How the PILLAR System is Designed for Seasoned, Successful Financial Professionals

By: Charlie Gipple, CLU®, ChFC® 
Senior VP of Sales and Marketing, Partners Advantage

The Partners Advantage PILLAR System (Partners In Life, Long-term care And Retirement) is a system that packages all of the proven content that I have tested throughout my career, that Partners Advantage has tested, that MDRT-level financial professionals have taken from us and tested, and brings it all together to help financial professionals who work directly with Partners Advantage deploy this content to generate more sales. It is a client education system, a seminar system and also a complete sales system.  

Here's how it is designed to help top financial professionals. First, the PILLAR System material covers the spectrum from simple to complex.  The complex being more aligned with the needs of top financial professionals.  This material covers topics such as behavioral finance and how to overcome some of the 117 biases that may exist in the consumer’s mind. It also covers educational information on how indexed products are hedged and how insurance companies approach the overall process. It covers advanced sales strategies, legacy planning, and many other areas.

Secondly, it provides world-class client-facing material, all of which has been professionally created for you. This is nice because the top professional doesn’t always have time to create important educational materials.  This system provides it.

A third key point is that many of the best financial professionals I have known are great at speaking with clients one-on-one.  But, I do know a few that are not great in front of a room full of people.  For these financial professionals, if they can fill a room, I would volunteer myself for speaking with their clients in a seminar or one of our great speakers at Partners Advantage.

The fourth key to this system is accountability.  I used to use a personal trainer.  I didn’t use this personal trainer because I thought he knew more about lifting weights than I did.  I used him because of accountability!  When you have somebody you are accountable to, you tend to perform very well.  We want to be your accountability coach as well.  Regardless of how motivated an individual is, there can always be an accountability coach.

There is much more you need to learn about the PILLAR System and what it can offer you. Contact your Partners Advantage Brokerage Director today, to ask for more information: 888-251-5525, Ext. 700.


For financial professional use only. Not for use with consumers.

*Production results gathered from January-June 2016. Not all financial professionals in attendance experienced the same results and there is no guarantee of future success. The information provided is for your own practice management purposes and education.

The third party information and opinions included in these presentations have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Partners Advantage. Although we may promote and/or recommend the services offered by these companies, financial professionals are ultimately responsible for the use of any materials or services and agree to comply with the compliance requirements of their broker/dealer and registered investment advisor, if applicable, and the insurance carriers they represent.

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Years of Testing and Proven Sales Results - Lead to Unveiling of the Partners Advantage PILLAR System

By: Charlie Gipple, CLU®, ChFC® 
Senior VP of Sales and Marketing,
Partners Advantage

The PILLAR System is coming! PILLAR is an acronym for: Partners In Life, Long-term care And Retirement.  It is a full system of professionally designed, client-ready materials and training to explain how to make it work for you. In short, this is a vehicle (a package) that takes all of the PROVEN content that I have tested throughout my career, that Partners Advantage has tested, that MDRT-level financial professionals have taken from us and tested, to help financial professionals who work directly with Partners Advantage deploy this content to generate more sales. It is a client education system, a seminar system and also a complete sales system.  

The PILLAR System was developed as a result of an epiphany I had on an airplane when I was analyzing some hugely successful sales results that we have experienced in 2016. While analyzing the numbers, I realized the education we provided to the financial professionals though our eight-hour road shows created really impressive results!  The data shows that financial professionals increased their annuity business by 72% shortly after the road shows and their linked benefits business by 143%.  I was also looking at numbers on client seminars that I've done for some of our top financial professionals that said the seminars were getting 60%-80% appointment ratios.  So, in short, I realized, and I already knew, that what we do at the financial professional level works and what we do at the client level works.  We know the training for financial professionals works and the client materials work, so how do we connect the two together? We created the PILLAR System to do this - Partners In Life, Long-term care And Retirement. This proprietary system brings it all together and it is only available to financial professionals working with Partners Advantage. This system is, packaging world-class content in an easy-to-use format all the way from educating yourself as a financial professional to deploying that content with your clients.

Stay Tuned...the PILLAR System is coming early in 2017!

For financial professional use only. Not for use with consumers.

*Production results gathered from January-June 2016. Not all financial professionals in attendance experienced the same results and there is no guarantee of future success. The information provided is for your own practice management purposes and education.

The third party information and opinions included in these presentations have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Partners Advantage. Although we may promote and/or recommend the services offered by these companies, financial professionals are ultimately responsible for the use of any materials or services and agree to comply with the compliance requirements of their broker/dealer and registered investment advisor, if applicable, and the insurance carriers they represent.

