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by Frank C. Bearden, Ph.D., CLU, ChFC on Apr 5, 2018 9:00:00 AM

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My View, the Client’s or Both?

There are more than two viewpoints when selling life insurance; the agent's, the client's and both. The example given shows how the two viewpoints can be blended into one with our compromising the recommendation.


My View, the Client’s or Both? By Frank C. Bearden, Ph.D., CLU, ChFC


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The ethical point is not to compromise the recommendation but to recognize the value of your client’s position, as well.


In the 43 years that I have been involved in selling life insurance, I have repeatedly been faced with a dilemma that I thought had two points of view: mine and the client’s. Developing client proposals usually resulted in dealing with these two views. However, I slowly learned there weren’t two points of view, but three: my view, the client’s view and both. Let me explain and provide an example, as there is an ethical point involved.


Proposals for additional life insurance invariably generate some resistance from the person receiving the proposal. Maybe the individual is not comfortable about thinking of his mortality, maybe the concern is more about affordability, or there may be other factors involved. The financial advisor, in trying to think for the benefit of the client, is concerned about providing financial relief for the myriad problems the death of the client can bring. This tends to be not so much an impasse as a spirited discussion with initially different points of view. What is the ethical thing to do in these times? Let’s consider an example that is a composite of many situations shared with me by advisors over time.


A case in point: John and Alice are an early middle-aged couple with three active children. John and Alice have good positions with two technology firms, and both have gone through downsizings and the search for new positions. Mary is their financial advisor. She attempted to make the point in the last annual review that John and Alice should increase their personal life insurance, as they have many years of family responsibility ahead, with college expenses on the horizon. She performed a needs analysis for John and Alice to quantify the concern she expressed. Then she prepared appropriate life insurance recommendations. These can be taken as Mary’s point of view in the recommendation discussion.


As intelligent and responsible people, John and Alice were attentive to the recommendation until they considered the premium expense. The premiums were affordable but seemed like a large expense just as they were planning for a family vacation and filing their income taxes. So they told Mary they wanted to wait until these two hurdles were over and then they would reconsider the recommendations. Mary stressed the importance of resolving the issue before the trip, due to the severity of the consequences of an unexpected death. Nonetheless, they persisted, and this can be taken as the client’s point of view.


This story ends not in the way we would want it to, but with John and Alice filing their taxes and going on an enjoyable family vacation. When they returned, Mary called for an appointment to review the insurance proposals, and her clients were somewhat receptive. John and Alice agreed to apply for level term insurance rather than the whole life and term proposals originally presented.


Mary was somewhat disappointed, as she thought both clients had an important opportunity with the whole life policies due to their excellent health history that could change. Nonetheless, term insurance it was, and the amounts of coverage recommended by Mary were accepted, applied for and issued. This can be taken as the combination of both points of view.


To explain more about the client’s view, John and Mary were about to pay off a large income tax obligation to the IRS, and they had avoided any vacation during the past five years to pay on the obligation. They were embarrassed by the tax obligation and did not mention it or the importance of this investigation. This does not necessarily justify their decisions, but it does explain them.


The life insurance that can do its work is that which is in force. A successful placement of life insurance is usually the result of the advisor and the client getting to the third viewpoint, which acknowledges the value of the advisor’s recommendation as well as the client’s position to arrive at a kind of blended viewpoint involving both. The ethical point for a financial advisor is not to compromise the recommendation, but to seek to recognize the value of the client’s position as well, with the active possibility of untold elements, so that a remedy that will provide the needed protection can be found.

Frank C. Bearden, Ph.D., CLU, ChFC, is managing member at Ethics Consulting. Contact him at fbearden@outlook.com or at 210-724-1958.


This article appeared in Advisor Today.


Topics: Sales