Articles

Technology and Life Insurance Sales

When you think about it, the very foundation of the insurance industry is based on person-to-person connection. From merchant ships with insured cargo to burial clubs, insurance has always been about protecting and linking people.

It makes sense, then, that social media is becoming an increasingly important tool connecting agents and insurers to prospective clients, especially millennials, a market that all agents need to be focusing on. And social media isn’t just helpful in prospecting—it also creates a tool for client retention. Let’s take a look at four ways social media is changing the face of insurance sales and service.

 

1. Social media allows for increased visibility. Look around yourself the next time you’re out in a restaurant, at a mall, coffee shop or even in a park. You’ll no doubt notice a high percentage of people slouched over a smartphone, tablet or laptop. Sometimes it feels as if people are paying more attention to the digital world than they are to the real world around them. By using social media to establish yourself, you will broaden your reach and catch the attention of those more digitally-minded prospects.

 

2. Technology allows for a head start in relationship building. As mentioned, insurance has always been about relationships. Before our more recent technological advancements we had to build those relationships one cold call and in-person meeting at a time. That wasn’t easy—and it wasn’t exactly efficient. Now we can create an interactive online presence that establishes a firm foundation for a relationship with many, many prospects at once. We can do this simply by using social media as a way to be social—to share information, humor, announcements and more and to converse with people.

 

3. Technology, including social media, gives us a whole new way to present marketing materials. Hand someone a brochure and they know they’re being marketed to. Give someone a presentation on his or her mobile device and they feel like they’re being informed. When you focus on online content marketing, you create something that’s informative and shareable and isn’t seen as an ad. With 70 percent of customers preferring to learn about a business through content rather than ads (according to a study by Content+) and 78 percent of consumers believing that a business building branded content is more interested in building a good relationship with them (per Custom Content Council) and 90 percent of Internet users listening to recommendations shared by friends (according to NewsCred) this is an important route to take.

 

4. Social media offers social proof. Insurance sales might not be a high school popularity contest, but having social proof of your popularity sure will help your business. Testimonials on your website are a good step but verified social proof—such as recommendations on LinkedIn and comments via Facebook and Twitter—go the extra mile. Likewise, certain online awards and recognition can give added social proof that makes people trust you (and your firm) immediately.

Our journey with social technology is far from over. Adapt or die may sound like an overstatement, but for an insurance agent hoping to keep his or her career going over the next few decades, it’s a truism that needs to be recognized.

 

Written by Jon Scaman, Financial Services Manager, Global Financial Distributors

Six Prospecting Tips for Life Insurance and Annuity Sales

Prospecting is the most important activity you can perform to ensure the longevity of your business. If you aren’t prospecting and marketing yourself regularly then it’s just a matter of time before your office phone stops ringing and your appointment book is empty.

But prospecting shouldn’t be a disorganized, anxiety-filled activity. It should be carried out efficiently by spending your time on the most effective and successful methods you can find. Here are six proven ideas for prospecting that can help boost your sales.

 

1. Choose a target market. The best way to sell to a prospect is to understand them well enough to make a strong case about why they need life insurance or an annuity. When you choose a target market to focus on, you can invest your time studying that market so completely that you can make an unbeatable, personalized pitch for your products. Whenever possible, identify a target niche that has a specialized need and focus all your marketing collateral on their specific situation. Not only will this strengthen your selling skills, it will also make it easier for you to find prospects.

 

2. Ask for referrals. Referrals can work magic on your book of business, but many of your satisfied clients won’t think about referring their friends, family and business associates unless you ask them to. Once your clients start making referrals, make sure you thank them in writing.

 

3. Start making cold calls. According to LifeHealthPro, many advisors find that cold calling is still one of the leading methods of prospecting—more effective than social media and advertising. So no matter how in-depth your social media and advertising campaigns are, you still need to pick up the phone and call prospects.

 

4. Deliver on your promises. Often, when we think about prospecting, we focus on getting to the prospects—but if you really want to turn them into clients then you need to show that you value them and that you can be trusted. The easiest way to do that is to come through on anything you promise them. From getting new illustrations to showing up on time to appointments to calling them back when you get an answer to one of their questions, make sure you always keep your word.

