Recently someone asked me, “What role do insurance products play in the lives of people who are approaching retirement age?” When I think about this, an analogy comes to mind.
For most people, retirement is a destination that they hope to reach. For the purposes of my analogy, I will choose Hawaii as that destination.
An airplane en route to Hawaii from the mainland will fly off course 98 percent of the time because of shifting winds over the ocean. Although the winds vary in severity and direction, the plane always arrives in Hawaii. How is that possible? The plane lands in Hawaii because its crew has the qualifications, training and resources to ensure that the plane reaches Hawaii. Although they don’t always know how strongly the winds will blow or what kind of weather may occur during the journey, the crew understands that these things will happen and they are able to make the appropriate adjustments to ensure that our clients’ final destination is reached safely.
To me, this example accurately depicts the journey to retirement and the role that we play.
Before planning your clients’ retirement journey, the first step is to decide what is important to them so you can determine the destination that makes the most sense. Only by analyzing each clients’ needs and finding out what is important to them will the advisor have any hope of assessing the likelihood that the clients will be able to get to where they want to go. Once the analysis is complete, the advisor can clearly identify the clients’ destination – their retirement goals.
The Flight Plan
Once a destination is chosen, it is important to pick the route with the greatest odds of reaching the destination safely and efficiently. This requires an advisor to analyze which products and services will meet the client’s needs and ensure that the client reaches that destination with the lowest risk and volatility possible. If significant weather is predicted, a pilot will choose to take a different direction and so must the advisor.
To me, the takeoff represents the early phases of the plan. It is the stage when the plane is most aggressive and consequently where the passengers also face the most risk. This is typically when an advisor is more aggressive with client assets and focused primarily on growth – taking a higher risk in order to achieve a higher return. It takes unique skills to handle a plane at takeoff, just as it takes unique skills for an advisor to get a client’s financial plan off the ground.
At some point it makes sense for the plane to ease out of its aggressive ascent and gently level off. There may be somewhat of a slow climb at this stage, but it is controlled and the passengers feel safe. In our world, this is when clients shifts from aggressive growth products with high risk to moderate investments designed to keep them protected while they continue gradually ascending.
At some point all the crew’s hard work should lead to a gentle and controlled landing. This is when the advisor must work with the client to ensure that the assets that are built up can be distributed and enjoyed when the client reaches the ultimate destination. You cannot land a plane in the same way that you take off. You must be more disciplined and conservative to ensure a safe landing.
When you think about this analogy, it can closely mirror the life of all who are hoping to land safely in their destination: retirement. So what does any of this have to do with the initial question about the protection products that our industry represents? During any flight, there is risk. The most masterfully executed takeoff (growth), leveling off (conservation) and landing (distribution) becomes irrelevant when the flight plan is diverted because of unexpected events.
Too many advisors focus on growth and distribution but ignore protecting the flight in the first place. Unexpected turbulence will happen for everyone who flies and everyone who prepares for retirement. Thanks to progressive product development, many protection products can help in the ascent or growth phase, the leveling-off phase, and the landing or distribution phase.
As insurance professionals, we need to help people understand how we can protect their flight plan. The future of our industry lies in educating all the professionals involved in all phases of a client’s plan about the importance of protecting that plan. Advisors need to see life insurance products as a strategy, not a sale. They need to form strategic partnerships with those who help clients during takeoff, leveling off and landing to ensure that they see how protecting the flight will alleviate their clients’ fear. Relentlessly educating not only clients but the other financial professionals in the industry about the importance of our products and services is critical.
Now, if you’ll excuse me, I have a flight to Hawaii to catch.