For any of you who have been to our “Transition Training” program, you know that we feel the best way to service your clients is by asking questions and listening to the answers. The old sales approach just does not work. In our training we talk about why it does not work and why if you ask the right questions you can better serve your clients and help them find the solutions that they need.

Synergy is all about producers helping producers, and our Transition Training offers proven marketing and sales concepts presented by professionals with proven track records – join us to build your practice and earn more income

I was pleased to see that industry guru Lew Nason believes the same as we do. Here is his article from Producers Web – the old ways just don’t work!

Old-fashioned sales techniques don’t work By Lew Nason

Do you want to set more appointments with the right prospects and close more and larger insurance and annuity sales in just a few days? Then isn’t it time for you to face up to the fact that the old sales techniques that have been taught for the past  50 years have completely lost their effectiveness?  

People today are too smart to fall for all those old-school mind games and gimmicks. Today, sales occur 98 percent of the time because the prospect has developed some respect and trust for the salesperson. And that kind of relationship only happens by having real conversations with people.
Today, you must learn to ask the right questions to get your prospects to tell you about their problems and what they really want.

By learning to ask the right questions and getting them to tell you, you’ll be able to move the sales process forward to get the result you want.  Learning to ask the right questions is the critical key to consistently setting high-quality appointments with your ideal prospects and closing more sales. Asking the right questions is how you establish immediate trust and competence with your prospects to build strong and lasting relationships. Remember, people buy from people they like and trust. Asking the right questions is how you get your prospects emotionally involved in the sales process. People buy based on emotions and justify their decision based on logic.  If you ask the right questions, it will make them want to solve their problems right now. You can learn how to conduct a better initial interview by trial and error, which is time-consuming and expensive. Or, you could find a mentor or hire a sales coach. Or, you could choose to live with a 25 percent to 40 percent closing ratio. The choice is yours!

This is a very cool  graphic…reposted from my friend Bob Searwright’s blog:

Above The Market

The following animation (from Calculated Risk, using Census Bureau data), which updates every second, shows the wave of demographic changes from 1900-2060.

The additional numbers of older Americans (and thus retirees and, by implication, the need for better retirement saving and planning) going forward — as the Baby Boomer generation retires – should be obvious.

An Irrevocable Life Insurance Trust (ILIT) provides an estate with funds to help pay estate tax obligations. In most cases, spouses create an ILIT, designate a trustee and name their children as beneficiaries. The advantage of using life insurance to fund the trust is that if properly structured the death benefit can avoid estate taxes and income taxes.

A “Crummey”  ILIT takes its name from a famous tax case involving Reverend Crummey. See Crummey v. Commissioner.  The case set the ground work to make it possible to gift premiums to the trust without having to pay gift taxes. To pay the annual premiums on the policy, you can put in up to $14,000 per person for your family members.  Since you are essentially buying a policy that benefits your family, those premium payments would normally be considered gifts to your beneficiaries.  However, done properly, you pay no gift tax on those payments, and when you die the trust will receive the policy proceeds free of estate tax.

The big catch is administrative.  Technically, the trustee of the trust should send out “Crummey letters” each year informing beneficiaries they can withdraw the gifted amount during a specified window, perhaps 30 days.  Usually, the beneficiary leaves the money in the trust.  But the IRS considers it a tax-free gift only if the person has the right to take it in the short-term.  An annual Crummey letter proves it even if none of the kids follows up on it—as you generally hope they won’t.

The Crummey power idea—giving the beneficiary the right to withdraw money which you hope they will never exercise—can be added to various other trusts too.  However, the place most people fail is in bothering to send out the annual letters, and documenting that they did.  One recent Tax Court case, Estate of Turner v. Commissioner, didn’t spoil the deal over the failure to send letters, but you can’t count on the IRS agreeing with that result.  Get reliable professional help with such trusts, and make sure the duty to send out the annual letters is very clear so it doesn’t fall between the cracks.

