Blog #86: The #1 Reason Advisors Are NOT Getting Paid What They’re Worth

Getting Started with InsMark Training Video

spacer image

Guest Blog by Scott Keffer

Image of Guest Blogger, Scott Keffer

Note from Bob Ritter:  Scott Keffer is an internationally-recognized business and marketing coach, keynote speaker, and author who you may have seen on ABC, NBC, CBS, FOX, and PBS, or in Worth, Wall Street Select, Money Show, Small Business Trendsetters, Research, National Underwriter, Resort Living, and Dynamic Business, among others.  His latest books include Double Your Affluent Clients® 47 FAST TIPS!  You Can Have Greater Success With Affluent, High Net Worth Clients!  and Giving Transforms YOU!

Scott will be hosting a Breakout at the forthcoming 2015 InsMark Symposium in Las Vegas on March 27 - 28.

In a recent survey of financial advisors, only 3 out of 100 said they were very satisfied with their income.  You aren’t getting paid what you’re worth, because you haven’t solved the #1 advisor problem.  It’s the problem that causes you to zone out when you’re sitting with your kids or having dinner with your spouse or golfing with your buddies or walking with your friends.

It makes you worry about where your next dollar will come from… or how you’ll pay for your children’s education… or whether you will ever live the “ideal” lifestyle you are always promising to your clients.  It’s what you worry about when you wake up at 2 a.m. and can’t go back to sleep and you wonder if you’ll ever be able to stop working 60 hour weeks… or ever be able to retire.

In survey after survey with advisors across the U.S. and Canada, more than 9 out of every 10 advisors say their #1 problem is, “Getting in front of better prospects.”

It’s not just a little problem… it is THE problem.

One of the biggest advisor marketing mistakes (get a copy of our Marketing Scorecard to discover the Top 10 Mistakes) is trying to position yourself as a “solutions expert.”  Let me explain.

In 1979, Steve Jobs visited a Xerox R&D lab and watched a demonstration of a pointing device that would control icons on the computer screen.  Xerox “saw” it as a $300 accessory on a business computer.  Jobs “saw” it as a game changer.  He instructed his R&D folks to create a $15 pointer that worked on counter tops and desks.  What was the difference between what Xerox saw and what Jobs saw?  Xerox was thinking from the “solution” point of view… their solution.  Jobs was thinking from his clients’ point of view.

How are you trying to position yourself?  Expert?

I’m not asking whether you are positioned as a competent advisor.  I am asking whether you are trying to position yourself as the “best” or “most knowledgeable” advisor, based on your technical and product knowledge.  This method is actually killing your positioning… and painting you and your practice into what I call: “commodity corner.”

Here’s why: there is no “best” advisor.  And positioning yourself based on technical skill, product knowledge and the latest planning solutions is a losing game.  Every advisor is doing the same thing.  And positioning yourself around your company’s latest product is even deadlier.  Industry designations (although helpful for your technical skills) don’t attract affluent clients.  Certifications don’t attract affluent clients.  Advanced degrees don’t attract affluent clients.

How do I know?  Look around our industry.  It is filled with advisors who are brilliant and technically savvy… and BROKE.

The affluent want a different kind of authority.  What I call a Client Authority.  Discerning clients want you to be an authority on their problems, issues, challenges, fears and concerns.  They must see you as someone who is intimately familiar with their problems.

Write this down:  If you demonstrate to prospects that you know more about their problems, challenges and issues than they do, they will automatically assume you have the solutions.  Your trust goes through the roof.  Your credibility skyrockets.

Most planners construct all their marketing messages, and spend all their presentation time, on their wonderful solutions.  A waste of time, for the most part.  They should be spending most of their time outlining, agitating and empathizing with the problems of their best prospects.

“People don’t care how much you know until they know how much you care” is an old sales cliché, but it’s timeless wisdom.  I’ll add, “And people don’t know how much you care until you show how much you know about them and their problems.”

So, how do you become known as the authority on their problems?

Well, you certainly don’t do it through the traditional, cookie-cutter brochures, websites, seminars, mailings, etc.  That’s all me-too, copy-cat, I’m-the-same-as-every-other-advisor marketing.

