We look forward to the Van Mueller newsletter every month. It's chock-full of sound bites, sales tips, and eye-opening statistics. If you've never read his newsletter before, check out some highlights from the August 2016 edition. We're sharing his introduction and the first of 7 sales ideas. If you like what you read, we encourage you to click here and become a subscriber.
Here's Jan Pinney's take on this month's issue: "As usual, Van has hit another home run again this month. His newsletter is so thought-provoking and full of information that it should help us all sell more life insurance, long-term care insurance and annuities. I was particularly amazed by his comment that we have fewer people working today than we did in 2000 and yet our unemployment rate is lower. Also alarming is that with only 50 million retirees, 162 million Americans are receiving government benefits! How is that sustainable? At the very least, it ought to make you a little more aware of our economy and the reality of our national debt. If you do nothing else with this information, to see these numbers in real time, go to www.usdebtclock.org and pay particular attention to the lower right hand corner of the chart."
Van Mueller: August 2016 Newsletter
Reprinted with the author's permission
August, 2016 – 7 Ideas and Views Newsletter by Van Mueller
I have qualified for Top of the Table for 26 years in a row. I have spoken at every important venue in the insurance and financial service industry. I have this monthly newsletter that I work on diligently month in and month out. To prepare for this newsletter I read 14 newspapers per day. I subscribe to and read over 200 periodicals per month. I have access to countless industry information outlets and I am fortunate to call people like Tom Hegna, Ed Slott, Bruce Etherington and Marv Feldman friends. I have studied under John Savage, Tom Wolf, Norm Levine, Charlie Flowers, Sid Friedman and many, many others. I stalk all the MDRT and Naifa Presidents because they are my idols. I study them and learn from them and aspire to their greatness. I have over 35 Google alerts that I review daily.
I am not telling you this to brag. I have nothing to brag about and you will understand that shortly. I tell you all of this because I want you to know and understand how prepared I am. I work diligently to stay apprised of everything that has to do with insurance, investments, retirement, taxes, world events, economic events, government, monetary policy, fiscal policy, inflation, deflation, negative interest rates, volatility and pensions. This by the way is only a short list.
I am not just friends with Ed Slott and Tom Hegna; I study their ideas and concepts vigorously. I also study Harry Dent, Porter Stansberry, Martin Weiss, John Mauldin, Bill Bonner and David Stockman just to name a few. I subscribe to and read and listen to everything and everyone who has ideas and information that pertain to what I do for a living. I study. I practice. I work as hard as I can to prepare for economic events that I believe will require all my skills to be of the best assistance to my prospects and clients.
Now, this introduction is about to take an unusual turn. Our prospects and clients do not want to understand all this marvelous information we share with them. They don‟t take action when they understand. They take action when they feel understood by us.
I had two very interesting occurrences in one week with two separate clients who had been with me for more than 25 years and were friends. They asked me to stop by and visit with them. I have reviewed their situation with them regularly and felt they had a good understanding of what was happening with their insurance, finances and retirement.
I have been made aware that I had made some assumptions based on my knowledge of these issues rather than theirs.
Both clients expressed to me how they worried they were about their impending retirements. They expressed worry to me that I had failed to realize they felt.
This is extremely important. They were not upset with me. They actually even apologized to me. They didn't want me to think I had done anything wrong. They did want me to realize that they felt more dismayed than I had understood, by current events not only in our country but worldwide. They had heightened concern that their retirement opportunity was being ripped away from them by these many unforeseen events. They had so many questions: What were negative interest rates and how were these negative interest rates affecting their retirements? With all the bad economic news that's been occurring why haven't we had a stock market crash yet? Where will the government get all the money they will need for Social Security and Medicare. Remember there will be over 130 million Americans over the age of 50 by 2030. Where will all that money come from? Will the almost certain increase in taxes diminish their incomes when they retire?
These were clients who had substantial money. Both had more than $500,000 in assets, not including their primary residence. Their fear was palpable. I was more than surprised, I was stunned. I had not done as good a job for these people that I thought I did. I had not listened well enough. I had asked more about what I thought they should consider rather than what they needed to understand to feel financially safe. I had not reassured them as well as I should have. I was doing a good job for them; they just didn't know it because I hadn't explained it as well as I thought.
