The Virtual Advisor

A twice monthly publication for current and past subscribers to the The Virtual Assistant (VSA), providing ideas and executive summaries of events that affect you.  Forgot your VSA login?  Click here.  If you do not want to receive this newsletter, click here.  If you wish to reactivate an inactive VSA subscription, click here.  Please feel free to forward this to any associates and/or your marketing support area.  In fact, we would appreciate your doing so!

SALES IDEA
E-MAIL LOWERS MARKETING COSTS

Advisors are rapidly learning that E-Mail Marketing can lower costs, increase client satisfaction and interaction as well as increase sales. Here are some points:

GENERAL:
Collect e-mail addresses from all your clients and everyone you hope will become a client. Always, always ask for a business card with an e-mail address from prospects!


ELECTRONIC NEWSLETTERS:

  • Create e-mail lists for clients and prospects.
  • Create your own HTML newsletters or buy some. A great choice is the monthly series of newsletters offered by The Virtual Assistant. See a sample here.  
  • Create your own e-mail groups or use services like Constant Contact or Mail Chimp and fire away each month.
PRE-APPROACH E- MAILS: Start sending "pre-approach e-mails" using a prepared report like the one here. Attach the report and put something like this in the body of your e-mail, "Hi John, hope you and Cindy are well. I just saw this idea and created a report for you to consider. I'll call for coffee and to discuss in a few days." 

Good selling!

Bill O'Quin, CLU, ChFC, RFC

Managing Partner, VSA,  LP
boquin@ix.netcom.com, 225-387-9845 (office) or 512-751-9845 (cell)

Executive Summary of Other Information You Might Want to Know!
April 1 - 15, 2012

INDUSTRY NEWS... MARKETING/TAX UPDATES...
HIRE VETS - An Edward Jones poll found that many people wanted those traits in their financial advisers that are found in veterans...discipline, goal focus and integrity. They should listen to clients, show leadership and determination, and follow through on promises.

GLENN NEASHAM INTERVIEW – Click here to read an interview with Glenn Neasham, the insurance agent who was convicted last fall of felony theft for selling an annuity to an 83-year-old woman who was later diagnosed with dementia. 

INFLATION FEARS - An MFS survey shows that 60% of investors were concerned about inflation, while only 41% of financial advisers think it is of concern. Here is a History of Inflation (1967 –2011) that might shed some light on today's situation.  

MORE PRESSURE ON FEES - Some advisors say Morningstar's decision to provide data on adviser fees and commissions in its Advisor Workstation platform will drive business away from higher-cost advisers and push down fees overall.  Click here for more information from InvestmentNews.  

FIDUCIARY HOOPLA – A new Texas Tech study reveals we already have individual states operating under the fiduciary standard and the brokers and IRA holders in those states are no worse off than the brokers and IRA holders in other states. (See "Stunning Academic Study May Cause DOL to Retain Original Proposal for Fiduciary Definition.") 

FIDUCIARY IMPACT - Oliver Wyman reports that if the Department of Labor imposes a fiduciary standard rule for investment advisers selling products to IRA holders, nearly 1 million fewer IRAs would be opened each year, and small businesses could stop establishing new 401(k) accounts. We have no idea how that was determined.

CRACK DOWN - Retirement plan advisors would do well to make certain the plans they advise are compliant with DOL rules.  The DOL's enforcement arm, Employee Benefits Security Administration (EBSA), closed 3,472 civil cases for $1.39 billion last year with 302 criminal cases resulting in 129 indictments and 75 guilty pleas or convictions.  Click here to review "5 fee disclosure steps for plan sponsors."  

LIFE SALES STRONG – LIMRA reports whole life insurance premiums increased 9% last year, the sixth year of steady growth as more consumers seek safety and simplicity. Companies sold 2% more individual life polices overall in 2011. Indexed universal life premiums were up 38% for the year as sales increased 30%.  More information is available in "Life Insurance Products: What's Hot Right Now."  

REGULATION 194 – That's a New York regulation requiring insurance agents and brokers to alert clients, in writing, how they are being compensated and to provide specific details upon request.  The regulation recently survived a court challenge and more states may follow New York's lead.  Click here for more information from The Wall Street Journal.  

SIX FAMOUS BRANDS – Did you know that, without the availability of cash value life insurance policies, there may never have been a Disneyland or a McDonalds?  Click here to read about the role life insurance also played in establishing Stanford University, saving J.C. Penney from the Great Depression, as well as the impact a life insurance policy had on establishing other successful business ventures.  
 
