Pro Tips

The New Rules for Approaching Advisors

by Tiffany Markarian

There are new rules for approaching and insurance professionals. As we have seen for centuries, when a crisis happens, insurance is there. When markets become volatile, financial advisors often see an uptick in insurance activity. The insurance industry has always been there to keep families and businesses whole and provide supplemental income in times of need. Sometimes, however, it takes a crisis or a pandemic to create that indelible reminder in the minds of advisors and clients of the need to protect your health, economic security, and emotional security. Insurance involves much more than managing potential risk; it is a critical survival tool.

Brokerage General Agencies (BGAs) stand ready, as they always have, to solve these needs and serve as an objective, consultative insurance resource for financial advisors and clients. However, the landscape has been evolving for decades, and BGAs have had to evolve their marketing and operational practices as well. Some financial advisors no longer have insurance as a core expertise in their practice. Some have insurance as an ancillary focus, and some have chosen to focus on other lines or revenue.

The New Rules for Approaching Advisors

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

Traditionally, many BGAs have focused on the “Ps”:

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

These are all important attributes and certainly commendable. However, in today’s world, most financial advisors and clients are not focused on your products, your people, your processes, or your exceptional service. These are expected. People 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; consultative partners focus on their clients’ outcomes.

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

Articulate Your Value in Outcomes

Traditionally, BGAs have used branding and marketing messages that appeal to those who are well disciplined in the insurance process and have insurance as a core expertise. This may have worked in the past, but today’s rules require BGAs to acknowledge that not every advisor who works with clients has insurance as a core focus. In these cases, traditional messaging, branding, and brokerage models will not always resonate. Even if an advisor believes in insurance, and has expertise with writing insurance, focusing only on the “Ps” could actually cost you the chance to do business with some advisors.

Whether we like it or not, consumers in every demographic can now accomplish a significant amount of their financial goals online, without the help of an advisor. Further, consumers are hardly insurance product experts themselves. They care about one thing and one thing only. What is the real benefit to me if I work with you, or what positive outcomes will I gain in working with you?

Many BGAs lead with communicating their value in terms of case management processes, compensation, or products, when 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 and the client’s point of view, not just yours.

Why Traditional BGA Brand Messaging May Not Resonate

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

  • We provide creative sales and product ideas that increase your revenue.
  • We have a robust agent portal on our website for resources.
  • We have a comprehensive suite of insurance product lines and solutions.
  • We deliver personal service and relationships.
  • We have start-of-the-art technology.
  • We specialize in impaired risk cases.
  • We have fluid-less underwriting and accelerated underwriting.

Each of the above statements are accurate, valuable, and beneficial services BGAs should take pride in. However, these messages are all about the BGA. It is not about the advisor or their clients. Advisors and clients speak in outcomes that are meaningful to them, and the desired outcomes will be different based on the type of advisor or client you want to work with.

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 BGAs to build a new marketing and brand strategy that focuses on researching and customizing your approaches to the niche markets you want to serve. You may need to have a different brand persona for each market 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 BGA distinct and earns your seat at the advisor’s 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 or client’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 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, insurance planning is not always 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 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 and risk management 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.

BGAs should avoid the cold “drop by” to an independent RIA’s office and instead focus on meeting RIAs through their professional networks, centers of influence, or more warm methods of cultivation.

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

  • You understand the method and manner in which RIAs do business…you provide services for insurance planning that is consistent with the advisor’s and RIA’s service model.
  • You help RIAs and advisors complete their financial planning.
  • 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 RIAs and financial advisors honor their fiduciary role.

The new rules require BGAs to beef up and expand their point-of-service (point-of-sale) expertise 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 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.” 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 BGAs 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 lines can be a bother and a pain point. This is where BGAs can step in as a resource.

Again, the new rules require BGAs 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 and disability income insurance. 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.
  • 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.

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 BGAs 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 BGAs 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 insurance 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 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 BGAs 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 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.

BGAs are sitting in a distinct and unique position to serve a multitude of financial professionals and their clients. You are among the most elite insurance professionals with a fully objective and unbiased approach. You are true consultants for insurance planning, 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 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 Advisors

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