Blog #157: Another Good News / Bad News Benefit Plan™ (Part 2 of 2)

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Bob Ritter's Blog #157: Another Good News / Bad News Benefit Plan™ (Part 2 of 2)

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Blog #157 will stress-test Loan-Based Split Dollar (LB-SD) as an alternative to the Controlled Executive Bonus Plan described in Blog #156.

Some Background

In Blog #156, we examined the use of a personally-owned Indexed Universal Life (“IUL”) policy funded with an executive bonus for Alan Westbrook, age 45, Senior Vice President, Sales, for Midland Oil Supply, Inc., an S corporation.  Alan is a serious rainmaker for the firm, but he is not a stockholder.  Midland’s President, Jennifer Hunt, wants to provide him with a significant retirement plan in addition to the company’s 401(k) plan in order to ensure he stays with the firm.

Jennifer is in a 40% income tax bracket counting the pass-through of the company’s taxable income.  Alan is in a 35% income tax bracket.

Blog #156 featured a Controlled Executive Bonus arrangement that was used to fund the IUL policy owned by Alan.  The “Control” feature is a written agreement with Alan that he must repay a portion of the bonuses should he voluntarily leave the firm (or be terminated for cause) during a prescribed number of years.  With Plan 1, the bonus repayment obligation terminates in five years.  An alternate Plan 2 terminates the repayment obligation in ten years.

Click here to review the tax consequences of the executive repaying any of the bonuses and the employer receiving such repayment.

Alan’s IUL has five annual premiums of $65,000 that are funded with a yearly gross-up bonus of $100,000 which includes the tax on the bonus.  The plan has a cumulative bonus repayment requirement of 60% during the five years (see Image 1 below).  This eliminates any repayment by the beginning of year 6, at which point the retirement benefit is fully funded.  Plan 1 is illustrated to produce annual, after tax, retirement cash flow of $75,000 a year starting at age 65 — all for no out-of-pocket cost for Alan assuming he remains employed for five years.  After tax, retirement, cash flow benefits total $2.25 million for the years illustrated.

Below are the repayment requirements of Plan 1.

Controlled Executive Bonus Plan 1
Image #1

Blog 157 image 1 Controlled Executive Bonus Plan 1

The ten-year premium for Plan 2 is $65,000 a year for five years increasing to $130,000 in years six through ten and is subject to a cumulative bonus repayment requirement of 60% during the first five years reducing by 10% a year in years six through ten (see Image 2 below).  This eliminates any repayment by the beginning of year 11, at which point the increased retirement benefit is fully funded.  Plan 2 is illustrated to produce annual, after tax, retirement cash flow of $235,000 a year starting at age 65 — all for no out-of-pocket cost for Alan assuming he remains employed for ten years.  After tax, retirement, cash flow benefits total over $7 million for the years illustrated.

Below are the repayment requirements of Plan 2.

Controlled Executive Bonus Plan 2
Image #2

Blog 157 image 2 Controlled Executive Bonus Plan 2

Click here to review the illustration for the Controlled Executive Bonus (Plan 2).

The repayment obligations of a Controlled Executive Bonus Plan may remind you of split dollar in many ways, but it is essentially quite different particularly in that the funding bonuses are tax deductible by the employer, and the premium loans in split dollar are not.  Click here to review a report entitled “Controlled Bonus Plan vs. Split Dollar Plan”.

Note:  If you missed reading Blog #156, you may want to review it for complete details of both Controlled Executive Bonus Plans.

Loan-Based Split Dollar

LB-SD automatically has a “Control” feature due to the premium loans made by the employer to fund the plan.  Split dollar loans are due in full until repaid unlike the plans in Blog #156 described above in which the employer establishes the percent of the cumulative bonuses due for repayment if the executive terminates voluntarily or is let go for cause.

The IUL illustration used with the LB-SD benefit plan is also the same one I used with Plan 2 of the Controlled Executive Bonus plan, i.e., five annual premiums of $65,000 followed by five annual premiums of $130,000, all funded by loans from Midland Oil Supply to Alan.

