In many of my classes, I spend time on two important words: delayed gratification.
And when I teach it, people understand how that plays a role in almost all of life, especially in financial planning.
If you wanted to become a surgeon, think about how much life you have to give away for 12 -15 years of formal education after high school just to pursue this career.
If you wanted to become a professional athlete, think about all the food you’d have to give up in order to maintain a diet to perform at an elite level. Or, the dedication and grind of consistently working out, even on the days you don’t really feel like doing it.
Now bring it back to financial planning.
If you’re going to have the discipline to be able to put yourself in a situation where you have tremendous financial security, meaning you have financial peace of mind and serenity, you have to embrace delayed gratification for three or four decades. That’s not easy to do – and the statistics prove it.
According to a recent study by GoBankingRate.com, 58% of Americans have less than $1,000 in savings. A Bank Rate study found that 1 out of 5 Americans save nothing at all for retirement or emergencies. An additional 20% of Americans save 5% or less of their income.
The main reason cited for the lack of savings is expenses, but people are also willing to admit that not all of it is essential expenses. The same study found that the average American spends more than $2,900 a year on restaurant food, takeout meals, prepared drinks and lottery tickets.
That is why the role of a financial professional is so significant. People need help embracing delayed gratification. You’re managing human behavior and people need to feel understood and to have an advocate in their corner guiding them on the right path. That means the Internet to me is not a complete financial planning solution. Never has been, never will be.
When it comes time to think about the topic of saving money and planning, think about how delayed gratification plays out over the course of someone’s life.
If you have a young individual that comes out of college and during the first 10 – 15 years of their adult life they do a really good job of saving money, they’re making all kinds of sacrifices. They are doing a really good job of embracing delayed gratification.
There’s not a lot of fun, toys, and extras because they’re doing the right thing. This means maybe putting off buying the new car in favor for continuing to drive the high mileage one they already own. They’re sacrificing drinks and a night out to make sure they are saving money. They’re trading an expensive vacation for one that’s more affordable, although maybe less glamorous.
In today’s age of social media, this has become even tougher to do. Posts online are usually people’s highlights – the vacations, fancy dinners, concerts and other events. It’s amplified the Fear Of Missing Out and the desire to keep up with the perception of other’s lifestyle. It’s become more important than ever to have a plan and a partner to stay on the right path.
Now, compare the previously mentioned saver to the more typical American right out of undergrad. Anything they want, they’re buying. They’re not only spending all of the money they’re making; they’re spending more than they are making. They’re racking up the credit card debt. When one credit card fills up, they open up a second one.
Business Insider reports a study that more than 40% of all U.S. households carry credit card debt, with an average balance of $5,700. It gets worse because when you exclude the households who pay their balance in full every month, the average debt is actually $9,333.
For the individuals who are spending money and not worried during the first 10 or 15 years of their adulthood, life is good! They’re taking trips that they’ve never dreamed of before. They have the toys that they’ve always wanted. That person’s life compared to the savers is way more fun!
But as time continues to tick by, the situations begin to flip.
Now, the saver gets into their 40s and into their 50s, and all of a sudden, because they’ve embraced delayed gratification, they’ve saved money, they’ve done things the right way, money begins to be almost a non-issue in their life.
There’s not much stress about money. They might have other issues that they couldn’t control that cause stress, but money is not a problem. Money is not causing anxiety or marriage problems. Through the art of that delayed gratification, slowly but surely over time, they’ve put themselves in a situation where they’re totally worry-free as it relates to money.
Now, consider the spender who had all that fun, who got everything quickly in their life. Now, all of a sudden, they start to realize the trials, tribulations, fears and anxiety from the years of not embracing the right choices and behavior. Money becomes a huge worry and a source of stress and anxiety.
But it didn’t get felt until multiple decades after they had all the fun.
That’s why the role of a financial professional is important. It’s your job to help clients see the future that they are creating sooner and to help clients understand that saving isn’t easy, but it’s the right thing to do.
I want to talk about why this business should get easier and much more rewarding over time if you have a systematic process for getting in front of your clients.
