Recapitalize Your Client Relationships

Recapitalize Your Client Relationships

Written by: Austin J. Barnes

As an advisor, you may know the challenge of working an older or new book of business: Perhaps some time has passed since you last spoke and you want to reconnect – but not sure of how to reconnect productively. 

Or, perhaps, you purchased an existing book of business from a retiring advisor and you want to connect in an interesting and meaningful way to these new clients.

Life settlements are an excellent tool that you can utilize to reengage with your senior clients.  Pick up the phone, or sit down, with them and introduce them to the potential to SELL, rather than surrender or lapse, a life insurance policy that is no longer wanted or needed or is no longer affordable. 

Statistics show that all too often – almost nine times out of 10 – policyowners will terminate their life insurance policies in their lifetime, having paid premiums for years, and perhaps decades. The reasons people drop their insurance are many, but include such things as changes in family, income or the need for the insurance.  Included among these reasons is the increased premium costs that seniors often face, in some instances by more than 100%. For retirees, it’s often impractical, if not impossible, for them to maintain a life policy while balancing all the other costs of living, thus forcing them to lapse or surrender their policies.

So, rather than wait until it’s too late, talk with your senior client about a life settlement.  This valuable alternative to a lapse or surrender has a 20+ year track record of paying seniors a market value for unwanted, unneeded and unaffordable policies in amounts that are 400-1000 percent more than the remaining cash surrender value in their policies, according to studies by the United States Government Accountability Office and the London Business School. 

The addition of resources from the sale of a soon-to-be-lapsed policy can make a significant difference in meeting or maintaining retirement goals for seniors.  The proceeds of a life settlement are often used to invest in retirement, or to retire outstanding debt, or to help meet personal financial or health care needs.

Life settlements are a safe, and secure way for your client to access this tremendous market value, as states now have established strong consumer protections for seniors.  In fact, this market is so well-regulated that over the past four years, not a single state insurance department has received a single consumer complaint against a single life settlement company.  Life settlements are a senior financial services transaction that you can feel confident in recommending to your client.

While not all policies are eligible for a life settlement, it still may make sense for your senior clients to have their policy appraised.  This is a value-added service to your client that helps them determine how to manage the policy over the next few years.  Again, this is a way to re-engage with your senior clients by offering them an appraisal for the fair value of their policy against the cash surrender value, if there is any, in the policy.

Here’s a few simple steps to start the conversation with your senior clients about finding out the market value for their policies:

Step 1: Talk with Your Client About their Life Insurance Policy.

Talk with your client about their policy.  Do they need it still?  Can they afford it?  Share the facts about the potential of increasing and unaffordable policy premiums, and discuss the importance of reviewing their life policies for this threat, as well as the potential to realize the policy’s secondary market value through a life settlement.

You will need their insurance documentation, including any statements and notices they have received. Explain that the process of appraising their policy will involve a review of their recent medical history as well as the policy itself.  There will be a need to Understand and determine their post-retirement financial needs and how their life insurance either fits or doesn’t fit into those needs.

Step 2: Review and Submit the Policy for Appraisal.

Life settlement companies like GWG provide advisors with guidelines for submitting a policy.  Does the policy meet these guidelines for policy type (Universal or Term), policy benefits ($100,000+), future premiums (increasing), cash surrender value (decreasing or non-existent).  Has the client had a change in health since the policy was issued?    If it fits the qualifications, submit the policy to a life settlement company like GWG.

Step 3: Deliver the Results to Your Client.

Many times, a policy that can pay a cash settlement can also offer the senior the ability to retain a portion of the policy’s death benefit for their beneficiaries.  This is known as a retained benefit life settlement.  Whether they choose a traditional cash settlement or to keep a portion of the policy for their loved ones, or both, they will no longer have to make premium payments, allowing them to help their client meet their retirement needs by reinvesting both the proceeds of the settlement AND the premiums that won’t have to be paid on the policy any longer.  If the policy isn’t a good candidate for a life settlement, you can also advise your client about what to do with the policy in the short and long term.  The life settlement company will work with you and your client to finalize the transaction, which in GWG’s case takes about 60-90 days on average.

In “recapitalizing” your book of business using life settlements you will be helping your clients sell an asset that either has or will soon become a liability that they can’t afford or don’t need.  You will be helping them generate significant returns for their unwanted, unneeded or unaffordable life policy.  In addition, you will likely receive compensation either from the settlement company (with GWG, it’s a fixed referral fee based on the size of the policy).or the client, AND, you will be able to help your client reinvest the proceeds, bolstering your practice in the process.