Dealing with the outstanding loans at the beginning of year 11 can be accomplished in several ways, all of which can be illustrated in the InsMark Loan-Based Split Dollar System:

1.     
Continue the loans.
This is not effective as it merely continues the “Control” period limiting Alan’s ability to leave the firm without any loan repayment obligations.
2.     
The executive repays the loans with personal funds.
This is obviously not an effective part of an executive benefit plan.
I can’t imagine using this for owner-executives.
3.     
The executive borrows from the policy to repay the loans.
This reduces Alan’s annual, after tax, retirement cash flow considerably.  (If a policy loan of $975,000 is taken in year 11 to repay the employer, the annual, after tax, retirement cash flow drops from $235,000 a year to $97,500.)
This variation is usually not efficient for owner-executives unless there is a different reason involved — like the sale of the business.
4.     
Pay Alan a one-time gross-up bonus sufficient for the tax on the bonus plus repayment of the premium loans.
This is not effective since a lump sum bonus of the size necessary to repay $975,000 of loans will increase Alan’s income tax bracket which, when applied to the bonus, will require an even bigger bonus to cover the repayment of the premium loans and the tax on the increased bonus.
5.     
Schedule equal annual bonuses that gradually repay all the premium loans over the remaining years until normal retirement (10 years in Alan’s case).
This is not effective as the “Control” of the outstanding premium loans now stretches until retirement, not an attractive result for today’s mobile executives.
This variation is often effective with owner-executives who have no interest in maintaining a “Control” feature for themselves.

Today’s non-owner executives are seriously mobile.  The more effective they are, the more mobile they become.  This is the reason that Jennifer Hunt, Midland Oil’s President, wants to provide Alan with a “get-out-of-jail” card with no obligation to remain employed past 10 years (in the case of Plan 2).  Is this thoughtless on her part?  Shouldn’t she want to retain Alan longer than 10 years?  If he is still a rainmaker, assuredly yes, and Jennifer is certainly free to include him in a new Controlled Executive Bonus Plan plan starting in year 11 in order to induce him to stay on board (likely with higher funding than Plan 2).

Each of the five exit strategies noted above is not particularly effective in this case which leads to the conclusion that LB-SD is not an appropriate executive benefit for a non-owner like Alan.  The Controlled Executive Bonus Plan is clearly the new split dollar alternative for those companies with important non-owner executives that want a powerful benefit plan for key executives, current tax deduction for funding, design flexibility, and serious financial penalties for top executives who depart early.

If I had to pick one of the split dollar exit options for Alan, I would select the one that schedules equal bonuses in years 11 - 20 that gradually repays all the premium loans over the remaining pre-retirement years.  (This is an easy option in the software.)

Click here to view this particular split dollar variation prepared in the InsMark Loan-Based Split Dollar System.  Due to its extended years of premium loans, the illustration reflects use of the long-term Applicable Federal Rate (“AFR”) to establish the loan interest rate for the premium loans.

Below in Column (1) is the “Control” feature of LB-SD in pre-retirement years.  By the beginning of year 11, $877,500 of the policy cash value is tied up with premium loans.  In the case of the Controlled Executive Bonus, all policy values are free and clear at this same point.

Blog 157 image 4 Excutives Net Cash Value Calculation

For comparison purposes, Click here to review the illustration for the Controlled Executive Bonus (Plan 2) in Blog #156 which far better suits Alan’s situation as well as the company’s.

Conclusion

So, is there a general rule when to use Controlled Bonus and LB-SD?

It depends on whether the covered executive is an owner or non-owner of the business.  My personal preference used to be LB-SD for either group, but with the development of the Controlled Executive Bonus, that arrangement has become my recommended plan for non-owner executives employed by any business entity (including C or S corporation, LLC, Partnership, Sole Proprietorship, and Tax Exempt Organization).

I think the decision as to Controlled Bonus or LB-SD for owner-executives depends on the relative tax brackets of the company and the owner-executive and the format of the business.  First, owners of companies that are not corporations can’t make much use of either personally-owned bonus or split dollar plans.  Even with a C corporation, a bonus paid to an owner who is in a higher tax bracket than the company may not make much sense either; LB-SD would likely be better.  When the owner of a C corporation is in a lower tax bracket than the company (you won’t find many such prospects), a bonus plan without the “Control” feature could be appropriate.

The company’s perspective is critical in the selection of which plan to use as they both offer a superb benefit for a non-owner executive.  If you are the CEO making the decision, which would you rather have: Controlled Executive Bonus with a funding tax deduction each year for ten years or LB-SD with non-deductible premium loans each year for the first ten years followed by ten years of tax deductions as the exit strategy of bonus rollouts occur?  I believe the Controlled Executive Bonus would be selected in most cases.