84166

Serving Clients with Estate Planning Needs

As we head toward the end of 2016 and prepare for 2017, we wonder how the estate planning environment might change. There is even some pressure to abolish the Federal Estate Tax.  Regardless of where we stand on this issue, one thing remains and that is the federal deficit. The issues are complex, however, the chances of adopting any measure that significantly cuts tax revenue is slim. So, let's assume the current $10,900,000 portable unified gift and estate tax exemption will stand unchanged.¹

How do we effectively help clients with estate planning needs? If we are to be the catalyst sharing ideas and bringing them to fruition, the process is still paramount. As we approach the end of 2016 it is more important than ever. In my work in this space I see cases sometimes fail because the correct process is ignored. You might get lucky and stumble upon an already developed case and make a product sale.  This is neither a sure or consistent entry into the market. 

Start with Fact Finding
The successful process begins with in depth fact finding. There are many great estate planning fact finders from carriers and other sources. They all have one thing in common. They guide you in asking the disturbing questions about estate reduction. They uncover client goals and dreams, for example do they want their children treated fairly or equally. Most importantly, they contribute to developing rapport with the client. Then, when you request all those private financial documents from your client or ask for a meeting with one of their other advisors, the client's answer is yes. I see more cases fail for lack of this step than for any other reason.

Learn how detailed fact finding, teamwork, and new alternatives available to insurance professionals can make a significant difference to affluent families during the largest wealth transfer period in history.  

Fill out my online form.

¹Source: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax  

For financial professional use only. Not for use with consumers.

Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of un-recovered cost basis will be subject to ordinary income tax. Tax laws are subject to change. 

Partners Advantage Insurance Services and their representatives do not give tax or legal advice.  Accordingly, any tax information provided is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Encourage your clients to consult their tax advisor or attorney.
Income tax free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans.  Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce death benefit, or cause the policy to lapse.  This assumes the policy qualifies as life insurance and is not a modified endowment contract.

Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy's account value and death benefit. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the ex that they exceed the policy owner's cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions.

The tax and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Partners Advantage does not provide legal or tax advice. Partners Advantage cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Partners Advantage does not assume any obligation to inform you of any subsequent changes in the tax law or other factors that could affect the information contained herein. Partners Advantage makes no warranties with regard to such information or results obtained by its use. Partners Advantage disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

75534

Behavioral Finance and the Two Lane Highway

Even though the “Robo-Advisors” would disagree with me, today I would argue that in this day and age the most important thing a financial professional can do is relate to the “art” and not the “science” of their profession.  In other words, the most successful financial professionals I have ever worked with would agree that it is about the art of simplification, analogies, storytelling, managing clients’ emotions so they make healthy financial decisions, and to help them through good times and bad times.  I do believe the “science” of algorithms, Monte Carlo Analysis, alpha, beta, sharpe ratios, etc.; they are all important, but should they take a backseat to the “art” of BEHAVIORAL FINANCE?  Let me give an example of a simple behavioral analogy I like to use in financial professional and client seminars.  

A fitting analogy is that buying high and selling low in the stock market is a lot like driving down a two lane highway. Pretend you are sitting in the right lane and both lanes are at a standstill. What do you do when you notice the left lane is starting to move? You move into the left lane. Shortly after that, the left lane always comes to a standstill. Well, shortly after that is typically when you see the right lane starting to move forward. So then what do you do? You move back into the right lane. What happens to the right lane at that point in time? It comes to a standstill. But of course, that is when the left lane opens up and you hopelessly jump back into the left lane. Many of us do this over and over again to then realize that it is a losing proposition. Why does this phenomenon happen with traffic where it seems like you cannot win by switching from lane to lane? Because everybody else has the same idea of jumping into the same lane as you, the moving lane, and eventually the bubble bursts and traffic comes to a standstill. Due to the fact that everyone moved from the other lane and thus "emptied" it, the other lane opens up. At that point, everybody jumps back into that other lane and you create another "bubble“ that stalls traffic. 

That is very analogous to how the stock market behaves. Because people buy high and sell low by chasing each other, they actually do not perform as well as what the market actually does over the long haul. 

Some of the most profound studies in this area have been done by the financial services market research firm, DALBAR. Dalbar recently launched their 22nd study on investment returns versus the returns actually experienced by investors. They found that over the 20-year period of time ending December 31, 2015, the average return for equity mutual fund investors was only 4.67% even though the average in the S&P 500 was 8.19%. Thus, a 3.52% "gap" in investment returns versus investor returns. This "gap" on a $100,000 investment can mean significant damage to a pre-retirees’ or retirees’ retirement portfolio. For example, if that $100,000 gets 4.67% over a 20-year period of time versus 8.19% over a 20-year period of time that is the difference of having $249,140 versus $482,772 by the end. This is a difference of $233,632 by "buying high and selling low." And this does not include the negative impacts of taxes and trading costs for the investor that moves in and out of the market.

