279

Your Legacy—Pay It Forward as a

Prince or Pauper?
Communicating Your Value Proposition and Understanding How Clients Make Decisions
Jeffrey Scott, CFP, ChFC

Everyone knows that life insurance is necessary. We sell an
intangible asset that is nothing more than a promise to pay
a particular amount at a specific point in time. The problem
is, how do we convince our clients of the importance of life
insurance in their individual lives? The answer is to let them
take responsibility for the purchasing decision. This session
will teach you how to communicate to the client to pay it
forward, the motivation behind the purchasing decisions,
the things that irritate clients, and how advisors can clearly
articulate their value proposition.
How Clients Learn
Each client is unique. Every client learns in his or her own
way. There are three basic ways individuals learn: visual,
kinesthetic, and audio.1‒3 How people learn influences their
ability to make purchasing decisions.
Visual learners process and remember information with
their eyes. PowerPoint, written text, a handwritten picture
on the back of a drink coaster, and, for those of you who are
old enough to remember, a chalkboard are all learning tools
that facilitate individuals to learn visually. If I can see it or
visualize it, then I can understand it.
Audio learners process and remember information with
their ears. Presentations, lectures, podcasts, face-to-face
meetings, and, for those of you who are old enough to
remember, tape recordings are all learning tools that facili-
tate individuals to learn from audio. Once I hear it, I can
remember it.
Kinesthetic learners process and remember informa-
tion by doing or practicing—often called muscle memory.
You can’t learn to catch a ball by reading a book—you
only learn how to catch a ball by trial, error, and practice.
Test—fail—learn. You need to do something to learn some-
thing. I love ice hockey! Nobody is born knowing how to
ice skate—not Wayne Gretzky, not Sydney Crosby. It takes
practice. Taking notes, using calculators, and drawing pic-
tures are all learning tools that facilitate individuals to learn
kinesthetically.
Each person has a principal method that he or she prefers
when learning; the other two methods are secondary learn-
ing methods. As advisors, we do not know how our clients
learn, so we must engage them with multiple learning meth-
ods to ensure that any message is understood. Telling them
is not enough (audio). Showing them is not enough (visual).
Asking them to take notes is not enough (kinesthetic). You
need all three methods to ensure that the client understands
and comprehends.
How Clients Make Purchasing Decisions
After clients process information via learning, the next ques-
tion is, how do they use that information to purchase a prod-
uct or service such as life insurance? Again, there are three
primary ways that clients make purchasing decisions. They
make the decisions with their heart via emotional factors,
their head via analytical factors, or their stomach (gut) via
somatic factors.4‒8
Emotional factors may include family, friends, pets,
social causes, or community groups, and involve how they
make people feel—both if they do something and if they
don’t do anything.

Jeffrey Scott, CFP, ChFC

Scott has worked for 25 years in the insurance industry. He is a regular media commentator on the
topics of insurance, superannuation, pensions and finance, and has lectured about financial planning
at the University of Technology, Sydney and about taxation at the University of New South Wales. He
created the first terminal illness benefit for life insurance products in Australia, helped develop lump
sum income protection benefits and introduced full income replacement coverage. Scott is currently
completing his PhD in taxation and business law.
ClearView Wealth Limited
PO Box R1572 Royal Exchange, Sydney, New South Wales, 1225, Australia
email: jeffreyjscott2015@gmail.com phone: 61.484.270128

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©Million Dollar Round Table Annual Meeting Proceedings | 2017

