My "Bersonal" View

When we do our training sessions, we stress the importance of Annual Client Reviews. We often say it is 10 times harder to find a new client than it is to keep a current client happy. With that in mind a great sales idea that works is creating a “reminder stamp.” The stamp, which you use on delivery of the policy says in bold letters –

MUST BE REVIEWED ON AN ANNUAL BASIS –

 CALL OUR OFFICE FOR APPOINTMENT

After you review the policy with the client, remind them how important the annual review is…and then seal the deal by pulling out your stamp. Stamp the cover of the policy and write your phone number underneath the stamp. You will be amazed how many of your clients will remember what you said just because of that stamp.

As the President of an National IMO, I get the chance to work with some great producers. There are many similarities between the best, but at the same time they are all unique in their own way. One of the best in the business is Brian Gilder. He has consistently been one our top producer for the last 10 years. He bases his practice on a fundamental belief that if you can read a client’s tax return you can provide the best service and help the client make the right decisions. For years I have been asking Brian to teach what he knows. Two years ago we introduced the training that has now become the state-of-the-art training for reps who want to learn Brian’s phenomenal system. The training – “Follow the Money – Using Tax Returns as the Basis of Your Practice” has been conducted four times. Each time the feedback and reviews have been off the charts. But more important, the reps who take the course have all had great success in incorporating Brian’s ideas into what they do.

Brian is a straight shooter…like the famous Howard Cosell, he “tell’s it like it is.” I asked him to write an article for the blog so you could get a feel for how he thinks and why his training is a must for advisors who want “real” training that is applicable and duplicatable. Enjoy.

What Do Professional Athletes and Insurance Agents Have In Common?

by Brian Gilder

What do Professional Athletes and Insurance Agents have in common? People and companies kiss their ass. I have been in the financial industry for over 18 years and work with professional athletes and financial advisors. When it comes to athletes and agents in our industry it seems most people/companies are afraid to speak the truth and challenge us to be better.

Professional athletes have been kissed up to since Junior High and everyone is afraid to tell them “NO”. You wonder why 60-70% of professional athletes go broke three-fives years after they leave the game? Nobody had the guts to stand up to tell them because they were afraid of getting fired. The players I work with know that I am not a kiss up. I always tell them 1000’s of people would love to work with you; however I am not going to kiss up to you when we are working with your finances.

Our industry is the same. A marketing wholesaler invites you to a free conference that serves some drinks and food to butter you up to write insurance business under them. Next, they explain how great you and their products are and might give you a sales script to follow. That is great another 1,000 agents reading from the same script. What was better the food or the knowledge?

When you are finished with a webinar or conference do you feel 100% confident you can talk to consumers about life, annuities, long term care, estate planning or pension planning?

Do you feel 100% confident talking with a clients CPA and estate planning attorney?

Do you feel 100% confident about a consumer asking you a question?

Do you feel 100% confident that you can ask the right questions and have solutions?

Most cannot because our industry has failed to teach the basic fundamentals and have made us “financial sales robots” instead of outside the box true advisors. So how do you become a true advisor and capture more business?

Know how to read and understand the client’s tax return

While some advisors prepare reports, charts, and have the client fill out forms, I read the tax return. The tax return tells you approximately 90%-95% about the client. You will also be able to:

1. Increase your sales. (The right way)

2. Know most of the client’s investments. (How much would you pay for that?)

3. Make yourself different. (Who else is reading tax returns?)

4. Sales/marketing opportunities. (106 I have used and teach in my class.)

5. Establish professional relationships. (You can be the quarterback.)

6. Better understand your client. (The questions and answers are in the tax return.)

7. Protect you from financial and regulatory standpoint. (It can save you’re a**)

 I teach workshops that are one to two days in Los Angeles, San Diego and Las Vegas. They are not free and they are not for lazy advisors. I work with some IMO’s that will pay for your course. Let me warn you I am a straight shooter that will push you to be the best. You can check out my television and radio appearances at www.briangilder.com.  Also visit www.followthetaxreturn.com

If you want more info you can call Brian at (310) 804-3767.

