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Compelling
Conversations
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Everything you hope to accomplish...
begins with a conversation. Because what we
do as an industry is so complex and abstruse,
what we say and how well we say it is often what
differentiates us and our practices from the
competition. In an increasingly virtual industry,
how we frame our business model, express our
value proposition and articulate our thoughts,
insights and convictions, have become
progressively more important over the last
decade. We all sound the same and as a result
the client/prospect assumes that we are. For the
vast majority of financial advisors, when it comes
to communication, whether in written or verbal
form, we are a left-brain industry attempting to
communicate with a right-brain client. We are
far more comfortable speaking to the head with
information, data, charts and graphs, than to the
heart using analogy, metaphor and story. Like
most of life this is not an either/or proposition.
Recent neuroscience studies show that we most
often make decisions based on emotion and
then justify and execute them based on reason.
So the former is the catalyst for action and the
latter hopefully insures that your emotions don’t
take you over a cliff.
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Recurring Conversations:
A Key to Your Success
We often have well over 100 conversations in the span of an average week with both clients
and prospects, most of which are extemporaneous, situational and very tactical. However,
given the nature of our profession, we have many “recurring conversations,” where we say
the same thing over and over again to different clients and/or prospects on the same topic or
situation. These conversations are your “scripts,” which more often than not, simply evolved
over time. This guide will help you begin to consciously architect those conversations which
are designed to achieve the desired outcome—a thriving practice and a satisfied clientele.
Feel free to modify these so they fit you comfortably and stylistically, but be sure to maintain
the underlying theme and structure.
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Your Value
Proposition
Your Customized
Approach
“What Do You Do?”
“So How Do You Do It?”
Eloquently and concisely describe what you
do for your clients.
Explain how you incorporate a “professional
model” of leading with process, rather than
a “sales model” leading with product, to help
your clients achieve their unique and personal
financial objectives.
“My team and I spend pretty much all day, every day,
answering the two fundamental questions that everyone
has of our industry: ‘Will I make it, and do I have any
financial blind spots?’ In
answer to the question, ‘Will
It’s not just what you say...but how you
I make it?’ I have found the
say it. Use metaphors, analogies and
majority of people I speak
stories to speak to both the clients’
with, haven’t even defined
head so they understand, as well as
‘it!’ So the first thing our team
their heart… so they are spurred to
does is to sit down and help
take action. Remember, none of this
you define everything you are
will likely “ring true” if you don’t run your
trying to accomplish with your
practice guided by this architectural
wealth...with a high degree
and philosophical framework.
of specificity. We then take a
look at everything you’re doing
financially, to determine if
what you want to happen actually has a chance to occur.
We basically map your current financial structure to your
overall short-term and long-term financial objectives. If
those two things align we pat you on the back and tell
you congratulations. If they don’t align, we point out your
specific challenges and give you detailed recommendations to help get you back on track.
“Once we have addressed Question 1, we move to
Question 2: ‘Do I have any financial blind spots?’ At this
stage, our team takes a 360° look at you financially, to
determine if there is anything you might have overlooked
that might do you, your family or your business harm. Any
risk exposure we uncover will be brought to your attention and again our team will provide a rational strategy
designed to help mitigate the risk.
“At the conclusion of this exhaustive process, you not only
have a comprehensive wealth management strategy in
place, but you have addressed the only two questions
that have ever kept you up at night: ‘Will I make it, and do I
have any financial blind spots?’”
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“As I said on the phone Mrs. Jones, I’d like to explain
briefly how I work with my clients, my philosophy and
methodology…and if that makes sense I’d like to find out
a little bit about you and what you’re trying to accomplish. If you don’t mind I’ll start. Our industry has evolved
in a very strange way. If you have ever received a call
from someone in our industry it’s usually about some
hot product or idea, isn’t it Mrs. Jones? I don’t know
any other profession that leads with product. I have
never received a call from my doctor because she was
running a special on appendectomies this week. I’ve
never received a call from my attorney because he was
running a special on divorces this week! Think about a
call like that, ‘Paul, this is John, I’m running a special,
50% off divorce proceedings this week, how are you and
Susan doing?’
