This Month:
Trust is money: the "X" factor in producer performance
New Conversations: How Securities America opened new dialog between client and advisor
Women seek more confidence in making financial decisions; men willing to take more risk
Reform or no reform, health and productivity management just may save corporate America
Life insurance: the new asset class
Helping Advisors provide added value
Social media's role in recruitment and sales
Insurance IQ study shows Americans lacking in confidence, knowledge of insurance choices
Producers rebuilding practices, reshaping careers
Income planning redefined: RIIA envisions tomorrow's advisors
New advisors take an old-school approach
Everybody likes to buy, nobody likes to be sold
Leveraging costs: in-house or outsource
How are you promoting yourself
Benefits and blunders of Social Media Marketing
Guiding small business through new economic reality
Community-based marketing positions agents in uncertain times
Prospecting in the High Net Worth Market
Prospecting: Its all in the process


Trust is money

The "X" factor in producer performance

by Keld Jensen

Keld Jensen has more than 20 years experience in international management, negotiation, and communication from his post as managing director of a listed Scandinavian company. He is chairman of the Centre for Negotiation at Copenhagen Business School, and has authored 16 books on management, business ethics, and negotiation. He can be reached at www.KeldJensen.com.

The financial crisis left a lot of investors with deep wounds and empty pockets. But as the market flirts with signs of recovery, a major roadblock for the financial advisor is investor unwillingness to put their faith, or their dollars, back in the hands of the professional.

There's no question that it will be a long journey out of the black hole of distrust. In the absence of trust, investors are reluctant to relinquish control of assets or invest in complex products they do not understand. When the trust gap widens, advisors make less money. When trust is low, the cost of the sale goes up, the sales cycle lengthens, and commission revenue goes down. When trust is high, referrals come easily, underwriting is expedited, and the bottom line is improved. The concept is simple, but its implications are huge.

The 21st century investor wants a relationship. They want an advisor who is going to put their interests first, offer valuable advice, and, most of all, put in the work to establish a high level of trust. Producers willing to acquire the Skills of Engagement, build rapport, and acquire Communicative Competence will find themselves in a trusted advisory relationship with prospects who will gladly become clients. Trust is money.

The Skills of Engagement

Research indicates that 85 percent of success in business comes from interpersonal skills. These six skills are the fundamental building blocks of relationship effectiveness.

The acquisition and mastery of these interpersonal skills requires a combination of attitude, perspective, experience, and knowledge of certain rules of conduct. Producers who are dedicated to achieving excellence in these areas will have laid the foundation for trusted advisory relationships.

Building rapport by adjusting your method of delivery

The next step to establish trusted advisory relationships is to build rapport by adjusting the way you deliver information to the prospect's preferred representational system. You can optimize the effect of your message by delivering it in the way your prospect prefers to receive information. There are three primary representational systems visual, auditory, and kinesthetic. People who are predominantly visual receive information best through a picture, illustration, or the written word. Prospects who are primarily auditory will respond best to being told either, in person or on the phone, the details you want them to hear. For these people voice mail is probably better than email. Kinesthetic people need to participate in the data transfer in some way so they can feel and experience the content of your message. You need to get across the table from these people and let them sit side-by-side with you while they take notes as you crunch the numbers. Or better yet, give them an assessment or questionnaire where they enter the data on line and hit submit to receive a report. Active participation is the key.

People want to do business with producers who understand them. They will advance a professional relationship more quickly with someone they like and feel comfortable with because they have a sense of similarity and common ground. You can enhance this sense of common ground by adjusting your delivery and your language to the primary representational system of your client. By adjusting your delivery, you can quickly build rapport, establish trust and credibility, and, thereby, enhance the clarity and persuasive value of your message.

Build trust through Communicative Competence

What I call communicative competence enables financial advisors to build a natural and intrinsic trust with their prospect. The process is made up of the following components:

A primary characteristic of effective communication is that it is two-way. It is necessary that both parties listen to each other, ask and answer questions, and make use of the answers to discuss alternatives. Instead of listening passively, you need to be reiterating what is being communicated in order to move the conversation forward. Listening implies that you respect the other person, are working to understand his or her viewpoint, and that you are striving to come to a consensus with which you both are satisfied. If communication does not function satisfactorily from the beginning, it will become increasingly difficult to find the common ground.

Body language is a key component of your non-verbal behavior and effective communication. The way you move your arms, your facial expressions, your gestures, and how you stand are all part of your body language. Eye contact is a vital component for establishing rapport and emotional connection. You can learn to use your voice to persuade other people that you are knowledgeable and confident. Often you can tell by someone's voice alone whether or not you can believe what he or she is saying.

There is a natural and direct connection between the words you use and your body language. As a good communicator, it is important to be aware of the signals you are sending so you can correlate your body language with the message you are trying to convey.

When body language, words, and intonation are working together to send the same message, you create congruence in your communication and you become trustworthy. In other words, congruence is produced when body language and words convey the same meaning. If you use your conscious body language to establish eye contact or raise or lower your voice you can build trust and make them more attentive. Similarly, unconscious gestures can demonstrate acceptance and support or distance and tension. People who convey these unconscious signals are not always aware that they are sending a powerful message about their good or bad intentions or their integrity or the lack thereof.

Contradictory behavior between your body language and words causes the listener to doubt what you are saying. Most humans have a built-in lie detector, which sends a signal to their subconscious saying something is wrong here. Do not trust this person.

Why trust is money

When you think about selling financial products, picture the sales process like the inside of a machine with giant interlocking, constantly moving gears. When there is not enough trust, the pace at which the gears turn becomes sluggish. Prospects who feel uneasy about a particular product or the true intentions of their advisor will ask excessive amounts questions, be slow to return your calls, and require a longer amount of time to think over the purchase. Trust acts as the lubricant for the gears of financial transactions. Trust greases the wheels so you are able to move through the sales process and build a book of business that is sustainable.

Perhaps the most attractive benefit of building trust is the potential that your client will become an advocate for you and your company. There is nothing more powerful than your own clients advocating on your behalf.

As the financial services industry looks for answers to tough economic complexities, it's time to go back to basics and rethink how we communicate. The Skills of Engagement, building rapport, and developing Communicative Competence are all ways that will help you fully understand your clients' needs. And when clients feel that you completely understand them and are willing to help, you'll see why trust is money.

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NEW CONVERSATIONS

How Securities America opened new dialog
between client and advisor

by P.E. Kelley
LIFE&Health Advisor Managing Editor

The market struggles of 2008-2009, subsequent recession and ongoing recovery have taken their toll on the American psyche as it relates to confidence about financial stability. The long-running bull market that preceded the decline created expectations among investors that haven't been entirely rewritten. As a result, many advisors continue to receive questions from clients about when their portfolio will be "back to normal" and when those years of eight percent returns will come back.

As an advisor, you may be finding your empathy turning to frustration that, despite your best efforts to educate your clients about the "new normal," they cling to their past expectations and perceptions. How do you divert their attention away from what they've lost, what they have not regained and the adjustments and sacrifices they may need to make to get back on track for their future?

To that end, Securities America, an Omaha based broker dealer, has launched a new client communications program called New Conversations, a series of business growth tool kits designed to help advisors enhance their relationship with current clients and begin strong relationships with prospective clients. New Conversations topics and their accompanying tools offer advisors a framework for engaging clients and prospects on important financial topics while showing them how to gain unique insight into the client's beliefs, values and goals. These topics provide excellent opportunities for advisors to showcase their value proposition and thought leadership with current and future clients in their marketplace.

Rediscovery

The first topic created for the New Conversations program was Client Re-Discovery. In difficult times, people often take a hard look at their life and rethink their goals and values. Your clients have probably been doing a lot of thinking about their lifestyles. What may have been a key focus a few years ago when you did the initial discovery meeting may no longer be a priority. Or, tough economic times may have caused clients to lose sight of their goals and values, which can lead to rash decision making that can hurt their financial future.

A re-discovery meeting process helps advisors be proactive about working with clients and helping them either adjust their goals to meet their new and changing needs or to help them see that their goals have not fundamentally changed and make them more comfortable with "staying the course."

Every advisor is looking for that "something" that will help him or her stand out from the crowd. Having a discovery process that continues to focus on the values behind the goals will differentiate you from other advisors who may be making recommendations based on an initial, and outdated, assessment of their client. An advisor's job is to learn what is important to his or her clients and then help them with those issues. That job never stops. Client rediscovery also reinforces the client-advisor bond, because you are taking time to listen to the client's values and showing the client you are interested in him or her.

Securities America has created a four-step process to help advisors not only conduct client rediscovery meetings but make the process consistent across their practice. These include a training webcast, a conversation guide, a podcast, a re-discovery template and sample of rediscovery materials. Having a process helps advisors create consistency across clients, which is important if those clients are sending you referrals. It also helps create consistency in office processes and procedures so staff can easily adhere to a standardized client experience.

In-service retirement plan distributions

Securities America will launch the second New Conversations module this fall around the topic of In-Service Retirement Plan Distributions. While most defined contribution plans allow distributions after an employee leaves the company, some 401(k) or profit sharing plan plans allow certain employees to take all or part of the assets from their plan account while they are still employed. These distributions may be eligible for rollover into an IRA or other eligible plan.

Clients may find in-service distributions an attractive alternative that gives them more investment options and more sophisticated strategies than available in their current plan. By consolidating those assets under their advisor, the client may also simplify their asset tracking and work toward their retirement goals more closely with the advisor. Through New Conversations, Securities America advisors will learn more about this option, including the need to work with an accountant to avoid any unintended tax consequences, and will receive tools to help them discuss in-service distributions with their clients.

The New Conversations program surrounds topics of interest to today's investors with systems, structure and tools to help advisors implement them uniformly across their practice. Of course, rediscovery and in-service distributions are just two possibilities for turning clients' and prospects' attention away from what they may have lost and toward what they have to gain. By applying the Client Re-Discovery process, advisors will likely uncover any number of financial topics they haven't explored with their clients. And as the old axiom goes, if one client voices a question or concern, others probably have the same question or concern but haven't expressed it. Careful listening, documentation of conversations and thoughtful analysis across the client base can help advisors find areas where they can potentially add value to the client relationship. That, in turn, creates more reasons for clients to refer the advisor to others who have the same concern or question.

Securities America plans to introduce more New Conversations topics and tools in the future, so advisors who find themselves in a conversational rut can give themselves, and their clients and prospects, something to talk about.

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Women seek more confidence in making financial decisions; men willing to take more risk

by Michelle Ransom

Michelle Ransom is an investment specialist with Charter Oak Insurance & Financial Services in Hartford, Conn., a general agency of Massachusetts Mutual Life Insurance Company. She can be reached at mransom@finsvcs.com.

In my day-to-day practice as a financial services professional, I visit with many families in southern New England, and for those whom I have visited, no matter what their financial resources, they have all been profoundly affected by the "Great Recession" of 2007 to the present. Many of the families I've encountered have seen their retirement savings dwindle, and are now faced with the stark reality of having to reshape their views of how they historically perceived the world of investing and how they are going to address their long-term retirement income needs.

Recognizing a need for new insights into the changing definition and dynamics of families in this country, Massachusetts Mutual Life Insurance Company (MassMutual) has introduced the "State of the American Family" platform, consisting of a series of research studies conducted over the months and years ahead.

This multiyear initiative will bring a deeper understanding to the different forms families take, how family members interact on matters financial and otherwise, how factors like ethnicity and income affect family dynamics, and trends that will shape families in the coming decade.

The initial research study from this new series, Families, Financial Attitudes & Planning, conducted by Forbes Consulting group for MassMutual, focuses on women, and the sometimes contrasting views of men, and how they make financial decisions for the family.

