Producers Web Trust Project
Earning trust before commissionArticle added by Rodney Ballance on January 11, 2012
Rodney Ballance

Rodney Ballance

Branson, MO

Joined: September 22, 2011

Oh how I wish we could point our fingers at some outside force or marketing conspiracy that has turned the world against us. It would be much easier to take if someone else had caused us to be among the lowest ranked professions in regard to trust.

Please indulge me for a moment as I take your thoughts back to a simpler time. Let your mind go back with me to black and white television, a time before the Internet, cell phones and even faxes. Think, if you will, about the time when television shows were about family values and promoted personal responsibility.

Back in the day when father knew best, the insurance industry was a highly respected industry where agents were looked up to by the public, and trusted for their knowledge and guidance in all matters of finance. Whole life insurance was used as a safe and predictable savings tool by some of the wealthiest people in the world, because of solid returns and tax advantages. It was the perfect bookend to their financial portfolio, implemented by professionals who understood exactly how to make it work to the client’s benefit.

What a stark contrast we see in how our industry is perceived by the public today. When people hear the phrase life insurance today, they run the other way, or have visions of some troll digging into their pockets for yet another monthly bill they have to pay.

Life insurance is a controversial phrase that pits the termites against the traditionalists. This ever growing debate is fueled by the entertainers on radio and television, who promote their one-size-fits-all philosophy to people who don’t take the time to educate themselves on how financial tools really work.

Oh how I wish we could point our fingers at some outside force or marketing conspiracy that has turned the world against us. It would be much easier to take if someone else had caused us to be among the lowest ranked professions in regard to trust.

The truth is, we agents and the companies we represent allowed this dramatic decline in how the public views our chosen profession. Over the past four decades, we have succeeded in confusing, and often alienating people from even wanting to discuss life insurance as a financial tool.

Back in the day of “Father Knows Best,” a popular television program from 1954-1963, people like Walt Disney were using whole life insurance policies to fund their dreams. They were able to realize those dreams because their trusted insurance agent understood advance strategies and effective uses for those time tested financial tools.

One reason I used this TV show in my thoughts is because the father, Jim Anderson, played by Robert Young, was a life insurance agent in the show and was an obvious community leader. Programs in those days reflected the real perception of people of that time.
The basic insurance tools haven’t changed, but the number of agents who truly understand and are able to implement those strategies has been declining every year. More and more agents are taught that earning compound interest or dividends from their participating whole life insurance policies is just too boring.

These agents teach and believe that people must have money in mutual funds or indexed or variable products if they want to outpace inflation. Complex graphs and charts provide entertaining fodder to unsuspecting clients who have fallen for the promise of pie in the sky returns.

These agents have worked hard to complicate a once simple strategy of saving. Companies have added to the lack of understanding by playing leap frog with one another in introducing more and more complicated products that may have a feature of safety, but all too often leave more room for disaster than protection.

My case is proven by the introduction of universal life insurance. Even though I like it when used correctly, it was once thought to be the greatest financial hybrid in history, but caused more ill will against our industry than any other single product ever launched.

Sold all too often by new salespeople seeking big paychecks and being recruited by companies to sell to their friends and families, these policies became the whipping post many of us would have to be associated with for years to come. Most salespeople had no real understanding of what could happen when those policies were sold at minimum premium, projecting ultra high interest rates for perpetuity.

This one product gave a megaphone to the once small voice of the people promoting the sale of term life insurance “termites” as a fix all for people just wanting to cover the potential of an untimely death of the breadwinner. This philosophy quickly grew legs when it was coupled with the promotion of buying mutual funds as a way to earn high returns in the stock market. Buy term and invest the rest was born.

As people were receiving letters from insurance companies telling them that the policies they bought from their nephew, who was no longer in the business, were going to lapse if they didn’t pay more premiums or reduce the benefit, that voice grew even louder. Buy term and invest the rest!

In 1980, Ted Benna introduced the world to a little known tax loophole in the IRS code, Section 401 subchapter (k). The financial world would never be the same, as people rushed to the new breed of insurance professional who now could help them with investing pre-taxed dollars in mutual funds with the hope of double digit growth.

Once again, the hype of this program was a loud calling to millions of unsuspecting, hard-working Americans who just wanted to save some money for retirement and protect their families. Time after time, these same people saw their quarterly statements look more like a roller coaster than a savings graph.
High commissions and marketing strategies by companies fueled the fire as corporate recruiters blanketed colleges and universities searching for new representatives to sell their wares. Recruiting bonuses and all-expense paid trips caused some managers to turn a blind eye to what was really best for the clients, and more toward building their sales teams.

Just as the perception of universal life insurance as a trusted product has diminished and whole life has come to be viewed as boring and old fashioned, mutual funds and indexed products may also be seeing their demise as the tool of choice for many.

It’s true that ours is a cyclical industry. The pendulum swings back and forth, but two things remain constant: mathematical equations that prove ideas such as compound interest and the rule of 72, which gives a general idea of how long it takes to double your money.

And the fact is that trust is earned. People will always do business with people they trust, even if they don’t understand the products they’re buying. There will always be another new and better financial tool hitting our alert button. There will always be companies recruiting and building teams of people they know will not be around for the long haul.

I hope that those who read this article will focus less on the hype of new marketing programs and more on building strong financial foundations, using time tested and proven financial tools. When you don’t have to go back to a client and try to explain why they lost money, but instead are able to share the excitement of how much they have earned, you build trust.

As these folks hear the horror stories about others who are losing money through risky investments or the latest financial fad, they will tell others about their financial advisor. They’ll tell others that their insurance agent truly knew best. You will then become a trusted advisor and a community leader.

Sometimes to find the way for the future, all we have to do is look far enough in the past. Robert Young was a fabulous actor in "Father Knows Best," but serves today as an example of exactly what the public is searching for, and what our industry is in great need of.

Trust and respect aren’t always cool terms to use, and traditional whole life insurance isn’t always the sexiest tool to discuss, but coupling these together in your practice for 2012 could be the turning point you’ve been searching for.

When people are talking about you as a professional, do they say (your name here) knows best? If not, make 2012 your year to make that happen. Focus on earning trust instead of commissions, and the money will follow.
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