As a financial planner, your goal is to get your clients on the right track to retirement but also to increase AUM, Assets Under Management. It’s a win-win for your clients and for you. Yet, while striving to achieve this goal, some financial planners neglect the one thing that makes AUM possible – their client’s paycheck.
Increase Assets Under Management
A report from PYMNTS found that approximately 48% of consumers earning more than $100,000 a year are living paycheck-to-paycheck. Among people earning more than $200,000 a year, 36% say they live paycheck-to-paycheck.
- Many well-off clients depend on being able to earn an income.
- Their paycheck is the asset upon which everything else is built.
- By adding individual disability insurance to your solution suite, you can help your clients protect their ability to both maintain and increase the assets you can manage for them.
Disability isn’t some farfetched worst-case scenario, either. It’s a real risk that, according to the Social Security Administration, will impact more than one in four of today’s 20-year-olds before retirement age. Around one in eight of today’s 20-year-olds will die before reaching retirement age, making disability a bigger threat than death for working-aged adults.
Assets Under Management Definition
Assets Under Management, or AUM, refers to the total market value of the investments that you manage on behalf of a client.
Let’s say a client comes to you with $1 million to manage. Over five years, your financial services help to grow this amount to $1.25 million. This increase obviously benefits the client, who now has greater wealth. It also benefits you as the financial planner because you can charge greater fees while also promoting client loyalty and referral business.
However, if the client loses their income due to disability, they may have to dip into the Assets Under Management in order to make ends meet. That’s why it’s important to protect AUM with disability insurance.
Protect and Increase Assets Under Management with DI
Disability is scary, but disability insurance doesn’t need to be all doom and gloom. Offering DI to existing clients and prospects can have profound impacts on your business and your clients’ retirement. It can also make you wildly referable.
Let’s look at some of the positives of DI and AUM.
- $1,000,000 AUM = $10k in revenue (Assuming 1% AUM fee). This fluctuates with market volatility. As total AUM increases, so do your AUM fees.
- $150k of DI premium on the books over 5 years = Approximately $157k in total revenue.
- $300k of DI premium over 10 years = Approximately $527k in total revenue.
- DI renewals increase every year just like AUM fees.
- You have increased client retention.
- Your clients will have preserved their retirement accounts.
- You have helped your clients preserve their dignity and control.
Top 5 Asset Management Firms
InvestmentNews ranked asset management firms to identify the top performers. According to their findings, the top five asset management firms are American Funds, T. Rowe Price, Vanguard, BlackRock and MFS Investment Management. Fidelity came in at number six to round out the list.
Secrets of Top Asset Managers
What makes an asset manager stand out? InvestmentNews looked at various criteria to rank asset firms, including reputation, transparency, ease of access, breadth of investment options and active management.
When people look for financial and asset management services, they want someone they can trust to keep their money safe and help it increase in value. If you can show your clients that you’re doing that, you can win their approval and loyalty. Unfortunately, sometimes investing money wisely isn’t enough. Unforeseen events can lead to financial ruin, and that includes health problems. By offering disability insurance to your clients, you can help your clients retain their assets. It’s also a good way to stand apart from asset managers who neglect this aspect of financial planning.
A Win-Win Situation
Selling DI to protect Assets Under Management is a win-win. Your clients win because if an illness ever forces them to stop working, they’ll be able to continue their lives without liquidating their investments. And they may be able to continue investing more – protecting and possibly increasing Assets Under Management.
You win by protecting AUM and by earning the extra first-year and renewal IDI commissions.
Ready to Grow Assets Under Management?
If you’ve been avoiding individual disability insurance sales because you’re not knowledgeable about disability insurance products, you can relax. Offering income protection is easier than you might expect – especially with DIS by your side.
The Assets Under Management (AUM) Guide outlines a win-win strategy. Download it now.