One of the advisors I coach called me one day with the “opportunity” to spend $7,500 on a full page glossy spread in a well-known national magazine.  My response, “Don’t do it.  Save your money.  I’ll show you a better way.”

Needless to say, he didn’t listen and spent the money anyway.  He was very proud of the picture of his team and the great words that were used to describe them and their work.

“Any response?  Any prospects contact you?”  Crickets…

He still likes to look at the ad framed on the wall of his office.

You become a different kind of authority by implementing what I call The Client Authority Model™.  At my boot camps, we spend one of the days showing advisors how to construct and execute a profitable, magnetic attraction marketing strategy using the model to consistently rise above their competition with their own Arc Of Distinction®.

If you’d like more on solving this and the other advisor marketing problems, grab a complimentary copy of my latest Special ReportHow To Position Yourself As An Authority And Get Qualified Prospects To Contact You:  The 3 Critical Marketing Criteria: Is Your Marketing (And Your Practice) Attracting Ideal Clients… Or Unknowingly Repelling Them?  Click here: I’d Like A Copy Of The Marketing Report and Scorecard.

InsMark Symposium

We hope to see you at the 2015 InsMark Symposium scheduled for March 27 - 28, 2015, in Las Vegas, Nevada.  Lots of great InsMark concepts and some terrific guest speakers as well.  Attendees tell us it is consistently the best sales and marketing meeting they attend all year, including the MDRT, COT, TOT, and Forum 400.  Contact Julie Nayeri at 1-888-InsMark (467-6275) or julien@insmark.com to register for the Symposium, or click here to view the Agenda and register online.

Symposium Testimonials

“The InsMark Illustration System and Wealthy and Wise software pays for itself.  Both provide so much and the InsMark Symposium helps you find all the hidden gems.  I will attend again in a heartbeat

Carey Stansbury, InsMark Silver Power Producer®, Toledo, OH

“The best non-company presentation we go to each year.  And no best product promotion!  The Symposium is about communication, sales, and the “how to” -- no insurance company does that anymore.”

Elmo Cure, InsMark Platinum Power Producer®, Plano, TX

seperator bar

More Recent Blogs:

Blog #85: IRS Says Goodbye to a Tiny Bit of Its Red Tape

Blog #84: “Why Pay $22,753 for Something You Could Get for $700?”

Blog #83: Crystal Clear Alternatives

Blog #82: A Great Holiday Video

Blog #81: Economics of a Roth IRA Conversion

 

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 #85: IRS Says Goodbye to a Tiny Bit of Its Red Tape

Getting Started with InsMark Training Video

spacer image

Bob Ritter's Blog 85 the IRS says goodbye to a tiny bit of its red tape image

Recognize the text below or something like it?

The following statement is required by IRS regulations (31 CFR Part 10, §10.35): Any tax advice contained in this material (including any attachments or referred material) was not intended, or written to be used, and cannot be used by you or any other person or entity for the purpose of avoiding penalties under the Internal Revenue Code.

It, or something very like it, has been a part of virtually every business email, letter, and presentation rendered after June 20, 2005, that is written by lawyers and CPAs as well as financial professionals.

Well, no more.  The IRS says Circular 230 is no longer necessary -- but it does so in sort of a grumpy way.

“I’m here to tell you to get that jurat ¹, that disclaimer, off your e-mails.  It’s no longer necessary.  I just don’t want you blaming all that extra garbage at the end of your e-mails on the Internal Revenue Service or the Office of Professional Responsibility,” said Karen L. Hawkins, Director of IRS Office of Professional Responsibility, to practitioners at a June 20 tax conference sponsored by the New York University School of Continuing and Professional Studies in New York.

The IRS’s chief counsel, William J. Wilkins, seconded Ms. Hawkins statement more politely, telling practitioners in a keynote address that the “Circular 230 legend is not merely dead, it’s really most sincerely dead.  So please omit.”

