There’s Plenty Of Life Out There For Advisor-Prospectors

Kevin Cox, an advanced sales consultant with Lincoln Financial Distributors, has a message for financial advisors who complain that no one’s buying life insurance: Clam up, you’re just not prospecting hard enough.

Cox has answers for advisors with clients in more than a dozen categories, from professionals looking for higher tax-free retirement income, to widows and widowers who are trust beneficiaries, to clients who own survivorship insurance.

For advisors attending Cox’s session on “actionable concepts using life insurance” at a clinic sponsored by the Society of Financial Service Professionals on Thursday in Philadelphia, a wealth of advanced sales strategies poured forth.

There was advice on how to structure “Survivor Roths,” when to execute opportune 1035 exchanges, what best course of action to take in the matter of charitable gift replenishments, and how to proceed with credit shelter trusts.

Cox said that advisors with clients owning concentrated stock positions should recommend a second-to-die life insurance policy.

Don’t get bogged down in details, though, Cox said. The secret is knowing how to communicate the value of the life insurance contract.

Soon-to-be retired corporate titans hold on to their company stock. These executives don’t like to sell their holdings, either out of nostalgia, because they think they know everything there is to know about their former employer, or because they want to pass the holding on to heirs.

Advisors who think they can convince former industry captains to sell the stock in exchange for a more balanced allocation within the portfolio are beating a dead horse.

The big kahuna ain’t selling, period, especially not the one living in a $1 million home and sitting on $13 million in stock.

Cox has a better idea: Recast the numbers in terms of how the policy can grow the share price of the stock the executive owns. OK, so Mr. Big may have to sell a few shares of his beloved holding, but it’s a small percentage.

The details of how much stock to sell and how much second-to-die coverage to buy are best left to Cox to explain, but suffice it to say that corporate executives with tens of millions worth of Coca-Cola or General Motors holdings amassed while they worked for the company aren’t afraid to talk about life insurance.

To these captains of industry, “insurance isn’t a foreign substance,” Cox said. How can financial advisors get to them?

“Talk to the attorneys and accountants you know,” he said, because the concentrated stock holdings are out there.

For lifetime professionals and entrepreneurs seeking higher tax-free retirement income who’ve maxed out on their employer-sponsored retirement plan, Cox said advisors should bring up supplemental retirement planning.

Advisors just need to make sure these prospects have excess cash flow and excess capital. Plant a seed or two in a prospect’s mind over coffee.

How about making an extra $5,000 or $10,000 a month in retirement? How does that sound? You’ve maxed out your qualified retirement options, so you’re still headed for a golden retirement. Let’s look at life insurance. It’s tax-free, remember?

But Cox says advisors need to leave the spreadsheet and the illustration baggage at home. Put down a few numbers to share on a one-sheet legal pad, nothing more. Cox’s most important piece of advice is for advisors to know their numbers cold.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].