Building value through client relationships

There is no doubt that remuneration for personal risk advice in this country is moving inexorably away from commissions and towards fee for advice.

For this reason, amongst others, the concept of value becomes more important than ever before. I believe there are three fundamental aspects of value that advisers have to master in building more meaningful and long lasting relationships with their clients. These are:

1) Creating value

2) Communicating value

3) Differentiating your value from 'the pack’

I have mountains of content around creating and communicating value, but in this article I want to focus on three differentiating risk advice strategies that will separate you from the pack and add real value for your clients.

I will also point out the ‘double whammy’ benefit of each strategy, namely for your client’s benefit (FYCB) and for your own benefit (FYOB).

Strategy 1 – Intergenerational advice

Have you ever been guilty of saying, or have you heard other advisers saying: ‘Insurance isn’t really relevant for most of my clients as they are mostly pre- or post-retirees.’

Can you spot the flaw in this statement?

What do you, and indeed most retirees, consider the single biggest financial risk in most people’s retirement?

Is it investment risk? Market risk? GFC?

No!

It is if serious illness, injury or death strikes a retiree’s child, grandchild or spouse thereof without proper protection being in place.
What impact will this have potentially on your clients’ retirement nest egg?

Who will be expected or required to fund the financial shortfall?

Ask your retiree clients if they would rather fund the financial shortfall themselves (and point out this could run into hundreds of thousands of dollars) or pay a small premium (which would have no impact on their nest egg) to a life company so that the life company could fund the shortfall instead.

Result:

An appropriate Personal Protection Package for all eligible children, grandchildren and spouses (FYCB).

You also turn a shrinking business with declining funds under management (as most clients are in draw-down phase) into a stable or growing business by bringing wealth accumulators into your client base (FYOB).

Strategy 2 – Child trauma cover

Some advisers tell me that not all of their adult trauma cover clients add their eligible children to their policy and it is usually because the parents are uncomfortable having the conversation, as they don’t want to contemplate something serious happening to their kids.

I believe it is crucial that all eligible children are added to their parents’ trauma policy, so I recommend that you don’t present child trauma cover as an optional extra benefit on their policy, but as an automatic inclusion (preferably for $100,000 per child) on their policy. The two most important reasons for this are:

1) A fantastic benefit – in the event of a claim, the sum assured will enable the breadwinner to take time off work to be with their sick or injured child. Any doctor will tell you that the single biggest accelerator/facilitator of a child’s recovery from a serious illness or injury is their ability to spend time with both of their parents, and given that compassionate leave in this day and age would probably be a long lunch, the value of the breadwinner being able to take a period of unpaid leave should not be underestimated.

2) Cheap as chips – the cost of $100,000 child trauma cover is typically around $100 per annum, so it should be a no brainer to include it for every eligible child. Also, making it $100,000 means that, when it is converted to adult trauma cover (with no underwriting) sometime between 18 and 21, it constitutes a more meaningful start to their adult trauma cover. One other point that you might not have considered: if you were to write one new personal protection package per week with two children attached to the parent’s policy, this will mean that you will have 100 guaranteed new clients per annum coming on board between 2 and 16 years’ time, depending on the age of the children when they are added to their parent’s policy!

Result:

Clients, that is the parents, get an invaluable benefit at a minimal cost should something happen to one of their children (FYCB). You also create a guaranteed new client pipeline simply by doing the right thing by your clients (FYOB).

Strategy 3 – 'P-plater protection'

Did you know that trauma cover is a product that is specifically targeted at the 18-25 age group?

NB Accident-related traumas:

Paralysis, major head trauma, severe burns, coma and loss of limbs – all of these medical conditions are included in a trauma policy because they are the most common injuries sustained in car accidents. Which group of potential clients have by far and away the biggest potential exposure to car accidents?

The answer: P-platers – especially male P-platers.

If made aware of the opportunity to buy a “P-plater protection” policy at a minimal cost, what parents of a child who is a P-plater would not buy this cover?

If a child has been on his/her parent’s adult trauma policy as a child trauma life insured, then it becomes the easiest of transitions to adult trauma cover (P-plater protection) with no underwriting.

Result:

Clients, again the parents, obtain peace of mind regarding potential car accident implications at a minimal cost (FYCB). You create the opportunity to tap into the virtually untapped 18-25 market with targeted risk advice (FYOB).

All of these differentiating risk advice strategies will add real value to your clients and will have the effect of separating you from the pack and establishing you clearly as a first-rate risk adviser who is creating a quality experience for your clients rather than just completing a transaction.

These and many other 'light-bulb moments' can be picked up at my Risk Workshop, which I am running in all five major capitals during June.

Chris Unwin is the founder and chief executive of Chris Unwin Training and Consulting Services.