I immediately called many, many of my top clients and shared the story of these two clients. Overwhelmingly, they agreed with the contentions of these two clients. I received an additional benefit. Surprisingly, they appreciated my call and my concern for their welfare.
Is the information I am sharing with you really about me? Not at all. I believe it is about all of us in this industry and is more important than me.
I believe the level of fear and uncertainty our clients are feeling is much more severe than we realize.
Even people with money are starting to feel like they won't be able to retire as soon as they wish or even at all. And those who are already retired may have to return to work. I hope you will consider as I have to go out of your way to be sure your prospects and clients are feeling heard and understood.
The primary reason we all do this is to provide a level of security and certainty to our prospects and clients about their insurance, finances and retirement. We Do Not Sell Policies. We do provide “Peace of Mind.”
I also want to provide some additional tools to help you be better insurance and financial professionals. These websites have become indispensable to me and I hope you will find them useful as well.
To be the best insurance and financial professionals that you can be requires access to accurate and dependable information.
During this negative election season you will hear countless varieties of opinion about similar issues and you cannot inject your feelings about any of it. You will be astonished how inaccurate all the information will be.
It is your job to inspire action on the part of prospects and clients even if the information they are using to form their opinions is totally wrong.
How? Let's begin by being absolutely clear and certain about one thing as it pertains to the use of this information. We do not, I repeat, do not use the information to prove our prospects and clients wrong. They are never wrong. It is their money. Your task is to inspire them to take action in spite of their views. This cannot be accomplished ever, by telling them anything. You must ask powerful questions. The information I am providing must be used to create powerful and important questions. The questions help our clients reason out for themselves as to why they should take action when they haven't done so previously.
WE SHOULD NEVER TELL PEOPLE TO DO ANYTHING! Telling is selling. Asking is advocating. People have real emotional attachments to their opinions, especially about money and especially during this election season.
Here's a list of resources to help you develop powerful questions that will inspire Americans to achieve the financial and retirement success they yearn for.
I will list the websites and give a few examples of how to use them. Regular use will help them to become a powerful resource.
Let's begin…
www.irs.gov - This is and should be your most valuable resource. Our products use and provide tax deferral and tax free benefits. A basic understanding of tax law is required to articulate that value. Every agent and financial professional should be required to read the 1040 instructions every year as fundamental knowledge for our profession.
Here's a shortcut for reading those 1040 instructions even though I would still recommend it. Go to www.irs.gov and click on “forms and publications.” Then click on “current publications.” Type “1040” in the find box. Click on the instructions rather than the form. Print out the instructions. Pay particular attention to pages 30, 40, 41, 101 and 102. These pages will help you do a better job for your clients.
Page 30 determines how much of your Social Security will be taxable. Page 40 shows the standard deduction for individuals and couples filing jointly over age 65. Page 41 shows the personal exemption for each person filing on the return. Page 101 shows tax allocations. Page 102 shows various tax brackets for singles and joint filers. Couples over age 65 filing joint returns find this information invaluable.
The standard deduction for this over 65 couple is $15,500. Each receives a $4,050 personal exemption; combined they total $23,600. If this couple is only taking a required minimum distribution of $10,000, ask them if they have someone they are madly and passionately in love with at the Internal Revenue Service that they want to leave a lot of money to.
They will surely ask “What are you talking about?” Knowing taxes allows you to explain that they can withdraw another $13,600 of fully taxable income from IRA's, 401k's, 403b's and gains on non-qualified annuities, declare it on their taxes and pay NO TAXES! Do they realize over 20 years they could eliminate taxes on an additional $272,000 ($13,600 x 20) of fully taxable income? Ask why they aren't doing that. You will make many sales.
If you understand and use the progressive tax rates found on page 102, you can help clients eliminate enormous amounts of taxes.
The first tax bracket is the 10 percent tax bracket. A married couple pays 10 percent of the next $18,550 of taxable income after the standard deduction and personal exemption.
I ask my prospects and clients to withdraw another $18,550 from their accounts. This can cause some of their Social Security to become taxable. That is acceptable. It will be taxed at a very low rate.