‘Well, John, I appreciate you thinking of me, but Susan
and I are doing fine.’
‘Oh…well…that’s great, Paul, could I talk to Susan for
a second?’
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Your Team Rationale
“So Why Are You On a Team?”
Explain the rationale, structure and value
of your team in helping clients “pick the lock
of complexity” in their financial lives.
“All professionals start with process. They want to find out
what you’re trying to accomplish and apply their services
to effectively get you there. I incorporate the same threestep process used by the medical profession. When you
go to see a doctor for the first time you go through a threestep process:
STEP 1 The Diagnostic Phase: where the doctor reviews
your past medical history, your current symptoms (and
if they’re really good), your future objectives for your
overall health.
STEP 2 The Prognosis Phase: where the doctor takes all
of that information, analyzes and/or researches your case
and comes back with…
STEP 3 The Treatment Phase: a specific and appropriate
form of treatment to address your unique medical needs
and objectives.
“Mrs. Jones, I formed a team because of one simple word:
complexity. Never in human history has life been this
complex. Better in many ways, but increasingly complex.
There is demographic complexity (people living longer
and blended families becoming the norm), geopolitical
complexity (economic and political changes continue to
alter this landscape), technological complexity (causing the
average person to reach “information overload” shortly after
breakfast each morning) and
financial complexity (the prolifYou could have the most sophisticated
eration of financial instruments
and elegant practice in your community,
and strategies continue to grow
but if you sound like every other advisor,
unabated). And ironically, the
your prospect will never give you the
more wealth you accumulate,
opportunity to demonstrate how different
the greater the complexity. It
you are.
gets to a point where you need
the fully integrated capability of
three institutions—banking, brokerage and insurance—to
begin to deal with these complex challenges. People spend
their entire careers in one of these industries and you need
all three brought to bear on your financial challenges.
So does this overall structural approach make sense?”
Take Action
Applying This 3-Step Process to Your Practice
• First we go through a deep discovery process where we look at your past
financial history, current financial structure and future financial objectives.
• In our second step, we do a thorough and in-depth analysis and return
with a written prognosis and comprehensive plan of attack.
• Then, and only then can we offer specific treatment, i.e., written recommendations, necessary to help achieve your overall financial objectives.
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“This is why we formed a team; to begin to apply the
collective insights and capabilities of those three industries to solve the complex financial needs of our clientele.
We believe one individual is simply incapable of knowing
all that’s necessary to address these challenges. So our
team members (both actual and virtual) have all subspecialized, to bring our clientele the breadth of capability
and the depth of insight necessary to help address their
complex financial challenges. We then wrap this capability
in a overarching strategic plan, which we design shoulder
to shoulder with our clientele, to ensure that everything
works seamlessly and harmoniously as clients seek to
achieve their goals and objectives.”
You can then go on from here to address the specific
roles and responsibilities of your actual team (those that
reside within your practice) and your virtual team (those
individuals you call upon for highly technical expertise
both within the firm and your local community).
Establishing a coherent and compelling rationale for your
team can dramatically expand both the perceived and
actual value you are capable of bringing to your clients.
The Boat Analogy
Explain Your Wealth
Management Strategy
Address complex financial needs utilizing three
institutional capabilities—banking, brokerage
and insurance.
“Mrs. Jones, I would like to take a couple of minutes and
explain the evolution of the financial services industry
and my position in that evolution through the use of an
analogy. No matter what financial institution you might
be talking to, they’re all trying to accomplish basically the
same thing for you. They’re trying to construct a financial
craft, put you and your family in it, and ship you off to your
destination. For illustrative purposes, that metaphorical
craft being built is a boat. So basically what we’re trying to
do is construct a financial craft in the form of a boat and
put you and your family in that craft and ship you off to
your destination.
“That boat is comprised of three elements: a sail, a hull
and a life preserver. Those are the three component parts
of the financial craft that we’re trying to build for you.
The sail represents equity securities. These securities
have the potential to increase or decrease in value over
time. For example, Mrs. Jones, your home is an equitybased security. It appreciates or depreciates in value
over time. Other examples include stocks, gold and other
commodities, as well as other forms of real estate.
