Recently someone asked me, “What role do insurance products and services play in the lives of people who are approaching retirement age?” While this sounds like a simple question, it has no simple answer. Our industry plays an important role not only for people who are getting close to retirement, but also for everyone who hopes to someday live their dream of what retirement will be.
Retirement means different things to different people. If you ask 10 people to close their eyes and describe what “retirement” looks like to them, you will get 10 very different answers. Some may envision attending the activities of grandchildren and enjoying a busy life surrounded by those they love. Others may describe a life of solitude on an island with few disruptions and few material possessions. Some may work toward a life involving the boats and cars that seemed illogical to purchase when they were raising children. Finally, some simply want to rid themselves of the daily burden that many consider their job to be.
When I think about the role that our industry plays in everyone’s definition of retirement, an analogy comes to mind. You will have to bear with me and read through the analogy because I believe the connection to our industry may be helpful.
Retirement for most people is a destination that they hope to reach. While each person may define that destination differently, the end goal is certainly arriving at a certain destination. One could liken this journey to a vacation destination. Everyone defines vacation differently and has different spots they like to visit. For the purposes of my analogy I will choose Hawaii.
It is a fact that an airplane en route to Hawaii from the mainland will fly off course 98% of the time because of shifting winds over the ocean. While the winds vary in severity and direction they are constantly there, yet the plane always arrives in Hawaii. How is that possible? The plane lands in Hawaii because of the qualifications, training, and resources of the staff who are charged with ensuring that the plane reaches Hawaii. While they don’t always know how strongly the winds will blow or what kinds of weather may occur during the journey, they understand that these things will happen and are able to make the appropriate adjustments to ensure that the final destination is reached safely.
To me, this example accurately depicts the journey to retirement and the role that we play. If you will entertain my analogy, you will see the connection.
Before planning a trip, the first step is to decide what is important to you so that you can determine the destination that makes the most sense. Advisors play a critical role in understanding the goals their clients are working toward. Only by analyzing each client’s needs and finding out what is important to them will the advisor have any hope of assessing the likelihood that the client will be able to get to where they want to go. Once the analysis is complete, the advisor can clearly identify the destination with the client—their retirement goals.
The Flight Plan
Once a destination is chosen, it is important to pick the most sensible route with the greatest odds of reaching the destination safely and efficiently. This requires an advisor to carefully analyze which products and services specifically meet the client’s needs and will ensure that the client reaches their destination with the lowest risk and volatility possible. If significant weather is predicted, a pilot will intelligently opt to take a different direction.
To me, the takeoff represents the early phases of the plan. It is the stage when the plane is most aggressive and consequently also where the passengers face the most risk. This is typically when an advisor is more aggressive with client assets and focused primarily on growth—taking a higher risk in order to achieve a higher return. A smooth takeoff could be likened to a very consistently bullish market. It takes unique skill to handle a plane at takeoff, just like it takes unique skill for an advisor to get a client’s financial plan off the ground.
At some point it makes sense for the plane to ease out of its aggressive ascent and gently level off. There may be somewhat of a slow climb at this stage, but it is controlled and the passengers feel safe. In our world, this is when a client shifts from aggressive growth products with high risk to moderate investments designed to keep them protected while they continue gradually ascending.
At some point all of the hard work of the professionals on board should lead to a gentle and controlled landing. This is when the advisor needs to work with the client to ensure that the assets that are built up can be distributed and enjoyed when the client reaches their ultimate destination. You cannot land a plane in the same way that you take off. You must be more disciplined and conservative to ensure a safe landing.
When you think about the analogy that I just gave, it can closely mirror the life of anyone hoping to someday safely land in their destination. So what does any of this have to do with the initial question about the protection products that our industry represents? During any flight, there is risk. The risk is high during takeoff and during landing. Anyone who has ever had a very turbulent flight understands the fear and uncertainty that will set in. What if the plane becomes disabled and needs to land in an emergency? What if you get ill during the flight? What if the landing gear does not descend before the plane touches the ground? The most masterfully executed takeoff (growth), leveling off (conservation), and landing (distribution) becomes irrelevant when the flight plan is diverted because of unexpected events.
Too many advisors focus on growth and distribution but ignore protecting the flight in the first place. Unexpected turbulence will happen for everyone who flies and everyone who prepares for retirement. Sometimes it is mild, sometimes severe. In the midst of unplanned events, protection products help to decrease fear and increase confidence. They make people feel safe as they work toward the destination we call retirement. Thanks to progressive product development, many protection products can even help in the ascent or growth phase, the leveling off phase, and the landing or distribution phase.
Our industry has everything to do with retirement. We address the number one issue people deal with as they approach retirement—fear. What if I get sick? What if I can no longer earn an income? What if I need a doctor? What if I die? Will my family still get there safely?
I have said it before and I will say it again: as insurance professionals we represent a noble part of the financial services industry. We need to help people understand how we can “protect” their flight plan. Educating all of the professionals involved in all phases of a clients plan about the importance of protecting the plan is the future of our industry. Our advisors need to see life insurance products not a sale, but a strategy. They need to form strategic partnerships with those who help clients during take off, leveling off, and landing to ensure they see how protecting the flight will alleviate their clients fear. Relentlessly educating not only clients, but the other financial professionals in the industry about the importance of our products and services is critical.
NAILBA has long worked with MDRT in tandem to provide first class education to the industry. We strongly encourage professionals in this industry to become involved in both of our organizations. The benefits are many. From the collaboration of like-minded financial professionals to the priceless education received through being a member, make it a point this year to join both of our organizations. You will meet advisors who work in all areas of constructing quality retirement plans for American families. Networking with these people provides infinite benefits to you, but more importantly to your clients. MDRT is one of their many quality events on the horizon. I strongly encourage you to give it a try. You will be a better “pilot” by having done so. In the meantime, I have a flight to Hawaii to catch.