My dentist, Dr. Frankel, is a good guy. He’s been my dentist for the past 5 years. Visiting him isn’t my favorite thing to do in the world but I do it because it’s necessary and the smart thing to do.Now, he hasn’t always been my dentist but the way he became my dentist is a good lesson in succession planning and one that could be quite useful in the retirement plan advisor world.

 My childhood dentist was Dr. Newman and I’d been seeing him since I first started seeing a dentist. As an adult, it was easy to continue to see him because I knew him, he knew me, and he knew my history.One day, about five years ago, I called for my annual check-up. The receptionist told me that she could get me in to see Dr. Newman in two weeks, but if I didn’t mind, Dr. Newman’s new associate, Dr. Frankel, was available tomorrow. I saw no harm in seeing Dr. Frankel. After all, he worked in Dr. Newman’s office so he had access to my records and he had Dr. Newman’s trust and confidence. I booked my first appointment with Dr. Frankel and the cleaning and check-up went smoothly. Later that year I needed another cleaning. Again, Dr. Frankel was more readily available so I took the appointment with him. By this time I was familiar with Dr. Frankel. He also knew me and remembered my history. So when I got the letter six weeks later announcing that Dr. Newman was retiring in six months and that Dr. Frankel was going to be assuming the bulk of the case load, it was an easy decision to remain as a patient of Dr. Frankel.

What I didn’t realize at the time was that this was Dr. Newman’s succession plan. Dr. Frankel had successfully transitioned the bulk of Dr. Newman’s patients and was now the primary provider for a large percentage of them. Yes, some of the patients left because Dr. Newman was gone. But most of them had stayed on and continue to stay on. Can this model work in the retirement planning world?

 Thinking ahead is a cardinal rule of business. In addition to monitoring the daily operation of your business, you need to think about the future. We ask our clients to do this, so why shouldn’t we?  And as difficult as it may be, it’s important to envision the day when you no longer will be in charge. Statistics show that more than 70 percent of small-business owners don’t have a succession plan in place (LIMRA Report 2005). Succession planning for a successful retirement plan advisor is a difficult process and an even more difficult topic to discuss. Typically there have been few solutions for the owner of a successful retirement planning practice. Most either have a family member to “pass the torch” to or they try to cultivate a valued employee to take over the business. Otherwise the only alternatives are to sell the business at a value way below market or to die in the saddle. Dying in the saddle may sound romantic, but it’s very hard on the horse. In this case, the horse is the business you’re trying to preserve. Let’s take a close look at the two main options and then see how the Dr. Frankel’s transition plan can work better than the other options.

 The Family Succession Plan: “Passing the Torch”

If you’re lucky enough to have a family member who is capable and willing to succeed you, then you’re ahead of the game. However, in choosing a successor, don’t force a member of your family to assume unwanted responsibilities. First, find out whether he or she is willing and able to assume the role. If so, make sure you’re in agreement that a moderately paced transition will provide the best environment for the company’s bottom line and overall stability. Once you decide on the family successor, most experts in the field of succession planning suggest using these steps to pave the way for a suitable successor: 

• Set a target date as your last day with the company and start shifting responsibilities ahead of time. You want to be able to oversee the transition while you’re still there.
• Set standards that take into consideration the needs of your successor.
• Decide whether to offer stock to retain key employees after the transition.

 The main advantage to the family succession plan is continuity. Most of us who own our own business like knowing that what we built will benefit our families for multiple generations. If done properly, a true legacy can be left for your family. Another advantage is that negotiations on price are usually not so painful, although most often the price of the business is paid out of the business’s profits. Or, since we’re viewing this as a legacy transfer, we sometimes discount the cost for the benefit of our family.

 Perhaps the biggest obstacle in this process is the negotiation among siblings as to who is the best choice as successor. I often refer to the classic film “The Godfather” as an example of a transfer of power and how tricky it can be. Most of us have seen the film and recall that Sonny Corleone was the oldest son. As the oldest, Sonny was the most likely successor. When he met his untimely demise, the next in line might have been Fredo, the second-oldest son. But Fredo was passed over for Michael, the youngest son. Which didn’t sit too well with Fredo.

