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 February 2021 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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February 2021 – 7 Ideas and Views Newsletter by Van Mueller
Wasn’t January one of the most interesting months ever? It seems that our country is now headed in a different direction. Economically speaking, is our new direction good for the American people? I would argue that it is not. We are trading one set of challenging economic circumstances for an equally or more challenging set of circumstances.
Please be clear about what I just shared, I have shown for a very long time in this newsletter that government, whether it be led by one party or another can’t fix the economic challenges that our country faces and we as individuals face. What we propose in this newsletter and, I hope, to our customers is that if we take the time to develop a strategy, we can have success “In Spite” of the government interference. That is why it is amazing to be an American. We Do Still Have Freedom of Choice, in most cases. I believe our primary responsibility is to inspire our customers to take action. If they are rich or poor or middle class; if they are young or old or different colors, religions, or nationalities in America you have the opportunity to develop a plan that can allow you to find success. Of course, that success level varies. Of course, some people have more opportunity than others. I am excited for our industry because we matter. We have access to our fellow Americans every day and we can ask them questions that will inspire those American to use their own common sense to reason out a course of action that will be beneficial to them.
What we propose in this newsletter and, I hope, to our customers is that if we take the time to develop a strategy, we can have success “In Spite” of the government interference. That is why it is amazing to be an American.
The secret to our success in this industry is asking powerful and informative and inspirational questions!
If you are paying attention, our world is filled with uncertainty. That uncertainty is increasing to dramatic, stressful and health threatening levels. We can help our customers to buy certainty. Certainty is life changing. It provides that old standby that we don’t use much in our industry anymore. Certainty provides peace of mind for our customers. It gets them the confidence to go forward. I can’t say this strong enough or well enough. You don’t sell insurance products. You help your customers buy security, well-being, structure and yes, happiness. When you come to that understanding you will start to feel joy for what you do.
In January’s newsletter. I shared that the Internal Revenue Service had not released the instructions for tax year 2020. They have since released that information. Please go to irs.gov. Click on forms and instructions. I would recommend printing the entire 1040 instruction booklet, which is 112 pages. The most important pages are as follows:
|Page 30||Social Security Worksheet|
|Page 32||Standard Deductions|
|#3 Under Age 65|
|Bottom Half Over Age 65|
|Page 107||Income and Outlays|
|Page 108||Tax Rate Schedules|
You will notice that these numbers for the standard deduction and the tax rate schedules that were provided in the January newsletter differ. The reason they are different is that the January newsletter provided the numbers for 2021 tax returns. In other words, they are the numbers for the year we are in. The instruction book provided by the Internal Revenue Service is for 2020 tax returns.
I would like to clarify a couple of things about the January newsletter. For married couples you will use examples one and two 80 percent or more of the time. You will use examples one, two and three 95 percent of the time.
The fourth and fifth examples will be available for when you come across bigger IRAs and 401(k)s. Now you will have something to talk about.
Now, I hope to surprise you. I sell more than 50 percent of my business using the first example. I am pretty sure that will be the case for most of you. Please study these examples in the January newsletter so you know them backwards and forwards. The government is now prepared to lower the boom on future income tax requirements. Isn’t it important the we show our customers that they have options when it comes to this increased income tax requirement?
I sell more than 50 percent of my business using the first example. I am pretty sure that will be the case for most of you.
Please remember, wage statistics shares that 50 percent of Americans make less than $35,000 per year and 67 percent make less than $52,000 per year. According to the latest Wage Statistics for 2019, 81 percent make less than $75,000.
In example one, remember the number $57,800 of combined Social Security and standard deduction. If a customer is living on $40,000 and has IRA or 401(k) money shouldn’t they be withdrawing all the way to $57,800? Remember, if they are a married couple and have less than $57,800 of Social Security and fully taxable money, shouldn’t they be withdrawing the difference every year? What is the income tax cost to that customer? Isn’t is less than one tenth of a percent? Are they really spending this money or are they moving the money from their left pocket where it is fully taxable at whatever rate the government desires, to the right pocket where they control what tax was paid and prevent any further tax on that money. Think about a customer who lives for 30 years with Tax free compounding. What is the value of that to your customers?
In example two, you are adding the entire 10 percent income tax amount to the equation. That number is $19,900. If you add that to $57,800 the number is $77,700. That is 81 percent of our customers according to the most recent wage statistics for 2019 provided by Social Security. Now, if you have a customer living on $40,000 you can move $37,700 from fully taxable and the effective rate is 6.5 percent. Ask your customer about this and provide an example. “If you have $400,000 in an IRA and you pay 6.5 percent you can eliminate the tax consequence for your family for only $26,000. If you wait until you die and the children pay the taxes at their rate instead of yours, that number increases to between $120,000 and $200,000.” Ask them which strategy would be better for them and their family.
Once you understand the basics of this, it provides all kinds of opportunities to be of service to your customers. Let’s take the same couple as an example. Let’s say they need $75,000 per year to live. You still have $2,700 per year that could buy a policy that would pay the $120,000 to $200,000 in taxes that the children would pay to inherit, and the effective tax rate would be 6.5 percent. There are so many opportunities to help your customer because you have found ineffective and inefficient money that can be made as effective and efficient as money can be. Your customers would be delighted to learn this very important information.