What apparently ticked the IRS off was the underlined portion above which, while not required, was often added to indicate that the IRS is responsible for requiring the Circular 230 disclosure.  Programmed by most to appear automatically, Circular 230 appears so often in so many unrelated places (e.g., e-mails to Mom and Dad, social media posts), it’s kind of like bird poop on your roof -- largely ignored by all.

So, as advised by Mr. Wilkins, “. . . it’s really most sincerely dead.  So please omit.”

Note:  The IRS says that elimination of the Circular 230 disclaimer will save practitioners and their clients at least $5,333,200.  That’s a pretty precise number, but there is nothing provided by the IRS to back it up.  That’s kind of hard to believe though -- it took us all of 20 seconds to remove it from InsMark’s email master.  How clients can benefit financially because their advisers have eliminated the disclaimer is beyond me.  My guess is it’s probably fluff to make the withdrawal look like a generous benefit extended by the IRS.  (You think?)

¹ Jurat:  The certificate of an officer that a written instrument was sworn to by the individual who signed it.

InsMark Symposium

We hope to see you at the 2015 InsMark Symposium scheduled for March 27 - 28, 2015, in Las Vegas, Nevada.  Lots of great InsMark concepts and some terrific guest speakers as well.  Attendees tell us it is consistently the best sales and marketing meeting they attend all year, including the MDRT, COT, TOT, and Forum 400.  Contact Julie Nayeri at 1-888-InsMark (467-6275) or julien@insmark.com to register for the Symposium, or click here to view the Agenda and register online.

Symposium Testimonials

“I have been in the business 30 years and have attended InsMark Symposium for over 20 years.  Each one gives me at least 2-3 impact ideas that I can immediately take back and have impact for me and my clients.  It is fun and always the best conference I attend annually.”

Chris Jacob, CFP, InsMark Platinum Power Producer®, SFI-Cadeau, St. Louis, MO

“InsMark helps us help our clients understand their money and their choices.  At every InsMark seminar -- especially the Symposium -- I learn something new that changes what we do and how we can do it more efficiently.  That translates to a better bottom line for us and for our clients.  It’s making more money for everyone -- just by pushing InsMark buttons on the computer.  I wouldn’t miss a Symposium.”

Kay Corbin, CLU, ChFC InsMark Platinum Power Producer®, Phoenix, AZ

seperator bar

More Recent Blogs:

Blog #84: “Why Pay $22,753 for Something You Could Get for $700?”

Blog #83: Crystal Clear Alternatives

Blog #82: A Great Holiday Video

Blog #81: Economics of a Roth IRA Conversion

Blog #80: Converting Low Yielding Assets into a Charitable Gift Annuity

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 #84: “Why Pay $22,753 for
Something You Could Get for $700?”

Getting Started with InsMark Training Video

Blog-84-Crystal-Clear-Alternatives-Mother-and-Daughter-sitting-on-the-beach

Editor’s Note:  Blog #84 examines powerful comparisons between Indexed Universal Life and “term and invest the difference” using both an equity account and a Keogh plan as the alternative investment.  The results may surprise you.

Your self-employed prospects/clients are often eligible for Keogh contributions well in excess of IRA limitations.  As is generally the case, when you compare cash value life insurance to any tax deferred retirement plan like a Keogh or IRA or 401(k), the life policy is typically the winner by a large margin.  Information in Blog #84 should be useful to you in your practice.

Last week in Blog #83, I discussed a life insurance analysis for Laura Lake Johnson, age 35, a very successful landscape painter living in Carmel, CA.  Coupled with the information in Blog #83, the discussion in this Blog continues a comprehensive look at what we call “CheckMate® Selling” -- our comparative technique used to emphasize the astonishing worth of cash value life insurance.

Laura is single with a four-year old daughter, Caroline.  As a self-employed artist, retirement planning is solely Laura’s responsibility.  In Blog #83, she was considering $1,000,000 of level death benefit coverage using Indexed Universal Life (IUL) that provides her with substantial after tax retirement cash flow.  For a reason described following the Table below, the IUL illustrations in this blog have an increasing death benefit during pre-retirement years; level thereafter.  The IUL is max-funded with five premiums of $22,753.

