Blog #98: The Value of “You” to Your Clients (Part 2 of 2)

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(Presentations in this blog were created using the Premium Financing System and Wealthy and Wise®.)

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Last week in Blog #97, we were treated to a Guest Blog by Mark Pace, President and Founder of Objectiview, Inc., in which he discussed using InsMark’s Wealthy and Wise® System as a chassis for charging fees for a variety of monitoring services provided by you.

Mark’s fee rationale is driven by this:  “The value you create by charging fees is worth far more than the fees themselves.”

InsMark Case Study - Fees vs. No Fees

There are two significant advantages to charging a monitoring fee:

  • The continuing fee revenue flow adds both to your cash flow and the value of your practice.
  • By regularly updating data, it helps keep competitors at bay.

There is a simple way to include such fees as part of the client presentation -- particularly if you are using InsMark’s Wealthy and Wise® and have directed the program to pay the fees via asset allocation -- not paid out-of-pocket by the clients.

Blog #96: Retirement Cash Flow Funded by Premium Financing released two weeks ago presents a classic opportunity to introduce a monitoring fee.  Blog #96 is a triple-barreled analysis involving premium financing injected into Wealthy and Wise.  In this example, the following three items need to be monitored over the 55 years of the evaluation (or until the clients’ deaths):

  • The premium financing transaction until the bank loan is repaid;
  • The life insurance policy involved in the premium financing;
  • All the components of the Wealthy and Wise evaluation.

In the absence of such monitoring, all three stages are likely to fall apart creating a disgruntled, and perhaps litigious, client and, to say the least, an embarrassed “you”.

What should monitoring include for the Case Study covered in Blog #96?

  • Premium Financing:  It ensures new loans are made for subsequent premiums, the client makes timely payments for loan interest, collateral is adequately maintained, and the payoff of the loan is made as scheduled.
  • Life Insurance:  It ensures the life policy values develop as illustrated -- or are at least within a specified tolerance.  Increases and decreases in premiums and/or death benefits may be recommended.
  • Wealthy and Wise:  It ensures that all plan data is evaluated yearly, pertinent changes are made, and new data is integrated.

Below is the key net worth graphic from Blog #96 which involves no monitoring fees:

Blog #96
Strategy 1:  Current Plan
Strategy 2:  Add Premium Financing
Strategy 3:  Increase Retirement Cash Flow
No Out-of-Pocket Cost to Clients
(Policy funded with bank loans, loan interest paid from client
assets, and policy loans repay the bank loan in Year 11.)
Strategy 3 reduces the gain in net worth while
producing over $11.5 million of additional
spendable retirement cash flow.

Net worth from blog 96 after providing required cash flow image

Let’s re-do the Blog #96 analysis as a Blog #98 analysis and include the monitoring fees shown below beginning in year 2.

Monitoring Fee Assumptions¹

Wealthy and Wise:  $5,000 annual fee for:

  • Revised data entry (changes in assets, benefits, and liabilities);
  • Confirming or changing all assumptions;
  • Confirming (or modifying) desired retirement cash flow goals;
  • Revised net worth and wealth to heirs projections.

Life Insurance Policy:  $2,500 annual fee for monitoring sustainability of policy premiums and values based on re-proposal technology;

Premium Financing:  $2,500 annual fee through year 10 (until the bank loan is repaid at the beginning of year 11);

¹Total monitoring fees:  $10,000 in years 2 through 10; $7,500 thereafter -- all indexed at 3.00% for a cost of living adjustment.

Assume the Sullivans have decided on Strategy 3 (increased retirement cash flow).  To see the impact of the monitoring fees, we’ll compare Strategy 3 from Blog #96 (we’ll rename this Strategy 3a) with Strategy 3 from Blog #98 (we’ll name this Strategy 3b).

Below is the revision in net worth that would occur with the monitoring fees noted above for Strategy 3b.  The fees have been incorporated on the Spendable Cash Flow Required report and are withdrawn from assets.  They do not require out-of-pocket cost from the client.

Blog #96 vs. Blog #98
Strategy 3a:  Increased Cash Flow with No Monitoring Fees
Strategy 3b:  Increased Cash Flow with Monitoring Fees
Neither Strategy Has Out-of-Pocket Cost to Clients
(Policy funded with bank loans, loan interest and monitoring fees paid
from client assets, and policy loans repay the bank loan in Year 11.)