The financial gender divide

The first study released under this platform, about women, men, their families and finance, shows that women, who now control $12 trillion in global consumer spending, recognize the need to get their finances in good order. During the span of my career, I've witnessed an expanding number of women exerting more influence in the financial decision-making process within their families. Women's roles in the household have broadened beyond the traditional scope of grocery store shopper to a role that represents a more comprehensive approach to family financial planning, in response to the challenges they face.

The study shows that one quarter of the women surveyed said they wished they were more in control of their finances, which was the same percentage among men responding to the survey, but 34 percent of women respondents also wish they were more confident in making financial decisions, while only 24 percent of men feel that way.

Only about one-fifth (19 percent) or women are confident that they are doing a good job of preparing financially for retirement, while close to a quarter (24 percent) of the male respondents are confident they are doing a good job. Tellingly, 41 percent of women worry about outliving their retirement savings. Recent data from the CDC's National Center for Health Statistics3indicates that women live about fives years longer than their male counterparts. Given this data, it becomes even more paramount for women to take an active role in managing their finances prudently, to help ensure they will have a comfortable retirement.

And when it comes to making financial decisions, men and women differ, as well. One-third of men surveyed say they are willing to take more risks to get better returns on investments, while only 17 percent of women are willing to take the same risks. Twenty-eight percent of men feel confident that they are selecting investment options to meet their goals, while only 16 percent of women feel as confident.

As would be expected, women are less likely than men to view the down market as an opportunity: only 23 percent of women said they viewed the past recessed state of the economy as a buying opportunity, as opposed to 41 percent of men. As the data suggests, women's more conservative approach to investing presents some unique challenges when planning for their retirement.

These insights have resulted in my beginning the planning process for my clients with education on investment concepts such as diversification, asset allocation, and time horizons. Knowing that men and women approach the planning process differently, I also must understand how they think, what they are feeling and how they want to work with me. Add to these a desire to be in control of their finances and the need for resources to do so. I pride myself in being able to provide these components delicately balanced with the client's tolerance for risk in the marketplace.

Information overload

Education seems to be paramount. One-quarter of all surveyed say they are skeptical of financial services companies, such as banks, investment companies and insurance companies. I have found that my clients over the past few years have talked to me about countless and uniquely different sources of advice in their lives: family, friends, financial education websites, television programming and even blogs. With so many different sources of advice, it becomes unclear where American families turn for the information they need to make sound financial decisions.

Not surprisingly, 37 percent of all respondents feel comfortable searching for financial information on the internet, and more specifically, despite indicating distrust, close to a quarter are likely to go to a specific company website for information on financial products and services. Only 10 percent said they prefer to go to a third-party website for financial information rather than a company website.

As a result of the large amount of available resources, good and bad, 34 percent of the women surveyed are overwhelmed by all the information available regarding investments and finances, and 42 percent, as opposed to 26 percent of men, prefer for their agent or planner to help them choose the type of insurance and investments that are best for them. Only 39 percent said they can make financial decisions, but they just need a little guidance.

In my practice, I've found that during these turbulent economic times, the role of the advisor has become a critical component. That's why I make it a point to pick up the phone and talk my clients through their fears and concerns. I have found that my clients look to a financial service professional for guidance in navigating the cyclical markets, so I feel it is my role to provide the reassurance they need by delivering the utmost level of service, when they need it the most. This has solidified my conviction that I am a guide to my clients in both good times and the uncertain ones.

Family values

Other survey findings indicate that the future of the American family is an important consideration. Parents have learned from the economic downturn and want their children to avoid similar hard lessons:

It's the economy

What is clear, both in my personal dealings with families and in the response to the Families, Financial Attitudes & Planning study, is that this current "Great Recession" has changed the way Americans spend money; more than half (53 percent) said they have scaled back their spending recently, due to the current state of the economy. I am finding that the economic conditions have really forced families to consider their spending patterns and evaluate what is a necessity vs. a luxury for the household. While their short-term reluctance to spend might put a damper on the growth of the economy, it does however, have positive side effects as well. It enables us, as advisors, to counsel the client on how to appropriately budget their finances and aids in creating additional cash flow that can be used towards savings.

As a financial services professional who works closely with so many families, I am trying hard to provide the information, education and even the confidence to help Americans emerge strong through the sputtering recovery. As an advisor, it's my personal mission to help empower families to make sound financial decisions by providing them with the knowledge and direction they need during these difficult times.

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Reform or no reform, health and productivity management
just may save corporate America

by David Gittelman

David Gittellman is Director of Marketing for Reliance Standard Life Insurance Company (Reliance Standard), a group life and disability insurance carrier. He can be reached at david.gittelman@rsli.com.

It seems like a universal truth: Given that health care delivery costs are burdensome and consistently getting higher, surely it must be cheaper to help an employee become and stay healthy than it is to treat him once he is sick. And based on that rational thinking, health and productivity management programs (HPM) have spawned and spread, fostered primarily by the large medical insurance carriers who typically ride shotgun on health care utilization. So why haven't matters improved?

How it works today

In the old days, no claim as to them being good ol' or bad ol', you paid your neighborhood physician for treatment, out of pocket. Maybe you paid him in chickens or bartered services. Then, around the time of the Great Depression, rudimentary employer-sponsored health insurance was created. A couple World Wars later, and it became the prevailing economic trend. Today, about six in 10 Americans receive health insurance through their employers. What started as an accommodation grew into a "benefit," then became an entitlement, and here we are in an age where the employer model keeps affordable care from individuals even while it threatens to bankrupt employers.

Data from various sources, including stops along the wellness continuum noted above, treatment providers, medical carriers, pharmacy managers, disability carriers and others, are collected, combined and analyzed to distill a desired corporate benefit, most often a combination of lower or moderated health delivery costs, reduced absence and presenteeism, that phenomenon when you're at work but distracted or "off your game" and improved productivity, satisfaction and loyalty. Oh, and a healthier work force, that's important, too!

Those are the major building blocks of the HPM legacy. So why hasn't it changed the world yet?

Shortfalls

There are three general groups of shortfalls that have traditionally kept unbridled HPM success elusive: employer shortfalls, process shortfalls and something we'll call "What Did I Buy?"

Employer Shortfalls - We know where the road to good intentions leads, and for all the noble objectives, many shortfalls begin in the workplace. For example, a voluntary program is only as successful as the percentage of employees who are actively participating. Often a great deal of thought is given to program construction, but not to employee engagement. Among competing priorities for time, effort and budget dollars, it may be hard to sustain an employee campaign past initial launch. And normal organizational barriers like different work sites, different medical carriers, and different geographical considerations can all make it difficult for employers to make good on their own good idea.

Process Shortfalls - When it gets right down to it, who owns the process? Is it the medical carrier, and if so, which one? Most large employers have multiple carriers, so the best case scenario can only be parallel programs running in place for employees enrolled in a particular medical plan. What happens to the rest of the employees? Are they less integral to the company's success? What if the program is employer centric, a loose confederation of individually purchased services and providers? Is there real integration of care delivery, communication and analysis, or just a loose web of vaguely positive services all reporting into a single corporate stakeholder? Which brings us to our final challenge:

What Did I Buy? - We started our discussion looking at an abstract idea that made perfect sense. What does it take to make the leap from logic to intelligence? Many employers are left with reports of the efficacy of various disembodied pieces of their HPM programs, or raw data that is difficult to interpret. On what are they to base fiscal and cultural decisions to measure the success of their business objectives?

The next generation

The recipe for the next generation of "smart" HPM programs is therefore written: Solve for the shortfalls and you can actually improve the health of the workforce and the corporate bottom line, plus, you can measure your success.

Engagement - The successful program must focus on the most important stakeholder, the employee. It can't be left to a splashy launch, which is often perceived as another corporate gimmick; health and wellness has to be ingrained in corporate culture, become part of the company's brand. This requires communication year-round, each year, and incentives that go beyond the initial payoff to complete a health risk assessment. Those who find a way to engage employees and make the program attractive, not just a good idea, will win.

Integration - For all the many providers and mighty insurance carriers out there, the real value of HPM is contingent upon integration. Data must be collected at all points along the wellness continuum and, for that matter, the employment continuum. Programs that neglect workers who are absent/disabled (Can you imagine? These are the employees for whom the program can work best, and fastest.) or those who opt out of the sponsoring medical plan, are fundamentally flawed. Programs that don't feed into, and operate from, a shared database/intelligence are fundamentally flawed. In the new HPM world, integration moves from buzzword to requirement.

Reporting/Analysis - All the data in the world is meaningless without critical analysis. The success of HPM is not to be measured by the number of stress balls deployed or even the number of employees engaged, but by the actual understanding of mitigated health trends and improved operations trends. In order to claim success, an HPM provider and the employer sponsor have to come to terms on agreed upon objectives, and these should include measurable shifts in health care spending, delivery, incidence, absence, satisfaction and other areas. At the heart of every desired outcome is a unit of measurement, and in most cases, a cash equivalent.

In this way, we can take steps to make a good idea a sound business practice. Rather than sitting idly by, employers can take meaningful action and become accountable as their employees accomplish the same when it comes to their health.

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Life insurance: the new asset class

by Michael Gordon

Michael J. Gordon is senior vice president of Agency-Life Operations at New York Life Insurance Company. He can be reached at Michael_j_gordon@newyorklife.com.

Life Insurance - Part of the New Rebalance of Assets

The recent economic uncertainty has had a big impact on Americans, and it has changed the way people think about their wealth and risk-taking, increasing the desire for financial strategies to better balance protection needs with goal achievement. As members of the financial community, we have good news for our clients: they now have a better way to optimize their portfolios by appropriately factoring in all aspects of their total economic wealth.

Human Capital Effect

Your clients protect their financial investments through diversification and regular rebalancing to maintain the proper risk/return profile to meet financial needs, and you may help them with this. But, in the conversation, advisers often overlook human capital, the present value of future earnings. In other words, human capital is the value or total worth of a paycheck to a family over a lifetime. It is an underappreciated component of a family's financial plan and by incorporating it into discussions your clients can more fully optimize their assets.

How? First, clients need to understand the risk. Loss of future earnings can be quite significant. In fact the mortality risk associated with human capital may be the greatest risk to total economic wealth. For example, a 30-year old working to age 65 at an average salary of $40,000 a year would earn $1,400,000 over that 35 year period. The premature death of this income provider and potential loss of $1.4 million can be devastating to the family's financial security. That future income represents a substantial asset: one the family is likely to depend upon to survive.

Life insurance is uniquely suited to guard against the potential loss of human capital in the event of premature death. Without life insurance that future income isn't protected. If there is life insurance in place, it is often the case that people don't have nearly enough life insurance to replace 20 to 30 years of future income.

A significant part of the overall equation is factoring in the client's age. Protecting human capital is even more critical when a client is in his/her 30s or 40s, because the value of future earnings is greater. Compare the 30-year old example above with a 55-year old working to age 65 at an average salary of $40,000, which means $400,000 in potential future earnings.

Comparing the two examples, it is clear that, with all else assumed to be equal, the human capital amount for the 30 year old represents a disproportionate share of the client's total economic wealth. In general, as one's career progresses, human capital decreases and turns into financial capital through savings and investments, making human capital a smaller proportion of total economic wealth.

Career Impact

In addition to driving life insurance needs, human capital plays an important role in determining a client's appropriate asset allocation. For example, a tenured professor has a stable income that is not correlated to capital markets. But a stock broker's income is impacted by the stock market, and therefore is more variable.

Recognizing the varying volatility of a client's occupation will impact overall asset allocation. All else equal, the tenured professor whose income is fairly constant would be able to tolerate a bit more risk when designing an overall portfolio, while the stock broker's income varies greatly from year to year, and therefore he/she may want to offset some of that risk by holding a greater proportion of stable, conservative assets.

