We look forward to the Van Mueller newsletter every month. It's chock-full of sound bites, sales tips, and eye-opening statistics. Here are our favorite parts of the April 2019 edition. We're sharing the full introduction, and 2 of the 7 monthly sales ideas. If you like what you read, we encourage you to click here and become a subscriber.
Reprinted with the author's permission.
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April, 2019 – 7 Ideas and Views Newsletter by Van Mueller
Last month we discussed country and global issues that could be used to start discussions that agents and advisors can use to begin discussions and conversations about issues like protection, financial growth and retirement. That information can be used to inspire our prospects and clients to take action.
I am anxious to get started with the second half of that conversation about issues because financial challenges and difficulties are creeping closer every day. This month I will try to share questions about the list of issues I provided last month that concern domestic issues such as Social Security and healthcare.
I will start, however, with an issue that was not on the list. This issue doesn't happen often, but it is considered to be a tremendously accurate predictor of stock market crashes and recessions. It has only failed to be accurate on one occasion in our history as far as I can determine. It is an issue that must be given consideration because of its accuracy. That issue is the occurrence of and the discussion about the “Inverted Yield Curve”.
This issue doesn't happen often, but it is considered to be a tremendously accurate predictor of stock market crashes and recessions. It has only failed to be accurate on one occasion in our history as far as I can determine.
Currently a 3-month U.S. Government bond is paying around 2.45 percent. Also, currently a 10-year U.S. Government bond is paying 2.39 percent. That means that you can get a higher return on a three-month investment than you can on a 10-year investment. Even a 30-year U.S. Government bond is only paying around 2.90 percent. This is a clear sign that our economy is very weak and very vulnerable at present.
When Jimmy Carter was President from January 1977 to January 1991 you could earn 18 percent in a money market account. A 10-year U.S. Government bond only paid 11 percent. A 30-year U.S. Government bond paid 13 percent guaranteed by the U.S. Government for 30 years and most people would ask, “Why should I tie my money up for 30 years at 13 percent when I could make 18 percent on my money market account?” Our economy was in such a serious recession during this time that President Carter said that Americans suffered from a “malaise.”
The inverted yield curve happened again in 2000 when the Nasdaq crashed 80 percent and most recently we had an inverted yield curve in 2007 and 2008 during the “Great Recession” which also included an approximate 50 percent crash in the S&P 500. None of the challenges that we faced in 2007 and 2008 were ever fixed. They were only temporarily bandaged. Our country now faces those challenges again only with a dramatic increase in intensity.
None of the challenges that we faced in 2007 and 2008 were ever fixed. They were only temporarily bandaged. Our country now faces those challenges again only with a dramatic increase in intensity.
Please Do Not Tell People About Inverted Yield Curves. Please Ask Them. Think of a couple of great questions such as, “Did you know that an inverted yield curve has been one of the most accurate predictors of stock market crashes and recessions? Did you know we currently have an inverted yield curve? Do you understand what it is? Should you be concerned? What action, if any should we take to prevent being harmed by this very accurate predictor of economic catastrophe?”
If you ask questions your prospects and clients will share THEIR opinions which are the only opinions that matter.
Let's get to the list I provided in last month's newsletter.
1. Social Security
There are so many questions to ask. What is the best age to take Social Security, so you maximize the benefit for you and your spouse? Will you get all your Social Security? What if you didn't; how would you make up the difference? Will the government need to raise taxes in the future to provide Social Security benefits? Did you know 140 million Americans turn 65 in the next 25 years? If we can't pay for the 62 million we currently have receiving benefits, where will we get the money for the 140 million yet to come? Will raising taxes be enough to provide all the money we will need for America's grandmas and grandpas or will we also have to print a lot of money to provide those benefits? Won't that reduce the purchasing power of our Social Security? Does it bother you that your Social Security is taxable? What if we could reduce or eliminate the income taxation on your Social Security, wouldn't that, at the very least, be worth looking into? Is any of your Social Security inheritable? If it isn't, what if you could make some or all of your Social Security inheritable, would you want to know that information?
I could write the whole newsletter with just questions about Social Security. Be creative. Think about all the things that would interest you about your Social Security and then develop questions that you can ask prospects and clients that you're curious about. Those questions are then asked with the most passion. This is a topic 140 million Americans are interested in. You haven't missed it!
I could write the whole newsletter with just questions about Social Security. Be creative.