Life settlements are a service you can offer to your clients to protect them from receiving little or nothing when they face the likely lapse or surrender of their policy.   Life settlements are an opportunity for you to knock on a client’s door with good—even great!—news, while turning zero-revenue clients into immediate revenue for your practice. That’s a win-win!

Start the conversation today to recapitalize your client relationships. Contact GWG to learn which policies are ideal for a Life Settlement and our process for working with your clients.

Austin J. Barnes is Senior Director of Policy Acquisition at GWG.  Mr. Barnes started his financial services career with Northwestern Mutual, building his personal practice while developing a large team of Financial Representatives.  Mr. Barnes holds a BS in Finance from St. Cloud State University.  Mr. Barnes had held numerous licenses and professional memberships including FINRA Series 6, Series 63, MN Life and Health, IFAPAC, NAIFA, and The Life Insurance Settlement Association. Mr. Barnes joined GWG Life, LLC in November of 2013. 

GWG Holdings, Inc.
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GWG Holdings, Inc. (Nasdaq:GWGH) the parent company of GWG Life, is a financial services company committed to transforming the life insurance industry through disruptive and i ... Click for full bio

Advisors: How to Prepare Before Calling an Agency

Advisors: How to Prepare Before Calling an Agency

Written by: 

You’ve read my other posts:

Related: Should You Work with a Marketing or PR Agency, or Neither?

Related: There's No Point in Paying for Outside Advice If You Have No Intention of Listening to It

And you’re finally ready to talk to a marketing or PR agency.

Or are you?

I’m amazed how many prospects contact an agency without any advance preparation whatsoever. It’s not just that they don’t know what services the agency offers. The real issue is, they can’t even explain why they’re calling in the first place.

You might be raising an eyebrow at my suggestion that you actually need to prepare before calling a vendor. Don’t. I want to help you maximize your time, and potential investment.

Here’s why: The best way to use a vendor’s time during an initial call is to conduct a mini-discovery session. At FiComm, we will ask: What is your vision for your business? How do your services address your market’s needs? Where are you headed as a company? What will get you to the next level? What marketing obstacles do you face? That information shapes our remarks, ensuring that everything we say will be directly relevant to you.

Many advisors find those initial conversations enormously valuable in their own right. They help clarify their thinking. But others feel put on the spot. They freeze. They respond in standard brochure-speak: “We were founded in 1984, we have four advisors, we serve 200 households with an average account size of $400,000.”

Or they say, “We were hoping you would tell us the answers to those questions.”

Well, that’s helpful.

Imagine you’re meeting a potential wealth management client for the first time. They have $700,000 in a brokerage account, $400,000 in a retirement account, two kids, a dog and a house in L.A. Great. You start by asking their goals for themselves, their money, and their family.

Puzzled, they tilt their heads and say, “We were hoping you would tell us.”

See what I mean? How can you possibly come up with a solution for clients who can’t even articulate their goals, or speak to their financial pain points?

The same is true for us vendors. Before we can help you, we need to know where your business is going and how you think marketing can help you get there. The answers don’t have to be “right” (and we’ll help you get there), but it you come prepared to participate, our conversations can be very fruitful. If you don’t—well, it’s hard to deliver value for you. We know we’ll constantly have to prove ourselves and remind you why you hired us.

“But, Megan,” some advisors say, “we’re not ready for that. We’re just trying to understand the basics. How will we learn if you don’t tell us?”

If you’re calling an agency just to get a general marketing education, then that’s what you’ll get—general information, most of it irrelevant to you, and lacking the specifics you’re really looking for.

So, don’t call an agency to be your marketing tutor. Instead, read. Advisors have never had better access to self-help insights and information—through trade pubs, custodian relationships, blogs, podcasts, other advisors and industry pundits. Be curious. Be inquisitive. If you hear something on a podcast that intrigues you, follow the host back to LinkedIn. Read what they write there. Email your questions. Attend a webinar. Be an active participant at industry events.

At some point, you’ll understand the basics. You’ll have identified your own issues. And narrowed down your questions. Then, finally, you’ll be ready to call an agency.

Instead of saying, “Tell us what we need,” you’ll say, “We need help with this.

Megan Carpenter
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Megan is CEO & Co-Founder at FiComm Partners, LLC. Her team develops winning communications strategies for entrepreneurs in the independent advisory community, and busines ... Click for full bio