Investment Policy - Areas to Strengthen Your Case and Secure the Win
Convincing a policyholder to switch their investment policy largely depends on how long they have been vested in it. The earlier they are into the policy, the easier it is to present compelling statistics and figures, coupled with strong relationship building, to encourage them to consider changing their servicing consultant.
However, since investment policies often come with surrender, withdrawal, or premium holiday charges, persuading a change becomes more challenging once a significant amount has already been invested.
To strengthen your positioning and highlight your company’s advantages, here are key areas you can discuss with your clients.
💸 Total Charges – Highlight differences in costs, able to use InvestView calculator for a clear comparison
1) No Perpetual Charges Applied (Assuming 15 years premium term, $6,000 Annually)
Policy A - 2.6% for 12 years
Policy B - 2.5% for 15 years
Estimated Returns at Year 15 - $149,005
Estimated Returns at Year 15 - $139,452
That’s nearly a $10K difference—quite significant for a $6,000 annual investment over 15 years,
2) Perpetual Charges Applied (Assuming 15 years premium term, $6,000 Annually)
Policy A - 3.9% for 10 years
Policy B - 2.5% for 15 years and 0.7% subsequently for whole of policy
Since the system can currently calculate only one phase of charges, the best workaround for comparing a policy with no perpetual charges against one that does is to analyze charges incurred during the premium term.
While not the most precise representation, an effective approach would be to first assess charges within the premium term (Similar to above), then apply a separate scenario demonstrating how perpetual charges can significantly accumulate over time as the account size grows simply as a means to illustrate to client on the impact of perpetual charges,
0% Charge: Estimated Returns at Year 30 - $558,130
0.7% Charge: Estimated Returns at Year 30 - $473,717
That amounts to nearly $74K in differences over a 30-year period, despite just a 0.7% perpetual variance.
💰 Welcome & Loyalty Bonuses and Fringe Benefits – Showcase how these can enhance investment returns or creating a competitive edge
With the welcome bonus feature enabled in the calculator, consultants can demonstrate how it enhances returns for the policyowner's benefit. Since the loyalty bonus function is not available at the moment, consultants can highlight how incorporating a loyalty bonus would further amplify overall returns.
📊 Highlighting Fund Differentiation: DCA vs. Lump Sum Returns & Dividend Yield Variations
Leverage InvestView for a competitive edge—compare funds, assess DCA/Lump Sum returns, and highlight winning advantages. Even if charges favor a competitor’s policy, superior fund performance can strengthen your proposal and justify your offering.
A $10,000 annual DCA investment over the past 15 years would have grown to approximately $647,572 based on historical performance.
A $10,000 annual DCA investment over the past 15 years would have grown to approximately $558,710 based on historical performance.
This highlights how selecting company funds within the same sector can significantly impact portfolio performance. Use this insight to your advantage.
🔈 Demonstrate Strong Investment Expertise and Portfolio Management - Be the 10%
You don’t need to deep dive into investment articles daily but rather establish a system to monitor and manage fund allocations effectively within an investment plan.
Nearly 90% of consultants do not conduct fund switches for their clients' ILPs after the initial sale, which significantly impacts returns since market movements are not optimized.
Make it a point to attend your company or agency’s investment seminars to gain insights from fund managers on fund allocation strategies for the quarter or year.
Key takeaways could include identifying underperforming funds where applying Dollar Cost Averaging (DCA) or Lump Sum investments could help acquire units at lower prices. This minimizes the risk of poor fund selection, provided the client’s ILP horizon allows time for recovery, potentially amplifying returns.
For example, the China Fund experienced a three-year downturn from 2022 to 2024. However, many analysts anticipated a rebound. If your client shared this sentiment, reallocating some funds into the China Fund could have positioned them for gains when it rebounded in early 2025.
This strategy emphasizes the advantage of acquiring funds at lower prices during market downturns rather than continuously buying at higher prices in a bull market.
With these strategies in place, along with strong client relationships, you’ll be well-equipped to handle their current and future investment queries. When opportunities arise, you’ll be their go-to advisor for investment guidance.