2. Medicare
Isn't Medicare the most dangerous program for the American people financially? With 140 million Americans turning 65 over the next 25 years won't Medicare become the most expensive program that the Federal Government administers? If the government doesn't have enough money for Social Security where will they get the money for Medicare? Won't Medicare have to pay less and less benefits in the future in order to stay viable? Won't Medicare deductibles have to increase dramatically? Won't Medicare's Part B and Part D costs have to dramatically increase? If that is so, won't Americans have to pay more for their Medicare supplements and Medicare Advantage plans? Doesn't that mean less and less discretionary money for other things? What will happen to the quality of the care we receive as Medicare patients? Will it deteriorate? How do we maintain access to quality health care under those circumstances? How do we make sure we have enough money or coverage to offset the increasing out of pocket expenses and non-covered services? Isn't having access to quality healthcare important to having a wonderful retirement? Medicare is another wonderful conversation starter.
3. Medicaid
This is healthcare that is provided by the states. For a couple of years Medicaid was fully funded by the federal government. Now, the states will be required to fund 10 percent of Medicaid by 2020. With Medicaid being a $2 or $3 trillion-dollar expenditure, that means the states who opted in to the Medicaid program will have to come up with $200 to $300 billion of new revenue. Ask your prospects and clients where the states will get this money. Will they raise taxes? Will they lower benefits? Will they borrow more money? Or will they do a combination of all of those things? They will have to start doing all those things, won't they? But will that be enough? Probably not. So, won't they have to go to the only entity that can print money for a bailout? Isn't that the federal government? What will that do to the purchasing power of our money? Won't it reduce it? What will happen to the quality of care? Will our quality of life be impacted by the tremendous financial pressure being applied to our healthcare system?
I hope you are beginning to understand that we are the only solution: We provide strategies that not only keep us safe from these challenges, we can even take advantage of them with proper planning. Remember, we sell pennies that buy dollars and we have products that allow one dollar to do the work of many dollars. This is the best time ever to do what we do.
I hope you are beginning to understand that we are the only solution: We provide strategies that not only keep us safe from these challenges, we can even take advantage of them with proper planning.
4. Interest on the Debt
Ask prospects and clients if this is beginning to be an enormous challenge. Ask, if we have $2 trillion deficits every year and increase our debt to $40 trillion by 2029 won't the interest on all that debt take away from other necessary government expenditures? Won't that increase future taxes dramatically? Wouldn't it be smarter to pay your taxes now when the tax rates are historically low, or should you build enormous amounts of money that the Internal Revenue Service and government can tax any way they want? Think about this: If interest rates return to their historic normal level of 6 percent wouldn't that mean we would by paying $2.4 trillion just in interest. That number would be 50 percent of the current budget of the United State. Could that cause any economic difficulties? Of course it could, but don't tell prospects and clients. Ask them!
5. War and Defense
Ask people if there is more unrest in the world or less? Is the current administration asking for more money for defense? By the way, it is. China is challenging everyone, including the United States, that enter the South China Sea. They are claiming international waters as their territory. There is more and more unrest between China and Taiwan. India and Pakistan continue to have more disturbances between their two countries. Why is that a concern? There are numerous reasons, however here are two considerations. First, both countries are nuclear powers and they have little regard for each other. Second, India is the second most populated country on our planet and many analysts believe they will surpass China's population. Economically, they are trying to follow the path China took to become a world power. Pakistan is the ninth most populated country on our planet. These two countries do not like each other. Europe is falling apart. France and Italy are at each other's throats with ever increasing intensity. Germany is at odds with many of the European countries they are giving financial aid to.
A headline in Greece recently stated that Germany conquered Greece militarily in World War II and is now trying to conquer Greece financially at present. There are a lot more European stories including and not limited to Brexit. Why is any of this important? The European Union was always a military and financial barrier to Russia. That is why we offered so much financial support. With Russia becoming more frisky do you think more or less financial support will be required?
Please, this is a ridiculously small review of a spectacularly complex issue. That doesn't matter. You just want to be able to ask about whether these things will require more or less money in the future. Just to be sure, it will require spectacular amounts of additional money in the future.
You just want to be able to ask about whether these things will require more or less money in the future. Just to be sure, it will require spectacular amounts of additional money in the future.
6. Homeland Security
Walls, walls and more walls. Do they cost money? Do we need to protect our borders? Of course. When you think of a wall, please think of additional people and additional technology such as drones. Will this cost more money?
Also, please consider that every metropolitan area in the country is adding myriads of surveillance and listening devices. Not only does this cost money, it also requires more skilled people to analyze all the spectacular amounts of additional data. Again, where will these governments get the money?
7. Healthcare Costs and Healthcare Reform
A new report that was made available to the American People disclosed that we currently spend $3.5 trillion of our $20 trillion of GDP on healthcare. Because of all the grandmas and grandpas in our country that is expected to rise to $6.5 to $7 trillion by 2029. Healthcare could easily consume 25 percent of our GDP by 2029. That dramatically reduces the amount of money available for the rest of our economy.
