The survey also found that financial advisers often miss the opportunity to speak to clients about the role of life insurance products in financial planning.
The survey’s other findings include:
- More than half of advisers (56%) do not speak with their clients regularly about life insurance;
- Just one-third of advisers (34%) described themselves as very comfortable recommending life insurance; and
- Nearly one in five advisers (18%) admitted to being uncomfortable or very uncomfortable recommending life insurance policies.
Even when a client has a life insurance policy, advisers do not necessarily make it a part of the annual review. Fewer than half (47%)
said they review existing life insurance policies with their clients on an
annual basis. Twenty percent said they assess their clients’ policies only 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. Some advisers (10%) discuss
clients’ policies only if clients raise the issue.
“Advisers are constantly reviewing the performance of their clients’ stocks and other investments. By contrast, they are reviewing their clients’ life insurance policies far less frequently, based on life events or client requests,” Kimbrough said. “Life insurance is not a set-it-and-forget-it product. It should be monitored and adjusted, if needed.”
Nearly half the advisers surveyed (42%) said they would like
to be more comfortable discussing life insurance and felt working with a life
insurance specialist who can help identify solutions for clients or attending a
seminar aimed at advisers could be helpful.
“Advisers are interested in integrating life insurance into their practices,” Kimbrough said. “For example, by partnering with a life insurance specialist, they can offer a fuller range of portfolio options, solutions and advice without having to invest the time and effort needed to become experts. In many ways, the adviser is akin to a primary care physician performing an annual check-up and calling in a specialist for a second opinion. Through this type of partnership, advisers can ensure clients’ needs are properly addressed, without exceeding the scope of their own expertise.”
Sabyrus Partners polled 103 advisers at the 2012 Financial Advisor Retirement Symposium in Florida, May 7 to 8, for the survey.