So again, whether it is providing simplification and analogies like the two lane highway or managing a clients emotions so they don’t “buy high” and “sell low,” today this is one of the most important topics a financial professional can use to “sharpen their axe” which is the study of Behavioral Finance.  

Learn more in the full white paper "What Robo-Advisors Cannot Do That You Can. An Introduction to Behavioral Finance," by Charlie Gipple, CLU, ChFC. 

Fill out my online form.

Questions or Need Case Assistance: Contact the Partners Advantage Brokerage Team at 888-251-5525, Ext. 700.

For financial professional use only. Not for use with consumers.

Please note that in order to provide a recommendation to a client about the transfer of funds from an investment product to a fixed insurance or annuity, you must hold the proper securities registration and be currently affiliated with a broker/dealer. If you are unsure whether or not the information you are providing to a client represents general guidance or a specific recommendation to liquidate a security, please contact the individual state securities department in the states in which you conduct business. The information in this presentation is for general use and while we believe the Information is reliable and accurate, it is important to remember individual situations may be entirely different. Therefore, information should be relied upon only when coordinated with professional tax and financial advice. You need to take into account your client's health and legacy goals. Neither the information presented or any opinion expressed constitutes a representation by us or a solicitation of the purchase or sale of any insurance or securities products and services.

76856

Postpone the R in your RMDs

This is an Advanced Markets Minute provided by and used with permission from Mutual of Omaha - Advanced Markets

As you know, starting at age 70½, owners of qualified retirement accounts must take required minimum distributions (RMDs). However, some investors may not want to take RMDs on their entire pre-tax account, as it is all taxed as ordinary income and may provide them with more income than they need. Unfortunately, as their name implies, RMDs are required. 

At the same time, today’s longer life expectancies may have some investors questioning whether they will have enough to cover their expenses in the later years of retirement.  According to IRS life expectancy tables, there’s a 50% chance of a 65-year-old man living to age 85 and the same chance of a 65-year-old woman living to age 88.  Retirees may find themselves needing income later in life to cover expenses which may increase as they age, such as prescription drugs, in-home care, and other health care related expenses. 

A client with these concerns may benefit from a Qualified Longevity Annuity Contract (QLAC).  A QLAC is a deferred income annuity that allows investors to postpone taking income from their traditional IRA or qualified employer-sponsored plan until up to age 85.  With a QLAC, the investor shifts the longevity, market and interest rate risk to the insurer, who promises to pay guaranteed income for the investor’s life. This creates a pension-like income, and allows the investor to postpone taking such taxable distributions until age 85.   

If your client is married, the QLAC can be structured to protect both the owner and the owner’s spouse from longevity, market and interest rate risk.  A joint and survivor annuity option can be selected at contract purchase, which will guarantee income payments for the owner and the owner’s spouse for as long as they live.  Simply structure the contract with the owner and owner’s spouse as joint annuitant’s and list the owner’s spouse as the beneficiary of the contract as well.  That way if the owner or owner’s spouse die prior to or after the income start date, the survivor can continue the contract and receive income payments for the remainder of his/her life.  If a return of premium death benefit is preferred, the owner can select a cash refund option. 

Like all good things, there are limits. The IRS has limited QLAC premium to $125,000 or 25% of the investor’s qualified account balance, whichever is less.  There are also restrictions on the flexibility of deferred income annuities that should be discussed with your client because the contracts are irrevocable, no withdrawals are permitted and will have no cash surrender value.  These are just a few items to note. There are other considerations with a QLAC that should be addressed prior to recommending to a client. Advanced Markets can be a resource to assist you with a QLAC. 

For the right client, a QLAC can let them postpone some required distributions and the taxes that accompany them. Call us in Advanced Markets if you have any questions. 

This information is general in nature and not comprehensive, the applicable laws change frequently and the strategies suggested may not be suitable for everyone. Clients should seek advice from tax and legal advisors regarding their individual situation prior to making financial decisions. Mutual of Omaha and its representatives do not provide tax advice. 

Contact Partners Advantage for complete Advanced Markets assistance at 

888-251-5525, Ext. 361

For financial professional use only. Not for use with consumers.

The advice provided in this communication is not intended or written by the practitioner to be used and may not be used by you for the purpose of avoiding penalties that may be imposed by the IRS or any other taxing authority.

The advice in this communication was written to support the promotion or marketing of the transaction(s) or matter(s) addressed by the written advice.

You should seek advice based on your particular circumstances from an independent tax advisor.

Harness the power of eApps and Drop Tickets

You could be missing increased life insurance business if you are spending more than 5 minutes per application! 

Partners Advantage Life Director Dan Tucker will show you how to harness the power of eApps and Drop Tickets to have cleaner life applications that are approved and paid faster. If you don't use online applications, LIFE insurance business could be passing you by! 

