It’s no secret that the past few years have been challenging for financial professionals. The impact of new regulatory procedures, competition, underwriting, professional staffing, and other ROI risks have created heavy burdens on advisors. Though no one has a crystal ball illuminating what insurance and financial professionals can expect in 2023, history and past experiences do provide some insight into potential challenges you might face and how to overcome them in the New Year.
Challenge #1—Identifying Qualified Prospects
Today’s consumers are less accessible from a prospecting standpoint. They have a wealth of information at their fingertips and the internet provides them with endless answers from “experts.” Unfortunately, many of these “experts” have their own biases that can skew educational content. Their content may not fully address the importance of insurance and other protection strategies within a financial plan.
Life insurance sales grew exponentially in 2020 and 2021 and it was not because of data. It was because Americans were spurred to action by the pandemic and the desire to protect their health and their loved ones. Life insurance gave them a feeling of stability. It presents an opportunity to share how you are able to help others protect their families and personal interests. The initial approach—with new clients—should be about helping them protect what is most important to them.
So, where do you find these new clients? Look at your list of old clients! The reality is the longer you’ve been in the business, the more clients you have whose needs have changed since you first provided them with coverage. It sounds simple, but it is true.
If you haven’t kept detailed client records, go to the brokerage outlet(s) that you use and ask them to send you a list of clients that you have written through them. This is a simple way to reconnect with older clients and possibly give them some better options on their life insurance and other policies. You have an existing level of trust that you can build on as you provide new solutions.
To further engage new prospective clients, it is imperative to provide educational content that focuses on the issues that matter to clients and their families—their legacy, protecting against health-related risks, as well as their economic and emotional security.
Focus and share constructive educational content on platforms your prospects actually read. For example, you may want to serve as a guest author for parent-focused magazines, blogs, podcasts, or social media platforms. Don’t focus on statistics and data; focus on the outcomes insurance planning creates for individuals, families and business owners.
Challenge #2—Protecting Clients from Future Estate Tax Changes
The current individual estate tax exemptions are scheduled to sunset in 2025, and no one really knows what is going to happen at that point or before that point. President Biden’s Build Back Better plan initially included provisions that would have changed the current tax law. Ultimately nothing came from it, but the fact that those provisions were included should be a cause for concern. Estate tax changes are still in discussion in Congress, and that is not always a good thing.
Whether these proposed tax law changes take place in 2023 or 2025, it is time to be proactive. Make a list of your clients who would be affected by an exemption change from $12M to $5M. These are the clients to approach about protecting their overall estate and tax payment assistance with life insurance, trust planning, and other advanced financial strategies.
Even if clients do not want to commit to purchasing some type of permanent insurance to alleviate potential estate taxes, you can design an inexpensive term plan to protect their insurability until the time comes when the tax laws are clearer. A few insurance carriers will let you purchase two term insurance policies and convert them to a Second-to-Die plan later, which is an effective strategy for those “wait and see” clients.
Challenge #3—Protecting Your Client’s Future Healthcare Needs Amidst Volatile Markets
While most investment portfolios have taken a beating over the last few months, the need to protect all of your clients’ assets remains the same. Today’s hybrid long term care solutions have shown to be an effective way to help protect your clients’ assets as well as move money. You can leverage a small portion of your clients’ portfolio to protect a majority of their assets during a future critical illness or time of extended care. Statistics have shown that 75 percent of Americans will suffer from some type of long term care need. Without proper long term care coverage a clients’ entire portfolio is exposed to the risk of paying for this care.
Most hybrid strategies are built on a permanent policy chassis that allows them to offer features such as 100 percent return of premium, long term care funding that is typically three times the original investment, or a tax-free death benefit should they be one of the lucky 25 percent that do not ever have to access the policy benefits.
Protecting your clients from the effects of healthcare or financial hardship requires proper planning and portfolio management. Hybrid solutions can help you leverage the same dollar for multiple needs as part of a comprehensive financial plan—even in a down economy.
Challenge #4—Managing vs. Cultivating Your Business
Insurance and financial professionals understand that risk management is not simply placing a case or selling a product. It is uncovering the personal values and outcomes desired by clients and creating a comprehensive protection strategy. This requires fostering client relationships and overseeing their financial performance over many years. The challenge facing financial professionals is the lack of time. Advisors often spend too much time on the operational aspects of their business due to case management and the administrative requirements to place cases.
Many insurance professionals still have not embraced digital resources and technology in the insurance process. Today’s digital and mobile apps allow you to quote, apply, submit, and manage all of your cases—right at your fingertips.
Despite the numerous benefits today’s technology creates, many professionals still hold on to the manual aspects of insurance sales—such as using a paper application as a means of establishing rapport with the client or tracking down underwriting requirements on their own with carriers. Manual processing and case management creates more time chasing down business and leaves little time to proactively cultivate new and existing clients.
Embracing today’s digital resources and tools in the insurance process helps expedite cases, reduces NIGO submissions, and can often accelerate the underwriting process. By leveraging online access to tools and case management, you can spend more time with your most valuable business resource—your clients.