CRUISING DOWN THE (MIS)INFORMATION HIGHWAY

An independent and successful financial advisor is going 90 miles per hour at all times. There are workshops to host, policy reviews to do, claim forms to complete, and an endless slew of phone calls fielded to assuage clients’ fears about the market. Who does the advisor trust to bring her new information? Whether it’s a new product that comes up from the competition, or a client inquiring about premium finance…ring ring. She calls the IMO.

The IMO positions itself as the trusted partner, the group that has it “all figured out so all you have to do is sit across the table from your client and sell.” How many times have you heard this before?

This business model has cheapened itself over the years by giving away top contracts like candy in exchange for lackluster support, uninspiring product pitches, and marketing programs that fall short of expectations. These transactional relationships are going nowhere… fast. The advisor’s information highway is flawed.

PASSING THE BATON OF FIDUCIARY RESPONSIBILITY

The financial powers that be are looking to regulate us more than ever before and assign responsibility swiftly and transparently. Financial advisors have, by law, a fiduciary responsibility to their clients.

The insurance companies have fought to have nothing to do with it. They do not want to be held liable for a recommendation that falls outside of the true fiduciary standard. When it comes to recommending products and solutions, fiduciaries are relying on a broken model that does not have the same best interest standard in mind.

A fiduciary advisor’s phone call to an IMO might go something like this:

*Advisor: *Hi Tony, I am working with a client who has a lot of concerns about rising taxes. She has a large 401(k) and is maxing out contributions. Her husband has a large pension coming his way. All of that they have saved is going to be taxable. She asked me about life insurance because she heard the cash value inside is tax free. What can you tell me about that?

IMO Tony: Well, she’s probably too old to get qualified for life insurance. This is something she should’ve started in her 30s. I mean, if you put it into an annuity, it should grow enough to where she doesn’t need to worry about it. Taxes are a good problem to have, am I right?

Advisor: She specifically asked me about IUL and I think she is talking to another advisor. She is convinced taxes will rise and eat away at her retirement savings.

IMO Tony: Okay. In that case, I do have something I can illustrate for you. It’s with Carrier A. They are illustrating the best because there are a lot of bonuses on the contract.

Advisor: Well, what is the probability of success? What is the recent index performance? What is the cost? How do I decide between Carrier A and Carrier B? Can you help me understand this? I agree that taxes are going to be a problem for her down the line.

IMO Tony: I can ask, but honestly, this is what we show when someone brings up IUL. It’s just the best one out there. You might completely lose the client through the underwriting process. You really should just stick with an annuity…

Sound familiar? This scenario has become, unfortunately, all too common in our industry. Fiduciaries are looking for real solutions to help clients mitigate rising taxes and market risk. While it’s easy to default solely to traditional concepts and planning vehicles—including annuities—most IMOs can’t get beyond the obvious product pitch.

Traditional vehicles like annuities can be important pieces to the planning puzzle. But there are other—and oftentimes—better strategies to consider. The stale product pitch is easy. It’s what they know. Why roll up the sleeves, do the hard work and design truly innovative strategies—with a much-needed alternative asset class—when you can memorize a pitch and roll with it for years? A great majority of IMOs are filling an empty cup halfway and getting away with it because it’s something advisors now expect. It’s been the standard for too long.

ALIGN WITH A THOUGHT LEADER

What real value is the IMO offering? Needless to say, many IMOs would go extinct if more carriers decided to allow direct contracts. IMOs need to do better.

There are very few thought leaders in this industry. Think about the scenario we highlighted with the advisor and IMO Tony. How many IMOs even know how to answer any and all of the advisor’s basic questions?

Real fiduciaries must go beyond the obvious to truly serve in the best interest of clients. They shouldn’t have to beg for answers to basic questions related to cost breakdown, index performance or how loan types work. It’s the advisor’s responsibility to practice due diligence and consider all angles—but they need help and expert guidance. Not another pitch.

This is a call for IMOs to do better. Do the hard work and truly educate. Become unrivaled experts and innovate—and generate actionable ideas and solutions that better meet client and advisor needs. Let’s live up to our promise of being a trusted partner.