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Vol. 7 No. 11 • November 2006 Official IARFC Publication www.IARFC.org
Serving Financial Advisors Worldwide
Las Vegas 2007Finding Security in an Uncertain World
Financial Advisors Forum May 15-17, 2007 www.IARFC.org
For more informationon Financial AdvisorsForum Registration,contact us today —Call 800 532 9060
or visitwww.IARFC.org
Get Your CE at Sea and Network with Leaders of the ProfessionVancouver to Alaska August 17-24, 2007
IARFC 2007 Alaska Cruise Conference
The Register • November 2006 Page 1
The Register is published monthly by the International Association of Registered FinancialConsultants ©2006. It includes articles and advice on technical subjects, economic events,regulatory actions and practice management. The IARFC makes no claim as to accuracy anddoes not guarantee or endorse any product or service that is advertised or featured. Articles,comments and letters are welcomed by e-mail to: Wendy M. Kennedy, Editorial Coordinator,[email protected] ISSN 1556-4045
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BOARD OF DIRECTORS
Edwin P. Morrow, Chairman & CEOCLU, ChFC, CFP®, CEP, RFC®
Judith Fisette-Losz, Executive [email protected]
Lester W. AndersonMBA, RFC®
H. Stephen Bailey, PresidentLUTCF, CEBA, CEP, CSA, RFC®
Jeffrey ChiewDBA, CLU, ChFC, CFP®, RFC®
Vernon D. GwynneCFP®, RFC®
Derek D. KlockMBA, RFC®
Edward J. LedfordCLU, RFC®
Constance O. LuttrellRFC®
Ruth LyttonMS, Ph.D., RFC®
James McCarty, SecretaryCLU, RHU, LUTCF, RFC®
Burnett Marus, TreasurerRFC®
Rosilyn H. OvertonMS, CFP®, RFC®
Ruben RuizChFC, CLU, MSFS, CSA, RFC®
Michael ZmistowskiRFC®
[email protected]_________________________________
Wendy M. Kennedy, Editorial [email protected]
Stephanie Langster, Administrative [email protected]
in this issue
2 Register Letters
3 Jack Peckinpaugh and Beth Peckinpaugh-BeasleyGenerational Success
5 IARFC Calendar of Events
5 From the Chairman’s Desk by Ed Morrow
6 Selling Group Long-Term Care Insurance Yet?by Wilma Anderson
8 Cato Comments – About Your Imageby Forrest Wallace Cato
10 The Power of PartnersIncreasing Your Marketing Contactsby Joel Lawson
11 Responding to the Mediaby Ed Morrow
12 Industry is swimming in alphabet soup An Editorial Reprinted from InvestmentNews magazine
13 Rx for alphabet soup: Unbiased, independent oversightThe IARFC Response by Ed Morrow
14 Consumer Focus — The Saver Summit Challengeby Paul Richard
16 The Move Toward Paperless Operationby Patrick Farabee
18 Compliance-Friendly MarketingStupid Marketing Tricks of Million Dollar Financial Advisorsby Katherine Vessenes
20 Reflections from Indiaby Mehdi Fakharzadeh and Ed Morrow
24 Loren Dunton AwardRequest for 2007 Nominations
Page 2 The Register • November 2006
Register LettersWe welcome your comments, suggestions and ideas.Please direct correspondence to: [email protected] may be edited for length and clarity.
To the Editor of InvestmentNewsmagazine (see editorial on page 12)
Re: Editorial dated September 11, 2006“Industry is swimming in alphabet soup”
Interesting editorial, however, if anarticle like this was directed to themedical profession about the numerous“specialties” in the field confusing thepublic there would be a parallel. Whichgroup of physicians would decide whichspecialties are acceptable and whichare not. Would doctors from Harvard orJohn Hopkins decide that doctors withdegrees from lesser schools would notbe as competent to practice medicine,or that physicians with training inchiropractic are not capablepractitioners (oops, sorry... that’shappened). Would this group ofoverseers decide the public is toostupid to understand which doctors arequacks and which are trained, skilledphysicians and therefore decide for thepublic they should only go to a MD andonly an MD?
This way, there would be no confusionfor the public. If not, the medicalprofession will continue to have thefollowing: cardiovascular surgeons,dermatologists, orthopedics, pediatrics,podiatry, vascular surgeons, OBGYN,allergists, ENT specialists, colon-rectalsurgeons, endocrinologists, mentalhealth specialists, herbalists, dietitians,chiropractors, internal medicine,audiologists, sex therapists,ophthalmologists, cranial-facialspecialists... you get the picture.
The designations in our multi-facetedprofession are not the problem. Thereare specialists who work with propertyand casualty, long term health care,mutual funds, trust work (mostlyattorneys thus probably exempt fromyour suggestions for oversight), theelderly, insurance products, tax issues,estate planning, divorce planning,planning for college funding and a
myriad of other financial specialties.The problem is the industry failure ofeducating the public of what thedesignations are and what is requiredto obtain them and what continuingeducation is required to maintain thedesignations. There has been adedicated effort on the part of certainorganizations to exclude and demeandesignations in order to further theirown designations.
Since the demise of the IAFP and the formation of the FPA, the NALUbecame NAIFA and championed theChFC and CLU; the AICPA becamecommitted to the PFS. There is nosingle trade organization for thefinancial planning profession.
This too is a problem. A designation isnot an assurance of competence inone’s profession. There are duncesand brilliant practitioners in thefinancial field with many designations(or with few). We have onerous,duplicitous and insane regulatoryrequirements in our industry now(check out the same issue ofInvestment News, page 2, “New NASDchief faces hostile environment”).
