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 September 2020 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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September 2020 – 7 Ideas and Views Newsletter by Van Mueller
In previous newsletters I have shared several sales presentations that I make regularly. One example is the "five question" sales presentation, which asks five questions that open the door to a conversation about many issues faced by our prospects and clients:
1. Will We Have Higher Taxes In The Future?
2. Will We Have Lower Benefits In The Future?
3. Will We Have Inflation?
4. Will We Have Increased Volatility?
5. What Will Happen If We Live Too Long? Or What If We Outlive Our Money?
Another presentation I have shared is the “What Benefits Would You Like" presentation:
1. Would It Be A Great Benefit To Never Lose Money Ever Again?
2. If You Could Access The Money That You Didn’t Lose After A Downturn, Wouldn’t That Create Opportunity?
3. What If You Could Do That With Reduced Or Eliminated Income Taxes?
4. What If You Could Use The Dollars That Are Helping You Achieve Financial And Retirement Success, For Protection Purposes As Well? Would That Be A Great Benefit?
a. Critical Illness Such As A Heart Attack, Stroke Or Cancer
b. Long Term Care
5. What If You Could Supplement Your Retirement With A Tax Free Income Stream That You Could Not Outlive, Would That Be A Wonderful Benefit?
Those were a couple of examples of sales presentations that I use on a regular basis. This month, I would like to share my “Paradigm Shift” presentation with you in this newsletter. It may take up the entire newsletter this month, however I believe it is imperative that you have information that will help you build important and inspirational conversations with prospects and clients that will motivate them to take IMMEDIATE ACTION.
It is imperative that you have information that will help you build important and inspirational conversations with prospects and clients that will motivate them to take IMMEDIATE ACTION.
Please be reminded that the purpose of these conversations is not to tell our customers anything. It is to take our customers through a process of discovery about issues that must be considered but, in many cases, have not been thought about. The questions help them organize their thinking about those issues, and give us direction about their most important considerations. No one is sitting around and thinking about anything that we do for a living, and there is plenty of media even telling them not to consider it. But we will never change their minds by telling. No one likes to be told what to do. We can only help them to reason out what is appropriate for their situation by asking them questions that help them arrive at and discover their own solutions. We are asking if they feel the need to take action concerning the issues we ask about. Make yourself a resource, an asset, a counselor. Prospects and clients will begin to look to you as part of their decision-making process. That is the perfect position to be in.
My “Five Paradigm Shift” presentation works on many levels. First, I am keeping the promise I made to the customer when I made the appointment, because I am asking them to consider issues that no one else is raising. Second, this line of questioning sets me apart and makes me seem unique compared to other insurance and financial professionals. Third, it creates a wonderful opportunity for referrals. Most of my prospects and clients can’t wait for me to share this information with their friends and families.
This line of questioning will set you apart and make you seem unique compared to other insurance and financial professionals.
Finally, and most important, it gets my clients emotionally committed to their problems and concerns and inspires them to search for a solution as soon as possible.
Ok, so what is a paradigm? It is a system of assumptions, concepts, values and practices that constitutes a way of viewing reality. When you change paradigms, you are changing how you think about something.
Let’s talk about Five Paradigm Shifts.
The First Paradigm Shift: Governments will not be able to care for their elderly!
This is just math. There are currently approximately 63 million Americans on Social Security and Medicare. There are 74 million Baby Boomers born between 1946 and 1964, and there are 66 million Generation Xers born between 1965 and 1980. So we have almost three taxpayers paying for every recipient. Isn’t the Social Security program already running deficits? By 2040, we will have 1.5 taxpayers paying for every recipient. What will happen then?
Every industrialized nation on the planet is aging. What happens then? In 1989, Japan was considered to be on par with the United States economically; then, demographics happened. Fully one third of the Japanese workforce retired. Since that time, the Nikkei, the Japanese stock market fell from 40,000 down to 10,000 and just recently hovered around 23,000. It is 31 years later, and they have recovered less than half of what was lost. Japan’s interest rates are negative. Their real estate values have collapsed. Their banking system remains in disarray. What will happen here as the Baby Boomers and Generation Xers retire? Won’t we have to increase our childrens' and grandchildrens' taxes substantially to support Social Security and Medicare? Or, will we make these programs less viable than they are now? Wouldn’t some combination of both actions be the most likely and palatable choice? If Social Security and Medicare become less viable, won't that leave an ever-increasing retired population to essentially fend for themselves? Are there any solutions that won’t put tremendous economic stress on our children and grandchildren?
