Missing an Opportunity

Financial advisors often miss the opportunity to speak to their clients about the important role life insurance products can play in financial planning, according to a recent survey by Saybrus Partners, Inc.

The survey found that more than half (56 percent) of financial advisors do not speak regularly to their clients about life insurance. The survey polled advisors at the Financial Advisor Retirement Symposium held this May in Florida.

Only one-third (34 percent) of financial advisors said they were “very comfortable” in recommending life insurance to their clients. Nearly one in five admitted to being “uncomfortable” or “very uncomfortable” in recommending life insurance policies to their clients.

“Our experience has shown that clients are looking to their financial advisors for comprehensive financial planning. Standard practice is that the planning process should begin with a foundation of protection and conclude with a wealth- distribution phase,” says Kevin Kimbrough, national sales manager for Saybrus Partners. “Therefore, it is critical for advisors to consistently include life insurance in their clients’ financial plans.”

The reluctance of financial advisors to speak to their clients about life insurance is consistent with consumer perspectives that were found in a survey conducted by Saybrus Partners last year.

Lack of regular policy reviews Even if a client has a life insurance policy, financial advisors don’t necessarily make it a part of their annual review. Less than half of those surveyed (47 percent) said they review existing life insurance policies with their clients on an annual basis.

Twenty percent said they only assess their clients’ policies when they know of a major life change, such as marriage or the birth of a child. That review is most often narrowly focused on whether the policy is adequately meeting their current needs. Some financial advisors (10 percent) discuss clients’ policies only if clients raise the issue.

“Advisors are constantly reviewing the performance of their clients’ stocks and other investments. By contrast, they are reviewing their clients’ life insurance policies far more infrequently, based on life events or client requests,” says Kimbrough. “This means that many of their clients may be lacking essential protection for themselves and their families or missing opportunities to more effectively transfer their wealth to the next generation. Life insurance is not a set-it-and-forget-it product. It should be monitored and adjusted, if needed.”

“For example, market volatility can have a strong impact on the performance of variable life insurance products, and fixed products can suffer in a low interest-rate environment, potentially leading to unintentional policy lapse. Other issues include the possibility of missing out on more affordable rates and newly available features like LTC riders,” Kimbrough adds.

When asked what would contribute to making them more comfortable in discussing life insurance, 42 percent of financial advisors said they would be interested in becoming more comfortable discussing life insurance either through working with a life insurance specialist who can help identify solutions for their clients or attending a life insurance seminar aimed specifically at financial advisors.

The survey of 103 financial advisors was conducted by Saybrus Partners at the 2012 Financial Advisor Retirement Symposium. The 2011 survey was conducted online within the United States by Harris Interactive on behalf of Saybrus Partners from July 22 to July26, 2011, among 2,410 adults ages 18 and older, of whom 786 said they currently have a financial advisor.

Saybrus Partners, Inc. is a life insurance partnership firm that helps institutions and financial professionals nationwide make life insurance a consistent part of their practice. For more information, visit www.saybruspartners.com and www.phoenixwm.com.


By Ayo Mseka
Advisor Today