Blog #16: What Do Your Clients Think About You?

(There are no InsMark presentations used in this blog.  It is a an informational blog only)

Getting Started with InsMark Training Video

Bob Ritter Blog #16 check list what do your clients think about you as a financial adviser

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Why do so many people feel abandoned by their financial adviser once a sale is made?

Here’s why: A new client usually sees a sale as the beginning of a relationship; many advisers see it as the conclusion of a transaction. Unless you maintain an ongoing, quality relationship with your clients, pretty soon they may be someone else’s clients.

One of the main reasons people do business with you is because they like you. Obviously, your high-end clients need more TLC, but the truth is that every client you want to keep needs it. The more you know about each one, the easier it is to stay in touch in a significant way.

Here are a few tips (the first three require some client selectivity; the last three apply to all clients):

  1. Share good restaurant experiences or movies – particularly new ones you’ve found you like.
  2. Email links to websites (or products on websites) that you think coordinate with your clients’ interests.
  3. If you subscribe to the online version of the Wall Street Journal, you can forward an article to clients for free even if they aren’t subscribers. It would be hard not to find an occasional pertinent article, and this capacity in the WSJ is reason enough to subscribe. I have the WSJ app on my iPhone and iPad where forwarding an article is also available.
  4. Send a monthly newsletter. If you’re not sending one now, consider using Forefield.
  5. Send a Thanksgiving card – almost no one else does it.
  6. Send an annual survey asking what your clients like and don’t like about your service, and how you can improve it.

Be careful not to bombard your clients – once every couple of weeks seems about right. And always include personalized remarks.

If you do these simple things, you will find when you call a client with a new financial idea that you won’t be pigeon-holed as that “pesky guy trying to sell me something”.

InsMark’s Referral Resources

If you would like assistance with any InsMark illustration, contact any of the Referral Resources listed below.  All are InsMark Agency Platinum Power Producers®, and they are highly skilled at running InsMark software and can help you using your choice of insurance company.  Mention my name when you talk to one of our Referral Resources as they have promised to take special care of my readers.

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More Recent Articles:

Blog #15: How to Take Money Out of a Business Without Paying Taxes on It — Legally

Blog #14: The #1 Financial Concern of Most People? Running Out of Money!

Blog #13: A New Look At An Old Idea

Blog #12: Three Smart (and relatively unknown by clients) Tax Strategies for Retirement Accounts

Blog #11 – Your Often Dead Without Deadlines

 

3 Reasons Why It’s Profitable For You To Share These
Blog Posts With Your Business Associates and
Professional Study Groups (i.e. “LinkedIn”)

 

Robert B. Ritter, Jr. Blog Archive

 

Blog #15: How to Take Money Out of a Business Without Paying Taxes on It — Legally

(Presentations were created using the Loan-Based Split Dollar System.)

Getting Started with InsMark Training Video

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For those with clients who own C corporations, did you know there is an IRS-approved way for owner executives to move money out of a C corporation without paying any tax on it? It’s called loan-based split dollar, and it works this way:

The corporation extends an annual series of loans to the covered executive. The loans are used to purchase an investment-grade life insurance policy (indexed universal life, for example).

Policy values and death benefits secure the loans. The loans can be repaid to the corporation in several ways:

  • Withdrawal or loan of policy values;
  • Death benefit of the policy;
  • Bonus from the corporation.

At retirement, the policy can be accessed by the executive free of income tax using secured policy loans.

Here is an example:

  • Executive age 45 in a 45% marginal income tax bracket;
  • Face amount of policy: $2,200,000;
  • Policy premiums: $100,000 a year for 7 years;
  • Loans from corporation to executive: $100,000 a year for 7 years;
  • Single bonus to the executive in years 1 – 20 to cover the loan interest costs due the corporation;
  • Loan repayment: In years 16 – 20, the corporation effects a gradual rollout of the split dollar arrangement equally over five years by way of a gross-up bonus used by the executive for loan repayment;
  • Executive’s policy cash value at the end of 20 years: $1,900,063;
  • Executive’s death benefit at the end of 20 years: $4,008,200;
  • Executive’s annual loans for retirement cash flow in years 21 – 40: $165,000;
  • Executive’s policy cash value at the end of 40 years: $1,688,707;
  • Executive’s death benefit at the end of 40 years: $2,072,667;
  • Executive’s cash-on-cash pre-tax equivalent IRR over 40 years: 33.41%;
  • Executive’s pre-tax equivalent IRR on policy death benefit over 40 years: 33.54%.

During the period the loans are outstanding, the executive’s loan interest due to the corporation is pegged to the Applicable Federal Rate (AFR). As of this writing (August 2013), the AFR ranges between 0.28% (demand or short-term) and 3.16% (long-term) based on the length of the loan.

Note:  It’s tempting to illustrate the short-term rate, but you should probably resist it. The demand rate changes monthly which makes a long-range life insurance proposal look meaningless. The short-term rate is good for only three years which makes a long-range illustration at this rate equally as problematic. We recommend you use the long-term rate because you can lock in the rate each time a loan is made. It’s probably best to let your client’s legal and tax advisers recommend which AFR to use.

Click here to view the actual InsMark illustration for this loan-based split dollar arrangement.

Here is an interesting prohibition: loan-based split dollar can only be used by privately-owned corporations. The big boys (public companies) can’t, thanks to Sarbanes-Oxley legislation. Most owners of privately-owned C corporations don’t know about loan-based split dollar, so you have a wide open field if you have access to such firms.

