Talk about trivial spending habits - better protection conversations

4 February 2019
Part four of our 'Five top tips for better protection conversations' series - talking about trivial spending habits.

balloon dogIn my last blog I talked about using different types of questions to gain a different type of answer.  We can do this using more ‘open’ style questions when we require a more open style answer. 

Be aware of which camp your questions fall into.  Closed questions are great, but should only be used when the answer you’re looking for is specific.

For questions about emotion, feelings or thoughts, ask your client to tell you about something, explain it or describe it to you. Using these open questions will yield far more information by way of a response than you could ever achieve using multiple closed questions.

Now, you might have noticed a theme in this series of blogs which is that each element in your protection sales process should be interesting to the client.  Everything you talk about should have a purpose and a point and needs to engage your client.

Trivial pursuits

So my fourth top tip is about something which I think most of your clients will find interesting.  Sometimes shocking and sometimes illuminating, this top tip has more depth than might first appear. This is to talk about trivial spending habits.

Part of any fact find is an analysis of income and expenditure.  Sometimes this can be laborious but it’s a necessary part of the process to help you establish affordability and any available disposable income. If you think about a client’s total spend each month, this would comprise of their mortgage, their council tax, their bills, their direct debits – that’s what you usually find on the expenditure analysis in any fact find.

But what about the other things people spend money on – the trivial spending? I looked at my own spending habits each week and typically, I would buy

  • About three cups of coffee each week at a cost of about £2.75 each
  • Two lunchtime meal deals from my local supermarket - £3 each
  • One takeaway meal for the family and me on a Friday – around £25
  • Around five glasses of wine or beer at a cost of £5 each

The thing is, it doesn’t feel like I spend a lot of money on these items but I was shocked to see that when I calculated the cost of these things, it actually totals £278 each month.

So the first thing to say is that, if people are spending that kind of money on relatively trivial items each month, it would be wrong not to include them in the expenditure analysis.  However, most fact finds don’t have a section where this can easily be accounted for.

But the reason this is in the top tips for better protection conversations is that this conversation with a client, firstly, will be an interesting one.  They’ll be surprised by how much money they spend on bits and pieces. Very often the amount of money people spend using loose change, contactless payments etc. can be significant but it never feels like it when you’re buying things.

"I can't afford it"

A common objection people have when it comes to buying protection is one of cost.  They tell you they can’t afford it. 

Now, sometimes, they actually can’t afford it. But sometimes, clients tell you they can’t afford it as a way of letting you down gently.  It’s a defence mechanism which in their mind is the first thing they can think of when they think you’re trying to sell them something they don’t want or need.

However, here’s the thing…

People usually tell you they can’t afford something when you tell them how much it costs – and you’re not going to know the cost until you do your research and present your recommendation to them later on. So, a quick analysis of your clients day to day spending habits will reveal money which is spent on trivial items.

The clever thing here is that you’ve anticipated that many clients will tell you they can’t afford it.

Doing this analysis does help remove that potential objection that could lay ahead about affordability.  It’s less likely your clients will tell you they can’t afford it when they’ve just told you they spend £278 per month on coffee and sandwiches.

Better protection conversations

Part five of our Better Protection Conversations blog series looks at how to help customers set a protection budget.

At Royal London, we’ve got a great tool you can use with your clients. It’s called the lifestyle calculator and allows you to have this very conversation.

Because it’s a calculator, you can edit the numbers to see the impact that changes you make could have on the amount of money you spend each month.

This tool will help you establish what money is spent on trivial/lifestyle items and it gives you an instant monthly total. But it also helps you establish a realistic budget for the client and it tackles that potential objection about affordability before we even get to the stage where we’re talking about how much protection costs.

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About the author

Vincent O'Connor

Senior Business Development Manager

Vincent has worked in Financial Services since 1994 and has experience from various angles as an Adviser within his own brokerage, for a life assurance company (Friends Provident) and for a Network (Intrinsic). Now at Royal London, he's focused on supporting the adviser community whilst continuing to strive towards developing fresh ideas, angles, and concepts for advisers to use.

Last updated: 04 Jul 2019

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.