Expand Your Business While You Help Your Clients

We've all heard how life settlements have emerged as a rapidly growing segment of the life insurance industry. But what does that mean for you and your own practice? For many financial professionals, your peers, life settlements have become an ideal tool for expanding one's business while strengthening existing relationships. If you haven't already looked into how life settlements can work for you and your clients, now is the time. I'd like to share with you how you can help your senior clients and in turn find a new outlet for the growth of your business.

Life Settlement -- Future Market Growth

More Americans than ever are embracing life settlements. As the population ages, the number of policyholders who can benefit from the sale of their unneeded or unwanted life insurance policies continues to increase. Yet the overall percentage of seniors and boomers who are aware of life settlements remains low. More often than not, the policyholder's rationale for the original purchase of the policy, based on his or her needs at the time, may no longer be valid because the needs have dramatically changed. Life settlements offer a new solution to seniors other than to surrender or lapse an unneeded or unwanted policy. The proceeds derived from a life settlement can have a profound impact on seniors' financial security. The following demographic groups represent significant opportunities:

Seniors. America's "greatest generation" has seen the global landscape change dramatically from World War II to the age of the World Wide Web. One of the biggest changes seniors have seen is a dramatic increase in their life expectancy. In fact, seniors 65 and older now represent one in every eight Americans, or 12.4% of our country's population.

Baby Boomers. In the upcoming decade, boomers will hold a majority of the predicted $160 billion estimated face value of life insurance. A study by Reuters in 2007 found that affluent boomers are assisting both their parents and their children financially, with 29% admitting this has slowed their retirement savings process. The need for boomers to create sources of retirement income will grow steadily over the next several years, because one in four boomers has saved less than $10,000 for retirement. This fact, coupled with increasing life expectancy, points to one inescapable conclusion: boomers will need substantial, sustainable income as they age, and life settlements could be a valuable resource to serve that need.

The secondary life insurance market, being driven by consumer demand, is only going to grow over the next three decades. Choosing a solid life settlement partner and understanding how to mine your book of business will help you take advantage of this unprecedented opportunity.

Choosing the Right Life Settlement Partner

In my conversations with financial professionals about life settlements, one of the biggest concerns they bring up is the barriers to entry. They ask, "What do I have to give up to enter this space?" They are concerned about the resources it will take and the capital needed to offer life settlements. Still others have shared with me that while their firm works with a few life settlement partners, none of those companies offers training or support.

One of the first questions to ask when considering a life settlement partner is whether they are a broker (bringing the policy to market and negotiating price) or a provider (the company purchasing the policy). A life settlement broker has a fiduciary duty to the agent and his or her senior client, while a life settlement provider has a fiduciary duty to its money source and its portfolio. Many agents believe going directly to a provider will yield better offers than going through a broker, but usually that is not true. In addition, more work typically is required when going directly to a provider.

Here are other questions to ask when considering a life settlement partner:

o Are they dedicated to the protection, preservation, and growth of seniors' portfolios?
o Are their processes and commissions transparent?
o Are they direct-to-agent, direct-to-consumer, or both?
o Do they perform due diligence on their business partners?
o Do they have an in-house compliance team?
o Can they provide you with resources to integrate life settlements quickly and seamlessly into your practice?
o Can they (and will they!) support you in your life settlement business?
Let's focus on the last two points. Ask yourself, if your settlement partner cannot or will not support you, how will you be successful?

At GWG Advantage, we use a "360-degree" support strategy to help financial professionals as they enter the life settlement marketplace. It includes these key areas: training, process, people power, marketing support, and added value. These areas can be your template for considering a settlement partner.

Training. Knowledge is the foundation to integrating life settlements into your business. Product knowledge -- the "product" being the settlement offer and the process that creates it -- accomplishes a few key things: First, it allows you to expand your product portfolio, which in turn equips you to better serve your book of business. Second, your expanded product knowledge gives you the power to unlock more sales potential in your book of business. How? Once you understand life settlements, you can review your book of business and quickly identify those clients who could benefit most from it.

Process. Your life settlement partner should have a seamless, streamlined process that takes the worries out of the settlement transaction while not bogging you down in paperwork. This allows you to focus on what you do best: finding business.

People power. In concert with process are people. If your settlement partner does not have the experience on staff, their ability to serve you and your clients is limited. We have life-licensed key account managers who can offer support at those times when that "extra set of eyes" is needed. Point-of-sale assistance also is available through a team of external wholesalers. There's even an Advanced Markets team that can tap into highly specialized life settlement work. We have found these multiple levels of support to be vital to a successful settlement transaction for all parties involved.

Marketing support. Tools to recruit and educate your senior clients about life settlements require a lot of time to develop. High-impact marketing collateral and point-of-sale tools, combined with a good follow-up process, can help educate and convince the client. Your settlement partner should have these pieces ready for you to use.

Added value. Why added value? It can make the difference between a good partner and a great partner. These value added services, which can take many forms, should help make the life of the settlement producer easier. We provide on-demand training, blogs, and real-time case and commission status as part of our value added services. It keeps our partners informed and in sync with the life secondary marketplace.

Now that you have a framework for partnering with a life settlement company, the next task -- and, some would argue, the most important -- is working your client base.

Getting Started

Getting started is easier than you might think. Focus on your book of business and segment it into tiers, if you haven't already done so. This will make it easier to identify those clients who are potential life settlement candidates. Although it takes time to do this, an added bonus is that it works for other products in your portfolio as well.

When recruiting agents, I always ask them to take a moment and run through their clients in their head. They usually can name at least six clients who could benefit from a life settlement. These clients who you can name off the top of your head are Tier 1 clients. The Tier 1 clients are the key to submitting business in the first 60 days after you decide to enter this market.

Once you dive deeper into your book of business, other clients will stand out as potential life settlement candidates. For some of these clients, it may be time to rekindle some old relationships. These are Tier 2 clients. The annual review with the client provides an important opportunity to see if a life settlement could be a suitable option. Again, use this method to support your other products as well. The life settlement sales cycle for Tier 2 clients will be somewhat longer than for Tier 1 clients. Remember, this is a process of gradually building your revenue pipeline.

Tier 3 clients are a bit more elusive, but still critical to long-term success. These clients are typically acquired through referrals, those that are already in your book of business pipeline (late-stage boomers age 60-65), and those that you recruit through other means.

Integrating life settlements into your business is a natural progression of your practice and allows you to expand your product and service offerings. Whether you have a large senior client base or are just starting out, with some simple planning and the right tools from your life settlement partner, you can do well by doing what is right.

E. John Koeppen is director of marketing at GWG Advantage and manages the branding, marketing, and communications needs of the company. He has more than nine years of experience designing and implementing strategic integrated marketing solutions for Fortune 100 companies.