Pro Tips

The New Rules for Approaching Financial Advisors

by Tiffany Markarian

There are a new set of rules for approaching financial advisors and professionals, especially in this COVID environment. Clients are demanding more value and a better experience from their advisor. Fee compression is affecting thousands of advisors and advisory firms. Some financial advisors no longer have individual products or insurance lines as a core expertise in their practice. For instance, some advisors have insurance as an ancillary focus, if they have it at all. Some have chosen to focus on other lines or revenue. Broker/dealers and Brokerage General Agencies (BGAs) stand ready, as they always have, to solve these needs and serve as an objective, consultative resource. The advisory landscape has been evolving for decades, and broker/dealers and BGAs have to evolve their marketing and consulting offerings in turn.

The New Rules for Approaching Financial Advisors

When approaching financial professionals within the broad niches of the advisory spectrum, or working directly with clients across diverse demographic communities, there are a new set of rules that require broker/dealers and BGAs to adapt their marketing and business development approaches.

Traditionally, many broker/dealers and BGAs have focused on the “Ps”:

  • Products
  • Performance
  • Processes
  • Platforms
  • Payouts
  • Premium
  • Pricing
  • Production
  • Placement
  • their People

These are all important attributes and certainly commendable. However, in today’s world, most financial advisors are not focused on your products, your people, your processes, or your exceptional service. These are expected. Advisors are focused on themselves and their own objectives and intentions – meaning they focus on outcomes they want, not on processes that are solely about you.

Merchandisers focus on their products or processes; consultative partners focus on outcomes for the advisor.

The new rules for approaching advisors require broker/dealers and BGAs to adapt their business plan and branding, much like other advisors have adapted their business models.

Articulate Your Value in Outcomes

Traditionally, broker/dealers and BGAs have used branding and marketing messages that appeal to those who are well disciplined in specific product lines or have particular products as a core expertise. This may have worked in the past, but today’s rules require organizations to acknowledge that not every advisor who works with clients has products, annuities, mutual funds, or insurance as a core focus. In these cases, traditional messaging, branding, and brokerage models will not always resonate. Even if an advisor believes in particular products,  focusing only on the “Ps” could actually cost you the chance to do business with them. They may not see you as distinct.

Many broker/dealers and BGAs lead with communicating their value in terms of compensation, product platforms, pricing, etc. They should be communicating their value in terms of meaningful, bottom-line benefits and outcomes. It is fine to mention your people, products, or platforms, but don’t lead with it. You want to lead with outcomes that articulate what distinguishes you in the marketplace. The outcomes you use should speak from the advisor’s point of view, not just yours.

Why Traditional Brand Messaging May Not Resonate

To properly put things in perspective, let’s look at some of the traditional marketing messages financial institutions have used or are still using in their branding:

  • We provide assistance and product offerings that increase your revenue.
  • We have a robust portal on our website for resources.
  • We have a comprehensive suite of financial planning tools, investments, and insurance product lines and solutions.
  • We deliver personal service and relationships.
  • We have start-of-the-art technology.
  • We specialize in impaired risk cases.

Each of the above statements are accurate, valuable, and beneficial services broker/dealers and BGAs should take pride in. However, these messages are all about the broker/dealer or BGA. It is not about the advisor or their clients. Advisors speak in outcomes that are meaningful to them, and the desired outcomes will be different based on the type of advisor you want to work with. The above statements need to be followed by outcomes, such as: “What this means to you”…”and the benefit to you is…”

The above statements can be talked about in your conversations but should not be the lead. Your lead messaging should communicate the outcomes you create. It requires firms to build a new marketing and brand strategy that focuses on researching and customizing your approaches to the niche advisory markets you want to serve. You may need to have a different brand persona for each type of advisor you want to cultivate.

Commissions are Not Always King

There are many financial advisors (i.e., Registered Investment Advisers or RIAs) who choose not to accept commissions in their business model, or are not able to, based on their registration. As such, leading with a conversation about “increasing your revenues” could backfire. If you are approaching financial advisors who do not accept commissions, you’ve just closed the door and positioned yourself as a sales and product merchandiser, not someone who understands the method and manner in which they conduct business.