Note:  One concept that works well for owners and non-owners of any entity (C or S corporation, LLC, Partnership, Sole Proprietorship, and Tax Exempt Organization1) is Executive Trifecta®, an InsMark-developed concept.

1There are no individual “owners” of a Tax Exempt Organization, so this comment applies only to executives of such organizations.

If you would like to review how Executive Trifecta works, go to Blog #136: Taking Care of a Rainmaker or, for an advanced version that uses data from our Key Executive Calculator to mathematically determine the loss of a key executive’s services, go to Blog #44: Alternate Golden Handcuffs for Tom Hamilton (Part 4 of “Valuing the Business”).  Blog #44 is the concluding episode of a 4-part series involving strategies for deciding to sell a closely held business.  If this overall analysis is of interest to you, go to my Blog Archives and review Blogs #41, #42, #43, and #44.

Prospecting

One sure way to ramp up activity regarding executive benefits is to ask business owners this question:

“Do you have any non-owner executives who are so valuable to your business that you want to do whatever is economically feasible to induce them to stay with you?”

If the answer is “Yes,” say:

“Retirement planning concerns are on the minds of most -- maybe all -- of your executives.  I’d like to show you a selective, cost-efficient way your company can provide a serious retirement enhancement to important executives.  Would you like to see how it works?”

If you do this, you should get many favorable responses.

Plan Documentation

Documents On A Disk imageVariations of Loan-Based Split Dollar and Controlled Executive Bonus are available in InsMark’s Cloud-Based Documents On A Disk™ (“DOD”) in the Key Employee Benefit Plans section of documents.  If you are not licensed for DOD and would like more information, go to www.documentsonadisk.com.  Those licensed for DOD can access DOD and those document sets by signing in at www.insmark.com.  (Specimen documents for Executive Trifecta are also available in this same location.)

 

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

Blog157.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.

Click here for the Guide to Digital Workbook File for Blog #157 that summarizes its contents of the Workbook.

 

Licensing InsMark Systems

To license any of the InsMark software products, visit our Product Center online or 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.

For help on how to use InsMark software, go to The Quickest Way To Learn InsMark.

 

InsMark’s Referral Resources —- Global short code goes here for Regular Blog subscribers only—-

 

Testimonials

“InsMark has increased my production by 10 fold.  It clearly communicates to the client the best financial scenario to take.”
Gary Sipos, M.B.A., A.I.F.® InsMark Platinum Power Producer®, Sipos Insurance Services, Freehold, NJ

“The reason I use InsMark products is because they are so good at explaining financial concepts to all three parties: 1) the producer trying to explain the idea; 2) the computer technician trying to illustrate it; 3) the customer trying to understand it.”
Rich Linsday, CLU, AEP, ChFC, InsMark Power Producer®, Top of the Table, International Forum, Pasadena, CA

“My experience with InsMark’s Executive Trifecta is career changing.  Showing this idea to a business owner is a win-win-win!  The business owner wins by protecting and retaining one of his most valuable assets (a key executive).  The executive wins by being recognized and rewarded for efforts, results, and loyalty.  The financial professional wins by gaining the confidence and business of a new client.  This concept can revolutionize a financial services career.”
Kerry L. Walker CLU, ChFC, InsMark Platinum Power Producer®, The Walker Firm, Inc., Aurora, CO

 

Important Note #1:  The hypothetical life insurance illustrations associated with this Blog assume the nonguaranteed values shown continue in all years.  This is not likely, and actual results may be more or less favorable.  Actual illustrations are not valid unless accompanied by a basic illustration from the issuing life insurance company.

Important Note #2:  Many of you are rightly concerned about the potential tax bomb in life insurance that can accidentally be triggered by a careless policyowner.  Click here to read Blog #51: Avoiding the Tax Bomb in Life Insurance.

Important Note #3:  The information in this Blog is for educational purposes only.  In all cases, the approval of a client’s legal and tax advisers must be secured regarding the implementation or modification of any planning technique as well as the applicability and consequences of new cases, rulings, or legislation upon existing or impending plans.

