You know the stories and statistics — the life settlement industry continues to blossom; a growing number of brokers and agents are turning life insurance policies into substantial cash for clients and themselves; and in a struggling economy, more and more seniors could benefit from life settlements.
It seems like the perfect time to get involved in the industry.
What you may not know, however, is how to take the first step. Each state has its own licensing requirements, and many in the general public remain completely unaware of the life settlement process. Even among your network of potential professional partners — such as CPAs, estate planners, and financial advisors — education and awareness can be limited.
On the whole, it can seem like too high of a hurdle to climb. In truth, however, getting involved with life settlements is too potentially lucrative for you to become discouraged by the obstacles.
First steps
As with any successful journey, the path to life settlement success begins with a single step. In this case, you must first determine your state’s licensing requirements and fulfill them. Most states now require some form of licensing, each with its own variances. Becoming licensed not only provides the legal requirements you need, but also gives you credibility in the eyes of your potential clients and partners. The best place to start learning about licensing and regulation is through the Life Insurance Settlement Association (LISA) at www.thevoiceoftheindustry.com.
When you’ve become a licensed life settlement agent, it quickly becomes your responsibility to become an educator, not a salesperson. Remember, the public is still largely unfamiliar with this $16 billion-and-growing industry, and many professionals are not far ahead of them.
The temptation will be strong to begin by simply cold-calling CPAs, estate planners, and other professionals who serve a client base that could greatly benefit from life settlements. Many agents have learned the hard way that this is neither an effective nor an efficient way to jump in. If you are visiting or calling 30 or 40 professionals on a daily basis, you are unlikely to schedule meetings with more than 5 percent of the people you visit, and less than 10 percent of those will wind up doing business with you.
Clearly, this is not a terrific return on investment. Rather than spending time cold-calling, I highly recommend establishing and maintaining a database of all financial professionals operating in the areas in which you are licensed and reaching out to them regularly. Creating educational marketing materials that can be viewed electronically at the professional’s convenience gives you an edge over more traditional outreach methods.
Having an established database and emailing that database allows you to reach hundreds of professionals, providing them with easy access to information about life settlements and your business. Before long, many of them will come to understand that life settlements can be a crucial component of their clients’ portfolios.
Another important step is to find the largest and most influential professional associations in your coverage area. By scheduling presentations in front of associations and business groups, you can speak to dozens of professionals simultaneously. You can check with your local and state chambers of commerce to begin this process.
If you have space in your budget, it can also be very wise to work with a marketing and public relations professional. Having assistance in crafting your business’ message and delivering it to your key audiences can begin to bring not only financial professionals, but also consumers, to your door. Consider how many people watch the local newscasts or read the local newspaper. If you can have stories placed on your behalf explaining the benefits of life settlements and positioning yourself as a leading expert on the topic, you will be in the very positive position of having people come to you seeking information without having to contact them first.
Preparing for success
Because you’re presumably going to find your services in increased demand, it’s incumbent upon you to prepare a professional presentation to deliver to all of your key audiences. A well-designed PowerPoint presentation that thoroughly but succinctly provides education to financial professionals and consumers will relay your information in a powerfully persuasive manner.
Even though your marketing and educational efforts have laid the groundwork for financial professionals, you must always remember that many of them do not understand the concept of a life settlement, and their time to learn is limited. A strong presentation will convince them that it is a breach of fiduciary responsibility not to give their clients the fullest possible information about life settlements. Your PowerPoint presentation will be extremely useful when meeting with associations and groups composed of estate planners, CPAs, and other professional organizations.
Remember to always drive home the value of a life settlement versus the value of a cash surrender or policy lapse. Explain in great detail how people older than 65 are suddenly faced with not having the retirement income they had expected because of the sagging economy and how life settlements can fill the void. And, wherever possible, include at least one case study.
The road ahead
Clearly, there is a great deal of groundwork to be laid before you achieve success in the life settlements space. As with any new venture, there will be a learning curve and you’ll make mistakes along the way. But keep your eyes on the prize. You are part of a multibillion-dollar industry, and with a little work, you can deliver outstanding results to people who need them.
John Yaker is executive vice president of The Quantum Group, a Baltimore-based registered investment advisory firm. He can be reached at john@quantumgrouponline.com or 410-327-9550.