Net worth from blog 96 vs blog 98 after providing required cash flow image

Note that the cumulative, projected, after tax, retirement cash flow of Strategy 3b ($34,599,347) in Blog #98 has been reduced by only 1.31% from the corresponding cash flow of Strategy 3a ($35,059,339) in Blog #96.  That small reduction will provide year after year monitoring of the Sullivan’s master plan for retirement.

Click here to see how the monitoring fees are illustrated in the Spendable Cash Flow Required report from Strategy 3b.  This report is numbered Page 45 and Page 46 which is its position in the full illustration available below.

The power of this approach is that the monitoring fees are packaged within the wealth analysis.  When you get to the Spendable Cash Flow Required report in your presentation to the client (or the advisers), consider making this point:

“These fees are designed so that I am able to monitor and adjust each aspect of your wealth plan every year as circumstances and data changes.  Every year, we analyze all the moving parts and recalculate them -- all of them -- over again.”

Click here to view all the reports from Blog #96 vs. Blog #98 -- divided into three sections:
Comparison of Strategies 3a and 3b (Pages 1 - 5);
Strategy 3a (Blog #96):  No Monitoring Fees (Pages 6 - 39);
Strategy 2:  Add Premium Financing (Pages 40 - 73).

That is a large number of reports; however, with a Wealthy and Wise evaluation, I recommend that you have all the reports for a given case with you when you are visiting with a client or client’s attorney or CPA.  Wealthy and Wise backs up every number shown, and you never know which report you’ll need to answer the inevitable question, “Where did this number come from?”  That’s why I provided all of them to you in this Blog so you can familiarize yourself with them.

Most Wealthy and Wise users select a few key illustrations for the main report and put the balance in an Appendix.

Note:  Special thanks are due to Simon Singer, InsMark Platinum Power Producer, Symposium attendee, and close friend to InsMark for the descriptive term “monitoring” fee.

 

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

Blog98.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 InsMark Systems

To license Wealthy and Wise or the Premium Financing 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, and we will provide you with recommendations.

Testimonials:

“Major cases we are developing have all moved along successfully because of the sublime simplicity and communication capability of Wealthy and Wise.  I guarantee that the proper use of this tool will dramatically raise the professional and personal self-image of any associate who dares to take the time to understand it.”
Phillip Barnhill, CLU, Minnetonka, MN, InsMark Gold Power Producer®

“As with all of the InsMark software, InsMark’s Premium Financing System has proven to be an indispensable addition to my ability to show my clients the advantages in using a “Financed Premium” concept to solve their financial needs.  Because of this, I was able to close three large financed premium cases easier and faster than ever before.  I no longer need to use the cumbersome and illegible spreadsheets provided to me from other sources.  As everyone understands, Premium Finance is a complex and involved concept to undertake.  With the InsMark Premium Financing System, I am now able to show my clients a professional rendering of Premium Finance that is concise and easy to understand.  As always, InsMark has delivered again.  I encourage all who use Premium Finance as a solution to their clients’ needs to purchase this system.  The cost of the system is not an expense, but rather an investment in your business.”
William Moates, Jr., Trilennium Financial Alliance LLC, Fort Smith, AR, InsMark Platinum Power Producer®

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More Recent Blogs:

Blog #97: The Value of “You” to Your Clients (Part 1 of 2)

Blog #96: Retirement Cash Flow Funded by Premium Financing

Blog #95: How Much Do I Really Need?

Blog #94: How to Double Your Affluent Clients

Blog #93: Maybe the Best Executive Benefit Plan Ever

 

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 #97: The Value of “You” to Your Clients (Part 1 of 2)

Getting Started with InsMark Training Video

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Blog 97 The Value of You to Your Clients Wealthy and Wise image

Zero Split Case Premium Financing
Click here to receive more information
about this exciting new program.
My Guest Author for Blog #97
Mark Pace, CLU, RHU, ChFC,
President, ObjectiView, Inc.
“The value you create by charging fees is
worth far more than the fees themselves.”

