Wednesday, May 31, 2017

Mr. Client, I'm The Best There Is.

I sell Life Insurance.  But I’m different than everyone else, because I’m the best there is at it.  

I am not the best at product knowledge.  I am probably in the top 5% there, but that’s not a big deal.  I can call around or use the computer and hunt down the info I need.  I am independent, so I have all the best carriers to use.  

I am not the best at underwriting.  Again, I am in the top 5% of all agents in that category.  Also, I know where to go when I need assistance, so unless there is a bribe involved, I cannot be beaten by another agent with a better medical offer.  

I don’t sell the most life insurance.  I am in the top 5% of producers, but this isn’t really a good measure of skill.  Many of the top producers have been caught using unscrupulous sales methods.  Some are master marketers.  Some work 100 hours a week.  I don’t like to work too much.  I want to enjoy my life.  I am not very well organized.  I don’t have a fancy office.  I do not drive a new car.  And I don’t sign my name with a Mont Blanc pen.

I am the best because I can perfectly figure out what the client needs and sell it to him or her.  I do not sell too much or the wrong thing or add superfluous policy riders.  [Thomas Aquinas said: "If a thing can be done adequately by means of one, it is superfluous to do it by means of several; for we observe that nature does not employ two instruments if one suffices."]
I know this sounds simple, but simple and easy are not the same thing.  I have put a lot of time into this in order to be the best.  But, that time isn’t the only reason.

Let’s say there is an agent whose skillset is similar to mine and that agent sits across the table from a client similar to mine.  The likelihood that the result will be the same is nearly none.  It is likely that the other agent will think too much about his own interests to do as good of a job as possible.  Think about it like this.  Would you expect to go buy a car and get the best possible deal without any haggling?  Would you even expect to get the best deal if you do haggle?  No.  And you don’t even fault the salesman because you know this person gets paid on commission and the more profit there is from the sale, the more they make.  Most of the time, you’re happy when you buy the car, even if you figure you could have gotten it for cheaper.  Otherwise, you would have left the car on the lot.  In the same manner, the other agent is likely to sell you something that is good but not the best.  Here is possibly the number one example of why most good agents cannot be the best:

  • Product A costs the client $5,000 per year and pays the agent a 90% commission.
    • $4,500 to the agent
  • Product B costs the client $5,100 per year and pays the agent a 95% commission.
    • $4,845 to the agent

All things being equal, I sell product A and the other agent sells product B.  Hell, you might even side with the other agent on this one.  I mean, it’s only 2% more expensive and the agent gets to bring home an extra $345.  

But what if Product B is 5% or 10% more expensive?  What if Product B is 30% more expensive and is poorly designed for your needs?  I would say that on average, this last example is the most likely to be the Product B that gets sold to you.

There are plenty of other examples out there on why the other agent doesn’t sell the right thing, like Annualized Commissions, Incentive Trips, Commission Bonuses, and the like.  I have given up more trips to Hawaii than I care to count because I do not place enough business with the same company.  Other agents would steer their last few clients to the company for the 10% bonus or vacation trip if they are close to earning it.

Here is the problem.  If an agent can be swayed at all, even if it only costs the client 2% more, then that agent will always cross his own line in the sand for the right amount of money.  I’ve even heard a few of these agents try to justify it.  To me it comes across like a little kid telling a lie to protect another lie.

I’m the best because I have no line to approach.  I just do the right thing every time.  It is just easier that way and it is the right thing to do for my client.  

Now given all this information above, I must tell you that I still have to call clients and prospects in order to get in front of them and find out what they need and then sell it to them.  If I didn’t, I would be out of business and could no longer be the best there is.  I always strive to do what I say I’m going to do.  This is important to me.  I do not overpromise on what I can accomplish because this helps no one.  

