There are many benchmark experiences in our industry that alter your perception of what it is that we do. Last month, my associate Andrea had a big one. Andrea is very good at her job and has a natural intuition for organization and processing. But she’s also not licensed. A choice of her own, to prioritize her family and become the very best at her support-based role.
Andrea’s epiphany moment didn’t happen at the office. She was at home, sitting at her kitchen table with her husband. An insurance advisor representing her husband’s company’s union sat across from them. And he underestimated her. Wrong move, buddy.
Not only was Andrea able to follow the rapid-fire industry jargon sales-pitch fluidly, she also knew that some of what he was saying was wrong.
The first red flag was his arrogance. Andrea knows, as most of our clients do, that we work with people experiencing major life transitions. Because of this, it’s common for us to send clients home to think about their options before we accept a decision from them. In-depth insurance planning can take a couple months, and comprehensive financial planning can easily take longer. So when the insurance agent told Andrea that she couldn’t get that kind of coverage anywhere else, was hesitant and annoyed to let her keep the quotes for her review, and told her that even if she did keep the quotes, nobody else would understand how to read them, Andrea was perturbed.
And when the agent told her that smoking habits don’t matter – anyone who smokes can just stop smoking for two weeks so that their medical comes back clear, and then it doesn’t matter if they smoke after that – Andrea was dumbfounded. “I was literally stunned” she says, recalling the encounter. You see, part of her position at our office has her reviewing every document that we send out for mail in case I’ve missed something. It’s a critically important role, and through this Andrea knows that insurance applications say – to the point where she actually highlights it prior to any meetings – “this information is true and correct to the best of my knowledge”. Further, insurance applications go on to explain that misrepresentation will result in a void policy – as if the contract never existed. That part of the application is typically written in bold. And in caps lock. When Andrea suggested to the agent that someone claiming to be a non-smoker even though they smoked just two weeks prior to the application is wrong, and could result in a denied claim, the agent rebutted that the claim would absolutely be approved, and that they couldn’t be denied if there was no smoking usage at the time of the application (wrong! And probably borderline insurance fraud.).
Licensed or not, Andrea’s high standard of ethics wouldn’t allow her to hold back. She launched an offensive attack, stunning her husband into silence (and a proud smirk). The agent through a few curveballs to gauge her knowledge, and then finally asked her what she does for a living. Andrea explained her key role in our firm, and proudly rattled off some of my designation certificates hung on what she refers to as the “Wall of Kickass”.
After a couple more attempts to regain command of the conversation’s energy, the agent left, with a damaged ego. One point Andrea, zero points high pressure insurance sales guy.
A fun story, but here’s the troubling part – at no point so far have we discussed what Andrea and her family actually have for insurance, where there budget is, or what additional coverage they might need. The meeting with the insurance agent left Andrea “somewhat disgusted”, which is a sentiment all too common in our industry.
This is especially disturbing given that a study by LIMRA shows that almost half of Canadian households would have trouble meeting everyday living expenses after just a few months if a primary wage earner died.
An obvious gap in insurance needs combined with a tarnished industry reputation wouldn’t be so bad if the chances and the consequences of being underinsured weren’t so devastating. Statistically, half of us will either die, become disabled, or be diagnosed with a critical illness before the age of 65. And without adequate insurance coverage, the consequences can be financially devastating.
The problem is, I think to a great extent, education. Partially this is industry based. Minimum agent education standards could definitely stand to be improved, and are still significantly sales-focused. And although the momentum is already building, it will take years to reform our industry. The other education factor is that risk management isn’t integrated into our school system, and so anyone interested in insurance coverage is dependent on the advisor to recommend what is in their best interests.
But the good news here is that both of these, to some extent, are within your control. From the licensing point of view it’s pretty simple – before agreeing to a meeting with an agent, just look them up. You can look them up with google, or easier than that, just ask the advisor.
It might sound egotistical, but sometimes we do this for fun. For example, a couple of months ago Andrea went on an undercover mission to try and find out how the agent behind a facebook posting was licensed. They were being touted as one of the “top financial advisors in Canada”. After several correspondences back and forth, Andrea was able to find the agent’s name, but was unable to confirm how or if this agent was licensed without booking an appointment.
So the basic rule here is, if you don’t like what you see, or worse, if you can’t find anything about the advisor, you need to find a different advisor. Remember, you’re the one hiring them. Due diligence and an interview should be your minimum standards, just like it would be for any other hire. Andrea’s advisor guest failed his interview process. “I don’t even think my dog liked him” Andrea quips.
You can also protect yourself from high-pressure sales calls by becoming involved and building your knowledge base. Even before seeking the advice of a professional you can establish a fairly good understanding of your personal finances with some easy steps. First, start by tracking your expenses and paying bill together as a family (kids included – what better way to learn household management?). You don’t have to try and rein anything in, just become mindful of your household’s needs. Then expand your knowledge outside of your specific situation. If you like to watch TV, you can pretty much get into anything by Gail Vaz-Oxlade. If you read books, the Wealthy Barber and the Millionaire Next Door are great starts.
If you have questions on how to determine an advisor’s licensing and designations, or for more information on building an insurance protection strategy that works with your family’s needs, speak with a Certified Financial Planner today.
Written by Meagan S. Balaneski, CFP, R.F.P.
Meagan S. Balaneski, CFP, R.F.P CERTIFIED FINANCIAL PLANNER® Advantage Insurance & Investment Advisors
Manulife Funds Representative
Manulife Securities Incorporated
The opinions expressed are those of Meagan S. Balaneski and may not necessarily reflect the views of Manulife Securities Incorporated.