Lesson #8 Agent 00-Who?

So as I said before, I’m a rookie in this field, and I’m learning the ropes. All the courses, exams, and licensing requirements completed, and I’m logging tons of hours on the phone and computer running investments summaries and illustrations. I’m very straight forward. I can explain things well, and in ways that everyone can understand, but this is the issue that I’ve encountered: People don’t realize how much their relationship is costing them. Let me explain.

The other day, I called up someone who was referred to me (let’s call him Henry). When I introduced myself, I immediately felt a tension, a sense of uneasiness (you know that feeling I’m talking about). This guy didn’t want me calling, and he couldn’t end the call faster. This was his first response:

– Aye, sorry to waste your time, but I already deal with George at Ivory Tower (fictional names), my entire family has been with him for years, so I’m not interested.

It didn’t matter what I said at this point; Henry was referred to me by another person who didn’t get prior consent. Fortunately, I knew of the advisor Henry was speaking about, and I knew I had to give it a try.

– Henry, if I told you that your friend cost you thousands of dollars over the years, without your knowledge, would you still be this person’s friend? (long pause).

Before he could answer:

-Do you know what a captive agent is Henry? (he answered no).

Before he could say anything else, this was my response:

-Henry, a captive agent, is an advisor who only represents one company. Some captive agents can and do sell products for other companies, but they tend to stick to their primary contract because they want to keep their bonus levels up. The more business they write with the same company, the more money they make. It’s that simple! The problem with captive agent structure is the company can charge what they want. They dictate the terms, the fees and the compensation and the advisors have to go along with it. ┬áDo you think a company that charges more for the same coverage has the customers best interests in mind? They are profit driven and not customer driven. An independent Insurance, Investments and Group Benefits Broker like myself knows where and what to shop. I’m an expert in knowing all insurance companies’ products; therefore, my recommendations are based on numerous sources. I want to make recommendations based on your needs…I never go straight to your budget! Also, because I always get the same bonus level across the board, my recommendations are never financially driven. I make the same compensation no matter which company you choose. Let’s make an appointment, and I can show you in person what I’m talking about. A second opinion doesn’t cost you anything. What day are you available next week?

I know that 95% of the advisor’s in my area are captive agents. This dialogue, I’ve rehearsed numerous┬átimes, and I have used it during countless calls. Unfortunately, it only seems to work 30% of the time. Why?

lesson 8 image 3

From my research, here are the main reasons people stay:

  1. Too much work to switch
  2. Costs money to change to another advisor (see lesson #6 part 2)
  3. Convenience of location
  4. Personal connection to the advisor
  5. Everything is from the same company (security and constancy)
  6. No news from the financial planner must mean good news

I could write six pages to explain how this rationale doesn’t hold water…I frankly don’t have that kind of time today. This is what I can say though, so listen up: You’re leaving hard earned money on the table! You are the carcass, and they are the vultures!

a) Look at the difference 1% return can make on a $300k investment over 20 years. Are any of the reasons above worth that kind of money?

Lesson 8 chart

b) Would you want to pay $10K more in premiums for life insurance for the same coverage?

c) Would you like your advisor to make money even though you are not?

A True Financial Security Advisor stays in touch with his clients, reaches out to them regularly and encourages them to call often for advice, anything money related. Captive agents and independent brokers/agents are both well qualified & educated and must always meet very high standards. We are mandated to stay current and are required to maintain continuing education credits. Wouldn’t it be nice if I could go into any dealership and get a quote for any make of vehicle, right off the assembly line? We can spend countless hours, days and weeks to shop for the best car that fits our needs and to get the best deal of course, but we don’t do the same for insurance & investments. Really? Again with the nonsense!

lesson 8 image 1

Let’s recap, in today’s lesson I learned:

  1. Captive agents don’t always have my best interests at heart;
  2. Captive agents are handcuffed to 1 company;
  3. We justify our choices without getting all the information;
  4. Ignorance is bliss but it can also cost you a $hit-ton of money
  5. It’s a pain in the proverbial a$$ to shop around for a new advisor, but I promise it will be worth every minute if you find a good one!

Listen, I don’t blame the captive agents. Some are my friends and great people! It’s all they’ve known for years. Most of them are slowly moving over to the MGA side, to become independent brokers like myself. (change takes time though…snail mail!) Unfortunately, change is terrifying for most people, and most are so stuck in their routines that they’ll never see the big picture. My proudest moments are not when I make a sale, but when a person tells me: I did not know that! It’s the greatest feeling in the world to share knowledge with someone. Ignorance can be educated and crazy can be medicated, but there’s no cure for stupid. Ask more questions, and you won’t make bad decisions.

I’ll learn ya!

Broke-A$$-teacher

https://www.asurea.com/asurea-life-insurance-agents/

https://www.lifeprotection.ca/compare/life-insurance-broker-vs-captive-agent

https://lsminsurance.ca/life-insurance-canada/2014/08/buying-life-insurance-from-an-independent-agent-vs.-captive-agent

https://lsminsurance.ca/life-insurance-canada/2012/09/life-insurance-distribution-channels-in-canada-2

http://www.logiq3.com/blog/canadian-life-insurance-distribution-model

http://ratesavecanada.ca/insurance.php?topic=306&id=76&article=insurance-agents

http://www.soundfs.ca/top-5-reasons-people-stay-financial-planner/

https://www.forbes.com/sites/rogerma/2017/01/04/5-things-to-look-for-when-picking-a-financial-advisor/#3d8c5291fc44

image credits:

https://www.brainyquote.com/photos_tr/en/m/marcustulliuscicero/383649/marcustulliuscicero1

https://www.trustedchoice.com/content/dam/trustedchoice/aboutus/captiveagent1

https://lsminsurance.ca/images/life-insurance-brokers-vs-agents-thumbnail

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