Let’s start with some fascinating statistics that demonstrate why this is the case. Then, I’ll show you the secret of how to give your income a boost while working less.
First, we’ll talk about a cardinal sin in this business: giving up on potential clients too soon. Often when reps meet with a new prospective client, they’ll work desperately to get them to buy something. Then, if nothing is purchased, they throw the potential client away.
However, we know that one-third of your clients will buy two to three years after the initial meeting. Two-thirds of your new clients will buy in the year you meet.
By throwing potential clients away when they don’t buy, you’re missing a third of the people you could potentially sell. Think about all the premiums you could be missing out on.
Second, after you’ve made the first sale, future purchases will require much less effort on your part.
Once they know you and trust you, clients will be more willing to follow your advice. Typically, the more purchases a client has made, the smaller the time and effort on your part to close a new sale. How this phenomenon can change your business is truly eye opening.
Statistics tell us that the average client will buy your risk management products seven separate times. These include life insurance, disability insurance, annuities, and long-term care. Your best clients will buy 12 or 13 times. Yet, the sales effort required actually goes down with each subsequent sale!
Consider that it takes approximately 23 hours of effort, eyeball to eyeball, to make a sale to a new client. However, the second sale takes less than three hours, and every sale after that requires slightly less time as you build the relationship.
If you build trust over time, clients will follow your advice much more quickly. However, to benefit, you must have a systemic process for consistently getting in front of your clients.
Third, the size of the premium grows with each purchase that a client makes. The statistic that proves this point is so jaw dropping that most people don’t believe me at first.
It relates to risk management products and the underlying premium earned from those products: on average, every single sale is greater in premium than the summation of all the previous sales.
Let me offer an example. On average, the premium of that fourth sale per client will outweigh the premium of the first, second, and third sale combined:
4th sale premium > 1st + 2nd + 3rd premiums
At first glance, you probably don’t believe it. Yet when selling risk management products, which require immense trust through years of relationship building, it makes perfect sense.
The lower-end premium products can be bought simply through logic alone. For example, suppose you meet a young family with no life insurance and you help them understand their needs – let’s say that’s $1 million on the breadwinner and $250,000 on the stay-at-home spouse. For them it’s a logical decision to buy that in term insurance. At a very low premium and short policy duration, they’ll make the decision to purchase it rather quickly.
However, to explain why they need to buy permanent insurance and spend thousands of dollars on annual premiums, you need to focus on building trust. Trust is earned over time, so life insurance clients are much more prone to buy term insurance early on, before converting to permanent insurance as they begin to have a higher degree of trust in their advisor.
The same logic holds true for retirement products like annuities. That’s why the premiums get bigger and bigger with the passage of time.
The points that we covered show that trust is built over time, and it may take 10 years or more to get there. However, you will be rewarded by spending less time per sale and earning much higher premiums.
To benefit from this tremendous opportunity, you need to have a process for getting in front of your clients on a systematic basis to build the necessary trust. The secret to doing that is the annual review.
The annual review provides an opportunity for a face-to-face meeting and lays the groundwork for a mutually beneficial relationship based on trust. Our objective is to work with the client to help them take complete ownership of the journey to long-term financial security.
We want our clients to feel continuity in our planning process, from where they started, to where they are going. They want to know that we have a plan and that there’s light at the end of the tunnel. Financial security is a 30- or 40-year journey, and they will have the confidence to place increasing trust in you with each passing year.
With increasing trust, sales opportunities will present themselves, and your clients will become more valuable the longer they have been with you. As I mentioned earlier, the average client buys seven separate times. Through annual reviews, you open additional cases and do so with less effort and higher premiums. You’ll be able to introduce products such as permanent life insurance and income annuities with ease. All the while, you’ll be earning more and having the kind of work-life balance you’ve always wanted.
Imagine you’ve met with your client and gave great presentation explaining exactly how much life insurance they need. Your client’s been nodding their head in agreement the whole time.
As a financial professional, it would be really easy to pat yourself on the back and simply continue on to the next item on your agenda.
