Insurance isn’t what they want. It’s what they need

People buy what they want, not what they need.

People buy on emotion and justify on logic.

People don’t want insurance. They want what it will do for them.

People don’t want financial planners.

They want financial advice. They want financial help. They want financial guidance.

When they get what they want, they will be more open to accepting what they need and why they need it.

The problem is, what they need is not provided by the financial planning industry.

One in two households in Australia reportedly live from payday to payday. In the US, 76 per cent of consumers reportedly live from one pay to the next, using credit cards to make up any shortfalls.

Can you imagine the size of this opportunity?

Risk advisers provide clients with insurance, income protection, trauma cover and possibly a retirement plan. After that, there’s little else except annual reviews and the odd update.

Almost any financial adviser or financial planner can provide insurance or investment, but few – if any –provide a service which will keep the clients tied to them for the duration. That service is personal financial management, working with clients on how to manage their daily lifestyle money.

It’s not budgeting, because if budgets worked (and they do, but users fail), there would be no need for new programs, books, CDs, courses or seminars. It isn’t about consolidating the client’s money in one place so they can see how broke they are. This is about a proven plan to show clients how to eliminate debts and manage money in order to create their wealth.

When 80 per cent of consumers fail to see advisers because they don’t feel they have enough money, this is a big problem. Our program was developed because of the constant stream of requests from clients who complained about not being able to make ends meet. The only advice available for a long time was to spend less than they earned and pay the highest interest debt first.

Once the client can see the road ahead is financially secured, they are more likely to feel comfortable in making sound financial decisions for insurance and retirement. The program even highlights the needs to be covered for insurance, which paves the way for the adviser to make recommendations.

Without needing to find new clients, advisers can now contact their clients and shore up retention, as well as review the sums insured while knowing the clients can comfortably afford the premiums.

Giving clients what they want – financial peace of mind and control – will get them what they need.

Nobby Kleinman is chief executive of Money Rules