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“The hull represents any kind of fixed income security.
That would include investments such as CDs, treasuries
and municipal bonds; all designed primarily to throw off
an income, versus appreciate or depreciate in value.
“The third element of the financial craft that we’re
constructing is a life preserver. The life preserver represents any insurance-based products that are primarily
designed to protect you and your family, versus throw off
an income stream or appreciate or depreciate in value
over time. Although it may have some of those components, it is designed primarily for protection.
“Now, Mrs. Jones, let’s say you have $1 million to invest.
There are currently three institutions that would be happy
to build that financial craft for you. Those three institutions
are the banking, brokerage and insurance industries.
“Let’s first go down to the local bank and say ‘Mr. Banker,
would you please build my financial craft for me?’ The
banker would be happy to do so. ‘Absolutely, I can do
this as well, Mrs. Jones. Here you go. Have a nice trip.’
You look at that craft and say, ‘Well that’s very interesting
Mr. Banker. If the financial seas get really turbulent, at
least I’m stable. However, I was actually hoping to retire
sometime before I keel over (no pun intended), and I’m
not quite sure this tiny little sail is up to the task. And that
life preserver doesn’t really look like it’s going to meet the
needs for myself, my family, or my business, if there’s any
kind of unforeseen catastrophe. This thing kind of reminds
me of the Titanic. I appreciate your help. Let me go see my
buddy the broker.’
And by the way, I can barely see that breath mint you’re
calling a life preserver. I appreciate your help. Let me go
see my buddy the insurance guy.’
“By now you can see this one coming, Mrs. Jones. You
call the insurance guy and he says, ‘You know it’s funny
that you should call. I had a
vision last night and a voice
This boat analogy can crystallize the
said, “build it, and she will
importance of a comprehensive wealth
come.’ And you end up with
management approach to both your
this thing. I guess you stick the
prospects and your clients.
sail on the life preserver and
hope for the best.
“For over a century, that’s been the problem with the financial services industry. Many had a very narrow view of your
portfolio and your financial needs based on limited training
and limited access to products and services. It’s the old
saying, Mrs. Jones: If all you have is a hammer, everything
looks like a nail.
“Well, we work for a firm that’s basically a giant financial
warehouse, which allows me as your advisor to go into that
warehouse and pull out whatever is necessary and appropriate for you to build a proportional craft that is designed
to help take you safely and effectively to your destination
over the long haul. Does that make sense as a methodology, Mrs. Jones?”
“So you call your broker and his assistant says, ‘Paul
should be getting back today from his third trip to Vegas
this month—how does 3:15 look?’ While you’re sitting
in the reception area, your broker comes flying through
the door and says, ‘Man am I on a hot streak! You want a
boat? I’ll build you a boat. I’ll build you a boat that will blow
your socks off. Hey buddy, let’s rock and roll.’ You look at
that boat and say, ‘That’s pretty exciting, Mr. Broker. With
that sail, it looks like I could retire in the next six months,
and I could send my 6-year-old to college next year. But
what if the economic seas get a little turbulent? With that
tiny little hull, at best I’m seasick and at worst I’m capsized.
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“Now let me speak to the issue of faith for one moment.
There is a vast difference between faith and credulity. Let
me illustrate. When a pilot gets into the cockpit they go
through a preflight checklist to minimize as many knowable risks as possible. Once they complete that checklist
their final act is...an act of faith. They start that engine with
the knowledge that there are risks that might lay ahead,
that could never be captured on that checklist. Another
pilot hops into the cockpit, takes the preflight checklist
and tosses it into the back seat, then starts the engine and
takes off! That is an act of credulity...blind faith...and that is
not what we’re talking about here.
Faith Versus Fear
Dealing with
Emotional Volatility
Emotional volatility can do far more damage than
market volatility. The first step is to establish the
philosophical context to address this challenge
and then provide the historical framework to
support it.
