Financial Advisors

Rethinking an Age-Old Risk Management Tool

There is a deep seated bias against “insurance” and insurance products in the mainstream investment advisory and RIA community. While there are many quality insurance products and insurance professionals that properly employ them to address client financial risks, there are valid reasons and some history that have hardened RIA mindsets against them.

Hearing the word brings to their minds what they see as some problematic categories of insurance like variable annuities, long term care, and indexed insurance products with the immediate negative connotations of “exorbitant fees”, “over slick marketing”, “misleading promises or improper uses” and “sleazy sales practices”. There seems to be a visceral reaction to those products as having an almost antithetical positioning from their core value proposition and brand. The last thing they would ever want to be perceived as doing is “selling insurance”!  

Unfortunately, in today’s world of hyper-competition and increasingly holistic financial services offerings and business models, that stance may increasingly be untenable. Taking a strategic position of adding carefully chosen and applied insurance products to their current value proposition can be truly differentiating. The truth is that any product can be misused or inappropriately sold by some but that does not change the inherent benefits of the product if it is properly applied to address an important client need.

Proactively correcting some of the perceived sins of the past by making sure these products are properly applied as part of a thorough financial risk management plan would also competitively position the advisory firm, especially in the High Net Worth marketplace.

Practically though, taking a wealth management planning approach with insurance may seem like a daunting jump for some advisory firms. Luckily there are firms building bridges to connect advisory firms to this opportunity by building awareness and practically guiding advisors on how to utilize and integrate insurance solutions to offer a more comprehensive wealth management tool kit and further their competitive positioning to grow their firms.

To better understand the substantial potential and easy glide paths available for advisory firms to practically add and implement a fully turnkey insurance program to their firms, we reached out to Institute member Matt Meyer, Co-Founder of The Blueprint Insurance Services that bills themselves as a premier insurance partner for RIAs and truly comprehensive financial advisors.

Hortz: Actively working with advisory firms throughout the industry, what have you uncovered that is preventing some of them from seeing the strategic opportunity and expanded competitive positioning that insurance products can offer them?

Meyer: There are several reasons why advisory firms may not identify the strategic opportunity of using insurance to be more comprehensive and competitive.  Primarily, they typically believe the insurance process is extremely cumbersome (too much paper, time, underwriting), along with too many product choices, lack of indepth product knowledge, and not enough product transparency.  Structurally, to some degree because biases exist against the products, many advisors are not licensed to sell insurance and/or will not accept commissions (like fee only advisors). They also don’t have the right team in place to make sure their clients are properly communicated to about the process itself. They may see the need but don’t have an insurance service infrastructure to maintain their quality service brand to their clients in this area.  Ultimately, they don’t want to jeopardize their client relationships with something that is not core to their business.

Hortz: How have you been trying to address changing this mindset? What needs to be done?

Meyer: We have developed multiple service platforms that we have specifically designed to help advisors address the obstacles we just discussed.  The end result is offering advisory firms a turnkey, easy way to offer expanded, high quality, relevant, risk management planning solutions to their clients.

We start by learning the advisory firm’s business so we can tailor insurance education and coaching on how to best apply the right insurance tools to address the specific client needs of their client base. The key here is that we do not train how to sell the insurance product but to realize the solution sets they represent so advisors are offering relevant solutions, not selling insurance.

We then provide a simple easy process to introduce conversations and questions into their existing client discovery process all focused around family wealth management goals and needs.

Most importantly, we created a full turnkey back office support program - from product selection, point-of-sale support, application support, underwriting, ongoing servicing. This provides the advisory firm with full service, private label turnkey program of their new insurance offering that is part of your proprietary value proposition and firm capabilities.

Lastly, we work with insurance providers that increasingly are offering no commission insurance products to address fee only advisors or we can act on an outsourced basis to process the appropriate business with the referred client.    

Hortz: How is your firm and approach different than other IMO and brokerage general agencies?

Meyer: Our focus is 100% focused on supporting advisory firms and the RIA channel which is unique in our space.  We understand their business and integrate into their process with client discovery documents and client conversations pieces that are focused on their firm culture, business processes and how to seamlessly integrate the insurance conversation into their practice. These carefully designed and specific client experience objectives differentiate us in the insurance marketplace. 

Hortz: How does all this relate to not “selling” insurance products?

Meyer: We typically start the engagement by collecting data about their clients’ current insurance portfolio (assuming they already have a policy). This approach allows us to conduct policy reviews and identify if their client is in a good position or they can enhance what they currently have.  This approach is a “review” and doesn’t involve selling anything new but merely looking at their current risk profile.

Hortz: Can you explain how you used technology to help implement insurance solutions for advisory firms?

Meyer:  As mentioned before the insurance process can be cumbersome and involve paper.  We have developed a paperless platform (Tick’It) for advisors to conduct all insurance transactions electronically with minimal effort from the advisor.  This platform allows the advisor to track and view any opportunities we are working on for them.  It has made conducting insurance business a seamless experience.

Hortz: Can you share with us what does success look like for advisory firms who make that jump?

Meyer:  Our most successful partnerships are those that allow us to actually look at their clients and very strategically approach them with specific planning solutions.  Proactively uncovering more financial needs and helping implement immediate solutions has only strengthened the client/family connection with the advisory firm that has led to engaging more family members, gaining more referrals and further building trust.

Hortz: What best advice can you give RIAs and other advisors on why they should rethink and start positioning a select group of insurance solutions as a strategic part of their growth and high net worth client engagement strategies?

Meyer: Our message is simple.  We believe that the new age of advice means being comprehensive with clients.  The more services an advisory firm offers, the more stickiness they will have with their clients and the less likely that client will go down the street to talk to another financial professional or multiple financial advisors.  Most importantly, we believe it’s doing what’s right for the clients by providing a full service, comprehensive financial value proposition. 

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Bill Hortz

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.

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