 Not every business has a family successor in place and ready to be the leader of the business. At some point it may become clear that the burden of managing your business requires the skills of a professional with few or no ties to your family. If such a person is already in your employ, his or her ascent to leadership may prove more advantageous to the business than carrying on a “family tradition.” If it’s a valued employee within the company, you’d begin the process about six months before the announcement of the succession, similar to the way Dr. Frankel and Dr. Newman worked their plan. Key clients and accounts will be referred to and serviced by the key employee to establish a sense of familiarity. It’s important that the owner and his successor coordinate the transition and timing of the announcement. As with the family succession plan, you should follow these similar steps once you’ve identified a successor:

•  Set a target date as your last day with the company and start shifting responsibilities ahead of time. At least six months should be allowed for the transition if you want to be able to oversee it while you’re still there.
• Set standards that take into consideration your successor’s needs.
• Use the strengths of your chosen successor and be sure to emphasize those strengths during the transition period.

The Synergy Plan:  “A Succession Agreement”

Even if you don’t have a family member or key employee that can be the successor, a new idea is emerging known as the “Synergy Plan.” It has a track record of success and the ability to adapt to any circumstance.  In this process, the owner of the business identifies another organization that is familiar with the synergy transition plan.

 The key to the synergy plan is the agreement. Both the business owner and the synergy partner must agree that this is a process they want to begin. The agreement outlines the parameters of how the transition will take place, who is responsible for what aspect, and how the parties will be compensated. Once the agreement is in place, the transition plan is divided into several different areas: Each area is discussed in detail and a plan is put into place. Once the “Launch to the Field” is implemented, the rest of the succession plan works very similar to the plan that Dr. Frankel and Dr. Newman used. A slow process of funneling requests and business through the synergy partner is created. This seamless integration of the two businesses has no real effect on the reps who work there. Instead, service is increased, relationships are preserved, and a smooth transition process is set in motion.

 Eventually, an announcement is made to the field that the merger/transition is complete. As with the example of the dentist, a large percentage of the reps will stay with the new entity. This is the goal and the success of this type of approach has been changing the way businesses view their transition. 

A synergy plan can be customized for any organization that wants to implement a succession plan. Each agreement takes into account the nature of the business and the values each partner brings to the table. The synergy plan isn’t a purchase, it’s a partnership between the two groups that delivers lasting value to both parties.

Something to think about on your next trip to the dentist.

What is the 403(b) Rollunder?

 The 403(b) Rollunder is without a doubt, the most exciting estate planning and preservation technique in use today. One of America’s best-kept secrets, the 403(b) Rollunder strategy utilizes time-tested strategies that provide guaranteed results.

 The most highly taxed asset in our estate is the 403(b). Qualified money has never been taxed and our good friend Uncle Sam has been waiting patiently for many years to get his “pound of flesh.” In fact, in many cases up to 70% of your 403(b) can be lost to taxes when we try to pass on our qualified plan to the next generation.

 The key to the Rollunder Strategy is the guarantees that support all aspects of the plan. While we are alive, we take systematic steps to transfer to an IRA and then to our heirs in a more efficient manner. We cannot totally eliminate the taxes on the Qualified plan, but we can minimize the taxes today and maximize the legacy to our heirs. In this way we “rollunder” the tax and provide a lasting tax-free benefit to our heirs.

 Is the 403(b) Rollunder appropriate for you?

 In evaluating the Rollunder as a wealth transfer technique we must look at the overall goals and objectives of the individuals involved and compare them to their current estate and asset allocation. Is there significant dollars in the 403(b)? Is the money in the 403(b) being used to provide current income? Do you have a desire to see that your 403(b) is used to provide a Legacy for your heirs? Your Estate planning team considers all of these factors as they determine the value of the Rollunder technique for you. As part of this process, we can provide you with a snapshot of how the current tax environment would affect your 403(b) if you should be trying to transfer today.