Laura’s Proposed IUL Policy
Increasing Death Benefit for 30 Years; Level Thereafter
Illustrated at 7.50%
Five Annual Premiums
($22,753 each)
$113,765
Initial Death Benefit $1,000,000
Cumulative After Tax Policy Loans for
Retirement Cash Flow from Age 65 - 95
$2,403,903
Cash Value at Age 95
Pre-Tax Equivalent Rate of Return at Age 95
$394,530
11.85%
Death Benefit at Age 95
Pre-Tax Equivalent Rate of Return at Age 95
$449,912
11.88%
This Table assumes the non-guaranteed values shown continue in all years.  This is not likely, and actual results may be more or less favorable.

Click here to review the IUL illustration.

Laura mailed the illustration to her CPA.  A few days later, he asked her an interesting question: “Why pay $22,753 for something you could get for $700?”  (He is referring to a $700 annual premium for $1,000,000 of 30-year, level term insurance.)  He added. “Do you think you might be better off investing the difference in a good mutual fund?

The CPA has surfaced “buy term and invest the difference”, and in response, I decided to use IUL with an increasing death benefit.  When comparing cash value life insurance to level term insurance (30-year term in this case) and a side fund, it is generally better to use a cash value policy with an increasing death benefit; otherwise, the term and its side fund combination will have a serious death benefit advantage until the term expires.

The following graphic summarizes the results of comparing the IUL to term insurance coupled with an equity account with growth of 7.50%.  The identical after tax retirement cash flow from the IUL is illustrated from the equity account until it is collapses.

Indexed Universal Life
vs.
Term Insurance and an Equity Account

Indexed-Universal-Life-vs-Term-Insurance-and-an-Equity-Account-image

This graphic assumes the non-guaranteed values shown continue in all years.  This is not likely, and actual results may be more or less favorable; however, the ratio of the comparison should remain relatively stable given equal interest and growth assumptions.

The equity account is consumed by Laura’s age 73 shortchanging her by over $1,900,000 in after tax retirement cash flow over the years illustrated compared to the IUL.

What has affected the growth of the equity account?  The main factor is withdrawals that must be grossed up to account for the tax generated by taxable gains in order to match the results of the tax free loans from the IUL.

Click here to review the detailed comparison reports.  As you can see from the Matching Interest Rate report on Page 5, it requires growth of 11.15% (a 48.6% increase over the 7.50% of the IUL) for the equity account to match the living results of the IUL over the years illustrated.

This is an impressive analysis,” says the CPA upon reviewing the new numbers, “but as we have discussed in the past, Laura, you are eligible to participate in a Keogh plan at a very high level.  Let’s have your adviser analyze the impact of contributing to a Keogh for five years coupled with the term insurance.”

Term/Keogh Plan Analysis

Since Laura will deduct the contribution to the Keogh but not the term premiums, the following calculation logic is assumed:

term-premium-calculation-logic-image

The following graphic summarizes the results of comparing the IUL to term insurance coupled with the Keogh earning a tax deferred yield of 7.50%.

Indexed Universal Life
vs.
Term Insurance and a Keogh Plan

Indexed-Universal-Life-vs-Term-Insurance-and-a-Keogh-Plan-image

This graphic assumes the non-guaranteed values shown continue in all years.  This is not likely, and actual results may be more or less favorable; however, the ratio of the comparison should remain relatively stable given equal interest and growth assumptions.

The Keogh collapses at Laura’s age 77 shortchanging her by a little over $1,536,000 in after tax retirement cash flow compared to the IUL.

What has retarded the growth of the Keogh in Laura’s retirement years?  All withdrawals from the Keogh are taxable which means they must be grossed-up to match the after tax loans from the IUL.  It’s simply no contest!

Click here to review the detailed comparison reports.  As you can see from the Matching Interest Rate report on Page 4, it requires growth of 9.07% (a 20.9% increase of over the 7.50% of the IUL) for the Keogh to match the living results of the IUL over the years illustrated.

