Consumers often cite cost and convenience (or the lack thereof) as reasons for not having life insurance. While any agent worth their salt should be able to counter excuses they hear from the uninsured, convincing people to part with their time and money can be challenging. Rather than talking yourself blue in the face trying to convince a hesitant consumer otherwise, a better approach might be to show that you’re saving them money and time.
How? You can employ Table Shaving to help save them money and Simplified Issue to save them time. We discuss both life insurance concepts below.
If everyone who wanted life insurance could qualify for the cheapest rates available, perhaps cost wouldn’t be as much of an issue. Unfortunately, consumers find that any number of health conditions (be it their own or related to their family history) and/or lifestyle factors can result in high monthly premiums.
For many, looking at the difference between what others might be paying and what they’re being forced to pay can be frustrating enough to walk away without a policy. This is why you should become familiar with the various table shave programs offered by insurance companies.
A table shave program is way for applicants with certain health conditions to save money on life insurance premiums by meeting specific criteria and/or wellness targets. Not all carriers offer table shave programs, and those that do have their own set of specific limitations, exceptions, and criteria. They’re typically used more for permanent life insurance policies, but a select few carriers also allow table shaving on term coverage as well.
A table rating can be triggered by anything (medical or non-medical) that increases the likelihood that an applicant will die prematurely. Those triggers can vary from carrier to carrier, but a few general examples are:
High blood pressure, cancer, diabetes, combined height/weight (obesity), poor family health history, sleep apnea, asthma
Mental illness, hazardous occupation, adventurous lifestyle, criminal record
Underwriting is more formulaic than fluid, which means an applicant with any one of these (or other) impairments can be automatically rated up several tables. Table shaving offers a little more flexibility in the underwriting process for
eligible applicants. Again, specifics differ from carrier to carrier, but there are a number of favorable health and lifestyle characteristics that can offset those impairments and improve an applicant’s rating.
Let’s say an applicant is mildly to moderately overweight and works in a hazardous occupation.
The underwriter will most likely see these as unfavorable or risky lifestyle factors and give them a lower health class rating, resulting in a higher premiums rates. At the same time, the applicant also undergoes routine wellness checks, hits the gym a few times a week, and comes from a family with no known history of serious medical problems. These favorable lifestyle factors can earn the applicant wellness credits that improve their health rating. The improved rating could save them hundreds of dollars, if not more, each year on premium costs.
Due to all of the carrier-specific variations in table shave programs, you might need to do a little digging to find one that matches your client’s individual situation. But the potential discounts they offer could go a long way toward converting a potential client.
Like money, time is a valuable commodity these days. When a person wants something, they want it now. Not six to eight weeks from now. For the impatient consumer, a Simplified Issue policy is a quick and easy way to get coverage without the medical exam or waiting period.
Granted, this convenience does come at a cost. Because the carrier is providing coverage without a medical exam to provide a clear assessment of the policyholder’s mortality risk, a Simplified Issue policy is going to be more expensive than a traditional plan. Premiums are based on the amount of coverage and can range anywhere from a few dollars more to twice as much as a traditional term life policy. And coverage for most Simplified Issue policies typically maxes out at $250k.
Not everyone will qualify for a Simplified Issue policy. Again, this is because the carrier is essentially “going in blind” by waiving the medical exam. Instead of making a trip to the doctor’s office, the applicant will have to answer a series of detailed questions about themselves (lifestyle, behaviors, family history) and submit additional personal information, such as medical and driving records. The carrier uses this information to determine whether the applicant is “low-risk” enough to be approved.
Generally speaking, a Simplified Issue policy is geared toward consumers who are young, in fairly good health, and have not previously carried a life insurance policy. Another advantage to both the consumer and agent is the quick turnaround time for these policies. The application process is fairly simple and can often be conducted over the phone or during a short face-to-face meeting. It typically only takes a matter of days (or hours in some cases) before the application is approved or denied. Death benefits are available immediately after the policy goes into effect.
A few situations where a Simplified Issue might be ideal include:
- Starting a new job in a hazardous or high-risk occupation
- Traveling abroad or to a dangerous location
- Medical issue or procedure that makes a person temporarily ineligible for traditional term life insurance
- Someone who takes part in dangerous or high-risk hobbies
While a Simplified Issue policy is far from the most ideal product available, it can be a good solution for those clients who value time above all else.
May is National Disability Insurance Awareness Month. The campaign, launched in part by the Council for Disability Awareness, is used to educate wage earners on the importance of planning ahead should their income source be disrupted by an unexpected disability. Because many advisors and agents butter their bread with retirement planning and life insurance products, disability insurance is probably not a topic that comes up in too many client meetings.
But it should. If you’re asking why, the answer can be found within the annals of pop culture.