280 Focus Sessions: Protection
When customers state, “I can’t afford it,” they have
made an analytical purchasing decision. Analytical fac-
tors may include the price (premium), benefits (sum
insured), time, expenses, and rewards, and involves facts,
figures, and anything that can be measured in a quantita-
tive manner.
Have you done business with people based upon how
they looked, how they smiled, or how they shook your hand?
Somatic factors involve the intangibles such as trust. People
choose to deal with other people because they trust those
individuals.
The clients who use emotion will need to have a reason
linked to how the purchase makes them feel. Love, guilt,
fear, happiness, and worry are all emotions that may be felt
when an individual makes a purchasing decision. Clients
who use analytical factors will need to know the facts of
the product, how much it costs, and the potential benefits
and then weigh up the purchase against other competing
expenditures that clients may incur. Clients who use their
gut, or a somatic decision-making process, normally rely
on the trust and respect of the person they are dealing with
to determine if they will do business with that person. If
they don’t trust you, they will never purchase the prod-
uct or service you are promoting or offering. Their trust
may be gained in a number of ways: number of years in
business, who has recommended you, the sports team you
support, the clothes you wear, your handshake, how you
make eye contact, your educational qualifications, your
knowledge of the product or service you are offering, the
people you have assisted who have similar issues, and how
you can assist them in reaching their goals and meeting
their wants and desires. For each client, one of these fac-
tors is the primary factor for making purchasing decisions,
while the other two are secondary. Thus, you need to dis-
cuss your goods or services with your clients in terms that
they will understand.
The Buyer Journey
Now that we understand how clients learn and what influ-
ences their purchasing decisions, we will now consider the
process that clients undertake when they purchase any good
or service, whether that be a car, a house, a new suit, a televi-
sion, or life insurance.9
• Step 1 is need recognition—The clients have to be made
aware that they have a need for a particular product or
service. This is normally done via marketing, advertising,
or word of mouth.
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• Step 2 is the information search—This involves customers
either researching (normally online) or shopping (visit-
ing various stores), asking for testimonials (from people
who have used the product before), or engaging experts
(who understand the various products and the various
options).
• Step 3 is the evaluation of alternatives—After determin-
ing all the products or services that are available, refine
the selection to determine the appropriate product to
meet their needs or wants.
• Step 4 is the purchase decision—This involves the selection
of the product or service, with the appropriate options or
features, at the correct price, from a reputable vendor or
business.
• Step 5 is post-purchase behavior—This is often the most
critical of all of the steps as this often involves the situ-
ation known as “buyer’s remorse.” After clients have
made their purchase, they may then regret the purchase
or doubt if they made the most appropriate purchase for
their circumstances. This is where appropriate interaction
with clients is vital, by telephone or email or text or let-
ters, reinforcing the decision that they have made based
upon the analytical, somatic, and emotional factors per-
taining to them.
The Three Biggest Issues Why People Need Life
Insurance
Now that we have identified how people retain informa-
tion and how they make purchasing decisions, we will look
at the triggers for when clients are most likely to purchase
life insurance. The first situation involves the baby boom
generation. This is the most prosperous and financially
savvy generation in the history of the world. As people in
this generation transition to retirement, their needs will
change. They will go from accumulating money for retire-
ment to drawing down (or spending) their retirement nest
eggs. They will want to maintain their standard of living
for as long as possible. They will want to prepare for any
long-term medical bills or aged-care bills that may occur
during their retirement. And after they die, they will want
their spouse or loved ones to receive as much of their estate
as possible and to pay the tax man along the way. Over
the next 30 years, upon the death of the baby boomers, we
will experience the largest wealth transfer in the history of
the world.
The second situation is divorce. Regretfully, almost half
of all marriages end in divorce. While this takes a significant
©Million Dollar Round Table

