Ready For Something Different? Try Thinking Inside The Box
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Thinking Out of the Box Case #1: A producer, whose specialty is estate planning, regularly takes home after expenses about $2 million a year. This producer is exceptionally adept and over a period of nearly 20 years has built up an excellent advisor referral network for estate planning cases.
He recently returned from an industry conference with the out of the box idea of adding retirement services to his practice. Why? Because he heard you can make a lot of money in retirement planning. He referred to this as out of the box thinkingthe expanding of his practice to leverage his current clientele.
Thinking Out of the Box Case #2: Another producer has grown a good business with variable annuities sold in conjunction with retirement planning. While the business is steadily growing, this producer is envious of the obviously more successful and affluent producers he sees at meetings. He has just heard about the life-planning concept and has decided to include it in his practice. He has decided that this out of the box thinking will enable him to help his clients think through all sorts of issues and concerns.
For quite a few years now there have been a lot of exhortations to "Think Outside the Box." These recommendations show up at conferences, in articles, among carrier personnel and among producers.
While there is some merit in the "think outside the box" position, it can mislead producers into making mistakes about their businesses. Consider the two examples aboveboth provided as cases of "out of the box" kind of thinking. The problem is that these notions of thinking of the box are, on closer examination, merely bad ideas.
Take case #1. On the surface it sounds good, but this producer was challenged to run the numbers on his idea. He created a spread sheet showing what he would have to invest in terms of his own time and money to set himself up in that ancillary line of business and forecast incremental sales. His result? This new business would break even two years after his own retirement date. He dropped the idea.
Take case #2. Here the key question is how does life planning translate into value for the client and value for the producer? Life planning might very well be beneficial for the client if the producer is a skilled psychologist. The risk is that life planning can become a financial drain on the practices of producers. This producer backed off the idea once he thought through these implications.
These cases illustrate the problem with thinking outside the box. All too often, thinking outside the box is an invitation to come up with a new idea without the discipline of analyzing whether it is going to work (i.e., make money). The emphasis of thinking outside the box is to come up with something truly creative and different rather than coming up with something truly profitable.
In the advisory business, time is money. Producers need to remember to spend their time on short- and long-term money-generating ideas. If the producer's objective is to generate truly significant financial returns, then it is time to stop thinking outside the box.
What is the Box?
It is time to focus on the box itself. What is it that makes the box generate money today and what will make it generate even more money tomorrow? In other words, producer resources should not be on flights of fancy but on the basics of their business. The answer is: Thinking inside the box.
The "box" is whatever product-market specialization a producer is in. It could be comprehensive financial planning for high-net-worth individuals. It could be philanthropic consulting. It could be qualified and nonqualified plans for small businesses. There is the box that contains an estate planner's business. There is another box that is about a corporate-owned life insurance producers business. The list goes on and on.
The box you are in is the specific product value you bring to a specific market segment.
The life insurance industry has many of these boxes. There are many boxes because the business is so complicated that one producer cannot master more than one or two and probably cannot be exceptionally successful in more than one.
When people talk about thinking outside the box they are usually just looking at another box and thinking, "Thats the way to go." The problem is that this is "grass is greener" thinking. Better than looking at other peoples grass is to "bloom where you are planted."