Dr. Steven Strange was at one time considered the top neurosurgeon in the world. That all changed one fateful night when he was involved in a fiery car crash. While Strange survived the crash, his hands—once skilled surgical instruments—were injured beyond repair. Despite months of treatment, his hands never fully healed. Dr. Strange would never perform surgery again. One tragic incident, one miscalculation on a windy, mountainside road was all it took to ruin a lucrative career.
If you’ve seen the movie or read the comics, you’d know that Strange drained his life savings in pursuit of a remedy for his career-ending disability. Sure, he eventually stumbled upon an ancient mystic, gained superpowers beyond imagination, and has saved the universe a dozen or so times. But in the real world, the story of Dr. Strange would have ended with “drained his life savings.” Unless, of course, he had a good disability insurance plan
Assuming that none of your clients are superheroes, the following paragraphs (rooted in facts, rather than comic book fantasy) should illustrate the value of a private disability insurance plan.
According to the Council for Disability Awareness, at least 51 million working adults in the U.S. do not have disability coverage other than what is available through Social Security.
This is a staggering figure, especially when we consider that 48% of American adults would not have enough savings to cover three months of living expenses if something happened that prevented them from earning any income. Couple that with a recent report that found nearly half of all foreclosures on conventional mortgages are caused by a disability or other medical-related setback, and it’s easy to see why agents and advisors should encourage their clients to consider adding disability insurance to their existing plan.
However, it seems that many believe (or at least hope) that Social Security Disability Insurance (SSDI) will be enough to keep them afloat if they become disabled. Data from the Social Security Administration reveals a much more sobering truth. At the onset on 2018, the average monthly disability payout was $1,197. That’s barely enough to keep the beneficiary above the current poverty level.
This is why even the federal government discourages people from banking on SSDI should an injury or medical condition render them disabled. By their own admission, the Social Security Administration has tacked a very strict definition on the term “disability.” As stated on the agency’s website, a person is only considered disabled if:
• You cannot do work that you did before;
• They determine that you cannot adjust to other work because of your medical condition(s); and
• Your disability has lasted or is expected to last for at least one year or to result in death.
Furthermore, SSDI benefits are not available for those determined to be suffering from a partial or short-term disability.
Of those who meet those guidelines and applied for benefits, only about one-third were actually approved to receive payments. And those payments typically won’t start coming in until after the roughly six-month waiting period. Someone who is forced to live within those means for several years, if not permanently, can forget about setting up or holding onto any sort of retirement nest egg.
So, if you look at life insurance as a way to soften the financial blow that comes with a death (income loss, funeral expenses, medical/hospital bills), then you should look at disability insurance in a similar light. Essentially, a personally-owned disability insurance policy, when used strategically with additional sources of income, can provide the insured with a comparable amount of stability and security they enjoyed before becoming disabled. Or, in cases where he/she will be able to eventually return to the workforce, it can keep money coming in while they recover or learn a new skill. This can also be the key to avoiding asset liquidation or dipping too deeply into existing retirement or life insurance funds.
Several factors will determine the details of an individual personally-owned disability insurance policy. First, the policyholder’s current situation should be taken into account. How much income will they need in the event of a disability? What additional sources of disability income are available to them (employer-provided short/long-term disability benefits, SSDI, existing income sources such as investments, savings, CD, etc.)? How much can they currently afford to put toward monthly premiums?
Once those questions are answered, then you can start hashing out the finer points of the policy, such as how long they must be disabled before benefits kick in (e.g. 60, 90, 180, 365 days) and how long they will receive those benefits (one year? five years?). Most policies only pay until the insured turns 65.
An important component here is the definition of total disability. Because this would be a personally-owned policy, the definition is a little more relaxed than the one given by the SSA. It can range from “the inability to perform their current occupation to the inability to work in any reasonable occupation based on their education, training, and experience.”
Other factors that will affect the overall policy are whether the individual wants the policy to provide benefits for partial disabilities following a period of total disability and if they want any rehabilitation expenses covered. Premium waivers, renewability options, the impact of inflation, and cost-of-living riders should also be a part of the conversation.
To our knowledge, the astonishing tale of Dr. Strange is perhaps the only example of NOT holding a personally-owned disability insurance policy working out for a person whose main source of income was taken away due to a disability. But he’s not real. And in the 12 years that May has been used to raise awareness about the value of disability insurance, the numbers suggest consumers are still slow to get the message. So, it’s up to you—Super Advisor/Agent—to the real hero here.
Next week, we’ll explore how liability insurance could have protected a science lab from litigation after a high school student touring the facility was bitten by a radioactive spider. Just kidding…
Last week we looked at how the emergence and evolution of biometric technology is changing the face of the life insurance industry. Through wearable devices, facial recognition software, and other biometric-based developments, many carriers are embracing the future. However, biometric tech is only ONE of the many game changers that agents and advisors should keep on their radar. This week, we look at two other factors—one technological, the other social—that could impact your business.