Life Sleeve Influences Bond Allocation

Traditionally, life insurance needs have been a separate discussion from conversations about financial assets. It is becoming increasingly clear, however, that human capital has an impact on the overall portfolio and therefore these two discussions should be done together.

The following scenario illustrates that having life insurance as part of the overall asset allocation provides optimal economic wealth.

First scenario - no life insurance

Investor A's total economic wealth consists of $1,500,000 with $800,000 in human capital and $700,000 in financial capital. While alive the riskiness of the investor's human capital plays a substantial role in her asset allocation as human capital constitutes more than half of her total economic wealth. Since the investor does not have life insurance, her legacy amount (financial assets available to surviving household members) is limited to only $700,000.

Second scenario - life insurance

Investor B also has economic wealth of $1,500,000 with $800,000 in human capital and $700,000 in financial capital. However in this case, Investor B decides to allocate $10,000 of his financial capital to purchase $600,000 in life insurance for the given year. Investor B's total economic wealth is marginally reduced to $1,490,000 but he has increased his legacy amount to $1,290,000 from $700,000.

An additional point is that Investor B, by having life insurance as a sleeve of his asset pie, has more than the obvious advantage of increased legacy amount. The life insurance sleeve of the portfolio represents a bond-like asset, considering the life insurer's conservative portfolio of investments underpinning its long-term commitment to policyholders. So Investor B may be more aggressive with the other sleeves while still meeting his overall target asset allocation. Those who have separate life insurance discussions are not appropriately factoring in this stable asset and their overall portfolio may be over weighted to fixed income, keeping returns lower overtime.

When clients or prospective clients see the options laid out, comparing Investor A and B next to each other, they will usually see that the integration of insurance and investments gives them a better potential outcome and better manages their risk than keeping them separate.

Better Balanced Wealth

The traditional definition of financial wealth, stocks, bonds, mutual funds, real estate holdings, and retirement savings, is incomplete. Human capital cannot be traded like a stock, but it is a vital component of wealth that client's must protect, and its riskiness is a critical consideration in determining the client's optimal asset allocation.

By evaluating a client's total economic wealth, combining key insurance and investment decisions, the result is a holistic approach that creates a tailored portfolio for each investor based upon their human capital and their financial capital, and accordingly more appropriately assesses their risk capacity.

It is time for all of us to have deeper conversations with our clients, conversations that take a broader view of the clients' wealth than we have traditionally taken. It is only by having such conversations that we can help our clients achieve their optimal asset allocations and better manage both market and mortality risk.

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Helping Advisors provide added value

by Art Brooks

Art Brooks is with BeneTrac, a Paychex company and provider of web-based electronic enrollment and employee benefits administration software used to manage benefit information. He can be reached at abrooks@benetrac.com.

Employer health insurance premiums increased by five percent, two times the rate of inflation, and the annual premium for an employer health plan for family coverage averaged $13,375 in 2009.

Startling statistics such as these from The Henry J. Kaiser Family Foundation (Employer Health Benefits: 2009 Annual Survey, September 2009), which illustrate the rising cost of traditional health care plans, are one reason the government points to the need for health care reform, and employers are looking to less expensive benefits alternatives. Increasingly, employers are looking to health savings accounts (HSAs) and their low-cost, high-deductible health plan companions as welcome alternatives to costly health insurance plans. Simultaneously, many are looking to inexpensive flexible savings accounts (FSAs) and non-insurance voluntary benefits to boost benefits offerings.

HSAs

With 2010 contribution limits of $3,050 before tax for individuals and $6,150 for families, HSAs can offer added flexibility for employees. They can use that money to pay for health care expenses when necessary, or grow the money tax-free for retirement when it is not. The fact that there is not a "use it or lose it" feature with an HSA can be a big attraction for employees.

HSA-linked plans can bring new, more budget friendly options to those companies that might have cut health benefits or would not otherwise be able to offer them. And, increasingly, even for those companies that already offer health insurance, switching to HSA-linked benefit plans is becoming a necessity to help keep costs in line. About 20 percent of businesses with fewer than 100 employees do not offer health insurance, according to Employee Benefit Research Institute. And, that number skyrockets when it comes to small business owners with fewer than five employees; 77 percent of those employers do not offer health insurance to their employees, according to Discover Small Business Watch, a monthly index polling small business owners conducted by Rasmussen Reports.

HSAs don't appear to be going away anytime soon. We have seen a five-fold increase in HSA enrollment during the past 12 months. Market research firm Celent also modified its earlier projections, which originally cited the HSA market's "disappointing early showing," with a revised estimate of 12.5 million accounts by 2012 (January 2008). A survey published by AHIP in May 2009 found that eight million people were covered by HSA/high-deductible health plans in January 2009. Of those, 1.8 million were covered by individual policies and approximately 6.2 million were covered by a group plan.

FSAs

Alongside HSAs, FSAs have become a staple in many benefits plans because they allow employees to put aside pre-tax money from their paycheck to pay medical expenses. They are often one of the first types of benefits being offered to offset a reduction in employer health insurance contributions and higher rates/employee contributions. FSAs have long been perceived as a valued benefit option but are increasingly becoming considered more of a "required accompaniment." FSA benefits can sometimes help buffer the increased financial burden of higher out-of-pocket expenses and deductibles being required of employees today.

Non-insurance Voluntary Benefits

Similarly, offering non-insurance voluntary benefits is another way companies are providing value. Non-insurance voluntary benefits are designed to augment core benefits by addressing the personal needs of a company's employees. Companies are offering a range of benefits including auto and home insurance, 529 college savings plans, deferred compensation, estate planning, fitness programs, lunch programs, medical opt-outs, pet care, profit sharing, stock options, uniforms, and more.

These benefits are often made available to employees with little or no cost to the corporation. They can supplement or enhance the existing benefits being provided, give employees unique savings or other value beyond typical retail offers, or help simplify their personal needs by saving time and providing easy access to needed resources.

In addition to these emerging benefits options, benefits plan offerings stand to evolve even more, as changes in the way we as a nation provide health care become more apparent. No one has a crystal ball to determine the outcome or how the government may be involved in the future of health care. However, as the need for change is identified, updates in legislation and offerings are likely to result.

Advisors Providing Value

What does this evolving benefits landscape mean for life and health advisors? Some may point to the argument that brokers will become less necessary as companies seek to work directly with carriers and other providers to obtain products. But, for those advisors and brokers who are able to remain on the cutting-edge of benefits and offerings, a number of factors point to the opposite being true. For these advisors, their roles can be even more vital to corporations in making benefits decisions and taking action on emerging requirements. These insurance professionals can provide added value on a number of fronts.

A key benefit that advisors can offer is access to innovative solutions from which organizations can select to meet their changing employees' needs. Brokers that can provide access to a number of health care, and other insurance and non-insurance alternatives, can have a greater edge. They can especially help clients in addressing companies' needs to lower costs, offer a variety of plans, and provide greater perceived value to help maintain employees.

Finally, as companies choose more complex plans such as HSAs, advisors can help them understand the effects of changing contribution limits and other emerging regulations. They can also help them manage more complex paperwork and provide a greater level of assistance in taking advantage of these plans.

With increasing costs and growing uncertainty in the market, benefits plans and offerings are continuing to evolve. The most successful advisors will not sit idly by to see how the market shakes out, but will proactively pursue options for organizations and use access to company information and industry expertise to look for new opportunities to meet prospects' needs. When these plans are the best option, brokers and advisors can foster goodwill by helping their clients save money on premiums. This helps advisors gain a client's business for the long-term and can help them introduce other products in the future.

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Social media's role in recruitment and sales

by Ed Mayuga

Ed Mayuga is a principal at AMM Communications LLC, a St. Louis-based public relations firm, specializing in public relations, marketing, crisis communications, social media and sales management training. He can be reached at 314-485-9810 or ed@ammcommunications.com ed@ammcommunications.com.

Using social media, such as LinkedIn, Plaxo, Facebook and Twitter, advisors can connect with potential clients and publicize their articles and quotes from the traditional print press. A person's social media profile shows up prominently in Google and Bing searches, so it is worthwhile to keep your profile as up-to-date as possible and take it a step further by using social media in the recruitment and sales process.

SOCIAL MEDIA RECRUITING USES

Social networking is like the typical backyard BBQ where people casually stroll in and out of conversations and provide their opinions occasionally about a variety of topics: sports, the weather, hobbies etc. Often, a financial advisor is asked for free financial advice, and the advisor will generally talk in broad terms about the market or the economy, but not specifics about a product or a particular stock.

This is an opportunity for advisors to demonstrate knowledge about the financial services industry and to market their services; although the advisor must be wary to not dispense anything that might be construed as financial advice. The regulations around social media can be found on the Financial Industry Regulatory Authority website (www.finra.org).

Another advantage to using social media is in the recruitment of new financial advisors. At a BBQ, an advisor may make a connection with some who is interested in pursuing a career or may know of someone who might be interested in this career. They may hear from their friends, "My daughter is getting out of college with a degree in finance" or "my son is considering changing careers and he has always been curious about being a financial advisor," which are perfect lead-ins to making a connection and potentially recruiting a new advisor.

Starting with LinkedIn

So where do you advisor start? LinkedIn, with over 60 million professional business users, has become the default social network for professionals and offers a great way to make virtual introductions, perform a faceted search on a company, and to join in group discussions that share general knowledge about a particular industry. Before the advisor sets up a profile, however, it is important to gain approval from the firm first.

Using the faceted search feature within LinkedIn can provide a valuable treasure trove for both recruiting new advisors and uncovering prospects. LinkedIn is also an excellent tool for connecting clients that may have mutually beneficial business interests, and such introduction can serve to increase an advisor's reputation as a trusted advisor.

The primary mistake that most people make with LinkedIn is not posting their profile pictures so that people can associate a name with a face. Another mistake is to make their profile look exactly like their resume, neglecting to include their personal achievements and awards.

When you set up your profile, you should use the free Google Keyword Tool (search Google for "Keyword Tool") and type in key terms that you think that potential clients would use. Then use these keywords while building a profile. You shouldn't make your profile all about business and should let your personality show through.

There are also several free applications like Box.net, SlideShare, and Amazon Book lists that advisors can use to embellish their profile. PDF files of brochures or recent articles where the advisor was quoted can be uploaded to the profile and downloaded by people who view the profile.

DON'T SELL, BE DISCREET

Social media, however, is not a platform for direct selling. The value of a social network is in the number of network followers and connections that an advisor makes, and people will often disconnect from those people that they feel are trying to "sell" something. But it can be a great place to ask for a referral. Asking for a referral breaks down into two rules-of-thumb:

LinkedIn also has the ability to display recommendations from co-workers, clients, and associates that can further reinforce an advisor's credibility. The best way to gain these recommendations is for an advisor to offer to write one in exchange. The aim should be for at least six recommendations to complete the profile. Another good practice is to join and actively comment in various groups to demonstrate knowledge.

Once the advisor has a good handle on LinkedIn and its capabilities, the next step should be to create profiles on Facebook, Twitter, and Plaxo etc. (again, after seeking approval from the firm). Facebook is more "social" and other people in the network have the ability to post pictures and "tag" or identify people in their photos. Some of these photos can be unflattering or possibly embarrassing, so you should keep a watchful eye on your profile.

DIPPING YOUR TOE IN THE SOCIAL MEDIA POOL

Keeping the networks separate is also a good idea. It is easy and efficient to link Twitter to Facebook then to LinkedIn, however those networks should be kept separate. Articles and short links that are posted to Twitter may not interest the people in the Facebook network, but may be of great interest to the LinkedIn user. It is important to keep the content fresh and to post ideas and articles that will help the network and build the advisors reputation as a trusted advisor. Just because it is a professional profile doesn't mean that the advisor cannot have fun with interacting with their networks.

