Best use of $5k annual premium for retirement cash?

[Golfnut2112]

I can't solve that paradigm for you. If you think they're SELLING people - and I'm using the term "selling" where you could substitute the words "assault" or even "rape"... I can't fix that for you.

Look up Van Mueller on Brokercheck. He has NO complaints. If he was doing it wrong or "fitting a square peg in a round hole", it would be showing up with a number of complaints... and he's doing between 800-1100 apps a year. There's another guy who I've followed who did similar production... but his brokercheck is spotted worse than my kids with chickenpox. Van is doing it right, even if you don't necessarily agree with it.

The paradigm shift you'd have to make... is that one could be helping their clients by predominantly selling them insurance and having a bias towards insurance.

Unfortunately, you see that bias as financially damaging to others, rather than helping them.

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If van muller is security licensed he probably is not trying to fit a square peg into a circle. I am talking about the life only guy talking about saving money future income etc. Chances are if they only have a life license, life insurance or a annuity is going to be used no matter what. Whereas a person that is fully licensed can use life insurance, annuities or securities based on the need.

 

[DHK]

If van muller is security licensed he probably is not trying to fit a square peg into a circle. I am talking about the life only guy talking about saving money future income etc. Chances are if they only have a life license, life insurance or a annuity is going to be used no matter what. Whereas a person that is fully licensed can use life insurance, annuities or securities based on the need.

Now I know you haven't heard him speak.

I've got two of his speeches on my YouTube channel. He's one of the biggest advocates of cash value life insurance you can think of. In my opinion, while I know he can sell mutual funds, he defaults to life insurance and annuities.

If you hear him, you'll THINK he's trying to "fit a square peg in a round hole", because that's where your mindset is. But he's serving his community, clients, and agents by teaching them.

He'd do the SAME JOB he's doing now, REGARDLESS of having securities licenses. I only point it out so you know that you can have a bias to life insurance and annuities, and still do it right.

 

[DHK]

Here's one for 75 minutes:

 

[DHK]

And it's another challenging perception that comes to light. It's not the compensation issue. It's the licensing issue.

Life & Annuities Only = "He only has a hammer, so everyone looks like a nail" syndrome.
Add in securities licensing = Now you're a "real" financial advisor because you can sell more stuff and are held to a firm's compliance standard (or RIA fiduciary standard).

What's missing is the higher level of thinking behind the life and annuity guy sales message. John Savage taught it, and he did $500k+ in business in the 80's. Top life and annuity agents doing 800-1100 applications a year have figured it out.

It's not the products you sell (or the licenses you hold). It's the problems and higher level of understanding that you bring to the relationship.

Now, I don't doubt that I can't "do everything". That's obvious and that's okay. There are situations where I cannot sell life insurance or annuities because it won't fit. That's a risk of being a specialist and you have to accept that business risk if you do business in this way.

But that doesn't mean I can't help them. It just means I can't SELL them. And if I refer them to "my guy" who CAN help them, didn't I still help them and aren't they willing to refer me to others - even though I didn't sell them a product? They'd refer me BECAUSE I DIDN'T try to sell them an in appropriate product!

I build a better relationship in my community, the other guy gets a sale, and I can still be referred despite the fact that I didn't sell them... because I'm there to help them make educated financial decisions that feel right to them - including the option of doing nothing, if that's what feels right.

Van Mueller was taught: "Van, every time you are in a home or an office, I want you to take care of those people, whether or not you make a commission. This is the greatest service business that has ever existed, and you have an opportunity to serve as many people as you would like and be successful, if you do some of the things I show you."

There are times when fixed insurance isn't the right solution. Sometimes they DO have enough coverage and have maximized their situation. (It's not often, but it does happen.) I congratulate them and perhaps bring up an idea or two, and leave it at that.

But it IS possible for the life insurance and annuity only agent to be a true advisor and help people to solve problems - as long as they stay out of where they aren't licensed or registered for giving any securities advice, legal advice, or tax-filing advice.

 

[Golfnut2112]

I agree it is possible to life and annuity agent to solve people’s problems. My issue is ONLY when they start using life insurance as some bank or as an alternative to a Roth. If someone can qualify for a Roth there is a pretty good chance that would be the best solution for them ( I am talking about saving for retirement) however if they don’t qualify, life insurance will probably work better than a fixed annuity.

 

[Allen Trent]

But that doesn't mean I can't help them. It just means I can't SELL them. And if I refer them to "my guy" who CAN help them, didn't I still help them and aren't they willing to refer me to others - even though I didn't sell them a product? They'd refer me BECAUSE I DIDN'T try to sell them an in appropriate product!

totally agree. I had a contractor in my house that is "only" a painter, so he was only skilled & licensed/insured to paint my house. but when he saw something not correct in my wall, he referred me to an electrician. Both are great contractors mainly only looking to sell their service in their expertise, but it doesn't make either of them better or worse for not being able to do what the other does.

I have my 6 & 63, but I know several friends & peers that are fee based planners or investment guys. All have their life licenses, but almost never assist any of their clients with DI, term life, LTC or income annuities when they are absolutely needed. I find that to be a big problem for anyone claiming to be a "financial planner". Granted, I don't like when some life only licensed discourages people from saving in 401k or Roth merely to sell big life premium commitments as if life insurance is the holy grail for every retirement dollar the person can save.