At InsMark’s recent Symposium that I attended, President Bob Ritter asked how many of the 140+ advanced planners in the audience charged ongoing monitoring fees for their clients’ financial plans and strategies including:

  • In-force policies;
  • Executive benefit plans;
  • Premium financing cases;
  • Wealthy and Wise® evaluations.

A handful of the attendees indicated they charged such fees for some of their services.  Throughout the meeting, I asked several who didn’t, why not?  The most common answer was the commissions they received seemed to preclude their asking for additional fees.

Below are my thoughts on using InsMark’s Wealthy and Wise System as the basis for charging fees for a variety of monitoring services provided by you.  (Bob Ritter tells me he will be providing examples of this in next week’s Blog #98 which will include fees built into the cash flow modeling.)

Charging Annual Fees for Wealthy and Wise®
and
Managing Life Insurance Performance

The opportunity to charge fees is mixed:

  • Some have the ability to pull such fees out in this manner;
  • Others can charge fees but have to be paid directly by their clients;
  • Others are prohibited from charging fees of any sort.

The Asset Under Management Industry did not take off until it was figured out how to make it painless to pay for the service.  When drawing fees directly from the funds under management, the industry began its meteoric ascent.

Advisers have to figure out which group they are in and check state/federal broker dealer and insurance company compliance.

The net worth and cash flow modeling that Wealthy and Wise provides is one of the best financial planning tools in the market place.  In and of itself, it delivers tremendous value to the client.  Moreover, when advisers update it annually, they deliver that tremendous value year after year.

However, until advisers have sold themselves on the value proposition of charging fees, they will avoid them -- resulting in their financial detriment or in reduced service to clients.  That is why advisers must be encouraged to believe the value they will create is worth far more than the fees they can charge.

Virtually everyone using Wealthy and Wise® is using life insurance as a core component of each client’s financial plan.  Since 1979 and the advent of universal life-type products, the vast majority of life insurance sold has been a buy and manage asset . . . not a buy and hold asset.  Since then, each policy has been created with its own unique performance rights.  These rights must be constantly managed if we wish the policy to perform as it was originally projected (and sold).  (Click here to review my position paper on this subject: Crossing the Great Divide.)

The performance management of life insurance by itself - like annual Wealthy and Wise reviews - merits a fee because the work is not easy, requires considerable expertise and delivers significant value.  Putting life insurance management together with an annual update of Wealthy and Wise creates a tremendously powerful value proposition.

Not only that, by going back to your clients consistently, and supplying this type of information, you are creating and maintaining a major differentiator that will not only reap you the added fees, but also provide you with strong referrals and new sales from existing clients.

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!

seperator bar

More Recent Blogs:

Blog #96: Retirement Cash Flow Funded by Premium Financing

Blog #95: How Much Do I Really Need?

Blog #94: How to Double Your Affluent Clients

Blog #93: Maybe the Best Executive Benefit Plan Ever

Blog #92: The Prospecting Magic of Endorsed Referrals from CPAs

 

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 #96: Retirement Cash Flow Funded by Premium Financing

Getting Started with InsMark Training Video

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Bob Ritter's Blog 96 Retirement Cash Flow Funded by Premium Financing image

Big News – Zero Case Split Premium Financing

We are so pleased to add a new resource for Premium Financing involving a zero case split.  Click here to receive more information about this exciting new program.

The premium financing case discussed in this Blog was first presented at the 2015 InsMark Symposium in Las Vegas.  The results are very powerful, and we thought you would like to review the Case Study.

One of the top markets for premium financing involves large face amounts of personally-owned life insurance purchased by wealthy clients to produce significant amounts of spendable cash flow during their retirement years.

Case Study

Robert and Lynne Sullivan, both age 46, have a current net worth of $6,400,000.  They are analyzing whether a premium financing arrangement can be a useful addition to their retirement plans.

The graphic below summarizes the results of the premium financing arrangement prepared in the InsMark Premium Financing System.

Premium Financing
Robert Sullivan, Age 46

Premium-Financing-Cumulative-Payments-Death-Benefits-image

Click here to review the illustration:

Next, the premium financing data was exported to InsMark’s Wealthy and Wise where it was integrated with the Sullivan’s overall financial plan.  One of the cornerstones of their current plan (Strategy 1) is $300,000 of after tax cash flow beginning at their age 60 indexed at 3.00% as an inflation offset.