Note:  In the past, most small, successful firms were either formed as S corporations or converted from C to S status. In view of the recent increases in individual income tax rates, you may see a significant switch back to C status.

Note:  The concept works for key non-shareholders executives of any privately-owned business entity where the owners want to favor a few with a superb benefit plan.

InsMark’s Referral Resources

If you would like assistance with any InsMark illustration, contact any of the Referral Resources listed below.  All are InsMark Agency Platinum Power Producers®, and they are highly skilled at running InsMark software and can help you using your choice of insurance company.  Mention my name when you talk to one of our Referral Resources as they have promised to take special care of my readers.

Note:  If you are an Independent Marketing Organization that is interested in becoming an InsMark Referral Partner, please contact Julie Nayeri or David Grant at the number or email address indicated in the paragraph that follows.

For a license to use InsMark’s Loan-Based Split Dollar System, go to InsMark or contact Julie Nayeri at InsMark at julien@insmark.com or (888) InsMark (467-6275). Institutional inquiries should be made to David A. Grant, Senior Vice President – Sales at (925) 543-0513 or dag@insmark.com.

 

InsMark’s Digital Workbook Files

If you would like some help creating customized versions of the presentations in this Blog for your clients, watch the video below on how to download and use InsMark’s Digital Workbook Files.

Digital Workbook Files For This Blog

Blog15.zip

Download all workbook files for all blogs

Note:  If you are viewing this on a cell phone or tablet, the downloaded Workbook file won’t launch in your InsMark System.  Please forward the Workbook where you can launch it on your PC where your InsMark System(s) are installed.

 

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More Recent Articles:

Blog #14: The #1 Financial Concern of Most People? Running Out of Money!

Blog #13: A New Look At An Old Idea

Blog #12: Three Smart (and relatively unknown by clients) Tax Strategies for Retirement Accounts

Blog #11 – Your Often Dead Without Deadlines

Blog #10: Annuity Rescue Made Easy

 

3 Reasons Why It’s Profitable For You To Share These
Blog Posts With Your Business Associates and
Professional Study Groups (i.e. “LinkedIn”)

 

Robert B. Ritter, Jr. Blog Archive

 

Blog #14: #1 Financial Concern of Most People? Running Out of Money!

(Presentations were created using Wealthy and Wise®.)

Getting Started with InsMark Training Video

Bob Ritter Blog #14 the number one financial concern of most people is running out of money for retirement

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Net worth certainly has value, but the amount of sustainable after tax cash flow that can be produced from net worth is the real measure of wealth. Also keep in mind that the invasion of net worth to provide an unrealistic level of cash flow is bound to end up producing no cash flow at all.

How are people to know? Check out the following analysis from InsMark’s Wealthy and Wise® System.

Male 65; Female 60
$3,000,000 in Liquid Assets Available for Retirement Cash Flow
Annual After Tax Cash Flow:
Strategy 1: $100,000
Strategy 2: $150,000
Strategy 3: $200,000

InsMark’s Wealthy and Wise® System net worth graph

As you can see from the Strategy 3 flag pointing to zero, $200,000 in cash flow produces a long-range disaster as the liquid assets run out at ages 85/80. Strategy 2 hangs on longer, but it eventually dissipates at ages 93/88. Strategy 1 more than supports its level of cash flow and also provides for a substantial inheritance for heirs.

Wealthy and Wise® also calculates that Strategy 1 can support $29,000 in additional annual cash flow with Liquid Assets never dropping below their starting point of $3,000,000. The $29,000 can be used for: 1) additional retirement cash flow; 2) gifts to heirs; 3) funding deductible gifts to charity in the amount of $42,000 (31% tax bracket assumed); or 4) a combination of all of them.

Every individual contemplating retirement (or any other scenario that requires cash flow) must be certain to determine the sustainable level that a given amount of liquid assets will provide. In addition, a valid analysis must also illustrate the conversion of some or all illiquid assets (if present) to liquid assets whenever a shortfall of cash flow occurs.

If you initially address “let’s be sure you won’t run out of cash” with each prospect or client, you will have vitally interested listeners to the rest of your presentation.

Resources

They are all highly skilled at running InsMark software and can help you with an InsMark Wealthy and Wise® analysis like this with the insurance company of your choice. Mention my name when you talk to them as they promise to take special care of my readers. You don’t need to be licensed for Wealthy and Wise® to secure help from Brian, Chris, or Erik – – although if you’re not licensed, we hope you decide to do so.

Note: If you are an Independent Marketing Organization that is interested in becoming an InsMark Referral Partner, please contact Julie Nayeri or David Grant at the number or email address indicated in the paragraph that follows.

For a license to use Wealthy and Wise®, go to InsMark or contact Julie Nayeri at InsMark at julien@insmark.com or (888) InsMark (467-6275). Institutional inquiries should be made to David A. Grant, Senior Vice President – Sales at (925) 543-0513 or dag@insmark.com.

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More Recent Articles:

Blog #13: A New Look At An Old Idea

Blog #12: Three Smart (and relatively unknown by clients) Tax Strategies for Retirement Accounts

Blog #11 – Your Often Dead Without Deadlines

Blog #10: Annuity Rescue Made Easy

Blog #9: Selling Incognito

 

3 Reasons Why It’s Profitable For You To Share These
Blog Posts With Your Business Associates and
Professional Study Groups (i.e. “LinkedIn”)

 

Robert B. Ritter, Jr. Blog Archive