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Is anyone content with the interest rates on CDs at banks? Why would someone choose a CD over other safe money ideas? Certainly a CD is appropriate if the money has a definite intention: the client is saving that money for a trip, down payment on a home, a new deck/pool in the backyard next year- you see the picture. Short term safety with a short term intended use makes a CD very attractive and safe with no worry of principal loss regardless of market conditions. The interest rate is surely unattractive, however, but the knowledge that the client’s “money with a purpose” will be there when the event arises equals a perfect match. Does every client with a CD have an intended use for their lump sum of money? The answer is no, and most often does not have an intended purpose for it, but as we hear so often, ” I just don’t want to risk it.” Average CD interest rates currently are 2.35% for a 5 year CD and 1.84% for a 3 year CD. (source: Monitor Bank Rates April 2016) What does this all mean? There are alternatives to CDs for money that is without purpose, money that needs to be saved safely, and clients are mostly unaware of the alternatives.
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CDs have us pay tax on money we aren’t using. (Those interest rates are pre-tax- yielding less after taxes are paid- do we remind clients of this?)
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CDs don’t allow us to access our money without a penalty- there is no liquidity available. (Are clients aware they truly are ‘locking up their money’?)
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CDs don’t avoid probate at the time of death, unless held in a trust. (The client dies, how do their loved ones gain access to the CD?)
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Three very important pieces that are solved by using a Fixed Annuity in place of that CD (again for monies simply needed to be saved safely). The objection typically in the mind of the advisor and client is “I don’t want to lock up my money (or my client’s money) in an annuity.” Isn’t that what a CD is already doing, without liquid access to any of it? A 3 Year Multi-Year Guaranteed Rate fixed annuity is currently paying 2%- that is higher than a 3 year CD, and a 5 year MYTGA is paying 2.90% with liquid access to a portion of that money during the annuity term. Annuities also avoid probate and have a named beneficiary allowing the family to access the money after the loved one dies.
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Ask your next clients/prospects 3 questions:
1. How do you feel about the interest you’re receiving on your safe money at the bank? (This will tell you if they keep larger amounts there.)
2. Is that money intended for something specific soon, like a trip or home remodeling? (If the answer is as expected, no- we just don’t want to risk losing it and don’t know of any safe alternatives)
3. I have a few ideas to share with you that have been interesting and appropriate for some of my other clients, allowing them to not pay tax on money they’re not using, giving them access to some liquidity and a simpler way to pass that money to loved ones when that time comes. When can we get together ?
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When was the last time you truly prospected for Life Insurance, used a Fact Finder, and uncovered holes in a client’s planning? We’ve gotten smarter with the long tenure in this business but have we forgotten about what made us great professionals?
Eschels Financial Group is very excited and proud to present on Tuesday May 24, 2016 Edwin Hale JD, CLU, Assistant Vice President Advanced Markets with Accordia Life Insurance Company. Ed has 40 years of legal and insurance industry experience in the areas of Estate Planning and Business Succession Planning. He has been both a practicing attorney and a life insurance agent, with a focus on estate and business succession planning for the closely held family owned businesses.
Ed will spend a compelling 2 hours with us on:
ØNeeds Selling- How to approach a Business Owner
ØFact Finders- Estate Planning and uncovering the life insurance needs about which no one asks
ØJoint work with agents once they have obtained a Fact Finder, and assistance closing that sale (Yes, joint work and no commission split)
ØThis is a Workshop providing concepts and training, not a product discussion.
Please join us on Tuesday, May 24, 2016 from 10am -12 Noon in our office conference room at Eschels Financial Group 555 South Old Woodward Avenue Suite 755, Birmingham, Michigan. There will be a light breakfast served at 9:30am. Call our office to reserve your seat for this rare event and opportunity at 248-644-1144.
The successful industry professionals are those that explore opportunities and continue to strive for greatness by investing in themselves- be that professional!
We look very forward to spending the morning with you, as you glean all that is available from Mr. Ed Hale.
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As a trusted advisor, your clients rely on you for all aspects of their financial lives. There are many ways to modify and change plans that have been put in place years ago, and as time moves forward often those plans are not needed in the same way or need to be altered. When it comes time for the annual Life Insurance review, and the client says, “I don’t think we need/want/can afford this Life Insurance policy any longer. The original reason we bought it no longer exists (children are grown, business loan is paid off, no longer an estate need etc). What can we do with this policy other than just surrendering it?”
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It is imperative to explore all financial options for the clients- why let a client lapse or surrender a policy when determining there is an alternative. Life Settlements- Life Insurance , like every other asset, has a Market Value. Before your client considers letting a policy go, call us to discuss the specifics. And interestingly, all policy types are considered now for Life Settlements- even convertible term insurance. The reality is: you will set yourself apart from other advisors and agents by educating clients on Life Settlements and the options for the unwanted/unneeded life insurance. Clients remember you told them about an idea that others did not- and isn’t that what we want as agents and financial advisors? To be distinguished as unique, with different and compelling ideas for clients provides them with more than the average agent.
- You can increase your business momentum with much ease by simply suggesting to your clients they consider a tax-advantaged alternative to those stocks or brokerage account mutual funds. They don’t have to abandon the market exposure completely- certainly not. But to realign a portion of those monies into annuities with tax-deferral (why do we pay tax on money we’re not using?- seems a bit counter-intuitive) and allow themselves safety of the gains and a guaranteed income when the time comes? Your clients will be on board with the idea, but are you? Are your own objections keeping those opportunities from your clients? Call us to talk this through. It’s time for a light bulb moment.
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Are you aware within Fixed Indexed Annuities and Indexed Life Insurance there are 100% participation in the various indices up to the caps? Are you aware there are uncapped (yes uncapped) index strategies allowing the client the full index performance less a spread? Why is any of this important? Because clients have told this industry after 2008 that they no longer can endure the wild rides with their money. They have firmly said they are aware they need some exposure to the non-guaranteed markets, but they now also know they must be more diligent with safety, as their individual lives are uncertain and when retirement happens often is not by choice but more by circumstance.
See the attached White Paper by Allianz Life Insurance Company “Reclaiming the Future”
Looking for the latest 2016 tax summary guide? Download here
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How will you guide your clients and prospects this year with new ideas? As we have known and anticipated for the last several years, interest rates are now on the way back up, and retirement income will be affected if bonds are the primary source. Have you considered the importance of showing a client what a guaranteed income would look like, one that has the opportunities to increase as the index performs?
The stock market can be an uncomfortable place for some clients.
Consider these three recent bull markets*:
- 1997-2000: Up 100% before declining 86%
- 2003-2008: Up 90% before declining 53%
- 2009-2014: Up 142%… where do you think the market will go from here? Now could be a great time to exercise a “correction protection” strategy for your clients by investing in the Protective Indexed Annuity II.
If you have clients nearing retirement who are concerned about another decline, ,help them exercise “correction protection” by taking their gains out of the market and investing it in the Protective Indexed Annuity II. This solution provides protected growth, opportunities for higher returns, and even offers secure retirement income with SecurePay SE, an optional withdrawal benefit.
Contact me now for more information:
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