“I believe there are two ways to go through life: faith or
fear.1 I choose faith: faith in the long-term viability of a free
people, in an open society, under the rule of law, with
private property rights, to improve their condition over the
long term. Now this has only been true for 6,000 years
of recorded history. However, if it ever ceases to be true,
the last thing you and I will be
worried about is our portfolio,
Always address the greatest challenge
because we will be too busy
facing your clientele: emotional volatility.
trying to find a local library to
obtain a book on farming...
because we will have reverted
to an agrarian society! I believe it is this reasoned faith
and historical perspective that informs us and guides our
long-term wealth management strategy. We can therefore
only work with clients who make their financial and investment decisions with the same philosophical and historical
perspective. So Mr. and Mrs. Jones, how do you make
your decisions...faith or fear?”
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“Our checklist is composed of your unique risk profile,
time horizons, specific financial objectives, current assets
and contribution levels. This highly personalized checklist
is combined with historical rates of return and a highly
diversified portfolio, which is designed to give you the best
chance of achieving all of your financial objectives.”
‘Heck No’
Protecting Clients
from Themselves
Explain to clients that there will be times
you might say not only “no” but “heck no”
because you refuse to allow them to fall into
financial ruin.
“Mr. and Mrs. Jones, one of the primary reasons you are
hiring me is to periodically over the next 20–30 years,
protect you and your family...by telling you no. Let me
explain. At some point in the future, the markets may go
straight up for three or four years and you might feel like
you missed out and be tempted to mortgage everything
you own, put your young children to work full-time, take on
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an extra job and put all that extra capital into the market. At
that point, I will not only say ‘no,’ but ‘heck no!’ At another
point in the future, the markets may go straight down for
two or three years, and you will come to me and want to
sell everything and invest it in tin cans and a shovel...to
help you bury your assets in your backyard...and again I
will say not only “no,” but “heck no!” Because here is the
agreement we are making today: I won’t let you do something I know will cause you to fall into financial ruin on my
watch. If you want to do something like that, you will have
to fire me and find someone else to do it for you. Does that
make sense?”
Over the years, I have had the opportunity to work
with many physicians. What always impressed me
was not just the deep knowledge and insight they
possess, but also the philosophical framework of
“First, do no harm.” If you wanted to pursue a medical
strategy which contravenes your physician’s recommendations, you were free to do so, but not with your
physician. They would simply refer your case if you
didn’t believe in their strategy.
Social Prospecting
“Breaking the Dance”
We all know someone that we run into regularly
at social events, whom we know would be a
great client, but we have never “found the right
opportunity” to broach the subject and/or
you’re waiting for them to approach you (since
they obviously know what you do and would
say something if they had an interest). Your
reluctance is all based on fear: your fear of
coming across like a ‘pushy salesperson’ and
their fear of being rejected by you. I know what
you are thinking...’ Wait a minute, I understand
the first one, but the second one...no way!’ (More
on that later.) The next time you run into your
“social relationship,” find the appropriate time
to say the following:
to make myself and my team available to you. However,
our friendship is far more important to me than any
business relationship we might ever develop, so I will rely
on you to reach out to me, if and when that need arises.
I just want you to know that the
door is always open to you.
Any client that consistently disregards
So with that in mind, ‘How
your advice should be asked to seek
‘bout them Cowboys?’”
their counsel elsewhere. Ironically, this
level of conviction often helps you retain
Again, feel free to play around
that same client.
with the language, however,
just be sure to maintain the two
key concepts of “second opinion” and “the door is always
open to you.” Now back to the fear of being rejected
by you. You must understand how you are perceived in
your community. Many of you have been extraordinarily
successful in an industry that is both fascinating and
mysterious to those on the outside looking in. People often
see you (contrary to the characterization in the popular
press), as a hybrid of Milton Friedman and Warren Buffett,
and assume you are given a stable of well-heeled, whitegloved clients to work with.
Consider this true story from an advisor who learned the
hard way:
A number of years ago I was speaking on this very issue
to a group of around 150 financial advisors. When I
concluded, an individual in the back of the room yelled
out, “Where were you six months ago?” To which I
responded, “I don’t remember what I had for lunch
yesterday, so where I was six months ago is a long-lost
memory. Why?” He then went on to tell the following story:
“Mary, you know we run into each other all the time at
these social events and I just want you to know something...if you ever have any financial or investment
question, or need a second opinion, I would be happy
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“Six months ago I was playing golf with one of my best
friends from childhood, who was both my college roommate and the best man at my wedding. As we approach
the first tee he says, ‘Since I’m now contributing to the
financial health of your firm...this round’s on you.’ I of
course asked what he was
talking about. He said that
Remember two key points for opening the
he became a client of my
door to a social prospect without coming
firm a couple of weeks ago.
across like a desperate salesperson.
