What your clients are saying behind your back

(January 2007) It’s everyone’s fantasy to be a fly on the wall in a secret meeting, or to wear a Harry Potter cloak of invisibility just to hear what people are saying when they think we aren’t listening. For advisors selling insurance, though, shape-shifting and fantasy accoutrements aren’t necessary if you want to know what your clients are saying about you.

LIMRA, the Life Insurance Market Research Association, has conducted research using interviews and focus groups to survey individuals who purchased a life insurance product from an advisor.

Much of what these clients had to say about the sales processes they experienced wasn’t pretty. At the same time, the survey also presents mixed messages for advisors. Although the water may be muddy, the conclusions are worth considering.

Here are some highlights of LIMRA’s “The Life Insurance Purchasing Process in Canada, Focus Group Findings,” on issues most relevant to advisors:

Lack of choice: Many of those surveyed were critical of the fact that they were often given only one, or at best two, choices of product. This made them feel that the advisor was primarily driven to make a sale and collect a commission, not to spend the time needed to help the client truly understand what was being presented and why.

At the same time, most popular market research is consistent with evidence that shows the more choice consumers have, the less likely they are to make a decision. A preponderance of choice frequently results in “analysis paralysis.”

Don’t know what “qualified” means: Focus group members expressed concern about what qualified the advisor to give financial advice. None indicated that the advisor gave any explanation about which designations they held or what they meant. As well, several clients pointed out that anything can be put on a business card these days, saying it can be hard to know what actual qualifications the advisor has.

This is a clear message to advisors to spend some time in every interview explaining the process of licensing, the concept of CE credits, the need to be continually upgrading education, and to explain the meaning and the academics behind designations like the CFP and CLU.

“Trust” is abstract and difficult to establish: Although the vast majority of those surveyed indicated no desire to purchase insurance in any other way than through an advisor, many felt that the key elements of trust were missing from the relationship. Key trust elements that were cited include integrity, expertise and knowledge, communications skills, respect shown towards the client, first impressions, referrals from family and friends, and not being pushy.

The paradox here is that the same people who said they would be much more trusting if their advisor was referred by family and friends, expressed a reluctance to offer referrals themselves, out of fear that the advisor would do or say something that would place them in a bad light.

Concerns about integrity and qualifications could be addressed if advisors actively and effectively communicated just what it takes to be in the business. It would also be most helpful if more advisors worked on a referral basis, despite the shortcomings of the process.

Contact is critical, but it’s not happening: More than 75% of those surveyed said they received no annual review from their advisor; 80% said they wanted one and many suggested they wanted contact on a semi-annual or quarterly basis.

Many clients surveyed felt the annual review only existed because the advisor felt enough time had passed and they were in a position to sell a new product or service. Clients say they prefer regular contact on a quarterly or semi-annual basis, “just to see how things are going.”

Planning and needs assessments not being done: Few members of the focus group reported any needs planning having been done in conjunction with the sale. The few who said such planning had been done said they were far more likely to keep the policy than those for whom no planning had been done.

This one is self-explanatory, but there’s another side to it — many advisors think it’s clever to do a mini-fact-find on the back of a napkin. Your clients and prospects are not impressed by this. They would much rather see their personal data in a proper folder or file in the same fashion as that found in a doctor’s office or a law office. Although it seems slick and clever, clients are not amused.

It pays to listen to what the marketplace is saying. The good news in all of this is that clients prefer face-to-face transactions with their advisors. The bad news is that too often, advisors take shortcuts because they know where things are headed, but clients do not.

Rick Forchuk, MBA, CFP, CLU, CH.F.C., is associate vice president of individual sales at the Empire Life Insurance Company.

(01/02/07)