When you entrust the management of your retirement nest egg or your family’s life insurance safety net to a professional, you should walk away with a peace of mind that you are putting your finances on the right track. A good agent is not only knowledgeable about the technical aspects of planning, but also can “consult” with you to learn exactly who you are and what you need.

Finding a Good Agent

The best way to find an insurance agent or financial advisor is from another satisfied client. I have been fortunate to have many clients refer their friends, family members and co-workers to me, but I am also surprised that not everyone has shared my business cards. I think the main reason is that our financial plans are still kept very private and close to the vest. To find a good financial advisor you can:

  • Ask your attorney
  • Ask your accountant
  • Ask your best friend, relative or neighbor
  • Ask a colleague in a networking group
  • Google “life insurance agent your town”
  • Consult your church bulletin or local newspaper
  • Visit your local Main Street insurance agency

Meeting with an Agent

When you first meet with a financial advisor, you should be prepared for about two hours of discussions. You should do at least as much talking (probably more) than the agent. Many sales people (that’s what insurance agents and financial advisors are) tend to talk too much and try to impress you with their knowledge. If they jump right to “the product/ solution that you need” right off the bat, that’s a bad sign that they are pushing something and not listening.

The agent should introduce himself and tell you a bit about himself and the company(s) he represent, including his background and area of specialization (if any). Take this opportunity to ask questions from the list below. From there, be prepared to discuss your goals as the starting point for the discussion – not what they have to offer (that comes last). This is crucial since it helps all of you work with the same information toward the same goals.

Don’t be afraid to discuss your concerns and past experience with financial planning. You should be comfortable discussing the good, the bad and the ugly with your agent, much like the discussions you have with your doctor. If you don’t give a full picture of your situation to the advisor, he won’t be able to give you the correct “prescription.”

Be prepared with copies of your current brokerage, 401(k) and bank account balances. If you have life insurance or disability insurance in place (including through your work), have the details handy. The agent needs to know what you already have, so he can tailor additional services to fill in the gaps without overlapping.

I always found that I did my best work when my clients did the most talking. The more they told me about their retirement dreams or college plans for their kids, the easier it made my job of finding the right mix of insurance and financial products to help them reach those goals. Only after we spend “quality time” on the foundation does it become possible to review different plans on my laptop and run calculations and premium estimates.

DID YOU KNOW?
"Employees consider health insurance to be, by far, the most important fringe benefit."
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Questions to Ask an Insurance Agent or Financial Advisor

Name:
Company:
Address:
Phone:

How are you compensated if we decide to work together? Fee? Commission? Fee and Commission?
There is a lot of debate about which is the most fair way to compensate an advisor. My opinion is that whatever structure is used will ultimately be fair if the agent actually listens to you and prescribes objective solutions to meet your goals.

What are your certifications and qualifications?
Insurance agents and financial advisors may have a slew of different licenses. At a minimum, you want an agent who has a life insurance license and preferably the “Series 6” license that allows him to sell mutual funds and variable annuities. Even if you may not need mutual funds or variable annuities, you at least want your agent to be able to consider them as options. A glossary of licenses and certifications follows below.

How many years have you been working in this field?
The insurance industry is notorious for churning out new agents and then dropping them after less than a year. This is not necessarily because they are bad agents, it’s just a very intense sales culture. Ideally you want to build a relationship with an agent who has a minimum of three years experience.

How long with your current company?
Many agents start as “captive” agents who can work with only one company. This is a great way to build one’s expertise, but as an agent’s cases become more complex, they often need to pull products and services from various companies. Either situation can work to the benefit of the client if they agent is forthright about their situation.

Have you ever been disciplined by your company or the industry? 
Most companies will very quickly terminate an agent who is disciplined. Regardless, you should ask the question and if you have time, consult the NASD website to verify it.

What are your planning specialties? 
Nervous agents will say that they “specialize in everything” (which is laughably impossible). Honest agents will say that they focus on “life insurance planning for young families,” “retirement planning for union members” or “estate planning for business owners.” Stick with an agent whose knowledge is best aligned with your goals.

Definitions and Acronyms

LUTCF (Life Underwriter Training Council Fellow): Coursework that provides complete knowledge of the range of insurance products, planning strategies and ethics.
http://www.theamericancollege.edu/insurance-education/lutcf-insurance-skills

Series 6: Securities license required to sell “variable” products such as variable annuities, variable life insurance, mutual funds and college savings plans. http://www.investopedia.com/terms/s/series6.asp

Series 7: Securities license required to sell individual stocks, bonds and related products.
http://www.investopedia.com/professionals/series7/

CPA (Certified Public Accountant): Intensive training program for public accounting work, auditing, tax planning, ethics and business consultation. http://en.wikipedia.org/wiki/Certified_Public_Accountant

CFP (Certified Financial Planner): Comprehensive program that covers the range of insurance, investment and retirement planning concepts, including estate planning. http:// www.cfp.net/