Sadly, from my experience, a negative side-effect of our compliance regime is the inability of many Financial Advisers (FA) to convince people of their need to own much larger and appropriate sums of life insurance. This, in turn, only adds to the massive underinsurance problem that exists in our country.

People buy what they understand, and they don’t buy what they don’t understand. People don’t buy life insurance because they understand it, they buy it because they are convinced the FA understands it. It is the FA’s ability to demonstrate in the most simplistic manner, a person’s need to own life insurance, which will result in that person saying “yes” to the FA’s recommendations. That has been my experience, that is also my belief.

In a talk that he gave at the Million Dollar Roundtable Meeting many years ago, the late Frank Sullivan mentioned that FA’s are more educators than they are salespeople, and the process begins with the FA’s self-education. In this context, Sullivan was not referring to academic/industry compliance-type education, but rather how FA’s could understand the sales process so well that they could simplify the most complex issue so that a teenage child could understand it. It is in this area of communication that I believe compliance makes it difficult for many new FA’s to succeed in the risk insurance area.

Take for example the actual sales presentation. I can’t think of a more difficult way for a FA to present life insurance recommendations to people than to sit down with them and try to hold their attention while proceeding through a comprehensive 20-30 plus page Statement of Advice (SOA) document explaining why the person needs life insurance.

When I entered the life insurance industry in 1971, my basic training focused on how to prospect, how to conduct a fact-finding meeting which would result in people asking me to prepare life insurance recommendations for them, and then presenting the recommendations (“Presentation Skills 101” – Reveal the need; Fix the problem; Offer the solution) . What of these basics has changed in the last 40 years?

According to a former ASIC senior management person, who spoke at the AFA National conference in 2004, the SOA was never intended to be “presentation” document. Rather, he pointed out, the S of A is a record of the FA’s advice.


Strategy Paper Meeting

Why not make the sales presentation a separate follow-up meeting (Strategy Paper Meeting) so that you can actually find out what the prospect wants to do—rather than tell him/her what to do — which, in turn, would enable you to compile a comprehensive SOA? In other words, involve the prospect in the decision-making process from the outset.
At a follow-up meeting, you could put a presentation on 1 page, to get a “feel” for what the prospect would like to do, thus engaging him/her in the decision-making process, BEFORE making specific recommendations.

EXAMPLE: assume that in the fact-finding meeting you ask the prospect “in the event of your death, what would you want done with the mortgage on your home? Assume the response is “I would like it paid out.” At the follow-up meeting, on one page, you set up the page as follows:



Q. Where will the shortfall come from?

By asking Fred this question I am inviting him to get involved in the decision-making process. The solution then becomes his solution, rather than my solution.

There are always two answers to this “shortfall” question: the prospect’s and the FA’s. The inexperienced FA immediately comes up with the solution – more life insurance! The experienced FA sits back and listens to the prospect’s solution FIRST! Assuming the prospect ultimately decides that he needs additional life insurance cover, then the FA has the opportunity to offer advice.


The Corps Act precludes the giving of advice prior to the provision of an SOA, but does not prevent detailed discussions about the client’s needs.

Simplicity makes the sale. Complexity loses it!