From time to time, I have prospects and clients who do not do what I ask of them.  I am not just talking about buying something from me either.  I am talking about taking smart steps to improve their financial picture.  If I am given the right information, we can usually work it out.  Other times we cannot.  I realize that people do not always make the proper decisions for themselves and their loved ones.  I like to help everyone, not just the good decision makers.  So this does bother me a little.
I am not the only person in the world who operates my business in this way.  I happen to know a few more who are also “The best there is.”  When you meet with one of these people, you will know.  The interaction will have a whole different feel.  You will not feel pressured, you will feel liberated or educated.  If you are asked to buy something, it will seem like you wished you had done it sooner.  You will leave the meeting happier than when you got there.  You might even feel compelled to take the guy or gal out for a beer.  And if it’s me you’re working with, I’ll accept your invitation.


Friday, May 12, 2017

How Many Light Bulbs Does it Take to Screw (In) the Client?

Here is the good news.  Your bankers, money managers, attorneys, insurance agents, fee based planners and CPA’s and other financial experts probably know more than you do.  This means that they can help you solve problems that would have been tough to solve on your own.

Here is the bad news.  You have to find half a dozen of these type of people to completely optimize your financial profile.  And that’s only if the half dozen you find are good at their jobs.

I feel a rant coming on.  I can give you examples out the wazoo of how asking simple questions of my clients has lead to discovering major gaps in planning.  For those of you who do not know me, I am really just an insurance salesman… and I really just mean life insurance as that makes up the bulk of my business.  Over the years, I have learned a little bit about everything my clients could do to complete their financial framework and do so, the best way.

Best?  Yes, that is a good enough word for it.  For me, it started in my mid 20’s finding the best insurance for my customers all over the country who found me through the internet.  To me, this meant getting the coverage that perfectly serves its purpose at the best price in the market.  Not many insurance agents sell insurance this way because they don’t know any better or don’t care.

In order to figure out how to discover the purpose of the coverage, I had to learn what questions to ask the client.  Most of my questions bleed over to the expertise realm of the other financial pros because I need that info to make the right call.  The more good answers I got, the more curious I became.  Like a 3 year old, “Why?” is a favorite question of mine… and it seems to me that “I don’t know” might be the most popular answer.

Who is at fault?  Most of the time it is the banker, insurance agent, attorney, money manager, and CPA.  The reason they are to blame is that they refuse to get good at asking questions about other aspects of their clients’ financial lives.  Because of this, the client misses opportunities to learn and improve each time.

Here are some examples:

Cpa: Does taxes thinking only about last year and next year.  Does not ask about insurance, or estate docs. and often does not even offer tax planning solutions because they have 200 other returns to do before the 15th.

Banker: Loan quotas, checking accounts, credit cards.  Some of them have daily calls from the higher up’s who are pushing these products.  The guys on the ground are forced into being short sighted in order to help the regional managers meet their goals.

Attorney:  Always afraid of saying the wrong thing.  They often refuse to partner with experts in tax, insurance, and wealth management.

Insurance agents:  Trying to make a sale for a weekly goal, or just plain product pitching.  The bulk of these guys are very weak in knowledge even about insurance and especially about other financial issues.  FYI: It takes 3 days to get an insurance license.  

Money managers/Financial planners:  These guys think no financial activity should be considered but through them... And since they often do not know much about insurance, they don’t mention it. Or they don’t because they think it cheapens them.  As if that could be a thing.  I have had conversations with many of these guys who say their clients don’t need insurance.  My response… “Would you put that in writing?”

It isn’t as if everyone in these professions are inept at leading their clients down the right path and helping to fully optimize their financial picture.  It is though, that it can be difficult for a client to find the right person for the job.  I meet very smart and successful people all the time who have puzzle pieces missing that one of these professionals above should have caught years earlier.  It isn’t the client’s fault.  Who has time to sort through dozens of potential problem solvers to find the right one?

I don’t mean to rob you of confidence in the work that some of these professionals can do.  I have seen and continue to see stellar work done by colleagues and competitors.  What I am telling you is that you need to find professionals who know more than their business card would indicate.  Be a smart client.  Do not take your friends or family’s endorsement blindly either.  Ask good, specific questions.  When you get their answers, ask why?  You’ll know it when you find the right person to help you… And if you can’t find the right person, let me know and I will point you in the right direction.

