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Archive for April, 2016

shell gameThanks largely to the skillful manipulation of modern advertising, we live in a product focused culture. With an increasingly low level of trust for the sales process, many consumers have become DIY shoppers in search of products receiving 5 star reviews in a quest to uncover the “best deal”.  The powerful confluence of advertisers and search engines steer us towards certain products we think will serve our needs well. Almost unwittingly, many consumers seem to have lost the ability to ask larger and more important questions.   Questions like “Why am I buying this product?”

Some simple advice for ALL consumers: asking why before selecting a what (product) is a much better approach to making a smarter buying decision!

Why buy insurance for your home, your car, your valuable possessions, or to protect your financial assets from lawsuits from third parties?  When have I asked these questions of my clients, I often received an expression suggesting puzzlement, annoyance, if not both. To ease these emotions, I ask if the reason is to replace what is owned in the event it were damaged or destroyed or lost in a legal settlement.  “Of course!” is the most common answer.  Well, if the real reason to buy insurance is to enable us to replace what we own in the event of an unforeseen loss, then why is “Save X% in Y minutes” the most common theme in insurance company advertising campaigns?

Here’s why: because advertisers have conspired with many insurance carriers to falsely (and dangerously) suggest to consumers that insurance products are commodities, conditioning many to respond favorably to “save money now” insurance advertising campaigns.   To gain market share, advertisements promoting low cost insurance policies frame savings as the de-facto product pitch. While many DIY’ers who select the “save money now” shell often can find a new insurance policy at a lower cost, they most likely have never asked and answered the question “WHY am I buying this insurance policy?”  That question usually surfaces after they experience an uncovered claim, and are reminded of the wisdom of the adage “we get what we pay for”.

Carl Richards, Contributor at New York Times Bucks Blog and the author of Behavior Gap, reminds us that in the financial services industry, consumer focus on product is also exploited by those who are paid to sell product. Richards is well known for using simple illustrations that lend clarity to issues that many journalists do not understand, including this one to depict the correct approach to establishing a personal financial plan.

plan process product Rcihards

While this illustration reminds investors to first establish a plan before selecting financial products, it is just as relevant to those seeking the right way to protect their homes, cars and other assets from unforeseen loss.

With inspiration drawn from Simon Sinek’s Golden Circle, Carl Richards explains: “Most of us are trained to think ‘What’ first, because it’s what you hear about all day long. It’s the message you read in financial publications and see on CNBC. But ‘What’ questions should come after we think about ‘Why’ and ‘How’ ….Starting with ‘Why’ means achieving clarity about your personal financial goals and creating a plan.

Thank you, Carl Richards, for reminding consumers to begin by addressing the larger “Why” questions before focusing on “What” insurance policy best meets their protection needs. For assistance in establishing a personal risk management program that eliminates the hidden risks of DIY planning by first focusing on understanding the protection you need, please contact me for an introduction to an independent private risk advisor.

 

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