Products are Solutions, Not the Lead

For many financial advisors, they are focused on advice, not product. As such, you never want to call a financial advisor an “agent,” “producer,” or “broker.” For financial advisors, those terms often imply sales pitches, quotas, or product pushing. If you lead with product, you miss the opportunity to communicate the real outcomes you deliver and solve. Product focused messaging is ubiquitous. It is not distinct.

Articulating your value in terms of outcomes is what makes a firm distinct and earns your seat at the advisors’ and their clients’ table.

Speaking in Outcomes

Speaking in outcomes is about positioning your firm and team as a consultative insurance resource that makes the right people aware of who you are. It is about articulating what makes you distinct from other firms using relevant benefits and outcomes that speak from the specific advisor’s point of view. Positioning helps you avoid being viewed as a merchandiser.

Let’s focus on the messaging and outcomes that resonate with different financial advisors and insurance professionals. It requires broker/dealers and BGAs to research the types of advisors they want to support and discover the outcomes that are meaningful to them.

1. Registered Investment Advisers (RIAs) and Financial Advisors

More and more financial advisors are letting go of commission-based products to focus on fee-driven / advisory business models. As a result, certain investment products or insurance planning may not always be a core focus or expertise in the RIA channel. Some advisors may not want to divert their core focus, so they refer insurance needs to other professionals, or their particular business model does not allow for product compensation. Some may opt for no-load insurance or annuity products. Some will include an insurance analysis in their recommendations, but they may not be able to pull the trigger or place the solutions in-force on their own.

If an RIA is fee-only, they can never accept commissions in their model. If they are fee-based, depending on their licensing, they may be able to accept commissions – but that does not mean they want to offer products for commission or compensation. Some choose to remain fee-based for the sole purpose of keeping 12b-1 fees or trail commissions active on legacy products they are still servicing.

That being said, regulatory environments are changing. Fiduciary and best interest standards have not only become the right practices for a client; they are required. Being a “fiduciary” is not simply about how an advisor is compensated; it is how they plan. This means insurance planning or risk management solutions should be a core aspect of honoring an advisor’s fiduciary role.

RIAs come in many shapes and forms. Some are independent and some are solo advisors. Some have their own office shingle, some work in wirehouses or are affiliated with broker/dealers. If you are formally working with a large complex wirehouse office, it may be customary to periodically drop into the office and build relationships on a traditional wholesaling basis. In the independent RIA space, that is not the norm.

Some wholesalers and BGAs are still doing cold “drop bys” to an agent’s or advisor’s office. Cold drop-bys should be avoided in the RIA space. Instead, focus on meeting RIAs through their professional networks, centers of influence, or providing relevant content in their trade publications.

To successfully approach RIAs, the outcomes that are meaningful for broker/dealers and BGAs to communicate include:

  • You understand the method and manner in which RIAs do business…you provide services that is consistent with the advisor’s and RIA’s service model.
  • You help RIAs and advisors gain scale in their business so they can focus on growth and client retention.
  • You help RIAs and advisors complete their financial planning and honor their fiduciary role.
  • When RIAs need help taking care of a client’s insurance need, you are a real resource, not just product options.
  • You enhance the RIA’s and the advisor’s relationship with their clients.
  • You relate to the advisor. You work in an unbiased, objective, consultative environment.
  • You enhance what RIAs can do for their clients. You help them address insurance needs without trepidation.
  • You help elevate the advisor’s client experience.

The new rules require broker/dealers and BGAs to beef up and expand their point-of-service (point-of-sale) expertise, or consulting services, and be a resource that works alongside the RIA and the advisor in solving needs.

2. Property and Casualty (P&C)

Like BGAs, property and casualty firms have always had one single outcome – taking care of their clients. Although both P&C firms and BGAs solve insurance needs, this is where the similarities often end.

The life insurance, DI, and LTC industry is very different from the P&C world. P&C coverages and policies have far more gradations and exclusions to the risks covered. Workers’ compensation plans have many exclusions against losses. Business interruption insurance has a wide variety of exclusions, as we are seeing with COVID. The P&C world has similar contracts with different sounding interpretations, which makes things very complex. These are often not the types of losses or exclusions you see in the life insurance world.

