The nature of relationships correlates precisely to the development of trust between consumer and provider. The psychology of relationships - as opposed to the psychology of selling - has more to do with the success of marketing and selling than any other factor in marketing a private professional practice. This is where you'll get the good stuff. Values based marketing spoken here.

The Marketing Problem
and The Opportunity

Consumers, the rating companies, brokers, agents and the host of non-insurance professionals who dabble in insurance don’t understand what they don’t know. They focus entirely on insurer solvency to the exclusion of product design issues that should also be raised. They think that "due diligence" — as they persist on calling their oversight of life insurance sales — means picking better rated insurers. But insurer solvency makes up only part of the problem and is fraught with problems of its own, such as the inconsistencies between rating firms and the various measures and vagaries they apply in their ratings.

Producers generally do not want to get involved. All this is too technical, and their own companies resist bringing up Due Care as an issue because compliance officers often do not understand it. Some companies have already been sued along with their agents who promised to perform due care and did not do it, or did not do it properly and the client suffered. And then there is the unfortunate fact that Due Care is not a legal obligation and has no generally accepted standard for performance, whereas due diligence is a legal obligation in securities sales and has a clear standard for performance.

So here’s the great (albeit brief) marketing opportunity for Due Care: Brokers and agents don't want to do it, even though marketing it as an expertise could bring them tremendous advantage. While other producers avoid it because there’s no hurry (nobody’s forced the issue yet); no need (people still tend to trust their insurance agents and brokers and the insurers the represent); no interest (it’s too complicated); or they have no vision (in marketing you can succeed by being first or best, but it’s always best to be first), the opportunity to market Due Care for competent brokers who see the vision is remarkable. In fact, many top producers are already doing this in a big way.

The life insurance due care market falls into three categories:

• Large life insurance portfolios that should have, although may not require annual performance reviews. Look for these in smaller trusts and personal estates with life insurance providing for future liquidity and capital needs. You may also find these in non-qualified deferred compensation cases and smaller qualified plans with blocks of life insurance.
  
  
• Accountable life insurance portfolios, meaning blocks of life insurance where someone is accountable (read "liable") for advising the client about the life insurance. Look for trusts and qualified plans with large blocks of life insurance, especially where the life insurance is the primary asset.
  
  
• Major life insurance purchases. Whenever non-insurance professionals are being paid to give advice related to the life insurance being purchased, the case is usually large enough to merit performing Due Care formally.
  

The influencers can be trusts and estates attorneys, accountants, trust officers and fee financial planners. The approach that works is to introduce Due Care as one of your expertises, and offer the non-insurance professional (NIP) your expert counsel and advice in your specialties. This way you put yourself on the same professional level as the other advisors (but in your specialty) and avoid the fallacious quid pro quo style of doing business, which you probably cannot keep up with anyway. To grasp how other professionals tend to associate, think of your dentist and the oral surgeon who pulls your teeth or the endodontist who does root canals to save your teeth. Your general practice dentist may manage your dental work, but refer you to the other specialists for surgery, just as your attending physician may send you to a specialist for more focused treatment. You can be a specialist in Due Care, and maybe unique in your marketplace.

The basic questions to pose to NIPs are these:

• Do you ever get involved in the decisionmaking process of your clients relating to life insurance?
• What do you do? How are you involved?
• How do you perform Due Care, or assure that it is done correctly?

At this point your discussion will reveal that the NIP does not know what Due Care is, may not care, relies on the agents or brokers s/he trusts (perhaps blindly) or the client’s agent, or simply does not know either the risks to the consumer purchasing certain life insurance contracts or the NIP’s own potential liability for rendering unqualified advice. We know that

• accountants who simply advise against life insurance in a qualified plan become de facto fiduciaries for that plan
  
  
• insurance trusts have been successfully sued by heirs for malpractice and negligence regarding the management of life insurance in the trust
  
  
• many errors and omissions carriers for lawyers have announced that they will no longer pay claims against attorneys for the life insurance advice they give because it is not legal advice they are qualified to give.

ignorance, not stupidity

The vast majority of NIPs are as ignorant about all this as the vast majority of brokers are, but the legal, accounting and trust professions are gearing up to deal with it faster than the life insurance business. They are not stupid, and as they begin to see the need, they respond. In this regard, non-insurance professionals are truly advocates for their clients. Peat Marwick is hiring staff Due Care professionals to perform this function and have announced it in their quarterly newsletter to clients. Like it or not, eventually even the insurance business will be dragged into performing Due Care on life insurance products offered for sale or subject to performance review. Irony reigns. Do you know any insurer training its agents and brokers how to perform Due Care? If you don’t, don’t be upset…it’s a marketing possibility now for you, with a short window of opportunity. Your competitors’ lack of vision is your golden opportunity.

So what do you do?

Due Care is a procedural standard for identifying the suitability of a life insurance contract or offer to a specific buyer. To perform Due Care, you would generally do something like this:

• examine sales illustrations for reality and assess the risks to the consumer, examining the underlying assumptions used to back the projected values
  
  
• examine policy contracts for safeguards for and against the buyer, weighing them with the potential impact of the underlying assumptions either coming true or not
  
  
• compare 10- and 20- year dividend and interest performance histories of the insurers to demonstrate their integrity relative to their illustrative values at the time of sale
  
  
• compare each insurer’s ratings by the various rating firms against your standard (e.g., recommending only insurers who rank in the top three ratings of three or all of the four major rating firms
  
  
• weigh all this for suitability in light of the client’s goals, objectives and risk tolerance
  
  
• communicate effectively to your client (or the client’s appointed other advisors) so that an informed buying decision can be made
  
  
• continue to advise your client — in writing, during the course of the contract purchased — of any changes in experience that may affect the contract’s anticipated performance

You don’t have to set up a department to do this, but you must be organized and competent to perform Due Care if you wish to market it successfully. When you hang your hat on your competency, you must perform well to succeed. Besides Due Care, what other demonstrations of competence in life insurance are there? There are some for sure, but none so pure as knowing how to uncover and effectively disclose what the consumer risks when purchasing new life insurance contracts or managing old ones.

Market Due Care as a Service

Once you are competent performing Due Care,

1. Call on trusts and estates attorneys, estate planning accountants, trust officers, fee financial planners and anyone else you can think of who influences the purchase and management of life insurance contracts but does not truly understand the product, and who may have an aversion to dealing with life insurance at all although s/he should be advising the client to purchase some.
   
   
2. Tell them your procedural standard, step by step.
   
   
3. Show them how you work and perform Due Care, emphasizing that your counsel and advice is based on a variety of factors and comparisons.
   
   
4. Offer your expert services to those who recognize the need for Due Care in their clients’ insurance decisionmaking and want you on their team. For now, forget the ones who don’t see the need; they may or may not come around later.

As competition increases from different quarters (other brokers, accountants and attorneys with insurance licenses, banks and trusts, commission-based financial planners, etcetera), the more you understand your products, practice Due Care and market this specific life insurance expertise, the more you will prosper in the high-end marketplace.

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