Producers as Dream Keepers

By Steve Parrish
InsuranceNewsNet Magazine, December 2011

We’ve all heard people make some version of this comment: “I don’t trust doctors (or lawyers or plumbers or financial professionals), but mine does a great job.”

This common consumer reaction leads to the marketing adage that consumers are typically unhappy with advisors, unless you’re talking about their own advisor. With the uncertain economy, how people feel about their financial professional can have a direct effect on how confident they are about the financial future. And it represents     an opportunity for advisors to market themselves.

Recent research suggests that whether an individual has an advisor-or-not significantly affects whether that person is taking steps toward retirement. Plus, it also affects how confident the person is in being able to retire successfully. The results from the most recent Principal Financial Well-Being Index are surprising and encouraging for financial professionals. The survey was conducted by Harris Interactive between April 28 and May 9, among 1,134 employees and 523 retirees and it yielded the following conclusions: 

• There is a significant disparity between workers who use an advisor and those who do not: 48 percent of workers who use an advisor believe they are saving enough money to retire comfortably, compared to 25 percent for those who do not use an advisor.

• Workers who do not use an advisor are significantly more likely to indicate they have not yet planned for retirement (28 percent) than workers who do use an advisor (11 percent).

• Of those who use an advisor, about two-thirds (64 percent) have worked with their advisor to establish goals for their financial security.

• Around half of employees (50 percent) who work with an advisor have created a plan to help achieve their financial goals.

The bottom line implication of this survey is that people don’t always know they need an advisor—but if they have one, they are more confident about their financial future.

This July, the Conference Board Consumer Confidence Index stood at a very low 59.5 (1985 = 100). With confidence so low, it can lead to consumer inaction. Lack of confidence is often a source of inertia. If, however, confidence can be gained through action, the consumer has a reason to act. The above research suggests that obtaining financial guidance can be one way to boost consumers’ confidence in their financial future; this is a reason for action. And this is also an opportunity for financial professionals. 

It should not be a surprise to financial professionals that they can help to boost their client’s confidence in their financial future. Organizing, explaining, allocating and monitoring a financial strategy are the hallmarks of the advisors’ activities. Even in situations where the future is scary, understanding the risk is better than fearing the unknown. But the challenge for the advisor is how to get the client comfortable with the need for guidance.

Dare To Dream

Even though the economic volatility continues, it appears as if consumers are beginning to move away from a bunker mentality. The fact that financial markets are once again functioning, even if at a slow pace, is an indication that consumers are cautiously once again considering their financial futures. In this environment, it is incumbent that the advisor help the client visualize a dream for their financial future. Instead of merely reacting to the woes of the current market, it’s time to once again dream about the future. The dream cannot simply be in the form of spreadsheets and models—it needs to relate back to family, health and retirement goals.

One approach we’ve been offering to advisors is to have them work with clients to make their financial dreams visible. Using a website, the client can express financial and retirement dreams in the form of a collection of pictures. Pictures might be of a vacation home, grandchildren, pile of cash or a clean bill of health from a doctor. The idea is to turn the intangible into the tangible and to get the client to be specific with retirement goals.

The advisor can then take these dreams and start the planning process. If a picture shows burning a mortgage, then the advisor can ask about target dates for retirement of the mortgage, the current balance and so forth. This can help boost the client’s confidence because the dream has been made tangible and specific financial steps can be taken to help realize the dream.

Many people report feeling better after they’ve had their check-up and cleaning at their dentist’s office. But, very few people report that they look forward to a visit to the dentist. In a time when finances are suffering and returns are disappointing, people are similarly unlikely to be excited about seeing their advisor. Who wants to see how much their retirement account has suffered? Even though the survey discussed above suggests these people may be more confident after working with an advisor, who wants to go to an advisor to hear “the bad news”? Advisors need to demonstrate a reason to get together, to share information and to begin planning. Simply stated, they need a reason to act. 

The list below shows some approach questions that can be used with prospects. These questions are meant to pique the client’s interest without establishing unfair expectations. Rather than focusing on “get rich quick” ideas, “mine’s better than theirs” claims or “how to avoid taxes” schemes, advisors can help the client concentrate on the client’s real financial goals. Through questions, the advisor helps the client understand the importance of planning. Instead of having a solution that’s looking for a need, questions help find out what needs truly are keeping the client awake at night. This way, the advisor can help clients picture their dreams and feel more confident about their financial futures.

Below you will find a few questions that will interest clients in planning for their financial future:

• Would you like to feel more confident about your financial future?

• A recent survey reports that nearly half of workers who use an advisor believe they are saving enough money to retire comfortably, compared to only a quarter who do not use an advisor. Are you currently working with an advisor?

• According to a recent survey, workers who do not use an advisor are significantly more likely to indicate they have not yet planned for retirement than workers who do use an advisor. Have you started to plan for retirement… would you like to start planning?

• It has been a rough time for people’s finances. Do you feel that it’s now time for you to dream again about your financial future?

• Some people report being confused or frustrated by financial planning tools, and that this causes them to delay planning for their financial future. Would you be interested in a do-it-yourself tool to help you picture your financial dreams?

Steve Parrish, JD, CLU, ChFC, RHU, is a national advanced solutions consultant with the Principal Financial Group, Des Moines. He can be reached at [email protected].

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