Brevity & Associates

Tuesday, May 2, 2017

The Availability Heuristic and The Proclaimers

Availability is a cognitive heuristic in which a decision maker relies upon knowledge that is readily available rather than examine other alternatives or procedures.  It uses strength of association for the judgement of frequency.  For example, one may assess the divorce rate in a given community by recalling divorces among one’s acquaintances.

Smokers who have never known someone to die of a smoking-related illness might underestimate the health risks of smoking.  The problem with relying on this kind of shortcut to judgment is that it often leads to poor estimates and bad decisions.  

This bias seems prevalent in many walks of life.  The news industry can even contribute with a little help from the human mind.  Remember the Ebola panic of 2014?   News of a rare disease in this country caused something just short of hysteria among the American population. Why? Because the media went wild. Article after article surfaced with the tiniest developments in the American cases.  In fact, the total confirmed cases of Ebola in the US were only 4.  The only actual transmission of Ebola in the United States occurred when a man in the last stages of the disease (most contagious) transmitted it to his healthcare professionals.  The others recovered and were discharged.

The financial services business is no exception.  Here is a response we have heard countless times as we have tried to arm our insurance consulting partners with solutions to assist their clients:

“That is too expensive.  My client would never buy that.”

Who is it too expensive for?  You the advisor?  Remember your financial situation is different.

The next response is:

“I’ve never had client spend(fill in the number)... $500/mo for coverage.”

So they don’t exist?  Sure they do.  You probably have some existing clients who would be very underinsured if they are only spending $500 per month.  Would you try to insure a skyscraper for what you pay in homeowners insurance?  Open your brain.

Many insurance agents look at what a client currently has and provide a lightning fast reflex type response: I can do it for Cheaper. Why?  Because saving someone money is the way to earn their business?  That’s the Availability Heuristic whispering in your ear.  Until you know someone’s entire financial picture, you cannot know if something less costly is better or worse.  

Also, not every dollar spent should be seen as a pure cost.  Look at the benefit it provides.  It could be piece of mind, business continuity, tax benefits, improved employee morale etc.  Let’s start from the beginning and use reason and logic to get our answers on how best to serve the client.

What about self serving bias.  People tend to give themselves credit for successes but lay the blame for failures on outside causes. When you do well on a project, you probably assume that it’s because you worked hard. But when things turn out badly, you are more likely to blame it on circumstances or bad luck. This bias does serve an important role; it helps protect our self-esteem. However, it does often lead to faulty attributions, such as blaming others for our own shortcomings.

We see our consulting clients push back.  Many find it tough get beyond this bias.  They use their own failures or successes as a guide to what they think the whole buying population wants.  One too many failures or successes early in their career can shape the rest of their work life.  Here are some of the things we have heard our consulting clients say:

  1. My clients only buy term insurance
  2. My clients don’t want to do health exams
  3. My clients like what I sell them
  4. My clients don’t buy life insurance
  5. My clients do what I say
  6. Term insurance is a bad deal, why would anyone buy it?
  7. I just sell (blank) because that’s what I know
  8. Disability/LTC is too expensive

These people have all shaped their opinions over time toward what creates less pain for them.  This leaves no room for the flexibility to really do the right thing for every client.  How many opportunities are you missing because of this mindset?  Why wouldn’t you want to have every feasible option availability so as to not limit yourself and in doing so provide a better client experience?  Don’t let the pain of possible failure be a roadblock.

I’m fairly confident The Proclaimers were in customer service prior to starting a band.  As a homage they wrote in 2 lines for song you can’t get out of your head.

When I'm working yes I know I'm gonna be
I'm gonna be the man who's working hard for you

I would expect most financial professionals say they are indeed doing so.  Many times their actions don’t reflect that.  They may not even realize they have a bias.  Take this as some cold water (or slap) to your face to snap you out of these tendencies.  Now that you know (half the battle) put in the real work to improve.