So, with the complications of Crummey Letters, wouldn’t it be nice to find a simple way to implement an ILIT without the hassle of Crummey Letters? An ILIT using the Lifetime Gift Exemption may be the answer. Commonly referred to as the Simple ILIT this concept should be explored if any consideration regarding the annual gift exclusion could be an issue (like the kids won’t cooperate or there are not enough kids to fund the ILIT ) – a Simple ILIT with no Crummey Letters may make more sense.

A Simple ILIT uses the Lifetime Gift Exemption rather than the Annual Gift Exclusion.  With the current Lifetime Gift Tax Exemption at $5,250,000 – it makes sense in most cases to use the lifetime exemption to fund the ILIT rather than the annual Crummey Gifts. In the Simple ILIT as gifts are made to the trust – either one lump sum or on-going gifts – the person making the gift uses his lifetime exemption rather than the annual gift exclusion. This keeps it simple and offers some other advantages:

• Children do not have to know and additional beneficiaries do not have to be sought
• Because children’s spouses are not needed as beneficiaries, divorce complications are eliminated
• Since children are not offered a present gift, the concept does not have to be re-sold every year that the gift is made
• Since annual premiums are not required to take advantage of the annual gifting amounts, larger premiums can be put into the policy

Keep in mind, with this strategy an annual gift tax return (IRS Form 709) must be filed to inform the IRS that part of the lifetime exclusion is being used so gift tax is not triggered. Also, by using this strategy you also use up some of the unified credit exclusion for estate tax purposes so a full analysis must be done. But for many estates that need this type of planning this idea works very well and keeps it SIMPLE.

The U.S. business group of Sun Life Financial Inc. released “Well- Placed Fears: Workers’ Perceptions of Critical Illness,” a white paper based on responses from over 4,000 U.S. workers about the potential costs of a critical illness. In a release, the company noted that the report found that many workers feared the financial impact of a critical illness even more than dying from one. Such concerns may be driven by a rise in out- of-pocket health care costs, as employer-sponsored health plans require workers to shoulder an ever-rising share of medical costs.

To highlight this trend, Sun Life Financial included in its report estimates of per-person out-of-pocket medical costs for individuals covered by health insurance who experience a critical illness, including cancer ($6,740), stroke ($17,680), and heart attack ($14,234). Sun Life’s per-person out-of-pocket cost estimates for critical illness are based on claims data from over 300,000 of the firm’s Stop-Loss insurance claims.

“Our findings suggest that benefits brokers and HR decision makers might especially want to consider offering critical illness and cancer insurance if their employee base contains a significant group of women, workers age 40 to 50, or singles,” said Bob Klein, Senior Vice President of Sun Life’s Voluntary and Multiline divisions. “Further, our research shows that workers in the transportation, utility, business/professional services, and manufacturing industries also seem particularly concerned with the financial impact of a critical illness.”

According to the Sun Life critical illness white paper:

-Half of all workers, especially women and younger workers, cite cancer as their most dreaded critical illness.

-Most workers age 40 to 50 fear the financial impact of a critical illness more than they fear death, especially single workers, single women, and single parents.

-Of workers age 22 to 39, most single parents and single women earning under $50,000 fear the financial impact of a critical illness more than they fear death.

-Most workers in the transportation, utility, business/ professional services, and manufacturing industries fear the financial impact of a critical illness more than they fear death.

Other key findings:

-Over one-third (36 percent) of workers believe they have critical illness coverage, when industry estimates suggest that under 5 percent of the U.S. workforce actually have critical illness insurance coverage.

-Two-thirds (66 percent) of workers who personally experienced a critical illness had to make financial sacrifices to meet uncovered medical or non-medical costs, despite owning health insurance.

-Over one-third (37 percent) of workers who survived a critical illness found themselves out of work for four months or longer.

-Tapping emergency funds or dipping into long-term savings were the most common financial sacrifices made by workers who experienced a critical illness.

-12 percent of workers who experienced a critical illness declared bankruptcy and 11 percent lost their homes.

