Think about it.  If your firm was at the heart of motivating your clients to engage in these services, not only will you be involved in bringing in the necessary professionals to carry out the plans-such as CPAs and attorneys-you should be billing for these advanced services at an enhanced rate, commensurate with the level of service-value billing.  After you have held your client's hand throughout the planning process, future core services provided by your firm will be needed to maintain your client's plan.

But what is the hook? How do you get them engaged? One way that has worked for numerous firms is to begin the financial discussion by inquiring about the status of their life insurance. Why life insurance?  For starters, article after article addresses how poorly life insurance as an asset class has performed. Nobody knows for sure, but from the articles I have read, the professionals I have spoken to and more specifically from my personal experience, nearly 75% of all in-force life insurance, is not performing anywhere near expectations (which means there is a 75% chance that you will find a problem that needs to be solved). 

 

Issues include:

    The policy will lapse prior to the death of the insured.
    The annual premium for the same death benefit can be significantly reduced.
    The same annual premium can purchase significantly more death benefit.
    The policy is owned incorrectly, creating inheritance or income tax that could easily have been avoided.
    The beneficiary noted in the policy is not consistent with current wishes and benefits will be paid to inadvertent beneficiaries.
    In-force policies may be subject to premium increases where newer updated versions contain guarantees not available when the current policy was purchased. Depending upon the new insurance product purchased, future premiums will not be subject to potential increases in cost.
    Many older policies cease at age 95 or 100 even if the insured is still alive. This will cause the policy to lapse with either no value or with a cash value far less than the death benefit. In some circumstances, the death of a policy before the death of the insured may create taxable income. Newer policies do not contain these age limitations.

Once a professional discussion of life insurance begins, there is only one way to properly evaluate a policy. You must begin with why the policy was purchased and what has since changed. Your clients' needs will become self-evident as the discussion progresses. And, as the financial advisor who initiated the process, you will lead the charge, directing all of the other players-from CPAs to attorneys-who may need to become involved in the process. And your efforts will not go unnoticed.

So if you can't remember the last time you called a client and asked them to lunch, with the billing clock off, just to chat about what is going on in their lives, I suggest you give it a try. After all, you'd do that for someone you met at a "networking event," wouldn't you? Like I said, it is so simple and self-evident that we forget who we are already indebted to as we pursue new clients.

When you do meet with your client, have a clear agenda and goals you would like to accomplish from the meeting. Start by finding out what is going on in their business and personal lives. Is there anything new (divorce, death, marriage, children, anew business partnership, etc.)? Have they set a long-term path for their business or personal estate plan?  Educate them: Explain that a great place to start is by professionally evaluating their life insurance and their need for it.

Ask your client if he or she is aware that life insurance is a massively under-performing asset. For example:

    5% to 10% of policies are at risk of lapsing in fewer than three years.
    20% are in danger of lapsing between three and seven years.
    80% need restructuring or replacement.
    70% are "orphan policies," with no assigned or licensed agent.

If you are not sure that marketing to existing clients is "up your alley," ask yourself the following:

    What type of business do you want to have? Do you want your clients to view you as a "one trick pony," or to see you as someone who plays a vital role in their overall financial health?
    Where would you rather spend your marketing time and money?  The most effective effort is spent with people who already know you and believe in you. They either do not know they need a certain service or may not know that you render the service or both.

When planning for the future of your business, you need to start by planning for your clients' futures.  The most ironic part of the story is that much of the cost of your services can be paid for with the savings found by a professional review of their life insurance. That is a true win-win.

Richard Newman, CPA, PFS, AEP, is founder of Life Audit Professionals in Boca Raton, Fla. He can be reached at [email protected] or 561-948-2421.

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