Whether you are new to the business or a seasoned veteran, there is nothing like a good sales idea to prompt you to widen your search for more prospects or close a sale you have been working on for months. Advisor Today spent several months looking for tips that will help you meet and exceed your sales goals. This is what we found.
Use creative ways to ask for referrals
NAIFA trustee Terry Headley, LUTCF, LIC, knows how hard it is to ask your clients that dreaded question, “So who do you know?” You don’t typically get high-quality referrals from so general an inquiry. But Headley, who is with First National Bank in Omaha, Neb., has some creative questions you can use in a relaxed conversation with your clients to generate names of people you would like to do business with:
- If you were going out to dinner Friday night, which three couples would you invite?
- If you were applying for a personal loan, which three people would you list as credit references?
- If you were just starting in my business, who are the first three people you would call on?
- Who are the three people who would speak most highly of you?
Once you ask the questions, do a little homework, Headley suggests. “See if you can secure a personal introduction—in person, over the phone or in writing, in that order of preference,” he adds. The better the introduction, the more likely you’ll be able to “borrow” the credibility of your referral source when dealing with the prospect.
Make good use of your hobbies
Elizabeth Ann Pollock, CFP, CLU, CSA, owner of Affordable Health & More in Waukesha, Wis., speaks foreign languages for fun. When she realized that staying fluent in French might be good for business, since she lives in an area with a lot of French-speaking clients, she became a member of a French club. Since she joined the group about a year ago, she has been getting a lot of leads just from club members. “It’s the affinity stuff,” she says. “Go out and do something you like and would go to anyway, and if it just happens to bring you business…”
She recently took over leadership of the group, and notes that she doesn’t have to say anything about what she does for a living to the members. “I have to send out reminders to the group through email, and Microsoft Outlook has a tool that allows me to include my picture, the name of my business and all my credentials with the email message,” she says. “As a result, they know what I do, and they don’t have to ask.”
Instead, they approach her—which was a real surprise to her at first. But then she realized that she was the only agent in town who spoke French, and that led to referrals. Hobbies, in other words, can lead you to natural liaisons with prospects who have something in common with you, and those connections count.
Use an IRA to fund whole life
Do you have a client over age 60 who is still working and has an individual retirement account or a 401(k) plan? Try using some of the money in his account to fund a whole life insurance policy, says Tom Schmidt, CSA, CLTC, president of Thomas A. Schmidt & Associates Inc., brokerage in Oklahoma City.
The newsletter establishes in the minds of his clients that he is the go-to guy for their insurance problems.
I have two clients in their mid-60s, a husband and wife. The husband was a doctor,” says Schmidt, who makes a six-figure income and has been a NAIFA Advisor of the Year. “The husband’s mother had just died, and the doctor was quite wealthy. Because of his inheritance, he went from a net worth of $2 million to $8 million.”
Schmidt recommended that the couple buy a second-to-die policy, but when the underwriting came back, Schmidt discovered that the wife was medically uninsurable. So he revised his recommendation. The next-best option was a whole life policy.
“The doctor and his wife had $1.3 million in a 401(k) account and an old IRA,” Schmidt says. “They wanted to leave the money to their son, but inheritance taxes would erode that amount. They’d lose money leaving retirement money to their child.”
Schmidt then came up with a recommendation. “I suggested that the doctor and his wife take money from those accounts as a distribution and use the money to buy a $1.6 million whole life policy to benefit the son,” he continues. “Life insurance is generally exempt from inheritance taxes, so they would be leaving their son much more money in life insurance than they would by simply leaving the money in the accounts to go through probate.”
Schmidt made a substantial sale, and it cost his clients no money out of pocket. “The end strategy is to pay for the whole life premiums out of a retirement account until the dividends from the policy rise to pay for the premiums,” he says.
“There are some limitations,” he cautions. “The big thing is they need more than $150,000 in income to do this. They should not depend on their retirement accounts for income. You have to make sure the client has other available assets for income.”
Take out the calculator
Many employers provide some type of group disability income insurance for their employees. So how can you sell individual DI insurance to someone who thinks he already has the coverage free of charge? Brian M. O’Laughlin, LUTCF, owner of the O’Laughlin Group independent agency in Kansas City, Mo., has the answer.
I call it the calculator sale,” he says. “I ask the prospect if he has group long-term disability through his employer. When he says he does, I ask how much the policy would pay him if he became disabled.” The typical answer O’Laughlin gets is 60 percent of the prospect’s gross income. “I ask him, ‘Who pays for it?’”
When the prospect says the employer pays, “I ask him to get his calculator out,” O’Laughlin says. “It’s always his calculator, not mine.
“Then I tell him to put in his annual salary, let’s say $60,000,” he says. He has the prospect divide $60,000 by 12 for a monthly figure ($5,000) and then multiply that number by .06 (60 percent). That number comes out to $3,000 per month.
“Then I tell him that that amount is taxable as income,” he adds. “If he’s in the 20 percent tax bracket, for example, that nets him $2,400 per month in net income. From that, he has to pay the bills, including his mortgage, buy food, gas, everything. ‘Can you live on that?’ I ask him.”
The answer is typically “No” or “I don’t know,” O’Laughlin says. “At this point, you’ve disturbed him beyond belief. I’ve just hit him with stark reality. From there, a simple supplemental DI insurance policy sale is a snap.
“You don’t talk about contracts, premiums, underwriting, nothing,” he points out. “It’s a simple explanation that cuts to the heart of the situation.”
Do joint work
Not every producer knows everything, especially if he specializes in individual coverage. What happens when he runs across a group insurance situation but doesn’t know enough about the subject to deal with the situation effectively?