Blockchain and Life Insurance
Where the Internet was the portal that brought the industry from paper-based to automated processing, Blockchain technology (if we are to believe the hype) looks to be the next “big thing” in the world of finance and life insurance.
In a nutshell, Blockchain is a virtual series (or chain) of blocks containing data. It was initially developed as a way to keep track of Bitcoin transactions. Whenever a transaction is made, a new block containing a timestamped and encrypted record of that transaction is added to the chain. Anyone involved in the chain can view the data in each block, but no single party can alter, or otherwise tamper with, records contained within the ledger. This combination of transparency and security is why so many see Blockchain as the solution to many of the problems (lengthy turnaround times, fraudulent claims, etc.) that bog down the life insurance and finance industries.
Instead of going too deep into these woods, we’ll briefly examine just one area that could potentially be better served by using Blockchain—the death claims process. When a person dies, the hospital enters all relevant information about the deceased into the chain. That information is then immediately available to all involved parties (state health department, funeral home, insurance carries, etc.). The death claims process, currently a long, drawn-out and cumbersome procedure, can be streamlined into a unified system that drastically reduces the burden for the beneficiary. What takes anywhere from two weeks to six months could be done in a matter of days using Blockchain.
Blockchain technology can benefit carriers by significantly reducing fraud risk. An estimated 10% of claim costs are attributed to fraudulent claims. As a shared, yet secure ledger, everyone involved in the chain can view and audit any updates in real time, making it much more difficult to falsify information or otherwise commit fraud within the network.
Like the innovations in biometric tech we explored last week, Blockchain is still in its infancy. However, as more and more carriers continue to adopt a beneficiary/consumer-focused approach to their business, this sort of streamlined and modernized system—one with the potential for improved user experience, on-time disbursements, minimized touchpoints, and enhanced fraud protection—could easily become the next industry standard.
Marijuana and Life Insurance
Another real-world revolution that is already leaving an imprint on the life insurance industry is not tech-based but rooted in social change.
As of this year, more than half of the United States has passed legislation allowing for the medicinal and/or recreational use of marijuana. Legal reforms at the state level (as varied as they may be) have resulted in widespread changes for multiple industries—especially in life insurance.
The way in which life insurance companies handle the changing landscape of marijuana laws is just as varied as the states that enacted these reforms. While many carriers have yet to budge from the tradition of raising premiums or outright declining coverage for applicants who test positive for THC, others are responding with more lenient policies of their own. Some major carriers have come out as more “marijuana friendly” than others, but nearly all still require applicants to undergo a medical exam that includes a blood and/or urine test.
For the independent agent, these changes mean more options for clients who use marijuana. Regardless of why they use (for medicinal or recreational purposes), you should encourage your client to be forthcoming about usage when applying for coverage. This has less to do with the legal issues surrounding marijuana—which is still classified by the feds as a Schedule 1 drug—and more to do with health factors. According to a 2016 survey by Munich Re, only 29% of underwriters who responded said their company classifies marijuana users as non-smokers. This means that the majority of carriers out there do not differentiate between marijuana use and tobacco use when pricing policies. And despite the growing popularity of alternate forms of use (edibles, vaping), there is little consideration given by carriers as to how the applicant uses marijuana.
What is making a difference for some companies is the frequency and reason for use. How often does the applicant smoke? Is there a legitimate medical reason for their use? By and large, if an applicant admits to using for medicinal purposes, or carries a prescription for medicinal cannabis, the carrier is going to price the policy based more on their medical condition than preferred method of treatment. For the recreational user, someone who uses a few times a month is going to get a much better rate than a heavy user. But going back to the health factors associated with smoking marijuana (mainly the carcinogens contained within cannabis that have been linked to the same illnesses as those found in cigarettes), it’s likely that an applicant who admits to or tests positive for any use, no matter the frequency, will be subject to the same rates as a tobacco user.
Overall, life insurance carriers are individualistic in their reaction to the changing tide of marijuana regulations. Some are adjusting, while others still adhere to longstanding policies regarding coverage for marijuana users. Will the rapidly-growing group of pro-legalization lobbyists and changing perspective of state and federal lawmakers see more carriers taking a relaxed stance on applicants who use marijuana? That is a question only time can answer. However, this is one issue that independent agents and advisors should keep a close eye on as more applicants—especially those in pro-legalization states—bring it to your table.
Biometrics and Life Insurance
There are currently an estimated 10 billion devices connected to the internet, a number that is expected to drastically increase in the near future. Rare is the consumer who doesn’t spend the majority of their day connected to the grid, via smart phones/homes/watches/etc. We love our gadgets and use them extensively in our daily lives, but almost every device on the market ultimately serves the same purpose—collecting data.
