Chapter 1: What Is Advanced Marketing? Why and How Should You Get Involved?
The Target Market
This book is directed to those life insurance producers that have proven themselves to be survivors in the business and who are ready to take the next step to advance their careers by engaging in advanced marketing. Generally, that includes producers who have been in the business for a few years or more and who are making a regular income, but not seeing significant growth in their earnings potential. In effect, it covers those who are working hard and making a living, but hitting a wall in terms of getting ahead.
Consequently, the purpose of this book is to show how to get over that wall to the better income and quality of life that is available through advanced marketing. That will be done by covering advanced marketing concepts in the areas of Estate Conservation, Business Exit Strategies, and Executive Compensation with an explanation of how to prospect, prepare, and present proposals in those markets. In addition, you will learn how to network and deal with other professionals, while understanding the risks associated with being careless or too aggressive in this market.
Advanced Marketing Is a Relative Term
You should begin this endeavor by understanding that advanced marketing is not restricted to high tax bracket individuals and large businesses that may be beyond your reach, at this point of your career. That is because advanced marketing is a relative term and covers a broad spectrum of socio-economic prospects.
For example, whether a buy and sell agreement is for a $50,000 Mom and Pop grocery or a $5,000,000 closely held corporation, you are dealing with the same conceptual problem â a need to plan for changes in ownership upon the retirement, death, or disability of the principals. This means that you can begin modestly in applying the concepts and, in time, work your way up to a more sophisticated and increasingly profitable customer base without getting overwhelmed from the start.
In addition, the subject matter is manageable in that there are only three primary areas of concentration to the advanced markets. They are estate conservation, business exit strategies, and executive compensation. You do not have to master all of these subjects, since no one does, but the variety of opportunities gives you the choice of finding the areas that suit your background, interests, and talents.
Why Be Interested in Advanced Marketing?
In regard to the question of why you should be interested in pursuing a career in the advanced markets, the first reason is that you can achieve a higher level of income. On this point, keep in mind that there is an absolute limit on the number of policy applications that an agent can take in a given period of time. Once that limit is reached, the only way to increase your income is to sell larger policies, and that means going into the advanced markets.
This enlightenment came to an agent I know as he stood outside of a car wash waiting for his car to be finished. He knew that he was working as hard as he could and making a living, but not getting ahead. Suddenly, he realized that if he could not sell more policies, then he would have to sell larger policies to get where he wanted to be. Not only that, but as he watched car after car come out of the car wash at $15 to 20 a piece, he knew that the owner of the car wash had money and was the kind of prospect, along with other business owners up and down the street, that he needed to pursue to meet his goals â and he did.
Another extremely important reason for entering the advanced markets is to improve the quality of your life. In that respect, you can choose to spend your career sitting around your customersâ kitchen tables at 8:00 oâclock at night and on weekends selling small policies. If that is what you want, itâs fine to do so, since people do need that kind of service and you can make a living.
But if you would rather work the daylight hours from Monday through Friday and see constant career growth, with a greater sense of personal satisfaction and professional accomplishment, you need to pursue the advanced markets. Further, the advanced markets provide not only larger policies, but also better retention rates. This is because the focus is on needs based selling, as opposed to product or pitch selling, and better-educated customers, who understand the need that a policy addresses, are more likely to keep it.
An excellent example of this comes from an agent I know who asks his customers to tell him why they are buying policies before he will deliver them. If a customer cannot clearly explain why they bought the policy, he will not give it to them and he is not kidding. His reasoning is simply that if they do not know why they bought the policy, they will not keep paying the premiums.
Major Current Trends
It is well known that a dramatic increase is developing in the number of senior citizens in our population and the advanced markets typically involve these older customers. They require more service, but as previously mentioned, generate renewal commissions that are much higher than what you will receive on comparable policies sold to younger prospects. Further, the greatest transfer of wealth in the history of our nation is taking place between the baby boomers and their parents, as the older generation dies off. Since this will require a tremendous need for financial products and professional services to deal with estate taxes and other problems, you need to be in the advanced markets to take advantage of the opportunities.