HARTFORD LOSING ADVISORS – Hartford recently announced that it will no longer offer annuities and that it will sell off its life insurance operations.  Not unexpectedly, financial advisers and broker-dealers are shying away from their products in the wake of the company's restructuring. "Companies make changes like this all the time, but the difference is that in the insurance business, when people buy a life policy, they feel like they're buying security."
 
E-MAIL SAVES MONEY - Companies that serve 401(k) plans are asking the U.S. Labor Department to reconsider its stance on mailed notifications, so that they can save costs by using email instead of regular mail to send information to plan participants.

PUBLIC COMPANY PENSION DEFICIT - Milliman reports that the 100 largest pensions of public companies had a record funding shortfall of $326.8 billion at the end of 2011. Falling stock prices and low interest rates are the culprits. Companies will either have to pour billions more dollars in or ask for regulatory relief. FYI, estimates for state and local pensions are about $4 trillion and the federal deficit is about $5.7 trillion.  According to a New York Times article, some public workers' pension funds are increasingly turning to riskier investments in an attempt to earn higher returns.  So far, not so good...according to the article, "while their fees have soared, their returns have not."  

$2B IN MLR REBATES - This from BenefitsPro.  According to an analysis by The Commonwealth Fund, if medical loss ratio rules had been in effect in 2010, health insurers would have owed customers about $2 billion in rebates. The rules, part of the Patient Protection and Affordable Care Act, took effect in 2011.  The first rebates are set to be paid in August and the federal government has said it expects much lower rebates, about $323 million.

SMALL BUSINESSES SELF INSURE – Bloomberg reports more businesses with fewer than 200 employees are choosing to self-insure. The trend could increase risk and premium costs when state insurance exchanges take effect in 2014 if more small companies choose to manage costs by self-insuring.


TAKE THIS JOB AND LOVE IT – In a ranking of 200 jobs, financial planners have the fifth-best career, according to an Investment News article.  "According to the experts, financial planners have less stress, a better working environment and fewer physical demands than most other jobs."  Plus, "financial planners out-earn the rest of the top 10 professions."  

WE NEED A RIOT - According to the National Taxpayers Union, we each waste about 12 hours a year, every year, filling out this crazy stuff. Schedule B. Schedule C. Above the line. Below the line. Deductions, exemptions, non-refundable credits. Medical bills over 7.5% of adjusted gross income. It's like we're being mugged and held hostage. Every year. The instruction booklet for the 1040 now runs to 189 pages.  Seventy-five years ago, it was two pages. The U.S. tax code is insane and out of control. It's tripled in a decade. It now runs to 3.8 million words. To put that in context, William Shakespeare only needed 900,000 words to say everything he had to say.
 
DON'T RUN AND DON'T HIDE - It's one of the worst tax time scenarios: You discover while doing your taxes — or you just know without even doing them — that you owe taxes, and you don't have the cash. What should you do? You may be tempted to ignore the problem. Don't do it. The worst thing you can do is put off filing your return because you're afraid of the bill. The failure-to-file penalty runs to 5% for each month that your return is late, up to 25% with a minimum penalty of $135. The failure-to-pay penalty is just a fraction of that, at 0.5% a month of the unpaid tax at April 17, and even that is cut in half for taxpayers who set up a formal installment plan with the IRS.

TAX FREEDOM DAY - Think that you are working to earn a living for you and your family?  Think again.  Since 2012 began, you have been indentured to the government.  In fact, you will have to work until April 17th to earn enough to pay off the combined 29.2% federal, state, and local tax bill.

HEALTH DENIAL – The Duck (Aflac) says about 60% of American workers think it is unlikely that they or a family member will face a serious or a chronic illness. Further, 58% of workers were not prepared financially for an unexpected event. Here is one in a series of e-mail marketing reports from The Virtual Assistant that might help your clients' awareness...Critical Illness.  

BACKDOOR IRA – With the 3.8% tax on investment income beginning in 2013, there is new interest in the "backdoor" Roth IRA...transferring money from taxable accounts to a Roth plan. The new tax will affect taxpayers with $250,000 of adjusted gross income ($200,000 for singles) and does not apply to municipal bond income and qualified payouts from Roth IRAs.

TEN MILLION+ TAX FREE – Clients with large estates have nine months to transfer at least $10 million to their heirs without incurring estate taxes. Tax exemptions -- which set the estate tax exemption and the gift tax exemption at $5.120 million -- are set to expire at the end of 2012.

