Are you overlooking those who may need you the most?

Three top producers explain how they thrive by focusing on the needs of middle-income clients. Let their example be your guide to success in this vastly underserved market.

I have a secret that I’d like to get off my chest. For more than 30 years, I have been affiliated with magazines in the life and health insurance business, and for more than 30 years, I have had this uneasy feeling that the industry as a whole — magazines included — put way too much emphasis on serving the wealthier market. It’s easy to understand why, as the needs of the wealthy are typically more interesting, obvious and, well, simply bigger than the average family’s needs. Bigger problems need bigger solutions, and therefore, the problem-solvers take home a bigger paycheck.

But the reality is that the middle market needs your help, too, and often in a more impactful way than the wealthy. After all, with fewer resources than the wealthy, those in the middle market are arguably in a much riskier situation, since they often lack any significant cushion of protection from a catastrophic financial event. Everyone’s financial resources are crucial, of course, but a middle-market family stands to become a less-than-middle-market family a lot quicker if their resources take a hit.

In This Month’s Roundtable, We Talk To Three Top Producers Who Understand The Ins And Outs Of This Market And Excel By Serving It: Brian H. Ashe, CLU; Robert N. Garneau, CLU, ChFC; and Shane Westhoelter, AEP, CLU, LUTCF.

Robert N. Garneau, CLU, ChFC, has been active in the insurance industry since 1977. His business interests include the accumulation, preservation and distribution of assets. He is active in the individual and business market, primarily in retirement and estate planning. He is a corporate registered investment advisor with MassMutual, based in Bedford, N.H. Garneau is very active with the Million Dollar Round Table and currently serves as chair of the Program Development Committee for the Focus Sessions in Philadelphia in June 2013. He is also treasurer of the MDRT Foundation and serves on the LIFE Board as a representative from MDRT.

Brian H. Ashe, CLU, is president of Chicago-based Brian Ashe & Associates Ltd. He has been in the insurance and investment business since 1969, assisting clients with life, health, disability, annuity and equity products. His work is concentrated in estate conservation, retirement planning, employee benefits and business insurance strategies. Ashe is the past president of the MDRT. A popular speaker, he has addressed groups in 38 states and 15 foreign countries. He is the treasurer of the Life and Health Insurance Foundation for Education and is a past president of the Chicago chapter of the Society of Financial Service Professionals.

Shane Westhoelter, AEP, CLU, LUTCF, is president of Gateway Financial Advisors Inc. in San Ramon, Calif. Starting as an independent insurance agent in 1988, he went door to door to establish his client base. In 1990, he established Gateway Financial Advisors as an insurance agency, independent financial planning firm and marketing organization, which expanded nationally. Westhoelter is a registered representative and registered investment advisor representative of Cambridge Investment Research Inc. He is a frequent speaker and lecturer on a variety of topics in the areas of financial and retirement planning.

Choosing the middle

Charles K. Hirsch, CLU: Can you talk a little bit about how you decided to focus your business on the middle market? Was this a conscious decision, or did your practice somehow gravitate in that direction?

Brian H. Ashe, CLU: The best reason to concentrate on the middle market is that it is the biggest market. A lot of producers and companies concentrate on the top 15% of our demographics, making the field crowded. That philosophy ignores 85% of potential buyers. There are two other reasons. First, there is safety in numbers. By having lots of clients instead of just a few, you can insulate yourself against sweeping tax law changes that can wipe out a market. Second, our industry needs to serve the middle market better, or we may find increased challenges from legislators to our tax benefits.

Robert N. Garneau, CLU, ChFC: I focus on the middle market because of where I live. In New Hampshire, most prospects begin in the low to middle market, but fortunately, many gradually become high net-worth clients over the years. Everyone wants wealthy clients, but picking the low-hanging fruit can be very profitable. In 1994, I was fortunate to set up two nonprofit employer-sponsored 403(b) plans, which have become a major part of my business over the past 18 years. They started with less than 100 participants in each plan and not a considerable amount of assets. I was worried I would spend too much time with them and that they did not fit my profile of clients and prospects. The other important consideration about nonprofit workers is that they might not be highly compensated because they care more about others versus income. Many times, they might be a low-to-middle-income earner but they have a spouse who is highly paid. Opportunities arise when their spouse isn’t in the same income bracket, which enables them to give back more than others. I had no idea how big the plans would eventually become. Now, I have more than 1,000 participants, and many consider me their “financial advisor.” Each year, more than 50 retire, which leaves me with plenty of prospects for retirement and estate planning.

Shane Westhoelter, AEP, CLU, LUTCF: Coming from a small Midwestern town and a middle-income family, I knew the importance of helping the middle-income market prepare for retirement and crisis needs. Growing up, I watched my uncles, grandparents and parents work hard in factories, on farms — always struggling to try and save for the future. This motivated me to make a difference and to help the middle-class market gain the knowledge and access to financial products and services they felt only the wealthy could afford.

