Friday, June 12, 2009

My Clients(2) - The Families

There were quite a number of arguments in my previous post on whether we should provide for our parents in event of death of a single person. I think it stems down to whether we treat parents as dependents. If we do, then its a "need', if we don't, then its a "want". However, my role is to guide my clients, especially the young singles. As they are semi-dependent on their parents, they may find it hard to understand that their parents can actually be their dependents in the later years. Anyway, this is out of topic for todays posting on "The Families".

Young Families
The Young Families I described here are those with Children aged 12 and below
a) The dependency need is the highest for this group of people. They generally have large loans outstanding such as car and mortgage and probably have several children below 12 years old.
b) The needs are increased especially if the family relies on only one breadwinner.
c) The needs must be met first via term insurance. I always recommend a combination of Level Term, Decreasing Term and even Group Term for the budget constraints families.
d) A mistake they always made is getting additional Life Insurance for themselves and kids at this stage. Life insurance at this stage is not likely able to meet their dependency needs or even retirement or savings needs.

The good and not so good on this group of client
e) This is my core group of clients and the group I love to meet. I will talk to them about medical, disability, critical illnesses and death coverage. I'll make sure they are well covered especially on the breadwinner.
f) They find the urgency to talk to us. They know that they need to do something with their insurance covrage. They know they need to save for their children, etc.
h) Their budget are normally constraint and unpredicatable. Many of them might have purchased too much Life and Endowment policies. They feel that they had spent too much money on insurance and its hard for me to recommend them additional coverage even when the need is there.

Matured Families
The Young Families I described here are those with Children above 12 yrs old
a) Their needs had reduced significantly compared to young families. Mortgage loans are nearly paid off and Children are in a less dependent age of 16 to 24.
b) Their cashflow are predictable and they are able to start a regular investment scheme over the next 10-15 years to accumulate up to 60 or even 65 yrs old.
c) They probably have a sizeable amount of savings in preparation for retirement. Some speculated in shares, some seek our advices for investments.

The good and not so good on this group of client
d) Its not easy to tell them about asset allocation and geographical or sectors diversification. Their mentality towards investments are normally extremes. Penny Stocks or Guaranteed Funds with maturity in 2-3 years.
e) Their health may not be that perfect and if they are still not covered under a medical insurance, the underwriting can get quite tricky.

Finding our own clients
* The beautiful part of our profession is the ability to look for the group of clients that suit us best. My favourite are the young families because I believe in term insurance and regular investments. As for the matured groups, I usually able to help them with their car insurances and investments.
* The group I'm find it hardest to serve are the young singles. They have all the time to research or even meet 2-3 advisers before deciding on a Shield or PA Plan. They read from every internet sources, demanding a lot of comparisons, capable of asking very extract questions and end of the day, they do not really value what we did .
* Having said that, I still need to have young single clients in my portfolio as they will have their families one day and will fall into my favourite category of clients. I just need to grow with them, serve them and be a friend to them.

1 comment:

Anonymous said...

i agree with u totally on the young singles. They are simply comparing and comparing and yet, still able to buy the wrong product and not heed your valuable advise.
Adeline =)