The majority of financial advisors
are not confident providing life insurance to their clients.
According to Saybrus Partners Inc., who recently surveyed 131 broker-dealer registered reps, RIAs and dually registered advisors, 30 percent of financial advisors do not regularly provide life insurance to their clients, and over half of them (52 percent) describe their attempts to dish out life insurance-based advice as not very successful. Why? Well, most feel overwhelmed by the current dynamic environment and the complicated processes involved.
Here are the respondents’ answers when asked about the most intimidating part of understanding and selling life insurance:
- “the variety of different types of policies and riders and how they fit specific client needs” (37 percent)
- “the abundance of paperwork required to sell and issue a policy” (25 percent)
- “frequent product development changes” (13 percent)
- “regulatory changes” (9 percent)
- “understanding combination products that address multiple needs (e.g. LTC) (8 percent)
- “leveraging policies for uses other than protection of heirs and/or income (e.g. succession planning for business owners) (8 percent)
Forty-four percent of the advisors polled noted that no more than 10 percent of their clients had asked them about life insurance over the past three years, which may be the cause behind such a lack of overall understanding. If clients aren’t asking for it, and if the breadth of knowledge required is overwhelming and time-consuming, many advisors may not think it’s worth it to try and become more successful with these products. But does this justify the fact that many financial professionals are failing to discuss life insurance with their clients, even if it's just to review their existing policies?
Investors are looking for stability, especially in this economic climate. What if the best solution for a client involves a life insurance-related product? Is it more efficient for these advisors to consult outside life insurance specialists to aide them in advising their clients, or should more financial professionals learn the life-insurance-selling ropes?
Of the 30 percent of financial advisors who don’t regularly provide life insurance to their clients, nearly half (49 percent) reasoned that “selling life insurance detracts attention away from their practice.” Could that be because they're choosing not to incorporate life insurance selling
into their practices in the first place?