“For example, your prospect, a business owner, has just told you he’s paying too much for his group coverage,” explains Arnold Katz, CLU, president of Brokerage Concepts Inc., in King of Prussia, Pa. “You may not know enough about group insurance to help him but you don’t want to lose his business. What can you do?”
Be a careful listener, Katz advises. “Ask him what he wants and what he needs. The answer may be to shift the cost to the business owner’s employees, but you don’t know enough about it to be of any help,” he says.
There is a way to salvage the sale. “Know your local brokerage shop,” he suggests. “You’re often dealing with a local businessman with 10 to 150 employees. You may be out of your league. You may need help. If you want to solve this guy’s problem and keep him as a client, you need to ask for help. You need to work with a competent brokerage outfit.”
Doing joint work with a brokerage is profitable for the referring agent, Katz says. “The producer typically makes 75 to 80 percent of the commission on the group sale, so you’re not losing business by referring the case out. And it’s the professional thing to do,” he adds.
Never stop prospecting
Reach out and touch someone—always, advises Milton Adelman, a representative with AXA Advisors in Falls Church, Va., who has been in the insurance business for 46 years. “Prospecting is a full-time job,” he says. “I prospect when I’m running errands, when I’m shopping, whenever I have an extra few minutes to spare when I’m in between things.”
Adelman always keeps his cell phone with him. “Whenever I have a moment, I’m calling someone,” he says. “The other day, I was at the car wash waiting the 20 minutes it took to wash the car. I called a client and asked him what was going on, how he was, and incidentally, did he have any questions for me about business, insurance, retirement or health?”
Adelman has an outgoing personality, and he’s not afraid to use it. “I talk to everyone I meet, everyone I deal with day to day,” he says. “The barber, the people at the grocery store, at the restaurant, at the dry cleaners, everyone. I don’t hesitate to engage in casual conversation. And I know I can offer a service everyone needs—financial protection.”
While it may not be a script exactly, Adelman does follow a train of conversation with people he’s familiar with. “I smile and say ‘How are you?’ he says. “I talk about the weather, a current event, a sports game—whatever might make them receptive. And if they are receptive, I tell them what I do and ask them if I may be of service. I rarely have an adverse reaction.”
Help your clients afford coverage
Everyone knows that small-business owners pay through the nose for group health insurance. It’s a valuable employee benefit. But it costs a lot even if no one in the group uses it. So how can you reduce the cost of coverage and help your client hold on to her plan?
Clay A. Monroe, CLU, ChFC, a broker in Nassau, Del., knows how. This January, Monroe visited a two-person jewelry and gift shop in his town. The only employees were the two owners, two women aged 62 and 44. They had a small-group health plan through the local chamber of commerce. It cost them $1,000 per month.
“The cost continually went up year after year,” Monroe says. “It was an old point-of-service plan with a $5 doctor visit co-pay, and first-dollar coverage on services and prescription medicines. I showed them how they could save a lot of money on their coverage.”
Monroe suggested that the women replace their current health-care plan with a high-deductible plan and install a payroll-deducted health savings account. “It would reduce their yearly premiums by 60 percent, and the 60 percent they saved in premiums would go to fund the HSA,” he says. “For these two ladies, the savings was $2,858 a year. That money went into a debit-like card for health plan co-pays, medicines and other medical-related expenses.
“The kicker was that both these ladies rarely went to a doctor or had health problems,” Monroe says. “They were paying a high premium and didn’t even use the coverage. With this approach, they saved over and above $1,600 net each year, and still wound up with the same amount of coverage.”
Monroe says that HSAs are interest-bearing and portable, and the money in the account carries over from year to year, unlike a medical savings account. This approach works for small-business owners, the self-employed and sole proprietors, he says.
“The bottom line is your client gets significant premium savings, and still covers 100 percent of her out-of-pocket expenses,” Monroe says. “It’s a simple, but tax-advantaged approach to medical expenses.”
When communicating with clients and prospects, use a newsletter instead of a business card
Does your business card have all of your relevant information? Name, address, phone and fax numbers and email address? How about your advice about DI insurance, long-term care insurance strategies, retirement planning and the latest in over-funded variable life insurance?
If it does not, take some advice from David Spellman, an agent with the Pratt Insurance Agency in Westbrook, Maine, who has qualified for MDRT for the past 15 years. “I let my client newsletter do my talking for me,” he says. “It’s got my name, picture and contact information in it, and tells my clients about insurance and retirement planning. It’s all in the newsletter. I use it instead of a business card or a resume.”
Spellman mails the newsletter, which is professionally produced by a publishing company and geared specifically to insurance issues, once every two months. “I used to mail it once a month, but I found out that most people were throwing them out,” he says. “Now I send it bimonthly, and it makes people think I send it every month, but it costs me about half as much.”
The newsletter establishes in the minds of his clients that he is the go-to guy for their insurance problems. “It’s constant communication,” he says. “It generates a conversation between me and my clients. And it generates more people to talk to than I have time to talk to.”
It costs Spellman $80 each time he orders the publication and $200 in postage to mail it. The total cost of ordering and mailing the newsletter is about $1,500 per year, he says. He mails it to his “A” clients and their employees, which constitute about 60 percent of his business. About 250 people receive the newsletter with each mailing; 90 percent are current clients and 10 percent are prospects.
“My specialty is to help small-[business] employers,” Spellman says. “I help them with their employee benefits and group insurance, then transition into retirement planning. Having an informative document to back me up helps a lot.”
Chuck Jones ia a contributor to AdvisorToday.