Top 5 Benefits of Online Life Applications: 

1. Get Paid Faster
   Cases processed more quickly
2. More Cases Placed Financial professionals experience higher placement ratios due to applications arriving in good order.
3. Less Paperwork Hassle Less paper with full case management and real-time updates on cases.
4. Full Compensation While the carriers or the eApp providers takes on some of the work, you still receive full compensation.
5. It's EASY!
   Online applications are easy to use.

Fill out my online form.

Need immediate case assistance, contact the Partners Advantage Brokerage Team at 

888-251-5525, Ext. 704 

For financial professional use only. Not for use with consumers. 

How Primacy Bias Impacts Effective Communication

By: Charlie Gipple, CLU®, ChFC®, Senior VP of Sales and Marketing, Partners Advantage

Our right brain is the underlying cruise control and the left brain takes effort to fire up. If it takes no effort from your clients to work their right brain and a lot of effort for clients to work their left brain, it is obvious one should appeal to the side that takes no effort, which is the right brain, the emotional and natural instinct side. This again is what we want to do with these “Seven Secrets to Successful Communication."

Secret 1: Primacy Bias
You only get one chance to make a first impression, which takes place within seven seconds of somebody meeting you. What the primacy effect says is that the vividness of a memory or retention of information is higher at the beginning of a presentation or sales pitch or conversation.

As you can see on the graph below, when you first meet somebody, this vividness in their memory is the highest, or almost the highest (we will talk about the right side of this chart in a bit), and then as time goes by, towards the middle of a talk, the vividness tapers down. This chart below is why, if I am going to prepare for a presentation or a sales talk, I have what I call the 50/20 rule. What this means is I put 20% towards my introduction and closing, and I will allot about 50% of my preparation time to the middle section.
 

So, with a 50-minute presentation, it is common for me to have 20% (or 10 minutes) of this presentation allocated to the opening and closing. In preparing for that 20%, I will spend around three of my six hours prepping for it.

First impressions matter and you only have one chance for a first impression. Without a great first impression, anything that follows is usually clouded in the listeners’ mind by the “bias” they formed earlier. So, it doesn’t matter how good the experience is beyond the first impression, if the first impression was negative, the following will be suboptimal to the listener versus if you otherwise gave a good first impression. Anybody who has ever presented and bombed at the beginning of a presentation knows exactly what I am talking about.

Learn more about the rest of the seven secrets: storytelling, simplification, power in the pen, feel/felt/found, confidence and recency bias...

DOWNLOAD the full white complimentary paper: Seven Secrets to Effective Communication, by Partners Advantage Senior VP of Sales and Marketing Charlie Gipple, CLU, ChFC.

Fill out my online form.

Questions or Need Case Assistance: Contact the Partners Advantage Brokerage Team at 888-251-5525, Ext. 700.


For financial professional use only. Not for use with consumers.
 
67113

The Life Insurance Coverage Gap: How Single Premium Life (SPL) Insurance Can Help

In 2015 there was a life insurance gap in our country that exceeded $16 trillion dollars. The “life insurance gap” is what the need is of American households less the life insurance coverage already in place. Back in 1960, 70% of U.S. adults owned life insurance, whether it was individual life insurance or through a group plan usually found at their jobs.  In recent years, this number has fallen to only 59% of American adults that have either an individual plan or group plan. Even more startling, only 36% of U.S. adults have individual life insurance policies versus 59% back in 1960. The fact that since 1960, American families have evolved to dual income households, the percentage of adults having life insurance should have increased, not decreased! In other words, if two people in the family are getting income, both of those income earners should have life insurance.

There are five key reasons cited by consumers for not having life insurance or adequate life insurance:

1. Affordability: In a study published by Prudential in 2013, 74% of consumers said that concerns about affordability prevented them from purchasing life insurance.
2. Cost: Related to the above, consumers consistently overestimate the cost of life insurance. In the 2015 Insurance Barometer Study, 80 percent of consumers misjudge the price for term life insurance, with Millennials overestimating the cost by 213%, and Gen Xers overestimating the cost by 119%.
3. Confusing: In that same Prudential study, 50% said that life insurance is too complicated to purchase.
4. Underestimating the Need: Consumers in the Prudential study felt that they were adequately covered. Furthermore, they felt that high face amounts are excessive, especially at death benefits above $250k. A majority of the consumers felt overall that death benefits of two to three times their annual income would be sufficient. This is backed up by the fact that the median household income in America is around $50,000/yr. and the median life insurance policy has a death benefit of $115,000.
5. Misperception about the Limited Role of Life Insurance: 63% of consumers in the Prudential study claimed they bought life insurance merely for funeral costs and final expenses. 

