The market for good financial advisors who provide comprehensive planning has never been stronger than it is today. The average age of Americans is getting older, particularly as millions of Baby Boomers hurdle into their 50s and 60s.
The traditional defined benefit retirement has gone by the wayside, and people are ill-prepared to take responsibility for their own financial security. Finally, the economy continues its slow pace of recovery following one of the worst financial crises in our history. Bottom line: people need help. And yet the number of financial advisors to serve them is actually dropping.
Rising demand for good advisors, combined with a falling supply, has led to competition for the best talent (ours is one of the few industries in America today that can't recruit good people fast enough). It also spells opportunity for the right type of candidate.
But who is the right type of candidate? We believe it has less to do with direct experience as it does with what drives you as an individual. Whether you're fresh out of school or you're someone 20 years older who has hit a career ceiling and wants to make a change, the people who succeed as advisors have two distinctly strong qualities — a high achievement motivation and a high service motivation.
Let's say that's you. You see the need and the opportunity; and you believe you have the right skill set and drive. You've made the decision to be an advisor, and you're being courted by several different companies. How do you decide who to join?
As with almost anything else, there's no easy answer. So do your homework.
What to Look For
When you're buying a car, you don't base it on the paint job without looking under the hood. The same can be said about deciding where you want to have a career as a financial advisor. You have to consider multiple factors; you have to see the big picture. Below is a list of considerations that we suggest you consider as you're making your choice.
I. Values — Look for a company that you believe genuinely puts its policyowners' interests first. A good place to start is by looking at how they approach relationships. Today's clients don't want to be sold products. They want to understand how those products will help them achieve specific outcomes. They want a plan. So you have to be an advisor before you're a salesperson. You have to be able to listen, understand concerns, identify goals, and develop solutions. You want to make sure the emphasis isn't on pushing products right out of the gate. II. Product quality — You want to represent products you believe are the best. But there is a whole range of quality on the permanent life insurance market. So you have to figure out how to evaluate what's out there. We recommend looking at four different factors:
Customer satisfaction — The best way to measure satisfaction is to look at either the "persistency rate" (how many clients keep their policies in force) or the "policy lapse ratio" (how many clients let their policies lapse). Compare these stats to industry averages.
Selectivity — How selective is the company about taking on policyowners? A good way to find out is to look at their mortality experience. A high mortality rate, relative to peers, speaks volumes about underwriting guidelines and has all kinds of implications from the cost of claims to lower potential dividend payouts. So look for a low mortality experience. And don't be surprised if it goes hand-in-hand with higher dividend payouts.
Product value — Compare the rate of return on the permanent life products you'll be offering to the rest of the industry. Remember that these are the ultimate buy-and-hold products, so be sure to look at returns over a horizon of 20 years at a minimum. You want to get a sense of how these products grow over decades, not quarters.
Expenses — How much does it cost to put a unit of insurance on versus at other companies? The lower the expenses, the more value you can deliver to policyowners in the form of potential dividends. It may seem like you're looking pretty deep in the weeds, but this matters. You want to work with a company that has a tight control on its expenses.
