According to LIMRA, 71% of consumers are more confused after meeting with their advisor. This figure comes from a 2021 study, which, however, does not cover Canada, the organization confirmed to the Insurance Portal.
This figure aligns with comments made by Christian McGuire, Regional Vice-President, Sales, Quebec, at PPI, during the conference Declining Policy Sales: Encouraging Solutions, at the Life and Health insurance Congress held November 18 in Montreal.
During a panel discussion, McGuire revealed that seven out of ten clients are more confused after meeting with their advisor. He confirmed that this data came from LIMRA. It reportedly originated from a research report entitled Every Excuse in the Book: Can You Motivate Consumers to Buy Life Insurance?" This document, published in 2006, states that five out of seven clients were more confused after speaking with their advisor.
Financial literacy
Christian McGuire believes there is always room for improvement among advisors who aim to demystify the financial world for their clients. "More than ever, we must consider their level of financial literacy. This varies greatly and is a central element of the client-advisor relationship. Understanding the markets, basic economic concepts, savings principles, and asset protection is not within everyone's reach," he observes.
For example, Quebecers scored a 54 on a scale of 0 to 100 in the 2022 Financial Literacy Index from Quebec’s financial markets regulator, the Autorité des marchés financiers (AMF).
Canadians are nonetheless among the world's leaders in numeracy, according to a 2023 report by the Organisation for Economic Co-operation and Development (OECD). With a score of 271 points, Canada ranks 10th globally, just behind the United Kingdom, but ahead of the United States (258), France (255), and Italy (245). The average score is 260. The world leaders are Finland (296), Japan (289), Sweden (294), and Norway (281).
The OECD has established five levels, ranging from understanding simple texts and concepts to solving complex problems. The UN agency notes that, for the past ten years, the general level of financial literacy has been declining among adults aged 16 to 65 in developed countries, with the exception of Finland and Denmark.
Year after year, studies conducted by the AMF on financial literacy conclude that the more financial products (investments, insurance) a consumer buys, the more their skills improve. The more financially well-off and educated they are, the more advantaged they are in terms of personal finance. The OECD also observes that young people generally fare better than those aged 55 and over.
Despite this, confusion among financial services clients persists.
Discuss, explain
"It comes back to the importance of knowing your client well," explains Christian McGuire. "It's all well and good to have people fill out forms or analyze their needs, but first and foremost, you need to know if the person you're talking to understands the concepts…We therefore need to have a conversation to properly assess their knowledge, environment, reality, needs, achievements, and goals. Before proposing anything, we must develop the relationship."
McGuire adds that when he worked at a financial institution, the advisors on his team didn't all have the same experience. Some focused on growth opportunities for the client, but less on their knowledge.
Advisors must clearly adapt to the client's situation, he emphasizes. Even if it means taking on a pedagogical role. Because the level of knowledge varies enormously from one person to another. He believes that advisors should collectively improve their ability to simplify complex concepts.
"People clearly lack formal education in economics and personal finance," he observes. "Some make better decisions than others." In this context, advisors often find themselves in a delicate position, sometimes even delivering an unpleasant message. For example, that their client is living beyond their means, that they lack retirement savings, or that they are underinsured. This complicates their work, notes McGuire.
“You have to be able to tell it like it is so the client fully understands the issues,” he continues. “The numbers don’t lie: the level of debt is very high among the population. Often, certain realities need to be explained more than once before the client changes their habits. The advisor must clearly demonstrate the impacts of the client’s decisions, not just emphasize the solutions or products.”
Constructive conversations
Tiffany Liu places great emphasis on the conversations she has with her clients. The director of Finadvance Wealth Management, a financial services firm in Vancouver, believes that an advisor must understand their client’s level of financial knowledge before addressing solutions.
From the very first meeting, she asks simple questions to find out if they manage their own investments, whether it’s their first time meeting with an advisor, and if they understand the jargon, she explains. It’s more of a conversation than an interview, she says. The goal is to understand their knowledge and experience. To do this, you have to ask the right questions, and ask them frequently, to properly assess their situation, concerns, and needs, she underlines.