“InsMark” is a registered trademark of InsMark, Inc.
“Executive Trifecta” is a registered trademark of InsMark, Inc.
“Documents On A Disk” is a trademark of InsMark, Inc.
“Good News / Bad News Benefit Plan” is a trademark of InsMark, Inc.

 

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More Recent Blogs:

Blog #156: Good News / Bad News Executive Benefit Plan™ (Part 1 of 2)

Blog #155: Marketing Magnification (Using Online Video)

Blog #154: Smart Alternatives to Traditional Retirement Plans (Part 4 of 5)

Blog #153: Smart Alternatives to Traditional Retirement Plans (Part 3 of 5)

Blog #152: Smart Alternatives to Traditional Retirement Plans (Part 2 of 5)

 

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 #156: Good News / Bad News Executive Benefit Plan™ (Part 1 of 2)

(Click here for Blog Archive)
(Click here for Blog Index)

(Presentations in this blog were created using the InsMark Illustration System)

Getting Started with InsMark Training Video

Bob Ritter's Blog #156 Good News Bad News Executive Bonus Plan Image

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In Blog #154, we examined the use of a personally-owned Indexed Universal Life (“IUL”) policy as an alternative to a deferred Profit Sharing Plan (“PSP”) for Jennifer Hunt, president of Midland Oil Supply, Inc., an S corporation family business.  Jennifer is in a 40% income tax bracket counting the pass-through of the company’s taxable income.

Alan Westbrook, age 45, is Senior Vice President, Sales, and is a serious rainmaker.  He is not a stockholder, and Jennifer wants to provide him a significant retirement plan in order to ensure he stays with the firm.

Let’s examine “old reliable”, the Executive Bonus Plan — with a couple of new twists.

Bonuses

$100,000 —  Company’s Annual Bonus to Alan in Years 1 - 5
$  60,000 —  Company’s After Tax Cost of Annual Bonus1
$  65,000 —  Alan’s After Tax Bonus in Years 1 - 52
$  65,000 —  Alan’s IUL premium in Years 1 - 5
$           0 —  Alan’s Out-of-Pocket Cost in Years 1 - 5

1Jennifer’s 40% bracket       2Alan’s 35% bracket    

Image #1

blog-156-image-1-bonus-employers-costs-excutives-cost-graph

This plan also includes a “claw-back” provision if Alan voluntarily terminates employment during the first five years or if he is terminated for cause during that period.  If Alan dies during the term of the claw-back, the repayment obligation is waived.

Note:  Specimen implementation documents for this plan are available below.

The repayment obligation looks like this:

Image #2

blog-156-image-2-specimen-implementation-documents-repayment-obligation

The percentage claw-back shown in Column (3) is arbitrary, and it can be any percentage desired by the business owner.  I illustrated 60% in this example, and the first five years in Column (6) illustrate pretty severe “bad news”, but the relief in the beginning of year 6 is surely “good news” when the claw-back is eliminated.  Alan is then fully vested in the policy’s growing cash value which is scheduled to produce annual, after tax, retirement cash flow of $75,000 a year starting at age 65 — all with no out-of-pocket cost for Alan if he remains employed for at least five years.

Below is a graphic of the overall plan:

Good News / Bad News Executive Bonus Plan
(Five Years of Funding)
Image #3

blog-156-image-3-Good-News-Bad-News-Executive-Bonus-Plan-Five-Years-of-Funding

Click here to see the full illustration from the Executive Security Plan module in the InsMark Illustration System.

Click here to review the tax consequences of the executive repaying any of the bonuses and the employer receiving such repayment.  (This report is also available in the illustration module.)

Would Alan accept such a plan, and what would it indicate to his employer if he refused it?  Probably that Alan is likely thinking of seeking other employment.  What a terrific management tool this turns out to be — either way:

  • It offers a benefit to a key non-shareholder executive that provides an important incentive to stay with the firm for at least five years;
  • If the executive declines to participate, it can also uncover someone who is likely considering different employment.

In some ways, this bonus plan performs like a loan-based split dollar plan except, unlike loan-based split dollar, the bonus plan is deductible by the employer.  The fact that it is not a loan-based plan means that provisions of Sarbanes Oxley do not prohibit its use for senior executives of public corporations.  Click here to review a report entitled “Controlled Bonus Plan vs. Split Dollar Plan”.

Note:  We will analyze a loan-based split dollar alternative for Alan in Blog #157.