Note:  Small withdrawals are illustrated from the Keogh in years 6 through 30 to provide Laura with the $700 for the after tax cost of the term premiums (including a factor for the 10% penalty tax through her age 59).  (See Page 5 in the Term and Keogh Plan Detail report.)

Advantages of IUL vs. Keogh/Term

The IUL has four additional advantages:

  • If the market turns negative, there is no market risk to the policy owner;
  • There is no 10% penalty tax associated for distributions prior to age 59½;
  • There are no required minimum distributions during retirement;
  • There is a substantial tax free life insurance death benefit available during retirement.
Summary of the Alternatives

Summary-of-the-Alternatives-image

*After a 35% income tax deduction on the five Keogh contributions.
**462% greater than the equity account; 222% greater than the Keogh/Term.

Conclusion

So -- is there ever a reason for spending $22,753 for something you can get for $700?  You bet there is!

Other Policy Forms

This comparison works equally well using other forms of cash value life insurance such as whole life, universal life, and variable universal life provided corresponding adjustments are made to the yield/growth of the equity and Keogh accounts that reflect levels of risk assumption corresponding to the type of policy selected.

Other Tax Deferred Retirement Plans

This type of comparison also works well with other Tax Deferred Retirement Plans such as an IRA or 401(k) -- provided only dollars in excess of those contributed by the employer to a 401(k) are used for the life insurance.

Important Note:  Laura’s retirement cash flow from the IUL consists of participating policy loans.  Many of you are rightly concerned about the potential tax bomb associated with life insurance policies with loan activity that can accidentally be triggered by a careless policyowner.  Click here to read Blog #51: Avoiding the Tax Bomb in Life Insurance.

 

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.

New Zip File Downloaders
Watch the video.

Digital Workbook Files For This Blog

Blog84.zip

Download all workbook files for all blogs

Experienced Zip File Downloaders Download the zip file, open it, and double click the Workbook file name to open it in your InsMark System.

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.

 

Licensing

To license the InsMark Illustration System, contact Julie Nayeri at julien@insmark.com or 888-InsMark (467-6275).  Institutional inquiries should be directed to David Grant, Senior Vice President – Sales, at dag@insmark.com or 925-543-0513.

InsMark’s Referral Resources
(Put our Illustration Experts to Work for Your Practice)

We created the Referral Resources listed below to deliver a “do-it-for-me” illustration service in a way that makes sense for your practice.  All are IMOs and InsMark Agency Platinum Power Producers®, and they are highly skilled at running InsMark software.  They will utilize your choice of insurance company, and they do not require a commission split.

Mention my name when you talk to our Referral Resources as they have promised to take special care of my readers.  My only request is this: if a Referral Resource helps you get the sale, place at least that case through them; otherwise, you will be taking unfair advantage of their generous offer to InsMark licensees.

Save time and get results with any InsMark illustration!

Joint Interviews

If you want or need help from a qualified producer for joint interviews with any InsMark illustration and are willing to share the case, email us at bob@robert-b-ritter-jr.com with details of the case, and we will provide you with recommendations.

Testimonials:

“The InsMark software is indispensable to my entire planning process because it enables me to show my clients that inaction has a price tag.  I can’t afford to go without it!”
David McKnight, Author of The Power of Zero, InsMark Gold Power Producer®, Grafton, WI

“Thanks to InsMark, we recently set business goals in our firm that I basically thought were ridiculously unachievable - until now.”
Brian Langford, InsMark Platinum Power Producer®, Plano, TX

“Where else can anyone go to learn how to double your business in two years.”
Vincent Mezzetti, CLU, InsMark Platinum Power Producer®, Florida, NY

“InsMark is an integral part of my business and has been for many years.  A great partner!”
Jeffrey Berg, InsMark Platinum Power Producer®, Edina, MN

seperator bar

More Recent Blogs:

Blog #83: Crystal Clear Alternatives

Blog #82: A Great Holiday Video

Blog #81: Economics of a Roth IRA Conversion

Blog #80: Converting Low Yielding Assets into a Charitable Gift Annuity

Blog #79: Insurance Sales to Clients with IRAs

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