An Open Question for Certified Financial Planners[?]

[marindependent]

Other than the obvious answer [you make a commission] Why do Some Financial Planners sell their clients Life Insurance policies?

Yes, many/most clients may need life insurance, but why are you the correct one to sell it to them?

Totally interested in various CFPs and why they do it this way.

 

[DHK]

@Tahoe Ray You're a CFP. You wanna take this on?

 

[marindependent]

Please allow me to qualify my question a bit: Why do CFPs that mostly provide true financial planning advice also sell life insurance?

Not, why you life insurance agents that go out and get a CFP sell life insurance?

Does that make sense?

 

[Tahoe Ray]

Please allow me to qualify my question a bit: Why do CFPs that mostly provide true financial planning advice also sell life insurance?

Not, why you life insurance agents that go out and get a CFP sell life insurance?

Does that make sense?

Insurance is a huge part of the CFP curriculum. Every financial plan is going to have a "risk management" aspect and part of that is going to touch on life insurance (and disability, LTC, some P&C etc.)

My experience is most CFPs DO NOT sell insurance. I think you're more likely to find ones who don't than those who do. In fact, any "fee only" planner, of which many are CFPs, are prohibited from selling insurance products (assuming they market their planning as such) due to the way insurance products compensate (commission).

A large part of my business model involves working with RIAs, fee-only planners, and other advisors who may recommend insurance products to their client base but don't actually sell the insurance. I speak their language and help those clients source and purchase those recommendations.

So, to answer your question: insurance is a large part of the planning process. Some CFPs sell the coverage that they recommend, others do not. It ultimately depends on their business model.

 

[DHK]

mostly provide true financial planning advice

I'm confused.

What does that mean?

Are you differentiating "true financial planning advice" from something else? Is "true financial planning advice" irrespective of products?

 

[marindependent]

@DHK, I am just attempting to distinguish between two common groups of financial salespeople: Life Insurance Agents vs True Financial Planners. Not sure of the best way to refer to True Financial Planners but I might say that they typically have some form accreditation in the investing world such as a CFP. These people sit down and review all of your assets and investments and make recommendation about investing and allocation.

 

[DHK]

Ah. You're talking about investment advisors who happen to hold CFP marks and primarily do asset allocation and perhaps some distribution strategies. And since they get to use the term "fiduciary" with their Series 65/66, what they do appears to be "real" planning.


I destroyed one of those types in a Facebook group whose Series 65 was just 7 months old. He tried to tell me that "I am held to a fiduciary standard while you are just held to a suitability standard". He tried to find me on "brokercheck" and assumed that since I wasn't there, I was only held to a suitability standard. After I posted my ChFC and RFC verification links and outlined my due diligence process (along with the problems I help people solve)... well, he tucked his tail and deleted his whole thread.

(He was trying to recruit agents to work with him since he can bring a "Fiduciary standard" to the recommendation. I asked him for his due diligence process, what problems he was trying to solve with his annuities, and what he believed the definition of fiduciary was. Failed miserably.)

 

[DHK]

Btw, one reason why these types would only recommend term... is because they will see whole life (or other cash value plans) as interfering with their AUM (and fees) and just see that it doesn't grow as much as their investment platform would.

 

[DayTimer]

Life Insurance Agents vs True Financial Planners.

As a former series 7, I'd have to say you are about as off as you can be.

There are investment based advisors, and insurance based advisors.

Done correctly, I'd bet on the insurance-based advisor's clients coming safely down the mountain every time.

"true" financial planners ... I'd lol if it were at all a laughing matter.

 

[DayTimer]

they will see whole life (or other cash value plans) as interfering with their AUM (and fees) and just see that it doesn't grow as much as their investment platform would.

If they could only figure out how to get their fee off the cash value inside a life insurance contract every year they'd sell record amounts.

Record-breaking amounts.