The 4 Objectives Financial Advisers Should Know For Risk Management.
Optimise protection
This does not mean ‘sell’ the client as much insurance as you can. An optimised risk plan is one which identifies, quantifies and prioritises the events which would cause greatest financial harm. It will balance the client’s ability to retain risk with their need to insure risk and make sure the budget they allocate to insurance is as effective as possible.
Reduce complexity
We know that most clients find risk management planning and insurance complex. They don’t know what all the different products do and how they work together. Expertise in small business risk management means you know how to ‘dovetail’ the insurance for the business needs, the personal income protection and ACC so that the client will be able to understand the purpose of each product how they all fit together and in their overall risk plan.
Increase certainty
Small business clients assume we understand that financial performance is not always linear and that the products we implement for them are not going to involve hurdles they didn’t expect at claim time. But increased certainty is not just about the ease of having a claim financially approved. It is also about certainty that the financial support the insurance provides adequately meets the financial losses the business, its owner, and the family face because we understood the situation and assessed the risks appropriately.
Minimise cost
It might seem that minimising cost conflicts with optimising protection but what we mean by this is that we want clients to retain financial risk where it can be shown they safely can and to maximise the use of wait periods and excesses to reduce costs. We recognise that every dollar that is spent on insurance is a dollar that they don’t have to grow wealth, so our clients rely on our expertise to guide them to make the best decisions about how they optimise their risk plan while minimising its cost.
Our purpose is to help small business owners develop a risk management plan that protects the business and their family from financial harm. The ‘umbrella’ we create for a client aims to protect the right risks and at the right level to optimise their financial resilience against death, disablement and ill health.
When you are talking with your small business clients, we encourage you to change the conversation.
Don’t ask them if they have insurance–find out if they have a risk management plan.
Don’t ask them who the key person is – develop an operational diagram with them so that you both understand the business.
You can be sure that the majority of small businesses will face the risks we have covered throughout this #knowledgeshare series and will not have a proper plan in place.
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