Making the transition from salesperson to consultantArticle added by Ed Morrow on April 15, 2013
Ed Morrow

Ed Morrow

Middletown, OH

Joined: October 29, 2005

Last month, I spent an afternoon visiting with a long-time member. After getting past the light conversation about how our friends in different cities are doing, we finally reached the most critical item on his mind.

He wants to have a well-established image as a “financial professional.” He wants to move from a “perceived salesperson” to a “valued consultant.”

How did this labeling evolve? When my friend entered insurance sales with a very reputable old line company, he was conditioned that he should give advice and service away for free. He’d be paid by the purchase of insurance. This was the hymn played daily by the insurance industry — and it is still their music. But he was conditioned. Now that he is dealing with much wealthier families and profitable business owners, he is still continually listening to the same songs.

He asked, "How can I charge fees when I am regarded as a salesman? The organizations I am associated with (a life insurance company and a securities broker/dealer) discourage me from charging fees. I do not manage portfolios, I am not a CFA, so I really do not qualify to be a registered investment advisor. The broker/dealer has that as an option, but unless I become immersed in the stock market, I cannot properly guide my clients in this area.”

“The life insurance executives are constantly urging me to sell more policies — life and annuities, but not critical illness or disability. I know most of my customers (age 45–80) need a periodic insurance review. Their need for insurance has increased, not reduced. They now have goals to support adult children, grandchildren, charities and all are afraid of what the government might do to extract the money necessary to get the government out of debt. I can do a lot of work, spend a lot of time and not end up with a large sale.”

What he wants to do are the following:
  • Deliver carefully prepared plans to guide the financial affairs of his clients and receive a fee.

  • Not manage portfolios or be responsive to the frequent shifts of the market.

  • Be perceived as the primary financial advisor for his families and bring in the services of qualified attorneys, accountants, business managers, realtors and trust officers as the client needs may indicate.

  • Continue business relationships with families to the next generations — those of his clients and of his firm (he is inviting his granddaughter to join as a successor).

  • Sell life insurance, annuities and health coverage, but not be so pressed that he must maximize the sales to get reasonable compensation.

  • Call on local business owners, many of whom are profitable and growing, delivering long-term financial services — not just try to sell a policy.
He never hired a public relations firm, an advertising agency or a media relations expert. He has never sent a simple media release to firms in his area. He has never written or revised articles to build a different image.

His granddaughter is interning with him while completing her university education. She wants to be in a profession that helps people, but the image of a “life insurance agent” makes her very uncomfortable. She wants to deliver advice and service and “help persons of all ages accomplish their dreams.” (That wouldn’t be a bad motto for their firm, would it?)

What am I doing wrong — or what am I not doing?

My response indicated an understanding of his problems and offered a clear assessment of his issues. These are not necessarily prioritized, since they all are important, and all must be addressed.

He has a serious branding problem. In his community, in his target market, he is perceived as “just another life insurance salesman.” He proudly displays certificates for his designations (which he is justifiably proud of), and all his stationery, business cards, brochures and office décor reflect this insurance background. Every year, he sends out announcements about his MDRT status.

He does not distinguish financial analysis from investment advice. He avoids charging a fee for estate planning, retirement planning, insurance needs calculation, business valuation, debt cancellation and business planning because he mistakenly thinks that must involve rendering “investment advice.”

His posture with other professionals is that of a salesman. He does not have or use any “financial consultant” marketing materials. He does not conduct any joint events with others in which he is a consultant, rather than a salesman. For example, he never considered giving the "Journal of Personal Finance" as a financial publication to other professionals.

His public image is that of insurance. He is listed in local directories under insurance. He is a very well educated man, but does not write (or re-write) articles on personal finance to gradually build a new image.

He does not have the mechanical tools. For example, he does not have the paperwork necessary to close a fee-based engagement:
  • a fee schedule or explanation
  • an engagement agreement
  • a satisfaction assurance
  • a plan acceptance
  • an invoice (for business clients)
  • a chart of his planning process
  • a code of ethics (certificate)
  • a non-disclosure commitment
  • a PowerPoint presentation
  • an objective plan structure
  • a business only bank account
  • a means of processing credit cards
  • An invoice procedure for businesses
None of these are expensive or difficult items. Intellectually, he understands all of them, and is quite qualified to employ them. But he does not.

As you read the list of adjustments needed by my friend, I am sure you realized that they were definitely achievable, relatively inexpensive and would require modest effort. The biggest challenge will be that of altering the mindset from salesperson to consultant. But, the transition is definitely achievable.
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