E-MAIL LOWERS MARKETING COSTS – Advisors are rapidly learning that E-Mail Marketing can lower costs, increase client satisfaction and interaction as well as increase sales. Here are some points:
GENERAL: Collect e-mail addresses from all your clients and everyone you hope will become a client. Always, always ask for a business card with an e-mail address from prospects!
ELECTRONIC NEWSLETTERS:
  • Create e-mail lists for clients and prospects.
  • Create your own HTML newsletters or buy some. A great choice is the monthly series of newsletters offered by The Virtual Assistant. See a sample here.  
  • Create your own e-mail groups or use services like Constant Contact or Mail Chimp and fire away each month.
PRE-APPROACH E- MAILS: Start sending "pre-approach e-mails" using a prepared report like the one here. Attach the report and put something like this in the body of your e-mail, "Hi John, hope you and Cindy are well. I just saw this idea and created a report for you to consider. I'll call for coffee and to discuss in a few days."  

GUARANTEED INCOME - According to a report from Prudential, bringing flexible guaranteed-income products to workplace and individual plans is one of three keys to increased retirement security. The report also recommends boosting saving and investing behaviors and optimizing Social Security benefit strategies. Well, for nearly 18 years now, I am boosted every month by my Prudential annuity!

VA POPULAR WITH PLANNERS – An Insured Retirement Institute survey indicates that 42% of financial advisors discuss variable annuities in every client conversation and recommend them to clients desiring guaranteed investments. "We found that the more educated advisors are, the more likely they are to use variable annuities in client portfolios, and not surprisingly, the happier the client." According to the survey, new clients' average allocation is 29% variable annuities.

FEELING BETTER - According to a Country Financial poll, Americans are feeling a little better about their ability to retire, the first such increase in optimism in five years. Among those surveyed, 35% said they think a middle-class family can save enough for retirement, up 6% from 2011.  And, in fact, a MetLife study finds that contrary to predictions, Baby Boomers are retiring, with those born in 1946 retiring in droves.  

BIG FEMALE MARKET – U.S. women represent a market twice as large as China and India combined, but studies show that women are unsatisfied with financial services companies. This is a great opportunity!  Learn more here.  

ADVISOR ADVICE - Clients who can't save enough for retirement because they enjoy purchasing items like boats and cars have prompted advisor Jorie Johnson to teach children about investing and setting financial goals. "Ideally, you're supposed to evolve and learn to delay instant gratification, but that doesn't always happen with clients." Here is a tool from 
The Virtual Assistant that could help, "Money Doesn't Grow on Trees… Teaching Kids about Money."  
 
TIDBITSSocial Security claims dropped in 2011, with fewer workers aged 62 and older applying for retirement benefits.  According to the annual Genworth survey, nursing home costs have increased in the past year by 4.2%, to $222 per day.  Health plan cost increases are starting to slow down, according to the 24th National Heath Care Trend Survey, with "slowing down" being a relative term...for the first time since 2001, projected cost increases are less than 10%.  Finally, the availability of employer-paid health insurance dropped to a record low 44.6% in 2011.

RETIREMENT BALANCES UP – The Urban Institute reports retirement-account balances hit a record $9.2 trillion in the first quarter, a significant improvement from the start of the recession. While investors have lost years of growth in their accounts, balances have climbed since the low of $6 trillion at the start of 2009.
 
WORKPLACE LIFE SALES - LIMRA says the workplace is where about 20% of American life insurance shoppers look for their coverage. Three-fourths of those considering life insurance through their employer bought the coverage, while 30% said they looked into the product simply because their employers offered it. "Clearly, the convenience of having the resource at their place of work coupled with the feeling of security felt by working with someone their employer has [implicitly] approved are drawing consumers to this channel."

MORE ETFs - Cogent Research reports that between 2007 and 2011, the number of financial advisers using exchange-traded funds increased by more than 40%. ETFs outstripped all other investment products.  Advisers using ETFs increased 10% last year alone.

GOLD PEAK - A record high gold price above $2,000 an ounce next year could mark the peak of the precious metal's more-than-decade-long bull run as monetary policy in key economies starts to normalize. Gold prices are likely to be driven above $2,000 as concerns over the euro zone debt crisis persist and the prospect of more U.S. monetary easing gains ground. Currently, it is just under $1,700 an ounce.



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