Currently, it is estimated that $750 billion a year of our healthcare expense is considered to be waste and fraud. That number is almost the entire current deficit of our country. That number will get much bigger and will become much worse. Why? There is no incentive for the people who get the $750 billion to change anything. Until there is, won't these wasteful expenditures continue to rise exponentially? If you refer back to number 3, Medicaid, you will also see that these rising healthcare costs will continue to be an enormous burden for government at every level.
Currently, it is estimated that $750 billion a year of our healthcare expense is considered to be waste and fraud. That number is almost the entire current deficit of our country.
Ask prospects and clients, friends and neighbors and even strangers this question: “Where are we going to get all this money?”
8. Unemployment
Ask your prospects and clients if they remember how many people lost their jobs in 2007 and 2008. Do you realize it was 14 million people? Many people believe as many as 20 million people will lose their jobs in the next downturn. If only 14 million lose their jobs, doesn't that mean they stop having Social Security (FICA) taxes and Medicare taxes taken out of their no longer existing paychecks? Will that further increase the financial stress on Social Security, which is already in negative cash flow and Medicare which the Trustees reported will reach insolvency by 2026? Also, where will we get the money to provide unemployment benefits to all these people?
The next questions are easy. If your prospect or client has money where will the government go to get the money they will need? Will they get the money from people who don't have any money, which is 90 percent of America or the people who do? Mr. & Mrs. Client, you do know the answer, don't you? Do you want to let the government and the Internal Revenue Service be in control of how much they can take, or do you want to have as much control as is legal under the law? This is an easy question.
9. Infrastructure
Again, this issue can start a major discussion about money and taxes. Where will we get the money for our airports, highways, bridges, electrical grid, artificial intelligence, etc.? If the seas continue to rise won't we have to move every military base on the coast of the United States? How do you repair all the damage that is occurring because our water and sewage systems cannot keep up with our growing population? This is very simple. Will these issues require more or less taxes in the future? Where will we get that money? Will we get that money from the people in our country who don't have any money or the people who do have money?
10. Natural Disasters
Are we not seeing the morning headlines filled with more and more natural disasters? Floods, forest fires, tornadoes, hurricanes, lava flows, severe rainstorms and snow storms are now every day occurrences somewhere in our country. Where do we get the money to clean up and then rebuild after these devastating disasters? That is correct! The good old American taxpayer. There are less and less taxpayers in our country and they are being required to pay more and more. Ask your customers if they want to allow the government and the Internal Revenue Service to be in control of how much is taken or do your customers want to have control of how much is taken? To do that, they must have a strategy. It must be formulated and begun before the laws change. Ask our customers what they want to do?
Ask your customers if they want to allow the government and the Internal Revenue Service to be in control of how much is taken or do your customers want to have control of how much is taken?
11. Fannie Mae, Freddie Mac, FHA
Aren't these government entities easing the requirements for loan qualification? Are they still doing what is called “Ninja” loans in the years leading up to the 2007 and 2008 crash? Ninja stands for No Income, No Job, No Assets. These requirements are eased when the economy desperately requires more stimulus. Use these questions to ask if a customer should be attempting to build more safety for their income and investments.
12. State, City and County Budget Shortfalls
Aren't we beginning to see these government entities reduce their services? Our cities are not as clean. There is less upkeep of our parks. Garbage pick up is not as regular. Our streets don't get plowed as quickly, etc. However, that is not the frightening part. Where will the cities, states and counties get the several trillion-dollar shortfall necessary to provide the promised retiree pension and healthcare benefits. Because they can't raise taxes enough or lower benefits enough or borrow too much more money, won't these governments be forced to go to the federal government and literally beg the government for a bailout? So, besides raising income taxes won't the federal government do what only they can do? Isn't that print more money? Isn't printing more money a hidden tax on the American people that reduces the purchasing power of their money? Doesn't that mean Americans will have less and less discretionary money available for healthcare, financial security and retirement? Doesn't that mean that cash value life insurance will become one of the most important financial benefits of the 21st century? Very Exciting!
Doesn't that mean that cash value life insurance will become one of the most important financial benefits of the 21st century? Very Exciting!
13. Derivatives
What is a derivative? Isn't it easily explainable as a bet? Financial institutions providing the opportunity to bet on all sorts of economic movement. This is prevalent because it is difficult for banks and financial entities to make a lot of profit in a low interest rate environment. In 2007 and 2008 only $89 billion of derivatives almost brought down the world's economy. At that time there were $600 trillion of derivatives. There are now $1.2 quadrillion of derivatives. One small mistake could have cataclysmic consequences. Should information like this require more caution? Please ask your prospects and clients.
