Your client is the person sitting in front of you.
This may seem an obvious observation, but it’s one that needs to be made. Institutionally-owned financial planners, in particular, seem to pitch their advice at someone other than their actual client. They advise some ‘perfect person’ designed by the institution’s marketing department to maximise sales results.
Life’s not like that, and neither is financial planning.
The happy couple beaming out from their PDS cover, enjoying their wealth and thanking their financial planner, actually does not exist. It’s make believe. It’s a photo-shopped day-dream from the ACME Casting Agency. It’s not your client.
Your client is the person sitting in front of you. He or she is a real person. There will be resistance. There will be non-interest. There will be cost issues and competing claims on the family’s budget. Your advice must be a compromise, a sensible balance that understands your client, is appropriate to your client and is in their best interests.
Few clients can afford the model risk insurance framework. The decision can boil down to “do I pay this $4,000 insurance premium or do I take the family on an annual holiday?”
What would you do?
Anticipate this reality. Work with it, not against it. Adjust your advice for it.
It may be that $100,000 of level premium, agreed value cover, 30 day waiting period income protection insurance is not appropriate to your client at all, because he cannot afford it. It may be that $60,000 of stepped premium, indemnity cover with a 90 day waiting period is the more sensible solution. And it is more appropriate to your client, because he can afford it.
Think about having a super fund hold the insurance to take the cash flow pressure off the family’s budget.
Compare the two options so your client can see how you are making the insurance affordable and feasible. Explain why you have compromised and why this is in his best interests and appropriate to him.
You might think this client is under-insured. You might be right. Deal with it. Explain your concerns in your statement of advice. A simple paragraph like this will do the job:
Some financial planners may say you are under-insured. We have discussed this. You are aware of the issues, and you believe our recommendation is a sensible compromise based on affordability and the many other claims on your family budget. Let me know if you are concerned about the under-insurance issue.
You are not your client’s nanny, and this paragraph places responsibility for the under-insurance on the client, where it belongs.
It much better for the kids if dad has some income protection insurance in place rather than no income protection insurance in place: the perfect-client model sales pitch, leading to unaffordable insurance cover, was never going to be accepted.
But real advice for real people will work.