Thomas R. Kestler, CFP®, CLU®, ChFC®, CMFC®, CSA®

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8 Secrets of Prospecting


How much money could you make if you had a steady stream of quality leads and referrals? We’ve all asked ourselves that same question. The reality is that 20% of all agents generate 80% of all commissions. And the top 20% of those high-performing agents generate 80% of the commissions in that group. What separates that top 4% from the rest of the field? They spend the vast majority of their time working at their maximum-income tasks. For most of us, that means face-to-face selling situations with a client.

Before we explore how you can work toward this goal, you must first take a long, hard look in the mirror. Ask yourself, “Do I have the tools that will allow me to capitalize on that consistent flow of prospects?” For example:

  • Can you close a sale? It may seem like a silly question, but if you’re not selling something on at least 70% of your appointments, you need help in this area. Too many agents blame poor sales results on poor leads, bad referrals, the weather, the season, the phase of the moon, etc. The reality is that right now you’re either a closer or you’re not. The good news is that closing skills can be learned. And, the more clients you meet, the more rapidly you’ll learn them.
  • Do you have the knowledge? Have you taken time to invest in yourself? Have you earned professional designations? Are you securities-licensed? Do you attend practice development programs? Our industry is changing so rapidly that not staying current will doom you to failure. In addition, the clients of today are much more educated than even 10 years ago. They can easily tell if you don’t know what you are talking about.
  • Are you selling multiple products to your clients or are you a “one-trick pony?” By offering multiple products, you not only increase the average income per client, but you also create greater client loyalty and, not surprisingly, more referrals.

I hope you see my point. Putting an advisor in front of a large quantity of prospects without the proper skills or knowledge is like asking a carpenter to build a house without a hammer or saw. The house may eventually be built, but the cost would be so prohibitive, nobody would buy it!

Now that we’ve gotten that out of the way, let’s talk about prospecting.

Stop Selling Features. Start Solving Problems.

Stop Selling Features header image

I never cease to be amazed at the way some advisors obsess over every change made by a vendor: “The sky is falling, the sky is falling!” Translation: rates or benefits are changing.

Your client doesn’t care, because clients buy solutions, not features.

I learned a long time ago that if you focus on features rather than solutions, you train your clients to concentrate on the wrong thing. Let’s look at two examples:

1. “My term rate is better than Company X.” By taking this approach, we are training the client that the only important thing is price. When somebody comes along with a cheaper price, you lose the client. If you don’t believe that, consider what happened in wealth management. Stockbrokers used to get $83 to execute a trade. Now people expect trade execution to be free.

You should instead focus on providing a policy that will deliver a known amount of cash at an unknown point in time, such that a surviving spouse and children will have stability and comfort following the untimely death of a parent and spouse.

2. “Cap rates (fees, participation rates, riders, etc.) are better with Company X than with Company Y.” Again, your client doesn’t care, let alone understand, the difference. By focusing on these features you distract them from the true solutions offered by an annuity. Try this positioning instead:

  • “This annuity will offer tax-deferred growth, protection of principal, and earnings slightly better than a certificate of deposit (CD).”
  • “An annuity is the only financial instrument that can guarantee an income that you can’t outlive.”

Or, use a feature to solve a problem.

  • “John, I know you are/will soon be taking required minimum distributions (RMDs) from your IRA/SEP/TSA/401(k). If I could show you a way to take your RMDs every year, and at your death pass on to Mary more than what you started with—even if you never earn a penny in interest—would you be interested?” (A great sales idea. Contact us to find out how this is done.)
  • “Helen, an income rider provides two safety nets on your policy. First, it provides a minimum step-up every year on your income value, protecting you against market volatility during the accumulation phase. Second, once you begin taking income, it provides a guarantee that if your account goes to $0, the insurance company will step in and continue your income payments as long as you live.”

It’s fine if you want to gripe about intricate policy changes with colleagues or attendees at an industry convention, just don’t do it in front of clients. By focusing on solutions, you’ll have happier clients and less heartburn.

To learn about the great sales idea mentioned above, or to get more information on how to differentiate solutions over features, please contact one of our dedicated annuity representatives at (800) 699-0299.

Three Year-End Charitable Giving Ideas

During this holiday season, many of us consider making charitable donations to a favorite cause or institution. In fact, according to the Giving USA Foundation’s annual report, American individuals gave $292 billion to charity in 2018.1 Many of the donations were large gifts as opposed to a few dollars here or there. If you’re considering making a significant gift, keep in mind these three strategies that could help both you and your charity of choice.

Donate Appreciated Assets

Some economic indicators suggest that we may be approaching the end of the longest bull market in history. Now would be a perfect time to consider donating appreciated assets—like stock that has grown in value—to not only support your favorite charity, but also receive a tax deduction and eliminate a future tax liability.

For example, let’s assume you have a stock worth $50,000 with a cost basis (the purchase price) of $20,000. If you sold the stock today, you would pay capital gains tax on the $30,000 gain. Assuming a 15% capital gains tax rate, the tax would be $4,500. However, if you direct your broker to transfer the stock directly to the charity, you receive a deduction for the entire $50,000 gift and the charity pays no tax on the subsequent sale.

On the other hand, if you want to donate a stock that declined in value, you would be better off selling it yourself and using the loss to offset other gains or to generate a deduction for yourself before donating the net cash.