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Insurance IQ study shows Americans lacking in confidence, knowledge of insurance choices

Survey indicates only 45 percent of Americans feel confident
making insurance decisions and 86 percent do not fully understand
terms used in current health care reform discussions

In today's challenging economic environment and with questions about the implications of the newly passed health care bill, it's never been more important for consumers to understand their insurance options. Yet, according to a new survey by the National Association of Insurance Commissioners (NAIC), only 45 percent of Americans feel confident making insurance decisions and more than 60 percent failed to correctly answer basic questions about insurance coverage, including:

Does auto insurance cover personal property stolen from your car? At what age do most people become eligible for Medicare? Can credit scores affect your auto insurance premium?

The answers-no, 65 years of age and yes-eluded the majority of the 1,000 American adults who took the survey, which was comprised of two sections, one section gauging broader consumer perceptions on insurance and a second 10-question IQ component that tested specific knowledge. In fact, most respondents only answered four out of 10 questions correctly on the IQ component. That's an average score of only 40 percent, a failing grade by most U.S. educational grading standards.

Also troubling is the fact that 86 percent of respondents said they do not understand all of the terms being used in the current discussion on health care reform.

"Consumers today are being forced to make difficult decisions about their insurance coverage, decisions that could have a very profound impact on their financial future," said NAIC Chief Executive Officer Therese M. (Terri) Vaughan. "At the same time, they are being overwhelmed with new and sometimes conflicting information about changes to our nation's health care policies. By doing their homework and brushing up on the facts, they can improve their Insurance IQ, which will ultimately enable them to make the best decisions for themselves and their families."

Other key findings related to knowledge of health care and insurance coverage include:

The NAIC survey also found that some of the basics of auto insurance are not well understood, even though it is one of most commonly purchased types of coverage by people of all ages and demographics. The survey found that:

How to Improve Your Insurance IQ

Although many people rely on their insurance agent or human resources department to help them make their insurance decisions, it's important that they become knowledgeable as well since they are the ones taking on the risk. Here are some useful tips:

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Producers rebuilding practices, reshaping careers

by Jim Reinhart

Jim Reinhart is Senior Vice President of marketing and protection of Genworth Financial. He can be reached at james.reinhart@genworth.com.

The financial crisis and the long, slow recovery have damaged virtually every sector of the U.S. economy. But few groups have been harder hit than independent life and health insurance agencies.

In 2009, new annualized premium for individual life insurance plummeted 15 percent compared to the previous year . Moreover, sales of variable annuities were down 18 percent and even sales of fixed annuities dipped one percent. For long term care insurance, new business in individual plans was down 23 percent year-over-year in 2009 while the number of new employer-sponsored groups fell 25 percent.

Helping these agencies recover and rebuild their businesses, and, ultimately, better serve their clients, should be a priority for carriers. Since the financial meltdown, smart insurers have begun revamping their marketing and distribution strategies, tactics and tools to be more responsive to the needs of independent producers.

American consumers continue to struggle to get back on their feet. In February, U.S. personal incomes were stagnant and savings rates fell. For advisors, this makes it difficult to identify and market to new prospects, as well as sell new products to existing clients. In order to grow their businesses, producers can no longer count on the tried-and-true strategy of moving up market. Instead, carriers need to help producers get back to basics; they need to guide them to forgotten or overlooked opportunities.

MOVING TO MAIN STREET

One under served and lucrative audience that bears a serious marketing push is the huge group of middle class and emerging affluent citizens, call them Main Street Americans. These are value and budget minded consumers, more so today than ever before, who are in serious need of financial security. Nearly 60 percent of adults living in households with income between $50,000 and $200,000 lack individual life insurance, and 37 percent of this group with dependent children lacks sufficient life insurance. Not only does this market represent 95 percent of the population based on income, as of 2007 this was a $21 billion-plus life insurance growth opportunity.

Many of these consumers have recently seen their retirement nest eggs cracked. In 2008, the average American's 401(k) balance fell more than 24 percent. While some people may have experienced positive gains in 2009, it is clear that the overall pool of assets they have accumulated to cover expenses such as long term care and secure their loved ones' futures has shrunk. Today, smart carriers and their producers are educating these consumers that insurance products represent a relatively inexpensive, and efficient way to help protect their remaining assets and their future.

But while Main Street Americans are seeking financial security, they are also reluctant to spend for it. For advisors, carriers must help them reach this audience with a compelling value proposition: today's insurance industry offers solutions to meet their individual needs with highly competitive pricing, flexible features and a streamlined way of doing business. Given the current stagnation in personal income and the growing threat of inflation, producers need methods for offering this audience policies with lower face amounts, thereby meeting needs and maximizing profitability.

Carriers are designing products such as more affordable universal life insurance, value-priced products for the term life insurance marketplace and long term care products with flexible premiums. Smart insurers are working to make it worth their producers' time to market and sell these products, offering succinct educational programs designed to instruct them on how to cater to this market with full solutions. Carriers are also investing in service platforms to support these initiatives.

CONSUMER INSIGHTS

The best carriers have been studying customer behavior during this volatile period, and are ready to feed producers consumer insights that are designed to not only drive sales, but also help them establish long-term relationships with Main Street Americans. For example, more consumers today are searching for single solutions to multiple financial security concerns. Thus, producers would be smart to offer them linked-benefit products, such as an annuity with a rider that can provide funding for qualified long term care expenses.

Given that the vast majority of consumers understand the basic concepts of insurance, carriers are also equipping their producers to connect with prospects on a level that goes far beyond the transactional. Insurers are launching programs to aid consumers (and their advisors) in having difficult but essential conversations about life planning. During a time when only about 35 percent of pre-retirees have a written retirement plan, carriers are offering marketing tools to help producers talk with prospects about securing their desired retirement lifestyle with guaranteed income solutions. Likewise, insurers offer programs to encourage families to discuss long term care options before they are forced to do so, long before their retirement savings are depleted.

Of course, consumers remain very budget conscious, making the long term care insurance sales process more complicated than it has been in recent years. Sales of long term care insurance fell sharply in 2009, prompting some carriers to take a fresh approach to marketing. One concept that is beginning to catch hold is the notion of studying and highlighting the consumer costs of living without long term care insurance, including the costs of lost work for a caregiver and the emotional stress stemming from caring for a loved one at home.

The insurance industry has wisely also ramped up efforts to market to the women of Main Street America. Today, more than ever, women bear more financial security risk than the men in their households. Both carriers and producers can offer women in-depth, highly targeted conversations along with products that will resonate with them and help provide them the financial security they need.

SHIFTING THE BURDEN

Going forward, smart carriers realize that distributors are changing their business models to adapt to new economic realities. Many independent producers are adopting hybrid revenue models based on both fees and commissions. They are also offering more full planning solutions on open architecture platforms; putting more emphasis on client relationships; and focusing more closely on trusted insurance brands in their product portfolios.

To support these shifts, carriers are aiming improvements in distribution where producers need them most. Rather than try to be all things to all producers, savvy insurers are targeting sweet spots, such as Main Street America, and working to determine where their capabilities best match those of their distributors, and then dedicating resources to serving these markets. Producers are demanding, and getting, better proprietary research and studies to make them better informed about emerging trends in their target markets.

Focusing on the markets and goals of a particular set of advisors can make both the wholesalers and the distributors they serve more efficient. For example, some carriers are making it easier for producers to sell a higher volume of lower-face life insurance to the middle class and emerging affluent by streamlining service delivery. By using new technologies and processes, insurers can dramatically reduce the sales cycle, improve placement rates and, thus, provide greater financial security to under served markets and enhance profitability for producers and agencies.

Indeed, taking the burden of administrative tasks and paperwork off the backs of busy producers is one trend that is accelerating among carriers. Despite the recession, some insurers have actually increased the number of wholesalers and sales support staff they employ. Others have tightened the bond between insurer and distributor by dedicating specific sales support staff to particular producers or agencies.

Those carriers that for decades have counted on independent distributors to drive business today understand the problems and demands of challenged producers. They realize that doing business as usual is only a memory for many producers, and one they might never relive. The American economic landscape has changed, and across the industry, many insurers are responding with new and innovative marketing and distribution solutions. These carriers know that only if they work even more closely with distributors and take on more of their burdens will the insurance sector as a whole find a brighter future.

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Income planning redefined: RIIA envisions tomorrow's advisor

by David Macchia

David Macchia, RMA, is Founder & CEO of Wealth2k, Inc., and Secretary of the Retirement Income Industry Association. He may be reached at dmacchia@wealth2k.com.

BUSINESS OPPORTUNITY

Retirement income is a demographically-driven phenomenon that represents the largest movement of money in the history of U.S. financial services. As Boomer investors begin to convert $20 trillion in accumulated retirement assets into retirement income, winning or retaining clients and their retirement assets is integral to the future success of a majority of the 600,000 insurance agents and independent financial advisors in U.S. In line with the needs of Boomers, the financial services industry is in the early phases of a shift away from its traditional accumulation-driven business model in favor of a new, income payments-driven business model.

The stock market breakdown in 2008 exposed the inherent weaknesses in popular income-generation strategies including managed payout funds and systematic withdrawal plans. Financial advisors have become sensitized to their responsibility to create retirement strategies that provide greater levels of predictability and safety. Industry wide, the focus is on outcomes.

The impact of the stock market breakdown has, perhaps, caused a permanent re-thinking by many focused on retirement income planning. Traditional income planning processes in many cases proved inadequate or incomplete when tested against the 2008-2009 market. Some retirement planning oriented advisors endured a painful reappraisal of their beliefs about retirement investing. This can be seen in research published in 2009 by the Financial Planning Association which revealed that 50 percent of advisors who had relied upon traditional income-generation strategies such as systematic withdrawal plans have abandoned the strategy.

Industry wide, a shift is unfolding. I believe we are at one of those rare inflection points where change is both rapid and deep, creating implications that will be felt for decades. Fueled by an increasingly more accurate understanding of the full spectrum of retirees needs, advisors are embracing an outcome-focused worldview.

A NEW BOOK OFFERING NUCH-NEEDED INSIGHTS

Recently, Francois Gadenne, Chairman of the Retirement Income Industry Association (RIIA), and Mike Zwecher, Ph.D., published a book called The RIIA Advisory Process that underpins the retirement planning philosophy of the Retirement Income Industry Association. One of the most important insights that emerge from the book is a notion that retirement planning is mostly about risk management. In fact, one can think of the retirement planning process as one where the practitioners allocate among various risk management techniques including risk transference, hedging, mortality credits and a risk-free asset.

To say that this concept of allocation among risk management techniques is important is really an understatement. In fact, it's vital for most retirees. But many advisors may not have the experience and insights necessary to craft the retiree's risk management plan.

A NEW DESIGNATION FOR A NEW RETIREMENT REALITY

RIIA has undertaken an effort to furnish both the vision and process for the retirement professional of the future. In fact, RIIA recently awarded its new professional designation, Retirement Management Analyst (RMA), to the first graduating class. The RMA is meant to convey a level of retirement planning expertise that is not available from other professional designation programs.

RMA candidates complete a program of study before taking an examination based upon the RIIA Advisors Process textbook and other required readings including Retirement Portfolios: Theory, Construction, and Management by Michael Zwecher.

Typically, a candidate will have at least five years experience as a financial advisor working with clients broadly on retirement and non-retirement portfolios, or comparable experience in the financial services industry directly involved in the retirement and investments business.

Having now gone through the process I can enthusiastically recommend it to any advisor who wishes to maximize his or her success in retirement planning.

