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Archive for February, 2016

The Year of the Annuity


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I never pitch products in my training programs or keynotes. It’s a rule I’ve lived by for decades because I believe that advanced skills are product neutral. It’s up to each advisor to decide what’s best for the client.

But there is a confluence of forces right now that is causing me to bend that rule a bit.

I think 2016 could be the Year of the Annuity!

If you’ve never done one before, it’s time to take a hard look at them.  And if you already have been using them…you might want to double your efforts for the rest of the year.

Why is now the right time?

Have you seen these markets lately?  What further proof do you need that a significant portion of retirement savings should be in something guaranteed? If today’s volatility doesn’t make you think twice, then you simply do not understand retirement reality. And despite all the shakes we’ve had so far this year, it’s possible that we’ve only seen the start of the economic storm.

Look, I’m far from a “gloom and doomer,” but there are too many indicators of trouble to ignore any longer. Retail investors are vulnerable to what happens in the markets, but we have virtually no control.  The massive movements that take place every day are being driven by forces we can’t even identify let alone understand. It sometimes feels that we are the forgotten flotsam on a churning ocean of uncertainty. We have no choice but to hang on and ride out the stormy sea.

I also believe the so-called “professionals” are equally unnerved by these bizarre and extreme swings. Having been a senior executive at a mutual fund family for a decade I know these folks have no choice except to keep hawking their portfolios and try to ride the waves as best they can or else they go out of business. Even when they see trouble, they have to stick to their discipline or they undermine people’s confidence in their management ability. It’s like the quarterback who sees the blitzing linebacker but has to stand in the pocket and take a vicious hit. Except they’re doing it with your client’s money!

The truth is that no one is in control of the markets anymore. Not the pros, certainly not the individual investor. And if you want to say the hedge funds are running things, now you’re really scaring me. Allowing for a few exceptions, this is a group that holds huge short positions in morality and ethics.

An annuity puts a portion of your client’s money into the hands of very large, very solvent and historically conservative companies who are much more tightly controlled than any bank. There may be no better way to stabilize a piece of the client’s retirement income. Take some risk off the table while you still have time!

blabber2“But what about the new DOL Rule?”

We’ve all heard that the Department of Labor is pushing a new rule that will affect how annuities are sold in retirement plans. But a couple of things about that.

First, this rule only affects with qualified plans. It doesn’t deal with annuities for assets outside of IRAs or other retirement plans…which is one of the biggest uses of the program.

Second, the rule has no impact on the innate value of annuities in the client’s portfolio. It only changes the way we will be able to provide advice and get paid.  It still has several unresolved gaps and exemptions at this point but most experts believe we will be able to survive it without too much headache.

Every insurance company and broker/dealer is working on plans to operate effectively in this new environment. So any pain you might feel will be short-lived. But the peace-of-mind you’ve given the client will last forever.

Please do not fail to recommend annuities this year simply because next year’s compensation structure is in doubt. Do it because it’s the right thing for the client. I promise you we will figure this out!

Third, nothing will happen until 2017.   Even if the rule went into effect tomorrow…you won’t have to change anything this year. And there’s a probability the whole ballgame may change after November anyway. The Presidential candidates seem to all have opinions about our industry so no one knows with any certainty what rules will affect our profession going forward.

The unique pain of taxes in a down year

Many clients will be paying taxes this year on non-qualified mutual funds that declared capital gains last year. But imagine about how angry it will make them to write a check to the IRS after they’ve lost 15% to start this year!  That tax bill is going to be a brutal one-two punch that leaves them reeling in frustration.

By placing the client’s tax-inefficient assets into an annuity you can mitigate, defer or eliminate this pain.  This “tax-alpha” can add up to a nice chunk of change and it shows the client that you’re thinking creatively on their behalf.

“Annuities are too complicated and expensive.”

No they’re not!  This is a tired old song that doesn’t play anymore.  Sure they might have riders with a bit of insurance language that can befuddle some people. But that’s why they need you.

Sit down with a great annuity wholesaler and in a half-hour they can teach you nearly everything you need to know about this product to position it effectively. You have to raise your game to be effective here, but annuities are not rocket science. They’re common sense and a little innovation that solves some major life problems.

And as for expenses, the benefits of an annuity are extraordinary and cannot be duplicated by you or the client at the same cost.

Even if you had the expertise, you could never create a plan with the same protections and guarantees. That’s called “strength in numbers” and it’s only available from an insurance company.

“The investment choices are too limited!”

Wrong again Poindexter! Modern annuities have as many or even more options than some of the most robust investment platforms in the industry. Then there’s a whole new category of “investment-only variable annuities” that are essentially managed money with tax deferral!

You have the freedom to do whatever you think best for the client. And the costs of these programs are shockingly low. I’m telling you it’s a new world out here. You need to get up to speed!

The bottom line:

Millions of investors are worried right now and with good reason. This is not a stock market prediction…it’s an emotional awareness of the client’s needs. While I may be personally certain that we are not collapsing into some extended depression, I would still want to protect my clients from fear and stress.

An annuity in some form can provide invaluable guarantees and income stability in their portfolio.

There’s an old Chinese proverb:

“The best time to plant a tree was 20 years ago. The second best time is now!”