14. Commercial Real Estate
Drive around your communities and see all the strip malls that have vacancies. Go to a mall and see how many store fronts are being closed. Isn't this a sign that our economy is slowing? Shouldn't we ask our customers if this is something we need to give consideration to? Should we take some or all of our gains off the table and give consideration to a more conservative financial path for a time? Don't tell any of our customers what to do. Ask for their opinions about what they believe would be the best course of action.
15. Corporate Debt
It is estimated that we have almost $3 trillion of corporate debt that must be refinanced in the next two years. This could create real problems for our economy. Both Sears and Toys R Us reached their demise because of too much corporate debt and their creditors decided that with higher interest rates. Toys R Us couldn't afford the higher payments, so they forced Toys R Us into bankruptcy to be sure the could get as much of their money back as possible now rather than later.
It is estimated that we have almost $3 trillion of corporate debt that must be refinanced in the next two years. This could create real problems for our economy.
Many companies will be forced into bankruptcy with higher interest rates coming during the refinancing of all this corporate debt.
16. Student Loans
Our children are now $1.6 trillion in debt just to student loans. Thirty percent of these loans are in default. Graduates cannot afford to buy starter homes and all the furnishings because they are overwhelmed by all this debt. Does this have a positive or negative effect on our economy? What happens to all these universities and colleges when people realize they cannot afford the cost?
17. Filial Laws
Ask our clients if they are aware that there are now 31 states who are beginning to exercise their right to go after children and make them responsible for the debts of their parents under the Filial Laws of the states. Can strategies be developed to prevent ever being bothered by a Filial Law? Of course, however it must be done before the crisis occurs. Ask your customers if they know about and understand the Filial Laws in their state.
18. Home Mortgage and Housing
Will housing crash again? When people lose their jobs will they lose their homes? Will that cause housing prices to crash in many areas of our country? Would you have your net worth harmed dramatically if the values of your home went down by 30, 40 or even 50 percent? How long would it take to recover that value?
Would you have your net worth harmed dramatically if the values of your home went down by 30, 40 or even 50 percent? How long would it take to recover that value?
19. Black Swan Events
Are there events we are not planning for? Are there things that could happen in our country and our world that we don‟t know about that could have dire economic results? Of course. Most probably. The crash will most likely start because of something we don't know about yet, rather than something we do. Derivatives in 2008 was a Black Swan event. Aren't the odds of one of these events occurring the longer we go into the fake bull market? Should we be building more safety into our financial and retirement futures? Please remember to ask and ask often. You will be astonished how effective all of this is the more you practice asking the questions.
We're passing on two of the newsletter's monthly sales ideas - every issue of the newsletter contains 7 ideas, plus one idea for the Canadian market. Subscribe to get them all.
Idea #1: Rules to Increase Chance of Success for New Agents and Advisors
The most important rule of all is this: Prospect, prospect and then prospect some more. Agents almost always get this backwards. They say things like, “I can‟t call on anyone until I really understand my policies.” I hope you will laugh with me. By the time you learn the policies, they will change them.
Agents at all experience levels in our business pretty much fail for only one reason. They Don't Have Enough Appointments! You must learn to ask questions that will inspire people who don't know you to have an appointment with you. You must learn to get appointments as your primary responsibility. It is actually more important than knowing about life insurance, annuities and mutual funds. Please use the questions you learn in this newsletter and PRACTICE so you become proficient at asking those questions. That is the most important thing you can do to find success in our business. This article provides 10 ideas. Numbers 1, 2, 8 and 9 are the most important points for building success in our business.
Title: 10 Commandments for Newbie Agents and Advisors
www.thinkadvisor.com/ (Think Advisor, March 18, 2019)
https://www.thinkadvisor.com/2019/03/18/10-commandments-for-newbie-agents-and-advisors/
Idea #6: Fixed Indexed Annuities Are Not Securities
The Illinois Supreme Court ruled that fixed index annuities are not securities. They verified what we all knew all along. They are a safe way for prospects and clients to build quality retirement incomes in retirement that they cannot outlive without ever having to experience losing any money.
The National Association for Fixed Annuities worked hard on our behalf to maintain fixed indexed annuities as a safe, non-securities way to save for retirement. The Illinois Supreme Court affirmed that this was correct. Please use these two articles as verification.
Title: Illinois Supreme Court Reaffirms Fixed Indexed Annuities Are Not Securities
www.thinkadvisor.com/ (Think Advisor, March 22, 2019)
https://www.thinkadvisor.com/2019/03/22/illinois-supreme-court-reaffirms-fixed-indexed-annuities-are-not-securities/
Title: Illinois Supreme Court Says Fixed Annuities Not Subject To Securities Regulations
www.fa-mag.com/ (Financial Advisor, March 22, 2019)
https://www.fa-mag.com/news/illinois-supreme-court-says-fixed-annuities-not-subject-to-securities-regulations-43941.html
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