 

5. Get involved in the community. Prospecting doesn’t have to be overt. In fact, it’s often more successful when you establish yourself as a trusted, positive, proactive member of the community and let the prospects come to you.

 

6. Track your progress and your conversion ratio. Every advisor has his or her own strengths and weaknesses in marketing and prospecting. Make sure you track your outreach attempts, failures, successes and your conversion ratio so you know what works best for you and what methods are less successful.

 

Prospecting is both an art and a science. Once you figure out what works best for your target market and your personality, you can create a prospecting plan that delivers new clients regularly. 

 

Written by Suzy Turner, Financial Services Manager, Global Financial Distributors

Using Leverage To Solve The Retirement Challenge

Consider this case: A husband and wife team has spent the last 15 years building a multi-million dollar real estate business. Through hard work, smart thinking and overcoming a few setbacks along the way, they built and manage a couple dozen medical office buildings around a Southeastern U.S. metropolis. 

While the rents provided a solid revenue stream, at every decision point the couple elected to reinvest in their business rather than set something aside for retirement. Capturing immediate opportunities today always outweighed the long-term planning required to meet future financial needs. 

When the couple finally sat down with a financial advisor, they determined that they would like at least $150,000 per year of income during their retirement years—or for at least 25 years. 

The husband and wife decided their best course was to allow their business to borrow $1 million to fund an equity indexed annuity that they would use to jump start their retirement savings. Over a two-year period, from early 2008 to early 2010, the couple’s company paid $78,640 in interest on the commercial loan. During the same period, the policy credited $241,989. In the two years following the program’s inception, the positive balance from interest crediting to the policy versus the loan interest paid by their firm provided the couple with a 200 percent return. At a time when the markets were barely paying 5 percent, this was clearly an extraordinary result. 

This story is on its way to a happy ending, but that doesn’t always happen for entrepreneurs. Almost by definition, business owners are “doers” who focus all their time and energy on building their businesses and meeting the needs of their employees. It can be an awesome responsibility—one that successful small business owners take seriously. 

But the sad truth is that in all of the “doing,” too many small business owners fail to plan for their own future needs. It’s not uncommon to find entrepreneurs who, despite their business success, have no plan with which to meet their future financial needs. By investing in their business, they have left all of their economic eggs in just one basket. 

There are several retirement programs available to business owners. Each has its own unique benefits and drawbacks that need to be carefully assessed. Selecting the right plan is often far simpler than funding it. 

The most obvious—and most common—financing choice is, in many cases, the least attractive (and in some cases impossible). Harvesting cash from the business can deliver the monies necessary to fund retirement plans, but it may leave the business weak and reduce its sales value—assuming the cash even exists. 

Another alternative, however, has emerged that lets financial advisors and their business-owner clients get on track by unlocking value that is stored in the business. Most companies don’t realize that cash flow—income from the sale of products and services as well as lease or rental income—is an asset that can be leveraged for any legitimate business purpose, including funding the owner’s retirement. 

By allowing the business to borrow money to fund an annuity or universal life policy, the business owner can “front-load” his savings plan and, through compounding interest, have a much better chance of reaching his goals without undermining the health of his business. It also may be a cost-effective and tax-efficient way to move money out of the business and into the owner’s control. 

While the cash value of an annuity or life policy enjoys compounding growth, the business makes level simple-interest payments for the length of the loan. The loan is secured by an assignment of the fully collateralized policy and perhaps a general Uniform Commercial Code Form 1 filing notice. Some lenders may also require the business’ accounts receivables or the owner’s personal guarantees as collateral. In some—but not all—cases interest payments made by the business may even be considered a tax-deductible business expense. 

And when the loan comes due—in as many as 20 years—the client will still be able to sell all or part of a healthy business, retire the note from a side fund or from the growth within the product, or arrange other means to pay it off. Meanwhile, the cash value from inside the policy will provide supplemental retirement income to meet the owner’s needs. 