And I cannot even begin to describe the financial impact of Long-Term Care. We already struggle to care for these people now. What will happen when we double or triple the amount of people requiring long term care? Where will we find the people to work in these facilities? Where will we get the money? The inflation rate for nursing home charges is around 6 percent. That means every twelve years we will require twice as much money for these services. That means $100,000 annually in nursing home costs today will become $200,000 annually by 2032 and $400,000 annually by 2044. This one challenge alone has the potential to overwhelm our economy and devastate the financial future of our country. Remember, governments will not be able to care for our elderly.
The inflation rate for nursing home charges is around 6 percent. That means every twelve years we will require twice as much money for these services.
The Second Paradigm Shift: People will live longer than ever before!
Every state in the United States is seeing a dramatic increase in the population over age 65, and the age group over age 85 continues to be the fastest growing age group. According to the World Future Society, 85 percent of all the people over age 65 who have ever lived are still alive today. An American man who is 65 today -- an age now reached by almost 80 percent of men -- can expect to live to age 86. An American woman who reaches age 50 free of cancer and heart disease can expect to see her 92nd birthday. The medical journal, The Lancet, predicts that 50 percent of the babies born today will live to age 100 or older. By 2080, the average life expectancy in the U.S. could be age 100 for men and age 105 for women.
As insurance and financial professionals, we should be excited for our careers. These people are the best prospects and clients we have. However, this information creates great challenges for all the programs serving those age groups. How will we pay for all these old and very old people?
Social Security was actuarially designed based on life expectancies of age 62 -- in other words, it was designed to only pay benefits for a short period of time for most Americans. Now, however, Social Security and Medicare are providing benefits for 20, 30 and even 40 years. Without reexamining the design of these programs, how can they continue to function on a sound financial basis? Will we see changes to social security, such as reduced or eliminated of cost of living increases, or making it 100% taxable once you receive back all you paid into Social Security? Will Medicare pay less, or be more restrictive, or both? Will out-of-pocket health care costs increase in retirement.
According to Gerald Celente, Director of the Trends Research Institute, who spoke years ago at the Court of the Table meeting, “There will be a lot of people long on life and short on cash." What would it be like to live 20 or 30 years longer -- but have no money?
What would it be like to live 20 or 30 years longer -- but have no money?
This information changed my practice. Shouldn’t we discuss planning to live to age 100 with every customer? I have even seen information that says forget planning to age 100; we should be developing plans for living to age 120. Insurance companies are coming out with many new life insurance products that have maturities of 110, 120 or even 130 years. What do they know that we don’t know? In spite of this information, almost everyone UNDERESTIMATES their own life span.
What a challenge and what an opportunity. How can we help people? 75 percent of all pensions in America are paid out joint and survivor. We are literally disinheriting the next generation of money that will be crucial to the financial survival of many families. Most Americans don’t even realize they are doing this. Ask them this question: “What if I could show you a way that you could receive approximately the same income you were going to receive under the joint and survivor election, but instead of the insurance company keeping the money when you both passed away, you would stay in complete control of the money and be able to pass it on to your family to use for generations to come? Would you talk to me about that?” They say, "of course I would talk to you about that." How many cases do you think you would open if you asked the right questions? Remember, people are living longer than ever before!
The Third Paradigm Shift: We are transforming from an industrial age, which by definition requires mass human labor, to an Information, Knowledge Age, which does not!
Author Jeremy Rifkin, who wrote The End of Work, Technology Jobs and Your Future says that if you are a secretary or a file clerk, if you work in the mail room, if you are on a factory floor, if you are a garden variety middle manager, if you are a bank teller or a librarian, if you are in wholesale or retail -- the chances are that your job will not be here five years from now. Less than 2 percent of the global workforce is still in mass assembly line work. We are seeing the virtual elimination of blue-collar factory workers. The factory of the future will only have two workers: A man and his dog. The man will be there to feed the dog. The dog will be there to make sure the man doesn’t touch any of the equipment.