“Sun Life’s research on critical illness underscores that even if you have robust health insurance coverage, a significant health condition such as cancer, heart attack, or stroke can divert a significant chunk of money from your savings, or in some cases, cost you your home,” added Klein. “Based on these findings, we think many workers will want to explore ways to increase their financial security in case they experience a critical illness.”

More Information:

http://www.sunlife.com/us

Here are some inspirational quotes to get you revved up for the rest of the year!

1. “Cherish your visions and your dreams as they are the children of your soul, the blueprints of your ultimate achievements.” Napoleon Hill
2. “The key to success is to focus our conscious mind on things we desire not things we fear.” Brian Tracy
3. “Success is getting what you want. Happiness is wanting what you get.” Dale Carnegie
4. “Obstacles are necessary for success because in selling, as in all careers of importance, victory comes only after many struggles and countless defeats.” Og Mandino
5. “A real decision is measured by the fact that you’ve taken a new action. If there’s no action, you haven’t truly decided.” Tony Robbins
6. “If you can’t control your anger, you are as helpless as a city without walls waiting to be attacked.” The Book of Proverbs
7. A mediocre person tells. A good person explains. A superior person demonstrates. A great person inspires others to see for themselves.” Harvey Mackay
8. “Freedom, privileges, options, must constantly be exercised, even at the risk of inconvenience.” Jack Vance
9. “Take care of your body. It’s the only place you have to live.” Jim Rohn
10. “You can have everything in life you want, if you will just help other people get what they want.” Zig Ziglar
11. “The number of times I succeed is in direct proportion to the number of times I can fail and keep on trying.” Tom Hopkins
12. “You have everything you need to build something far bigger than yourself.” Seth Godin

Death. It is a very difficult subject. Most people do not like to talk about it, think about it or contemplate the fact that it is inevitable. For those of us in the life insurance business it is a conversation we have almost every day. How we do it varies among professionals but one fact is clear…it is a topic that needs to be explored to provide service to our clients.

The life insurance business is a great business. I always tell people what Ben Franklin use to say…the only thing that is definite in this life is “death and taxes.” Since our business is specifically related to both death and taxes, it seems as a career we certainly have job security. In our training programs we discuss the conversations that are necessary to allow us to explore these difficult subjects. Typically, the best discussions begin with a question. Then we listen. As we listen to the answers we can determine the best way to help our clients face the future and the inevitable fate that awaits us all.  In the final analysis, the conversations we have with our clients are as important as life itself.

Here is a post that can add some levity to the situation. The five best movie scenes about funerals…enjoy and be proud of what you do.

FIVE BEST CINEMATIC FUNERAL SCENES

There is an old story about the shoe maker with holes in his shoes. The idea is he fixes everyone elses shoes but doesn’t take the time to fix his own. In my years as President of an IMO I see this so often with our financial advisors. They are very good at helping their clients prepare for retirement but they tend to neglect their own needs. With that in mind I thought it would be good to share this article I received today from ING. ING (soon to be VOYA FINANCIAL ) has long been a real force in the Small Business arena with some great ideas on planning for the business owner. Since most of our advisors are small business owners this idea is relevant…we need to plan for our own retirement…

Expert Advice on Retirement Planning for Small Business Owners

by Holly Kylen; ING Retirement Coach

Just as growing a small business is no easy task, finding the right strategy to save for retirement isn’t simple, either. No matter how near or far a small business owner is from retirement, it’s essential to have a long-term savings strategy. You may be like many small business owners and have been so focused on your company that you’ve neglected your end goal. here are the do’s and don’ts:

Do pay your future retired self first

Make sure you are putting money aside into a retirement plan, paying your future retired self during your working years. Retirement success is based on a variety of factors including how much you save along the way, so fit it into your budget somehow. Just like the success of your small business is up to you, the success of your retirement is also partly up to your ability to save along the way.

