Insurance: Your best foot forward

Although the prospect of initiating a conversation about insurance can be daunting, it represents a critical component of any financial plan. New advisors should not shy away from this important topic. In fact, some advisors find that leading with a discussion about insurance can provide the foundation for a strong, long-term relationship with clients.

This is the approach that Scott McEachern, advisor with Barrie, Ont.-based McEachern Financial, has taken in his financial planning practice. (The firm is affiliated with Toronto-based Qualified Financial Services Inc.)

“Insurance is the first step in the process,” says McEachern, 28. “We talk to everyone about insurance first, because we feel that’s the safety net of any financial plan.”

Given that many Canadians are underinsured – especially among younger demographic groups – there is significant opportunity for new advisors in the insurance space, McEachern adds. He focuses on working with Generation Y clients (a.k.a. “millennials”), especially those aged between 25 and 37.

“When [these clients] are buying their first house, getting married or having their first child, that’s when they really become receptive [to discussing insurance],” McEachern says. “There is always someone out there who hasn’t purchased insurance yet, who is coming up to a milestone at which there’s a need for it.”

The top priority for a new insurance advisor should be to get out and meet as many prospects as possible.

Interacting in person tends to be the most effective way to form connections with prospects, Smeenk Pritchard says, even if that means going door to door and introducing yourself. “When you’re out talking to people,” she says, “things happen.”

McEachern realized early on that it’s not productive to sit in his office and wait for clients to come to him. “That’s not how the industry works,” he says. “You have to go out and meet people.”

McEachern began attending local networking events and embraced every opportunity to meet new people. “That’s when things started to take off,” he says. “The more people you can talk to, the more people you can reach.”

The mentorship advantage

McEachern also has the advantage of working alongside his father, Robert McEachern, who has been an advisor for 35 years. When Scott joined the practice three years ago, he began working with some of the children of his father’s clients, which has been a successful strategy for him.

“That’s made it a little easier for me getting into the industry,” Scott McEachern says, “because [my father has] already built that relationship with the parents. And if the parents trust my father, then [their children] figure they can trust me.”

The mentorship and training that McEachern has received from his father also has been helpful in getting Scott’s career started, he says. Working with mentors and coaches has become increasingly important for new insurance advisors because fewer firms now offer full training programs for new recruits. Although many firms still offer substantial training programs for new advisors on the investment and mutual fund sides of the business, insurance training programs have become considerably less comprehensive as the insurance industry has shifted away from the career-agency model and toward independent distribution.

Because the life insurance sales process is considerably different from the investment sales process, Smeenk Pritchard says, the lack of training presents a challenge for new insurance advisors. “Because there is so little training done in terms of the life insurance sales process,” she says, “[new advisors] don’t know how to bridge the gap from the mutual fund sale to the life insurance sale.”

Mary Art, research director with Windsor, Conn.-based global insurance association LIMRA International Inc., suggests you research the training programs and support services that firms offer, and take that into consideration in deciding which firm to join. “If companies can assure you that there will be somebody to mentor you, to offer training and help you find some leads, I think it does help,” she says. “Companies that have a reputation for support are going to be able to attract more candidates – and, probably, better candidates.”

Acquiring industry designations, such as the chartered life underwriter and the certified health insurance specialist, also can help you to establish yourself early in your career, as well as familiarize yourself with industry products and strategies. “[Those designations] do establish credibility and professionalism,” Smeenk Pritchard says.

Although insurance products and strategies can be complex, it’s best to keep things simple when discussing insurance with clients and focus on the core purpose of life insurance – which is to ensure a client’s family will be taken care of when the client dies.

In addition, identifying a target market can help you to narrow your focus, allowing you to familiarize yourself thoroughly with the products best suited to the clients within that market. “Identify where you’re most comfortable,” Smeenk Pritchard says, “and where you have the most credibility.”

McEachern decided to focus on young clients, he says, because he can relate to clients who are around his own age. He focuses primarily on straightforward term life insurance products, as those tend to meet the needs of the demographic he serves most effectively and are the most affordable life insurance option. The latter factor often is a key consideration for Gen Y clients, he adds.

Keep it simple

“For some people,” McEachern says, “it’s a matter of budget, so we have to look at their budget and cash flow and see what they can afford.”

Beyond having a strong understanding of the fundamentals of the insurance products you’re selling, McEachern says, it’s important to be able to explain, in simple terms, why the product is important and how it can help your client.

“I haven’t had any problems promoting [life insurance] to people and explaining it to people,” he says, “because it’s something that I truly believe helps people.”

Although the early years can be challenging for young insurance advisors, recent research by LIMRA shows that 91% of young advisors who succeed are satisfied with their careers, thanks to this feeling that they’re helping clients.

“Those [advisors] who do succeed past that two-year point are very satisfied,” Art says, “because of their ability to help people secure their financial future.”

© 2015 Investment Executive. All rights reserved.