Life insurance carriers rely on personal data for underwriting purposes but collecting that information has traditionally been a lengthy process that involves medical exams and mountains of paperwork. Today’s “I want it now” society has given rise to a consumer base unwilling to wait the weeks (or longer) it can take carriers to approve a policy.
In fact, the 2017 Insurance Barometer Study published by LIMRA and Life Happens found that 51% of consumers surveyed listed “faster sign-up process” as an important factor when buying life insurance. That same study found 7 out of 10 respondents would be more likely to purchase life insurance priced by data and without a physical exam. The industry is responding by delving into the world of biometric data.
According to Munch RE, wearable tech (and the analysis of biometric data gleaned from these devices) has become the catalyst for change to the traditional underwriting process. Select carriers first started using biometrics a few years ago by giving wearable fitness monitoring devices (Fitbit, et al.) to new policyholders.
Programs like this are modeled after wellness initiatives, but also allow for quicker, cheaper, and, if the research is to be trusted, more accurate risk assessment. While not yet commonplace, several carriers are looking at biometrics as a way to improve consumer experience in a number of ways, including expedited policy approval and discounts/perks for health-minded customers.
The legalities and consumer confidence surrounding biometrics as it relates to life insurance are still being determined. It’s a given that any personal data used for policy underwriting (whether it be through traditional or tech-based means) is both necessary and submitted voluntarily. For agents and advisors, it will likely be more challenging to convince a Baby Boomer into allowing an insurance provider to track their physical activity than it would a Millennial. Concerns over who can access that data and what they’re doing with it might outweigh the enticement of policy discounts or third-party perks. Of course, when technology presents a problem, it can be quick to offer a solution.
A new product being rolled out by Lapetus Solutions uses facial recognition software to add an extra layer of security to the customer’s account and help mitigate fraudulent claims. The platform—Cronos—also incorporates biometrics in ways that go far beyond activity tracker-based programs. In addition to the enhanced security, Cronos’ facial analytics technology can scan a customer-submitted selfie, along with additional data, to predict individual life expectancy.
[su_youtube url=”https://www.youtube.com/watch?v=NE7_7dk_ZMI” width=”680″]
The company claims their product, which became available last year, can eliminate the need for physical examinations and provide quotes within minutes. Essentially, the software scans an image of the applicant’s face and extracts biological, physiological, genetic and behavioral information. This information, combined with other data, can—in theory—predict life expectancy and mortality risk more accurately than medical exams. Lapetus is also working on further innovations that could potentially identify early warning signs for various diseases and determine whether the applicant is, or once was, a smoker.
The jury is still out on how effective and accurate this technology truly is, and how heavily it will affect the life insurance industry as a whole. That said, this sort of innovative use of biometric-based tech is undoubtedly leading the industry into a brave new world.
Next week, we’ll examine other emerging social, technological, and industry-based trends that are changing the game for independent agents and advisors.
The Cambridge Analytica scandal has put Facebook on a roller-coaster ride of epic proportions. Concerns over how the social media giant handles the personal data of its users are reaching a fever pitch, with some high-profile users (Elon Musk, Steve Wosniak) joining the 1 – 10 Americans who have jumped on the #deleteFacebook bandwagon. Social media and tech experts have offered mixed reactions to how the company will emerge from the fray, but let’s be real – Facebook is not going anywhere. However, an overhaul of its business model could be on the horizon.
It’s safe to say that no one knows exactly how the unfolding Facebook situation will affect social marketing and advertising campaigns (if it does at all), so we won’t get any deeper into those woods. Instead, let’s look at an often-overlook social networking platform – Twitter.
Generally speaking, Twitter is not known as the “go-to” platform for lead generation or advertising. But it can be a valuable addition to an advisor’s toolkit, especially when used strategically.
When it comes to your social networking strategy, Twitter should not take priority over Facebook. New survey data from the Pew Research Center shows that 68% of adults in America use Facebook versus the 24% who use Twitter. And roughly 90% of those Twitter users are also on Facebook. Additionally, Twitter’s character limit and rapid-fire, real-time news feed presents its own set of challenges. So why bother?
The better question is “Why not?”
Honestly, there’s no reason you shouldn’t be active on Twitter. The Twitterverse is full of professionals (including your competitors), journalists, experts and influencers of all types. The platform can not only provide a direct connection to the latest trends and trendsetters, but also allows to take part in the conversation. Just make sure you’re careful about who you follow.
If you’re using Twitter as a business tool, you probably want to stick with following accounts that are relevant to you and your brand. Twitter’s algorithm makes suggestions based on your activity. This means that following and engaging with relevant accounts will lead to more of the same, thereby expanding your reach. Plus, it keeps your feed flowing with content that matters, rather than an endless stream of drivel. It’s also a good idea to reciprocate when someone follows you (as long as the account is legit and relevant).