emotional toll on everyone involved—both spouses and any
children—it also takes a significant financial toll as well. In
many property settlements, the woman (wife) is provided
with a larger share of the assets, but is also responsible for
being the principal caregiver for the children. This normally
means that she owns illiquid assets (family home), but has
limited earning capacity (as she normally has to arrange for
the care of her children). In many property settlements, the
man (husband) is provided with a smaller proportion of the
family assets but has more freedom to work longer hours
(as he normally does not have custody of the children as
often). From a financial perspective, this provides unique
opportunities and issues for each of the former spouses.
The woman is normally very budget conscious but wants to
ensure that her children are provided for in the event of her
sickness, disability, or death. The man is normally willing
to take more risks or take more debt to reestablish himself
financially, as he is aware that he has a regular (and pos-
sible increasing) income stream over time to service such
an arrangement. In nontraditional families, these roles may
be reversed, so the advisor must conduct adequate due dili-
gence (fact finding and needs analysis) to ensure that any
recommendation is appropriate (do not assume anything).
The third situation involves various family situations.
Death of a spouse, caring for aging parents, the “sandwich
generation,” challenges of “boomerang children,” and raising
a time-poor family each have potentially significant financial
impacts. It is the advisor’s responsibility to ask the various
“what if” questions to ensure that clients have considered the
various scenarios and have an appropriate risk management
situation in place. The solutions may be any combination of
the following: ask family for assistance, government social
assistance (if available), charity, religious groups, personal
savings or investment, or the most cost-effective of all the
options—life insurance.
Reasons Clients Normally Purchase Life
Insurance
There are six primary reasons why individuals initially pur-
chase life insurance:
1. Bought house/new mortgage—If people become sick or
disabled or die, they want to ensure that they maintain
their family home. Life insurance becomes a risk man-
agement tool that can pay off outstanding debt. This is
often an analytical and emotional purchasing decision.
2. Pregnant or recently had children—Most parents
want their children to have a standard of living that is
©Million Dollar Round Table
Your Legacy—Pay It Forward as a Prince or Pauper? 281
as good as or better than what they have experienced.
Often this means a good education. This is often an
emotional purchasing decision.
3. Advisor recommended—The trust and respect clients
have for their financial advisor will depend upon how
readily clients accept their advisor’s recommendation.
This is often a somatic purchasing decision.
4. Starting a business—In many circumstances, new
business owners have invested a lot of their own mon-
ey into the business and/or have borrowed significant
amounts of money to get the business started. This is
often an analytical purchasing decision.
5. Health scare—After an injury or serious illness, many
people soon realize that they are no longer invincible.
They also realize that it is statistically possible that
sickness, disability, or death may happen and that life
insurance is a worthwhile and cost-effective purchase.
This is often an analytical and emotional purchasing
decision.
6. Friend’s advice—Once a friend has either had a seri-
ous injury or illness resulting in a life insurance claim,
or the trusted friend has advised of the value of life
insurance, then a person is more likely to purchase.
This is often a somatic purchasing decision.
Reasons Clients Normally Lapse or Surrender
Life Insurance Policies
Alternatively, there are a number of reasons why individuals
choose to lapse or surrender their life insurance policies:
1. No longer relevant to circumstances—This is often a
perception issue. In many cases, the need for life in-
surance still exists, but as circumstances change, many
clients may not understand how life insurance is still
relevant. Appropriate communication and interaction
with their financial advisor, who is able to provide rel-
evant education, is key.
2. Unaffordable—This is simply an analytical method
of assessment. As other priorities arise in the life of
clients, they may tend to believe that finances and re-
sources need to be redirected to other items. Appro-
priate communication and education with their finan-
