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4 Key Characteristics That Financial Planners Should Look for in an Insurance Agent

Buying insurance is an important part of any financial plan. For financial planners, having someone who provides expert, unbiased insurance solutions is critical.

I sat for my Certified Financial Planner exam in 2010.  As many of you know, a large part of the coursework is centered on risk management.  According to the CFP board, 12% of the exam is about insurance.  That number only increases when looking at all the other categories (estate planning, retirement planning, educational planning, etc.) of the test.

The challenge is that, in today’s business environment, this critical coverage is often left up to the client to implement.  Whether you’re an RIA without an insurance license, a fee-only financial planner, or a financial advisor who doesn’t write insurance, you need someone to help you put in place the risk management/insurance planning portion of your clients’ financial plans.

At www.highincomeprotection.com I assist the clients of financial advisors and planners in securing valuable insurance coverage.

Having a CFP® certificant, who specializes in insurance and who can help you implement a key portion of your clients’ financial plans, can be a major advantage.  So what are the four key characteristics that financial planners should look for in an insurance agency? If you’re referring your clients to an insurance agency, here is what that agency needs to have…

Financial Planner Needs in an Insurance Agency:

#1          Expertise

Financial Planner Expertise

Personally, I have been in the financial services industry since 1998.  I became insurance licensed in 2004.  Since 2010, I have worked with hundreds of financial planners and advisors, selecting carriers, coverage design, and the right policies for their clients.

A large part of what we all do is experience-based.  From choosing a carrier based on the best underwriting outcome to making sure a particular policy’s definitions fit the client’s objectives, my job is to be an expert.  Understanding how all variables interact with each other is crucial.

Make sure your insurance agent has the experience necessary to design your client’s plan properly and to understand exactly what you, as the Planner/Advisor, require.

#2          Objectivity and Independence

Many financial planners have strategic alliances, and that is important.  What is also important is that the source you select to write your clients’ insurance should be independent.  Most captive agents cannot offer the best possible policies for each of your clients.  While some policies the captive agents write can be very strong, people’s circumstances differ.  Making sure you’re referring your insurance business to an independent agent (who can write almost all carriers) will allow for the best possible pricing and policy design.

Objectivity is also a challenge.  If an insurance agent has a general agency that favors certain carriers or has a compensation arrangement that weights one company over another, that is a conflict.  While many companies pay different commissions, that should never be a determining factor when selecting a policy.  Doing the right thing for the consumer will ultimately pay the agent in spades, regardless of the compensation on the individual case they’re writing.

As a financial planner, you have a fiduciary responsibility to your clients. Consequently, you should look for agencies that are independent and where the agent has a fiduciary responsibility to your client as well.

#3          Analysis

Your agent must understand how insurance fits into the financial plan. He or she must also understand that you, as the financial planner, have a very specific requirement for the type(s) of insurance your client needs. Your agent should work with you and your staff to place the policy that fits your client’s plan.  While he or she will offer their opinion on each case, it is your agent’s role to place the policy you chooFinancial Planner Analysisse.  That is accomplished through your recommendation, client discussion, and client budget.

If your client is unsure about how much insurance coverage they need, there are handy calculators for both disability insurance and life insurance.

Most cases that we place are term insurance, long-term care insurance, and disability insurance.  Although some clients require more advanced policy design (estate planning, business owner needs, etc.), most simply need to protect their income and assets from death and disability.

Make sure the insurance agent with whom you partner is part of your team.  They should be consultative in discussing policy design with you, but they should implement whatever your final recommendation is without “upselling.”

#4         Their Network

Last, it is nearly impossible to be an expert in all disciplines of a particular field.  I have a life and health license. 95% of my produced business is term life insurance, long-term care insurance, and disability insurance.    Although I am licensed to assist clients in securing health insurance and advising them on Medicare supplement plans, I refer that business to the experts in those fields.  The same holds true for those clients who need property and casualty insurance (home, auto, umbrella, etc.)…that business is referred to agencies with an expertise in that market.

Your agency partners should be experts in a few insurance lines.  Specialists are preferred over generalists.

In Summary

If you’re a financial planner looking for a professional alliance to which you can refer your clients for their insurance needs, I can help.  My agency is in Lake Tahoe, NV, although I do business nationally.  You can check my credentials on LinkedIn or by visiting www.highincomeprotection.com/about.

If you’re looking for a local agent (and you’re not in northern California or northern Nevada, where I live), please look for the following:    Expertise, objectivity, independence, the ability to think through and consult on a case, and a network they can refer business to for the types of insurance they don’t write.

Selecting a strategic partner to refer your clients to is an important decision.  Don’t leave the purchasing decision of the insurance dictated by their financial plan up to your clients.  Make sure you have a relationship with an insurance agency that can help your clients implement a very key component of their financial plan.

As always, I’m happy to help.  Please contact me via phone at 888-636-2310, schedule a call, or visit www.highincomeprotection.com for additional information, calculators, and quote options.




About High Income Protection Insurance
About High Income Protection Insurance

We work with individuals across the nation to secure the best disability insurance rates.

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