Do learn about your retirement plan options as a small business owner

There are three main types of tax-deferred retirement plans geared specifically towards small business owners: Simplified Employee Pension Individual Retirement Accounts (SEP IRA), SIMPLE IRAs and Solo 401(k)s. In addition, some entrepreneurs opt for traditional 401(k)s. To determine which plan makes sense for you, you need to consider your time horizon, savings goals, your desire to access the money before retirement and, if you have employees, their participation.

Do make a list what you want to do in retirement

Like most small business owners, you have likely dedicated your life to building your business. Ramping down in retirement may be harder than you think. So, before retirement, consider what you want retirement to look like and how involved you want to be in your business. Making a list of the top five activities, hobbies, and places you would like to visit once you do retire, can help put things in perspective.

Do consider your biggest fears about retiring

Perhaps you fear running out of money in your late 80s, facing a major illness that could wipe out your retirement savings, or finding out your fixed monthly income in retirement is not enough to cover the basics. Facing these fears before retirement and planning ahead can help alleviate these fears.

Do not depend on selling your business to make your retirement dreams come true

Selling a business should be viewed as a windfall, not the core of your retirement savings strategy. You should have your ducks in a row when it comes to succeeding in retirement. Relying on selling your business when the time comes to retire is not your best option.

Do not get discouraged if you feel like you are too late

It is never too late to start saving for retirement. There are many small business owners in their early 50s who are behind on saving for retirement. Even at that stage, you can still kick your savings into high gear for the last 10 to 15 years before retirement and make up a lot of ground.

Do not miss out on the Roth IRA if you are eligible

It is a good idea to put some portion of your retirement savings into a Roth plan. If you’re considering an IRA or 401(k), you’ll want to decide whether to use a Roth version of those plans. Like a traditional IRA or 401(k), earnings in a Roth grow tax-deferred. But you invest a Roth with after-tax dollars and your eventual distributions will be tax-free as long as you’ve had the plan for at least five years and you’re older than 59½.

Do not wait until the end of the year to fund your retirement plan

Figure out what your savings goal is for the year, divide it by 12, and set up an automatic monthly deduction to put money into a retirement savings every month.

Do not touch that retirement money

It is imperative for small business owners that put money in their retirement accounts to view that money as off the table until retirement. Early withdrawals can incur ordinary income tax, plus if you’re under 59 ½, a 10 percent penalty.

So, what is the end result of setting up and funding a small business retirement plan? Well, nothing beats the happiness of a small business owner who is able to retire and have a bucket of money allowing them to do all the things they’d been dreaming about. Time to make it happen!

James Gandolfini created a legendary character in his role as Tony Soprano on the HBO series “The Soprano’s.” From the opening scene of the 1st show, where Tony was in his therapists office, to the last scene when the screen just went blank leaving us to wonder what happened, Gandolfini was must watch TV. When the news of his passing came I was shocked and saddened as like most fans of the show we were hoping for a movie at some point but more importantly to see a man cut down while still in his prime is always an eye opening experience.

And heart issues are nothing to joke about. Gandolfini was the same age as I am. Over the last two years I have become acutely aware of how possible heart issues can be as I have had three friends my age have heart attacks. In the end it seems that Gandolfini had lived a full life and his true legacy to the world can be seen in the incredible characters he leaves behind.

But what about his financial legacy? Being Tony Soprano on television made Gandolfini a very wealthy man. As it turns out his sudden death came before he could do the proper planning and the biggest beneficiary of his wealth will be the IRS. In this article we can see what happened and what could have been done. We talk about this in our training, but to see it on paper is a real eye opener. I will always remember James Gandolfini for his work on screen…but as professionals let us remember him as a lesson of why we need to be planning now.

Gandolfini’s $30 Million Estate Tax Mistake

by Dan Caplinger Jul 8th 2013 4:28PM

In “The Sopranos,” the IRS didn’t stand a chance against Mafia boss Tony Soprano. But thanks to poor planning, the IRS will be the biggest beneficiary of actor James Gandolfini’s estate. Gandolfini died with an estate worth an estimated $70 million. But in what estate lawyer William Zabel referred to as a “catastrophe” in an interview with the New York Daily News, Gandolfini’s will left about 80 percent of his estate unprotected against estate taxes, with rates that will add up to about 55 percent when you consider both the federal and state portions. What’s worse, some well-established estate planning techniques could easily have avoided much of that bill while still achieving most of what Gandolfini was trying to accomplish.