 403(b) Rollunder: The Steps Involved

While you are alive, you can take steps to transfer your 403(b) to your heirs today. You can guarantee all the elements of your program by using specially designed financial products. The rollunder utilizes cash-rich life insurance with maximum guarantees as the main source of transferring wealth. This is the form of life insurance that many Fortune 500 companies are using today. It was not long ago that a person 75 years of age or older couldn’t even purchase this type of protection. But that was then, and now cash- rich life insurance has evolved over the years to include guarantees that provide coverage for the rest of your life on a guaranteed basis.

 Life Insurance with these types of guarantees is usually the best choice for transferring wealth. The reasons are many. For example, the death benefit is paid at death. It is the only financial vehicle that matures exactly when your beneficiaries need it the most. Yet another reason is that cash-rich life insurance has income tax favored treatment. Not only is the cash buildup free of income taxes, but the death benefit is as well.

 For funding the cash-rich life insurance we also use a product with specific guarantees. This product is called a Single Premium Immediate Annuity (SPIA) and is often used by government entities to provide lifetime incomes to lottery winners. The SPIA provides an income that cannot be outlived and can be utilized by either a single individual or a married couple. As long as one person is still alive the income stream will be generated. This is important, as we want to be sure that the funding of the cash-rich life insurance will not be interrupted and the benefits will be available upon death on a guaranteed basis.

 The actual 403(b) Rollunder steps are as follows:

 Transfer your 403(b) into an IRA account or the portion that you want to “rollunder”.

• With the rollover amount purchase a SPIA with a guaranteed income stream
• Begin taking the distributions from the SPIA
• Pay the income taxes on the distribution
• The net income stream is then used to fund the cash-rich life insurance with the guaranteed death benefit
• Have a trust own the policy so the benefit is outside your estate
• Name your heirs as the beneficiary

  Commonly Asked Questions  about the IRA Rollunder?

Why are taxes so high when we transfer our 403(b)’s to the next generation?

Qualified money, such as the money in your 403(b), has never been taxed and has grown tax deferred throughout the life of our plan. This means that any distribution from the 403(b) is subject to income taxes. Upon death, your heirs will also be subject to the same income taxes. In addition, if the 403(b) is part of your estate and your estate is large enough to be subjected to estate taxes, then the 403(b) will also be subject to estate taxes. This is double taxation and can eliminate up to 70% of your 403(b).

Why do we use cash-rich life insurance as part of the 403(b) Rollunder?

Cash-rich life Insurance with death benefit guarantees are usually the best choice for transferring wealth. The reasons are many. For example, the death benefit is paid at death. It is the only financial vehicle that matures exactly when your beneficiaries need it the most. Yet another reason is that cash-rich life insurance has income tax favored treatment.  Not only is the cash buildup free of income taxes, but the death benefit is as well.

Why do we use a Single Premium Immediate Annuity (SPIA) in the 403(b) Rollunder?

The money in your 403(b) can be used to provide a lasting Legacy for your heirs by utilizing the Rollunder techniques. The key elements of the plan are that the income stream that is created by the SPIA cannot be out lived. Any other investment would be at risk to market fluctuation and may not provide the funding necessary to ensure the cash-rich life insurance will be properly funded.

 How does my age affect the IRA Rollunder?

As most people are aware, cash-rich life insurance premiums are based on the age of the insured. The older we are the higher the premiums will be. On the other hand, when we use the Single Premium Immediate Annuity (SPIA) as the funding vehicle the opposite is true. The income stream is also calculated on age; however, the older we are the higher the payout will be. This helps to make the Rollunder strategy viable for just about any ages.

What happens if the tax laws change?

Tax laws change and so should your estate plan. Even though governing tax codes will evolve, the plan and strategy utilized today will continue to provide the Legacy to your heirs that you desired. Any new tax laws cannot effect the planning you have already completed.

 Can I use my own attorney for advice or help?

Of course. However, we have found that out Affiliated Attorney Network, with its high level of expertise in these strategies, cost less and actually saves time in the execution of your trust work.