Why Only Five Years of Funding for the Bonus Plan?

Let’s assume that Alan is so valuable to the company that there is a serious incentive to retain him for longer than five years.  Below are details of a change in plan design that doubles the bonus in years 6 through 10.

Extended Bonuses

$200,000 —  Additional Bonus to Alan in Years 6 - 10
$120,000 —  After Tax Cost of Additional Bonus (40% bracket)
$130,000 —  After Tax Extended Bonus to Alan (35% bracket)
$130,000 —  Alan’s IUL premium in Years 6 - 10
$           0 —  Alan’s Out-of-Pocket Cost

Image #4

blog-156-image-4-extended-bonus-employers-costs-excutives-cost-graph

This revised plan also includes a “claw-back” provision if Alan voluntarily terminates employment during the first ten years.  See below for the new claw-back — note the reduced schedule in years 6 - 10 in Column (3).

Image #5

blog-156-image-5-bonus-to-excutive-annual-after-tax-retirement-benefits-graph

At the beginning of year 11, Alan has full vesting of some serious seven-figure cash values which are scheduled to produce annual, after tax, retirement benefits of $235,000 a year starting at age 65 totaling over $7 million for the years illustrated — all with no out-of-pocket cost for Alan if he remains employed for at least ten years.

Below is a graphic of the revised plan:

Good News / Bad News Executive Bonus Plan
(Ten Years of Funding)
Image #6

blog-156-image-6-Good-News-Bad-News-Executive-Bonus-Plan-Ten-Years-of-Funding

Click here to review this revised Executive Bonus Plan.

Note:  Controlled Bonus Plans typically include an Endorsement of Policy Ownership Rights (“Endorsement”) which restricts the executive from accessing policy values prior to retirement.  The Endorsement takes the form of an Agreement between the business and the executive in which the executive agrees to this condition.  The Endorsements are registered with the issuing insurance company and, as a result, the executive is unable to take any action on the policy other than that allowed by the Endorsement.

In the event of an Executive’s death prior to retirement, the Endorsement allows the immediate payment of the death proceeds to the Executive’s family.

Owner-executives frequently use a bonus approach for their own plans; however, they never use a claw-back or Endorsement technique.  This is because owners do not want to impose voluntary restrictions on the funds in their own plans.  While owners may well be willing to provide bonus funding for valuable non-owner executives, they do not want to see cash values easily squandered by such executives in pre-retirement years or, worse, used for competitive ventures, thus the Endorsement.

Conclusion

One sure way to ramp up activity regarding executive benefits is to ask business owners this question:

“Do you have any non-owner executives who are so valuable to your business that you want to do whatever is economically feasible to induce them to stay with you?”

If the answer is “Yes,” say:

“Retirement planning concerns are on the minds of most -- maybe all -- of your executives.  I’d like to show you a selective, cost-efficient way your company can provide a serious retirement enhancement to important executives.  Would you like to see how it works?”

If you do this, you should get many favorable responses.

Plan Documentation

Documents On A Disk imageSpecial plan documentation is required to support this benefit plan.  InsMark’s Cloud-Based Documents On A Disk™ (“DOD”) has a comprehensive set of specimen documents for the Controlled Executive Bonus Plan in the Key Employee Benefit Plan section of documents.  If you are not licensed for DOD and would like more information, go to www.documentsonadisk.com.  Those licensed for DOD can access DOD and that document set by signing in at www.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.

New Zip File Downloaders
Watch the video.

Digital Workbook Files For This Blog

Blog156.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.

Click here for the Guide to Digital Workbook File for Blog #156 that summarizes its contents of the Workbook.

 

Licensing InsMark Systems

To license any of the InsMark software products, visit our Product Center online or 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.

For help on how to use InsMark software, go to The Quickest Way To Learn InsMark.

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!

Testimonials

“InsMark has increased my production by 10 fold.  It clearly communicates to the client the best financial scenario to take.”
Gary Sipos, M.B.A., A.I.F.® InsMark Platinum Power Producer®, Sipos Insurance Services, Freehold, NJ

“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

“The reason I use InsMark products is because they are so good at explaining financial concepts to all three parties: 1) the producer trying to explain the idea; 2) the computer technician trying to illustrate it; 3) the customer trying to understand it.”
Rich Linsday, CLU, AEP, ChFC, InsMark Power Producer®, Top of the Table, International Forum, Pasadena, CA

 

Important Note #1:  The hypothetical life insurance illustrations associated with this Blog assume the nonguaranteed values shown continue in all years.  This is not likely, and actual results may be more or less favorable.  Actual illustrations are not valid unless accompanied by a basic illustration from the issuing life insurance company.

