Many say the ability to do it is 'critical,' but far fewer consider themselves successful at it
Raymond Adamson minces no words on the subject of cross-selling.
"If you're focusing only on one aspect of your client's needs, then you're leaving yourself open to competition from another advisor who will offer your client a full-service approach," he says. "The fact is many clients want a single point of contact for their financial services."
Adamson, a vice president and senior coach at The Covenant Group, Toronto, Ont., stresses that cross-selling is key to boosting the insurance professional's productivity and profitability, and to enhancing client relationships. Those who don't market ancillary products, he adds, risk losing the client's business.
Most advisors evidently agree, but few are acting on their convictions. Citing a survey of the independent research firm Axis Consulting, Adamson notes that 94% of insurance advisors believe that the ability to cross-sell effectively is "critical." But only 46% consider themselves successful at cross-selling.
That may true, at any rate, for advisors whose primary focus is on insurance products. But registered reps who engage in comprehensive planning say that discussion of varied risk management products is all but essential when conducting a financial needs analysis.
"Cross-selling becomes almost a byproduct of having done the analysis," says Kevin Rex, a principal at Summit Financial Partners, Parsippany, N.J. "My approach is to evaluate the client's situation from four standpoints: law, taxes, investments and insurance."
To that end, Rex determines future cash flow requirements, then poses "what-if" questions to measure the financial impact on long-term goals and objectives. Where risk exposures exist–the inability to meet critical illness or disability expenses, replace lost income due to the breadwinner's death, fund nursing home care, etc.–Rex will advise plugging the exposure with an appropriate policy.
Advisors themselves risk exposure to lawsuits when they don't cross-sell, according to Bryan Beatty, a financial planner and registered rep at Egan, Berger & Weiner, Vienna, Va. Says Beatty: "Someday, some folks will wake up to find their inheritance affected. They'll say: 'This [financial need] is something that my advisor should have broached with me. Why wasn't it?'"
Which products lend themselves best to cross-selling? Reps say that largely depends on the client's financial situation.
Experts urge, for example, that reps discuss long term care insurance with boomer clients who are over age 50 and have substantial assets to protect. Thomas Winter, an advisor with Legg Mason Wood Walker, Newport News, Va., finds that LTC and life insurance are among the easiest product combinations to pitch.
For young couples with children, particularly those with limited financial means, Rex will often suggest pairing mutual funds with term insurance. More affluent parents who wish to begin funding their child's undergraduate education might also benefit from having a 529 college savings plan.
But Rex observes that other investment vehicles, including cash value life insurance, deferred compensation plans and stock options, are better suited to funding other anticipated expenses (e.g., a child's graduate-level education or wedding). The reason: The parents might ultimately decide not to pay for these expenses, leaving them free to use the invested assets for other purposes.
Beatty suggests discussing investments before life insurance because of negative perceptions about the insurance industry and the stereotypes that many prospects still hold about life insurance agents. He calls to mind the image of the slick salesman who is fixated on pushing product, irrespective of the client's financial needs.