There are so many opportunities to help your customer because you have found ineffective and inefficient money that can be made as effective and efficient as money can be. Your customers would be delighted to learn this very important information.
The January newsletter is filled with multitudes of ways to use the progressive nature of our income tax system and the spectacular benefits of cash value life insurance to eliminate that income tax responsibility and leverage the money to provide a variety of benefits to our customer that they must have in the years and decades ahead. Please take advantage of the information in the January newsletter.
Before I start with the next increased narratives for the 40 questions, I want to also update you on additional current information that became available that I use quite frequently and you would be advised to use it as well.
Truthinaccounting.org updated its 75 largest cities information on January 26, 2021. They assert that 62 of the 75 largest cities in the United States do not have enough money to pay their bills. Chicago, New York and Philadelphia are in the bottom five financial catastrophes.
How do you use this information? Can cities and states print money? No. So, they have to lower benefits, borrow more money, increase taxes or a combination of all those things. What taxes can they raise? Income taxes, sales taxes and property taxes can be raised. Will it be enough? Not according to Truthinaccounting. So, won’t these entities have to ask the only entity who can print money for a bailout? Will the federal government raise taxes to do that and won’t they dramatically increase the “stealth tax” inflation by printing enormous amounts of new money thereby reducing the purchasing power of that money? Isn’t that a tax increase on everyone? So, Mr. & Mrs. Customer, even if you live in one of the 13 cities or 10 states that are financially in good shape, won’t the government still be coming after you and your money to take care of the 62 cities and 40 states that will require “bailing out”? Ask them if they are going to let the government come and take their money in any amount they want or do they wish to develop a strategy where they determine how much the government and the Internal Revenue Service can take? You are inspiring your customers to take action. You Are Not Selling Them Policies, Interest Rates, Cash Values or Premiums.
Understanding this will enhance your career in ways you cannot even begin to understand. Would you like to enhance your career? Please learn this material and how to share it with questions.
Many of you ask me all the time “what are the answers to the 40 questions”. Actually, the answers are whatever your prospect or client tells you. However, I was not understanding your questions about, what were the answers. So, beginning in the December 2020 newsletter I began to create a narrative for each of the 40 questions. In December I did questions one through four. I will continue to provide narratives for all 40 questions in this and future newsletters. By the way, when I say narratives, I am actually talking about how to create conversations using the 40 questions. As you review the December 2020 issue, this and future issues, you will realize I never talk about products or policies or selling. I am developing conversations where the customer uses their own “common sense” to reason out certain things they are doing may not be appropriate or beneficial for their particular situation. I never tell them they are wrong and for the most part I am only asking for THEIR opinion. Theirs is the only opinion that matters. The 40 questions are always free and available at https://www.vanmueller.com. Let’s start with question #5.
I never talk about products or policies or selling. I am developing conversations where the customer uses their own “common sense” to reason out certain things they are doing may not be appropriate or beneficial for their particular situation.
5. Is there someone at one of the local nursing homes that you are so crazy about that you want to leave them most, if not all of your money?
Mr. & Mrs. Customer did you know it only takes six months to a year in a nursing home to deplete a lifetime of savings? Do you realize COVID-19 has even changed this discussion? Do you understand that 40 percent of all the people who have died from COVID-19, have died in a nursing home? Realizing that, would you ever put someone you love into a nursing home unless you really had to? What if there was a way to develop a strategy that would allow you to be cared for in your own home? Would that be something you would be interested learning about?
Also, do you know why most people don’t provide for long term care even though it is almost certain they will need the care? Isn’t it expensive? And aren’t you worried that if you pay for 10 or 20 years and don’t use the benefit then you have wasted that money? What if we could provide coverage for that contingency, but if you didn’t need the coverage you wouldn’t have wasted one cent on the coverage. May I ask you this, if there was no cost or obligation for this information and all I was going to do was ask you questions that will help you clarify how to control this difficult challenge, wouldn’t that be worth 45 minutes of your time? I could go on and on with this question. Everyone knows someone who is dealing with this issue. It is a wonderful conversation starter and appointment getter.
6. When government needs more money in the future, will they get that money from the 90 percent of Americans who don’t have any money, or the 10 percent who do?
Mr. & Mrs. Customer aren’t you in the 10 percent? In order to be in the 10 percent do you realize you only need $200,000 or more? Ninety percent of Americans cannot put $200,000 together. I know it sounds like a lot of money, but can I ask you this? If you retire at age 65 and live to age 95 how long will $200,000 or less last? So, Mr. & Mrs. Customer even though you did everything right. You saved, you invested, you lived within your means, the government will come and take your money to take care of all the people who were not willing to do what you did. Not only will they take it from you, won’t they be taking it from your children and grandchildren? Are you okay with building a legacy for the Internal Revenue Service and the government rather than your family or business? If there was a way to be in control of how much the government takes when would you want to implement a strategy for that; before or after the government comes and takes your money?