The confusion and misperceptions around life insurance create a perfect opportunity for SPL to help fill the coverage gap. Affordability should not be an issue with SPL because the target age group for SPL is 60-85 years of age. These folks likely already have money that they are merely looking to pass on to the next generation. Of course, if the client has “lazy money” in CDs, money markets, etc., the affordability issue can be easily overcome. Furthermore, SPL is a very simple product to understand. If the client puts $100,000 into the policy, the death benefit will immediately be $200k, for example. Note: the death benefit can be anywhere from 15% to 200% higher than the premium the client puts in based off the age of the insured. And by the way, the death benefit would be WITHOUT TAXES.
Learn more in the full white paper "SPL: Bridging the Gap from Annuities to Life Insurance," by Charlie Gipple, CLU, ChFC. It provides case examples, addresses costs and how you can find success in explaining these products to clients. 

Fill out my online form.

Questions or Need Case Assistance: Contact the Partners Advantage Brokerage Team at 888-251-5525, Ext. 700.



For financial professional use only. Not for use with consumers.

This material is intended for educational purposes only and is not intended to serve as the basis for any investment or purchasing decision. Insurance and annuity products: Are not deposits. Are not guaranteed by a bank or its affiliates. May decrease in value. Are not insured by the FDIC or any other federal government agency. This information is written in connection with the promotion or marketing of the matters addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, your clients should consult their own tax or legal counsel for advice. Pursuant to IRS Circular 230, Partners Advantage Insurance Services and their representatives do not give tax or legal advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Encourage your clients to consult their tax advisor or attorney. The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances. Encourage your clients to consult their tax advisor or attorney. The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances. Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy’s account value and death benefit. Assuming a policy is not a modified endowment contract (MEC), withdrawals are taxed only to the extent that they exceed the policy owner’s cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions. These characters are fictional and are not actual customers. Your own decisions should be made in light of your own financial situations. This hypothetical examples used are for illustrative purposes only, is no guarantee of return or future performance, and does not depict the actual performance of a specific product or its investment options. In order to provide a recommendation to a client about the liquidation of a securities product, including those within an IRA, 401(k) or other retirement plan, to purchase a fixed or variable annuity or for other similar purposes, you must hold the proper securities registration and be currently affiliated with a broker/dealer or registered investment adviser. If you are unsure whether or not the information you are providing to a client represents general guidance or a specific to liquidate a security, please contact the individual state securities department in the states in which you conduct business. Indexed Universal Life is not a stock market investment and does not directly participate in any stock or equity investments. Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; a market-indexed insurance product is not comparable to a direct investment in the equity markets. Clients who purchase IUL are not directly investing in a stock market index.

65157

November is the Perfect Time to Focus on LTC Awareness and Protection

November is Long-Term Care (LTC) Awareness Month and we’re excited to announce a new turn-key social media campaign to educate consumers on the importance of long-term care protection. This campaign includes approved content including articles, videos and images! Courtesy of OneAmerica®.

Contact Partners Advantage Brokerage Team at 888-251-5525, Ext. 700 for access to these resources to help educate your clients.

Now is a good time to have this conversation with your clients:
“When should I prepare for long-term care?” You know that you can’t buy car insurance at the side of the road just after an accident. In the same way, the very best time to look at LTC protection is before you need it, when you’re healthy and may prepare for the future you want. By choosing LTC protection now, you and your family may look forward to the future with more confidence.

Fill out my online form.

For use with financial professional use only. Not for public distribution.

Sources: 
1. Ahrens, Marty. National Fire Protection Association. “Home Structure Fires.” Sept. 2015. 
2. U.S. Department of Transportation National Highway Traffic Safety Administration. “Quick Facts 2014.” March 2016. 
3. U.S. Department of Health and Human Services. 2016, June 24. “Who Needs Care?” 
http://longtermcare.gov/the-basics/who-needs-care/.

OneAmerica® is the marketing name for the companies of OneAmerica.

Partners Advantage Brokerage is not an affiliate of the companies of OneAmerica.

Don't Enter through the Exit -Proper Ways to Approach and Illustrate IUL for Retirement Income

By Lisa "Lee" Morris
VP of Underwriting and Development,
Partners Advantage Insurance Services

An experienced financial professional knows all aspects of transferring wealth, replacing income, protecting assets and certainly providing supplemental retirement income all using life insurance products. IUL products have gained great traction in the marketplace as they address many of these aspects, but particularly retirement income. Although the main premise of life insurance is to replace a financial loss, why not accomplish even more by replacing a financial loss AND preparing for retirement. 