cial advisor are essential to understanding the various
options available to them: a comprehensive review of
their budget, ability to reduce the sum insured and
thus reduce the premium, make the policy paid up,
remove optional benefits and thus reduce premium,
and make the policy level premium (if it was stepped).
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282 Focus Sessions: Protection
3. Loan reductions—If clients associate the need for life
insurance with only one situation (such as a debt, loan,
or mortgage), then when that situation no longer ex-
ists, they perceive that the need for life insurance no
longer exists. It is essential for financial advisors to
continue to educate clients on the need for life insur-
ance throughout their life.
4. No engagement from insurance company—Life in-
surance companies often complain about high lapse
or surrender rates from their clients. Regretfully, they
often only communicate with clients when they are
demanding premium payments. Regular engagement
by life insurance companies for reasons other than
premium payments is necessary to reduce lapse and
surrender rates.
5. No engagement from financial advisor—Financial
advisors often complain about high lapse or surren-
der rates from their clients. Regretfully, some financial
advisors only communicate when they initially sell the
policy to the client, after which customers do not hear
from their advisor. Regular engagement and review of
the client’s situation by financial advisors (even after
the initial sale) is necessary to reduce lapse and sur-
render rates.
Customers want infrequent, personal, and tailored con-
tact, not frequent and generic.
Establishing the Client Value Proposition (CVP)
In order to establish your client value proposition, you must
first determine if you have the attributes of a trusted finan-
cial advisor. These attributes include the following:
• Engagement—the ability to both listen and understand a
client’s goals, needs, wants, and dreams
• Examine—the ability to clarify the need and get clients
to focus on their goals
• Explore—the ability to provide guidance to customers
For a trusted advisor, the rewards are these:
• Customers will share their personal and family issues
with you.
• Clients value your input in all their financial and lifestyle
decisions.
• You will be able to assist clients to better understand their
values.
• You will invest the time to truly understand clients’ val-
ues, needs, and financial and lifestyle objectives.
• Financial products are never discussed in the first meet-
ing.
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• Every one of your clients is an active promoter of your
business.
The Client Value Proposition (CVP)
Most people can state what they do in their jobs, but very
few people can tell you what they believe.10 We discussed
earlier that people make purchasing decisions based upon
three things: emotion (heart), analytics (head), or somatic
(gut/feel). For clients to trust and respect you and buy the
product or service you are promoting or selling, they need to
believe you. For that to occur, you as a trusted advisor must
be able to clearly articulate three things:10
1. Purpose—Why do you do what you do, and what do
you believe?
2. Process—How are you going to demonstrate your
purpose in what you do?
3. Result—What are the specific actions and tasks that
you will perform?
The client value proposition is a promise to your clients
of the level of service they can expect to receive from you
and your staff. There are four key areas when considering
your CVP:
1. The importance of life insurance
2. Implementation and underwriting
3. Claims philosophy, process, and promise
4. Client engagement
The Importance of Life Insurance
Do you believe that life insurance is important? How would
you articulate the importance of life insurance with clients?
Remembering how clients learn, how clients make purchas-
ing decisions, and client purchasing behavior, how would
you clearly articulate your belief in life insurance and the
value it delivers to clients? For example, you might say this:
I am a dream maker and a dream creator!
I believe that life insurance is a wealth
protection safety net that allows clients and
families to achieve their financial goals by
replacing income or paying off debt.
Implementation and Underwriting
After you have convinced clients that they need life insur-
ance, and they have agreed to purchase life insurance,
next comes the implementation phase. For many clients,
the purchase of life insurance is a very new experience.
Thus, they are normally anxious and nervous as they do
©Million Dollar Round Table