Why, then, do some clients feel confused after such an exercise? Some advisors use professional jargon, technical terms, and complicated presentations, Liu observes. Because of this, clients quickly become overwhelmed. Liu says that these advisors want to show they are professionals. They primarily display their knowledge and convey information, but they don't create clarity because they don't know how to simplify their explanations, she says.
Others simply don't have the solutions or the answers and don't dare say so, she adds. They beat around the bush, equivocate, and change the subject without providing a clear answer. She explains that some of her clients have told her they've experienced this kind of situation where the advisor veers off to another topic to avoid answering.
Everyone has their own area of expertise
When Tiffany Liu doesn’t have the answer, she says so frankly. When this happens with a client, it’s usually something outside her area of expertise. She’ll tell them that she’ll check it out or refers them directly to a colleague who is an accountant, tax specialist, or lawyer, she explains. With this approach, the client feels supported.
Liu sees herself like a general practitioner. She finds the problem, offers a diagnosis, and finally, a remedy, she says with a laugh. And, if necessary, she suggests “consulting a specialist!”
“My area of expertise is insurance,” comments Christian McGuire. “My colleague is better than me at investments and taxation. I never hesitate to refer my clients to her when needed. They appreciate it…Especially those from Generations X and Y, who, thanks to technology, are used to being offered bundled deals (mortgage, property and casualty insurance, life insurance, investments). Advisors must adapt their approach accordingly,” observes McGuire. “Otherwise, the confusion will only increase for the client, who will have difficulty making decisions.”
One of the main responsibilities of advisors is precisely to help with decision-making, he adds.
Client limitations
“I like to think this statistic applies to other advisors besides myself,” jokes Martin Forget, president of Le Maître de l’Assurance. “Some clients who say they’re confused are people who don’t dare ask questions. It’s easier to say you understand than to admit your limitations, or even to ask questions you consider silly.”
He stresses that advisors shouldn’t just ask if the client is following along, especially since some clients aren’t particularly interested in finance and wealth management. “We have to adapt our approach accordingly…For example, I asked a client if he wanted to talk every year. He laughed and refused, admitting he wasn’t interested. There are more of these clients than you think. And they won’t read the documents you send them.”
To avoid confusion, Forget begins by explaining his own background and his strategy. At the second meeting, he moves on to recommendations, which he limits to two. “Many clients have needs in several areas, but if I propose too many scenarios or if the meeting drags on, they lose interest,” he says. “Beyond two hours, no one is functioning properly. Myself included! It’s better to suggest another meeting.”
Forget conducts between 80% and 90% of his meetings virtually. He seeks to understand his client, their aspirations, and sometimes asks seemingly unrelated questions, just to connect better. While he occasionally uses graphs, he quickly returns to the camera to maintain a frank discussion about the issues and needs, even sharing his screen with projections, for example, on the evolution of premiums over time. “People don’t always understand the principle that the premium for term life insurance increases after 10 or 20 years. We have to explain,” he underlines.
Some clients don't fully trust their advisor, preferring the opinion of their brother-in-law or artificial intelligence, he points out. "Widespread misinformation generates a lot of confusion," he explains. "All the brothers-in-law who have invested in the stock market have never lost money and have the best insurance coverage available on the market..."
Things are not like they used to be
“The profession has changed; we’re no longer insurance salespeople, but advisors. We’re more educated and versatile. We work in insurance, investments… Clients have changed too. Those who consult us are more educated than those who don’t,” states Céline Paret, president of Monarque Conseil based in the Greater Montreal area.
She reveals that advisors have a bit of a chameleon-like quality: their language must be adapted to each client. They often have to rephrase. “You can see the question marks in their eyes,” she continues. “So, you have to establish a dialogue. Some clients ask questions, others shut down.” To make herself understood, she sometimes uses metaphors.
In her view, graphs, figures, and documents often complicate discussions. She only uses them with clients who are analytical or knowledgeable. “I always check if the client has understood and I summarize the topics covered at the end of the meeting.” If something isn't clear, I rephrase it. Being a good listener is a fundamental quality in this profession,” she maintains.