However, in many cases, you may find that unexpected difficulties arise when it comes time to implement your plan and purchase the life insurance policy.
As a result, it’s important that you uncover clients’ objections early on in the planning process. Here are four questions to accomplish this goal and get to the bottom of your client’s real life insurance objections.
After going through my presentation, this is the first question I would ask. Almost every time, the client would say, “yes.”
What this told me is that, from a logical perspective, they understood everything in terms of my life insurance recommendation. They understood the number I was recommending and what it was designed to do.
After my client would say “yes,” I’d usually respond along the lines of:
“It’s at this point in the plan, that nearly 100% of my clients say that it makes sense to them because I just mathematically walked them through how we calculated their life insurance number.
“But let me ask you this question: At this point in time, what percentage of my clients that all just said ‘yes,’ actually take action and move forward with this recommendation?”
Then I’d stop talking and let the client respond. They would throw out answers like 90%, 85%, and 60%, and eventually we’d get to the correct answer, which is about one third. This is an important lead in to the next question.
In other words, what you’re asking them is, “Why is it that nearly 100% of clients understand their life insurance recommendation and think it makes sense, but only one third of them actually move forward with it?”
The reality is that this question is asked from a third-party perspective, but the only way they can answer it is from a first-party perspective. They have not met the two-thirds of clients who did not move forward with the life insurance recommendation and therefore can not answer the question from any other perspective besides their own.
Now, you’ll hear the client’s real issues. This may include things like they just don’t believe they’ll need the life insurance, the life insurance amount seems too large, or they think if they died their spouse would simply get remarried.
There are tons of potential answers that could come here, but regardless of what does come up it’s important to let them air them out and truly listen. Once they’re complete, I’d take a deep breath, look at them and say…
There are two potential outcomes from this question. The first is that they say that it is an issue for them and you then have a chance to have a conversation about it.
The second is that they say no. In this case, I would ask if they could think of any other reasons why clients don’t move forward with the life insurance recommendation. Then, again, I’d follow up with, “Could this be an issue for you?”
I would continue this process until I felt comfortable that we had truly aired out the real issues. Once I felt satisfied that I had addressed them to the best of my ability, I’d then close out the conversation and move on to the next item on the agenda.
Regardless of the issues your clients raise about life insurance, getting them to open up is a huge accomplishment.
The mistake so many reps make during their presentations is that they only scratch the surface when they check in with their clients. It becomes so much harder to implement the plan down the road because of everything that’s been left unsaid.
Asking questions, truly seeking to understand, will not only help you better understand your clients – it will also help your clients better understand themselves. This happens naturally when they are forced to verbally articulate their thoughts. Regardless of whatever action they take, this alone is a tremendous gift that an advisor can give their clients.
The younger representatives who I mentor often ask how I became motivated so quickly. A big factor in my development was my environment and, I’ll be honest with you, I got lucky.
I came up in one of the best environments an advisor could ask for in the early years of my career. Most of my colleagues were 15 to 25 years my senior – the salt of the earth, people who lead by example, people I trusted, who cared about others, and people you would love to have in your community.
Because of all this, I trusted them completely when they told me about the importance of life insurance, and disability insurance, and saving money. And when they shared stories of what they accomplished with their clients, I soon felt as if I had embarked on a lifelong mission.
Another important aspect of the culture I came up in was high expectations. If you did not qualify for the Million Dollar Round Table by the end of your third year where I worked, you were terminated. I wasn’t going to wait until my third year.
I bought a poster board to cover my bedroom door. From the board’s lower left corner to the upper right corner, on a diagonal line, I wrote the letters “MDRT”; from the left upper corner to the lower right corner I drew another diagonal line, and I wrote “Rookie of the Year, 1990.”
I focused on both of those things. I looked at them every single day. There were many days I felt defeated and many days I worked long hours, but I never went to bed without walking past that chart.
By the end of 1990, I qualified for the Million Dollar Round Table, and I won the prestigious rookie of the year award. I qualified for the Million Dollar Round Table each year since entering the business, and even achieved “Court of the Table” on three separate occasions. All of this was achieved in my 20s.
