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MDRT INSIGHTS

A Client’s Financial Plan Must Match Their Comfort Level

With Annuity Awareness Month upon us, it’s important to be aware of the many options our clients have, whatever their investment approach. The three most important factors when evaluating a client’s suitability for an annuity product is their age, health and risk tolerance. I have learned that annuities are an effective retirement vehicle for clients who want to have some growth. An added benefit for conservative clients is that an annuity provides an underlying guarantee in a very uncertain economic world.

Conservative Versus Aggressive    
As a financial advisor, it is difficult to be all things for all people. Therefore, developing a specialty in a certain type of annuity is key to building success in annuity sales.

For clients who seek safety, security and growth potential, a variable annuity may be preferred over a fixed annuity. Variable annuities have a lifetime guarantee, growth rate and income. Although variable annuities cost more than other investments, they provide protection to a client’s portfolio that is often unattainable with other tools. Fixed annuities provide a means to mitigate risk while maintaining a steady income, which is ideal for retirees who want a known income stream to supplement their retirement income.

On the other hand, clients who like the excitement of stocks, trading funds and other investment options can choose a more aggressive investing approach.

With either approach, it’s important for the client’s comfort level to match their financial plan in order to create a successful, long-term client relationship.

How to Build a Successful Annuity Practice in Today’s Market
Years ago, the way to gain clients was through seminar selling. This is how we built our business. It was an efficient way to get a lot of people in one room and tell them about your services and financial planning opportunities. From there, we asked for referrals from each person at the seminar. Today, however, the market is flooded with seminars, which has made this method a bit more difficult.

Not only are seminars a harder sell, clients today are less trusting of people. This makes it especially hard to educate prospects about financial planning.
Because of these changes, my practice adopted a referral-based system for new clients.  When a friend hears of something great that their advisor did for another friend, they’re much more likely to feel positive about working with them.

The Importance of a Moral Compass
You should always treat clients as if they were members of your own family. Imagine in your first meeting that your mom and dad are sitting in front of you. What would you do for them? If the recommendation you’re making is not one you would make for your own parents, then it’s not the right recommendation. Having this moral compass helps you show your clients you’re truly invested in their interests.

I’ve always used a soft approach with lower-cost products that have lower fees and lower commissions that may be more helpful for investors who are starting out. Clients are much more willing to work with you and trust you overall when they know you have their best interests in mind.

Customer Service
Once you attract clients, the next step is retaining them. The practice of treating clients as you would treat your family continues with exceptional customer service. Meet with every client and keep in touch with them. Some ways in which to keep in touch are by sending them a newsletter, an email blast or even a magazine containing positive stories.

How to Remain Successful
You will reach a certain point in your practice when you won’t need to add many new clients. Planning for your clients’ lifelong financial needs will become a lifelong partnership. Once you hit that point, the key is to take care of your clients. Occasionally this will generate a referral, but working to attract new clients is no longer a big part of the business.
After doing something for almost 40 years, if you’ve done it the right way and you’ve done the right thing for people, you will have a positive relationship with clients that will last a lifetime.

Donald P. Speakman, MSFS, CLU, ChFC, CFS, CFP, CRPC, AAMS CMFC, from Pittsburgh, is a 32-year MDRT member with 26 Top of the Table qualifications. At Speakman Financial Group he specializes in retirement planning, with expertise in creating programs for l [email protected].


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