not know what to expect. Remembering that customers
learn in three distinct way, how many ways do you com-
municate the implementation and underwriting process to
a client? If you are smart, you will do it three ways: First
you will tell them (audio), next you will provide a list of
written instructions (visual), and, finally, you should pro-
vide a video that demonstrates what people are supposed
to do during the implementation and underwriting process
(vicarious kinesthetic). This should literally be a step-by-
step process that takes clients through each stage. Do not
overlook any detail, and do not think that anything is too
trivial to omit—include everything. Also, if you deal with
multiple life insurance companies, document the process
for each company as there will normally be some (albeit
minor) differences in process or procedure. Some of the
items that should be included in the information provided
to clients are these:
• Detailed, end-to-end implementation and underwriting
process
• Obtaining medical and financial underwriting require-
ments
• Client engagement at completion
• How you get paid—honesty is the best policy (upfront
commission, level commission, salary, bonuses, fee for
service)
Claims Philosophy, Process, and Promise
When a life insurance policy is sold to any client, all that
we are doing is selling a promise that when clients are sick,
injured, disabled, or die sometime in the future, we will be
there to assist them in obtaining the sum insured amount
from the life insurance company. The big question is, how
will you as a financial advisor add value to your clients at
claims time? This is the most stressful time of any client’s
life—that is, after a significant health or medical event has
occurred. How have you communicated the value you will
add at claim time?
• Map your claims process, including level of involvement
and service promise at claim time.
• Document your process in dealing with claims (internal
perspective and an external client experience perspective).
Client Engagement
We discussed earlier that clients who are not engaged by
either their life insurance company or their financial advi-
sor are more likely to lapse or surrender their life insur-
ance policy. This creates the potential risk to clients of not
©Million Dollar Round Table
Your Legacy—Pay It Forward as a Prince or Pauper? 283
having appropriate life insurance cover when they need it
most. Between the implementation (underwriting) stage
and claims stage, it is necessary for the financial advisor
to appropriately engage with the customer along the way.
1. Detailed end-to-end client engagement process and
service offer.
• What will you provide to the customers for the pre-
miums and fees that they pay?
• How often will you provide the review and service?
• Is the service to only your client, or will the service
be extended to family and friends as well? Articulate
why everyone in the client’s family should have you
as their advisor.
• Options may include newsletters, seminars, birthday
cards, webinars, client parties, annual reviews, or spe-
cial offers.
2. Critically assess the make-or-break points.
• Must ask the clients what they want—face-to-face,
over the phone, via your website, via email, or Sur-
veyMonkey. Do not assume that you understand
your clients if you have not asked them. Telling cli-
ents what you can do, without understanding what
they want, is a waste of both your valuable time and
their precious time.
• Don’t forget to ask clients what they do not want.
There is no use providing a service to clients that they
do not value or want.
• If there is a change in the client’s circumstances or
details, will you contact the life insurance company,
or will the client have to do that?
• Will you specifically tailor any service offering to the
client’s wants and needs?
3. Build a plan to ensure that you can deliver exceptional
client experience (from the client’s point of view).
• What will you deliver (generic information, specific
information, industry innovation, market trends)?
• How will you deliver it (face-to-face, seminar, online,
blog, written communication)?
• Who on your team will deliver it (you or a staff mem-
ber)?
• When will it be delivered (frequency—one time only,
weekly, monthly, quarterly, or annually)?
4. Build a robust and comprehensive service offer.
5. Establish ongoing service offer protocols and process.
6. Define how you will continually add value throughout
the life of the insurance policy.
7. Have a robust education process where you continu-
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284 Focus Sessions: Protection
ally educate your clients to the value and importance
of insurance.
Client Value Proposition—Strategy on a Page for
the Client
Remember that no matter what you say, clients will not
remember everything. Thus, it is important for you to
provide them with the reasons why you recommended the
products, the benefits and features, the ownership structure,
the cost of the premium (stepped or level), the premium fre-
quency, the sum insured amounts, and what the intended
use of the benefits will be for. In some countries, it is manda-
tory to provide this information in detailed multipage docu-
ments; regretfully, we know that most clients rarely read
these documents. So, it is important to provide an “executive
summary” or alternatively a “strategy on a page” that pro-
vides this information to clients in an easy-to-comprehend
format, in addition to any mandatory documents that must
be provided in your jurisdiction.
In summary, there are three things that you need to
remember:
1. Clients learn by hearing, seeing, and doing.
2. Clients make purchasing decisions by emotion (heart),
logic (head), and feeling (gut/somatic).
3. To differentiate yourself from other financial advisors,
you need to clearly articulate to your clients your pur-
pose (why), actions (how), and results (what).
Don’t forget to ask your clients what they want first.
Then, ensure that you have all of the processes, procedures,
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and service promises clearly documented. Finally, communi-
cate in a format that clients understand.
Endnotes
1. F. Constantinidou and S. Baker, “Stimulus Modality and
Verbal Learning Performance in Normal Aging,” Brain and Lan-
guage 82, no. 3 (2002): 296‒311.
2. B. Rourke et al., “Child Clinical/Pediatric Neuropsychology:
Some Recent Advances,” Annual Review of Psychology 53 (2002):
309-339.
3. University of Pennsylvania, “Visual Learners Convert
Words to Pictures in the Brain and Vice Versa, Says Psychology
Study,” ScienceDaily (2009), http://www.sciencedaily.com/releas-
es/2009/03/090325091834.htm.
4. A. Bechara, “The Role of Emotion in Decision-Making:
Evidence from Neurological Patients with Orbitofrontal Damage,”
Brain and Cognition 55 (2004): 30‒40.
5. P. Cheng, “Improving Financial Decision Making with Un-
conscious Thought: A Transcendent Model,” Journal of Behavioral
Finance 11 (2010): 92‒102.
6. D. Court et al., “The Consumer Decision Journey,” McKin-
sey Quarterly (June 2009).
7. D. Kahneman, “A Perspective on Judgment and Choice,”
American Psychologist 58 (2004): 697‒720.
8. J. Montier, The Little Book of Behavioral Investing (Hoboken,
NJ: John Wiley & Sons, Ltd., 2010), 10.
9. J. F. Engel, D. T. Kollat, and R. D. Blackell, Consumer Behav-
ior, 4th ed. (New York: Holt, Rinehart & Winston, 1982).
10. S. Sinek, Start with Why: How Great Leaders Inspire Every-
one to Take Action (New York: Penguin Group, 2011).
©Million Dollar Round Table