Insurance pros have an advantage financial pros don’t

female insurance pro shaking hands with client (Photo: fizkes/Adobe Stock)

As an insurance professional, you often find yourself in competition with advisors from financial services firms. Both of you represent firms with history, yet these competitors might position opening an account with them as a “step up” in the client’s financial journey. But you have a secret weapon. Use it.

Financial advisors at major firms are seeking prospects who can invest substantial amounts of assets immediately. Put another way, they have new account minimums. This number might be $250,000 or more. The size of the number depends on the firm. They are looking for prospects who have accumulated a significant nest egg.

Insurance agents cast a wider net because you can take on clients who start on the wealth building journey by investing from their cash flow. They buy insurance or start investing in stock funds with a small amount which they gradually build up through monthly additions made as automatic debits to their checking account. This has lots of advantages.

1. New customers can take you for a test drive. The advisor at the financial services firm is asking their prospect to turn over a large lump sum to a stranger (at a good firm). Will the relationship work out? What if they do not like the investments? There are a lot of “what if” questions. The insurance agent is bringing the new client into the fold with much smaller dollar amounts. As the client gets comfortable, they can add substantially more money.

2. The numbers are bigger than they sound. Suppose the minimum account is $250,000. Does someone with $250,000 qualify? Maybe not. They might have $250,000 in total across all their taxable and retirement accounts. That is a hard decision to put all your eggs in one basket. In reality, the prospect needs $500,000 or $750,000 in assets so they could take some from here and there without disrupting relationships. The insurance agent is working with smaller amounts, built up over time from cash flow.

3. No one needs to get fired. People do not keep their money under the mattress anymore. They have it at other financial institutions. If they had $260,000 in total assets and the advisor requires $250,000 to open a new relationship, someone needs to get fired. They are closing current account relationships. That can be awkward. Even if everything is a form of online relationship, it takes work to close everything down. Establishing a new relationship with you does not mean you must disrupt existing relationships.

4. They get you. Many people like a 1:1 relationship, a person they can call their agent or advisor. If the prospect does not have $250,000, the financial advisor at the major firm may let them know they can still be a client, just as long as they are comfortable working through the firm’s call center or having an online relationship. You need $250,000+ to get that personal advisory relationship. However, you are able to offer that relationship without the steep price tag. (The client needs to understand, though, you have many clients.)

5. Dollar cost averaging. When the stock market is volatile, prospects might think: “What if everything gets invested today and the stock market tanks tomorrow?” This can make them hesitant to commit. Regardless if your client is investing in their 401(k) at work or through monthly automatic debits to their checking account, they are gradually adding money over time. That is the concept behind dollar cost averaging.

There are many reasons why it can be easier for insurance professionals to initiate and later develop account relationships.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” can be found on Amazon.


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