Harvard shared a study predicting over 70 percent of people working today will be out of their fields and doing something else within two years. In the 21st century, people won’t just need new job skills, they will require a new way of thinking. They will have to learn to create work. That adjustment will take time and money.
In the 21st century, people won’t just need new job skills, they will require a new way of thinking. They will have to learn to create work.
The Fourth Paradigm Shift: Interest rates will remain near zero for the foreseeable future.
I read an article in the Financial Post that predicted interest rates would remain below 1 percent until 2030 and below 3.5 percent until 2050. Governments will attempt to keep interest rates low, so they can continue to service all the new debt they are creating in a manageable way.
It would be wise to master the accounting rules of 72 and 115. The rule of 72 says that if you divide the interest rate into 72, it will approximate how many years it takes money to double. It also works for inflation. If you divide the inflation rate into 72, it will approximate how many years will be required to double your income so that you can maintain your current standard of living. For the rule of 115, it is how many years to triple your money or your income.
Here are some examples. If you earn 1 percent on your money, it will take 72 years to double. If we have 3 percent inflation, you will have to double your income every 24 years to maintain the purchasing power you began with, or triple your money every 38 years to do so.
This paradigm will also impact the returns of cash value life insurance and annuities, and will change everything that we have ever known or believed about our industry. Retirees must be aware of the planning opportunities our industry provides, such as guaranteed income you can’t outlive, mortality credits, and the most important concept of all, leveraging. We must learn to ask our customers if they would like all the additional benefits these products provide -- without paying anything extra. In this environment, our industry has the tools to help our customers achieve financial and retirement success in spite of the blunders being made by government, the Federal Reserve, and Wall Street.
Our industry has the tools to help our customers achieve financial and retirement success in spite of the blunders being made by government, the Federal Reserve, and Wall Street.
The Fifth Paradigm Shift: Our governments will print more money than ever believed possible.
According to www.usdebtclock.org, the M2 money supply in the year 2000 was $4.8 trillion. Currently, the M2 money supply is $18.5 trillion. Our population has only increased by 10 percent since the year 2000, yet our money supply has increased 385 percent since the year 2000. This information is provided daily by the Federal Reserve at www.federalreserve.gov.
Now, let's get scary. It is forecast that the M2 money supply will increase to $42.8 trillion by 2024. That is a 231 percent increase in four years. Finally, the debt clock predicts that the M2 money supply will increase to $98.6 trillion by 2028. That is an $80.1 trillion increase in eight years or a 533 percent increase in only eight years. It is also predicted that currency and credit derivatives will have increased to $1.2 quadrillion by 2028. This is all artificial money creation.
This will dramatically decrease the purchasing power of ALL Americans. IT IS A STEALTH TAX. And everyone will have to pay it. Whether they make $10,000 per year, $100,000 per year, 1,000,000 per year or $10,000,000 per year.
Think about it: if inflation rises to only 5 percent, using the accounting rule of 72 that means Americans will lose half their purchasing power every 14.4 years. If we have 5 percent inflation and you need $100,000 per year to live, in 14.4 years you would need $200,000 per year to buy the exact same goods and services. Everyone pays! And remember, Americans are living longer, which will exacerbate the problem. Most Americans will likely have a lower rather than a higher standard of living in the future.
I believe this will be our biggest and most dangerous challenge. How do we offset 5 percent (or even higher) inflation with less than 1 percent interest rates? How do we offset inflation if the stock market provides zero returns like it did from 2000 to 2010? We have the answers: guaranteed lifetime income, mortality credits and leverage. Our industry is the only one who can offer these solutions.
How do we offset 5 percent (or even higher) inflation with less than 1 percent interest rates? We have the answers: guaranteed lifetime income, mortality credits and leverage.
So, how so do we turn this information into a sale? By this time in the conversation, my customer is overwhelmed with questions, emotions, concerns, etc. I simply ask: “So, what do you want to do about all of this?” They usually say, “I don’t know, what do you suggest?” I reply with: “I hope you will laugh, but I actually have to ask some additional questions so we can clarify exactly what you want to accomplish. Would that be okay?” Then I share an emotional fact finder that has only five questions. This process will help them to organize how they want to proceed.
