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Relationship Is Key

Middle America wants sound advice from someone it trusts.

By Brian S. Cohen

A property and casualty (P/C) agent met a widow and her young child through an introduction by a mutual friend. Fortunately, the widow’s husband had a sufficient amount of life insurance. Unfortunately, she didn’t know what to do with the proceeds. Paralyzed by grief, she did nothing and let the funds sit in a bank account. She wanted help but didn’t know where to turn. She felt alone.

Upon learning of her predicament, the agent let her know he might be able to help. He met with her several times over the next three weeks, spending most of his time asking questions. Was she paying the bills? Could she afford to continue to live in their home? Did she want to stay there? What were her goals for her child? What were her needs? What was her experience with investing?

After he felt he had a solid understanding of her situation, they discussed a variety of options available to her. The widow appreciated the advice she received and the efforts the agent made to understand her situation. He listened and understood what she needed.

People don’t care what you know; they want to know that you care and can be trusted.

As a result, she asked the agent to handle all of her financial needs, from her auto and home insurance to her life insurance and retirement needs. It was an easy decision because she trusted him.

This is a true story that highlights an age-old sales strategy that is making a comeback—focus on the power of the personal relationship. People don’t care what you know; they want to know that you care and can be trusted.

Today, the issue is not whether you know the right answer. There are thousands of access points to information that can provide you with the right answer. Instead, the issue is getting customers to allow you to help them find the right answers. They won’t do that unless they know you and trust you. Sales professionals who understand this point have a huge advantage over those who don’t because relationship selling, by its nature, favors the local, trusted professional.

It’s easy to see why people are looking for individuals they trust to do business with. Our trust in big institutions has been shattered by recent corporate accounting scandals. Polls show that Americans feel out of touch with their political leaders. The bear market hasn’t helped build people’s confidence, either. In the ‘90s, investors could do no wrong. It was easy to be an aggressive investor. Now, we’re shell shocked when we open our brokerage statements each month. Many investors know they need help, but feel stuck as they ask where to go and whom to trust.

An age-old sales strategy is making a comeback—focus on the power of the personal relationship.

Unfortunately, many financial professionals have not responded correctly—they have simply stopped calling their clients. They’re afraid to talk to them because they believe they will be blamed for the poor performance of their portfolios.

In fact, several surveys have illustrated that many customers don’t hold their financial advisors responsible. But they do want help and advice.

At this time when clients need to speak to their financial advisors, they have stopped calling. As a result, advisors and investors are quickly drifting apart, which adds to a crisis of confidence.

It is a negative cycle that presents tremendous opportunities to those advisors willing to communicate with their existing customers and new prospects.

Time to get personal
Advisors’ focus needs to shift from “product peddling” to relationship building. Over the last several years, advancements in technology have actually created a gap in human-to-human interaction. It even became an accepted practice for companies to encourage their customers to point-and-click their way to planning their financial future. Today, more than ever, people want a personal relationship with their financial professional.

The rapid growth of Farmers Financial Solutions, a member of the Farmers Insurance Group of Companies (FFS), is proof of the power of the personal relationship. Launched in September 2000, FFS has converted to date 6,000 of Farmers’ P/C agents into total financial service providers. These agents now can offer a multitude of financial solutions—from P/C to life insurance to investment products. Almost all of the converted agents had little or no experience selling investment products. But, what they did have was long-standing customer relationships.

In 2001, FFS generated 182,000 transactions and the company generated thousands more last year. The trust and personal connection that had been built by these agents gave them the confidence to contact their customers and the credibility to be taken seriously.

Customers knew their agents understood their individual financial positions and risk tolerance, and trusted them to have their best interests at heart. What’s more, the agents learned that their middle-income customers had a strong sense of distrust of Wall Street and felt no one was interested in helping them save for retirement.

Apprehension in the middle
It is important to understand that Middle America’s apprehension about investing has been brewing for some time. While the combination of terrorist attacks, corporate accounting scandals and the roller coaster ride of Wall Street has served as an effective blow to confidence in all investors, all of these factors have had the greatest impact on the middle-income investor.

For years, there has been the perception that nobody in the financial services industry wanted to work with middle-income investors. Transaction sizes averaging $1,000 to $5,000 were hardly considered “power plays,” and there was a general belief that there was too little money to be made in this sector.

As a result, the big brokerage firms abandoned this market and forced these investors to figure things out on their own. While some were able to find success, many made mistakes and miscalculations.

The middle-income market is huge and untapped. LIMRA International defines this market as households with annual incomes of between $25,000 and $85,000, and recent U.S. Census data estimates this market represents approximately 50 percent of all American households. That’s a large potential market of retirement dreams and savings goals that need direction.

But the trap many advisors fall into when targeting this market is to adopt direct marketing tactics and frequent cold calls. Middle America can’t be persuaded by hardcore sales tactics; it wants sound advice from someone it trusts.

If the ’90s were described as the “Digital Age,” this first decade of the new millennium should be seen as the “People Age.” The Internet revolution failed because the “visionaries” lost sight of the most important attribute of a successful business—the strength of the customer relationship. It is essential to realize we now work and live in an era in which personal customer relationships are a key factor in defining overall success.

Brian S. Cohen is president of Farmers Financial Solutions, LLC, a member of the Farmers Insurance Group of Companies. He can be reached at


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