Are we missing the point?

 Let’s stop for a second and go back to basics. Why do independent financial advisers need to exist? We can think of 3 key reasons.

• People need to be nudged into action – this includes making decisions around financial planning and choosing the best insurance options for them. They need someone to hold their hand and give them confidence in decision-making.

• People need to ensure they are protected in the case of injury, illness or death – which means medical and risk insurance advice.

• People need to ensure that they look after their money wisely, build their wealth, manage their debt, and ensure a retirement reality.

If we pause and focus on the last point (building wealth ), too often, clients are given beautifully calculated FNAs and insurance quotations that they simply cannot afford (unless they make some holistic budget changes). And if they do accept the need for the amount of insurance cover – then they could be paying hundreds of thousands of Rands a year in premiums, and leave little for investment or retirement savings.

Here we find ourselves in a very real conundrum – where clients that are nearing 65 and wish to retire or slow down the pace, simply can’t, because they haven’t saved enough, and yet, they have been spending +-R10 000 pm on various life insurance policies for the last 35 years.

Many advisers that are considered highly experienced and respected, even within our ICON stable, show evidence of this trend being in place for decades. Lots of insurance premiums, and not enough investing for future wealth.

But, it’s not all doomed. We have a solution. There is a smarter trick that too many advisers are missing. At ICON – we call this Rebalancing. Looking at the real client needs and cover solutions that are out there, with a new lens, to free up premium for investment purposes.

Traditionally – this is how the Life/Risk insurance advice process would go:

1)     Meet client

2)     Do financial needs analysis

3)     Covert needs to a lump sum

4)    Request quotes from consultants

5)     Meet client again

6)    Select 1 quote / provider that gives the best bang for buck

Then when/if this cover is left un-checked, results in over insurance in the future as the LS cover increases annually while the real need decreases as your client near retirement

 At ICON, we encourage two key changes to the above process.

1. We use a combination of income and lump sum benefits - resulting in far more sustainable premiums and cover that matches their decreasing needs.

2. Premiums are freed up to invest and save for wealth-creation.

3. We leverage the best of breed providers within our stable to produce a highly tailored cover proposal for the client. This may result in various risk needs being covered by 2-3 insurers.

The result?

• A lean, cost-effective solution that is very tricky to replace

• The most sustainable premiums to maximize client wealth over time

• Best possible future insurability

• Flexibility and use of niche solutions for the client profile  

Unlike the traditional way, this solution is one that in fact requires less housekeeping, makes annual reviews easier, and doesn’t have the same risks of your clients being grossly over-insured in their later years.

ICON’s independent perspective means that we can create value and leverage the best products and underwriting in the market. Because of our independence, we can also help the adviser in a very objective, practical manner. Our impartial standing means we can help compile notes for you and your clients around product due diligence, record of advice, and replacement records.

Using the concept of Rebalancing, you can help the weigh-up between insurance premiums and savings / wealth creation.