The graphic below compares Strategy 1, their current plan, with integrating the premium financing arrangement in Strategy 2.

Strategy 1:  Current Plan
Strategy 2:  Add Premium Financing
Strategy 2 produces a net worth gain in excess of $51 million with no out-of-pocket cost to the Sullivans.
(Policy funded with bank loans, loan interest paid from client assets,
and policy loans repaying the bank loan in Year 11.)

Net-Worth-After-Providing-Required-Cash-Flow-image

Strategy 3:  An alternative to the $51 million increase in net worth of Strategy 2 is to add to their spendable retirement cash flow by reducing long-range net worth.  The graphic below compares all three Strategies.

Strategy 1:  Current Plan
Strategy 2:  Add Premium Financing
Strategy 3:  Increase Retirement Cash Flow

Strategy 3 reduces the gain in net worth while producing over
$11.5 million of additional spendable retirement cash flow.

No Out-of-Pocket Cost to Clients
(Policy funded with bank loans, loan interest paid from client assets,
and policy loans repaying the bank loan in Year 11.)

Net-Worth-After-Providing-Required-Cash-Flow-Strategy-3-added-image

The choice is the Sullivans: increase net worth with Strategy 2 or increase net worth and spendable cash flow with Strategy 3 — or anywhere in between.

Note to Wealthy and Wise Licensees:  To calculate the maximum additional cash flow, we used the Cash Flow Availability Calculator in Wealthy and Wise located on any of the drop-downs on the Desired Cash Flow tab.

Below is the impact on the Sullivan’s heirs (assuming an annual 3.00% increase in the estate tax exemption).

Strategy 1:  Current Plan
Strategy 2:  Add Premium Financing
Strategy 3:  Increase Retirement Cash Flow

Wealth-to-Heirs-Cumulative-Spendable-Cash-Flow-image

Details of the Wealthy and Wise Analysis

Click here to view all the reports from this analysis divided into four sections.

Compare Strategies 1, 2, and 3 (Pages 1 – 5);

Strategy 1:  Current Plan (Pages 6 – 37);

Strategy 2:  Add Premium Financing (Pages 38 – 69);

Strategy 3:  Increase Retirement Cash Flow (Pages 70 – 103).

That is a huge number of reports, I know; however, I recommend that you have all the reports for a given case with you when you are visiting with a client or client’s attorney or CPA.  Wealthy and Wise backs up every number shown, and you never know which report you’ll need to answer the inevitable question, “Where did this number come from?” That’s why I provided all of them to you in this Blog so you can familiarize yourself with them.

Most Wealthy and Wise users select a few key illustrations for the main report and put the balance in an Appendix.

 

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

Blog96.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 Wealthy and Wise or 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, and we will provide you with recommendations.

Testimonials:

“As with all of the InsMark software, InsMark’s Premium Financing System has proven to be an indispensable addition to my ability to show my clients the advantages in using a “Financed Premium” concept to solve their financial needs.  Because of this, I was able to close three large financed premium cases easier and faster than ever before.  I no longer need to use the cumbersome and illegible spreadsheets provided to me from other sources.  As everyone understands, Premium Finance is a complex and involved concept to undertake.  With the InsMark Premium Financing System, I am now able to show my clients a professional rendering of Premium Finance that is concise and easy to understand.  As always, InsMark has delivered again.  I encourage all who use Premium Finance as a solution to their clients’ needs to purchase this system.  The cost of the system is not an expense, but rather an investment in your business.”
William Moates, Jr., Trilennium Financial Alliance LLC, Fort Smith, AR, InsMark Platinum Power Producer®
“InsMark has created without question the best suite of software for our industry that has ever existed.  I personally have been using their software for almost 30 years, and it changed my career.  This unique and user friendly software will add many thousands to your income for as long as you’re in business.  InsMark makes me look good, and it will you as well.”
Simon Singer, CFP®, CAP®, RFC®, International Forum Member, InsMark Platinum Power Producer®, Encino, CA

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More Recent Blogs:

Blog #95: How Much Do I Really Need?

Blog #94: How to Double Your Affluent Clients

Blog #93: Maybe the Best Executive Benefit Plan Ever

Blog #92: The Prospecting Magic of Endorsed Referrals from CPAs

Blog #91: The Best of InsMark at the Symposium

 

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