Advisors who seek out and successfully complete the RMA studies will acquire two types of professional advantage. First, they will become better at their jobs; more effective at implementing the planning techniques that matter most to retirees.

Secondly, advisors who earn the RMA designation will gain a form of competitive advantage which will help them win retirement planning clients and their assets. RMA advisors will be equipped to more effectively convey their professional competency and build confidence among investors. A prospective client having an initial conversation with an RMA advisor will quickly discover that the RMA offers a worldview that's different form accumulation-oriented advisors. Accumulation-oriented advisors tend to promote "hope," while RMAs tend to focus on outcomes.

HUB & SPOKE

The RMA advisors process is based upon a hub and spoke model. The client is at the center of the process with the spoke arrayed around the client. Each spoke addresses key planning concepts including:

Essential to the RMA process is the philosophy of, "first build a floor and then expose to upside." This construct places a high priority on creating a baseline of retirement income to meet the client's essential expenses, before, in accordance with individual needs and objectives, exposing the appropriate share of retirement assets to upside growth potential.

A SUCCESSFUL FUTURE IN RETIREMENT PLANING

Retirement planning professionals are beneficiaries of what may be the most significant business opportunity in the history of financial services. It's well understood that tens of millions of Boomer clients need expert retirement planning guidance. But while many advisors recognize the scale of the opportunity, not many have yet mastered the new advisory process that is so critical to their clients' financial success in retirement.

Making a commitment to acquiring the knowledge needed to better serve retirees' needs is the first critical step in maximizing your personal success in retirement planning.

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Rebuilding trust: what do your clients really think of you?

by Doug Cottings

Doug Cottings is Managing Director of GfK Financial Services, N.Y. He can be reached at doug.cottings@gfk.com.

Following one of the worst financial services crises in decades, financial service professionals are more concerned about their image and reputation than ever. These concerns are well founded. Most professionals within the industry recognize that their business is built on relationships and those relationships are built on trust. Anyone who has had direct interaction with a customer recently is aware of the many negative influences currently impeding their trust.

Given the number of surprises financial services clients have experienced over the past 24 months, clients are not as trusting as they once were. Concerns about the industry's trustworthiness are often reinforced by the media, legislators and the White House. Continued criticism of executive bonuses, recommendations for additional "too big to fail" legislation and health care reform constantly remind financial services customers of their vulnerabilities. This is all framed against a back drop of high unemployment and a fragile economy, making many people leery of financial services companies in general.

My company conducts thousands of interviews with the customers of financial services companies and their intermediaries every year to help provide insight that will improve the financial services industry. Through these interviews we have learned that the majority of Americans are quite concerned about keeping what they have safe. The value of their portfolio, the volatility of the stock market and the possibility of inflation and rising prices in the future are among the most common financial concerns. Close to half (48 percent) of Americans agree that "when investing, I care more about keeping my money safe than making it increase in value." In 2008, only 37 percent of Americans agreed with this statement.

It would be hard to describe a relationship, where one party is leery of the other, as healthy. Current opinions about financial services companies are proving to be a challenge for most organizations. Forty-eight percent of Americans agree somewhat or completely that "financial services companies never look out for their customers' best interest." In addition to concerns about ethics and the quality of advice provided, customers have additional concerns around their company's stability (e.g., if collapses or sells itself what happens to my policy, cash value, investments, etc.) as well. They are quite worried about companies raising fees, or "nickel and dime-ing" them to make up for losses. In fact 67 percent of Americans agree somewhat or completely that "I feel that financial companies are always trying to sell me something."

In spite of all this, quite amazingly some financial intermediaries (i.e., agent, broker, financial advisor, etc.) have managed to improve trust among their customers. What are they doing that others have not?

PROACTIVE OUTREACH

Unfortunately, in the absence of information most people tend to assume the negative. Financial intermediaries who recognize this and have taken the time to ensure that they are communicating more with their clients than they had in the past are actually improving their client relationships in spite of current market conditions. This is true even in situations where customers have experienced significant losses in their portfolios; these clients still trust their advisor if the advisor has been proactively communicating with them.

What do customers consider to be proactive? Actually customers are more generous than many imagine them to be regarding what they consider to be proactive outreach. The communication can take all forms and it does not have to be delivered personally from a financial intermediary. In general, for a contact to be considered proactive it should anticipate the customer's needs. Clients consider something proactive if their advisor initiates contact with them regarding something that may trigger a question, concern or problem, in advance of them having to contact their advisor. Customers are looking for communication that is candid and transparent. They should be convinced that the intermediary is looking out for their best interest and not reaching out to them for their or their company's own benefit (e.g., for an additional sale, to avoid a formal complaint, etc.).

Among the more consistent examples client cite regarding triggers for proactive outreach from financial intermediaries include:

Statements and reporting

Most financial service company statements or reports show what happened over the previous period. What most statements do not communicate is why it happened, and if what happened is not desirable (a fee or lower than expected values), how it can be avoided in the future. Current conditions are good for financial intermediaries to have teachable moments with their clients. Based on our research, 49 percent of Americans agree that they wish they had "good, basic education and advice on personal finances." This sentiment is even more prevalent among the affluent.

Until financial intermediaries home offices are able to design their statements and reports with such information, agents, brokers, and financial advisors should attempt to do so.

Life events

Intermediaries who know their clients well enough to be on top of the life events occurring in their clients lives are well positioned to improve trust with these clients. When intermediaries are proactive and reach out to clients to explain whether their financial services should be updated in light of the event, clients feel valued. When intermediaries reach out and explain how a service or fee may no longer be necessary because of the change in the life, clients trust in the intermediary improves dramatically.

Issues that surface in the media

Intermediaries exceed client expectations when they initiate communications to explain why something that might be of potential concern appeared in the news and what the impact might be. The topics that may trigger concern vary by client but often include unfavorable coverage of the company their financial intermediary represents, legislation changes and/or lawsuits that may impact their product or holdings, market volatility, etc. Obviously it is important to know the customer well enough that only issues they deem to be significant merit outreach.

A Review

Client trust in a financial intermediary is dramatically improved when a review is done with some routine frequency. Whether it is every six months, annual, or every 18 months does not seem to matter as long as it is consistently done.

Proactive outreach does take time. It is important for financial intermediaries to collaborate with their home office to help shift some of the servicing that could be centralized away from intermediaries and moved to the home office. It is also important for intermediaries to recognize that they should be proactive communicating with any client of value. Often we find that if an intermediary is proactively communicating, they are only doing so with about 20 percent of their client base and it is not the most financial valuable clients; it is the 20 percent with whom the intermediaries are most comfortable.

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Advising the middle-income market

New advisors take an old-school approach

by Michael Kalen, CLU, ChFC

Michael Kalen, CLU, ChFC, is Chief Executive officer at Futurity First Insurance Group, Rocky Hill, CT. He can be reached at 860-838-4800 or at michaelkalen@ffig.com.

A survey by Prudential Life revealed that in view of the market events over the last 18 months, 70 percent of Americans are now more inclined to pay for financial products that offer guarantees, even if these cost more. That slice of good news coupled with the gap in life insurance coverage and retirement readiness, especially in the middle income market, presents strong opportunities for agents and advisors who specialize in guarantees.

But, what does that middle market individual, family or business owner need to take the step forward toward acquiring income protection and strong guarantees in their retirement savings efforts? Studies point to the fact that middle income consumers prefer to buy life insurance, health insurance, and annuity products in a face-to-face environment from a trusted advisor. Yet, advisors have moved upscale leaving the middle market customer highly under insured and ignored. In fact, millions of middle market families and businesses are never even approached by a professional agent, yet they all have the same protection, retirement, business, and estate planning needs as the affluent family, business owner, or corporate executive.

Today's middle market customer needs an "old school agent" with a modern twist. Clearly, the agent must understand the customers' wants and needs and be willing to establish a long term relationship often across the kitchen table. But, the agent in the middle market must also have the same level of objectivity, competency, knowledge and passion as an advisor in the affluent market place. There are five key elements that will help agents build their middle market clientele: product choice backed by financially strong insurers, comprehensive educational and practice development support systems, access to local, community-based markets on a favorable basis, competitive compensation that promotes product neutrality, and technology platforms to promote efficiencies and effectiveness.

Product Objectivity

The captive career agents of the previous generation didn't have product objectivity. Today's agents, however, must have product choice to be able to offer objective, straightforward advice based on each customer's specific needs. While many independent brokers have access to a myriad of products, what they don't necessarily have is a way to access the carriers in a way that makes it easy for them to do business.

A new twist for agents is the emergence of distribution companies specifically targeting the middle market to bring together best-in-class product portfolios with top selling contracts backed by financially strong carriers. One platform of select carriers allows the agent to scan the market and offer a turn-key approach to competitive products. Combining that platform with the necessary training and support makes the agents' job easier and helps them leverage everything the carrier has to offer. Plus, with an economy that is still struggling to find momentum, consumer concern about financial strength, and increasing regulation of the insurance industry, the value of an ongoing due diligence process for carrier evaluation can't be overstated.

Competitive Compensation with Product Neutrality

Obviously, competitive compensation is a must, but being competitive alone isn't enough and focusing only on commissions is misguided. For today's agents to be successful, the compensation structure must be designed in a way that allows them the freedom to be neutral in product recommendations. This approach benefits the customer and agent with a spotlight on doing what's right for the customer versus which product pays out the most.

While many companies tout the highest payout, they miss the point that agents value a full complement of benefits as part of the compensation package. Agents view benefits such as expense allowances, health insurance and 401k plans as attractive and will often choose a distribution company based on the added value these benefits offer them and their families.

Educational and Practice Development Systems

As agents consider companies with which to affiliate, educational and practice development systems rank high on their list of support. Ongoing professional development supported by the local branch coupled with systems that uncover client needs and help agents build their practices are a significant part of an agent's long-term success. Middle market customers rely on their trusted agent to be highly educated about these complex products and able to educate them about which product is right for their situation and why.

Effective communication between agent and customer is of paramount importance. While agents focus on a needs-based, not product pushing, approach to the middle market, they should avoid developing the "20 pound" comprehensive, often times overwhelming, financial plan. A modern twist is a client education approach that focuses agents and customers on identifying the most urgent financial need first. Then, agents work with customers educating them along the path of choosing the right product to address that specific situation.

We use a "life event financial security continuum" system, walking customers around a wheel of five key financial security needs: death, retirement, disability, accident and sickness, and chronic illness or incapacity. This simple approach allows customers to isolate the most important financial concern at one point in time. The agent focuses on bringing a solution to that concern and then continues to work with clients, prioritize their needs, and address one need at a time, over time.

Community-Based Marketing and Local Support

Agents are most successful when they are steeped in their communities. Being affiliated with a local office to tap the expertise of the branch manager, product specialists, underwriting, case and training support locally boosts productivity and effectiveness. This local office is not like the old school. It doesn't have desks for all agents. Rather, it has flexible work stations, a conference room, and electronic connectivity so agents can do their work and maintain mobile within their community.

Because some consumers are suspicious of agents and insurance and are uncomfortable with the insurance buying process, trust is vital. As a result, community-based marketing continues to be a significant factor in the success of developing a client base. Building trust requires being intimately involved in the community, investing in activities that aid the community while raising the awareness of the agent and the branch, and creating strong links in natural markets. With the advent of online social networking, the marriage of the two can be a powerful combination for agents to enhance communications with their clients while making others aware of what they do.