I can’t stress enough how I owe my early success to so many people. I simply followed the instructions offered by my superiors. When I had questions, I went to my mentor who always helped me. When dealing with cases that I couldn’t quite get my head around, I worked jointly with colleagues, who were always there for me.
I remember at the end of my first quarter hearing the importance of learning via joint work. From then on, I made a point to participate in a minimum of one joint-work appointment each week. I participated in as many as four in some weeks.
During my first calendar year, I completed 84 joint-work appointments. After the 30th meeting, I felt I could sell better than some of the people that I collaborated with, which often frustrated me, but I always managed to learn one or two things from every meeting, which ultimately benefitted me down the road.
I’m the first to admit that I’m not smart enough to invent original sales concepts. Every single thing I know about sales was absorbed from others through my dedication to learning and my ability to soak up information like a human sponge in the first decade of my career.
Most of my material comes not from my victories, but from multiple defeats, the challenges and rejection I faced daily. While there were many tough days, I have such fond memories, and the experience molded and shaped my entire future.
Much of who you are today is the product of your environment. Your environment is more than just other people, but people play a big part of it. Think about the people in your life. What expectations do they set for you? How would you describe the culture they create? Are they available and able to provide you with support?
Take control and make a conscious effort to be with people who inspire, guide, mentor and challenge you to become the best you can become. Don’t limit yourself just to the people in your office. Seek others across the country or form a study group. With technology, most geographic limitations have been removed.
As you are building this environment, remember that it takes time. You can’t just snap your fingers and have all the right people in your life. But in the meantime, you can always learn from others through books, blogs, audio programs and more. Find the people who have achieved the most success in your field. Dive deep into their content and figure out what makes them tick. Commit to continually seeking these individuals out and it will have a dramatic impact on your life!
As we approach the end of this year, there’s no better time than now to spend some time in reflection and set your goals for the coming year.
Ever since my first year as an advisor, I always challenge myself to think big – and this year I want to challenge you to do the same. However, before you get started on this exercise, first you need to know what thinking big really means.
This is a topic that I talk a lot about in my workshops and training programs. Often times I ask the reps I’m working with to rate themselves on a scale of zero to ten. Ten means that you are tapping into your entire potential and zero means that you are nowhere close.
On average, most people give themselves a score somewhere around seven, a couple people will say eight. For the vast majority, I think that this shows that we are setting the bar too low.
Research shows that about the top 25% of financial advisors made over $160,490. On top of these salaries many advisors earned bonuses, so realistically you could assume the top five to ten percent are more likely earning between $200,000 – $300,000.
However, if you look at the top financial advisors in the U.S. who work with individual consumers and families, you’ll find an enormous gap. According to Forbes, the top advisor in the United States is Jeff Erdmann. He has $7.1 billion in assets with a typical household account of $36 million.
I feel fairly confident in saying that he made at least $25 million in net revenue. Are there a lot of advisors who are making this amount? No. But this is proof that it is possible.
Think about it from another perspective. The world record for the one-mile run is 3 minutes and 43 seconds. That’s the fastest a human has ever done it. At 51 years old, there is no way that I could run it under 4 minutes. However, 3 minutes and 43 seconds is the bar.
With this in mind, on a scale of zero to ten in your one-mile run, you don’t give yourself a ten unless you’re setting the world record. Makes sense, right?
The same holds true for your career. If a financial advisor making $25 million sets the bar as a ten, then how is it justifiable that an advisor making $300,000 would give themselves an 8 or 9 rating?
Now, this brings up a whole another topic that I think is a sensitive one, which is that not everybody needs or wants to be that $25 million per year advisor. For some advisors, they’ll say it’s not important to them. But I think that hurts us to think that way.
There’s a healthy balance between being happy with where you are in your life and what you aspire to be. If you feel that you never have enough, if you’re never happy, if you’re always looking for more and you never stop and smell the roses, life is pretty miserable.
