Liberty Life invited to South Africa Harry Beckwith, sales and marketing guru and bestselling author, to speak to its brokers at its Take The Lead Roadshow on service delivery and sales and marketing, as brokers often fulfil the roles of ‘salesmen’ and advisors. Harry took some time out of his busy schedule to answer some questions from COVER magazine.
COVER: Where do you see ‘selling’ fitting into the advice process?
Selling comes after you have convinced the prospect that you are capable of giving expert advice and, that you genuinely have the client’s needs at heart.
COVER: What do you think of supporters of a fee-based financial planning environment thinking there is no place for ‘selling’?
I think they are wrong. There are thousands of people who can offer good financial planning advice and the best sales people and marketers among those advisors will have the most success. In addition, even with fee-based planning, the advisor still will often find the need to ‘sell’ the client on a particular course of action. As an example, a young client may take too conservative a position. The advisor will need to sell that client on the idea that a higher risk position actually will be much more rewarding.
COVER: Do the negative stereotypes of the old ‘life assurance salesman’ persist? What can we do to banish them?
The characteristics of many of sales people have changed, but the stereotypes that many prospects have of those sales people have not changed. That is the obstacle that today’s financial advisors need to overcome: they need to demonstrate that they are informed financial advisors who are giving advice rather than just selling a product.
There is a wonderful Woody Allen movie Take the Money and Run, in which the character Allen plays is sentenced to the worst possible punishment, which is having to go into a hole with a life insurance salesman. That illustrates the old stereotype which still exists with many Americans, and, I assume, many South Africans; but, ethical attitudes and professional behaviour can change this.
COVER: How do we go about unlearning the old and developing the new?
That is one of life’s great questions. We humans are creatures of habit, and feel most comfortable with what is most familiar to us. One way that you unlearn that is by taking risks and realising that the risks pay off. But taking risks is not comfortable for most people. That’s why risk-takers thrive, and few risk avoiders do. Risk-takers are the lucky few.
COVER: Are our clients ready for an environment where advice is charged for and selling of actual products has a secondary position?
The question should always be: “Am I reaping a greater financial reward than I am being charged?” Secondly, financial planners should realise that clients don’t want products; that want a portfolio that helps them achieve their very specific needs. One size simply does not fit all.
My American clients are almost all fee-based. The fee is calculated based on the total assets that the advisor is managing for a client. I think this is the ideal approach, because it means that the advisor shares in the rewards that the client realises, but also suffers if the client’s portfolio suffers. So, the interests of the advisor and the client are perfectly aligned.
COVER: Are salesman born or developed? If developed, how does one develop the necessary qualities?
The answer is both. All successful sales people share characteristics that they were born with. A sales person must have guts and the ability to deal with rejection; not all people have those qualities. But to be most successful, they need to learn the practices that produce the most consistently positive results. So, great sales people are born and developed.
COVER: Do you see the fee-based model work in emerging markets? Should there not be a middle road?
There probably should be a middle road because too many in emerging markets have, by definition, limited resources. Their immediate need is for insurance, and not for additional investment advice. They should pay on a cost per product basis.
The potential problem is that companies and financial advisers might not find it attractive or profitable to even prospect in the emerging market. This potential problem is one that the South African regulatory agencies need to recognise, to ensure that the emerging market customer is adequately protected.
Harry Beckwith’s latest thinking can be followed on his website www.beckwithpartners.com, at www.psychologyToday.com (under his behavioral Economics column called ‘Unthinking’) and on Twitter.
Harry Beckwith with Francis Raffner, Divisional Director Franchise from Liberty
Personally, I am fascinated by insurance distribution due to the vast array of channels and models that are being used. Regarding financial planning and the debate about commission v fees as well as selling v advice, I think they are not mutually exclusive. The bottom line is that people have different needs and respond differently to different approaches. Besides selling yourself and your services, once the plan is complete, somebody has to implement and therefore somebody has to ensure the client follows through on the advice. That involves selling.