Using Technology to Enable Relationships

Agents in the middle market are expected to be as technologically savvy as those advisors working with affluent clients. More important, however, is that agents understand how to use technology to facilitate relationships with clients and enable faster processing to deliver products and services. Agents who focus so much on the lap top and forget to listen can overwhelm customers, especially seniors. In some cases, the process of buying insurance can be as simple as ordering something from Amazon.com. Many customers are happy with this and some expect it. However, there are those for whom the paper application is still the "process of choice". This will evolve quickly over the next few years.

From a corporate technology platform perspective, it's about ease of doing business. Technology plays a major role in simplifying the insurance buying process from e-applications, scheduling Attending Physicians Statements exams on site, even tele-underwriting, to paying commissions and handling claims. An advantage for agents who have access to best-in-class products through a distribution company is that they can work through a centralized new business platform to process all paperwork instead of through multiple carrier channels.

The middle market is wide open for agents who chose to pursue it. To leverage the market potential and accelerate growth, agents should look to specialized companies and consider not only the products and support services offered, but also the intangibles, the culture of the organization and a local branch environment that cultivates success, integrity, camaraderie and team work. With the right tools, "old school agents" who bring objectivity, knowledge, passion, and communications with a modern twist will be on the "Most Wanted" list of millions of customers.

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Everybody likes to buy, nobody likes to be sold

by Nathan Jamail

Nathan Jamail is president of the Jamail Development Group and author of The Sales Leaders Playbook. He can be reached at 972-377-0030 or at www.NathanJamail.com.

"Everybody likes to buy things but no one likes to be sold" is not a new expression, but what does it really mean? Does it mean that people don't likes sales professionals or that they don't want a sales professional selling them something they cannot afford or do not want? People want to feel like they are making their own decisions, yet at the same time, people like having an expert who will help them make an educated decision rather than sell them.

So, how do you do that? The answer is not to use your grandfather's selling skills of persuasion, which uses tricky steps and questions that can make customers feel like they are being trapped. At the same time, it is not a passive "information dump" that gives a customer a lot of information but removes control from the sales professional. The key is using "influential selling skills," a well-planned strategy that allows sales professionals to truly understand the customer by creating likeability, trust and influence. It should have the feel of a comfortable and casual conversation. This is a simple concept in theory, but make no mistake, it's not that easy to pull off! There are three things that every sales professional must know and do to keep customers from feeling like they are being sold:

Ask questions to understand a customer versus sell a customer

If a sales professional has attended any selling skills training, he or she knows to ask open-ended questions, however that's just the beginning. The reason most people feel like they are being sold has little to do with the words in a sales professionals' response, rather it is the intent of the question itself. Most sales professionals are asking questions to sell the customer something rather than to understand them � or worse, just to ask questions.

One example is when a sales professional asks, "Would it be beneficial to increase your profits or improve your ROI?" That question can be insulting to a prospective customer or makes the customer think, "Oh no, here comes the sales pitch." A sales professional may also just tell the customer about the product or service before ever understanding anything about the customer or his or her current situation, which is another red flag. This tells the customer the sales professional is selling not understanding. Just remember the old phrase, "No one cares about how much you know until they know how much you care."

Just like a book or story, there is a beginning, middle and an end to the question and understand process. This does not mean a sales professional should ask a prospect a hundred questions because that would just be annoying; it does mean that questions must be purposeful and in the correct order.

The first few questions should be about the prospect's company, who they are, what they do, how are they different than their competition. The next few questions should be about their current relationship with the person or company that provides them with the product or service you are selling. Questions like, "Tell me what you like (or dislike) about your current provider?" "Who do you currently use?" "How long have you been with them?" The last set of questions should be about their actual usage of the product or service. Use questions like, "Tell me how you use your current service?" and "What does the perfect product look like?" In understanding the customer there are not any trick questions, but there should be questions based on known industry weaknesses or a company's strengths.

It not just what you say or how you say it, but when you say it

This is where most sales professionals lose it. Even when a sales professional knows what to do, many times he or she just can't stop it. A sales professional will ask the prospect a question and the prospect gives just the answer the sales professional was hoping for. So, the sales professional immediately explains how their company does it better, then another question is asked, and once again the sales professional offers another great solution immediately. The problem is the prospect starts to see a pattern and thinks, "Oh, I get it; every one of my answers is another reason to buy this product."

When this happens, the prospect will start to put up a wall because he doesn't want to be sold. So, fight the urge to offer solutions or say anything about your company until you are completely done asking them all three sets of questions. By not giving a solution after every response, the prospect will feel more comfortable and relaxed, and will feel as if the sales professional is really trying to understand him or her. A prospect (or customer) will tell a sales professional everything they need to know if asked.

Selling is a skill

Make no mistake; selling is a skill and just like any skill to get better is to practice. Selling is one of the most difficult skills of any profession because you must deal with non-tangibles such as egos, attitudes, personalities, emotions, and situations you have no control over. The greatest mistake most experienced sales professionals make is thinking that just because they have been doing it for a number of years that they know it all and have no need to practice. A sales professional is never too good or can never have enough experience that they don't need to practice. If a professional athlete ever said he or she was not going to practice anymore because he or she has been playing the game for more than 10 years, we would think he or she was crazy or just lazy. Just like there are advances in medicine or techniques in sports, there are advances in selling skills.

Bonus Tip: Be proud

Being a sales professional should be something a person is proud of and should not try to disguise it with names like "consultant" or "problem solver." A consultant gets paid for their advice regardless if the customer makes a purchase, and a problem solver gets paid for solving problems regardless of whether a prospect buys anything. A sales professional may consult with a prospective customer and solve their problems, but they get paid when the prospect buys their service or product. In fact being a great sales professional is an honorable job that truly helps people. Just like a doctor is critical to a person's health, a sales person must establish a relationship built on trust and influence, and is responsible for helping people make the right decisions. My name is Nathan Jamail and I am a sales professional. Are you a sales professional?

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Leveraging costs: in-house or outsource

by Alan Protzel

Alan Protzel is the Director of the Life Insurance Division of The Marketing Alliance, St. Louis, Mo. He can be contacted at 314-275-8713 or aprotzel@themarketingalliance.com.

Reviewing the costs and competencies of your business processes is a never ending journey. If you are committed to continuous improvement, you are familiar with the introspective process of asking yourself to ruthlessly analyze your own business. You are also accustomed to asking yourself questions such as:

The decision process addressed above begins with knowing the true cost of processing an application. Here is a simple formula you can use for measuring the cost of each case:

((Fully Loaded Cost per Employee times # of Employees) + Equipment) divided by # of Cases = Cost per Case

Where the "fully loaded cost per employee" includes:

Now that we have quantified cost per application, we can use this to make decisions. The decision to retain administrative and clerical tasks includes a commitment to subsidizing a fixed cost base. In case processing, like any manufacturing process, variability is the enemy. Of course, it is easy to staff for 300 cases per month, so long as you get very nearly 300 cases each month. However, if you get 200 cases one month and 400 the following month, you have a staff that is either underutilized half of the time, think cost per app, or overworked half of the time, or both.

Additionally, when you lose an associate, you incur overtime costs until new staff is trained and online (don't forget the training costs associated with turnover). When a staff member takes vacation, you will probably have overtime for the remaining associates who must absorb the vacationing associate's workload, and according to Murphy, when one associate is on vacation, another will either get sick or quit. Because we are all salespeople, our success in aggressive pursuit of new business can lead to unpredictable numbers of applications.

Dick Waterworth, principal of Quantum Insurance, located in Omaha, Neb., recently went through the exercise of analyzing the productivity of his team. He now outsources the case processing of his agency's applications. "Having another group handle the processing of my agency's cases was more cost-effective for me. They use the same software and networks that I used to purchase, which now means I don't have to make that investment. This outside group has the scale which my agency doesn't. It also frees up my time and that of my employees to be more productive on the marketing and sales side," said Waterworth.

An interesting point is made about not just the effects on cost, but also on quality of service. This leads to more introspection of how best to align the firm such as:

Mark George, CEO at Issue Insurance, a 35-year-old agency located in Vandalia, Ohio, has incorporated a hybrid solution of keeping half the case processing in-house and outsourcing the administrative tasks. His 10-member staff now focuses mainly on client relationships and sales support.

"We are now a better agency because our resources are focused on what is most important - our brokers and clients. The case managers are more responsive to brokers now. We don't have to switch people around when we're really busy in one area like case processing letting other functions like marketing support go unattended," said George.

Frank Petraglia, principal at Frank Petraglia & Associates, a boutique brokerage agency based in Coral Springs, Fla., went through the process of examining his agency's technology investments several years ago. Initially, Petraglia was skeptical about giving up control of the application process to an outside firm. What changed his mind was when he started the analysis of the cost savings by redeploying associates to other agency responsibilities and making the hard decision to reduce head count. Two years later, Petraglia said that going through the process was difficult but it has proven to be better for his business. He is now significantly more profitable and he has more time for customer relationships and personal time.

"I'm able to focus on what I do best, which is to sell. My employees are doing what they do best serve our clients and help with sales. For our agency, it was best to outsource the case processing. It was cost effective. Plus, I feel that we are more focused now on our clients and don't have the distractions so we can better serve them," said Petraglia.

Although having the discipline to escape the entrepreneurial urge to "do it myself" can be difficult or scary, this could also be the missing step that propels the business forward to the next level. Management consultants frequently ask their clients "are you working in your business, or on your business?" Perhaps outsourcing gives your business the leverage it needs to grow.

Jack Dewald, owner of Agency Services, Inc. in Memphis, Tenn., shared his experience; "For us, outsourcing has been a wise business move because it makes our work scalable. We sell not only life insurance, but also other products. Our case managers are now case marketers. The administrative work is now handled by an outside group which now frees up the case managers time to provide more dedicated support, service and time to brokers and clients."

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How are you promoting yourself?

by Ed Mayuga

Ed Mayuga is sales and marketing director for AMM Communications, LLC, St. Louis, Mo. He can be reached at Ed@ammcommunications.com or at 314-485-4390.

Consumers today are bombarded with information through radio, television, and the Internet, making it even more of a challenge for financial advisors to cut through this 'white-noise' and have their messages heard. So what do you do if you are a small or solo practitioner and want to get through to a larger audience?

Just because you may be a small fish in a big pond doesn't mean that you can't make a splash. Effective marketing allows consumers to get to know, like and trust you, and trust is a precious commodity today, given the impact of the credit crisis on your credibility. But where does your own marketing strategy begin?

Testimonials

How well do you know your current clients? Do you feel that they can adequately verbalize how well you serve them and that you help them meet their ultimate financial goals? If so, then they would be the best people to ask for testimonials and endorsements for your practice. There is a reason that most modern commercials, websites, and print ads contain sound bites and testimonials from people that have used the product or service' because they work.

As consumers, we are more inclined to trust the opinion of people who we perceive to be like us, rather than the stated claims of those who are trying to sell us something. So this is a good time to go through your list of contacts, both current and former clients, and asked them if they would give you a short sentence or sound bite about how you have helped them develop a plan to meet their financial goals.

Another good source of testimonials is your colleagues and former co-workers because they are probably in the same industry and can speak to your particular expertise. The social-media tool LinkedIn has an effective mechanism for soliciting and receiving personal recommendations and it allows you to return the favor easily. Even better, create a short video clip of your clients speaking about your services. This is a very common marketing approach: buy your client lunch, set up a video camera, and ask them to answer on-camera a few questions about what makes you special.

Your Website

Do you have a website? If not, why not? If so, when was the last time you updated it? Search engines such as Google and Bing routinely 'crawl' the internet to find and index new content, therefore having and maintaining a strong online presence is not only vital, it's essential. Most people will use a search engine to do their homework on you before you meet them, and they will form their opinion by what they see on your website. There are many types of search engine optimization tricks to show up on the coveted 'first page' but that is not the purpose of this article. The best way to remain relevant on the internet is to have a constant stream of new content for your website and to ensure that you show up in 'organic' searches.