What the Will Said
You can read Gandolfini’s will for yourself, but on the whole, it has fairly simple provisions. After giving $1.6 million to various friends and relatives and making provisions for his personal property and his house and land in Italy, Gandolfini split the remainder of his estate among four people — 30 percent each to his two sisters, 20 percent to his wife, and 20 percent to his daughter. His son received the proceeds of a life insurance policy that isn’t subject to estate tax.  As ordinary as those provisions might sound, Gandolfini’s will represents a missed opportunity in estate planning terms. By leaving only 20 percent of his estate to his wife, Gandolfini missed out on what could have been an unlimited deduction for estate tax purposes for gifts made to a surviving spouse.

How to Handle Complex Family Situations
Of course, one complication is that Gandolfini’s surviving spouse, Deborah Lin, isn’t the mother of his son, Michael. Often in situations involving and children of previous marriages, parents are reluctant to leave all their money to a surviving spouse, as they want to ensure that their children won’t have to rely on their step-parent to provide for them.  However, even in cases involving children of previous marriages, the use of marital trusts can usually take advantage of the marital deduction while still ensuring that children will eventually receive the bulk of the estate.  A typical marital trust will provide for income from trust property to be paid to the spouse, and for the assets that remain after the surviving spouse dies to go to the children or other desired heirs.  You have to be careful in drafting the marital trust so that it qualifies for the marital deduction while still providing protection for your kids, but proper planning can reach a beneficial result that could have cut tens of millions of dollars off Gandolfini’s estate-tax bill.

Don’t Make a Celebrity Mistake
Gandolfini’s estate-planning errors are far from the only tax mistake among celebrities. Some are basic missteps, like Wesley Snipes having failed to file income tax returns and Nicolas Cage having an unpaid seven-figure tax bill outstanding. Lauryn Hill failed to pay taxes for years, and on Monday began serving a three-month sentence for tax evasion. Moreover, Gandolfini at least had a will. Many celebs who died unexpectedly, including Jimi Hendrix, Amy Winehouse, and Barry White, didn’t have valid wills at all, an issue which can raise a host of other complications and unintended results. So in reviewing your own estate-planning situation, be sure you’ve taken care of the following issues:

• Make sure you have a will. Doing so is the best way not only to make sure the right people get your property after your death but also to name someone to take care of minor children in your absence. Without a will, long court battles can ensue, and that will not only create emotional stress but also sap financial strength at a most difficult time.
• There are a number of other vital documents to have. A living will lets you make your wishes known about life-preserving treatment, while a health-care power-of-attorney will let a loved one act more broadly on your behalf when you’re unable to make your own decisions about medical treatment. Similarly, a durable power of attorney will let someone take financial action on your behalf if you’re incapacitated, saving a huge amount of complications.
• Finally, financial planning can be as simple or as complex as you choose to make it. With the federal estate tax exemption currently at $5.25 million, few people have to worry about tax considerations, although some states have estate taxes that kick in at levels as low as $675,000. Make sure to coordinate your will’s provisions with your investments, life insurance, and other financial planning to ensure a smooth transition if something happens to you.

No one likes to contemplate their own death. But the expensive lesson that the IRS is about to teach the Gandolfini family is one that you don’t have to learn the hard way, as long as you take some easy steps now to avoid a big IRS bill later.

I am a big fan of Holidays. Especially the 4th of July. BBQ, beaches and fireworks…what could be better for relaxing and reducing our stress levels? Because lets face it, times are hard. Yes…I said it. No matter what industry you are in, the economy is making it harder to make a living. In our industry premiums are down, commissions have been reduced and our clients are slow to make decisions. This causes STRESS.

