Is This Simple But Costly Mistake Lurking in Your Clients’ IRAs?

Let me tell you about a couple I knew who were married for 34 years. They managed to raise and educate four children through college. He retired from his first career early due to heart disease and then began a second one as an accountant. Years later, she also retired and was ready to enjoy life with her husband as a homemaker. Unfortunately, he died unexpectedly while doing the job he loved, suffering a massive heart attack literally at his desk while working with clients.

She was devastated and had the most difficult time coping with this sudden tragedy. Luckily, they had put away some money over time and most of it was in IRAs established years earlier, which had grown nicely. One of the great things about IRAs is that they can be easily transferred to beneficiaries without going through the timely and expensive probate process.

But this couple never named beneficiaries for their IRAs. They just assumed that the surviving spouse would inherit the deceased’s money. Then the reality of this costly mistake hit home. Unless the spouse or child is named as the beneficiary, the money must go through probate court. His IRA could not simply be rolled over into hers. The result? Income taxes were due on the entire amount instead of being able to defer them until much later. And those taxes dramatically reduced what she had hoped to receive for her grandchildren and her own living expenses.

This often happens when people forget to update their IRAs and wills. Money that could be passed down to subsequent generations becomes snared in the probate process. Parents or grandparents whose bank and IRA accounts still carry the beneficiary designation of “per stirpes” or left to “the estate” of the deceased will cause headaches and potentially cost hundreds or thousands of dollars unnecessarily.

Few parents would want their children to suffer due to the unnecessary early payment of income taxes on their hard-earned savings. Even worse, there are often cases when, after a divorce, beneficiary designations are forgotten about. Then, when a death occurs, money may actually go to the “ex” and his or her new spouse instead of the children of the deceased.

Ensure your clients don’t make this mistake with their beneficiary designations and protect them from unnecessary hassle.

When It Comes to Training, Do You Drag Your Feet?

Last week-end Kathy and I enjoyed a trip to Okoboji. On Sunday, we were sitting near the pool people watching. Several people walked past us, and we couldn’t help but notice the vast majority dragged their feet or shuffled as they walked. This got me thinking about situations in which salespeople drag their feet and how this affects their sales.

Prospecting. As my friend LeAnna Kruckeberg says, “No one ever defaults to prospecting.” Many salespeople drag their feet and procrastinate when it comes to engaging in this activity. However, it is the one sales activity that can influence your final results more than anything else.

Lead follow-up. It never ceases to amaze me how many people drag their feet when new prospects contact them. I can think of several situations where I contacted a company to inquire about a particular product or service only to have my email or voice mail ignored, forgotten or misplaced.

Sales follow-through. Very few sales happen in the first conversation, which means salespeople need to follow through if they want a sale to move forward. However, many salespeople drop the ball and fail to follow up after that initial sales call.

Information. In today’s lightening-paced world, people have a very low “wait” tolerance when they request information about your products, services or offerings. I recently read that companies (and salespeople) who get information to a prospect faster than their competition significantly increase their likelihood of capturing that sale.

Self-development. Many salespeople and their managers believe that their existing skill set is sufficient and that they don’t need to update or improve their selling skills. Sales training expert Colleen Francis reports that three-plus hours of sales coaching a month will ensure a salesperson hits 107 percent of his or her quota, while less than two hours of coaching per month sees that rep hitting 90 percent of quota. Yet many salespeople resist coaching and even more sales managers drag their feet and fail to provide effective sales coaching.

Adapt and change. If there is one thing I have learned in business and in sales, it’s that change is inevitable, which means we need to constantly adapt and modify our approach if we want to generate better results. Salespeople, however, are notoriously reluctant to change their approach, particularly seasoned veterans.

In today’s competitive sales world, dragging your feet can cost you money in lost sales opportunities—especially if your competitors are light and quick on their feet.

How to Follow Up on a Referral

My follow-up might look like this:

Dear _____,

Jane Doe mentioned your name and thought that I may be of service to you as an insurance agent.

To get to know me, please click this link to look at the following insurance specialist testimonials (attach link).

Here is a link to understand the “Client Protection Review” process (attach link) that Jane Doe is working on.

Please e-mail me back if you would like to have a complimentary conversation about how I can help you meet your coverage needs and exceed your financial goals.

Kind regards,

Doug

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Hopefully, this example will guide you the next time you’re fortunate enough to receive a referral.

Five Lunches. Four Breakfasts. More Sales!

The secret to building a solid sales business? Five lunches and four breakfasts each week. That’s nine meetings a week. (It could be 10, but who wants to meet for breakfast on Monday morning?)