If there was a way to be in control of how much the government takes when would you want to implement a strategy for that; before or after the government comes and takes your money?
If you ask the questions correctly you can get people emotionally disturbed at what they believe is the inequity of money transfer when they have worked so hard to build what they have. Additionally, I can even inspire people at the upper end of that 90 percent who only marginally are approaching what they need to have for a comfortable retirement. I ask them, what if they are unable to achieve a successful retirement because some of their money is being taken to take care of people who don’t work as hard as they do to build a safe and secure retirement future? I know you think people sit around and think about this. They do not! Your discussion will open their eyes to the challenges they face if they wish to achieve a successful retirement.
7. Where is it written in finance that you have to lose 30, 50 or even 70 percent every time we have a stock market crash in order to make money?
Why does Wall Street continue to insist that no one can time the market? Who benefits from this notion? Do you benefit or does Wall Street? Are these downturns that occur every six to ten years market timing or dramatic shifts in momentum that should and must be addressed? What if you could develop a strategy that would prevent you from ever losing money ever again? Would that be a good strategy? And if this strategy allowed the money to remain liquid while it wasn’t losing any money wouldn’t that be amazing? Couldn’t you wait for all the bad to occur and then when the government said we need to fix what’s happening in the markets we’re going to print more money, wouldn’t that be the most opportune time to be invested? Here’s the best part: What if you could do all of this with reduced or total elimination of your income tax liability? Wouldn’t that be amazing? If you were to get started with a strategy like this would you want to begin before or after the next downturn?
Why does Wall Street continue to insist that no one can time the market? Who benefits from this notion? Do you benefit or does Wall Street?
The increased volatility in the markets is keeping people who should take advantage of stock market opportunities from participating. If our customers knew we had strategies that would dramatically reduce the risk while still maintaining the opportunity to participate in the upside, wouldn’t that increase our customer’s interest?
Question 8 is another version of questions 7. I will share how I use that question.
8. How many times will you lose 30, 50 or even 70 percent of your money before you say “enough is enough”? I am going to do something different. Would you be further ahead if you had not lost any money in 2000 to 2002 or 2007 and 2008 or March of 2020? Why do people continue to do this?
Ask your customer these questions. Are the markets being manipulated by Wall Street, the government and the banks? Are they being manipulated for your benefit or for the benefit of Wall Street, the government and the banks? Even if you didn’t know what was going to happen, even if these markets were never manipulated for your benefit, what if there was a way you could be kept safe? Even better, what if there was a strategy that would allow you to take advantage of these manipulations as they happened, wouldn’t that be vital information? What if I could ask you a series of questions that would allow you to ascertain for yourself how to be in control of those manipulations, at the very least, wouldn’t that be worth 45 minutes of your time if there was no cost or obligation? Would you have 45 minutes available next week?
Again, there is really no limit to the amount of questions I can ask pertaining to market circumstances and its uncertainty. What if I could provide certainty? Would I be valuable to my prospect or client?
I hope you are beginning to see how much fun you can have using these questions. You are no longer in an adversarial situation. You are their advocate, their advisor, their counselor. It brings joy back into what we do for a living. We will do more questions next month. Let’s get started with this month’s sales ideas.
Idea #1: What about Bitcoin?
U.S. News and World Report provided a wonderful article about Bitcoin and how and if advisors should advise about this increasingly interesting investment.
I am asked about it all the time and I am sure you are as well so I thought this article would provide some foundational information to help answer questions. If you know me, I also used the article to form questions that I would ask my customers rather than telling them anything. Here’s a couple. Should you ever put your money into something you don’t understand? Would you be comfortable with the volatility of Bitcoin. It can increase dramatically but it can also decline dramatically. What would your reaction be during a serious decline? Is Bitcoin a currency or an investment? Please think in terms of asking questions so the customer can reason out for themselves if Bitcoin is right for them.
Title: How Financial Advisors Should Advise Clients on Bitcoin
https://money.usnews.com/ (U.S. News and World Report, January 25, 2021)
Idea #2: Did the Government Do Something to Benefit Cash Value Life Insurance? What Is Section 7702?
I have included two very informational articles about the new section 7702 adjustment that the government approved to begin January 1, 2021. It makes selling cash value life insurance more valuable and easier to sell for the long term. It also now allows companies more flexibility to provide new and varied products. The reduction in the interest rate this year to 2 percent and then a floating rate after 2021 will allow a higher cash value increase and a better internal rate of return on cash value policies. The articles explain that the rollout of this new opportunity will be varied in our industry and will require us to re-examine the cash value products we sell. There is quite a bit of information in these articles. I had to read them four or five times to understand the positive implications of this new legislation. I suggest you get and read these articles if you sell cash value life insurance of any kind.
Title: #257 The section 7702 Christmas Miracle
https://lifeproductreview.com/ (The Life Product Review, January 5, 2021)
Title: A Small Tax Change Is a Boon for Permanent Life Insurance
https://www.wsj.com/ (The Wall Street Journal, January 10, 2021)
https://www.wsj.com/articles/a-small-tax-change-is-a-boon-for-permanent-life-insurance-11610283602 (subscription required)
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