Tweet to engage:
A tweet has a much shorter lifespan than a Facebook post, so strive to be as engaging and informative as possible. While you can’t expect each and every Tweet to go viral, you should post content that other users want to share. Ideally, you’ll use Twitter to drive traffic to your website. Tweeting links to landing pages, seminar registrations, etc. is good, but your primary focus should be on spreading those original and informative blog posts you’ve written (You are writing original and informative blog posts, aren’t you? If not, get to work!).
A prospect doesn’t need to follow you, or even have a Twitter account, to see your tweets, so this is a good opportunity to prove yourself a knowledgeable and trustworthy advisor (and generate new leads in the process). Including an image (photo, infographic, etc.) is another good way to make your tweet standout and increase engagement.
#Hashtags, when used properly, can organically increase engagement and improve click-through rates. They are used to categorize content and track topics that people are tweeting about or searching for. Hashtagging is not overly-complicated but can be tricky. Avoid using too many hashtags in one tweet and, to maximize effectiveness, make sure you’re dropping the “#” in front of a keyword(s) relevant to your post. Test the waters a bit and see how recently and frequently a hashtag has been used before including it in your tweet.
Be personable, yet professional:
Just as you would with LinkedIn or Facebook, your Twitter profile should be reflective of you as a professional. Use a clean, quality headshot for your picture and chose a handle that incorporates your name and that of your firm. Your bio should be short, to the point, incorporate keywords that pertain to your business and areas of expertise. Make sure to include an email address and link to your homepage as well. Like your tweets, a well-crafted profile will show a little personality and a lot of professionalism.
Twitter’s advertising platform is very similar to Facebook. Multiple types of campaigns are available, and each allows you to set the budget and length to fit your needs. Slightly different than an advertising campaign, Twitter’s Promote Mode automates the promotion of your tweets for a monthly rate.
Of the estimated 330 million tweeters out there, Twitter ads can be customized in a number of ways to help you hit the mark. Targeting options include gender, language, interests, behaviors, location, keywords and device.
While Twitter analytics don’t quite measure up to Google or Facebook, they still give a detailed look at engagements, impressions and clicks. This allows you to get an idea of what’s working versus what isn’t before deciding whether you should go back and tweak your targeting settings.
Is a Twitter ad campaign worth opening your wallet for? Maybe, maybe not. According to Statista, Twitter has far fewer users than most other social network sites but the number of adults who use the service has grown dramatically in recent years.
There are pros and cons when it comes to using Twitter, and those will vary depending on your specific target market. The majority of Twitter users are between 25 – 44 years old, earn $70K or more a year and typically access the site via smart phones. Keep this in mind when considering how much time and effort you want to invest into your Twitter account. You won’t reach nearly the number of potential clients as you would on Facebook or through an email campaign, but a solid Twitter presence can be a good way to supplement your business.
5 Simple Things to Enhance Your Workshop Presentation
Agents and advisors still rely on workshops or seminars for their marketing efforts for one reason: they can work. However, if you find yourself getting a lackluster response during and after your workshops, consider these tips.
Pepper In Jokes (Judiciously)
Humor can be tricky when dealing with a wide audience. What’s funny to you may not be funny to others; in fact, it could be off-putting. However, a handful of safe— even corny—jokes, can liven up a dry presentation.
While a seminar is your chance to present information—in your style and voice—
an hour of one person talking will fatigue most people, even if the information is relevant. Keep your attendees active and engaged by lobbing out questions throughout your presentation. This can be in anticipation of the next slide’s information, as a pause between sections, or a check for knowledge.
Use A Co-Presenter
Not only can a co-presenter shoulder some of the work, it gives the audience another personality to latch on to. Definitely be clear on hierarchy—if you’re the principal presenter, do the work of a principal presenter. This co-presenter can also serve as a floater; eyes and ears throughout your presentation space. This can help corral attention forward.
When organizing a workshop, many advisors will offer a raffle at the end of the session. This can be good to keep butts in a seat for an hour, but it doesn’t necessarily keep them engaged. Instead, offer two or three raffles throughout the presentation. This helps to build momentum for your session and serves as a way to break up your information.
Use A Variety of Media
Ah, the old trusty PowerPoint—a reliable way to present information to a large group of people. Most PowerPoints stick to a steady rhythm of bullet points, blocks of text, and maybe a few charts or images. You can enhance your seminar by using different media, whether it’s more illustrative charts and graphs, relevant videos clips, or easel pad/whiteboard drawing. The more you can mix things together, the more live you can make things, the more your audience will feel engaged.
