Selling insurance when the market is down

Selling life insurance isn’t easy. Some people think they don’t need it. Others think they can buy it cheaper on their own, eliminating the middleman. Interest rates are really low — others think they can find better places to put their money. Then the stock market falls off a cliff.

You’ve heard the saying: “The stock market goes up like an escalator, but down like an elevator.” Things can happen quickly, and that’s not always a good thing.

What should an insurance professional do when the stock market declines?

If you specialize in insurance, it’s tempting to say: “Not my problem” when the stock market zigs and zags. This would be a mistake. You can become someone clients can count on when things are difficult if you reach out to them as the voice of reason. Here are some ideas about how you can handle this with your clients:

1. Call your clients. Although they might not invest with your firm, you still help them handle their money. Everyone wants to feel they’re an important client. Reaching out personally delivers this message. You might pick up your phone. You might set up a Skype call. You might send a personal email. The keyword is “personal.” It’s not a generic, “Dear client, call if you have questions” blast email. It’s hand-holding.

2. What does your company think? Your clients don’t want to hear about how scared you are. That wouldn’t make them feel any better! They likely want viewpoints. Your firm, or one of your marketing partners, likely has insights on what’s going on in the stock market. Share this in simple, easy-to-understand terms.

3. Do they own insurance products connected to the stock market? This is an either/or situation. If they own something where they share in market performance, yet have principal protection, talk about it. If they have variable annuities connected to the stock market, talk about those, too. This might not be a pleasant conversation, but you want them to conclude “She’s on top of this; she is looking out for me.”

4. Products that earn interest. Many investors consider bonds “boring,” especially when interest rates are low. After the U.S. federal reserve dropped the rates by half a percent (50 basis points) on March 3, it implied rates on money not yet invested will be even lower. Your clients may own fixed annuities and other insurance products. Review them. They may have a newfound appreciation for safety.

5. Who else has called? They likely have assets with other firms or work with an accountant. You probably offer the same services through your firm under the banner of wealth management. You aren’t making a play for that money, because that would come across as opportunistic. Ask what those firms have been saying about the stock market and the economy. It’s a way of backing into “Have you heard from your financial advisor?” The viewpoint you shared earlier is important because you’ve been sharing it with your wealth management clients. This plants the seed you could help with some of their other investments if they aren’t getting the attention they feel they deserve.

6. What have you done? You’ve shown your client they are a person, not a number. You have expressed concern, shown empathy and tried to do your part in calming their fears. What if you were the only one who called? You’ve tactfully planted the idea there are more ways you can help with their financial picture beside the single channel of insurance. This approach also opens the door to more financial planning.

Lots of things in life can get clients scared. Being there to reassure them helps them see things more clearly and hopefully stops them from making poor decisions.

Learn about surviving during economic downturns

• “The economy and common-sense brilliance.” Watch two MDRT Past Presidents discuss their decades of success, no matter how the economy is doing.
• “Fear Factor.” Read in Round the Table how to alleviate client concerns during a recession.
• “Greece: From collapse to compliance.” After an economic and political crisis in Greece, read how financial advisors found opportunities to assist clients as the country found its financial footing.
• “How to get through tough times.” Watch as MDRT Past President Jack B. Turner, CLU, ChFC, talks about surviving difficult times.