Guy E. Baker, MSFS, CLU, of Irvine, Calif., is the founder of BTA Advisory Group, a multi-disciplinary organization serving the needs of wealthy families and owners of closely held businesses. He is a 41-year MDRT member with 33 Top of the Table qualifications. He has served in numerous MDRT leadership positions, including president in 2010. Additionally, Baker is an Excalibur Knight of the MDRT Foundation and served as its president in 2000. He also served as a board member of AALU and is a past president of the Orange County Association of Insurance and Financial Advisors.
Richard F. O’Boyle, Jr., LUTCF, M.B.A., is a licensed life and health insurance agent and registered representative in Islip, N.Y. He works primarily with middle-market families and business owners. He has written extensively in the areas of eldercare and retirement planning. O’Boyle publishes “The Insider’s Guide to Retirement and Insurance Planning” at www.retirementandinsurance.com. He holds a B.A. and M.B.A. from George Washington University.
Marc A. Silverman, M.B.A., ChFC, CFP, began his financial planning career in 1983 and formed Silverman Financial in 1989. Silverman is a 27-year MDRT member with 16 Top of the Table and five Court of the Table qualifications. He is a past chair of the Top of the Table and an Excalibur Knight of the MDRT Foundation. Silverman earned his M.B.A. from the University of Miami and is a past president of the University of Miami Alumni Board School of Business. He is a past president and board member of the Miami chapter of the Society of Financial Service Professionals.
Perhaps we’ll look back in a few years on the financial crisis that began in the fall of 2008 as a moment of financial awakening for the middle market in the United States. Not only did it disprove the long-held belief that a person’s home is an asset that will always build value, but it also made us start to rethink many of our long-held beliefs about savings and retirement. In short, the past few years have taught some tough lessons about the uncertainties of financial security.
It seems the crisis is also teaching some lessons to the financial services industry itself, including the life insurance business. In the rush to serve those with the financial wherewithal to invest at higher levels and purchase increasingly sophisticated financial products, some financial services companies and producers seem to have lost sight of the fact that the middle market has a crucial need for their products, services and expertise.
In this month’s roundtable, we pose questions to the following producers, who are among the finest in serving the needs of the middle market: Guy E. Baker, MSFS, CLU; Richard F. O’Boyle, Jr., LUTCF, M.B.A.; and Marc A. Silverman, M.B.A., ChFC, CFP.
Getting the conversation started
Charles K. Hirsch, CLU: In the difficult economic environment that the United States has been living through during the past several years, money is definitely tight in the middle market. How do you approach the conversation about the need for life insurance when you know that you’re more than likely talking to someone who has very real and very valid concerns about any and all additional family expenses?
Guy E. Baker, MSFS, CLU: The best approach is to acknowledge these are tough times and maintaining a fiscally sound budget is of the highest priority. “However,” I might say, “Mr. Prospect, if it is this difficult for you to deal with these issues, with all the experience and ability you have, what would it be like for your family if you weren’t able to help them? What if you didn’t come home tonight because of a fatal car accident? Or you bumped your head and suffered a stroke? What then? For just a few dollars a month, you can guarantee your family would be able to survive these tough times, whether you were able to provide for them or not.”
Death and disability are a reality. Stuff happens. We did not cause the problems. But we can sure solve them. We have to remember why we do what we do. We may be their last advocate. No one can guarantee they will be able to bring home a paycheck next week. But we can guarantee that if they can’t, because of illness or death, we will deliver on the promises.
Richard F. O’Boyle, Jr., LUTCF, M.B.A.: Many of my clients in the middle market have seen friends, family members or even themselves lose their jobs. The economic uncertainty over the past few years has driven many of my clients to look for a sense of security. I work closely with my clients to better understand their budgets and, therefore, find the cash flow to cover the life insurance premiums, which, in most cases, for new policies, is a 15-year or 20-year term plan. I also find a strong level of interest in disability income coverage, although sales of these policies is limited by pricing and transparency concerns.
