Make a difference and watch your sales grow

By Lew Nason

Insurance Pro Shop


Over the past two decades, many of the major insurance companies have been moving to and focusing on the more affluent markets. They want to believe they can make more and larger sales in those markets. Thus, they'll need less agents, which means they'll spend much less money on recruiting and training and they'll make huge profits. Yet, they appear to have forgotten whom they served for the past 100-plus years, and what made them the mega-companies they are today. According to LIMRA (Life Insurance Marketing and Research Association) the middle-income marketplace is wide open. And, in our opinion, this provides an exceptional opportunity for those few insurance agents, financial advisors and financial planners who will make the effort to learn how to truly help middle-income families to solve their financial problems.

Understanding their problems

This change in focus on the part of the insurance companies, is one of the main reasons why so many middle-income families are struggling with too much debt and a lack of savings. It's because these families no longer have anyone helping them to identify and establish their financial priorities. Consider that everything they see on the TV, read in the newspaper or get in the mail wants them to spend more money to get what they want right now, instead of what they actually need. Studies show the average consumer is exposed to more than 3,000 marketing messages every day. In the last decade, solicitations jumped from 1.52 billion annually to 4.29 billion.

And, it not just the insurance companies who've changed their focus. Banks and other financial institutions that used to encourage savings are now pushing the use of credit cards, because it's where they make the largest profits. They've made it extremely easy to qualify for credit, so you can get whatever you want right now.

Consider these staggering statistics:
  • The average consumer debt per household in the U.S., not counting mortgage debt, is about $14,500. This is especially noteworthy because before the 1930s, most middle-income people had no major debts.

  • At an average interest rate of only 15 percent, consumers are paying more than $2,000 in interest each year.

  • Credit card debt in America has tripled from $238 million in 1990 to over $850 billion today.

  • The personal savings rate in the United States has dropped from between 10 percent and 11 percent in the 1970s to just under 2 percent since 2000, and in 2005, it dropped to a -1 percent.

  • Some 1.6 million U.S. households -- one of every 35 -- filed for bankruptcy in 2007.
-- "With personal savings rates at one of its lowest rates ever, not only are secure retirements in jeopardy, but also many Americans are one medical emergency or layoff away from financial disaster."
* "Many ways to boost U.S. personal savings," By Dar Haddix, 4/1/2005

-- "There are currently as many as 22 million U.S. families that lack a basic checking or savings account and who are often forced to cash checks through such services as check cashers, which charge high fees."
* "Many ways to boost U.S. personal savings," By Dar Haddix, 4/1/2005

Solving their problems

As an industry, we need to get back to helping middle-income families. We need to help families look at and talk about the financial problems they are facing now and will face in the future. It's about helping them to re-think and establish their financial priorities; deciding what's really important to them now and in the future.

A change in philosophy

Unfortunately, most agents and advisors are being taught to tell people they need to invest in (or buy) "this or that" by taking additional money out of their current budget. The problem is that many middle-income families are only one or two paychecks away from going bankrupt. They don't have any savings or even an emergency fund (except for their credit cards). We need to change our focus and start helping middle-income families find the money to:
  • Reduce or eliminate their consumer debt

  • Maximize the amount they can invest from current income

  • Reap the upside of the market, while guaranteeing the safety of their investment principal

  • Position their assets to increase their eligibility to qualify for college financial aid

  • Minimize their income taxes

  • Position their money to provide more current liquidity

  • Maximize their investment returns (with less risk and tax deferral)
And, in many cases, we can help them do it all without taking additional money out of their budget or changing their current lifestyle.

Start helping middle-income families

Is there any question that most middle-income families are spending their money in the wrong places? With all of the advertising messages they receive today, they are focused on living only for today. And, many of them are sacrificing their and their children's futures. Over the years, our industry has added to their problems. The push by most financial institutions is just to make money. They'll train you about their products, but not how to market your services to attract the right prospects to you or make it easier for you to close sales.

Consequently, in order to survive most agents, advisors and planners have been selling policies with low deductibles and all sorts of unneeded, expensive riders along with supplemental policies that aren't really needed. They're telling people to put their safe money in the stock market because it's an easier sale. They aren't telling their prospects and clients about quantity discounts and price breaks. They're not helping people properly use the new types of home mortgages. Their clients are losing money in the stock market, disqualifying themselves for the free money available for college financial aid and are paying more income taxes than necessary. This is keeping many families from saving money and building a secure financial foundation. In fact, it is pushing many families into bankruptcy. Is it any wonder that people are suing us?

Note to insurance companies, financial institutions, marketing organizations and all agencies: If you want to solve your compliance and regulatory issues, then start training agents, advisors and planners on how actually to help people. And, start supporting and promoting the industry organizations like NAIFA and the IARFC. The cost will be a lot less than the cost of being sued. It's the right thing to do, and you'll make a lot more profits.

Make a difference and watch your sales grow

It's time for each of us to step up and start making a difference in our clients' lives instead of just making a sale. The truly amazing part is that if you learn how actually to help people instead of just pushing your products, you'll make a lot more money. People today are looking for real help and not just another salesperson who wants them to spend money they don't have!

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