5-minute Finance: Put Your Financial Philosophy On Paper

By PJ BYRNE

One of the best ways to create a strong foundation for your practice is to institute a formal financial philosophy that outlines what you expect your advisors to cover in client meetings. This could include how you recommend your employees address life insurance, premiums strategies or critical illness coverage. Having these standards in print holds your employees accountable, making sure they’re consistent in client interactions while also encouraging them to confidently express their professional opinions. With just a few written standards in place, you can ensure quality in all areas of your practice and set the tone for client expectations as well.

Set Client Expectations

Oftentimes clients only request specific coverage for a product they think meets their needs, but it’s up to us to make sure the client is well informed to their options instead of simply taking a product order. As part of your philosophy, establish which type of policies and coverage your advisers are minimally obliged to address with clients. This way, if a client only asks for the bare minimum of life insurance, you’ll be able to define what you must share with them and explain why.

We always tell clients it’s our duty to inform them proactively and make sure they’re well-educated on all of their options so that they’re adequately covered in the case of an unfortunate event. This way, if there’s an injury or death, they know their family members will be able to continue with their daily lives and keep up their standard of living. Our required minimum standard defines what coverage would clear family debts, cover funeral expenses, provide an ongoing household income until the youngest child becomes independent and cover the children’s schooling through high school.

Incorporating a minimum standard of advice also educates clients about coverage that might not be as popular or that they don’t realize is a needed option, such as trauma or critical illness coverage. For example, many clients may not know that critical illness insurance has the highest chance for a lump sum claim. Even if clients don’t purchase our recommended coverage, we’ve at least made sure they’re well informed for whatever life throws at them.

Remain Consistent And Confident

Employees are less likely to forget a detail or skip a product with a written reminder in front of them. For example, many advisors won’t talk about long-term level premiums because they’re concerned about their affordability or they’d rather recommend the cheaper stepped ones which may mean the client pays more in the long term. However, we should always remember that it’s up to the client to make this type of informed decision, so we require employees to discuss the benefits and negatives of all different premium levels. This helps them remain confident that if a higher premium is right for that client, that’s what they can and should recommend.

Financial advisors are sometimes treated like insurance vending machines instead of experts who can provide holistic well-rounded advice. A financial philosophy gives your employees the confidence to back up their recommendations, the opportunity to address concerns as needed and the permission to provide the client their professional opinion on all areas of insurance available.

Honesty Is Policy

With an established financial philosophy, you and your staff can have the same necessary, honest and upfront conversations with anyone who walks through your door. I’ve found that clients appreciate the transparency, and they recognize the philosophy is in place because we genuinely care about them and believe in what we do. At the end of the day, it’s the client’s prerogative to decide which coverage they want to purchase, but it’s our job to share our knowledge to put them in a better place.

PJ Byrne leads the Mr Insurance team in Brisbane, Australia. He has more than 19 years of industry experience, is an MDRT Life and Qualifying member and a Top of the Table qualifier.