How Money Managers Invigorate Business


You’ve heard it a million times—we’re in a relationship business.  But most brokers don’t act like it.  They still think there business is managing portfolios rather than correctly understanding their job is managing clients.  If you want to really have relationships that last, get all of their financial business.   That includes all type of insurance.  If you want to know why you have shied away from offering insurance and how to add it to your business, read on.

The first year I joined the wire house, my gross was $325,000.  However, ONE life insurance sale accounted for $40,000 of that gross.  I was lucky to meet an insurance agent who wanted to meet my richer clients.  I learned from him the outrageous income that insurance generates.  I also realized that by ignoring the insurance, I would be doing my clients a disservice. If I did not supply their insurance opportunities, they would get inconsistent advice from me and the insurance agent rather than the coherent plan that one professional can provide.  Most importantly, I was leaving the door open for the insurance agent to steal my client.

The reason most brokers don’t get into insurance is the thought that insurance is difficult or messy or hard to understand.  In fact, insurance is just like securities—the client gives you a check for an expected future benefit. Isn’t that what you sell when a client starts a portfolio with you —an expected future benefit? Moreover, insurance products provide some guaranteed benefits which stocks or funds do not. Finally, the commission is outrageous.  It is common for the commission to be 50% to 90% of the first year premium.  The client gets a policy with a $50,000 annual premium and you could get $25,000 to $45,000 of gross for one ticket!

The other reason I see stockbrokers/money managers resist insurance is due to a scarcity mentality.  They don’t want the insurance expert at their firm or an independent insurance agent to talk to their client.  That foolish scarcity mentality will lose clients in the long run because someone will meet all of their needs and the account will leave.  Such a stockbroker could be potentially splitting commissions with an expert (and learn everything they need to know by watching the expert) but he gives up the chance at this income and education.

So how do you learn to present insurance?  The best way is to make friends with a local successful life insurance agent with 20+ years of experience and sizable production.  You can find an agent in the yellow pages or inquire with the local chapter of the Estate Planning Council (  Let him tell you the profile of the client to look for.  Then set up some appointments with the agent, yourself and your clients. (Every broker dealer has different compliance rules regarding fixed insurance so check with your BD before transacting business or splitting fixed insurance commissions).

After a few of these meetings, you’ll be comfortable selling insurance yourself and amazed at how simple insurance sales can be.  And you don’t ever need to mention insurance until after you gain a new client and set up a portfolio.  Then, you can bring up the insurance conversation.  Just a few policies a year can double your current production.  Here’s a few client opportunities to watch for—

Did you know that insurance can be purchased in qualified plans, and that when an insurance policy is distributed from a plan, it is taxed at a low value which can be as low as 50% of the account value?  In other words, the client pays tax on only 50% of the value he distributes from his plan.

Any business owner or professional must have disability and life insurance.  What happens to the value of his practice when your doctor client becomes disabled or dies?  You can either let an insurance agent sell the disability and life  insurance to him or you can.

For those clients with sizable estates, they need insurance to pay estate taxes.  The cost of the insurance is often less than 20% of the estate tax.  In other words, you can offer an “80%-off” sale.

Variable life insurance can make a very sensible sale for the younger client who needs the insurance coverage and the tax deferred (and possibly tax free) growth.  For the older client, say the grandparent, variable life can be a very powerful way to accomplish college funding.

For any client over age 60, you need to understand and offer long term care insurance.

There are books and web sites about any of the above topics.  Your choice is to spend more time gaining incremental stock market knowledge or invigorate your practice and your gross with the many opportunities of insurance.




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