So…why doesn't your financial advisor seem all that eager to get into a discussion about life insurance? Most, other than suggesting you should probably have some term insurance will never even bring it up.
Why is that? Aren't most financial advisors also licensed to sell insurance?
Yes, they are and they love selling variable annuities. What's the aversion to offering life insurance to their clients?
Surely if you're going to refer to yourself as a “financial advisor” you are representing yourself as one who advises their clients regarding all matters of their financial lives…right?
Well, there are really only a couple of reasons we can think of that would explain the aversion:
- Ignorance–they just don't know enough to competently engage in the conversation regarding life insurance.
- Compensation–most financial advisors are of the mindset that it's their job to “gather assets”. If they can gather enough and charge an fee based on “assets under management” (AUM), life is good. Example: financial advisor builds his practice to have $100 million in AUM and charges on average 1% fee. That's a million bucks a year on autopilot. Life insurance is not part of that equation.
Now, I'm not suggesting there's anything wrong with getting paid to perform a service. It's not a bad business model that's for sure.
I do wonder if perhaps those who bill themselves as financial advisors who offer comprehensive advice could do a better job of at least mentioning the life insurance need?