The magic meeting number. Nine meetings a week equals 36 meetings a month, equals 432 meetings a year. (A solid 52 weeks a year adds up to 468 meetings, but I subtracted four weeks for vacation and other things that get in the way—conferences, personal business, sick days, etc.)

Either way, the number—432— is staggering. This is what I ask my sales team to do. Do they reach that goal? Rarely. Selling is hard work. Continuing to expand our relationships and build our networks is hard work. But what a great return on our investment.

Set goals and stretch to reach them. In order to grow you need a goal. When your goal is to bring new clients to our agency and the company, your most important activity is expanding your referral network. Think of it this way: Say you have 200 meetings a year with potential referral sources. What if half (100) of those connections were to introduce you to a potential client?

Referrals deliver sales success. We know with a referral introduction to your decision maker, you will convert a minimum of 50 percent to clients. That means 50 new clients to our agency. Sounds too good to be true? It’s not. But you need to work the process. If you work it, it will work.

Your biggest problem becomes following up on those great referrals. That’s a nice problem to have, and if you’re like me, you love having that problem. Nine meetings a week—go for it.

Avoid Mistakes Buying Life Insurance

Many people make simple mistakes when considering the purchase of life insurance.

These mistakes can have a devastating effect on the beneficiary of the life insurance and can cause unnecessary and undue harm.

Approaching the purchase of the life insurance policy with sufficient information can help avoid these basic mistakes and have the policy provide the desired protection. The three basic mistakes made in the purchase of life insurance:

1. Selecting the wrong type of coverage: A life insurance policy is one of two types: temporary or permanent. If the need is only temporary (such as debt coverage) then a temporary policy may be appropriate. These policies are known as term insurance and can be for almost any term period such as 10 years or protection to a specific date such as age 70. A permanent policy (such as whole life) will provide protection for your whole life. This policy will pay the death benefit regardless of how long you live.

2. Not buying enough protection: Many people look at life insurance as a necessary evil and the thought of a large amount of money for a beneficiary can be unsettling. But the fact remains that in the event of death income and debt will need to be offset and having enough life insurance is important. The formula for a reasonable amount of life insurance to purchase is 7 times your gross income plus the unpaid amount of a mortgage. Other considerations could be funds for retirement of the remaining spouse or funds for a childs education. It is always suggested that to error on the side of too much coverage is prudent.

3. Not being informed: Many people are not sufficiently informed about their options when it comes to buying life insurance. There are numerous policy choices and numerous company choices. It is always smart to investigate several choices before making your selection. Many well qualified insurance professionals are available to assist you in your policy selection and being informed as to your options will help you make the correct decision

The Black Swan

The Black Swan

The recent movie, The Black Swan, starring Natalie Portman as a ballerina dancing Swan Lake earned her an Oscar and the movie a nomination for an Academy Award.

In addition to the Black Swan being an important part of Swan Lake, it also has a second meaning in the financial world.

The term “Black Swan” is also used to describe a scenario involving sudden and unpredictable financial movements or an unforeseen event. Most financial forecasters admit that a “Black Swan” cannot be predicted and then is therefore outside their area or responsibility.

A recent “Black Swan” event is the aftermath of the financial disaster caused by the recent Tsunami in Japan. The damage caused physical damage which in turn caused a loss of jobs and a loss of commerce to the Japanese and world economy.

Being unable to predict what will happen in the future, can cause serious stress when it comes to your important money, money that must be depended on for a safe and secure retirement. Some people have no clue of how to prepare for the Black Swan (Tsunami) so their important funds are often at risk.

One approach many people have used is the benefits provided by annuities. Annuities are safe and secure and out of the reach of a Black Swan event.

Annuities also provide:

* Guaranteed income
* Guaranteed rate of return
* Avoidance of probate
* Protection from risk of loss

Tuesday Morning Minutes

Family finances, lies, and warning signs

We expect a certain amount of discretion when discussing financial matters: How much money you make, how much you paid for those earrings, and so forth. But there should be no secrets between spouses, right?

Well, sometimes there are. A survey by the Denver-based National Endowment for Financial Education found that among couples, 31 percent have deceived their partner about money. More than 50 percent admit to hiding cash or minor purchases, and 34 percent said they’d lied about either their income or their debt.

The consequences can be severe: 16 percent of survey participants said their dishonesty about money resulted in divorce. NEFE advises partners to watch out for these warning signs:

• Reluctance or anger around discussing finances
• Major purchases made without discussion
• Bills or charges for purchases you weren’t aware of
• Lines of credit secretly opened in your partner’s name—or yours