Marketing Corner – Thursday, January 11th, 2018
It is finally 2018. The previous year was full of activity, significant changes to the tax code, and a lot of news. What will happen this year? Here are three things that could impact the financial landscape of your clients and prospects in 2018.
The GOP-led effort to change the federal tax code passed, and as of December 22, 2017, became law. Obviously, with something as large and cumbersome as our tax code, there are many different ways the changes could impact consumers, depending on their specific situations.
- While President Trump’s tax plan originally proposed four income brackets, the new law keeps seven, with adjusted income ranges. Most have been lowered.
- Current brackets: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%
New brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%
- The law also gets rid of the personal exemption for years 2018 through 2025, but increases the standard deduction to $12,000 single/$24,000 joint.
- Alternative Minimum Tax (AMT) exemptions have increased to $70,300 single/$109,400 joint. The AMT has been eliminated completely for companies.
- The new law doubles the lifetime estate tax exemptions—to $11.2 million, single/$22.4 million, joint—meaning even fewer households will face estate taxes.
- The corporate tax rate was reduced to 21% from 37%. Pass through entities may enjoy specific deductions of up to 20%.
What does this all mean? Well for one, corporations may have more money for planning and profit distribution. With the reduction of the AMT, higher middle-class earners may have more income to address pressing concerns (like say fortifying their retirement plans). While estate tax exemptions may make it more difficult to target high net worth individuals for planning opportunities, there are likely other areas that can be leveraged, such as charitable donations and more efficient wealth transfer options.
A Bull Market
For many market forecasters, the issue is not a question of if, but when. When will the market face a correction? Over the last year, we’ve seen numerous market records broken. In 2017, the Dow Jones Industrial Average achieved four 1,000 point milestones. Around this time last year, the market finally cracked 20,000. Then March 1st it ticked above 21,000. Then in August, 22,000. On October 18th, the Dow jumped another 1,000. November, another 1,000. Just a few days into 2018, the Dow broke another record, cracking 25,000, closing at 24, 922.68 on January 4th. It can only go up right?
We are nearly a full decade into a very bullish market. Some market analysts are suggesting that a 2018 correction might not be too severe, but point to a flat year, when compared to the last few. Whatever the ultimate result, the risk is building in the market and at some point, it will break. This might be a good time for clients to allocate more of their assets into safe-money products.
The Federal Reserve
After nearly a decade of zero, or near zero rates, the Fed, under chair Janet Yellin began raising rates in late 2015 and then again in late 2016. Last year saw three rate hikes—one in March, one in June, and finally one on December 13th. Rates will likely continue to rise, even as Janet Yellin’s term expires. President Trump’s pick for the Fed Chair, Jerome Powell, seeks to maintain continuity with the current fed reserve approach of gradual rate increases. Outgoing chair Yellin, in her last press conference, indicated a projected three rate hikes for 2018.
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Marketing Corner – Thursday December 14th, 2017
In last week’s Marketing Corner, we discussed how advisors can use the downturn around the end of the year to evaluate their year in the business. This week’s post discusses how to create an insurance marketing plan to hit the next year running.
A marketing plan is a lot like a business plan. It organizes many aspects of your business and projects forward to specific, achievable goals. You can think of a marketing plan as part of your overall business plan or as something that dovetails with your business plan. However you think of it, having a written catalog of marketing goals is particularly helpful in charting the growth of your practice.
It may seem like unnecessary homework, especially when you have many operational, day-to-day duties. But use the end-of-the-year downturn to consider at length your marketing plan. Draw on input and feedback from all your employees and draft a document that can be shared among relevant parties.
Here is a simple five-step process for creating an insurance marketing plan.
Step 1: Assess Current State of Business
Using metrics and feedback, assess how your company is growing. Consider what’s working and what isn’t. Compare metrics to previous months and years. Get an overall sense of how the company is situated. Is there a particular market that you are seeing more business from? Less?
Step 2: List/Brainstorm Goals
Consider your main goals for the next coming months and years. Identify them by timeframe, i.e. “in two months, I’d like to see this much growth,” “by next year I want small businesses as clients as well as individuals,” “in eighteen months, we need to see a 200 percent increase in revenue.” Obviously, your goals will be unique to you and your practice, but don’t be afraid to list out everything you want and what you think is reasonably achievable. Once you have your list of goals, prioritize them and plot them on their respective timeframes.
Step 3: Identify Specific and Non-Specific Goals
From the list, separate your goals into specific and non-specific categories. When we ask agents what they want for their business, many initially offer non-specific goals like “I’d like to see growth,” or “I want to get more appointments,” or “I’d like to convert more leads.” Non-specific goals can be good for the broad trajectory of your business, but being more
specific will help you figure out how to achieve short-term goals.
For instance, let’s say you did $500,000 in production last year. You might say, “I’d like to see if I can do a million even.” Depending on your area and specialty, this may or may not be a reasonable goal, but at least it is specific, with quantifiable and measurable metrics.