Talk with your clients about an annuity today. Stop staring at the screen, worrying about DOL and get moving.  Rise above the noise and confusion and grab some annuity protection. Securing even a small piece of the portfolio is better than sitting around fully exposed to danger and anxiety.

Folks are scared and they need you more than ever. Be brave! Leap into that stormy sea and save some lives. You will be well rewarded for your courage!

A Screaming Opportunity!

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You gotta’ love The Man Clam!  And he’s wearing a suit and tie no less. Such a natty mollusk!

Listen…we are living through a scary B movie right now.  The stock market has just finished its worst start to any year in history and people are engulfed by a massive blob of uncertainty!

The fact is that you should be doing cartwheels!

This is an ideal time to boost your prospecting activity and reach out to new clients. There is a confluence of forces right now that make clients more willing to listen to a new advisor than at any time in the past decade.

And yes that includes 2008 because people were so clouded by anger that new relationships were toxic from the start.

Today’s horror movie includes client uncertainty, massive advisor lethargy and lack of modern marketing skills, media sponsored confusion, looming retirement, and rising interest rates.  Add to all that the general negative tone of an election year and you have a blockbuster Hollywood script for jumping ship.

The genuine fear in the minds of investors right now has many thinking that whatever they’re doing with their money is not the right thing. And that makes them willing to listen to a calm, clear, reassuring voice. Or ANY voice…since far too many advisors are not communicating effectively with their clients.

How do I prospect?

This is by far the single biggest question I’ve been getting for over thirty years.  I do have an answer, and you’re going to love it.

You prospect from PASSION!

The reality is that every prospecting technique will work if you truly love it and do it well.  The trick is to find a set of activities that you actually enjoy doing and do them…a lot. Do them until you get really good at them.

It doesn’t matter what those activities are because every advisor is going to be slightly different and there are a thousand ways to succeed. The list runs the gamut from simple direct mail to complex trade shows and event marketing. Some strategies are free or cheap as dirt…others will cost you $40,000 a month. The key is that you must enjoy them because if prospecting causes you pain or anxiety you’re not going to stick with it long enough to get good.

And anyone who tells you that you must suffer pain to grow either really doesn’t care about your success or is saying, “I don’t know what to tell you!”   So they repeat the ancient slogans of the past sales business…The Willy Loman School of Beating Your Head Against a Wall Until You Die!

“Let me help!”

“A hundred years or so from now I believe, a famous novelist will write a classic using that theme.  He’ll recommend those three words even over, ‘I love you.'”  

(A FREE Referral book to the first ten people who can identify that quote!)

I have an entire range of tools designed to help advisors grow their business. These include books, audio CDs, DVDs and workbooks.  Some cost money and some are free.  If you order anything in the next 48 hours, use the coupon code “Aces” and you’ll save a ton of money.

But here are some free tools you now that might get you started. You can download them right from the Resource Vault on the website.

The Prospecting Assessment. This is a simple questionnaire that will help us identify the activities that you’re likely to enjoy and the ones that you should totally ignore.  Share it with your manager, coach or talk with me about it. It’s a great starting point.

The Cold Call Counterpunches & Do/Don’t Checklist   I use the phone sparingly as a marketing tool but I know that many advisors are still encouraged to smile and dial. This will help you make calling a more effective tool.

The Rule of 2 is a good general guide for setting some consistent marketing activity goals. You can modify it for your own style.  

The Personal Profile Interview  is one of the best marketing/branding tools I’ve ever created. It will dramatically boost your stature in the minds of prospects and differentiate you from a mass of “plain vanilla” advisors.

The Social Prospecting Script is designed to help you approach your closest personal friends, neighbors, golf-buddies, board colleagues, etc. and bring up the idea of doing business without looking salesy.  It allows you to penetrate your inner circle and look like a hero instead of pushing too hard for their business….very powerful.

The Passion Prospecting Program

If you really want to grow a modern way, you need to attend my training program “Passion Prospecting: New Clients – New Assets – New Power!”  In this full or half-day session, I teach advisors specifically how to find those modern marketing activities that are most likely to generate new relationships and create some real enjoyment in the process. It’s a fantastic session that we can do right in your office. It’s not cheap but it’s worth every cent.

Tell your manager or better yet, grab a couple of good wholesalers and tell them you want something more than a product pitch. The best ones will be happy to sponsor a session locally. I work with most mutual fund and annuity companies and they are always looking for a way to add value. If you can pull together a group of twenty five advisors, I might even be able to find a sponsor for you. So let me know.   

The bottom line

Right now you have a rare window of opportunity to grow your business. It will take a little effort but people will pay attention. The amazing part is that you don’t even need a particularly unique or exciting message. Even something as simple as a “second opinion” call will pay off.

“Mr. Prospect, I know you have an advisor. But there’s a lot of confusion and uncertainty in the markets right now. There has never been a more important time to have a fresh set of eyes look at your portfolio. Best case is that I can confirm you’re on track and doing just fine. But I might be able to identify some potential danger spots that your current advisor simply can’t see.  It can’t hurt to have my team take a look. You don’t want to just keep plowing through this stormy sea without taking a compass reading. It’s just too tricky out here right now.”

For a little extra motivation you could warn him about the hedge-fund manager who turned into a terrifying, giant, blood-sucking leach.

Ah, nevermind…that’s redundant!