Leveraging assets to meet personal financial goals isn’t for every client; however, given the right set of circumstances, it can be a very effective tool. There are four keys to making this program work successfully. 

 

First, it takes the right client. 

 

The client needs to have a solid business with a steady stream of income in excess of what the company needs to pay its bills or grow. Other firm assets that are not already pledged as collateral elsewhere are frequently considered as well. 

In addition to lease or rental income, other types of assets could include inventories, holdbacks at auto dealerships, medical receivables including Medicare and Medicaid, and pre-need contracts at funeral homes. 

 

Second, the client must be comfortable with leverage. 

 

Most business owners are accustomed to using debt to cover start-up costs or acquire the equipment and workspace that helps their business grow. Unlike equipment, which depreciates over time, financial products are appreciating assets that will become more valuable as the years go by, making this an even more attractive option.

 

Third, it takes the right vehicles. 

 

The economics must make sense. To get the widest spread between loan interest and interest crediting within the insurance product, it’s important to start with a long term, simple, interest-only loan of 10, 15 or 20 years whatever the retirement horizon may be. Over time, products that enjoy compound interest will outpace simple interest products, even when the interest rates are at the same or similar levels. 

Purchasing universal life insurance policies or annuities offers a combination of low cost, tax efficiency, stability and principal protection. That last item—principal protection—is important to consider when principal loss is a concern, especially with retirement planning. As a result, clients benefit from the highest possible degree of security and potential for higher returns. 

 

Fourth, it takes the right partner. 

 

Look for a partner that is an established leader in this space or has established relationships with banks to provide the financing; relationships with legal and tax services to ensure each transaction provides maximum value to the client; and relationships with highly rated carriers to provide the carefully selected insurance and annuity products. It’s also important to work with a partner that has the experience to pull the deal together quickly and can make this program successful. 

Using leverage to fund a retirement plan is a frequently overlooked solution to the very common problem of starting too late on retirement planning. In fact, it really can be a smart solution for shifting dormant, non-productive assets into a more useful position for the benefit of the business owner. This approach keeps risk in check while still offering the potential for the same kind of returns any conservative client would expect to receive. 

 

Published by Broker World magazine's April, 2011 edition

Author's Bio Alan M. Harrington, JD Harrington is a senior vice president of Entaire Global Companies, Inc. and president of Global Financial Distributors, an Entaire subsidiary. Harrington was formerly senior vice president of variable distribution for Old Mutual Financial Network. Additionally, he served at the senior executive level for Banc One, responsible for fixed annuity and traditional life insurance marketing; Fortis Life Insurance Company, where he was responsible for the legal affairs and managed care strategy for the health insurance operation; and AEGON. He started his career as a trial lawyer in Texas, where he remains an active member of the Texas State Bar and is licensed to practice in the Northern District of Texas. In addition to a law degree from Loyola University in New Orleans, Harrington earned a BS from the State University College of NY in Buffalo, NY. He is a licensed insurance agent and holds his NASD Series 6 and Series 26 licenses. Harrington can be reached at Entaire, 1200 Ashwood Parkway, Ste. 150, Atlanta, GA  30338. Email: aharrington@globalfd.com.

Funding Buy-Sell Agreements

A good way to pay the premiums is to use a loan against the firm’s assets.

According to the Commissioners 1980 Mortality Table, there’s a one-in-five chance that a 40-year-old business owner will die before reaching 65. If he has a partner, there’s an almost 40 percent chance that one of them will die before he reaches 65. Add partners and the risks climb even higher. 

Given these statistics, small-business owners need a business-succession plan, generally referred to as a buy-sell agreement. A properly structured and funded buy-sell agreement is critical to keeping the business in the hands of its owners while maintaining the firm’s value, in the event of one owner’s death. 

Buy-sell agreements can be designed for many eventualities—a desire by the owner to sell the business, disability, divorce or death. Any of these events can arise at any time, so it is important to be as prepared for them as possible. A business-succession plan in the form of a buy-sell agreement is therefore critical. 