Important Note #2:  Many of you are rightly concerned about the potential tax bomb in life insurance that can accidentally be triggered by a careless policyowner.  Click here to read Blog #51: Avoiding the Tax Bomb in Life Insurance.

Important Note #3:  The information in this Blog is for educational purposes only.  In all cases, the approval of a client’s legal and tax advisers must be secured regarding the implementation or modification of any planning technique as well as the applicability and consequences of new cases, rulings, or legislation upon existing or impending plans.

“InsMark” is a registered trademark of InsMark, Inc.
“Documents On A Disk” is a trademark of InsMark, Inc.
“Good News / Bad News Benefit Plan” is a trademark of InsMark, Inc.

 

seperator bar

More Recent Blogs:

Blog #155: Marketing Magnification (Using Online Video)

Blog #154: Smart Alternatives to Traditional Retirement Plans (Part 4 of 5)

Blog #153: Smart Alternatives to Traditional Retirement Plans (Part 3 of 5)

Blog #152: Smart Alternatives to Traditional Retirement Plans (Part 2 of 5)

Blog #151: The Trump Presidency: How It Will Impact the Sale of Life Insurance Retirement Plans

 

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 #155: Marketing Magnification (Using Online Video)

(Click here for Blog Archive)
(Click here for Blog Index)

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

Getting Started with InsMark Training Video

Bob Ritter's Blog #155 Marketing Magnification Using Online Video Image

mag·ni·fi·ca·tion

Noun:
the action or process of magnifying something or being magnified, especially visually.
"visible under high magnification"

Synonyms:
enlargement, enhancement, increase, augmentation, extension, expansion, amplification, intensification, inflation

There are a couple things happening in the world of marketing that virtually every business needs to understand.

Online Video is the new king.

It’s the king of advertising . . . now reaching more customers every day than TV, radio and print media.

And, it’s the king of consumer education . . . now (by far) the preferred choice of consumers and business people for product research and analysis.

The best way to understand this is to examine your own behavior.  When you want to learn about something, what do you do?  If you’re like most of us, you go to Google, type in a search term and then find a website that looks like it has the information you want.  Then, you click on the website and try to find quick text information that answers your question such as “how much will it cost to purchase PowerPoint software?”  Then, if you want any more detailed information, such as “I need a basic understanding of PowerPoint and how it works”, then you will look for a video on the website to explain this.  That is Online Video.  Or, how many of you just bypass Google altogether and go straight to YouTube, type in your search term there, and start watching videos?  There’s a reason Google purchased YouTube in 2006.

We observed what was happening with Online Video about 5 years ago and started incorporating it into our user support and education.  One example of this is the videos located at The Quickest Way To Learn InsMark support platform.  (As an aside, we strongly suggest that anyone using the InsMark software watch these videos.)

So, what does the explosion in Online Video mean for you?

It means that you have to seriously consider adding Online Video as part of your overall marketing strategy.  And, then this begs the following two questions:

1)  How can you produce video that your target customers want to watch?
2)  How will that video increase your product sales and net profits?

We think we’ve found a fantastic solution that answers both of the questions above.  In short, you can cost effectively leapfrog to the major-leagues of Online Video for your chosen target customer demographic (with distribution of your video content both nationally and in your local market). We will explain all of this more fully during our webinar later this week (see below to learn more).

Important Note:  During the webinar, we will also be offering attendees a special arrangement where if you commit to using InsMark presentations in your consumer videos, you will then receive up to 5 hours of FREE technical support help from InsMark’s video experts.  This could come in handy for any number of reasons (especially for anyone that isn’t that familiar with Online Video).  For example, our experts can help you learn how to set up your business YouTube account, upload videos, and then optimize your videos for Google and other search engines.

Anyway, don’t miss this webinar event!