It’s up to you to find the balance between feeling blessed and happy for what the good Lord gave you while simultaneously stay inspired and motivated to tap into your full potential. There’s an art to it.
But what becomes problematic is when reps immediately start thinking about all the things that they have to give up in order to reach their full potential.
They think if I were to make $25 million per year, I wouldn’t be able to have a great relationship with my wife or husband. I wouldn’t be able to have a great relationship with my kids. I wouldn’t be able to coach my son’s T ball or my daughter’s soccer.
I call that The Power of the AND versus the Tyranny of the OR. The “OR” is the bad one. In this mindset, you have to choose between the things you want in life. By choosing one, you miss out on the other.
On the other hand, there is The Power of the AND. Think about what your world would look like if you could figure out how to earn $25 million and be happily married, have an unbelievable relationship with your children, have unshakable faith, great friends, superb health, and lots of fun hobbies.
That’s a well-balanced life and it is possible! But you have to believe it in order to achieve it.
That’s a lot to think about, but the most important thing is that when you think about the bar you set for yourself, it should be a wakeup call.
Most people can only set the bar based on the environment they are in. The bar becomes whoever the best producer is at your office or that you’ve ever met. When you hear about this individual producer in Connecticut that makes $25 million, you say to yourself I never met that guy, I’ve never seen that guy, I don’t believe it.
The art and challenge of thinking big is really getting out of your normal territory and believing in what is truly possible. My wish for you this coming year is to set your sights higher than ever before and think BIG!
Throughout my nearly 30 years of experience, I have always found that the best way to prospect is through referrals.
There is nothing stronger than being introduced in an extremely positive way to a new prospect, from someone who they trust and care about.
In order to generate these referrals, you’ll need to tap into your existing client base, leveraging their network of friends and family.
You can’t wait for the referrals to come to you. You have to take initiative and actively prospect with your clients on a regular basis.
The great news is that it’s simple and easy to do with the right approach. The right approach is by using an agenda in your client meetings that blocks off time for prospecting.
Hypothetically, imagine that you are an existing client of mine who is meeting with me for an annual review. There are couple things I want you to feel within the first minutes of the meeting that the agenda will help accomplish.
First, I want you to feel that I’m professional. I’m professional because I came prepared for this meeting. I’m not just winging it.
In addition, I want you to know that I care enough about you that I am using the agenda to make sure you know how our time will be utilized, instead of me just doing whatever I want to do.
With this in mind, you should have your agenda printed out and open with some dialogue along the lines of the following:
“Mrs. Prospect, before we get started today, let me tell you what my staff and I are prepared to review, just to make sure we are on the same page. Is that OK with you?”
“Yes”
“In the first part of the meeting, I want to cover all the assets you have and make sure you don’t have any questions about it. I want to make sure you understand every ounce of what you own.
“Then I want to go over an insurance review. In addition, I want to review all the changes that have occurred over the past year since we last met. Then, I want to go over all the financial goals we’ve discussed to see if there’s been any changes there as well.
“Then, last but not least, Mrs. Prospect, I want to pick your brain for a couple of minutes about a few people that my team and I have identified who I think are in your market that I’d like to ask for some help with.
“So, before I get started today, that’s what I have on the agenda. Are we on the same page?”
Then, the client typically says, “Yes, that’s good.”
This is really simple, but think about what we’ve just accomplished. They’ve experienced you as a professional, who is prepared and cares enough about them to check in prior to diving into the meeting.
Additionally, they just gave you permission to prospect at the end of the meeting. What may have been a daunting task had you not brought it up at the beginning, is now out in the open and agreed upon.
A word of wisdom: Do not bring up prospecting on the agenda with a prospective, new client.
Imagine if you’re a brand new client, you’ve known me only for a few minutes and I’m bringing up prospecting on the agenda.
You would not have even figured out if YOU want to work with me yet. You haven’t even figured out if you like me yet! It would not be professional or appropriate.
I’m not telling you not to prospect at the end of a new client meeting with a prospect where everything is going really well. There may be situations where it makes sense to do it. I’m simply telling you not to open with an agenda that has prospecting on it.
