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I have a client who was approached by a friend from company X to buy a limited paying premium whole life policy. My client wanted to support her friend. However, she still call me to get some quotations of similar products from other insurers. I showed her a similar plan from another insurer that is nearly 30% cheaper. She felt that she is torn between because on one hand she want to support a friend on the other her friend's product is so expensive. It is quite common for people to be approached by their friend and the feeling of obgliation to buy is there. I have a better suggestion.
I told my client that there are now two products - one is more expensive than the other. Her friend's product is the more expensive one. She can support her friend by paying her a financial planning fee using the first year's saving. For example, if the difference between the two product is $500 than she can consider paying this $500 to her friend as a planning fee. Than she can buy the cheaper product from me and save 500 * Z (where Z = the remaining number of premium years to pay). In this manner, the friend is compensated and at the same time she gets to buy a cheaper product with significant savings. I do not suggest buying products for the sake of supporting friends. Firstly, many life insurance do not pay commission perpertually. Usually it pays commission 3 or 6 years only. It does not mean that as long as the policy is in-force, the adviser is getting something. Secondly, some products are so expensive and yet the difference between the premium compared with a cheaper alternative does not go entirely to the adviser. In other words, it is not logical to buy the product for the sake of "supporting" a friend. What should you do when approached by a friend or relative to buy a financial product and yet you know that the product is expensive? If the adviser did a good job in financial advice and planning, compensate him or her through a fee. As for products, get it from someone else who can provide a more compeitive pricing. As for existing advisers stuck with a restrictive product range, I know there is a saying that it is possible to sell ice to eskimo and you can also talk a bird down the tree. What this means is that it is possible to sell even with lousy products because the art is in the selling skill. But really, the role of a financial adviser is to give advice - not a bird seller or a ice seller. Would you want to be a ice seller for the rest of your life? Some new advisers I met decided to join certain company with very restrictive product range. They told me that the company can teach them how to sell. Once they master the art of selling, they will consider to join an IFA. I guess the assumption is that the IFA firm de-emphasis the selling part. I found these remarks interesting but troubling. In the first place, advsers joining the industry already got the wrong idea that this is a sale job. It is scary to know of new advisers entering into the industry with the wrong perceptions. |
