How should advisors adapt when clients believe nothing will happen to them and they don’t need to protect their income? Is it necessary to scare them, or is it better to take a lighter approach?
In a conversation at MDRT headquarters before the pandemic, four MDRT members discussed their strategies and identified the types of questions that are too aggressive, too soft and just right.
Mitchell: I don’t know whether it’s really scaring them so much as just making them realize the implications of not covering their income. So if you’ve got X amount coming in each month, and if that X amount stops coming in, I usually ask, “Well, how long are you OK with that? When X stops coming in, how long can you live without running into a major problem, and where would you go and get the money?”
It’s more drawing their attention to it in a very focused way than really scaring them. It could definitely be scary, but I just bring their attention to really what would happen. I sit there and say, “OK, you don’t need disability insurance, no problem. So you need X amount per month. Show me where you’re going to get it.” And I sit there with their net worth statement and say, “OK, are you going to take it out of your retirement vehicle? How long would that last? How are you going to retire?” Just sitting and having a real discussion, looking at actual numbers, is easier than telling scary stories.
Genoff: I think it’s too soft just to ask the question whether they feel they have appropriate insurance in place. A lot of people will think that having $100,000 of life insurance is enough for their family. A lot of people will look at a sum of money like that and think they’ve hit the jackpot. But they’re not looking at the long-term implications.
They’re not understanding that we aren’t just talking about one lost year of income; we’re talking about potentially 30, 40 or 50 years of lost income. Once you explain a bit further what happens if one of the significant people in that family is not around anymore, then they worry perhaps a little bit more.
But I think that asking those closed questions like “Do you have insurance?” or “Do you have appropriate levels of insurance?” — quite often people will just say yes or no to that, and they won’t really want to go any further.
Green: Asking, “Don’t you care about your family?” is way too hot. I get them involved in the computation by asking them, “So how much income do you think you could draw, or your family could draw, if we delivered a check for $250,000 tomorrow?”
Really understanding their response, and then showing them where maybe there’s a gap in what they think can happen and what really could happen from a planning perspective often leads them to understanding. It provides an opportunity to continue the conversation or get back on track to a proper amount of coverage to transfer that risk rather than retaining it.
Mitchell: One of the too-hot selling points that I heard once that I would never do is an individual said, “My wife will be fine. This is the amount of income protection I want to have.” And the advisor said well, “Let’s get your wife in here and say that in front of her.”
I think that was a little on the too-hot end. So maybe just going through really what the situation would be if we lost the income: Where would we get the money? “We don’t have a place to get the money today. So let’s insure it. And then when we do have a place to get the money, let’s decide whether we continue the program or not.” When you bring different situations in and you’ve got a family, you want to treat that with respect. You don’t want to say, “Well, now your kids are going to be destitute.” But you also want to say, “What do you want for your kids? Let’s make sure that happens.”
Green: It’s perfectly appropriate to be bold and just call them out a little bit. A question I love to ask is, “When you had that conversation with your spouse, how did the discussion go?” Oftentimes, there hasn’t been a discussion. And then that creates conversations between me and the client that often go in a different direction than it would have.
Foxx: I think clients respect us more when you have that direct approach. Not to scare them but just to be realistic. One of the questions I asked my first few years, after painting a gloomy picture, was, “Do you care enough to change that?” I think that was a bit abrupt and direct, so I’ve softened the language a little bit. And now I ask them, “After painting this picture, we all agree that this is what it would look like. How does that make you feel?”
Based on their body language and facial expression, I can see that it’s being received a little better. It’s a warmer approach. In most cases they say, “I don’t feel too good about that. Would you present ideas to me today?”
Genoff: Clients need an emotional attachment to what they’re buying. When it comes to something so intangible like insurance, the way Everett is asking has reshaped that question about how they’re feeling.
Clients will become very defensive if you start to push the wrong buttons and you’re playing on the wrong emotions. You’ll see them folding their arms. They’ll move back in their seat. They’ll potentially look at their partner in the room and give them the eye. And then you know at that point, potentially you’ve gone too far, or you need to find a way to get them back into the right frame of mind.
Mitchell: It’s important for the client to see you as not an opponent but a teammate. And to be sitting on the same side of the table as them just looking at their financial plan, as if you were them.
Listen to the full conversation at mdrt.org/podcast.