The Eight-Step Presentation

This presentation has enabled this advisor to become an excellent listener during a sales interview and to stay on track.

By Raymond Jones, ChFC

Through practicing and listening to sales training tapes, financial advisor Raymond Jones has developed an eight-step process, which he says is responsible for many of his large-value sales. In his book, Back Up the Truck, Jones outlines his Eight Step Presentation Process:

1. Get to know your prospects and make them feel comfortable. One of the most common mistakes we make is not breaking the ice or the initial tension that often exists when we meet someone for the first time. It is important to make people feel comfortable and to develop a friendly rapport with them. Talk with them about current events, their jobs or their families, he writes. Also, share your personal experiences to let them know that we are humans, too. Seating is important, as well. Never sit across from a desk or a table. You either move beside the prospect or ask him or her to sit beside you. “Remember that people will not do business with you if they do not like you or they feel uncomfortable,” Jones writes.

2. Sell yourself and your company. Jones has found out that the 2 most common objections that prospects have for not buying are they are not sold on his personal qualifications and they are not sold on his company. So, his presentation booklet has information about him and his company. He also emphasizes his business experience, his philosophy of the product, his educational background and the educational programs he has completed. This is because prospects generally want to know why they should do business with him and something about the company he represents.

3. Ask the magic question . This step has probably helped close more sales for him than anything else he has done in an interview. You need to find out what your prospect wants to avoid going off in the wrong direction. The best way to do this is simply by asking them the magic question. Here is an example: Jones asks the prospect: “Do you have any questions about your insurance or investments in general?” Then he keeps quiet. If you ask the question sincerely, your prospect will tell you what is on his or her mind. They might respond: “Well. I want to start a college fund for my children.”

If they do want to start a college fund, then deal with that concern first. “If the prospect wants a blue car, don’t try to sell him a red one,” Jones advises.

4. Get the pertinent facts. Based on what the prospect says in step 3, you should try to get the facts that pertain to their particular interests and needs. For instance, if they have been general in their answer, then you have to get the facts about their overall situation. But if they have been more specific, such as saying they want insurance on their spouse, then you should get the acts that pertain to this particular need.

5. Point out the problem through rational analysis. After obtaining the facts, take your prospect through the solutions you have for them and how their individual needs can be met by using these solutions. Go through this analysis carefully and show the prospect how their facts and situations relate to the problem. “Do not proceed any further until you get their agreement that there is a problem or a need,“ he writes. “No one will buy anything unless they feel they have a need. If you have done an effective job of showing the need and you have the prospect’s agreement to that need, then you can proceed.”

6. Present the solution. After you have illustrated the need, then present your solution. Try to present a solution that you would want if you were in their situation. If you don’t, then your prospect will begin to question your credibility.

Get the referrals and keep yourself in the selling profession.

7. Close or keep silent. After presenting your proposal, it is time for the decision. After going through the illustration and you feel that the prospect understands the solution, you should keep quiet. Jones offers the following example. He asks the prospect: “This product will provide the service and the solution you need, and the cost is $100 per month.” Then he does not say anything else.

On most occasions, the prospect will either say: “Yes. I feel that this is an adequate solution to my problem, or I can’t afford $100 per month.”

At this point, it is simply a matter of if they will purchase what he has proposed or if they will need some modification to the solution. Jones does not go into a long closing speech — he simply presents the solution and keeps quiet until he gets a reaction from the prospect.

Just as it was with the magic question in step 3, this is a time when you must give the prospect an opportunity to air their honest opinion. ”It is not always a yes or a no when it comes to closing a sale,” he writes. “It can be a yes, a maybe or a no. No matter what the response is, the result can be positive for the prospect and the salesperson. The prospect must be the first one to speak after you present your solution.”

8. Don’t forget to get referrals. If you have done a good job on the seven steps mentioned above, then your prospect will look at you as a professional and will be more willing to refer you to others. If you leave the interview without getting referrals, then you do not have anywhere to go even though you might have made the sale.

“And if you do not have any place to go, then you are basically out of the selling profession,” he writes. “Referrals provide an opportunity for your prospects to show you how grateful they are for the products and services you provide. Get the referrals and keep yourself in the selling profession.”

Raymond Jones, ChFC, is a financial advisor in Columbus, Ohio. He has over 40 years of experience in sales and sales management. As a Life Time Achievement Award recipient and an MDRT qualifier, Jones’ books and workshops have proven beneficial to individuals throughout the business community. Learn more at www.backupthetruck.biz .

Is Life Insurance Really Too Expensive?

If you lead the client discussion with ALL the benefits that life insurance can provide, in all likelihood, you will have a more compelling discussion than the one that results by just running “the numbers.”

By David Appel, CLU, ChFC, AEP

A2012 study by the LIFE Foundation and LIMRA found that:

Survey respondents were asked to estimate the annual cost of a 20 year, $250,000, level-term life policy for a healthy 30-year-old consumer. The actual cost is roughly $150 per year, but Americans estimate the cost at $400. Younger adults, who are the most likely to qualify for preferred pricing, overestimate the cost by nearly seven times the actual cost!

Based on this cost misperception, it is no wonder that survey after survey concludes that individual life insurance ownership is at an all-time low. Potential buyers perceive the cost of term life insurance to be multiples of what it really is, which may be correlated to the lack of demand for the product.

According to the website Intelligent Economist, Price Elasticity of Demand (PED) is defined as “the responsiveness of quantity demanded to a change in price. The demand for a product can be elastic or inelastic, depending on the rate of change in the demand with respect to the change in the price.” Price elasticities are almost always negative, meaning that if the price goes up, the demand for the product goes down, absent any other differentiators.