Here are some non-specific goals with their specific equivalents:
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|“I’d like to see more business by the end of the year.”||“In the last half of 2017 we did $250,000 in production from twelve clients. For the last half of this year, let’s see if we can do $400,000 in production from 15-20 clients.”|
|“I want to do more digital branding and marketing.”||“We should have an interactive consumer-facing website in the next two months and implement an email drip campaign.”|
|“I want more big fish clients.”||“Let’s target pre-retiree doctors and try to convert ten to clients by the end of the year.”|
Non-specific goals are not always bad. They can provide you a sense of your company’s big picture and provide direction for your various specific goals.
Step 4: Identify Your Target Market(s)
Every business should have an idea of who is buying from them and who they want buying from them. A large retailer or restaurant wants anybody and everybody to shop from them, but they also know based on experience and purchase habits, who is coming to their stores. They are fine with a large number of small-to-medium sized purchases, but they obviously want as many big purchases as they can get.
Likewise, you as an insurance agent or financial advisor might want anybody (usually meeting an income threshold) who can benefit from your services. So if you think that your target market is anybody, you will get anybody—which could be a hodge-podge of leads and prospects that burn before you can convert them or might be a steady stream of small fish clients that keep your business afloat without significant growth. This type of business is good and well—it’s where the majority of business likely comes from and it’s important to not ignore it.
But if you can target specific market types while you conduct everyday business you will be positioned for growth. Going back to step 1, where you assessed the state of your business, think again about the client types you already work with. Where does the majority of your business come from? What are things you can do to enhance production from this segment of your business? What are potential client types to pursue harder? Profile your target clients. For example:
Client Type: Pre-Retiree Doctors
Income Threshold: 80,000 per year
How Many Current Clients: 5
How Many Brought On Last Year: 2
Goal For This Year: 4
Client Type: Mid-Level Professional
Income Threshold: 60,000 per year
How Many Current Clients: 18
How Many Brought on Last Year: 7
Goal For This Year: 12
Step 5: The How (Matching Marketing Solutions To Target Markets and Goals)
This step is where you begin to think about marketing solutions to go after your target markets and specific goals. With any new business initiative, cost will always be a deciding factor. The one thing we’ve found working with our agents is that not one single strategy will work; rather, it is a mix of targeted strategies that grow brand awareness and bring in more prospects.
When thinking about marketing solutions consider:
Appropriateness for target market
The senior market may be less receptive to digital marketing and a younger market may not be receptive to direct mail
Cost and ease of implementation
Digital solutions like social media, email, and web campaigns, may be relatively cost-effective for a broader audience. But more expensive solutions like workshops may be what pull in higher-end clients
Metrics and Logs
What kind of measurements will you use to track your marketing campaign? Digital marketing is great because platforms like social media and e-blasts provide easy ways to track response rates.
Once you have followed through on your marketing plan examine what worked and what didn’t. Then you go back to Step 1. While your overall, non-specific goals for the business may not change, your specific ones can and should. A good marketing plan is not only a document to chart the future of your company and keep you accountable, it is a living document that changes and grows as you do.
As we near the end of the calendar year, advisors often find a slowdown in business. Usually this affords some family time, some time to tie up loose ends, and some time to think about how business went in the previous year and what needs to be done in the next.
However, advisors and agents often evaluate their year from one single metric: production. While production can be an indicator of success, it is not the only metric that matters. It tells part of the story, but not the whole thing.
Focusing only on production can leave you vulnerable to blindspots and missed opportunities for more sustained growth. Digging deeper can not only help you more accurately evaluate the year, it can help you build a better marketing strategy for the next year.
Here are four ways to dig deep and evaluate the year.
Examine Your ROI of Marketing Activities
You may have done excellent production over the year, but how much did it cost you to hit those numbers? Look at the past year’s marketing activities and see if you can directly tie them to specific cases.
Obviously, marketing is a little more complex and may not always offer a direct correlation to a case. You may conduct certain marketing actions purely for the sake of brand awareness and these are less likely to receive a direct return on investment. However, think about the quantifiable aspects of the past year’s marketing to get a sense of what’s paying off.
There’s a huge difference between clearing a million in production from a $20,000 marketing budget than there is clearing a million from a $500,000 budget.
Examine Your Target Market
If examining your marketing activities gives you an idea how your production came to you, looking at your target market will tell you who it came from. This is important because it can help redirect your marketing activities or even open you to new markets. Did the majority of your production come from your ideal target market or was it a range of demographics?
Most advisors will have a certain client profile they target. Some may specialize with pre-retiree boomers. So, if you target pre-retirees, but saw more business from younger clients, you’ll want to rethink how you are marketing, maybe to readjust to your preferred target market, or to focus more on the new client base.