Heap Your Donations

For 2019, to receive a deduction for charitable gifts over the standard deduction, you must be able to itemize your deductions. The chart below shows the standard deduction for the various filing statuses:

Filing Status Standard Deduction Amount
Single $12,200
Married Filing Jointly & Surviving Spouse $24,400
Married Filing Separately $12,200
Head of Household $18,350
Source: Internal Revenue Service

Let’s assume that you and your spouse are contributing $6,000 per year to your church. Since this amount is below the Married Filing Jointly standard deduction of $24,400, you would receive no additional deduction other than the standard $24,400. On the other hand, if you were capable of “heaping” the next five years into 2019, you could donate $30,000 before year end and take a deduction for the full amount. Do a quick check with your accountant to make sure the strategy works for your personal situation.

Donate Part of Your IRA

Typically, when a taxpayer reaches 70½, they are required to begin taking required minimum distributions (RMDs) from their IRA accounts, which are fully taxable. However, in 2015, a minor change to the tax law allowed taxpayers over 70½ to transfer up to $100,000 annually from their IRA directly to a charity, tax free.

In situations where these retirees don’t need the additional income, it may be more tax efficient to have the RMD amount (or more) transferred directly to the charity of their choice as a charitable rollover. This strategy satisfies the RMD requirement without generating additional taxable income to the owner.

Making a financial gift to a worthwhile charitable organization can be a game-changer to the organization itself. More likely, your holiday season will take on a distinctly different feel, knowing that you shared your wealth with those who need it more.

1 Giving USA 2019: The Annual Report for Philanthropy for the year 2018, IUPUI Lilly Family School of Philanthropy, 2019.

10 Things to Consider before Resigning from Your Broker/Dealer

Business Discussion

Transition is tough. Nobody leaves a broker/dealer (BD) they’re happy with. In fact, the pain you’re experiencing with your current BD has to exceed the pain of moving on, especially since the old days of “block” transfers are long gone. Today’s transitions are like going through a divorce and remarriage in 30 days with 300 children, but at some point, you may realize it’s worth it. Here are 10 things to consider before notifying your current BD of your intent to move on.

1. Make a firm decision. This may sound simplistic, but it’s essential. All too often, advisors think about leaving their BD and start checking into options. Then they begin to stew over all the paperwork, the effect of a change on their clients, the interruption to their business, etc., taking it all the way to the five-yard line without going for the score. After all that effort, they end up staying with their current BD and their practice often begins a slow death spiral. The point is, be decisive. Either move on to greener pastures or stay where you are and add more water. Both are good decisions. Anything else is a recipe for disaster.

2. Identify your new home. This is no easy task. You must take your time and do your due diligence. Every BD has a unique culture and set of offerings, so consider everything they provide, not just payout or incentive summary. Be sure their culture is in line with yours, because once the “honeymoon” phase is over, you’ll have to work with their people and processes for a long time. You don’t want to set yourself—or your clients—up for another divorce.

3. Read and understand your rep agreement. That document you signed years ago not only outlines your obligations to the firm while employed, it also outlines your obligations—and theirs—upon resignation. It’s important that you understand and abide by their pre-notice requirement. Many agreements require a 30-day pre-notice on either party. This protects both you and them from an immediate termination. This agreement should also outline their obligations regarding payment of commissions post-termination. With that in mind, it’s always best to set your termination date after any large, recurring commissions. For example, if you receive large deposits at the end of each calendar quarter, your termination date should be after those are typically received.

3 Keys to Producer Success

I am often asked by new and old agents alike, “What does it take to become really successful in this business?”  What I’ve learned over the years is that there is no one thing that, like a magic pill, will guarantee success.  Instead, there are three key things that, when applied consistently, can keep you on track for success and help you avoid failure.

1. Relationships. The relationships you build, nurture and value could be the single most important success strategy in your business – and your personal life.  While we cannot choose our family, we all make choices daily on who our friends are, who our idols are, who we hang out with, and who we choose to marry.  These choices have an immeasurable effect on who we become and how we see ourselves.  Just like the statement, “You are what you eat,” you become like those with whom you choose to associate.  The books you read, the TV shows you watch, the recordings you listen to, all combine like tiny threads to form a rope of bondage – or a lifeline.  Which one do you have?

Asset Distribution: The Next Big Wave

The buzzwords over the past 10 years have been asset accumulation and asset allocation.  I propose that if you jump on this bandwagon now, you may be following the wrong paradigm.

Don’t get me wrong, asset accumulation and allocation are still very important. But the next big wave in our industry will be asset distribution.

With 76 million baby boomers approaching retirement, how prepared are you to provide them with a safe, dependable, consistent stream of income?

The skills we acquired in order to have been successful in the past will continue to serve us well into the future — if and only if we use those tools properly.  If the wrong tool is used in a particular situation, the results could be disastrous!

Let’s look at an example:

401(k) Rollovers: A Legal Liability?

Did you know that, as a licensed insurance agent, you could be breaking the law by transferring funds from a 401(k) into a fixed or fixed-index annuity?

If the 401(k) was invested in securities, you could potentially be in hot water because the SEC prohibits unregistered individuals from giving investment advice. In practice, however, the SEC rarely pursues unregistered individuals. FINRA, with its focus on broker/dealers and their registered reps, has little time to oversee insurance-only agents. This type of enforcement tends to be left up to each individual state’s insurance department.

Several states have laid out specific regulations as to what advice can be provided by an insurance-only individual. Conversations around risk tolerance, goals, and general asset allocation are fine. But making recommendation to liquidate securities or which specific security to liquidate are considered investment advice and are illegal unless you are appropriately licensed.

The same rules apply to any other qualified plan rollover, annuity replacement, or brokerage account/mutual fund liquidation.

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