However, you should use this agenda in all of your annual reviews with existing clients. I found it to be extraordinarily helpful in my meetings.
Not only for the reasons stated above, but it also helped solidify my own commitment to prospect in all of these meetings. With prospecting on the agenda, you're highly likely to do it and dedicate the appropriate amount of time to it, not just the last two minutes.
I encourage you not just to read this article, but to take action! Start using an agenda in your meetings and you’ll quickly see how your prospecting results – and your clients perception of you as a professional – are greatly enhanced.
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At a certain point in the financial advisor/client relationship comes the time to move your financial plan to action. This is where the rubber hits the road. When all of your hard work of asking questions, digging deeper, building a relationship and crunching the numbers is turned into a personalized financial plan that you present to the client and ask them to move forward with.
I call this the implementation stage of the sales cycle. In an ideal world, your client would implement all of your advice on life insurance, retirement planning, education planning, disability insurance, and more. However, the vast majority of clients are rarely in a position where they can follow all of your recommendations right away.
As a result, it’s very important to have a course of action for when a client lacks the funds or the discretionary cash flow to address all the issues your plan says should be addressed. I find this to be a rather controversial and stimulating topic when out in the field teaching. Advisors have vastly different approaches and prioritize different aspects of financial planning based on their work experiences. But the bottom line is that you should be able to offer consistent advice that you can defend and communicate succinctly to your clients.
As an example, let’s assume a client needs $1 million of life insurance and a $2,500 a month supplemental disability policy. The client also needs to save an additional $500 a month for their kids’ education and an additional $1,000 a month for retirement.
However, you provided a concise financial breakdown in your fact-finder meeting, and you are aware that, at best, the client has $500 a month to work with. That will likely represent 99% of your clients.
Very rarely are you going to come across a client who possesses the complete amount of discretionary cash flow to cover every single problem their plan identifies. Therefore, it’s important for you to be confident about what you prioritize.
I cannot tell you specifically what to recommend, but I can offer how not to go about it. Often times, I see reps suggesting what they think the client wants to hear. For these reps, such advice is a very subjective process, and their advice constantly changes, varying from one client to the next.
You absolutely must cease this immediately.
One of the most attractive things about working with a professional, regardless of industry, is their level of confidence in their beliefs, what they’re willing to stand for, and more importantly, what they’re willing to jump on a sword for.
Your business is not about pleasing your clients. It’s not about finding hot buttons and figuring out what they’ll buy. Your business is about communicating what you believe with a tremendous level of conviction to each client and being willing to walk away from clients who disagree.
As a former rep and as an trainer today, my priority is risk management. I help clients find the $1 million necessary for life insurance, which may initially be all term insurance. Then, I suggest they buy disability insurance before we begin discussing saving money.
Once they are saving, my priority shifts to retirement, then to education. I can’t tell you how many challenging conversations I have had with clients who were far underinsured in both life and disability. These clients would look at me and say, “Listen, all I want to talk about is saving money for my kids. I won’t talk about anything else.”
When that happens, I’d simply close my briefcase and move on. That’s not a client who I wanted to work with. Knowing what you stand for and how you communicate it to your clients is imperative. Make sure you understand your position and that you can articulate it with pride and conviction.
I always made clear to my clients that very few clients were able to implement the full plan I created for them immediately. One of the advantages of working with me was my ability to help them prioritize correctly based on their financial needs and goals.
And, while the fundamental philosophy behind the plan remained the same, I did not offer a cookie-cutter approach to financial security. I sought to understand them – the facts, yes, but also the feelings, the story behind the human being. Once I understood them, I could draw upon my knowledge and help them prioritize based on what’s important to them.
The next time you’re ready to move your financial plan into action, make sure you have a clear vision of where aspects of the plan rank in priority. Be ready to explain why with conviction. Help your client understand that very few people are able to implement a plan that will generate total financial security immediately. It’s a process and journey that can span decades. You are here to help guide them along the way.
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