This was a conscious decision. I felt it was an underserved market that truly needed our services, and I knew it was the larger percentage of population, which to me meant more opportunity. I decided to build my practice on the masses, one client at a time instead of going after the “big sale” like many others. It was also more comfortable for me personally. Since I had not come from a high-income family, I could relate to, understand and identify with the middle-class income and families.

Biggest middle-market challenges

Hirsch: What do you find to be the most challenging aspects of the middle market, both in terms of the challenges that your clients face and your own personal business challenges in meeting their needs?

Garneau: One of the challenges of working with the middle market lies in the fact that they do not have a great deal of spendable income for planning. When all of the bills are paid, they have little left to save or spend on protection. They focus on taking advantage of their match in their retirement plan and making sure they leave their family in a better position than they were in. They have similar goals as high net-worth clients, but not the same dreams. They are not worried about taxes and legacies, but rather making it in retirement, staying retired and leaving something for their heirs.

The business challenge for me with regard to the middle market is that I need to service more clients annually. Delegating some of the service work to my assistant is very important. These clients are not insulted to talk with an assistant rather than me when they have a question.

Westhoelter: One of the biggest challenges I find the clients face is finding the money out of current income to purchase the products they really need or to save what they should be saving. The challenge to adjust lifestyle to gain financial independence is a hard decision. Another challenge is finding the time to meet with a financial professional. Often my clients are two-income households or even multiple job holders, so finding time to meet when all parties can be present is a challenge. I find we must be flexible and be willing to work around their schedules, meeting at nights, on the weekend or even on work holidays. This requires a commitment from us as professionals to work when it is needed, not only when it is convenient.

Ashe: The biggest challenge to clients in the middle market is finding the money to do the things we suggest. They are faced with tough decisions on how to pay for their home, raise and educate their kids, and save for retirement. Our challenge is to help them understand how our products can assist them in those areas, how relatively inexpensive our products are, and how important it is to make sure losses from death or disability are not catastrophic.

Reaching the masses

Hirsch: What are your primary methods for communicating with prospects in the middle market? In other words, how do you reach them and let them know how you can help?

Westhoelter: To reach our market — clients and potential prospects — we host a number of educational workshops and client appreciation events, and we sponsor charity events. We also use technology — emails, Facebook, and Twitter communication. We still do mailings and regular telephone call touches. We also try to set ourselves apart with unique ideas like our “Friday Breakfast at IHOP.” Every Friday, we invite clients to join us for a cup of coffee and breakfast at an IHOP restaurant. We invite a product sponsor when we can or simply just meet to “talk shop.” We have found this to be so effective that we have also implemented a “Bring Drinks to Soccer” program during the week. We have committed to bring a cooler of drinks and apples and oranges to soccer and baseball games for the local youth teams. In so doing, we have found that the parents will stand around and talk with us and introduce us to other parents. We have a number of our associates doing this at several games, and the coolers have our company name on them, so it gives us great branding as well. The kids love it, and the coaches and parents appreciate the small gesture.

Ashe: Since I have been a producer for more than 40 years, most of my communication is through referrals from existing clients, attorneys, accountants and personal observation. We also send out an anniversary letter to all clients, with an anniversary checklist that helps us keep informed of needs, changes in jobs, marriages, newborns, etc.

Garneau: Communication and developing strong relationships with the HR person and fiscal officers is very important. I “roam the halls” of each plan, and clients do not hesitate to ask questions, set up appointments, or both. I suggest they call my assistant to set up a meeting, and come to my office as much as possible, so I can better service their needs. I also send personal birthday and holiday cards to every client and their family. Many times, they will call and say how much they appreciated it, and how it was the only card they received. We also conduct “lunch and learns” in all the locations on a quarterly basis, where I update clients on their plan and the state of the market and answer any questions. Additionally, we have annual reviews and periodic phone calls to stay in touch. I always make sure my clients know planning for retirement will be different than the planning done for the accumulation phase, and there are many opportunities to protect their money in retirement. This always triggers appointments and questions.

Teaching the masses

Hirsch: Do you find that people in the middle market need a lot of education on what insurance is all about and how it can help protect them, or do you find them fairly knowledgeable about the financial tools you can provide? If education is important to your approach, can you talk a little about how you educate your prospects?

Ashe: Education is the biggest job. Most clients in middle markets or even the wealthier markets know little about the different kinds of life insurance, their costs and benefits, and how these products fit into an overall financial plan. It’s symptomatic of a general low level of financial literacy. We find the material from the Life and Health Insurance Foundation for Education (LIFE) to be extremely helpful, not only for its simplicity but also because it comes from a not-for-profit foundation and is not company branded. We often include “slicks” — one pagers — from LIFE in our written communication to clients.

Garneau: The education of the middle market is sometimes easier than the upscale market. They put their trust completely in you because they typically don’t have other advisors. They want you to advise, not suggest. Quite often they will say, “Tell me what I should do,” which is something you do not hear in the upscale market. They always read the information I provide to them, and I dedicate as much time as they need to grasp the concepts or concerns we discuss. I also share many concepts from the Life and Health Insurance Foundation for Education (LIFE), and take advantage of the resources provided during Life Insurance Awareness Month (LIAM).