I said...what? He said there
was an advisor whom he was
impressed with that worked for my firm and had been
talking to him on and off for the last couple of years; and
that heck, if the firm was good enough for me to work with
over the last 15 years, it should be good enough for him
to help with his investments. After I recovered from that
punch in the gut, I asked him, ‘why hadn’t you approached
me?’ he said that he assumed I was ‘full’ and not taking
on any new clients. If I had this script six months ago I
would more than likely have my best friend (who was quite
wealthy I might add), as a client. I just didn’t know how to
frame the message in such a way that it didn’t look totally
self-serving and as though I was trading on our friendship.
I will never allow this to happen again!
Referral
Request #1
The “Ideal Client” Strategy
Have this conversation during your annual review
or over lunch with clients you wish to replicate.
“Mary, have I ever explained
to you how we manage our
Change the focus from “Help me, help
practice? Great, let me take
me” to “Help me, help you.”
a moment and explain it
because it impacts you as a
client. At its essence, every business in the United States
has two fundamental requirements if they’re going to
survive: to grow and to serve. Fail at either, and over time
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the business will atrophy and die. One of the greatest challenges is allocating time and resources appropriately to
those two critical requirements. Many advisors spend 70%
of their time trying to grow and only about 30% of their time
actively engaged in serving their existing clientele. We have
reversed those percentages in our practice, which is one of
the many benefits of our team structure. We spend 70% of
our time working with our existing clientele and only about
30% trying to grow our practice. I assume that, as a client,
you would like us to continue to work that way? Great! The
only way we have been able to accomplish this is with the
help of our best clients. Those clients consistently introduce
our team to individuals and families that they believe can
benefit from our services. Now before you give me any
names, let me describe the kind of people that we are best
designed to serve. And frankly Mary, this is the easy part. If
we had 100 clients just like you, not only would we be one
of the most productive practices in Dallas, we would be one
of the happiest; because our friendship transcends a purely
business relationship. So Mary, I’d like you to think of two
or three people that when you look at them, you feel like
you’re looking into a mirror. Now when I said that...who just
popped into your mind?”
Now, the key to this referral request is that it only
works for those clients that you wish to clone. If this
is not true, it will be blatantly disingenuous and
therefore fail miserably. However, for the right client,
whose relationship with you truly transcends a purely
business relationship, this can work beautifully for
the following reasons:
• It’s genuinely flattering.
• It engages one of the most powerful human
instincts, enlightened self-interest. “It is in my
interest to keep you off the streets and in front
of my portfolio.”
• The request is specific (when you look at them...)
rather than general (who do you know...), which
of course brings specific and prequalified people
to mind.
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“Hey Bill, as I said on the phone, I stumbled upon something as I was analyzing my practice which I need your
insight on. I really appreciate your taking the time to
allow me to pick your brain. I noticed that over 30% of my
clientele are physicians, with a fairly large percentage
being surgeons. I knew I worked with a number of doctors
but this number surprised me. As I thought about why
this was occurring I came up with a couple of interesting
insights. I think the first catalyst was my mom, who like
many mothers hoped her little boy would grow up one
day to be a doctor. To plant that seed she bought me a
book entitled, “The Making of the Surgeon.” (At this point
Bill stopped me and said that was his favorite book about
his profession and that he too had read it as a young boy,
about a young doctor going through his internship and
residency at the famed Bellevue Hospital in New York.
Dr. Nolan’s journey was so captivating that I decided that
I too would become a surgeon.)
Referral
Request #2
Niche Market Strategy
Evaluate your clientele for possible centers
of influence.
