ID Trends Winter 2021 ID Trends Winter 2021 | Page 17

WINTER 2021 17

How do we generate interest and urgency around the ( DI ) product ? Stop selling the technical benefits of DI to the nontechnical consumer .

Trending

I believe the opportunity to add or increase DI sales over the next few years is exceptional . Consumers are reevaluating their financial priorities in the face of market volatility , low interest rates , changing political landscapes and an ongoing pandemic . If our clients are thinking differently about their portfolios , shouldn ’ t we think differently about how to advise them ?

I know that question is going to get resistance , as it should . After all , I ’ m asking the most successful folks in our industry to do something other than what ’ s led them to prominence . I ’ m not reinventing the wheel here , but giving it an important update . Here ’ s what I propose :

Go to market as you have for years , which in a comprehensive planning model probably resembles something along the lines of this 5-step approach :

Step 1 is an attraction interview describing who we are and why we do what we do .

Step 2 typically defines your unique value proposition or philosophy of money management .

Step 3 illustrates your analytics or tools for evaluating portfolio performance . Step 4 is the recommendation phase . Step 5 is implementation and review .

Adding a step

This process is time-tested and empirically successful . We can make it more successful in today ’ s market by adding Step 6 : The cash flow conversation . Complete this step before implementing any of the strategies discussed in previous steps .

Here ’ s my rationale : Steps 1-5 of a traditional planning model are predicated on the assumption that the client will have the cash flow to support the funding schedule for the recommended portfolio . In other words , the fundamental element of financial success is sustainable positive cash flow . Yet , I ’ m fairly certain that most advisors do not have this conversation with all clients before implementing long-term accumulation strategies .

Carving out 1 – 3 %

By creating a hedge strategy of 1-3 % of your client ’ s gross income , you could very well preserve the funding and keep the client on a straight path to financial independence . On average , that ’ s all it ’ s going to take — 1-3 % of gross income allocated to a DI policy . That gives you and your client permission to utilize 97 % of their net worth because you backstopped the cash flow .

Add Step 6 to your selling process and say something like this to prospects : What ’ s your plan to replenish cash flow in the event of a disruption primarily due to becoming sick or hurt ? It ’ s the greatest risk to your financial goals .

Then give them time to process . It ’ s likely the first time anyone has asked them that question .

Stop selling a product and start selling cash flow because that ’ s really what DI is .

Top 5 reasons for long-term disability claims

( Source : Council for Disability Awareness )