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the Insurance

was recently in Croatia at my company’s conference fortop-producing insurance advisors, where I was struck bytheir dedication and professionalism, but also somethingelse. Many of our conversations centred on how weattracted and connected with clients without ever startingwith the word insurance. It’s so rare to hear advisors say

that clients seek them out looking to buy insurance. Why is that? It’s never wise to make generalizations, but it’s hard to deny the

jokes made over the years at the life insurance advisor’s expense. Ioften refer to the funny scene in the 1993 film Groundhog Day inwhich Bill Murray’s character, Phil, has a chance meeting on a streetcorner with Ned Ryerson, a life insurance salesman. Ned isn’t dressedfor the boardroom, and appears to be pushing a single premiumlife policy at everyone he runs into. What’s no joke is the impact this perception has on trust for

our industry overall. Studies reveal that advisors are close to thebottom of the list of professionals consumers trust. While we knowCanadians that have an established relationship with an insuranceprofessional appreciate the role that advisor plays in their family’sfinancial peace of mind, life insurance ownership is at its lowestlevel in 30 years. It stands to reason that we can’t rely on buildingthe brand by converting one client at a time — especially since theaverage age of life insurance advisors is over 60. I believe the issueto resolve comes down to two factors: what can be done to create agreater general awareness of the reasons why clients may actuallywant insurance, and how to close the gap between the perceptionand reality of a career selling life insurance.

INSURANCE

Insurance advisors don’t alwaysreceive the respect they deserve fromthe general masses. Wayne Millerexplains how to improve the consumer perception about insurance to your advantage

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JANUARY / FEBRUARY 2016 FORUM 21

ingful analysis before making any product recommendation. Butbefore you get into the nitty gritty about insurance, consider thistwo-prong approach.

1. Explain the difference between human capital and financial capital.Help clients to think about insurance differently. Start by explainingthe traditional use of insurance — to protect income. In the incomeearning years, the clients and advisors are focused on asset accu-mulation. In a client’s mind, risk management tends to take a backseat because it’s human nature to think a tragedy is “not going tohappen to me.” But human capital is our greatest asset — the presentvalue of our future ability to earn an income or grow our business.Human capital is a temporary asset as most plan to “retire” at somepoint. Protecting this temporary asset with temporary life insuranceis just a smart decision. If you position the premium as an additionalfee to guarantee the accumulation plan, many clients will see thisas an easy cost–benefit decision to make.

2. If they are wealthy, explain why they will value insurance.Once we’ve established the role of insurance as human capitalprotection, some clients, most likely the older, wealthy ones, willsee they don’t need insurance because, frankly, their accumulatedassets far exceed what is required to live comfortably in retirement. For clients who fall in this category, it’s then time to talk to them

about their financial capital. At a certain level of affluence, clientshave maxed out their tax-free savings options and may have assetsin a corporation. And for high-net-worth clients who’ve builtsignificant financial capital, they realize that the more they have,the more they have to lose. They have worked hard to build theirbusiness and don’t want to see a sizable portion depleted from taxes.This is when adding the insurance and estate advisor to their teambecomes highly strategic. For the wealthy — and generally only forthe wealthy — permanent life insurance is utilized successfully toprotect financial capital from market risk and tax exposure.Wealthy clients want insurance, they just don’t always know it

at first. But it seems there’s something holding us back as an indus-try because it’s rare to hear even top advisors say that clients seekthem out looking to buy insurance. We are seeing higher insurancesales overall (larger cases to affluent Canadians) even at a timewhen life insurance ownership is declining. That’s because it isthe high-net-worth clients who hear the message about what per-manent life insurance can do for them. If insurance professionals join together, we’ll see increased

respect for an industry that richly deserves it. We’ll replace thesilly jokes with the common knowledge that when someoneachieves high-net-worth status, they will want to have a discussionabout owning life insurance. And then, when the next generationis aspiring to a short list of sought-after careers, that list willinclude insurance and estate advisor. �

WAYNE G. MILLER, BMATH, ASA, ACIA, is regional vice-president, nationalaccounts and strategic business development at Sun Life Financial. He’s publisheda variety of white papers, including PAR as an Asset Class, and speaks regularlyon life insurance and advising affluent clients. He can be reached atwayne.miller@sunlife.com.

As with most challenges, it helps to understand historical con-text. I can only speak from my few decades in the industry, but Ibelieve the insurance stigma was formed based on collective, yetdistant, memories of once meeting a character like Ned Ryerson,and reinforced by gaps in financial literacy — in Canada andabroad. But we all know the days of being cheesy or relying onpushy sales tactics are long gone. When people do connect with an insurance advisor, the fact is

they won’t buy what they don’t understand or believe in. For eventhe most astute investors, insurance advisors need to find time toexplain the insurance strategy, which involves explaining every-thing from the Capital Dividend Account, to how to look at a long-term Internal Rate of Return after tax. With acronyms like ACBand NCPI, coupled with insurance illustrations that provide reamsof data tables and compliance details, it’s no wonder clients needan insurance professional to help them sort it out. But it seemsthe gap in literacy starts far before any challenges associated withunderstanding insurance products. As boomers live longer in retirement with fewer defined benefit

pensions and increased government downloading of responsibility(not to mention increased lifestyle spending tendencies), gaps inoverall financial literacy are a growing concern. The September2015 issue of the Journal of Retirement included an article onFinancial Literacy and Economic Outcomes. It referenced a 2004survey of Americans over the age of 50 and said “…we were aston-ished to learn that only half of older Americans knew the rightanswer to two basic questions about interest rates and inflation,and only one-third knew the right answer to those two questionsplus a third question on risk diversification.” The questions weremultiple choice and very easy. Imagine if there was a fourth ques-tion on life insurance! Without a strong understanding of riskmanagement or diversification, how could one really appreciatethe benefits of insurance? No wonder it’s generally seen as anexpense — and one many people would rather avoid. While it would be great to have this specific data for Canada,

we can imagine that the results are similar. The Canadian govern-ment has recognized the issue. In December 2010, Canada’s TaskForce of Financial Literacy concluded its three-year mandate givenby the federal finance minister. The task force defined financialliteracy as having the knowledge, skills, and confidence to makeresponsible financial decisions. Among the 30 task force recom-mendations was a proposal that the formal education system pro-vide a foundation for financial literacy. They also noted the needfor lifelong learning, meaning financial literacy education be pro-vided when people are most likely to be receptive to it. And that’swhere we come in. A lack of literacy equates to a lack of appreciation of insurance

and therefore is limiting sales. On a macro level, improved financialliteracy will result in a reduced strain on social programs that couldultimately reduce government expenditures and maybe even per-sonal taxes. In a nutshell, insurance helps drive fiscally responsiblesocial policy. This is why such industry associations as theConference for Life Underwriting (CALU) champion key issueswith government regulators and policy-makers as a welcome voiceat the table. And there’s good reason for the insurance industry toget this respect. Across all major Canadian life insurance carriers,there are impressive payout rates and corporate stability, even intimes of relative economic crisis. You obviously look at each client’s situation and do a mean-P

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