One day I was analyzing my practice and noticed that I
was beginning to build a fairly significant presence in the
local medical community, among doctors generally, and
surgeons specifically. I then asked what turned out to be
two very important questions about my practice: what is it
about the medical profession in general and surgeons in
particular that is so attractive to me, and how can I more
effectively grow my practice within this particular niche
market? The result of this thought process resulted in the
following script, which I tried out on a physician that was
not only a good client but a great friend. I scheduled a
lunch meeting the following week under the premise of
wanting to pick his brain regarding the direction I wanted
to take my practice. We met for lunch the following week
and after a few pleasantries I said the following...
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“I later ran up against my lack of affinity for math and
science...but as you know Bill, I never lost my fascination with and respect for your profession. My second
discovery was how much I enjoyed working with surgeons
temperamentally. I have discovered over the years I work
best with individuals that are extremely decisive. People
who continually vacillate and equivocate drive me to
distraction. Surgeons are temperamentally wired to make
tough decisions, with the best information available, and
continually move forward towards the best result. Being
wired that way myself makes us a great fit.
“So with my affinity for both the profession and the practitioner, I decided that I wanted to consciously grow my
practice much more in this arena. And, as I thought about
the best way to do that, I realized something: I could never
know as much about your profession as you do Bill. So
here’s my question. If you were me (and you know me
and my business model as well as anyone), how would
you more consciously and systematically attract more
surgeons into your practice? What would you do?”
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At this point...say nothing...and let your client talk.
And here’s how the story ended. My client thought for a
moment, smiled and said, “Well the first thing I would do is
take me to lunch on Wednesdays.” I responded somewhat
quizzically, “You know I always enjoy lunch with you Bill...
but why?” He said, “Well, every Wednesday a number of
my colleagues and I meet for lunch down here. On any
given week there could be anywhere from five to 15 of us
sitting around just shooting the breeze, telling war stories,
complaining about the bureaucracy...basically we’ve
become an informal support group.
“These are exactly the kind of men and women that fit your
profile. So here’s what we should do: the next Wednesday
you find yourself in the neighborhood, give me a heads
up and you can join us for lunch. I’ll simply tell everyone
that I was meeting with my financial advisor and asked
you to join us for lunch. The rest is up to you.” I of course
said, “How does next Wednesday look?” He laughed, and
said that would be great. It went off just as anticipated.
He introduced me and because I was the new kid on the
block, I was both the center of attention and conversation.
At the conclusion of the first lunch, I was not only invited
back, “any time you’re in the neighborhood,” but to stop
by to chat with a couple of the surgeons at the table on my
next visit.
The bottom line is I never would have considered
this approach without the direct insight and guidance
of my client.
Leverage centers of influence. Evaluate your existing practice
and determine what are the 3–5 key niche markets that you
have cultivated thus far and ask yourself two questions:
• What is it about that particular industry and/or profession
that you find interesting?
• What is it about the people within that industry and/or
profession that you find attractive?
Our Investment
Strategy
Point A to Point B
People don’t invest their assets to beat an
arbitrary index but to go on a journey with specific
goals, objectives and critical demarcation points.
Help them on this journey and they will beat a
path to your door.
“Historically, our investment context has been subjective:
‘My investment portfolio is better than their investment
portfolio.’
“Because each client has a different starting point (point
A) and different goals and objectives (point B), our
investment philosophy is very simple: to craft a comprehensive and balanced investment portfolio designed to
take each client from point A to point B with the greatest
degree of certainty and the least amount of risk necessary to get them there.
“The simple postage stamp illustrates the one constant
threat we always take into consideration. In 1974 that
postage stamp cost a dime and today it costs 49 cents, a
390% increase. This is the greatest threat to reaching your
point B. This risk—inflation—is one of the greatest threats,
and we design your portfolio to combat it.”
Historical Market
Context
Expanding Your Client’s Perspective
Without historical context and market history,
your client’s north star will be the most recent
news broadcast.
How many times in the past few years have you heard this
one? This always happens after a significant downturn,
as the client continues to navigate the future with a
rearview mirror. (This is a concept borrowed from Nick
Murray, one of the financial industry’s premier speakers,
and simply made visual.)
You should all have a laminated copy of the current
Ibbotson chart showing the markets over the last century
or so. Here’s how to utilize that chart.