First Question: What do you want to happen when you die? Not what you think might happen or what someone told you would happen, but what do you want to have happen the day you die? They will ask what I mean. I reply again, “Please tell me everything you want to happen when you die. Would you like your children to attend the same school? Do you want your spouse to have to return to work? What do you want to happen to your business? Who do you want to own your business?" Etc., etc., etc.
Second Question: What do you want to happen when you become disabled? They will ask what I mean. I ask if they realize that almost everyone in America becomes disabled for some period of time, so "Please tell me everything you want to happen if you can’t work for one or two or three years or possibly never again. Do you want to turn a physical catastrophe into an emotional catastrophe? Do you want to have to get a divorce to qualify for benefits? Do you want to lose your home?" Etc., etc., etc.
Third Question: What do you want to happen if you have a critical illness like a heart attack, a stroke, or cancer? Do you want to lose your house, or do you want to lose your mortgage? Do you want to return to the job that probably contributed to your heart attack, or would you like to train for a different job? Wouldn’t money give you that opportunity?
Fourth Question: What do you want to happen WHEN you go into the nursing home? They will ask what I mean. I ask if they realize that Social Security predicts that 85 percent of Americans will require long term care eventually. What do you want to happen then? Do you want the government to get your money? Do you want the nursing home to get your money? Or, do you want your family to get your money if you go into the nursing home? They all say that they want their families to get the money. I ask, “You understand that with the way you have things set up now, that will not happen? What would you like to do?” Etc., etc., etc.
Fifth Question: What do you want to happen when you retire? Do you want to stay in Wisconsin and freeze to death in the winter or would you like to move someplace warm? Do you want to work on the golf course or play on the golf course? Do you want to run out of money before you run out of month? Do you want to be an old man or an elderly gentleman? What’s the difference? Isn’t it money? Etc., etc., etc.
This is the most important phase of the sales process, because your customer is discovering and sharing with you the most important financial decisions that they will ever make. Then you transition by asking to see all their “stuff” to determine what they need to do to accomplish their now organized goals.
This is the most important phase of the sales process, because your customer is discovering and sharing with you the most important financial decisions that they will ever make.
We sell financial miracles. Here are three of the financial miracles we sell: (1) We sell the financial miracle of compound interest, (2) We sell the financial miracle of tax deferral or tax-free compound interest, and (3) We sell the financial miracle of leveraging -- pennies that can buy dollars and one dollar that can do the work of many dollars.
Because this was an extended beginning to the newsletter, I am going to close with a slightly shortened version of the sales ideas. The explanations for these ideas will be shorter in order to keep the newsletter around normal size and reading time. I chose articles that explain the concepts clearly and concisely.
Idea #3: Use This Article to Make Sales
This article is just a great headline. Used in conjunction with www.usdebtclock.org, it can start a powerful conversation.
Title: US Printed More Money in One Month Than in Two Centuries
https://cointelegraph.com/ (Cointelegraph, July 31, 2020)
https://cointelegraph.com/news/us-printed-more-money-in-one-month-than-in-two-centuries
Idea #4: California Is an Example of What Is about to Happen
California currently has the highest state income tax, and they wish to retroactively increase the marginal California tax rate from 13.3 percent to 16.8 percent. They also wish to begin a wealth tax of .4 percent on net worth over $30 million. But even the increased tax recommendations will not even come close to all the money California has to come up with. I don’t know how California is going to pay for everything they have to. I am NOT picking on California. THIS IS HAPPENING IN EVERY STATE IN AMERICA! You are beginning to see the early stages of what states, cities and municipalities must do to raise the revenue they need to run all their programs and services. We must help our customers to begin planning for this.
Title: California Legislators Propose 0.4% Wealth Tax, Plus 16.8% Income Tax Rate
https://www.forbes.com/ (Forbes, August 17, 2020)
https://www.forbes.com/sites/robertwood/2020/08/17/california-proposes-168-income-tax-rate-plus-4-wealth-tax/
Title: Why California’s Latest ‘Soak the Rich’ Tax Proposals Are Likely to Backfire
https://nationalreview.com/ (National Review, August 20, 2020)
https://www.nationalreview.com/2020/08/california-wealth-tax-proposal-will-likely-backfire/
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