In that regard, lawyers have historically acted as the central figure in planning and executing clientsâ business and personal planning. The current trend, however, is for individuals from the financial services industry to act as coordinators with other professionals such as the lawyer, accountant, banker, and securities broker in creating and effectuating such plans. Besides contributing to design elements of the plans from the insurance and financial side, they help coordinate the activities of the other professionals and seek to maintain the momentum of the planning process toward completion. The bottom line is that this means the life insurance agent may have more influence over the situation with a greater certainty that it will come to fruition.
Another feature of the advanced markets is that it involves the seeming endless process of tax reform. To your customers it may be frustrating, but I know from long experience that those who take advantage of tax saving opportunities while they are available come out better than those who do not. From your perspective, while it is a challenge to keep up with the changes, change is your best friend because it constantly creates potential new prospects and keeps giving you reasons to revisit your existing clients for new sales opportunities.
Candidates for Advanced Marketing
Even new agents should seek from the very beginning to acquire advanced marketing skills. That is because what you become is very much affected by what you see yourself as being. If you think of yourself as a professional who will grow and develop during your career, you will be more likely to do so. Further, the higher you aim, the higher you are probably going to hit. An ambitious attitude will help to avoid developing a sense of complacency that can retard career growth.
In any case, intermediate agents are the ones who possess the greatest potential for moving into the advanced markets and dramatically improving their performance. This is because they are in a position to capitalize on what they have already built to move up. In doing this, however, they need to keep up their regular efforts to make a living while they work their way into the advanced markets. This is because it is a process that, as will be explained, takes time and one cannot drop his or her regular efforts to go elephant hunting and expect to survive.
How to Prepare for the Advanced Markets
The most successful approach to the advanced markets requires that the agent adopt a policy developed by the 3M Company called âbootlegging.â Essentially, it requires people to bootleg or steal 5% to 10% of their regular time and effort to create new products and ideas. Applying this concept to the advanced markets, this means that you must find a way to set aside 5% to 10% of your time to educate yourself, prospect, prepare, and present proposals to these new types of customers.
Considering how much time you are already putting in, it may seem like a daunting task. One thing is for certain, however, and that is that it will never happen if you just keep on keeping on. The way around that obstacle is to make an appointment on your calendar with yourself to engage in your development, just as you make appointments with other people. Here, keep in mind that no one is more important to your development than you yourself; so donât break those appointments with your future.
The first step in your development is to get the necessary training and education. If you do not have your CLU or ChFC, get them. These designations are the best investment you can make if you are really serious about moving into the advanced markets. Then join the local alumni chapter of The American College to take advantage of the ongoing training programs offered.
In addition, form or join a study group with other agents who are similarly interested in the advanced markets. I can assure you that this is what the top producers do to develop and share ideas. Further, if you are interested in estate planning, you should join your local Estate Planning Council. That will not only expose you to other successful agents in the market, but also introduce you to other professionals like lawyers and CPAs with whom you need to develop networking relationships, as explained later.
Finally, it is also a good idea for new and intermediate agents to find a senior agent who is already successful in the advanced markets to act as a mentor and role model to accelerate the learning process. To make this work, the less experienced agents should not hesitate to share commissions with the senior agent to close cases that are beyond their level of knowledge and skill. The reason is that it is a great way to learn on the job and, as far as commissions, 50% of something is a whole lot better than 100% of nothing.
The Ethics of Commission Sharing
Whenever commissions are to be shared, the prospect must be seen as the client of the referring agent and not the consulting agent. Further, all communications between the home office, the prospectâs other professional advisors, and the consulting agent should be shared with the referring agent. In addition, all the decisive planning strategies proposed by the consulting agent for the prospect should be run by the referring agent before being shared with the prospect.
Lastly, in terms of how the actual funds should run, the parties might consider an even split on the commissions and expenses where the consulting agent is directly involved in meeting with the prospect. On the other hand, where the consulting agent is only distantly involved, such as by telephone, the parties might go for a 25% - 75% split.
