Early in this course it was noted that to be unaware of the unethical sales practices that the insurance industry has dealt with, one would need to avoid newspapers, television and the radio. However, it isn't only members of the industry that are aware of the problems; our prospects are equally aware of them. We can see this public awareness in the results of an ACLI survey entitled Monitoring Attitudes of the Public. That survey showed that:
36% of people have negative opinions of the insurance business
fewer than 1/3rd felt the industry was either fair, trustworthy or caring
more than half felt that policies are difficult to understand and that agents try to sell them insurance they don't need, and
45% felt that agents don't tell the whole truth when selling insurance.
These are sobering results. Since the public is aware of the compliance and ethical challenges being faced, however, it makes sense to candidly discuss those challenges with prospects. In addition, the efforts that we have made to make our own practice compliant and ethical should also be shared. Our final section examines what we can do to turn our ethical and compliant focus into a marketing advantage.
An important key to turning our ethical and compliance efforts into a marketing advantage lies in differentiating ourselves from the negative stereotype that emerges from the ACLI survey. How we should accomplish that differentiation is, of course, the issue.
An important factor in turning your ethical and compliance efforts into a marketing advantage is to be proactive. Ask your prospect to express his or her feelings about the negative industry publicity. Don't wait for the prospect to surface the issue. In the way that you would use open-ended questions to draw out your prospect's needs and wants, use them to draw out your prospect's feelings.
An open-ended question that would do that is, "What is your opinion of the insurance industry?" This is the sort of question that is designed to allow our prospect to give vent to any negative feelings and concerns. Alternatively, you might ask "What is your image of an insurance agent?"
It is important to remember that your prospect may have those negative feelings. If you don't expose them and resolve them, they are likely to remain there and impede the sale. If you openly address them, you have a chance of correcting the record with respect to your financial services practice.
By asking these questions, you assist the prospect to:
give vent to his or her feelings
develop a clear and accurate picture of the problems the industry is experiencing
become aware that only a relatively small number of companies and agents are responsible for the unethical sales practices that have received publicity, and
understand that you are not among the small number of unethical and non-compliant agents.
When the prospect has told you what he or she thinks about the industry or about insurance agents, it is important to summarize what he or she said. This approach frequently enables the prospect to see that we understand and have a clear picture of his or her concerns. To effectively summarize you may wish to say:
"If I heard you properly, you said…"
and then continue to summarize the prospect's feelings and concerns.
Sometimes you will find a prospect that does not have any feelings-positive or negative-about the insurance business. You may want to tell the prospect about the deceptive sales practices that have been brought to light and about the few failed insurance companies.
You could approach the issue by saying:
"In the last few years, a number of deceptive sales practices have come to light. Although these things were done by a relatively few agents, it was shown the agents had failed to give their customers all of the information they needed to know to make an informed decision. In some cases, information was even misrepresented. The fact is, the customers didn't know what they were buying.
"We have taken a number of precautions to be sure that these practices don't occur with our clients, because we believe that is both wrong and bad business.
"Furthermore, a handful of insurance companies failed because they forgot that they needed to take a long-term, conservative view. By concentrating their assets in high risk investments, these companies were unable to meet their commitments when those investments ran into trouble.
"That, too, was wrong and bad business."
This is the point at which you can begin to differentiate your practice in the eyes of the client. You may want to begin by sharing your own values statement with this prospective client. If you don't have a printed values statement, you may want to seriously consider developing one. A good ethical code that you may want to look at before you begin writing your own is shown in the Appendix.
After you have shared your statement of values, you may want to explain your, voluntary ethical and compliance review and its evaluation of your sales tools and practices. After describing your review, you could say:
"This kind of ethical and compliance review is not required by any regulatory body; it's entirely voluntary.
"We went through the review because we wanted to be sure that we not only complied with the law in what we said to and did for our clients, we wanted also to be sure that it squared with our values system.
"We realize-and you may, too-that only those agents committed to a practice of full disclosure will spend the time and resources on this kind of review. It is unfortunate, but many agents don't take this approach or hold themselves up to the same high standards.
"We think that full disclosure is the only way to work with clients, because it means that the client is given all of the information he or she needs to be able to understand what is being purchased and why.
"What this means to you is that I will provide you with all the details you need to make an informed and educated decision.
"Does that make sense?
"Do you agree that this is the right way to proceed?"
The compliance and ethical principles upon which your practice needs to be based aren't gimmicks. They are real and important keys to changing the way financial services professionals are perceived by the public, and are the basis for well-earned trust.