Page 3 Profile
Adding Life
by Carolyn S. Ellis
L&HA Features Editor
Kevin Kimbrough is National Sales Manager for Saybrus Partners, a subsidiary of The Phoenix Companies, Inc. A recent study by Saybrus Partners revealed that only half of individuals with a financial advisor and a financial plan have ever discussed adding life insurance to their plans with their advisor. We spoke with Kimbrough about providing financial professionals with support, product expertise, and personalized insurance solutions for their clients, to add value to their practice in a time of market volatility.
L&HA: The Saybrus Partners study showed that financial advisors are missing an opportunity to evaluate life insurance their clients have and to use it to meet important goals in their financial plan. Were you surprised by the findings?
KK: The study results are pretty consistent with the anecdotal evidence we have been seeing for a long time. The typical financial advisor who has more asset or investment management focus really isn't confident enough to wade into discussions about life insurance despite its importance as the foundation for a good financial plan. The headline issue is that life insurance is not consistently talked about and that's an opportunity for an advisor to differentiate him- or herself and add value for clients. It's a big opportunity to educate clients about uses of insurance and additional features, riders and benefits they aren't aware of.
L&HA: Is this the first study to show this so clearly?
KK: There have been other studies including one by Financial Advisor Magazine in 2006. They looked at the fact that many financial advisors don't do life insurance at all. When they drilled down, the reason was a lack of confidence on the part of financial advisors to get involved in the more complex issues around life insurance planning and the whole life insurance process.
L&HA: Do advisors need more education or to partner with insurance experts?
KK: We've found that the partnership approach is more pragmatic. Our firm is focused on partnering with financial institutions and their advisors to help them make life insurance a consistent part of their businesses. Even if advisors begin to do life insurance regularly it's still not their focus and it's difficult for them to learn all there is to know. Taking the CLU curriculum or something like that can be a little overwhelming.
Saybrus consultants around the country partner with advisors and help them put together a plan to consistently implement life insurance in their practice. We start by helping them understand which clients probably have needs that could be addressed by life insurance. We do that by profiling, breaking down their clientele into different types of needs that can be addressed.
L&HA: Do you work with advisors case by case or train them so they can replicate this process on their own?
KK: Early on, it's "Let us come in and help you from A to Z." Once a partnership is established and the advisor gains more comfort and experience in the arena, we see them begin to do more of the basics like term insurance or single premium life insurance. They then fall back on us for more complex business, like estate and retirement planning applications of life insurance.
L&HA: Do they work solely with products from The Phoenix?
KK: No, we are more of a product-neutral partner. In our point-of-sale business we don't represent The Phoenix products at all. We do a lot of business with John Hancock and Pacific Life because we have an arrangement with them with the Edward Jones financial advisors. In other accounts we deal with as many as 4-5 additional carriers depending on the right product to fit the solution. Advisors get paid the same as if they did the business without us.
L&HA: What are some of the solutions you address?
KK: Most clients are aware they need some life insurance to protect their kids and spouse for the replacement of income, but a lot aren't aware of the benefits of using life insurance for cash accumulation and the tax efficiencies of that. Later in life at retirement or post-retirement when clients start thinking of transitioning assets they are unaware of the issues around wealth transfer and where life insurance might be the most efficient vehicle to use to transfer assets such as IRAs and annuities that transfer inefficiently from a tax standpoint.
L&HA: These don't sound like new strategies.
KK: That's right. Issues around wealth transfer and cash accumulation, that's been done for a long time. It seems that advisors aren't really drilling down and showing clients the other things life insurance can accomplish and where it might be the most effective tool.
L&HA: Are advisors working with you finding success?
KK: When we have established a partnership, we see the advisor's business increase significantly. Most of the large broker dealers who have looked see that client satisfaction goes up significantly when insurance is part of the conversation and client retention is improved when insurance is discussed and possibly added to a client’s portfolio.
L&HA: It seems that with today's market volatility advisor/client meetings can be colored by fear and uncertainty. Wouldn't life insurance solutions give clients a more positive feeling and sense of control?
KK: Some advisors have reacted to market volatility by saying, "This is the wrong time for me to be talking to my clients about insurance." To the contrary we think it's a good time. Clients can look at life insurance as an asset when they use it for wealth transfer to their children and grandchildren. They add an asset that is not correlated to the market's performance, meaning the return to the estate is tied to the life expectancy of the client, when that client actually dies, it's not correlated to interest rate or stock market environment.
L&HA: Does this approach get people at retirement age to buy life insurance who would not usually be doing so at this stage of life?
KK: If we focused on that age demographic, we would probably see even fewer conversations taking place around life insurance because people make the assumption they are beyond the age where they need life insurance. In fact, post retirement, when we talk about what we are going to leave the grandkids or do we need to incorporate long term care to protect some of our assets (by adding a life insurance policy with LTC), there's a lot of opportunity to talk about life insurance with those clients. It gives clients more confidence they can spend down their other assets, and the kids will still get what they want them to get.
L&HA: With your experience in the industry, it must be exciting to be in a position to embrace this concept.
KK: In the 19 years I have been in the industry I have maintained specialization and focus in the area of life insurance, something fewer and fewer and advisors have done. The core of what we have done at Saybrus Partners is to offer to financial institutions and their advisors the opportunity to partner with somebody who has the expertise they are lacking and don't have the opportunity to build.
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