The document discusses the perception of insurance advisors and how to improve it. It notes that insurance advisors are often the subject of jokes but that they provide important financial advice. It argues that improving financial literacy could help change perceptions by increasing understanding of risk management and insurance. The document recommends that advisors explain the difference between human and financial capital and how insurance protects both. It also suggests advisors discuss how permanent life insurance can benefit high-net-worth clients.

1. 20 FORUM JANUARY / FEBRUARY 2016
the Insurance
was recently in Croatia at my company’s conference for
top-producing insurance advisors, where I was struck by
their dedication and professionalism, but also something
else. Many of our conversations centred on how we
attracted and connected with clients without ever starting
with 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. I
often refer to the funny scene in the 1993 film Groundhog Day in
which Bill Murray’s character, Phil, has a chance meeting on a street
corner with Ned Ryerson,a life insurance salesman.Ned isn’t dressed
for the boardroom, and appears to be pushing a single premium
life 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 the
bottom of the list of professionals consumers trust.While we know
Canadians that have an established relationship with an insurance
professional appreciate the role that advisor plays in their family’s
financial peace of mind, life insurance ownership is at its lowest
level in 30 years. It stands to reason that we can’t rely on building
the brand by converting one client at a time — especially since the
average age of life insurance advisors is over 60. I believe the issue
to resolve comes down to two factors: what can be done to create a
greater general awareness of the reasons why clients may actually
want insurance, and how to close the gap between the perception
and reality of a career selling life insurance.
INSURANCE
Insurance advisors don’t always
receive the respect they deserve from
the general masses. Wayne Miller
explains how to improve the
consumer perception about
insurance to your advantage
I
Brand
Beefing Up

2. JANUARY / FEBRUARY 2016 FORUM 21
ingful analysis before making any product recommendation. But
before you get into the nitty gritty about insurance, consider this
two-prong approach.
1. Explain the difference between human
capital and financial capital.
Help clients to think about insurance differently.Start by explaining
the traditional use of insurance — to protect income.In the income
earning years, the clients and advisors are focused on asset accu-
mulation.In a client’s mind,risk management tends to take a back
seat because it’s human nature to think a tragedy is “not going to
happen to me.”But human capital is our greatest asset — the present
value of our future ability to earn an income or grow our business.
Human capital is a temporary asset as most plan to“retire”at some
point.Protecting this temporary asset with temporary life insurance
is just a smart decision.If you position the premium as an additional
fee to guarantee the accumulation plan, many clients will see this
as 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 capital
protection, some clients, most likely the older, wealthy ones, will
see they don’t need insurance because, frankly, their accumulated
assets 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, clients
have maxed out their tax-free savings options and may have assets
in a corporation. And for high-net-worth clients who’ve built
significant financial capital, they realize that the more they have,
the more they have to lose. They have worked hard to build their
business and don’t want to see a sizable portion depleted from taxes.
This is when adding the insurance and estate advisor to their team
becomes highly strategic.For the wealthy — and generally only for
the wealthy — permanent life insurance is utilized successfully to
protect 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 seek
them out looking to buy insurance.We are seeing higher insurance
sales overall (larger cases to affluent Canadians) even at a time
when life insurance ownership is declining. That’s because it is
the 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 the
silly jokes with the common knowledge that when someone
achieves high-net-worth status, they will want to have a discussion
about owning life insurance.And then, when the next generation
is aspiring to a short list of sought-after careers, that list will
include insurance and estate advisor. ấ
WAYNE G. MILLER, BMATH, ASA, ACIA, is regional vice-president, national
accounts and strategic business development at Sun Life Financial. He’s published
a variety of white papers, including PAR as an Asset Class, and speaks regularly
on life insurance and advising affluent clients. He can be reached at
wayne.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 I
believe the insurance stigma was formed based on collective, yet
distant, memories of once meeting a character like Ned Ryerson,
and reinforced by gaps in financial literacy — in Canada and
abroad. But we all know the days of being cheesy or relying on
pushy 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 even
the most astute investors, insurance advisors need to find time to
explain 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 ACB
and NCPI, coupled with insurance illustrations that provide reams
of data tables and compliance details, it’s no wonder clients need
an insurance professional to help them sort it out. But it seems
the gap in literacy starts far before any challenges associated with
understanding 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 in
overall financial literacy are a growing concern. The September
2015 issue of the Journal of Retirement included an article on
Financial Literacy and Economic Outcomes. It referenced a 2004
survey of Americans over the age of 50 and said“…we were aston-
ished to learn that only half of older Americans knew the right
answer to two basic questions about interest rates and inflation,
and only one-third knew the right answer to those two questions
plus a third question on risk diversification.” The questions were
multiple choice and very easy. Imagine if there was a fourth ques-
tion on life insurance! Without a strong understanding of risk
management or diversification, how could one really appreciate
the benefits of insurance? No wonder it’s generally seen as an
expense — 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 Task
Force of Financial Literacy concluded its three-year mandate given
by the federal finance minister. The task force defined financial
literacy as having the knowledge, skills, and confidence to make
responsible 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 need
for lifelong learning, meaning financial literacy education be pro-
vided when people are most likely to be receptive to it.And that’s
where 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 financial
literacy will result in a reduced strain on social programs that could
ultimately reduce government expenditures and maybe even per-
sonal taxes. In a nutshell, insurance helps drive fiscally responsible
social policy. This is why such industry associations as the
Conference for Life Underwriting (CALU) champion key issues
with government regulators and policy-makers as a welcome voice
at the table.And there’s good reason for the insurance industry to
get this respect.Across all major Canadian life insurance carriers,
there are impressive payout rates and corporate stability, even in
times of relative economic crisis.
You obviously look at each client’s situation and do a mean-
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