Marc A. Silverman, M.B.A., ChFC, CFP: I approach middle-market clients with life insurance opportunities by discussing their needs and what they are trying to accomplish for their family. Although they may not have as much money as wealthier clients, they still have a need to provide family protection in the event of their demise, and maybe even more so than the very wealthy. Although the recommendation may not be permanent insurance, having some term insurance may be a viable solution. I never heard a widow ask what type of insurance she was receiving when her husband passed away. It was, “How much money am I going to ultimately receive?” This is obviously accomplished by conducting an analysis to determine exactly what is needed.
Overcoming that biggest concern
Hirsch: What do you find to be the biggest concern on the minds of middle-market prospects, and how do you approach them about potential insurance needs in light of those concerns?
O’Boyle: When discussing insurance planning with a middle-market prospect, I find an intense concern for reliability and stability. That usually leads to questions about my career and the companies I represent. Pricing always follows, but I find that a slightly higher premium for a much better company is not a major issue. We often discuss third-party company ratings and current news. I present myself as “the conservative guy,” as opposed to the aggressive investment advisor — even though I am properly licensed to sell mutual funds and variable products. I place life insurance in the context of other financial assets, such as retirement plans and other savings vehicles.
Silverman: The biggest concern of most middle-market clients and prospects is eliminating credit card debt and ensuring they have enough money to ultimately retire at a reasonable time in the future. This can be approached by performing a complete fact-find to learn what is top of mind, and provide life insurance — permanent or term — solutions that can be employed in the event of their passing.
Baker: Most of our prospects and clients are concerned about their investments and whether they are going to be able to accumulate enough money for retirement. I have learned through the years their concerns are far more important than mine. So if they are worried about saving money and keeping it safe, then I need to be able to discuss measures they can take that will help set their minds at ease. Buying life insurance can be an afterthought for them — something they deal with after they have found peace of mind.
Our job is to help our clients find peace of mind. We do this through listening to their concerns and helping them think through the steps they need to take to achieve their goals. If we focus on our needs and goals, we will fail. We have to set those aside and focus only on what is important to them.
Is the middle market neglected?
Hirsch: Some people in the business have expressed the worry that too many companies and too many producers are chasing high net-worth individuals and families, and in doing so, the middle market is being neglected. Do you find this to be true? If so, are there steps that companies and producers can take to help make sure people in the middle market are adequately served?
Silverman: As advisors become more successful in the insurance business, they generally want to chase prospects with more money. My advice is to not neglect Middle America, as this is clearly an underserved market with many needs that are, unfortunately, not being met. I believe producers can take steps to make sure the middle market is served by working with large corporations that have pension plans to help employees fully understand the nature of their plans. When these prospects retire from, or leave their jobs, they need to work with and rely on someone they can trust. This has been our marketplace for the past 12 years. It has been said there are some 10,000 Americans retiring each day for the next 20 years as the baby boomers transition through retirement. The first of those baby boomers turned 65 this year.
Baker: There has always been the push-pull effect — what we might call “big case-itis.” It has been prevalent ever since I started in the business in 1966. Abandoning the middle market is a mistake many agents make. There is no reason an agent can’t serve both. But I am not sure it is as neglected as it may seem. There are many fine, dedicated agents who continue to work this market because they love their clients and they know the importance of helping them deal with the problems of life — living too long, dying too soon, and becoming disabled and unable to work.
I am seeing more and more advisors focusing on assets under management. This will bring the agents back to the middle market. There are a lot of assets in this sector of the economy. They need our help, and they want good advice they can trust. As the agents/advisors realize this, the middle market will become more appealing and profitable. This transition is just now happening and will take a few years. But over time, the middle market will have sufficient representation again.
O’Boyle: When I entered the business about 10 years ago, my core clientele was a solid middle-market family. As time went on, I would get referred to more affluent prospects, but I always remained comfortable with the “kitchen table” sale. I don’t think that this client is being neglected; so much radio, television, and Internet advertising is directed at selling cheap term life insurance. The key is for the advisor to educate the middle-market prospect that they can get, indeed that they deserve, a real live licensed agent to meet with them and properly recommend the right insurance product or products.