Here's a great example. Our client draws their entire standard deduction and personal exemption of $23,600 from fully taxable income. In addition they withdraw the entire 10 percent bracket amount of $18,550. This is also from fully taxable income. They also have Social Security income of $25,000. Combined they have a gross income of $67,150. This causes $15,052.50 of their Social Security to be taxable. Combined with their fully taxable withdrawals of $42,150 they have taxable income of $57,102.50.
The first $23,600 is not taxable. The next $18,550 is taxed at 10 percent or $1,855. The remaining $14,952.50 is taxed at 15 percent or $2,242.88. The combined income tax liability is $4,097.88 which is 6.1 percent of their gross income of $67,150.
Over the 20 year life expectancy of this 65 year old couple they can withdraw $843,000 of fully taxable money, have some of their Social Security become taxable and only pay $51,423 of federal income taxes.
Ask this question: “If you could eliminate taxes on $843,000 of fully taxable money and it would only cost you $51,423 over 20 years would you do it?” Isn't that better than losing 40, 50 or even 60 percent of that money to the Internal Revenue Service at death? Please ask them. You will love the answer.
www.usdebtclock.org – This had been one of the most useful websites of my entire career.
Here are just a few things that can be illustrated from the website. First and foremost, the unfunded liability for Social Security is $15 trillion. The unfunded liability for Medicare is almost $28 trillion. The total U.S. unfunded liabilities are over $103 trillion or almost $900,000 for every man, woman and child in the United States. Will that get better in the future? Or, will those liabilities increase? Where will we get the money for these programs? Will we reduce benefits, increase taxes or print more money?
Our country produces $18.5 trillion of goods and services. Total federal, state and local spending is $6.8 trillion. Government now spends 37 percent of everything we produce as a country. Is that percentage increasing or decreasing?
The federal government spends almost $3.9 trillion while taking in only $3.3 trillion. Where do they get the rest of the money?
There were more workers in the year 2000 than there are right now. How can unemployment be down?
162 million Americans are now receiving benefits. There are currently only 50 million retirees. We are now supporting one-third of the population over and above our Social Security and Medicare recipients who are included in the 162 million.
There is a great section on how much money we have created out of thin air. What will happen when that begins to create inflation? This will blow your mind. We have increased the monetary base more than 5 times what it was in the year 2000. Does that sound good to you?
Now do you know why the stock market has risen without good fundamentals? Enormous money printing.
This website shows how this all increases dramatically by 2020. It shows the debt and pension issues of all the states. There is so much information I could use a whole newsletter to write about it. It will be fun if you explore this site yourself.
Next month I will provide 7 to 10 more websites for your arsenal. But for now, let's get on with the first idea.
Idea #1: ZERO PERCENT INTEREST RATES FOR A GENERATION
John Mauldin from Mauldin Economics just disclosed that interest rates could stay at zero for another 7 years or more.
Because interest rates have been at zero since 2007 that means if you add seven more years to the nine years of zero percent interest rates that we could have endured these interest rates for almost a generation. It's astonishing to think that the government is struggling to find a way out of this conundrum.
How do you save for a quality retirement at zero percent interest rates? How do you build assets for the future if you are unable to earn any returns without taking an inordinate amount of risk?
The economy itself has only grown 16 percent in this seven year recovery. Remember, that is with exorbitant printing of money and zero interest rates for almost a decade.
Traditional investment strategies won't work much longer. How will all the financial entities generate returns in a zero interest rate environment?
If you ever needed to understand the need for life insurance, now is the time. If our clients make no returns or even negative returns they will be forced to spend principle. Life insurance can regenerate the principle that is being spent using the leverage of the death benefit. Life insurance can allow you to use the mortality credits available from annuities.
It is a great time to be an insurance agent.
Title: Expect Around 0% Returns For The Next 7 Years
www.forbes.com (Forbes, July 25, 2016)
http://www.forbes.com/sites/johnmauldin/2016/07/25/expect-around-0-returns-for-the-next-7-years/#2d97903970ee
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Did any of these stats blow your mind? Have you used any of them in talks with clients? Tell us in the comments!