One good way of demonstrating your expertise is through a commitment to write a blog entry on a daily or weekly basis and post it on the same day and time each week so that the search engines can find you. Blogs do not have to be long or elaborate; they need to be easily consumed in a five to 10 minute period of time, because people on the web tend to have a short attention span. Other good ways of demonstrating expertise and creating trust are to include Twitter feeds, SlideShare presentations, and RSS Feeds from your blog on your social media profile. You can also easily link your social media profiles by way of widgets to certain pages on your website.

Social Media ' (LinkedIn, Plaxo, Facebook, Twitter)

Everyone is talking about the new wave of social media platforms that are sweeping the internet. You may have a profile on one of these services, but have you looked at the last time you updated it? Many people initially set up their LinkedIn profiles when they received an invitation from someone in their network, filled in the cursory information, and maybe connected to a few former co-workers or friends, but that's it.

Your social media profiles show up very prominently, however, whenever someone does a Google search on you and that is why it is worthwhile to keep your profile as up-to-date as possible. It does take some time, however, so I recommend setting aside an hour or so to fill in the relevant information for LinkedIn, Plaxo, and Facebook.

The goal here is to set up as professional a profile as possible, especially with Facebook, which tends to be more casual and social. As I mentioned before, LinkedIn is a fantastic way of seeking and receiving personal endorsements or recommendations. In fact, LinkedIn will prompt you to seek recommendations in order to complete your profile. There are also widgets for Twitter, SlideShare, and blog feeds as well that can further reinforce your profile. In addition, there are a variety of ways to interlink your various social media profiles so that you may only need to update one profile at a time while seeing the results on one or more of your other profiles.

At the end of the day, your goal is to increase your visibility and credibility in your field. These new marketing tools may have a learning curve that requires some time and effort, but they go a long way in providing you with better access to your clients while maintaining a highly competent and professional image.

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Benefits and blunders of Social Media Marketing

by Pam Lontos and Maurice Ramirez, Ph.D

Pam Lontos is president of PR/PR Public Relations and author of "I See Your Name Everywhere". Maurice Ramirez, Ph.D. is the chief strategist for Social Media at PR/PR. He is a speaker on the importance of Social Media Marketing. They can be reached at Pam@prpr.net or at 407-299-6128.

As a business owner, you already know the importance of utilizing traditional PR, print, radio and TV exposure, to keep your name circulating in the marketplace. Now, however, there's a new PR outlet with which you need to become familiar: Social Media Marketing (SMM).

Social Media Marketing is the use of various social networking sites to enforce your brand and market your business. A social networking site is simply an online meeting place. Think of it like an eHarmony or Match.com for business people.

According to the Nielsen Research Group, social networks and blogs have moved ahead of personal e-mail among the most popular online activities people engage in. Additionally, USA Today reports that the time spent on these sites is growing three times faster than the overall Internet rate. More than two-thirds of the world's online population now visits social networking and blogging sites.

Knowing this, it's clear that if you haven't yet engaged in Social Media Marketing, the time to start is now. But before you do, you need to be aware of the top mistakes businesses make with this new technology.

HAVING MORE THAN ONE FACE ON THE INTERNET

When you're engaging in Social Media Marketing you're really building your image from the ground up. The goal of SMM is to virally spread parts of your image across the Internet. The word "parts" is important. Basically, you're starting with a holographic image of yourself in the virtual world. You then need to break that hologram apart and find the appropriate places on the Internet where you can frame certain pieces of that hologram.

When someone looks at all the pieces at the various sites, they should be able to put them together to see a single whole. They should not see multiple images of who you are, as that would ruin your credibility. Therefore, if you have multiple Facebook accounts, for example, your personal one has to be hidden and by invitation only. You don't want that other image out there confusing people and possibly diminishing your reputation.

COLLECTINGFRIENDS

SMM is how you create instant buzz on the Internet by getting the same message out over and over. It's spreading your message and getting yourself known. Social networking, on the other hand, is about making friends. For example, you've likely seen someone on LinkedIn who has 25,000+ contacts. That's great, but what do you do with all those contacts? Remember, just because you have a phone book in your office doesn't mean you can open the book at random, pick a name, and call them for business.

When you collect a contact, you're supposed to be opening the door to exchange information and build a relationship. Think of it as relationship marketing in the 21st century, and the same rules apply. The only difference is that you're building the relationship online rather than over coffee.

PUTTING OUT THE WRONG MESSAGES

You've likely seen people put posts on Twitter or Facebook that say something like, "'watching a great movie and eating popcorn." Such messages may be fine for personal networks, but for business networks you need to put out messages that are useful to your readers. That's how your message spreads virally.

The key is to keep your messages consistent. Remember that people are subscribing to various feeds in order to get your information. They are essentially saying that your message has value. That's why you can't do a series of sales tips and then post a couple of your favorite omelet recipes. You have to stay on message.

POSTING INAPPROPRIATE INFORMATION

Don't allow yourself or anyone on your site to post anything online that you don't want your most conservative client to see. You never know where something will end up, especially since the nature of the Internet is for things to spread virally. For example, a CEO of a corporation had a picture of himself and his girlfriend on a topless beach in Mexico, and she's riding on his shoulders. For some reason, he decided to post the photo on his personal invitation-only Facebook site.

The only problem is that he was married. His wife (or rather, his now ex-wife) saw the photo. How? Someone on his invitation-only Facebook account thought it was a great picture and decided to repost it on the public Internet. To top it all off, his board of directors got wind of the photo and fired him. Now he's no longer employable in that field or that position again. The moral of this story: Never post anything on any site that you wouldn't personally show your own grandmother.

SPREADING YOURSELF AROUND

In the "old days" of the Internet, people believed they had to keep all their content on their own Web site. The theory was that spreading it out ruined your credibility and diminished your reputation. Not so today. In fact, with SMM, the opposite is true. The more places you can get your message to appear simultaneously, the more effective your message will be.

Think of it as constructing a funnel. You want to lay several trails of information, all of which lead to your main site. Therefore, no matter how someone stumbles upon you, as long as they "follow the trail," they'll eventually find you. That's essentially what you're doing with your Twitters and other SMM messages.

GET NOTICED WITH SMM

The marketplace is changing, and you have to change with it. Your name has to be everywhere, in print, on radio, on TV, and on the social networking sites. The more you can get your name and message circulating in the various mediums, the higher your chances of clients seeing your information and ultimately hiring you. Thanks to SMM you can get your message out to thousands of people in an instant. And the results are greater credibility, more exposure, and higher sales, all of which positively impact your bottom line.

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Financial advisors see rebound of earnings, shift to fees

Financial advisors are making more money, seeking more education, and providing more holistic advice to clients as compared to a year ago, according to the College for Financial Planning's 2009 Survey of Trends in Financial Planning.

Responses, provided by hundreds of financial advisors surveyed by the College, indicate a shift to greater customer service. Advisors are charging fees rather than commissions, creating more comprehensive plans, and emphasizing client interaction.

"As people watch their retirement savings or child's college fund shrink, they are increasingly asking advisors for solutions to help live their lives, rather than simply grow their stock investments," said Bing Waldert, Director of Cerulli Associates. "That requires a more comprehensive approach with a greater emphasis on customer service and better training."

Key findings include:

Advisors cited "helping clients improve their lives," solving client problems and client interaction as the top drivers of career satisfaction. They also identified a significant opportunity for makers of financial planning software, citing cumbersome technology as the second-greatest obstacle to their job. Despite difficult capital markets and economic challenges facing the financial services industry, the top obstacle was clients' reluctance to pay planning fees.

"We see a lot of reason to be optimistic in these survey results," said John Sears, president of the College. "Our industry continues to mature and adapt to people's needs. Advisors are getting away from a sales-based model and adopting a broader approach... and they are recognizing the value of education in making that transition."

For the first time in the survey's 13-year history, the College for Financial Planning partnered with Cerulli Associates, a Boston-based research firm specializing exclusively in the financial services industry.

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Guiding small business through new economic reality

by Herbert K. Daroff, J.D., CFP

Herb Daroff is associated with Baystate Financial Services in Boston. He is a contributing editor for LIFE&Health Advisor. Daroff can be reached at hdaroff@baystatefinancialplanning.com.

How do you start a small business in America today? You start with a big business. What are small businesses concerned about today? What keeps the business owners up at night?

As financial planners, how much real "financial" help are we providing for our clients? Like any financial analysis, you need to start with: Balance Sheet = Assets minus Liabilities; and Income Statement = Sources (Income) and Uses (Expenses).

Assets and Liabilities

Debt to equity ratios are always important in financial analysis, but even more so now. They may be relying more on financing from banks and other sources to stay above water. Businesses need to keep capitalization in focus. The value of the stock in their own business is down. This may be a good time to invest more capital into the business. Remember from personal financial planning, when stocks are "on sale" that's a good time to buy, not run out of the store.

Of course, you need to help them balance the risk of "too many eggs in one basket". Businesses that were not heavily leveraged are in better shape right now, but the amount of their leverage may be increasing. Financing covenants are getting tougher, as well. Falling out of a covenant could result in a note being called, which could be disastrous to a small business.

Income and Expenses

Sales are slipping. Many businesses qualify for significant volume discounts and bonus compensation at the end of the year based on sales volume. These incentives may not be part of this year's results unless things turn around quickly.

Since none of us are in this economic mess alone, businesses are seeing receivables getting larger and stretching out longer and longer as their customers are having increasingly harder times collecting from their customers. So, as a result, payables are increasing, too. Opportunities to get favorable terms are slipping by. There goes the profit.

Extra care must be taken on collections. You don't want to risk losing a large account, but you also cannot let any account take advantage of you.

Managing a business in good times, while it is growing, takes very different skills than running a business in tough times. The Henry Kissinger school of diplomacy is learning how to step on people's toes without scuffing their shoes. That is not an easy thing to do. Consider meeting with customers and suppliers, as well as employees. We are all in this together.

Employee Benefits

One of the largest expenses to a business is the cost of providing employee benefits (in addition to payroll and lease payments). A journalist interviewed me several weeks ago suggesting that this would be a good time for business owners to contribute their own business stock to their 401(k) or profit sharing plans to cut back on cash flow. I told him that I thought this was a really BAD idea for two reasons:

Most employees are delighted that still have a job. Some with jobs have been asked to take reductions in compensation, forego bonuses, work fewer days. As for retirement plan contributions or even matches, don't hold your breath.

Again, as we recall what we preach in personal financial planning, especially for those just starting out: make sure that you have an adequate emergency fund to cover essential expenses;

The focus on compensation and benefits is a critical part of financial analysis for small businesses (and, as we have found out, for big businesses, too). With Massachusetts mandating health insurance, more businesses are looking into the higher deductible programs to reduce costs for the rank and file employees.

As stress levels increase, health may become seriously impaired, especially for the owners and other key employees. A change in health by the owners and/or key employees, rising to the level of disability and missed work, can have a devastating impact on a business, especially one with reduced staffing.

Businesses have to be prepared. Emergency funds and insurance suffer in these difficult financial times, but they are very important to maintain, if at all possible.

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Community-based marketing positions agents
during uncertain economic times

by Susan Bumstead Chanley

Susan Chanley is a Principal of Crystal Communications Group, Wakefield, Mass., and a regular contributor to Life&Health Advisor. She can be reached at sbumsteadchanley@comcast.net.

In today's volatile economic climate, no one can predict with any degree of certainty how the economy or stock market will perform or when they will recover their losses. What we do know with a high degree of certainty is that many hard working, middle-income Americans have been directly and negatively impacted by the economy.

