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Holistic Planning is “In”

OctNov2016-Conklin

Fact-finding has always been very important in the overall sales process. Today with the DOL fiduciary rule entering the scene, if you are legally required to serve each and every client’s best interests you need to have a reliable way to uncover and document clients’ financial issues and goals. Oftentimes, the challenge lies in helping your client uncover what they really want.

Following are some examples that can help lead to more fixed annuity sales and a better fact-finding process with your client.

Uncovering Client Wants: What’s Most Important?

Many people have their retirement savings in a place they don’t really want it; they just don’t know it yet. Your client may have his or her retirement savings mostly in stock mutual funds, or alternatively in bank accounts and money market mutual funds that are paying essentially no interest today. Usually, a client is happy with the choice that he or she has made. In fact, clients are often happy enough that they may not even want to hear about alternative options.

Regardless, I ask each client a fact-finding question, such as:

When deciding where to store the money you are saving for retirement, what is the single most important aspect for you?

  1. Making sure your money is safe
  2. Having the potential to earn high interest or growth
  3. Being able to move all of your money at any time

I have found that the great majority say they want (1) safety. Then I ask which one is the second most important factor? They usually say (2) interest/growth potential. So, their wants are (1) safety, followed by (2) interest/growth potential, and thus, (3) liquidity is the least important priority of these three for them.

Now let’s reconsider where a client has his or her retirement savings today:

When a client’s retirement savings are in a stock mutual fund, what does it give them? (2) interest/growth potential and (3) liquidity. A client’s money has the potential to grow relatively quickly, and he or she can move their money whenever they want, but their money isn’t necessarily safe in the sense that, if the market declines, most likely so does their retirement savings’ balance. Thus, without thinking about it, your client sacrificed their biggest want: (1) safety.

When a client’s retirement savings are in a bank account or money market mutual fund, what does it give them? The answers here are (1) safety and (3) liquidity. Chances are they are very focused on (1) safety, but remember that they said they would prefer (2) interest/growth potential over (3) liquidity. Here again, there is a mismatch between what they have versus what they want.

To help a client visualize what he or she has versus what they want, draw a picture like the one below. I ask the client if he or she would agree that they want a new solution that matches their priorities, which provides (1) safety and (2) interest/growth potential, with less of an emphasis on (3) liquidity.

OctNov-Conklin-chart

If a client agrees, then you not only have his or her permission, but also their desire to see what can better satisfy their needs. As you know, a fixed declared rate annuity or fixed-index annuity often fits their preferences.

Uncovering a Client’s Wants: Why There?

Another anomaly that you will often see is when a client has money in a bond mutual fund. After asking him or her to rank their three priorities, I’ll ask my client another fact-finding question, such as:

Why did you put your money there?

Quite often a client will say they wanted a portion of their money to be safe, and a bond mutual fund is what their advisor suggested.

Then, I ask the client if it sounds safe that their value fluctuates up or down every day, and that if interest rates rise rapidly, their bond mutual fund could rapidly fall in value. Of course, that doesn’t sound safe to them, so they become open to hearing about something safer, as long as it still satisfies their desire to earn the best rate of interest that they can achieve consistent with their desire for safety. Again, often a fixed declared rate annuity or fixed-index annuity better fits their preferences.

Uncovering a Client’s Wants: To What End?

In any endeavor, it makes sense to plan with the end goal in mind. Your client is saving for retirement to achieve something, so what is that end? A good fact-finding technique is to ask a client:

What are you ultimately trying to achieve with your retirement savings?

  • Are you trying to create a steady, reliable income in retirement?
  • Do you want your income to be guaranteed to continue for the rest of your life?
  • Do you want to be able to know right now what income you will be able to rely upon, without guesswork?

Often, the answer to all three questions is yes. If that is the case, then you can ask your client if his or her current strategy accomplishes each of those goals. If a client is relying on some of the most common places where people put retirement savings – such as mutual funds or bank accounts – the answer to each goal will be no. So, the client now sees what they currently own isn’t what they want.

To help a client visualize what he or she has versus what they want, draw a picture like the one below. I ask the client if he or she would agree that they want a new solution that matches their priorities: one that delivers steady, reliable income that is guaranteed to continue for life and one they can know right now, without guesswork.

OctNov-Conklin-chart2

If a client agrees, then once again, you not only have his or her permission, but also their desire to see what can better satisfy their needs. As you know, a fixed payout annuity or an annuity with an income rider often fits their preferences.

When it comes to fact-finding, it helps to cast a wide net. Quite often, good fact-finding can result in sales of all types of asset and insurance solutions.

Fact-finding is a winning proposition all around. Your customers win since they end up with products that better meet their wants and needs. The regulators win since you end up serving each and every client’s best interests by reliably uncovering what they want. And, of course, you win because you make more sales and gain satisfied customers.


Chris Conklin Chris Conklin is vice president of individual annuities at The Standard, where he has full P&L responsibility for the individual annuities line of business. Besides being a Fellow of the Society of Actuaries, Chris is a licensed agent, has sold insurance and annuities, and co-owned a national marketing organization. For more information on The Standard, visit www.standard.com.

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