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Helping Clients Manage Risk

Use your financial knowledge to help your clients make the right financial decisions.

By Donald Ray Haas, CLU, ChFC, CFP, MSFS

How many of your clients and prospects have a love-hate relationship with insurance? Some of my clients have even called risk management “a necessary but evil cost” in their complicated financial lives.

Even though your clients may complain frequently about paying insurance premiums, their tune will change when they become beneficiaries of life or disability income insurance. Although people brag about their policy’s payoff, they really should brag about what a prudent financial decision they made to manage risk, even though the amount they paid may have been more than they were willing to pay initially.

For 47 years, I have advised clients on how to work through their typical love-hate issues with insurance. As a financial advisor, you can properly serve your clients only after you have developed their trust.

After you have accomplished this goal, place your clients’ interests first. And realize that because of your specialized knowledge of insurance and financial services, you will help them make intelligent decisions and enhance their financial well-being.

Building a rosy future
Here are four practical approaches to help your clients manage risk and prepare for a bright financial future:

  • Recommend self-insurance.Encourage your clients to self-insure those items or parts of items that can be managed easily within their income or net worth, without jeopardizing other financial goals. Examples of this type of self-insurance include deductibles and co-pay elections available with most insurance products. Explore options with each client according to his or her particular financial situation.

  • Recommend the greatest amount of money your client can afford to self-insure in order to maximize resources allocated for other expenditures and wealth accumulation. Even though your commission will be less, your clients will appreciate the fact that by placing their interests first, you are saving them money. Believe me, clients will recognize what you are doing and will appreciate this approach. And in the long run, you will win their trust—a valuable tradeoff.

  • Keep ‘em coming back. Regardless of what line of business you are in, you should become your client’s sole advisor on all their personal insurance products. Establish yourself as their only insurance advisor. However, do not think that you are a specialist in all areas simply because you know the language of insurance contracts. If a client asks a question about a highly specialized topic, discuss this issue with a specialist and then get back to your client with the answer he understands. Make sure you use layman’s terms with your clients; avoid insurance jargon or highly technical contract terms whenever possible. Clearly, your winning strategy here is to keep your clients coming back for more, especially as their risk management needs change.

  • Keep it short and simple. Develop and present a succinct Protection Recommendations page, which summarizes your recommendations for each type of insurance coverage. Keep this summary to only one page. I have used this approach for more than 20 years, and my clients love it. Make it easy for them to make these tough decisions by starting each bulleted recommendation with an active verb such as change, delete, add, modify, buy or sell.

Use your knowledge of insurance and your commitment to professional ethics to enhance the decision-making process for your clients. Present your recommendations as tactics to solve their problems or fulfill a certain need. In the long run, you will sell more products and services and enhance your practice.

The next level
I take this approach to the next level by first providing a summary page on each type of insurance, followed by the Protection Recommendations page mentioned earlier. For a sample copy of my Life Insurance Summary page and the Protection Recommendations page, visit

Needs and wants
Over time, many of my clients have moved from a semi-affluent category to a high-net-worth category. As they have accumulated wealth, I have observed a strange phenomenon: they have moved from a world of “needs” to a world of “wants.” Nevertheless, their financial attitudes remain in the “needs” world. In the 1960s, Abraham Maslow, a humanistic psychologist, explained this natural transition in his “Hierarchy of Needs” theory.

Next month’s column will focus on how to advise high-net-worth clients who have climbed up the wealth-accumulation ladder and reached the top rung, but have not really changed their attitudes toward money.

Donald Ray Haas, CLU, ChFC, CFP, MSFS, of Southfield, Mich., has been an insurance agent and financial consultant for more than 47 years. You can reach him at 248-213-0101 or at


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