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Earlier this year, I wrote a column titled “You Might Be a Salesperson If…” in which I described some traits of planners whose primary activity is sales, rather than advice. I was surprised by the vehemence of the emails and online responses from people who first self-characterized as salespeople based on what I wrote, and then objected to my depiction of them.

It did not surprise me that so many readers were able to (sometimes uncomfortably) self-identify as salespeople. After all, the center of gravity in this profession seems to be dually registered reps who, based on the BD surveys conducted by this magazine and others, generate roughly 65% of their revenue from sales commissions.

Salespeople are not evil, or wrong — they just aren’t the future of the planning profession. In order to go beyond being just a salesperson, you’ll need to change your service and compensation model.

Over the years, I’ve noticed that sales agents interact with their clients very differently from how professional planners do. Here are some of the differences, based on the categories of advice you offer.


The sales process: Amplify and reinforce your customers’ fear of short-term volatility to induce them to buy high-commission products, such as equity-indexed annuities, that limit upside more than downside. Recommend a product, such as a non-traded REIT, that provides high income checks in the first few years, with reserve dollars taken out of the customer’s own investment. Define these as “safety” vehicles against the impending market downturn that might impoverish the customer.

The professional process: Educate clients on how volatility tends to decrease over longer holding periods as a way to overcome their fear of short-term volatility and help them buy into a long-term time horizon. Recommend patience with the inevitable ups and downs of a well-diversified investment portfolio.


The sales process: Introduce product solutions to issues such as college funding (annuities), retirement income needs (borrowing from permanent life products) and high-tax obligations (illiquid investments with write-offs). Tell customers that products solve problems — and they’re less work and more remunerative than figuring out procedural solutions.

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The professional process: Brainstorm procedural solutions for client issues, using trusts, gifts or retitling of assets, charitable donations of appreciated property, income shifting and maximization of government-provided tax incentives wherever possible.


The sales process: Use the discovery meeting(s) to uncover the customer’s assets that can be redeployed into in-house investments, separately managed accounts and life insurance. Focus your attention on the investment portfolio.

The professional process: Use the discovery meeting(s) to identify the client’s goals and dreams, and chart a course for achieving these goals one step at a time. Focus your attention on the client.


The sales process: Make sure the customer knows that one can never have too much life insurance, recommend permanent rather than term insurance and make the sale based on the client’s love for his or her family. Also, pay attention to bonus commission opportunities as they arise.

The professional process: Co-define a future lifestyle that the client wants to protect for the family based on current and future income expectations, and carefully determine the portfolio that would be required to support that income. Then bring in an outside insurance professional, with instructions to shop the market for the best, lowest-cost term insurance for clients who are not in a special needs or significant estate tax situation. This greatly increases the amount of coverage clients can afford. Diminish and ultimately eliminate the premiums as the client approaches retirement, because, at that point, the spouse and kids are likely able to self-fund their own lifestyles.


The sales process: Help customers understand that you get paid in two ways: via fees and commissions, and also by them giving you the names and phone numbers of their friends and neighbors. Also, constantly strive to uncover the assets customers have been hiding from you.

The professional process: Monitor the client’s incremental progress toward personal and financial goals, update the plan as needed, and provide coaching and advice to facilitate progress.


The sales process: Sell an expensive annuity with a pricey rider that provides an income guarantee that is never as generous as it looks, and which, if the rider is invoked, requires the customer to annuitize the annuity’s cash value. This will mean that, throughout retirement, the customer will receive a very low rate of return.

The professional process: Create a tax-aware decumulation plan from the retirement portfolio, filling up the lower income brackets each year with premature distributions from the traditional IRA to prevent future tax problems and lower the overall marginal rate throughout retirement.

In the early years, start taking income by liquidating any assets in the taxable account that have short- or long-term losses, taking IRA distributions up to low tax brackets with additional income from the Roth IRA. This will generally control the client’s tax rate and keep it low each year in retirement. Revisit the amount of distributions, client lifestyle expenses and portfolio sufficiency at least annually, and also after any significant market downturns, in case the distribution level needs to be reduced temporarily to protect the long-term viability of the plan.


The sales process: Carefully model the future tax obligation, and sell a permanent life insurance policy to cover all or part of it.

The professional process: Create an annual gifting program up to the gift tax exemption amount, and determine if income tax planning or estate tax planning is necessary. Make sure to hold highly appreciated assets in the client’s name until death to get the step-up in basis for heirs. Consider charitable income strategies and make sure that, at the client’s death, you file an estate tax form so the surviving spouse can claim portability of the unused estate tax exemption going forward.

I’m sure there are many other ways to distinguish the sales mentality from the professional one, but if planners were to shift from the former mindset to the latter, they would be well on their way to providing professional service and advice. In the very near future, professionalism in planning will also be defined by having the CFP and/or the CPA/PFS credential, and in asset management, by the CFA designation.

Meanwhile, if you feel my description of the sales process fits more with with how you interact with your clients than my description of the professional process, please don’t blame the messenger. As of today, membership in the small, idealistic, client-focused profession is voluntary. You can choose, based on your behaviors, where you belong.

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