There are “diamonds in the rough” in your files

This week, the world’s largest uncut diamond was auctioned by Sotheby’s in London. At a whopping 1,109 carats, the white diamond was anticipated to fetch as much as $90 million (however, the bidding failed to reach the reserve price of $70 million).

The main thing that I found most interesting about this story, is that the diamond, discovered in the Karowe Mine in Botswana, was not found by the old method portrayed in movies, which is somebody standing in muddy water. The company installed state-of-the-art technology in 2015 which is credited for making the find.

This got me thinking about the financial advice business and a time when I helped an insurance advisor find a diamond in the rough of his files.

Mining your book using state-of-the-art technology

In 2012, I was helping a dual-licenced insurance advisor that was new to using RazorPlan financial planning software. He was having difficulty using this “new technology” with existing clients for insurance planning. You see, like so many other advisors he felt he knew everything about his clients and with each file we reviewed he would say something like “I have all their business” or “they don’t need more insurance”.

I challenged him to let me simply pick 10 files at random and he would arrange a meeting which I would participate in as the Estate Planning specialist. The first file I choose was for a 64-year-old client where the advisor “had all their business”; reluctantly he agreed to setup the meeting so I could do a RazorPlan analysis.

At the meeting I followed my normal insurance review agenda (click here for a copy) where I discovered not 1 but 2 large corporate owned 10 year term policies that he had purchased from another insurance advisor that is no longer in the business. Total amount of coverage was over $10,000,000!

Next, instead of focusing on the term insurance, I followed my agenda and transitioned to RazorPlan to get more information about the client’s situation. I used what I call the “Know My Client” agenda (click here for a copy) as I wanted to understand the big picture and the needs, if any, of the client.

To make a long story short, RazorPlan effectively illustrated to the client that he needed the coverage long-term to pay the taxes at death on his business. RazorPlan also established that he could more than afford the annual premium (which was in excess of $100,000) needed to convert the 10-year term to a permanent plan. The client signed an Agent of Record change form and scheduled a follow-up for the next week where the advisor converted both term policies to permanent insurance.

So what is your “diamond in the rough” story and was a new technology responsible for the find?

 

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