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Financial Literacy = More For Everyone

Financial literacy is a hot topic for today's consumers. This literacy blanket covers everything from banking, to investments, to insurance. At its core Financial literacy helps educate consumers to make smarter, more responsible decisions with their finances.

Because this is such a big blanket, the effort to educate consumers really has to come down to the advisors. There are some regulatory bodies that do a good job; however, because the financial service industry is so broad, they are only really able to scratch the surface. That is where we, as advisors and experts in our craft, need to step up and use this expertise to educate consumers because when consumers actually understand the products and services we are trying to sell, they can fully appreciate the value. A recent post in the Insurance and Investment Journal suggested that insurance sales year over year were down 4.5% with the largest decrease coming from people in the age range of 49-55 (These are the people who likely need insurance the most as they are in the sweet spot of transitioning income and insurance needs.)

Unfortunately, if we have such a big literacy gap and consumers need to fully understand their options before they feel comfortable making a purchase, its no wonder we have declining sales.

demographic factors promoting guided self service

Source: Accenture, Generation D - An emerging and important investor segment

A cursory Google of financial literacy for life insurance pulls up limited information and the information that it does pull up is more focused on consumer protection and fraud rather than education on the best ways to get protected (This is where advisors come in.)

CLHIA recommends these tips when talking to an advisor.

Talking to an advisor? Here are some questions to ask:

  • How long has the advisor been in business?
  • What company or companies does he/she represent?
  • Does the advisor belong to a professional association?
  • Has the advisor qualified for professional accreditations?
  • Is the advisor licensed in your province?
  • Will the advisor provide references from other clients?

For all the advisors reading this I'd be curious if you could share in the comments what you think your clients should ask you.

Now, these are all great questions for picking an advisor you don't know but after I select my advisor, we need to now get educated on executing a strategy because nobody gets protected by just having an advisor. They also need to purchase a product. As a consumer speaking with an advisor, I would ask the following...

  • How do ensure I have enough insurance in place at the time of death to cover my needs?
  • Speaking of that, how much life insurance do I need?
  • What type of coverage do I need and will that change over time?
  • What about the other forms of insurance CI/DI?
  • How do I know I am getting the best price/value and are there other factors besides just cost?

This financial literacy issue is actually a bigger problem for brokers than it is consumers. Financial literacy is the lever to facilitate sales. Stronger larger sales that generate referrals from happy informed customers. When you can educate your clients on the value of life insurance and validate why you carefully selected certain products, vetted against alternative strategies, your consumers will naturally see the value of your recommendation and appreciate the due diligence put forward. Your clients will feel more confident they are protected and be more willing to refer you to their friends and family. You, as an advisor, will have less exposure to litigation by giving full disclosure on the way you selected these products. You will also have a back up to show how you determined suitability or need in the future if you need to be able to comprehensively review their existing policy to new opportunities to mitigate potential lapse or adjust to changes in need.

I want to share some results from a recent survey we conducted from our members that shows while roughly 90% of our subscribers had some increase to their revenue (over 35% experiencing significant to high increases), 67% said client communication had increased a high/significant amount and there is no question in my mind as a consumer that if we could all educate our clients of their options we will naturally sell more and have better-protected clients. I know educating clients is no small task with so few hours in the day but I also want to point out that that more than half our subscriber base noted a high/significant increase in productivity(with over 92% experiencing some).

What degree does lda impact the following?

In conclusion, if you want to sell more, save time and most importantly have better protected happier clients you owe it to yourself to commit to Life Design Analysis. We make sign up easy as well with a free 30-day trial with no credit card required. If we want to make an impact we can no longer keep doing the same thing.