Financial advisors often miss the opportunity to speak to their clients about the important role life insurance products can play in financial planning, according to a recent survey by Saybrus Partners, Inc. The survey found that more than half (56%) of financial advisors do not speak regularly to their clients about life insurance. The survey polled advisors at the 2012 Financial Advisor Retirement Symposium in Florida held earlier this month.
Only one third (34%) of financial advisors said they were “very comfortable” recommending life insurance to their clients. Nearly one in five (18%) advisors admitted to being “uncomfortable” or “very uncomfortable” recommending life insurance policies to their clients.
“Our experience has shown that clients are looking to their financial advisors for comprehensive financial planning. Standard practice is that the planning process should begin with a foundation of protection and conclude with a wealth distribution phase,” said Kevin Kimbrough, national sales manager for Saybrus Partners. “Therefore, it is critical for advisors to consistently include life insurance in their clients’ financial plans.”
The reluctance of financial advisors to speak to their clients about life insurance is consistent with consumer perspectives that were found in a survey conducted by Saybrus Partners in 2011.Regular Policy Reviews Lacking Even if a client has a life insurance policy, financial advisors don’t necessarily make it a part of their annual review. Less than half (47%) said they review existing life insurance policies with their clients on an annual basis. Twenty percent said they only assess their clients’ policies when they become aware of a major life change, such as marriage or the birth of a child. That review is most often narrowly focused on whether the policy is adequately meeting their current needs. In addition, some financial advisors (10%) discuss clients’ policies only if clients raise the issue. “Advisors are constantly reviewing the performance of their clients stocks and other investments. By contrast, they are reviewing their clients’ life insurance policies far more infrequently, based on life events or client requests,” said Kimbrough. “This means that many of their clients may be lacking essential protection for themselves and their families or missing opportunities to more effectively transfer their wealth to the next generation. Life insurance is not a set-it-and-forget-it product. It should be monitored and adjusted, if needed.