Proper place for all products in moderation for all the right reasons, refer out when outside of expertise or licensing

 

[DHK]

Btw, let's compare business models real quick:

Firm 1: Requires insurance, Series 7 & 66 licenses
Charge a planning fee, recommends a VUL, VA rollover, Roth IRA, and DI policy

Firm 2: Requires insurance license only
No planning fee, recommends an IUL, FIA rollover, DI policy, and refers out the rest as needed.


Firm 1: American Express Financial Advisors and their "Happy Meal".
Amex Sux – Because who doesnt think amex sucks
"Just like McDonald’s Happy Meal, AEFA’s financial plan happy meal always consists of the same items: Annuity, VUL, AXP Funds, and disability insurance."

Firm 2: Fixed Indexed Insurance agent only (at least you don't have the market exposure of the variable contracts). At least these producers have the word "insurance" in their firm name.

At my credit union, we were primarily selling variable annuities ALL THE TIME. Yes, we sold mutual funds (when variable annuities weren't a fit) and we finally got a wealth management platform... but we primarily sold VAs.

At least now, I'm selling FIAs and IULs... along with term and DI. Less risk for these clients, more commissions for me... to me, it's a win-win.

Licensing is not a test of morality in advice. Everyone has a unique business model (and their own inherent biases) that works for them (and hopefully for their clients).

 

[DHK]

Here's a 4-hour training video. I'll just reference two time-stamped parts.

2:33:55 - Hates to be in his office; hands his apps to his assistants. "Warm up" in the sofa. Always take water so you can bond with people. You only gave me 10 minutes. You will be able to make a decision whether I can help you and so will I. Nobody can do what you can do with this one:
1 - Do you think taxes will be higher in the future? Yes or no.
2 - Do you think taxes will be WAY higher with all the money we're going to need? Yes or no.
3 - Now I'm going to ask you a question: I bet you've had 20 advisors, and nobody has asked you this question. It'll be a surprising question - Are you ready? DO YOU WANT TO PAY THOSE TAXES? (You've just made the sale)
4 - What are you going to do to make sure that taxes don't harm your investments and wreck your retirement? (Seeds vs Harvest with Woman from the IRS story - pay taxes on your seeds or on the crops from the harvest you have?)
5 - How come you're not doing that with your money?

Van - you are easily the smartest insurance agent we've ever met! Van - Nobody asked us the stuff you've asked us! They infer my intelligence by what I've asked them, not what I've told them.


2:47:05 - What's the #1 rule of investing according to Warren Buffet? NEVER LOSE ANY MONEY! Rule #2-10: Refer to rule #1. Who are the only people that sell programs that never lose any money? US! Don't most people lose then get back to even? The Time Value of Money & recapturing investment losses.

One has $100k, one lost $50k down to $50k. How long will it take the money to double at 7%? $50k - $100k - $200k - $400k. (If he would've got out of the market, he wouldn't have the $400k) The woman starts at $100k - $200k - $400k - $800k. Did the guy make a $50k mistake or a $400k mistake? That's the TVM! You can prevent people from ever taking losses! Cash value life insurance with "THE State Farm".

Isn't that going to cause more and more volatility? Isn't it happening faster and faster? If you make mistakes couldn't you lose everything? How could you be in position to take advantage of good volatility?

Of course, this training is with State Farm, and they no longer sell investments/securities in their offices because of all the DOL issues. At least I haven't heard that they've decided to reinstate broker/dealer sales in their offices.

 

[DHK]

And I'll go ahead and add in this video of Van Mueller talking about selling 800 policies a year. He's certainly an unapologetic life insurance and annuity agent.

And yes, I want to emulate him... but in my own way and style.

 

[Golfnut2112]

Btw, let's compare business models real quick:

Firm 1: Requires insurance, Series 7 & 66 licenses
Charge a planning fee, recommends a VUL, VA rollover, Roth IRA, and DI policy

Firm 2: Requires insurance license only
No planning fee, recommends an IUL, FIA rollover, DI policy, and refers out the rest as needed.


Firm 1: American Express Financial Advisors and their "Happy Meal".
Amex Sux – Because who doesnt think amex sucks
"Just like McDonald’s Happy Meal, AEFA’s financial plan happy meal always consists of the same items: Annuity, VUL, AXP Funds, and disability insurance."

Firm 2: Fixed Indexed Insurance agent only (at least you don't have the market exposure of the variable contracts). At least these producers have the word "insurance" in their firm name.

At my credit union, we were primarily selling variable annuities ALL THE TIME. Yes, we sold mutual funds (when variable annuities weren't a fit) and we finally got a wealth management platform... but we primarily sold VAs.

At least now, I'm selling FIAs and IULs... along with term and DI. Less risk for these clients, more commissions for me... to me, it's a win-win.

Licensing is not a test of morality in advice. Everyone has a unique business model (and their own inherent biases) that works for them (and hopefully for their clients).

You forgot Firm 3 which is a combination of Firm 1 and 2 and uses whatever product addresses their need whether it’s a fixed product, a securities product or a fee based product. Just today I had 2 meetings a 54 year old man who was completely risk adverse and I recommended an index annuity. The other was 68 years old who wanted to be invested but also wanted liquidity so a fee based ETF portfolio was recommended. I could not imagine sending the 68 year old down the street because I did not have the proper license.