Here is the key if you decide to use this strategy. Make sure that you do not enter through the exit door by calculating the retirement income first and then solving for the face amount. An applicant still has to financially qualify and justify the amount of total insurance for which they have applied. Many financial professionals will simply ask an applicant how much sounds like a good idea for your retirement needs and create illustrations based upon the applicant’s response. However, the correct approach is to determine the total amount that the applicant can qualify for coverage and THEN illustrate the amount of retirement income that the applicant will be able to withdraw as retirement income without collapsing the policy. By following this technique, you can adequately meet financial justification and participate in a much smoother ride to policy issue.


For financial professional use only. Not for use with consumers.

Partners Advantage Insurance Services and their representatives do not give tax or legal advice. The material in this article is provided for informational purposes only and should not be construed as tax or legal advice. Guarantees and benefits are based on the claims-paying ability of the issuing insurance company. Keep in mind that most life insurance policies require health underwriting and, in some cases, financial underwriting.

69474

How Creative Destruction is Shaping Annuity Trends

By: Charlie Gipple, CLU®, ChFC®, Senior VP of Sales and Marketing, Partners Advantage

Creative destruction is the idea that in the process of evolution, free markets can become somewhat messy while making progress. Although the world becomes a better place because of this evolution, progress, and upgrades, the process can be quite the disruptor for those who find themselves on the wrong side of creative destruction. 

This comes to mind as you look at the latest trends in the annuity world. There have been wins as well as losses over the past four years. The variable annuity (VA) product line has struggled but fixed annuities, indexed annuities, single premium immediate annuities (SPIAs) and deferred income annuities (DIAs) have excelled. 

What is causing the creative destruction in the variable annuity world? The No. 1 instigator was the 2008 financial crisis. During this time period, many manufacturers realized that guaranteed lifetime benefits (GLBs) were too costly for them to continue offering the living benefits. This caused a number of VA carriers to leave the VA business. If they continued, they eliminated products. 

Again, with creative destruction there are losers but there are also winners. The winners of this process have been the new VA innovations introduced by the carriers over the past years. These recent VA innovations are investment-only VAs (IOVAs); VA + deferred annuity (VADAs); and structured product VAs (SPVAs), also known as buffered VAs. 

Another benefactor of creative destruction within the industry is fixed indexed annuities. FIAs have been able to maintain strong guaranteed lifetime withdrawal benefit (GLWB) features that have been easily hedged within the design of a FIA product than in a VA product. The benefits that once defined the VA world are now defining the FIA world and other annuity products. 

There is another source of creative destruction on the horizon, as the Department of Labor’s (DOL) fiduciary rule takes effect in April 2017. As of now, the DOL is mandating that FIAs fall under the Best Interest Contract Exemption in order for the financial professional to get paid commission. This upcoming rule will affect a fair amount of FIA business because the new regulation focuses on qualified money. Time will tell how significant the impact will be.

Despite the significant storms on the horizon, I believe the annuity will be able to put more emphasis on the creative and less on the destruction.

Taken from Charlie Gipple’s article in InsuranceNewsNet Magazine, August 2016: “How Creative Destruction Shapes the Fixed Annuity Market” 

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For financial professional use only. Not for use with consumers.

Annuities are designed to meet long-term needs for retirement income. They provide guarantees against the loss of premium and credited interest, and the reassurance of a death benefit for beneficiaries. 

An income rider or benefit (sometimes called Guaranteed Lifetime Withdrawal benefits, or GLWB) is an additional feature available with some annuities and generally optional and come with additional costs. Income benefits are designed to provide income options above and beyond the standard annuitization or free withdrawal features in annuities. 

Fixed indexed annuities are not stock market investments and do not directly participate in any stock or equity investments.  Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; neither an Index nor any market-indexed annuity is comparable to a direct investment in the equity markets.  Clients who purchase indexed annuities are not directly investing in a stock market index.

Pursuant to IRS Circular 230, Partners Advantage Insurance Services and their representatives do not give tax or legal advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Encourage your clients to consult their tax advisor or attorney. 

The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances.

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Single Premium Life Insurance: The Perfect Storm has Arrived

By: Charlie Gipple, CLU®, ChFC®, Senior VP of Sales and Marketing, Partners Advantage

There are several factors that are currently in place to create what I call “The Perfect Storm” for single premium life insurance. For financial professionals who currently sell annuities, this product line provides a smooth transition into the life insurance world. Thus, the purpose of the remainder of this paper.

LAZY MONEY 
At the time of this writing (August 2016), the average five-year CD is paying .80%. Even worse, the average one-year CD is paying .30%. This is only 30 basis points! Using the rule of 72, this would take a client 240 years to double their money and that is not including taxes! Even though I am being somewhat facetious with the “rule of 72” comment, when I share that statistic in client seminars the audience either laughs, sighs in shock, or both. 

