fix. Our new generation of advisers fear the consequences of not ticking their compliance box every bit as much as they fear actually selling. I believe that this is in a large part attributable to our compliance and regulatory regime being based on the client wanting the product and generally asking for the product becuase that’s how investments work. What they fail to recognise is that Risk, is NOT Investment even though they are both financial products. Every client I’ve ever met want’s a successful investment strategy and of course hates the adviser when it’s not so successful. Never have I met a client who wants a successful protection strtategy unless they’ve already passed the point of “easy to protect.” But I’ve got a lot of grateful clients who are thankful that I was able to sell them quality products that they didn’t want when we first met.
You make a valid point Don, of course it’s an emotional business especially when a change of health occurs and a claim is triggered. But it still must have a logical and technical side for 2 reasons; firstly, many people we have to deal with are “logical” personality types and they like facts and figures and secondly, now with all the compliance and FOFA etc., we are a fact and figure collector.
So yes, we need to “sell” the concepts but do it with some emotion. In other words, nothing has changed despite all the legislation and regulations that we must adhere to.
Insurance Companies should take advice from experienced advisers, who understand that the initial sale, which we do, is only the beginning of the sale process.
Retention of existing Life policies is an area that the Insurers need to become proficient at and unfortunately, they have tended to be reactive, rather than pro-active, in that they have retention teams when a policy is about to lapse, which is important, though a reselling of WHY the client owns such a valuable asset, sent to them twice a year, with a free call hotline to be able to talk to a person and get easy to understand explanations of their policy benefits, would help retention of existing policies and allow advisers to focus on ”DARE I SAY IT” selling more new Life policies.
Advisers could train staff at Insurance Companies on how to sell the benefits of the policies to existing policy holders, as unfortunately at the moment, the conversations tend to be factual relays of information, with no empathy or questions as to what it is the client needs the policy to do for them.
If nothing else, it can reopen the discussion and increase retention and provide opportunities for more cover.
Your absolutely correct Don and the fundamental reason for younger advisers not selling risk insurance is that they do not believe in it. ASIC had told them for years it was a worthless product because it paid commission and that we all know only good products don’t pay commission don’t we! When they get sued by the spouse of the client for not selling them risk insurance they will then understand.
ASIC is also to blame as they consider risk insurance a poxy product part of the old school and for a while they followed the policy line of their mates in the UK Financial Services Authority. This in the UK was full of left wing socialist lawyers who almost destroyed the UK life insurance Industry and its cashflows and thus tax. The Authority was crushed by the UK Treasury and Government and Life Insurance again strives in the UK.
In the same way ASIC needs to be crushed by the Government and the Senate into actually doing its job and not pushing a left wing ALP lawyer view of the financial services market.
Where is ASIC with the ETU receiving millions in undisclosed commissions discovered by the Royal Commission. Sadly quiet. Embarrassing really is it not.
Yes risk insurance needs to be sold but if your waiting for the regulator to agree Don, your going to be waiting a long time.
From Jeremy Wright’s Comment (Sept 10):
“Advisers could train staff at Insurance Companies on how to sell the benefits of the policies to existing policy holders…” Spot on!
The number of times I’ve (and no doubt many an adviser has also) sat through the introduction of a company employee and were told of the person’s degrees, their so-called qualifications, all of the alphabet-soup which follows their names, and other BS and irrelevant facts — but NEVER of their capacity to do the job — says it all.
Spot on Don.
I hope the Product Providers & Dealer groups read your article.
Regards
Jack
When a family decides to insure the major breadwinner or partner it is very comforting that at a time of disaster, that strikes when it’s least expected, thank god that someone convinced them and “sold” them adequate life insurance. In a career spanning 4 decades we have been the only person at funerals handing the family a cheque to remove the financial burdens. The bank, the funeral directors and anyone else owed money usually press for quick payment.
This usually requires alongside the logical decision process some emotional sales experience to drive them to action. I have never in my history had a bereaving spouse tell me that they had too much insurance and offered to give some back.
We hold our heads high as the purveyors of a commodity that is the solution to many family’s future financial security and underpinned that security whilst they worked, earned and invested till they have enough to self insure.
For what its worth after nearly 30 years of advising on solutions to clients. Plus coaching many new advisers. To many advisers make purchasing insurance ‘the problem’ clients buy solutions not problems. I spend most of the interview uncovering liabilities and discovering what plans they have in the event of the unforseen to look after themselves and families, insurance is never mentioned. Once the client realises they have a problem the insurance (protection strategy) becomes a solution. Clients buy and maintain solutions .
Looking into the eyes of a client last week dealing with her terminal illness claim. What was she looking for compliance scores no was she concerned a commission was initially paid on placing the policy no she was looking for money ! Who will supply it, not me an insurer …. We initially asked the hard questions , now the reality hits
Cheers
Sales skills which we learned a long time ago when life offices had tied agents, were among the best sales training programmes ever offered.
Those days are gone but the need for such skills remains. What I’ve said in this forum more than once is still true: insurance isn’t bought it’s sold.
We see in the TV ads for direct life insurance happy prospective clients calling up and wanting to buy life insurance and it’s all done in as long at the ad takes. This scenario is a fallacy. Clients seek financial planning advice, yes, but rarely seek life-risk insurance advice – unless they’ve had a mishap which can then mean they’re uninsurable anyway.
Some things never change. Selling life-risk insurance is one of them and the sales skills we learn enabling us to do it well is as fundamental to our work as it’s always been.
Spot on Paul,
The only way clients will seek Life Insurance Advice is to separate it from Financial Planning. There needs to be 2 tiers of Financial Advice.
Clients are happy to sit down with a general insurance broker and be told how much they will lose in certain scenarios – and the take up is huge!
Music to my ears Don, and something I have been passionate about for thirty plus years. The industry has a massive retention problem and unfortunately most are looking for solutions in the wrong area. Its simple, if the client has emotional buy in to their decision to purchase cover, the retention issue will largely look after itself.
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