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What the Market is Saying
According to a study conducted in 2005 by the Pew Research Center, baby boomers are balancing a full plate of family responsibilities and therefore want simplicity and financial security. As a result, many boomers are willing to take the time and make the effort to get what they want. Many boomers' concerns include protecting their nest egg, making sure their income will increase in the future to offset inflation, and being able to transfer their remaining wealth to the next generation. These concerns present a perfect storm of opportunities for prepared financial professionals.
Twenty years ago, the insurance industry was pondering a pivotal question: Should an industry associated with guarantees market products with variable results? The question represented an enormous paradigm shift that is difficult to understand because many in business today have operated in an environment where variable products are broadly sold. An idea that resulted from actuarial/investment collaboration, however, has refocused an industry toward providing lifetime income for retired people, for those needing care, and for distributing remaining assets to those left behind. With this in mind, the industry may be perfectly positioned to provide boomers with what they want.
Variable annuities may represent a sliver of your offerings today. But tomorrow, they may become a centerpiece of your practice. If so, life insurer affiliation(s) may be a key element of your success. High-quality products are a given, but insurer relationships are more complex than simply being appointed with companies that have hot products. How many company relationships can you realistically manage? How many variable annuity kits can you keep current?
The pace of variable annuity improvements likely will continue. But financial professionals may lack the luxury of time to monitor product nuances while simultaneously focusing on the vital tasks of attracting and retaining clients. Therefore, making the right insurer selection(s) now will provide the options that clients need in the future. While insurers do that, you can focus on the bigger picture: Continually adjusting business deliverables to align with client needs.
Boomers are coming of age. Positioning your practice to attract them requires vision, alignment, and patience. But these qualities cannot emerge without the three vital keys to success: Becoming referral-worthy, keeping current in your profession, and showering your clients with service.
Becoming Referral Worthy
Those born at the beginning of the baby boom, in 1946, are now 62 years old, an age when people tend to get "set in their ways." It is not too late to reach them, however, by adding products and services that they will find attractive. Remember that growing a practice will continue to be challenging work, but focus and execution makes it easier. Here are a few suggestions for aligning your business goals with what boomers want:
1. Have a clearly defined "ideal prospect." The characteristics you might want to consider in defining your ideal prospect include age, net worth, income, marital status, social attributes, attitudes about saving/investing, and other demographics. Commit those characteristics to an easily readable format.
2. Explain your process and what you do from start to finish using a single-page visual aid. Any commonly available word processing software can be used to do this.
3. Carefully hone and practice a verbal delivery to accompany your ideal-client and planning-process visuals. Present both visuals three to four times each week to referral sources and referred persons.
4. Be prepared immediately to achieve stupendous results.
Keeping Current
Have you found yourself excited about a new feature after meeting a wholesaler? Some financial professionals hop from feature to feature thinking they are selling the "best" product. Features are simply a means. My experience has shown, however, that features of real value likely will be made available to existing policyholders over time. Experience also shows that features of real value will be added to a portfolio on an ongoing basis.
As a professional, you are trying to help clients achieve their ends. Educate yourself about variable annuity features and about the principles of retirement planning. Consider coursework toward a new designation. Commit to understanding the financial and social issues facing your target group and master that understanding. Variable annuities are an important tool, but not a one-size-fits-all solution. In-depth knowledge of the threats facing clients in achieving financial security will allow you to make available other financial solutions in addition to variable annuities.
Showering Them with Service
Position your practice to deliver top-notch professional service. Exemplary service keeps clients with you -- and satisfied clients refer more business. In a competitive marketplace, great service can be a differentiator. Without a referral system, new clients occasionally might show up on your doorstep anyway. But, with a referral system, client referrals become the norm. Regular contact is vital. Working optimally, your practice should touch clients systematically, thoughtfully, and frequently. This may guarantee a high level of business retention and endless referrals.
Treat clients the way they deserve to be treated. My experience tells me that fewer and fewer financial professionals will be around to service the needs of the 75 million boomers needing help. However, there will be plenty of opportunity and no need to make a fast buck.
Prepare for growth by implementing your client attraction system, stay current professionally, and shower your clients with relentless service. They are going to need you for a long time, and going the distance will continually remind them of their wisdom in selecting you. This will yield a second harvest as you assist them in transferring their remaining wealth to the next generation -- and a third when you transfer an enormously valuable practice to your successor.
James R. Johnson, CFP, has worked in the financial services industry since 1975, with service of nearly 20 years in individual operations at OneAmerica Companies. Mr. Johnson currently is a financial advisor for OneAmerica, and is president of WealthPlan Strategies, LLC, his financial planning firm.
The views and opinions expressed in this article are solely those of Jim Johnson and do not necessarily reflect the views and opinions of OneAmerica Securities, Inc., or its affiliate, American United Life Insurance Company. The article is provided for informational purposes only and is not intended as an offer to sell or to solicit an offer to buy interests in any fund or security. James R. Johnson is a Registered Representative of OneAmerica Securities, Inc.