Or consider the case of the business owner who is joined by one of his children who helped build the business and has earned the right to run it one day. But the owner has other children. Finding a way to let each child share in the owner’s legacy is a common estate planning dilemma. A buy-sell agreement can help the owner pass the business to the active child while creating the resources for a financial inheritance for the other children. 

However, business owners don’t frequently take this step. Some surveys suggest that less than one-fifth of active business owners have a formal business succession plan. Reasons for this include the distraction they face in running a business and cost. 

But cost shouldn’t be a barrier. While there are many alternatives for funding buy-sell agreements, permanent life insurance is popular and meets the needs of many small-business owners. 

The premiums can be attractive, and the death benefit is usually free from federal income tax. Nevertheless, some owners may worry that paying the premiums out of pocket will divert cash that might be better used to grow the company, depending on the size of the policy and the age of the insured. 

There is another way to pay the premiums—leverage. This is a commercial loan that is taken out against the business assets used to fully fund the insurance policy, giving the owners the agreement they need while preserving resources in ways that keep the business healthy and growing. The life insurance policy’s cash value may grow, offering at least an opportunity to keep up with the growth in the company’s value. 

 

Using leverage 

 

Leveraging assets to fund a buy-sell agreement is not for every client, however. The ideal client needs to have a solid business with a steady stream of income in excess of what the company needs to pay its bills or grow. Other firm assets, such as inventories, holdbacks at auto dealerships or medical receivables that are not already pledged as collateral elsewhere, are frequently considered as well. At the same time, the client must be comfortable with leverage. Most business owners are accustomed to using debt to cover start-up costs or acquire the equipment and workspace that help their businesses grow. Unlike equipment, which depreciates over time, financial products are considered appreciating assets that become more valuable as the years go by, making them an even more attractive option. 

Using leverage also takes the right partner. To achieve success, look for an established leader with: 

  • The banking relationships to provide the financing 
  • Relationships with legal and tax services to ensure that each transaction offers maximum value to the client
  • Relationships with highly rated carriers to provide carefully selected insurance products 

It’s also important to work with a partner that has the experience to pull the deal together quickly and can make this investment successful. 

 

Published by Advisor Today. All rights reserved.

Alan M. Harrington, J.D., is president of Global Financial Distributors, a leader in leveraged-based financial strategies for small businesses and entrepreneurs. Email him at aharrington@globalfd.com. 

Accelerating Retirement Savings with Leverage

It’s a common tale. A small business owner has devoted his life to building his company. He’s put every dollar he has into it and, in return, he’s done an excellent job of providing a nice living for his family and his employees. But then retirement appears on his horizon, and he realizes that he’s saved too little to retire comfortably or leave something for his heirs. 

Usually, the only real course of action is to make the most of the existing assets. It can mean taking on more risk than is prudent to eke out slightly higher rates of return. Or worse, it can require harvesting cash out of the business in ways that leave it weak and reduce its sale value. 

 

Cash flow as an asset 

 

Another set of tools has emerged that let financial advisors and their business-owner clients get back onto plan by unlocking value that is stored in the business. Most companies don’t realize that cash flow–income from the sale of products and services as well as lease or rental income–is an asset that can be leveraged for a legitimate business purpose, including funding the owner’s retirement. 

By allowing the business to borrow money to fund an annuity or universal life policy, the business owner can “front load” his retirement savings and, through the might of compounding interest, have a much better chance of reaching his goals without undermining the health of his business. It’s also a cost effective and tax-efficient way to move money out of the business and into the owner’s control. 

Consider the case of the restaurant owner. For the last 15 years, this businesswoman has successfully built a restaurant franchise group with multiple locations across the city. But while she paid close attention to the demands of the business, she ignored her retirement planning. Her current retirement savings were significantly behind her ultimate needs. 

To supplement her retirement savings, the franchise owner and her financial advisor allow the business to take out a simple, interest-only loan for the benefit of the business owner. The owner, in turn, fully funds an annuity with a face value of $1 million. 

While the annuity enjoys compounding growth, the business makes level interest payments for the length of the loan. The loan is secured by an assignment of the fully collateralized policy and perhaps a general UCC1 filing. Some groups may also use the business’s accounts receivables or the owner’s personal guarantees as collateral. 

