by Tony Vidler 
Often advisers forget how valuable the service bit is in their “professional service” business. Everyone has heard some story about how a business did well from going the extra mile for a customer…but rarely do you hear about a professional services business that has a standing process for going the extra mile because they know that it continually improves sales results, profitability and is a very effective form of marketing…if not THE most effective form of marketing.
One practice I dealt with does precisely that, and converts 70% of the “uninsurable” cases that would not ordinarily get converted into clients by most other advisers.
The usual situation for most financial advisers dealing with insurance placement is that there will be a percentage of submitted cases that are declined, deferred or loaded heavily by the insurers, resulting in proposals that simply do not proceed. For the advisory firm this is a serious amount of time and effort that is usually written off…there is a substantial cost involved for the practice in “not proceeding” insurance business.
That sunk cost which the majority of firms write off from such cases has been turned around however by one boutique insurance practice. It assumes responsibility on behalf of the client and the insurer to manage the placement of the business proactively.
On any occasion where a client is declined, deferred or has an exceptional loading the adviser initiates discussion with a medical professional to find out more about the condition that has caused the problem. It is worth highlighting that the adviser is not having a conversation with the client’s doctor about the client’s personal case, they are finding out about the medical condition itself from another practitioner. They summarise what they have found out about it. As a standing procedure, alternative medicine and therapy methods are looked into and summarised, and a possible alternative action plan to manage the health issue is put together for the client by the medical professional that the adviser engaged to provide the “second opinion”.
In contrast to the standard insurance proposal situation when a client is considered a bad risk and simply declined or priced out of the market, resulting in the adviser raising their hands in surrender and saying “sorry, I can’t help you“, this particular business rolls its sleeves up and goes to work for the client quite proactively.
Typically there is a period of 3-6 months of managing the client’s necessary changes to diet, exercise, medication and so forth. The result? Healthier, happier, satisfied potential clients. Not a bad outcome so far….but remember: these are prospects who are not actually clients. They are people who essentially got turned down by an insurance company that other advisers walk away from.
During this period of investigation and managing lifestyle changes there is significant dialogue and relationship building with the client as well – and that is priceless. The adviser is no longer someone trying to sell a solution, they have become someone who is taking an active interest in their client living well. Generally they are more involved in creating “wellness” in the prospects life than the medical profession actually are.
When the necessary change has been managed to the point where it is worthwhile for the client to try again on the insurance, the adviser pays 50% of the specialist or medical reports to put the case for reconsideration to the insurer. But the client has to pay the other 50%….they have to put some “skin in the game” and show that they are serious about getting the plan put in place. There is no doubt however that at this point in time the adviser and the client are in partnership….they are working together to get the client the result they want, which is incredibly powerful positioning.
In over 70% of the cases the adviser is able to get the client acceptable coverage and terms within about 6 months from when they were originally declined or deferred.
Often there is additional premium in the form of loadings, but just as often there is not. The average proposal size is larger however in these cases, and with a 70% conversion rate on otherwise lost business, it is proof that there is money along the extra mile. Bear in mind that in the last few years it has become commonplace some 15-25% of proposals to fit into this category (deferred/declined/exceptionally loaded) as underwriting has become more stringent. Do some maths on that…if you get 10 of these cases per year at an average of $5k in revenue per time there is over $50,000 in revenue that did NOT get made usually. But this practice typically unlocks around $35-40,000 of that…and generates significant goodwill. It would be fair to say that this boutique practice welcomes difficult cases – they are good business and typically generate extremely good clients who value the advice and the relationship.
Which brings us to that final lovely little benefit that arises from this proactive approach: clients are inevitably moved rapidly up the loyalty ladder, and usually become excellent sources of referrals.
Have you heard of a better way to take a lukewarm prospect and turn them into a raving fan inside a year?
I haven’t.
There is definitely money in it for a practice from going the extra mile in providing genuine professional service at the front end of an engagement.
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