Scheduled Webinar

To learn about how you can cost effectively produce and distribute Online Video to your key customer demographics, there will be a LIVE one-hour Webinar on Thursday, March 2nd at 11 AM (Eastern).  This Webinar is entitled “Consumer Video Marketing for Cash Value Life Insurance”.  Simply click here to register.  By attending the webinar, you will discover:

  • Why Online Video is the #1 advertising method today….BAR NONE
  • How the “talk show style” is the most effective way to educate the public and then drive qualified prospects to your agency
  • Why Online Video has the longest shelf life of any advertising medium (allowing you to use it over and over again for years to come thereby increasing your return on investment)
  • How changes in the way the Internet has developed creates an ever greater opportunity for you to use Online Video now more than ever before
  • How Steve Savant can help you produce consumer videos that are tailored to the financial strategies that you like the best (and have sold most effectively in the past)
  • How consumer video is now the best return on investment that you can make when compared to every other traditional advertising strategy (i.e. direct mail, TV, radio, etc.)
  • Why you need to learn about this new advertising medium and how it can help you dominate your local market…fast
  • THE COST FOR YOU TO ATTEND THIS WEBINAR IS ZERO.

Steve Savant will be the main presenter during this Online Video webinar.  We are all very lucky to have Steve in our industry.  First, he is an insurance and tax expert.  Second, he promotes and defends cash value life insurance as one of the premier financial products in the market today.  Third, he is aggressively building a media brand to educate consumers through his Online Video talk show programs.  We don’t know of anyone that has Steve’s level of life insurance knowledge, due diligence credibility and digital marketing savvy.  And, while Steve’s media platform helps all of us battle the Dave Ramseys and Suze Ormans of the world, Steve can also give you practical knowledge and turn-key solutions that will improve your marketing results today.

More About Steve Savant

Ken Buckley imageSteve Savant is a syndicated financial columnist and video talk show host. He has been cited on CNN, Fox, NBC, ABC, CBS and appears in 280 publications a month as well as the top online blogger in the insurance industry.  He presently hosts the Let’s Get Down to Business, the daily talk show for advisers and Steve Savant’s Money, the Name of the Game, a weekly consumer show.  Steve is also a contributing author to InsMark, Life Specs and Back Room Technician.

His 30-year career has included over 2,000 wholesale and retail seminars and workshops as well as carrier conventions.  He’s also has taught continuing education courses at the Arizona CPA Society for CPE, as well as accredited courses for CLU®, ChFC®, CFP® & CLE.  Steve also has been a financial guest on KTAR, KFNN, KFYI and KFNX in Phoenix, Arizona, in addition to appearing on the nationally syndicated Business News Radio network as an insurance consultant.

Steve has been published in industry magazines such as Insurance News Net, National Underwriter, Brokers World, Mid West Broker, Life Association News, Business People, Senior Magazine and several broker/dealer newsletters.

Steve’s has spent the majority of his career focusing on tax advantaged life insurance income.

Licensing InsMark Systems

To license any of the InsMark software products, visit our Product Center online or 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.

For help on how to use InsMark software, go to The Quickest Way To Learn InsMark.

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!

Testimonials

“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

“The reason I use InsMark products is because they are so good at explaining financial concepts to all three parties: 1) the producer trying to explain the idea; 2) the computer technician trying to illustrate it; 3) the customer trying to understand it.”
Rich Linsday, CLU, AEP, ChFC, InsMark Power Producer®, Top of the Table, International Forum, Pasadena, CA

“InsMark’s Checkmate® Selling strategy is still one of the most compelling tools to bring a client to a definitive decision, based on their best case alternatives!!! Solid mathematical comparisons that prove the validity of our insurance solution!!!”
Frank Dunaway, III, CLU, Legacy Advisory Services, Carthage, MO

 

Important Note #1: The information in this Blog is for educational purposes only.  In all cases, the approval of a client’s legal and tax advisers must be secured regarding the implementation or modification of any planning technique as well as the applicability and consequences of new cases, rulings, or legislation upon existing or impending plans.

 

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More Recent Blogs:

Blog #154: Smart Alternatives to Traditional Retirement Plans (Part 4 of 5)

Blog #153: Smart Alternatives to Traditional Retirement Plans (Part 3 of 5)

Blog #152: Smart Alternatives to Traditional Retirement Plans (Part 2 of 5)

Blog #151 – The Trump Presidency: How It Will Impact the Sale of Life Insurance Retirement Plans

Blog #150: Smart Alternatives to Traditional Retirement Plans (Part 1 of 5)

 

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