The Impact of COVID on P&C Firms

Since the onset of the COVID pandemic, there are battles over whether front line workers will contract COVID and will these losses be covered under workers’ compensation plans. With small businesses facing interruption due to COVID shutdowns, these types of pandemic losses are not always covered. COVID has also created new needs for online cyber liability and E&O insurance. There is major exposure when people are working from home and their children are playing or homeschooling on their computers. P&C firms are busy helping clients protect their data and businesses from cyber threats.

With personal lines (i.e., auto and home insurance), P&C firms are quickly realizing these products can be bought and sold online without a broker. This is becoming less of a profit margin as a personal line and more of a focus as a commercial line (i.e., Uber and Lyft). With commercial lines, compensation is based on recurring revenue or renewal compensation, much like an RIA. As long as the products stay on the books, the revenue will stay. P&C firms and brokers are less focused on new product sales as they are focused on retaining and conserving the risks and policies on their books.

Gone are the days where broker/dealers and BGAs should blindly call a P&C firm and say, “Let us show you how to increase your revenues, or we can get your producers licensed to sell life or annuities.” P&C producers are focused on riding the COVID wave, navigating claims and exclusions, and trying to take care of their clients to retain their policies and revenue. That being said, the pandemic creates significant opportunities for firms to help take away other pain points for P&C firms.

In addition to COVID and retaining the policies and risks on their books to keep revenues stable, independent P&C firms are worried about being around for the future. They need to hire younger talent, get comfortable with technology, and better utilize data. It doesn’t matter what size the firm is. Some larger P&C firms may have more resources, but they still have to deal with navigating exclusion riders for clients when a claim happens and keep their clients happy in tumultuous, competitive environments.

P&C firms and producers see themselves as risk management and risk control consultants, not salespeople. As such, they are not product focused. While P&C firms are solely focused on taking care of clients and keeping their revenues stable, they do have the chance to talk with clients about other things. However, stopping what they are doing to license or train their team to sell life insurance or other risk management lines can be a bother and a pain point. This is where broker/dealers and BGAs can step in as a resource.

Again, the new rules require firms to beef up and expand their point-of-service (point-of-sale) expertise and be a resource that works alongside P&C firms to solve clients’ needs.

To successfully approach P&C firms, the outcomes that are meaningful for BGAs to communicate include:

  • You help P&C firms change their business plan and solve questions and additional needs created by COVID. Every client requires a different risk plan. You can help them bring additional wins for clients through life, DI, and LTC insurance planning, using your point-of-solution and service / point-of-sale expertise. You can do this together with them.
  • P&C firms are in a firestorm right now with COVID. They are overworked and dealing with clients who are facing exclusions or contracts that do not cover pandemic risks. You can take the pressure off by solving the personal life, DI, and LTC needs that may be able to be solved more easily.
  • You take away the small thorns by helping them solve other talking points.
  • Some workers’ compensation plans have multiple exclusions, but you can help their clients be successful with other risks to their health.
  • As P&C firms are focused on navigating business interruption insurance, you can help them further protect their clients’ business interests with life, disability income insurance or long-term care. P&C firms aren’t always looking for life, DI, or LTC opportunities on their own because they are navigating the COVID pandemic. If they are speaking with a client about business interruption coverage, they can also ask about life, DI, or LTC, knowing they have you as a resource.
  • You take away the pain points of solving important life, DI, and LTC needs by allowing them to punt the ball to you as a trusted insurance resource. You can work directly with their clients.
  • P&C underwriting is always being changed by court cases and is always in motion. You can help provide their clients easier personal insurance solutions by working together.

3. Employee Benefits and Executive Benefits Specialists

The group and executive benefits markets are no longer markets that compete solely on price or product. This is most evident since the inception of the Affordable Care Act (ACA) and other governmental regulations. For the past several years, benefits advisors and brokers have been trying to navigate several fallouts of these increased regulations, such as dwindling commissions, heightened competition to retain business, competition amongst health plans, and an unpredictable economic climate. They face the threats of state health exchanges, private exchanges, and defined contribution executive benefits models.

Benefits advisors must compete with other brokers based on service since the margins have changed, which means they have to spend more time understanding their competition and their clients.

Group benefits advisors and brokers are growing concerned about their future role, and some have already started adapting their business models to this new reality. There has been increased merger and acquisition activity, along with merging their practices with human resources firms, P&C firms, and wealth advisory firms.

