Identifying a problem leads to getting the sale

Insurance is not an impulse purchase. It doesn’t go on clearance or get offered as a two-for-one sale. If a person cannot see the need, they are unlikely to buy. They might understand the “nice to have” logic but they don’t see an immediate need. Identifying a previously unseen problem can change everything.

Retirement planning is a good example. A prospect who is committed enough to bring along their requested account statements sits down with you to go through the financial planning process. They tell you about the lifestyle they would like to have in retirement. They might not be able to attach a price tag, but it might be similar to the lifestyle they currently enjoy, possibly with more money needed for vacation travel.

For some reason, people think their expenses will go down dramatically in retirement. They don’t realize dry cleaning suits, buying lunch and commuting to work isn’t that dramatic a cost, therefore not a great cost reduction. It has been said 80% of preretirement expenses is a good number. It might be as low as 55%, or it might be higher because of travel.

You and the prospect set the date for the second meeting. In the meantime, you do research and analysis and assemble a proposal. This might include best-case, worst-case and average outcome scenarios.

At the second meeting, you present the average outcome scenario. It indicates the prospect would run out of money perhaps eight years into retirement. (You will likely mention the worst- and best- case scenarios too.)

The prospect has a problem of likely running out of money while they are still alive. Fortunately, there are options. You might suggest three:

• Option 1: Are you willing to work longer?
• Option 2: Are you willing to increase savings you direct toward retirement starting now?
• Option 3: Are you willing to have a lower standard of living (income level) in retirement?

The answers to all these questions from the client is likely “no.”

This leads to your proposal to the client, which might involve both insurance and investments. Are they willing to consider a different strategy that might give you a higher probability of reaching your goals? The prospect says “no” or “Let me think about it.” The meeting ends. The clients might have gone away, but the problem remains. It doesn’t go away until they take action.

They might seek out a second or third opinion. It is likely the same problem will be identified. Although these are competitors, their identification of the same problem validates your initial research. Others are now saying they have a problem, and it needs a solution.

Because you were the first to identify the problem, though, they might come back to you. Others might offer solutions, but they are probably very similar to yours. Don’t pressure them, but you are in a good position to continue to tactfully follow up and close the business.

Bryce Sanders is president of Perceptive Business Solutions Inc. His book, “Captivating the Wealthy Investor,” is available on Amazon.

For more ideas to help you close, read this MDRT member-exclusive content

• “3 ways to improve your follow-up”
• “Understanding the psychology of the sale”