How to target the high-net-worth client
By Daniel Williams
What is the biggest roadblock you have to locking in high-net-worth clients? Contributing Senior Market Advisor writer Ed McCarthy is researching a story on that topic for a feature story in an upcoming issue of SMA.
The following are two of the key ways McCarthy has identified so you can lock in on that wealthy prospect.
Getting more mileage with hybrids
Wealthy clients often hold large cash balances. But with interest rates so low, they’re more likely to consider options for leveraging their liquidity. Jonathan Schwartz, CLTC, owner of got LTC? LLC, Westwood, N.J., says linked life long-term care insurance products appeal to prospects in a low-rate environment.
“If you never need the long-term care, then there’s a death benefit going to a named beneficiary tax-free like any other life insurance product,” he says. “In today’s economic environment, the reality is if a person has got money sitting in the bank or money market or a CD, they’re earning less than 1 percent. For a typical 65-year-old female, the leverage is 2 to 1 on the (contract’s) death benefit, so where else is the client going to get a 100 percent return on their money?”
Go through the gatekeepers
Referrals from wealthy prospects’ financial advisors have always been one of the best sources for new LTCI business. Kerry Peabody, CSA, CLTC with Clark Insurance, Portland, Me., gets most of his LTCI business from other financial advisors.
“The harder sale is the advisor because once the advisor sits down and encourages the client that this is something that they need to be educated about, half the battle is done with the client,” he says.
Peabody often focuses on how long-term care expenses can affect the healthy spouse.
“You have to demonstrate, even for a high-net-worth client, how quickly they can have a significant impact,” he says. “Most of my clients are couples. In my opinion, you’re not going to have much success selling long-term care insurance to a wealthy single male because, frankly, he doesn’t care, and it’s never going to happen to him. If you’re talking to a husband and wife, you need to make them understand how a long-term care need will impact a healthy spouse.”