Furthermore, I also train agents and clients on the fact that risk is in the eye of the beholder. In other words, if $100,000 in a CD would guarantee you $300 (30 bps) a year in interest, is that money safe? Many people would say yes, but I would argue this not the case. With inflation averaging 3.9% over the last 60 years, one is guaranteeing themselves a loss in the purchasing power of their money to the tune of 3.6% (3.9% -.30%) per year. Alas, I would argue that CDs are some of the riskiest investments a person can make! 

How much of this “lazy money” is sitting in banks earning very little? Total deposit balances at FDIC-insured institutions was $9.4 trillion in 2013, because of the “flight to safety” that has taken place since the financial crisis. This is a significant increase from the $6.7 trillion that sat in banks in 2007.1

When we look into the psyche of the person who has their money in these low paying instruments, they are not sitting in these savings accounts and CDs with the intent of getting large amounts of interest. Yes, they are attracted to CDs because they pay more interest than passbook savings, but most important to the investor is the money has more liquidity than say an annuity.

What if there was an alternative that did all of this, and then some? What if there was a product where your clients could receive interest on a tax-deferred basis that could possibly be superior to what they are getting with their “lazy money”? While at the same time, if interest rates on those CDs or money market accounts were to skyrocket, the client has the ability to cash out whatever he/she put into the policy via a “return of premium provision”? It is available and it is called single premium life.

Learn more about this topic in the full white paper by Charlie Gipple. It provides case examples, addresses costs and how you can find success in explaining these products to clients. Request the complimentary white paper HERE.  

Fill out my online form.

Questions or Need Case Assistance: Contact the
Partners Advantage Brokerage Team at 888-251-5525, Ext. 700.

1 BAI, Perfect Storm for Rising Deposits, Dan Geller, Sept. 4, 2013

For financial professional use only. Not for use with consumers.

This material is intended for educational purposes only and is not intended to serve as the basis for any investment or purchasing decision. Insurance and annuity products: Are not deposits. Are not guaranteed by a bank or its affiliates. May decrease in value. Are not insured by the FDIC or any other federal government agency. This information is written in connection with the promotion or marketing of the matters addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, your clients should consult their own tax or legal counsel for advice. Pursuant to IRS Circular 230, Partners Advantage Insurance Services and their representatives do not give tax or legal advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Encourage your clients to consult their tax advisor or attorney. The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances. Encourage your clients to consult their tax advisor or attorney. The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances. Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy’s account value and death benefit. Assuming a policy is not a modified endowment contract (MEC), withdrawals are taxed only to the extent that they exceed the policy owner’s cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions. These characters are fictional and are not actual customers. Your own decisions should be made in light of your own financial situations. This hypothetical examples used are for illustrative purposes only, is no guarantee of return or future performance, and does not depict the actual performance of a specific product or its investment options. In order to provide a recommendation to a client about the liquidation of a securities product, including those within an IRA, 401(k) or other retirement plan, to purchase a fixed or variable annuity or for other similar purposes, you must hold the proper securities registration and be currently affiliated with a broker/dealer or registered investment adviser. If you are unsure whether or not the information you are providing to a client represents general guidance or a specific to liquidate a security, please contact the individual state securities department in the states in which you conduct business. Indexed Universal Life is not a stock market investment and does not directly participate in any stock or equity investments. Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; a market-indexed insurance product is not comparable to a direct investment in the equity markets. Clients who purchase IUL are not directly investing in a stock market index.

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Seven Secrets to Effective Communication: Secret #2: Building Your Story-selling Muscles

By: Charlie Gipple, CLU®, ChFC® 
Senior VP of Sales and Marketing, Partners Advantage

Of the seven “secrets” I discussed in my September presentation at the MDRT® Top of the Table meeting and the associated white paper on this topic, I believe storytelling is the most important one. Working with thousands of MDRT-level producers over the years, I have noticed the one trait that most, if not all, have in common is they know how to take the complicated and distill it down into an easy-to-understand format, usually by using stories. 

It is not what you say; it is how you say it. 

For example: If I told my wife that her face could stop a clock, I would not get a favorable response from her. Conversely, if I told my wife that when I looked at her, time stood still. She would think I had given her a great compliment. EVEN THOUGH I SAID THE SAME THING, I SAID IT VERY DIFFERENTLY THE SECOND TIME COMPARED TO THE FIRST TIME AND WILL GET A COMPLETELY DIFFERENT OUTCOME. Rolf Jenson, the Director of the Copenhagen Institute for future studies, says this, “The highest-paid person in the first half of the next century will be the storyteller. The value of products will
depend on the story they tell.” Think about that.