Westhoelter: I have found that most are informed in a general sense, but they are more on information overload and not sure what is correct or accurate. They hear many things but do not always understand what they hear. I try to take the industry talk out of my conversations and bring it to a level of everyday communication. Often I will say, “I do not do financial planning; we do Quality Life Planning. We focus on the real needs in life and help solve for these areas of concern — what if I live, what if I linger, what if I leave, what is my legacy.”

I have found that I need to explain insurance in a way they can relate to, such as “protecting you, the money machine for the family,” or I tell them that buying term is like “renting an apartment; as long as you pay the monthly premium, you have protection, but you will never have any ownership or equity value like you get when you buy a house.” By using stories and examples, I help my clients understand what we really do.

What they’re buying

Hirsch: In today’s financial environment, what kinds of products are resonating with your clients in the middle market, and why do you think these products are striking a chord?

Garneau: The middle market finds annuity products very valuable in their retirement years, from the protection of their lifelong savings to guaranteed income for life. Fixed annuities with guaranteed interest rates are always of interest to them. Conventional long-term care is sometimes not affordable, and the new life products with long-term care access riders are becoming very appealing. Life insurance is also very important to them, but there is a need to fully explain all options, not just permanent protection. Getting an inventory of term protection is beneficial in their early years, and the conversion opportunity is important in the later years. Many times, the middle market will be the beneficiary of an insurance product of their parents, and they want to protect those assets for them and their children. They work hard to save what they can and do not want to lose it for any reason.

Westhoelter: The past few years, losing money in their investment accounts has been a real concern. Many cannot take the risk nor have time to make it up if they do lose large amounts over extended periods of time — not to mention the downturn in their homes and mortgage as well. The concern for how they will pay for care or who will provide it if they need it in future years is also growing more important. So products I have seen increase in my practice have been what I would call combination products — products where a client can get protection against potential needs or care, and minimize to the best of their ability against market risk with those dollars, and products where they might be able to have one premium pay for several potential needs in the future. Since there are many products and each client need is different, we like to discuss the needs and options with each client and allow them to make the decision that is best for them and their budget. The focus on how to make the premium dollar do more than one thing is becoming a higher focus than in the past. I hope we will see products continue to develop along this line of thinking, enabling clients to invest and grow money if they need it, but also providing needed protection if the unexpected arises.

Ashe: Term insurance always resonates because one can get a large amount of death benefit for a small initial premium. We urge those who buy term life that, if their needs will last longer than 15 to 20 years, they need to convert their term life to some form of permanent life insurance as soon as they are financially able. For those who are currently financially able and have permanent needs, we recommend both universal life and whole life policies. These products are attractive because the insured can levelize premiums, accumulate cash values on a tax-deferred basis, access the cash through loans and withdrawals, and supplement retirement, while maintaining death benefits in the later years. They have been particularly attractive in the past 10 years as the economic downturn in the United States has decimated investment portfolios and 401(k)s. Permanent life insurance provides assurance their “financial bucket” can be refilled, and their heirs will be protected even when the insured is in his or her 70s, 80s and 90s. We have sold very few variable life insurance policies.

The last word

Hirsch: Any further thoughts?

Westhoelter: One additional item I would like to mention is the rising concern of providing for multiple-generation needs. In the middle market, I find frequently that people are taking care of their aging parents — either physically, financially or, at times, both — and still supporting their own children — even those who have completed college or even married — because of the soft economy and job markets. This puts added pressure, concern and financial stress on them, as they are also trying to prepare for their own financial futures. In my practice, I have found my clients willing to pay for life insurance or do 529 plans on behalf of their children because they know that if something happens to their children, they will have the financial burden of the grandchildren or helping the surviving spouse if no protection is in place. The same is true for aging parents; my clients will help pay, if not totally pay, for long-term care for their parents because they know they will be paying for it in the future, either directly or indirectly, if no protection is in place at the time of need.

Ashe: Now may be the best time ever to be in our business. We have more products, attractive premiums, and prospects — and less competition — than we have ever had before. The challenge is for us to take our message to the middle market continuously, passionately and creatively to enhance their financial well-being. We need to justify the favorable tax benefits we have before Congress considers reducing some of them as it looks for sources of funding for the country’s debt.

Garneau: Middle-market clients build assets over their lives and quite often are not in as much debt as upscale clients. They live within their means, know how to budget and don’t take anything for granted. They do not need to travel south in the winter, nor have a big summer home. Many quite honestly have more money in retirement than they did their entire working years. It is an honor to help them, and they truly appreciate all we do for them. High net-worth clients sometimes take for granted the work we do and change loyalty from one advisor to another. If you want referrals, the middle market is ideal. They want to repay you for all you do for them, so they will tell their friends how much you mean to them. Happy selling and servicing this great market. Make it a great year!

By Charles K. Hirsch, CLU From the October 1, 2012 issue of Life Insurance Selling



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