Related to this, you should also examine how much of your business came from existing clients and how much came from new clients. And from your new clients, how much of them were referrals and how many were from your marketing efforts.
Examine Your Consistency Quotient
Landing big cases with high production is certainly a goal for most financial advisors—who wouldn’t want to spend their career shaping high-value cases that pay off big every time? Unfortunately, not every case will be as big as you like. Smaller, more run-of-the-mill cases may pay off down road, especially if the client becomes a lifetime customer.
Just as you wouldn’t want to judge your performance based on the very small cases that yielded slim comp, you shouldn’t judge how well you did based on your big cases. To get a better appreciation for how well you did, isolate the outliers and look at the bulk of the past year’s cases. The areas where you are consistent and see consistent growth are going to be better signals of your success than a few big cases as you move into the next year.
Examine How Well You Achieved Your Business Plans
What were your goals at the beginning of the year? How many did you achieve or how close were you to achieving them? What prevented you from doing so?
In talking with financial advisors and agents, we find that many don’t have a set new-year business plan, and if they do, it’s often simply doing more production. Having a specific set of goals, versus a vague direction, is going to be better for the mid-term and long-term sustainability of your practice. This is because a set of specific, reasonably achievable goals, gives you basic metrics to measure. This helps you to understand why you achieve these goals, and why you perhaps fell short on some of them.
If your goal is only to do more production, then what constitutes more? If you have a specific number, say, hitting your first million-dollar year, what will you sacrifice or overlook to achieve this? How much did it cost you to hit a million? What other opportunities did you overlook? The point is the story of your year in business is not just your production or revenue; it comes down to who your clients were, how they found you, how effective your marketing was, the consistency of your cases, and how you measured up to your business plans.
Stay tuned for next week where we will discuss tips on creating an insurance marketing plan.
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In a recent post, InsuranceNewsNet discussed the challenges presented by companies that are “born digital.” These “Born digital” companies (think Amazon, Airbnb, Uber, and the like) have set customer service expectations that filter to all kinds of organizations, including insurance companies, argues Lincoln Financial president and CEO Dennis R. Glass.
This is especially true for younger consumers. Born digital companies connect directly with their consumers, offer efficient and immediate brand response, provide clear and user-friendly interfaces. “Born legacy” organizations, say insurance companies, have to match the consumer experience offered by born digital firms.
Here are five ways you can compete with “born digital” companies:
Whether you engage with your consumers through email, social media messaging, or phone, it is always going to be a good idea to respond quickly to inquiries and follow-up questions. Leads decay a little bit over time—this is true if you’re dealing with a Boomer prospect who responded to a direct mail piece or a Millennial who asked a question on your company’s Facebook page.
Publish Engaging Content
A good content strategy will employ a mix of formats and topics. For example, short status updates, brief blog-style posts, longer in-depth articles, leveraged content from other sources. While you may have a specialty or focus, create posts that address a variety of topics. Financial planning has many different areas that can be covered—consider who your audience is. Boomers may be more concerned about Social Security and positioning assets for retirement, whereas younger consumers will likely be concerned with wealth accumulation and dealing with student debt.
Modernize Your Website
An outdated website can make it difficult for your client base to quickly access relevant information about you and your company. Your site should have clear, easy to follow information presented logically, adhere to good design basics. Large buttons, uncomplicated fonts, and high-resolution visuals enhance the user experience for all consumers types—Boomers, Gen Xers, Millennials. Modernizing your site also means that it is mobile friendly with numerous ways for your consumers to contact you directly from their phone.
Provide Useful Digital Tools
Selling financial services and insurance online is very different than selling tangible products (ala Amazon) or providing a convenience service (ala Uber). Online shopping outlets can capture large spans of consumer attention with an endless array of products to peruse, ratings to compare, and digital widgets. In the financial services sphere, however, there are things you can do to encourage consumers to spend time on your website and connect with your brand. For example, quote tools, calculators, and other similar interactive elements. Some advisors do draw on these resources when constructing their website. But they fail to pick relevant calculator tools, or choose ones that have too many variables, or they put them on a little-seen Resources tab.
Offer Kits, Guides, and Whitepapers
Build up a library of guides and marketing material that can be easily accessed by consumers. This library can contain product information, concept pages, worksheets, and yes, even a brochure on why the consumer should work with you. These things should be available on your website and promoted on your social media platforms. You can (and should) also do e-blasts on them. Whether you offer them as a direct download or issue them through a follow-up email, you should still use a form capture screen—the simpler the better.
Consider Video – Video will generally see higher levels of engagement compared to other forms of content.
Balance Digital and Traditional Marketing – Just because you are attempting to attract more digital natives, does not mean that other, more traditional forms of marketing won’t work for you. Embrace both and strike a balance.
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