In some (but not all) cases these payments may be considered a tax-deductible business expense. This deal takes only 27 days to complete. When the loan comes due, the client will still be able to sell her healthy restaurants, retire the note from a side fund or arrange other means to pay it off. Meanwhile, the annuity will provide the supplemental retirement income the owner needs. 

 

Three keys to a successful program 

 

Leveraging assets to meet personal financial goals isn’t for every client. But given the right circumstances, this strategy can be very effective. There are three keys to making this program work successfully.

First, it takes the right client. The client needs to have a solid business with a steady stream of income in excess of what the company needs to pay its bills or grow. Other firm assets that are not already pledged as collateral elsewhere are frequently considered as well. In addition to lease or rental income, other types of assets could include inventories, holdbacks at auto dealerships, medical receivables (including Medicare and Medicaid) and pre-need contracts at funeral homes. 

At the same time, the client must be comfortable with leverage. Most business owners are accustomed to using debt to cover start-up costs or acquire equipment and workspace that helps their businesses grow. Unlike equipment, which depreciates over time, financial products are appreciating assets that become more valuable as the years go by, making this an even more attractive option. 

Second, it takes the right vehicles. The economics must make sense. To get the widest spread between loan interest and investment growth, it’s important to start with a long-term, simple, interest-only loan of 10, 15 or 20 years—whatever the retirement horizon. Over time, products that enjoy compound interest will outpace simple interest products, even when the interest rates are the same or similar.

While the proceeds of this loan can be used to fund almost any retirement vehicle allowed by the U.S. tax code, only a few products actually meet the criteria. For the owner to gain the most, however, the program needs to be selective–it should only benefit the owner, for instance–as well as offer low costs and tax efficiency. Purchasing universal life policies and annuities offers a combination of low costs, tax efficiency, stability and principal protection. The last item—principal protection—is important to eliminate the risk of principal loss in a down economy. Clients benefit from the highest possible degree of security and potential for higher returns. 

 

Tapping an established leader 

 

Finally, it takes the right partner. Look for a partner that is an established leader in this space or has established relationships with banks to provide the financing; relationships with legal and tax services to ensure each transaction provides maximum value to the client; and relationships with highly rated carriers to provide the carefully selected insurance and annuity products. It’s also important to work with a partner that has the experience to pull the deal together quickly and can make this investment successful. 

Using leverage to fund a retirement plan is a frequently overlooked solution to the common problem of starting too late on retirement planning. In fact, it really can be a smart solution to shifting dormant, non-productive assets into a more useful position for the benefit of the business owner. This approach keeps risk in check while still offering the same kind of returns a conservative client would expect to receive. 

 

Published at http://www.lifehealthpro.com/2010/04/07/accelerating-retirement-savings-with-leverage

Alan M. Harrington, JD, is the president of Global Financial Distributors, Duluth, Ga. You can e-mail him at aharrington@globalfd.com.

The Value of the Indexed Universal Life Bucket

If you’ve spent any time researching retirement planning, you’ve probably heard about the bucket approach. Essentially, bucketing is an income strategy that involves breaking your portfolio apart into three segments so that the cash you’ll need soonest (short term) is invested in low-risk, easy-to-liquidate positions such as money markets, short-term CDs and T-bills.  Cash you’ll need in five to ten years (medium term) is invested in longer-term bonds and CDs as well as mutual funds and stocks, and the final bucket (long-term) remains invested in mutual funds, ETFs and/or stocks with more aggressive growth potential so it can continue accumulating enough to last throughout retirement.  As you run out of money in the first short-term bucket, you begin to liquidate holdings in the medium-term bucket and move them to the short-term bucket while transitioning some of your long-term investments into the medium-term bucket.  One of the biggest benefits of the bucket approach is that it allows your long-term investments to remain untouched during bear markets, so you don’t liquidate positions and lock in losses. Many people aren’t aware that there is a fourth bucket that can be used for income needs throughout your retirement, and that is the cash value growth within an indexed universal life (IUL) insurance policy. 