This chart illustrates a price increase from $50 to $60 with a corresponding demand going down from 100 to 50. Given the same demand curve the opposite is also true, when the price goes down, the demand goes up.

It would follow that if the price of term life insurance goes down, one would think that consumers would buy more of it, but that has not occurred. Term insurance pricing wars between life insurance carriers have been going on for many years while ownership of insurance has been decreasing for years. What is the problem? Maybe it is the perception of price as discovered in the 2012 study mentioned above. When a consumer thinks that the price of a product is between 2.67 and 7 times the actual cost, what would that do to demand?

The prevailing attitude is that term life insurance is all about price and that there is not much that distinguishes one term product from another. The premium is paid for a pre-determined period (the term) and the insured is “covered” by a stipulated death benefit for a specified length of time according to the contract, so long as you pay the premium.

Generally speaking, the only real differentiator between term products in today›s market is possibly the conversion options offered by insurance carriers that price their products higher than those that have more limited conversion options. Another factor affecting price may be the carrier’s ratings, also known as counterparty risk. The more highly rated a company, the higher the premium may be, but we show no evidence of that being the case. There are many very highly rated carriers with very competitive term pricing.

For your clients who are considering purchasing something that goes beyond the product term period, conversion privileges would be important and might cause them to pay more for coverage. This is not complicated, but how often is this really part of the term sale process? For many advisors, the conversion conversation is critical planning advice. For others who are more transaction oriented or just “filling an order,” not so much.

Price is important. But it cannot and should not be the focus of the conversation.

Permanent insurance and price

Let’s also look at permanent insurance. Does price really matter? It depends on the product being considered. For guaranteed universal life (GUL), which is essentially permanent term insurance, it›s all about price when considering only the death benefit — ignoring for the moment any riders or other benefits such as long-term care or chronic illness. A lower price can enhance the rate of return of the “investment,” which means that the lower price paid for the same amount of death benefit results in a higher internal rate of return (IRR).

But is life insurance a good investment? The answer is: it depends. Essentially, it depends on when the client passes away. Let›s look at the pricing for one of the most competitive GUL products in the market for a

$1,000,000 death benefit on a preferred risk 55-year-old male. Many advisors request the cheapest premium because they fear that their competition may subsequently show the client a shorter guarantee period causing the loss of the case.

Which would you recommend to your client and how would you defend your recommendation? If you picked “Guaranteed to Age 100,” what happens if the client lives to age 101?

This brings us back to price elasticity. Is an 8.6% increase in premium from $11,189 to $12,151 really going to make the client NOT buy the needed coverage? Some financial planners may say invest the difference, which will enhance the return to the family. I would argue that they are absolutely correct. This means that if we take the difference in the premium between the “guaranteed to age 100” premium and the “guaranteed to age 120” premium, or $962, and invest it in a conservative, 3% after-tax return, by age 100, it will have accumulated to $95,619 — a 9.56% increase in wealth transferred to the beneficiaries. But what happens if the client lives to age 101? Will the $95,619 be enough to pay the premium at that age? I would think not.

Universal life

What about current assumption universal life, such as an interest-based product or an index-based product? These products create a bit more complexity because they must be managed and monitored for performance.

This is the same product from the same carrier with the identical assumptions. The difference of $17 in premium, assuming 6% Index returns, is the difference between projected duration to age 101 (when it lapses) versus projected duration for life. What has been proven by running various design scenarios is that ink sticks to paper.

Index returns do not credit year over year 6% returns as the illustration projects. IUL fluctuates between a floor of 0% and a cap rate, let’s assume of 10%. The sequence of returns is what will dictate how this product will perform over time and a $17 difference in premium will not matter one way or the other. The only way to know how this product is going to perform is to monitor the performance and manage the premium flows based on re-projections of past performance. This needs to be communicated to the client at the time of sale and on an ongoing basis, not 10 or 20 years later when it is too late to make changes to the premium flow!

So, what premium should the client be shown? $11,004? $11,021? Something different altogether? It has already been established that consumers overestimate the cost of life insurance by multiples. In fact, consumers have no idea what premiums should be, and many would argue that neither do agents, brokerage agencies or even the actuaries that designed these products. No one knows, but why? Because no one knows what interest rates will be going forward or what the Index linked performance will be in the future.

Regardless of the product, spread sheeting products based on price is not good practice. Clients make late payments; clients miss payments altogether and clients borrow funds from their cash values. Interest rates go up and down and markets go up and down as well. How can consumers possibly know what product is the best for them?

The best life insurance policy is the one that is in force the day the insured dies.

The best life insurance policy is the one that is in force the day the insured dies. In 2017, Prudential paid almost $5.8 billion in individual life claims and over $10 billion if their group life insurance claims are included. AXA Equitable paid approximately $2.1 billion in individual life claims, while Principal paid over $1 billion. This is what is important — this is what people buy and frankly, the difference of a few dollars of premium on a spreadsheet will not change that.

Consultative selling and ongoing policy reviews need to become more ingrained in how an advisor approaches his/her clients. Well-structured life insurance provides numerous benefits that must be a primary part of the conversation with your clients. If you are not discussing long-term care, chronic illness benefits and other available riders, the tax deferred growth of cash values, the tax favored access to cash values through withdrawals and loans and the tax-free benefits paid at death, then you are focusing on the wrong aspects of the sale.

If you lead the discussion with all the benefits that life insurance can provide, in all likelihood you will wind up having a more compelling discussion than the one which results by just running the numbers. Yes, price is important. But it cannot and should not be the focus of the conversation.