The super wealthy and well-positioned affluent also have concerns, but their concerns have more to do with changes in their net worth than changes in lifestyle. The concerns of the affluent are different from those of middle-income Americans and this is the target market for Futurity First, a two year old independent, career agency insurance group headquartered in Rocky Hill, Conn. According to Margaret Audet, Senior Vice President, five of the most common challenges this market segment faces are:

Agents Poised to Solve Problems

"As many people tighten budgets to reduce spending, there is an increasing interest in reviewing existing insurance coverages to find cost savings opportunities," Audet said. "This is where a well trained advisor can be a big help."

The huge loss of value in retirement assets coupled with ongoing stock market volatility has created a "flight to safety" which has made the guarantees of insurance and fixed annuity products much more desirable. Consumers seeking safe places to put their cash are more interested in working with agents who can help them choose the right products

At a business level, the pressure on employers to cut back or eliminate employee benefits to improve earnings has increased dramatically. "Employers are looking for less costly ways to provide benefits to their employees," said Audet, "and agents with the knowledge and support to offer voluntary, supplemental worksite products can provide exactly the solution these employers are looking for."

Standing Out in the Community

While the current economy is challenging, it also offers some unique opportunities for community based agents to position themselves locally to provide the products and services middle-income families and business owners need. Most middle-income consumers do not have a trusted agent, are suspicious of insurance products and companies and are uncomfortable with the insurance buying process. Audet believes these are key reasons for consumers to choose to do nothing, resulting in a market that is the most under-insured and under-protected in the country.

The solution, from Audet's perspective, is for agents to establish trust. The best way to do that is by becoming involved in their communities, by developing "links" in their natural markets. Successful agents are always attentive to the opportunities to create links and then strengthen those links over time.

The best way for agents to develop links is to initiate and be actively involved in a wide range of community-based marketing activities. Three of the most effective activities are: developing relationships with the owners or proprietors of places where the agent regularly does business; joining organizations that have a visible, well respected presence in the community; and developing centers of influence. Other techniques include community based mailings, signage, as well as print and radio ads.

"All community based marketing initiatives and activities are designed to make the agent a more known and trusted member of the community," Audet said. "The very best links for any agent, however, are the referrals received from satisfied customers."

Community Marketing In Action

Justin White, the Branch Manager of Futurity First's Houston office, believes that investing in community based marketing is the best way to position his branch and his agents for the future, no matter how the economy performs. Agents are expected to "walk and talk", brand themselves as the local insurance resource. Each new agent's goal, according to White, is to use community based marketing initiatives to develop and earn the trust of 100 clients in their specific market area in the first year. The agent then begins year two with 100 clients to meet for annual reviews and to ask for referrals. "If agents do a good job in year one, they'll get five to 10 referrals from each of their 100 customers. This will allow them, at the very least, to double their customer base in year two. They then begin year three with a minimum of 200 clients. The process begins again, and their success is all but assured."

Agents do their own networking and community outreach through memberships in business networks, such as Chamber of Commerce, as well as meeting people at church fairs, offering seminars at senior centers, participating in town or community festivals, sponsoring holiday photo opportunities or getting involved in youth sports. According to White, it's all about being genuine, being involved and offering something of value.

Adrienne Sloan is an agent who works in White's branch. New to the business, she started to "work" her territory by developing her natural market, visiting the many stores, shops and vendors where she does business. She introduces herself to the proprietor or owner, mentions that she lives in the community, and tells them what she does for a living. She may offer to review their life insurance, provide them with quotes or prepare a complementary analysis of their employee benefit program. She is persistent, friendly and stays in touch, whether anyone accepts her offers or not. Sloan has also been successful in offering a seminar series to residents of a senior living apartment complex, assisted living facility and a new moms program.

A husband and wife team, Kelly and Brenda Wuthrich, also in White's Houston Branch, feel that their joint message of working together to meet the insurance needs of people in their neighborhood truly resonates with customers.

"It's face-to-face, walk-and-talk branding that is helping us expand our client base even in a tough market," says Kelly Wuthrich. "People don't enjoy talking about insurance, but they know they need it. If you get involved in the community, build trust, and offer simple tools to help people understand what they need and how they can afford it, you'll do really well and your customers will be very appreciative."

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Prospecting in the High Net Worth Market

by Herbert K. Daroff, J.D., CFP

Herb Daroff is associated with Baystate Financial Services in Boston. He is a contributing editor for LIFE&Health Advisor. Daroff can be reached at hdaroff@baystatefinancialplanning.com.

What does High Net Worth (HNW) mean today? It's like the question, "How do you create a small business in America today?" You start with a large business. At one time, I used to define HNW as anyone paying federal estate taxes. Today, however, do we start HNW at couples over $7M or individuals over $3.5M? HNW is clearly a very relative term. Some might use $10M. Others may use $1M.

Regardless of your definition, how do you get in front of these people in a favorable manner?

The best way has always been through a referral from a trusted advisor, such as an accountant or attorney. In order to get meaningful referrals you need to demonstrate that you can provide value to the existing relationship that the advisor has with his or her existing client. You can talk about the things that everyone else talks about (e.g., saving taxes, putting away more for retirement, gifting assets, etc.) and stand in line waiting for good referrals, or you can differentiate yourself by selecting things to talk about that are currently topical and for which you offer a distinctly better approach.

One concern that everyone has in common right now (HNW or not) is that their investments are worth less than they were a year ago.

How do you safely restore that value?

I bought additional life insurance. I know that my wife and kids will have the same amount that they would have had last year if I die before my investment values are fully restored. With something as simple as a 10-year term policy, if my accounts recover within the next 10-years, I can begin to reduce the coverage. Of course, many of us understand the value for post-retirement life insurance (e.g., replacing principal spent by one spouse for the income continuation needs of the surviving spouse, funding the income taxes for a Roth Conversion at death so that a "stretch" IRA becomes a Stretch-Roth).

Buying life insurance is certainly not going to differentiate you, but reminding the advisor that with the newly increased estate tax exemptions at $3.5M ($7M for married couples) clients can buy life insurance inside their taxable estate with their tax deductible retirement plan funds.

In a profit sharing plan, 25 percent of the new contributions can be used for the purchase of term, universal life, or variable universal life, and 50 percent can be used for whole life. Funds already in the account (with some limitations) can all be used for premiums. The client incurs income tax only on the economic benefit (like split-dollar, Table 2001 or term cost if lower and meets the provisions of the Internal Revenue Code). Except for those who believe in "sub-trust", the death benefit in excess of the greater of the premiums paid or the cash value will be included in the participant's taxable estate, but the proceeds are received free of income taxes for the beneficiary even if death occurs before age 59.5. There are also issues to consider for rolling out the life insurance before rolling the retirement account to an IRA.

How do you regain confidence to start re-building the accounts

Fortunately, last year I placed 30 percent of my retirement funds into a guaranteed minimum income benefit (GMIB) rider under a variable annuity. Seventy percent of my funds are down about 18 percent (better than the 30 to 40 percent others have seen). Thirty percent in the GMIB is up six percent for my future retirement income needs. So, using $1M as an example:

Not bad for these last 12-months.

Of course, had I put 100 percent into the GMIB, my "income base" would be $1,060,000 (up six percent, instead of down 10.8 percent). Clearly, I would not have done that then, or now.

We have gone back to accountants and attorneys who last year rejected this for their clients and they now are more receptive. Of course, the benefits under these lifetime riders are now being significantly curtailed. However, the conversation will still differentiate you from the investment advisors who are showing 20 to 40 percent reductions in account value to their clients and to the clients' advisors.

Once you are in front of the NHW client (or not HNW), you need to ask the right questions, such as:

Remember, prescription without diagnosis is malpractice.

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Prospecting: It's all about the process

by Alan Protzel

Alan Protzel is the Director of the Life Insurance Division of The Marketing Alliance, St. Louis, Mo., a national network of Independent Brokerage General Agents. He can be reached at 314-275-8713 or aprotzel@themarketingalliance.com.

Sales - the yin and yang of life. The yin is the reason people go into sales, the flexibility, the chance to be your own boss, financial incentives and opportunities, and competitiveness. The yang is the discipline and balance required to be successful and happy. Being in sales can be freeing and exhilarating for the right person.

So why are some people in sales who don't enjoy it? The sales process is predicated upon having enough qualified prospects. The art of managing the prospecting pipeline can be significantly improved by adding the discipline of process. Without process, prospecting and actual selling can cause you to work far more hours than necessary or desirable. To excel, you have to be disciplined at prospecting and have a process that you work to create prospects each day.

Many believe it takes a certain "personality" to be successful in sales. Simple inspection of the successful sales people we know tells us that a wide variety of "personalities" find success in sales. The most successful and fulfilled sales people are those who "work a system" and implement a regular prospecting and selling process.

My professional career spans more than 30 years of sales and sales management experience working with career and independent producers, and Brokerage General Agents. All are in business, the sales business. Some are retailing to clients, others wholesaling to producers, all are selling. The common thread that can be identified in all of the successful business people is that they have implemented a daily process for prospecting.

The truly successful sales people understand that consistently implementing a daily prospecting process works no matter what the business landscape looks like. In fact, during tough economic times it's those sales professionals with the discipline who thrive. Prospecting is frequently discussed in emotional terms, some love it, some hate it, but those who address it unemotionally, as a process, are on the right track.

Identify and know your ideal client

Don't chase everyone. You will exhaust and frustrate yourself and, more importantly, you will never build any efficiency into your prospecting system. Many financial advisors will say that their ideal client is a "high-net-worth individual, executive or business owner." Is a high-net-worth individual someone who has $500,000 of investable assets or $250,000 in a 401(k)? What about the start-up business owner who has very little cash and lots of inventory, or is it a third-generation family business owner? The point is that you need to be focused with your description of an ideal client and share it with everyone you know so people understand what you do and how you can help them.

Build the prospecting process with a call and move on up

Obviously, beginning the prospecting process must be addressed. It may be working a targeted list of qualified suspects (that's why the focused definition of your prospect is so important), or calling a network of associates and/or contacts asking for referrals. Again, you must be able to articulate the characteristics of the person to whom you wish to be referred.

You need to dedicate and schedule time regularly for prospecting. For example for those starting out, make it a goal to spend two hours a day to place 20 calls and speak with five new clients or get 10 referrals.

Rate your prospects by A, B, C and D

When you start making contacts or receiving referrals, you will need to categorize them into A, B, C and D prospects. Classify prospects as your best (ready to begin the buying process), next best (ready to enter the buying process in the next six months), warm leads (may enter the buying process in the next 12 months) and poor prospects (will not enter the buying process in the next 12 months). Determine how often you need to call, email and visit in person with them, and the best means to do so. Will you call your A prospects each week? Do you send a monthly electronic news letter to every name in your contact list? How often do you contact you C prospects - monthly or quarterly?

Be proactive. How will you follow up?

Many sales people feel that if they leave that one voicemail or send that one email, the prospect will magically respond. That is called reluctance. A key part of the process is the follow-up schedule. Determine how many days, weeks or months need to go by before you follow up again. Perhaps As are contacted every couple of days; Bs every month; Cs quarterly; Ds annually. What tools and resources do other successful sales people use?

Be pleasantly persistent. Your clients' timetable is usually slower than your timetable. Do not allow yourself to fall into a situation where things can drag out for months. Keep the urgency of your business at the forefront of your activities.

Be accountable to yourself

Establish your process and then execute it faithfully. Just like a manufacturing process, if done haphazardly or irregularly, the final product will be of low quality.

There really has never been a greater time to be in financial services sales and there is a growing need for quality sales professionals in our industry. The best sales people will do well in any economy because those are the individuals who have a prospecting process, a daily plan and the discipline to implement.

Keep the following principles in mind for effective sales

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