“When you constantly perceive yourself as stressed, you never get the stress turned off and you bathe yourself in a toxic substance.” Thea Singer, MIT

Stress can be toxic. It can invade all we do and makes us less productive. It can also be passed on to others and can have an effect on our co-workers and families. Here are five simple ways to reduce stress…I am not suggesting we all become Zen masters…but lets try to do one of these and see if it helps:

• Break a Sweat – Exercise is widely viewed as a healthy outlet for stress. If we can find a routine around exercise and stick with it, this has a long-term effect on our stress levels and our over all health.
• Skip the Unhealthy Snacks – Stress eating makes us feel better…temporarily. Over time it wears down our ability to keep anxiety at bay – so skip the late night ice cream.
• Call a Friend – Talking to a friend, joining a club to make new friends – these ideas are universal but can give you an outlet ideally before you need it.
• Be Compassionate – Acceptance of others, letting go of resentments – these ideas in particular are good at warding off stress.
• Meditate – This can be a simple three-minute process. Stop in the moment and quiet your mind. Listen to the voice inside and breathe (too zen for you?)…believe me it works.

Over the years, there has been a lot of life insurance premium that has been paid or sold with the use of Premium Financing. If used properly, and if the case meets certain parameters, the idea of Premium Finance can be useful and effective. The problem with the concept is that like a lot of ideas that can generate large premiums there is a tendency to try to use it in cases that really don’t fit. We have the resources to help you with these types of cases. But first you must understand the where, when and how of the concept and when to use it.

Simply put, premium financing is an innovative alternative for funding life insurance premiums. Financing arrangements are designed to even further leverage insurance premium dollars while providing the needed insurance coverage at a more economical cost.

 Benefits

􀁺 Reduce current out-of-pocket cost for life insurance coverage

􀁺 Minimal or no impact on current investments

􀁺 Potentially favorable gift tax consequences

􀁺 Provide liquidity in a large illiquid estate

􀁺 Deferring or avoiding capital gains taxes payable from liquidating appreciated assets

Premium Financing enables individuals with a high net worth to purchase life insurance without depleting other assets or changing their normal cash flow. They are able to protect net worth, continue business development, and pass their financial legacy to future generations without altering other financial objectives.

 Eligibility

Not all can participate in such a strategy. Here are some parameters for those who would qualify for such a plan. They must:

􀁺 Have a need for life insurance

􀁺 Have a net worth of $5,000,000 +

􀁺 Have an annual income of at least $200,000 +

􀁺 Have sufficient assets to pledge as collateral for a Letter of Credit (generally to pay the difference between the surrender amount of the policy and the outstanding loan.)

􀁺 Based on underwriting can qualify for a life insurance policy

􀁺 Consign to a minimum of $1,000,000 in loans to provide premium

Considerations

Collateral

􀁺 Policy surrender value is the main source of collateral for loans

􀁺 The amount of collateral required varies between the various lending strategies

􀁺 Collateral needs are most commonly covered by a Letter of Credit

􀁺 Letter of Credit must be provided for AA rated banks

􀁺 Other items used for collateral.

􀁻 Cash

􀁻 Brokerage Accounts

􀁻 Real Estate

􀁻 Collectables

Plan Designs

Alternative Plan Designs:

􀁺 Accruing Interest – The client does not pay the interest of the loan. Rather, the annual interest due is added to the loan principal and paid out of the policy death benefit at the insured’s death. Thus, causing the amount of the loan to be greater.

􀁺 Interest paid – The client pays the interest of the loan with their own funds. The loan is for only the amount of the premiums to be paid

􀁺 Rollouts – Taking a large enough loan to over fund the insurance policy so that in time the client can take a loan out of the insurance policy to pay off the entire loan.

By working through one of these cases you can grasp all the complexities and variables involved. We work with insurance companies and credit facilities that are experienced in all alternatives, so that your various needs are met. Our resources include plan designers experienced in working with lawyers and accountants, to help you understand all of the plan designs. When combining all of these financial aspects, advisors provide clarity to clients so they can feel comfortable and confident in how their objectives will be achieved.

Now aren’t you glad you asked?