Several independent benefits specialists continue to press forward with product and service diversification, lowering the cost of their operations, and offering ancillary and voluntary products to keep themselves relevant amidst changing markets. To compete, many benefits advisors have had to figure out what other value-added services clients need, such as administering employee benefits for small groups or offering individual insurance lines. As healthcare products become more commoditized, service and elevating the client experience becomes an important differentiator.

To compete and grow in a client-centric marketplace, benefits advisors may need to recalibrate their business model to help manage growing workloads and potentially expand into new individual and commercial business opportunities. Benefits advisors need to understand their clients deeply and engage in an ongoing relationship, potentially for multiple lines of business.

Broker/dealers and BGAs can be a significant partner in helping benefits advisors evolve. You can help them expand their business offerings to deliver enhanced consultative service.

To successfully approach benefits advisors, the outcomes that are meaningful for firms to communicate include:

  • You can work together, with little to no work on the advisor’s end. Benefits specialists do not have the time to be the ‘end all be all’ with life insurance, DI, or LTC insurance. They can leverage your point-of-solution and service expertise.
  • You are a consultative resource that is an extension of their brand. When they need assistance solving individual lines, you are available as a resource.
  • You help them take care of the additional needs that affect their clients’ health and threats to their economic and emotional security.
  • You get to know their practice, how they are growing and evolving, and help them create a different business plan to capture additional opportunities.

Once again, the new rules require firms to beef up and expand their point-of-service (point-of-sale) expertise and be a resource that works alongside benefits advisors in solving needs.

4. Independent and Career Insurance Advisors / Agents

Like every sector of the financial services industry, independent and career advisors are affected by competition, but their practices are often structured differently when it comes to support. Independent advisors do not have the substantial back-office resources like advisors in career / captive firms, and they must rely on their own ability to build a brand and reputation in the marketplace. Independent insurance advisors and agents are deeply affected by service issues as their practices mature, and they do not always have the time to elevate their client service, let alone build relationships in the community to meet new clients.

For career / captive advisors and agents, they may have more support through their company, but may also have contractual limitations on products. Career advisors and agents may have more training and marketing resources available, but for many of the younger agents, they may not have the robust training platforms as in past years, and competition creates a strong need for target market development.

For many of these independent and career professionals, the ability to focus on specialty products as a means of differentiation with centers of influence is one of the key factors for growth, but they need assistance and support from firms like practice consultants or BGAs to be trained and equipped to deliver these services.

The main challenges that are common to both independent and career professionals are meeting new prospects and marketing, especially in this COVID environment. Additionally, they quickly need to become entrepreneurs, adapt to new technology, manage their time, stay focused, hire their own staff, and increase their knowledge to keep up with changing times and strategies. As these advisors begin to age, energy levels can start to wane in trying to keep up with the changing landscape.

To successfully approach independent and career professionals, the outcomes that are meaningful for firms to communicate include:

  • You give them more time to focus on their business and the assurance that they have served their clients well.
  • You help push things over the finish line; you respect their time.
  • You help them mine their book of business to capture additional opportunities.
  • You provide them with expanded consultations and training for marketing, estate, business, and advanced planning.
  • You get to know how they work and the clientele they want to work with.
  • You have their back on the big and small cases. You go the extra mile and do what you say you will do for them.
  • You help them run their business more efficiently so they can spend more time with clients.

Independent broker/dealers and BGAs are sitting in a distinct and unique position to serve a multitude of financial professionals and their clients. You are true consultants for financial planning, practice management, investment management, insurance and risk management consulting, not product merchandisers.

For insurance-enabled professionals, you conduct traditional brokerage in the most responsive and efficient manner. For advisors who have insurance as an ancillary focus or do not focus on insurance in their practice, you have the ability to work alongside them with point-of-solution and service support. You can serve as case consultants or work directly with the advisor’s clients on their behalf.

To maintain this position, it requires broker/dealers and BGAs to ease up on products, processes, or compensation as the lead message. Focus more on the relevant outcomes you create for different advisors, so you gain common ground and a reason to engage in further conversation.

Tiffany MarkarianThe New Rules for Approaching Financial Advisors

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