Why does a teenager spend $200 on holey jeans today? Because it is a story. It is a FEELING of freedom and being a rebel. Jeans with holes in them are the best example of an inferior product being sold at a premium because of the “story.” Another example would be Harley-Davidson. The company dominates the U.S. motorcycle market, not because they have the fastest bikes or arguably the best built bikes but because they have the best story. I have had two of them and I loved them, certainly not because of their reliability but because of the “story.”

In commercials, Harley-Davidson does not talk about technology in their bikes and how their engines are made no more than a financial professional should talk about actuarial tables, tax code, COI charges, etc. on life insurance. The story that Harley-Davidson markets is that there is a good amount of comradery and “family” and a different lifestyle once you join their “club” (herd mentality) after buying a Harley-Davidson. We all see this with people that own Harley-Davidson motorcycles—it is a lifestyle.

An interesting study on storytelling took place around 50 years ago. There was a Nobel Prize winning neurosurgeon by the name of Roger Sperry who had found a way to mitigate epileptic seizures. An epileptic seizure is basically an electrical storm in the brain that goes from right brain to left brain, etc. What he found was if he disconnected the left brain from the right brain, it would mitigate these seizures. While he was doing this, he hooked up an EEG machine to both sides of the brain to measure electrical activity. He then fed the brain analytics and found that the left side (analytical side) of the brain fired up. There was nothing on the right. In other words, the brain was half asleep. Then he fed the brain “emotional” things like pictures and stories. The outcome was different; both sides of the brain fired up at that point! NO longer was the person half asleep. Stories are how we have learned since we were babies and stories are how we will learn until we die. The importance of storytelling and opening up the “mind’s eye” of our clients is paramount.

Many people think they have to be a “natural storyteller” to not bomb when trying to tell stories. This is very far from the truth. I am naturally an introvert and not a “natural storyteller” but the year that I decided to embrace and PRACTICE telling stories was the year that my career changed for the better. This was about 15 years ago, and since then, it has become almost muscle memory to me. In other words, storytelling can be taught by practicing and reading! There are great books on storytelling by Ty Bennett, and also a powerful one called “Storyselling for Financial Advisors: How Top Producers Sell” by Mitch Anthony and Scott West.

DOWNLOAD the full complimentary white paper: Seven Secrets to Effective Communication, by Partners Advantage Senior VP of Sales and Marketing Charlie Gipple, CLU, ChFC. 

Fill out my online form.

Questions or Need Case Assistance: Contact the Partners Advantage Brokerage Team at 888-251-5525, Ext. 700.

For financial professional use only. Not for use with consumers.

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Developing Business Relationships with CPAs

By: Oscar Toledo, Director of Sales and Marketing, Partners Advantage

A common inquiry I receive from insurance professionals is the request for leads. We all look for those creative ideas that will help place us in front of the right clients. One suggestion is to partner with CPAs that have mutual business values and are willing to work together to develop prospects for both of you.

The first step in getting to know possible CPAs is to get to know their gatekeepers. You will find more success getting past gatekeepers if you treat them as decision-makers. Ask them a few questions about the business and make sure you make it clear that you don’t want to waste the accountant's time – or the gatekeeper's time. Communicate your reason for the visit/call and qualify the CPA. Do they already work with an insurance professional/advisor? Ask for a place on their calendar.

Once you are in the door, here are some key questions to ask during your first meeting with the CPA:

• Who is your target client?
• What kind of services do you offer?
• What are your strengths/challenges?
• What is your ideal working relationship?

Remember, the focus is to get to know them.  

Help them understand you are looking to establish a business relationship to benefit them, your shared clients, and you.  Provide examples of the type of services and solutions you offer. 

Formalize your relationship by discussing your roles and developing a plan. You should also walk the CPA through the process you take your clients, such as:

• How often you meet with your clients
• Fact-finding
• A discussion with the client to inquire about their current CPA relationship as well as other industry professionals such as attorneys, P&C, etc. 

Be a resource for the CPA, just as you expect them to be your resource. Offer to have their website link on your website, reference them in your client monthly newsletter, or ask if they would like to write an article for the newsletter.

Having a relationship with CPAs with mutual business values will help both of you develop your prospects and strengthen both of your businesses.  

Looking for more CPA relationship resources? Contact me at 888-251-5525, ext. 124 or by email at otoledo@partnersadvantage.com


For financial professional use only.  Not for use with the public.

This material is intended to provide general information only. It is not intended to render legal, accounting, Social Security or tax advice, and the services of those professionals should be sought. Financial professionals who utilize this material may be able to identify potential retirement income gaps and introduce products, such as fixed annuities, as potential solutions. The testimonial may not be representative of the experience of other financial professionals and is no guarantee of future success.  

Always follow your firm's policies and procedures regarding review and use of third-party templates, creation and distribution of client and prospect materials, hosting of client and prospect events, offering giveaways or prizes, and your firm's employment process.

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