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Give This Message to Your Agents and Watch Your Sales Soar

While many life insurance agents define themselves as life insurance agents, they will not prosper in the coming years because they define themselves too narrowly. Few clients have purchased your product because it was the best or the cheapest. They bought you and were comfortable with you. So although we all say we are in the relationship business, you do not act that way. You continue to sell life insurance rather than leverage the relationship.

Specifically, you have allowed the big securities firms for years to make money from your clients’ investment portfolios, while you have chipped with a variable annuity here and there or the sale of some mutual funds. But you never get the big money because you keep defining yourself as the life agent while the other guy, the stockbroker, gets the investment business (fortunately, the stockbroker has left the insurance business on the table for you to get).

But if you start defining yourself correctly, as the trusted financial advisor (I don’t care that your captive company won’t let you use this title, I am talking about what you call yourself in your head), then you realize that insurance and investments are the same. In both cases, the client gives you a check to improve or protect their financial situation. What’s the difference if the client’s money is going into the general account of the insurance company (a bond portfolio) or you are selling the client a bond mutual fund or a managed bond account. In both cases, the client has given you a check in order to be better off financially.

“But I really don’t know much about investments or the stock market!” you exclaim. You don’t need to. Your job is to capitalize on the relationship and use others to manage the investments.

In fact, to position yourself the best way, I recommend that you do not use mutual funds, but rather, individual managed accounts for your clients. If you sell mutual funds, you have sold your client a ‘Black box product” and he knows it. You are nothing more than a product pusher. If you sell your client an individually managed account, where he gets statements and sees the transactions in his own account, you have sold your client a service. And even though he knows you do not manage the money, he is now engaged with you in the “process” of money management. You now have a client engaged in a continuous relationship, not just another customer.

But if you want to keep peddling insurance and let the Internet take away your term insurance business and let the no-loads take away your mutual fund business, fine.

If you want to get into the money raising/money management business, keep reading.

There are 3 choices you have regarding the management of the money:

  • You can become a Registered Investment Advisor and manage the money yourself (without knowing anything about the stock market!). To become an RIA, in most states, you may need to take 1 or 2 NASD exams and then pay a fee to the State. Then, you have a license to charge fees to manage investments. How will you know what to do with their money? You can use many of the winning mechanical systems that you can get for free or little: the Dow Dividend Strategy, the model portfolios maintained by S&P, the Value Line System. There are many such systems you just follow. You do not need to know one stock from another and these systems have excellent track records. You just buy and sell when these systems tell you to.
  • You send the funds off to a professional money manager such as SEI, Lockwood, RWB or many others that have very good systems, will supply you with the sales script and the presentation materials. You will also need to become an RIA for this option.
  • Option three does not require that you file as an RIA. You can sign on with an existing RIA who will manage the money. You sign on as a “solicitor,” a status that does not require any tests or licenses in most states. You can be raising money and collecting ongoing fees next week!

If you want to make more money from your existing clients, turn your customers into fee-paying clients and have more to offer your prospects, then fee based money management may be the answer. In addition, did I mention that as long as the client is happy, you get continuing fees every year and build your own retirement annuity?

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© 2008 Financial keynote speaker—Larry Klein