10
For Institutional Use Only I Not for Use with Retail Investors
®
The Right Way to Invest
You point to it and ask, “Mrs. Jones, has anyone ever
given you the English translation of the famous Ibbotson
chart?” Of course the answer will be no.
“Historically, all of the downs are temporary, and historically
all of the ups are permanent. We design a long-term investment strategy for each of our clients to help them on their
unique financial journey. We do not make draconian investment decisions each time the market goes up or down.
“Does that make sense as an investment methodology?”
It’s important to remind your clients and prospects that
past performance does not guarantee future results.
Our Insurance Strategy
Preparing for Tuesday
Our industry historically chases relative
performance as if it’s the Holy Grail and too
often leaves our client’s entire financial life
teetering on the edge of disaster because
“we don’t do insurance.”
“Our insurance strategy is very simple. We protect
against the three major contingencies that can devastate
you financially:
Market Psychology
“You can die too soon. You can live too long.
Or you could break down on the journey.
Taking Advantage of Fire Sales
“Unlike any other investment decision you make, this one
is always on the clock because everyone has a Monday
and Tuesday in their lives ... on Monday you’re insurable
and on Tuesday you’re not. We always make sure to pack
our life preservers before we take your financial craft out
to sea.
Your greatest challenge as an advisor is not
managing your client’s assets but managing
their emotions.
“Mrs. Jones, let me take a moment and explain in simple
terms the single greatest challenge people face when
dealing with the stock market. When there’s a significant
markdown in prices at Nordstrom’s, people are very happy
and run into the store.
“Ironically, when there’s a significant markdown in prices
in the stock market, people are very unhappy and run out
of the store!
“One of my many jobs is to remind you of this
periodically.”
For Institutional Use Only I Not for Use with Retail Investors
“When death or disability occurs and expenses and/or
taxes are demanded there are only three options:
“You can sell assets (often at fire sale prices) getting
pennies on the dollar.
“You can try to take out a loan (often at the time you are
least credit worthy).
“Or you can settle your liabilities with insurance.
“Only insurance provides liquid capital, on demand, for
pennies on the dollar.”
11
OppenheimerFunds
®
Estate Planning 101
Sell Some Milk to Save the Cow
Accumulating a large estate is only half the battle.
Preserving it is the other half.
“Let me take a moment and make a very complex subject
easy to understand. Let’s assume for a moment that you
have one cow and a bucket of milk. Someone comes
along and demands that you give up one of the two.
Which would you relinquish, the cow or the bucket of milk?
Right, obviously you would give up the milk, because
with the cow you can get more milk. You now understand
estate planning better than most lawyers. Let me explain.
“Your estate today is comprised of all of your assets both
tangible and intangible.
“Now what can those assets generate? Right. Income and
capital gains.
“We’re now going to convert (metaphorically) all of your
assets into a giant herd of cattle.
12
Disability Discussion
Preserving the Money Machine
For most people, a significant loss of income
is a terminal loss of lifestyle and legacy.
“When you die, let’s say one of the first people to come
and visit your family is an IRS agent. The agent then tells
your family that with your death, they will have to give up
50% of your herd.
“Mr. and Mrs. Jones, if you had a machine in your attic that
generated $200,000 of income every year like clockwork,
what would you insure that machine for in case it broke
down or blew a fuse? Nine out of 10 clients will say, ‘Well I
would probably insure it for $200,000 or whatever it would
take to replace the income.’
“However, you had the foresight to take a little bit of the
milk produced each month, and you bought a life insurance policy for pennies on the dollar to satisfy the IRS
when the time came. So you preserved the herd for your
children and your children’s children.”
“At this point I’d say, ‘I would agree with you. And what’s
ironic, I’m actually talking to that machine right now! Bob,
you currently generate $200,000 a year in income, year
after year just like clockwork. What happens if you break
down and that income ceases?’”
For Institutional Use Only I Not for Use with Retail Investors
CEO Advisor Institute
SM
For Institutional Use Only I Not for Use with Retail Investors
CEO Advisor Institute
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CA1000.015.0615 June 23, 2015