Employing newer technology in your approach
Hirsch: How have you incorporated technology into your approach to the middle market? Do you market on the Web or through any social media tools? If not, why not? And if so, have you had the kind of results you were hoping for?
Baker: We are using our website as an education tool. You cannot talk to anyone anymore who has not gone to your website to find out about you and your company. The Web is becoming an interactive brochure. With video, you can now put up a meaningful message and keep it current. So this is something every agent should be considering. Besides, it is fun to play around with various ideas and see what happens. There is one investment manager who has accumulated more than $1 billion from Internet inquiries.
As for social media, this is a growing area and again requires content. So yes, we are experimenting with it and hoping to find a workable combination. I have gotten several leads from people who have found us on the Web. It does work. But it cannot replace our basic prospecting activity. It is only a supplement.
O’Boyle: I consider myself a technology-forward advisor in that I try to communicate with my clients on whatever platform they use. I have a blog and a monthly e-mail newsletter that I take pride in. I use my website to brand myself and convey my knowledge and experience. Nevertheless, I try to minimize the amount of e-mailing of quotes and illustrations, and I try to use e-mail only to schedule appointments and medical exams. I find that a lot of the important detail gets lost unless it is conveyed in person.
Silverman: We have a large database of people we have met with over the years through seminars. We have developed relationships with these people using workshops to explain their company-sponsored pension plans. We do not actively engage in social media because of the strict regulations outlined by FINRA; however, we do market through the Web as allowed. We also e-mail prospects regarding upcoming workshops to encourage attendance. This has proved to be of real value because prospects share event information with friends, family and colleagues, broadening the opportunities for new client relationships to form.
Effective sales technique
Hirsch: Can you share an approach to prospects in the middle market that has worked well for you recently?
O’Boyle: It’s old school, but I still use a detailed fact finder and budget-based needs analysis. I came from New York Life’s training program, which instilled those as the basics of building the value proposition. With a more affluent prospect, I present whole life insurance within the context of all of their other investments, showing that correct positioning of their assets can possibly minimize income taxes and build a conservative foundation to their portfolio. That’s not to say that I still don’t present whole life insurance to the middle-market prospect — I find that the cash flow isn’t always there to support the premium.
Silverman: The approach that has worked well for us is to target a specific market, namely the electric company, the telephone company or the Florida retirement system. The common ground is all of these prospects work for the same company, and they all have the same pension plan. These folks need to be educated on how their plan works. Assuming you do a good job for this market, your name spreads in a very favorable manner. By hosting workshops to explain their pension plan and/or 401(k) programs, your business has the potential to increase significantly.
Baker: The name of the game is trust and credibility. This happens fastest when you are referred by someone the prospect trusts. So I am doing what I have always done. I network in organizations where I can meet people. I build on the chain of influence, and I ask for referrals. There is no shortcut to this process. You have to be out there seeing the people. Sitting behind my desk is not going to get me any leads or business.
Final takeaways
Hirsch: Any further thoughts about the middle market?
Silverman: Middle America is a marketplace that has been neglected and clearly needs more attention. Like the old expression says, we must recognize there are a lot more sparrows in the world than there are eagles.
As advisors, we have a tremendous opportunity, if the producer will take the time to learn the pension plans of various large companies within this market.
Baker: To sum it up, the middle market is crying out for help. They don’t want to buy insurance anymore now than ever. But they do want help investing their money and determining the goals and objectives. Most have no clue how much they really need to save and whether they can get there. We are the solution. And the more time and energy we invest in our clients, the more referrals and satisfied clients we will reap from the process.
So I would strongly recommend learning how to manage money. Most advisors will never do this themselves. But they can team up with organizations that can do this and be finders and relationship managers. Financial services is a team sport. The stand-alone advisor is becoming extinct. The need for a team approach is fast becoming the way of the future. So now is the time to start building your team and services.
Charles K. Hirsch, CLU, is a contributing editor to Life Insurance Selling. He is the president of Hirsch Communications Consulting in Florissant, Mo.
