Advisors Need a Bright, Shiny Shingle


By Linda Koco

There is periodic discussion in insurance circles about complaints that many producers never or rarely contact middle-income customers.

I’ve heard some of this grumbling from women who ask me whom to contact, since no one has contacted them. Some men ask too. Sometimes, the questions are from people who are closer to upper income than middle-income, depending of course on how you define those categories. So even when consumers move up the food chain, they don’t always have financial professionals seeking them out.

Now Bankers Life Center for a Secure Retirement has published some choice numbers on the issue.  In July, the Center commissioned an internet survey of 1,000 Americans, ages 50 to 68, with annual household incomes of $25,000 to $100,000.

Nearly 60 percent indicated that they do not use the services of a financial professional. Among baby boomers in this group, the large majority (85 percent) said they had not been contacted by a professional who asked for their business in the past year. In addition, 63 percent said they have never been contacted.

Meanwhile, among boomers who did have a financial professional, 25 percent said they sought out the relationship themselves, while only 6 percent said the relationship was initiated by the advisor.

If you’re doing the “hmmm” thing at this point, I’m right there with you. As in, “Hmmm, maybe that is part of the reason why life insurance ownership is falling and why industry surveys keep finding that many mid-income consumers are clueless about insurance.”

Insurance distributors and carriers tell me they are aware of the no-contact problem. However, given the waning ranks of professionals in the field, they don’t feel they can do much about it right now. A common explanation is: “The advisors will gravitate to the markets where consumers have enough money to buy, and that’s the upper-income market.”

But the Center’s survey also found out something else that may stimulate a new way of thinking about this.  The ‘something else’ comes in two parts:

First, those who do use financial professionals generally have more saved for retirement. For instance, 26 percent of middle-income boomers who have a financial professional reported having investable assets of more than $500,000, compared to 5 percent of those without a professional.

Second, and perhaps more importantly, not all of those working with financial professionals start with a high level of assets. In fact, nearly half (43 percent) of the boomers who have worked with a professional for less than two years reported having less than $100,000 in investable assets. But that number drops to 24 percent for those who have worked with a professional for 10 or more years.

Bankers Life President Scott Goldberg’s take is, “Boomers need to take the initiative, reach out to one or more professionals and develop a financial plan for their future, because as we can see, the results tend to pay off.”

That puts the onus on the consumer to locate an advisor rather than the other way around.

Of course, not every boomer will have the wits and resources to ferret out their own advisors. In addition, some consumers end up with referrals to people they don’t like. But in this do-it-yourself era, that’s what is on the table and that’s what some consumers (who recognize they need an advisor) are already doing.

Insurance and financial professionals who serve the middle market, or who want to, might want to build on this understanding. For instance, they can make sure their firms are “findable”—in their town, on the net, via social media, etc. Industry marketers could help too, by spending some advertising dollars on educating consumers about how those who use financial professionals tend to do better than those who don’t, and about how consumers can “locate a professional on our website.”

Viewed this way, the prospecting model turns into is a two-way street, with consumers and advisors “reaching out” to one another. It’s not the same old, same old, but since the one-way street has some potholes right now, maybe the two-way model is worth exploring further.


Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Connect with Linda →

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