Paret acknowledges that knowledge and language vary greatly from one client to another, particularly due to cultural background. “Everyone wants to build wealth and protect themselves, but you have to be flexible when addressing difficult issues,” she confides.
While some focus on values, death benefits, and wealth accumulation when discussing life insurance, others have difficulty talking about death and wonder if they will be able to repatriate their loved one's body to their country of origin, Paret explains. For example, clients of French origin will benefit from having the differences between the products they were familiar with in France and those offered here explained to them. “We hook them by pointing out that term life insurance is more advantageous than mortgage insurance, because our products are different from those in Europe,” she observes.
“You have to instinctively adapt your pitch to the client’s situation,” she adds. “Some prepare an hour before the meeting. I improvise.”
Disagree
Micheline Varas, president of Customplan Financial Advisors, questions whether LIMRA's statistic was interpreted correctly. "It is true…many Canadians have been impacted by poor advice," she stated. But, “Canadians who work with a financial advisor report greater confidence in their finances (64%) compared to those without one or who are unsure (44%)," she says, citing a 2024 study by the Financial Consumer Agency of Canada (FCAC).
Based on several statistics from various sources, she maintains that Canadians are generally more confident, experience less stress, and believe their financial situation improves after consulting an advisor. Varas believes the confusion stems more from social media or from people's social circles.
Karl Krokosinski, CEO of Customplan Financial Advisors, says he wonders where LIMRA got this data. “From clients of pyramid schemes? Multi-level marketing organizations?...I simply don’t believe that 71% figure.”
He points out that the insurance industry is very diverse and that the approach varies depending on the organization. For instance, an advisor tied to a bank is trained to sell what the bank tells them to sell, he comments. “With us, it’s different because we’re the only independent producers in the country. We may have the status of managing general agent, but we are first and foremost practitioners.” He says they continually cultivate their knowledge and like to share it with clients.
Krokosinski acknowledges that the level of financial literacy among the population is not very encouraging. “We do our part. We hold training sessions with our clients; we teach them the language of money,” he says.
Are advisors generally poor communicators? Not at all, he replies. But, certainly, over the past 50 years, there have been a lot of peddlers in this industry, he comments. Some products were sold for the wrong reasons and some organizations played heavily on fear and exaggeration. However, today, we’re in a different place, he says.
Krokosinski believes he doesn’t have to sell anything when he talks with his clients. He prefers to explain what insurance provides in terms of protection and financial benefits. He understands that some people aren’t familiar with the terminology, that the education system has its shortcomings, and that many don’t like to spend time on their personal finances. But fundamentally, when we meet with a client, we primarily make suggestions based on their personal and family situation. “At that point, I don’t need to sell them anything.”
Being an educator
Cathy Hiscott, president of PPI, also emphasizes the importance of dialogue with the client: Advisors should dedicate more time to their interpersonal skills rather than their technical knowledge. Above all, they should ensure that the products align with their clients’ objectives, rather than simply confirming whether those objectives fit within the proposed solution, she says. According to Hiscott, if an advisor merely reviews the features and differences between products, the client will indeed be confused and will not take action.
There’s nothing revolutionary about advisors’ work, she says, adding that they need to demonstrate empathy and adopt a pedagogical approach, especially when the client is unhelpful. Advisors must avoid being defensive. Not everyone has the skills of a good educator, she says, but it’s something that can be developed. She prefers to use pen and paper for her presentations. Visuals clearly trump graphs and columns of numbers, she observes.
How can advisors improve? Hiscott believes the industry offers excellent training programs, but that more emphasis should be placed on interpersonal skills. This is especially true given the complexity of insurance products.
Advisors need to be efficient, concise, and precise, she continues. Anyone can do math, Hiscott observes, but delivering the message clearly is another matter entirely. There’s psychology behind a sale. Storytelling is important, but it must be based on concrete, tangible examples. Advisors must connect with clients. Numbers alone don’t tell the whole story. Ultimately, she says, “the client must truly feel that we’re solving their problem based on our recommendations,” she concludes.