 

Understanding the IUL bucket 

 

With interest rates at historic lows, many retirees and pre-retirees setting up their short-term buckets are concerned about the inability to find short-term, low-risk, liquid investments that can still outpace inflation.  IUL policies solve this need by allowing policyholders to increase the policy’s cash value by an amount that’s based on the performance of a chosen index, offering the policyholder far higher interest potential.  However, these policies also have what’s called a “floor” that prevents policyholders from losing money during market downturns.  Because an IUL policy mixes security with upside potential, retirees can gain competitive rates along with protection against downside risks.

 

Locking in gains, preventing losses 

 

One of the benefits of the bucket approach is that a retiree can keep the bulk of his or her investments tied to the market so that, during a bear market, they can continue to hold their positions until the market recovers rather than being forced to liquidate and lock in the losses. IUL policies, on the other hand, have a far better system. Not only do these policies expose owners to some of the upside potential of their chosen indices during bull market years, they also lock in those gains and have a floor or minimum return during the bear market years so there is no loss. 

 

Solving the tax problem 

 

Yet another benefit of having an IUL policy as a fourth bucket is that loans can be taken tax-free. Taxes can quickly reduce the value of the income you’re pulling out of your retirement buckets, which can prevent the money from stretching as far as you need it to. During high-tax years pulling added funds out of an IUL policy not only gives you access to tax-free cash but also helps you avoid breaking into the next tax bracket. 

 

The biggest fear of retirees is that they will run out of money. It’s a reasonable concern to have, and one that a bucket approach can help prevent. With an IUL running point on both short- and long-term income needs, it’s a fear that can realistically be overcome.

 

Published at www.producersweb.com

By Suzy Turner, Financial Services Manager, Global Financial Distributors

Forum 400 Names Alan Harrington New Member

President of Global Financial Distributors Recognized as Top Life Insurance Producer

ATLANTA, October 02, 2013 — Forum 400, an elite group of the top life insurance producers in thecountry, is pleased to announce that Alan Harrington, President of Global Financial Distributors, Inc., hasbeen accepted as a new member of the organization. Forum 400 membership is exclusive and by invitation-only, and to date, only 280 professionals meet the rigorous qualifying criteria.

Alan Harrington is the President of Atlanta, Georgia-based Global Financial Distributors (GFD). GFD is a leading provider of insurance and annuity-based financing solutions to business and individual clients.

“I’m thrilled to have been invited into the Forum 400 membership,” said Mr. Harrington “I look forward to the open sharing of ideas with other members and am excited to be included among this distinguished group of industry leaders.”

Candidates applying for membership in Forum 400 must participate in a demanding, seven-step application process, which includes interviews, detailed background information, and letters of recommendation from existing Forum 400 members. Applicants must also qualify with a competitive minimum annual personal financial services income produced in the previous year. The application process is also designed to educate potential members about the culture of sharing in Forum 400.

“It’s an exclusive membership by design,” said Barbara O’Connor, Executive Director of Forum 400. “Individuals who qualify are not only incredibly successful advisors, but also embody the sharing mentality that is so central to Forum 400’s mission. We believe Al is an excellent addition and look forward to his contributions to the membership.”

About Forum 400
Founded in 1973, Forum 400 is an elite group of pioneers and leaders who continually shape the life insurance industry and related professional communities. Its sole purpose is to provide an environment for the open exchange of innovative ideas and solutions from only the best in the industry to enable its members’ continued success.
For more information, visit www.forum400.org.

About Global Financial Distributors
Headquartered in Atlanta, GA, Global Financial Distributors is the fastest growing architect of insurance and annuity-based lending strategies for businesses and individuals in the market today. These strategies are collectively marketed under the Leveraged Planning® brand.
GFD can be visited on the web at www.globalfd.com
###

1200 Ashwood Pkwy, Ste. 150, Atlanta,GA 30338 1.800.515.2599 www.globalfd.com

Press Contacts:

Global Financial Distributors:
Eric Stein; 678-218-1220; edstein@globalfd.com
Forum 400:
Megan O’Donoghue; 800-499-0974; modonoghue@forum400.org