So now we need to beg the questionwho is better? A CFP® or an AEP? A ChFC or a CLU? A PFS or a CFA?Who is going to decide? A group ofCFPs like the ones that stated the FPA has two classes of membership:CFPs being the premier class; everyoneelse is secondary.
This sets the industry against itself andwe will all be losers for it. Educate thepublic...don’t segregate the profession.The last thing we need are professionalsarguing like small children that “ourteam is the best...your team isn’t.”
Hey, but then again...I could be wrong.
Burnett Marus, RFC®
Dallas, TX
INTERNATIONALIARFC COORDINATORS
Jeffrey ChiewAsia Chair
DBA, CLU, ChFC, CFP®, RFC®
Liang Tien LungChina Development Organization (IMM)
RFC®
Ralph LiewPhilippines Chair
RFC®
[email protected] Balmori
Executive [email protected]
Jerry TanSingapore Chair
CIAM, CMFA, RFC®
Zhu Xu LongChina Chair, Shanghai
RFC®
Samuel W. K. Yung, MHChair, Hong Kong and Macao
CFP®, MFP, FChFP, CMFA, CIAM, RFC®
[email protected]. Teresa So
Advisor, Hong Kong and MacaoPhD, MFP, FChFP, CMFA, CIAM, RFC®
RFC®
Ng Jyi WeiMalaysia Chair
ChFC, CFP®, RFC®
Aidil Akbar Madjid Indonesia Chair
MBA, RFC®
[email protected] Soemarto
MA, RFC®
Jeffrey ChenTaiwan Chair
RFC®
Preecha SwasdpeeraThailand Chair
MPA, MM, RFC®
Demetre KatsabekisGreece Chair
MBA, Ph.D, RFC®
The IARFC Register is accepting articles of 300 to 1,500 words on planning and practice management topics. Submit via e-mail, along with an
electronic photo and short bio of less than 100 words to: [email protected]
Jack Peckinpaugh has achieved whatmany professionals long for — the abilityto pass down to his heirs his philosophiesand his successes. How he has done sois a tribute to him and also to Jack’scommitment to his community and hisprofession. Many of those he recruitedinto financial services and life insuranceand those his leadership has impactedwill continue to successfully influencemany other lives.
Jack Peckinpaugh, CLU, ChFC, CSA, RFC®,LUTCF as been involved in the financialservices industry since 1954. Followinghis graduation from Ball State Universityin Muncie, Indiana with a major inbusiness administration, he served inKorea as an officer and helicopter pilot.When separated from the service Jacksigned on as an agent with IndianapolisLife. He immediately joined the local LifeUnderwriters Association and quicklybecame active, serving as local presidentin 1959 and as the Indiana statepresident in 1961. He has earned theChartered Life Underwriter (CLU),Chartered Financial Consultant (ChFC),the Certified Senior Advisor (CSA),Registered Financial Consultant (RFC®),and LUTCF designations. Jack attributes his success as anassociation leader and in running ageneral agency to the training he receivedin Officer’s Candidate School and to theexperience he acquired as a helicopterpilot — responsible for the lives of hispassengers. He claims, “There’s a bigdifference between book knowledge andleadership skills. The principles of goodleadership I learned in OCS have beeninvaluable.”
Jack was a general agent for twenty-fiveyears and qualified for the industry’sprestigious Million Dollar RoundTable his first year in thebusiness. In 1972, Jack wasnational chairman of the LifeUnderwriter Training Council,headquartered in Washington,in 1975, Jack served aspresident of the Million DollarRound Table.
He has qualified formembership in the Million DollarRound Table organizationcontinuously over the past fivedecades and is a chartermember of the Top of the Table,and continues to be a Top of
the Table producer. Having served aspresident of both the Indiana and EastCentral Indiana Association of LifeUnderwriters, he became president of theNational Association of Life Underwritersin 1981.
In 2004, at the National Association ofInsurance and Financial Advisors (NAIFA)Convention and Career Conference, Jack was named the recipient of the 63rd annual John Newton RussellMemorial Award. This award recognizessustained and meritorious service to the life insurance and financial servicesindustry, and is considered the insuranceindustry’s highest honor.
To have served as national president ofthree large and important organizations isa real testimony to Jack’s hard work aswell as his quiet, but firm leadership style.When asked if these positions helped himin his business, Jack replied, “I don’t thinkI ever got a client as result of beingpresident of NALU, MDRT or LUTC — but Iacquired stature and confidence fromserving these organizations and goingthrough their leadership chairs. I stronglyurge everyone in financial services tobecome actively involved in more thanone financial service organization.”
Dedicating his career to furnishing a fullrange of services and products withproven performance records, Jackcontinues after 50 years to help meet theneeds of high net worth individuals,successful professionals, business ownersand retirees. Jack has also been very
active in his community. He servedeight years on the Board of Trusteesat Ball State University, twelve yearson both the Muncie CommunitySchool Board and the Delaware
County Council and four years as a
Delaware County Commissioner. He wasthe recipient of the 1962 DistinguishedService Award from the Delaware CountyJunior Chamber of Commerce.
Jack and his wife, Thelma Ann, reside on a67 acre farm near Muncie. Each of theirthree daughters, Beth, Janie and Kelli livein Muncie and the Peckinpaughs have nointention of retiring elsewhere. In hisspare time, Jack raises, breeds and showsBelgian draft horses. He could not do this,with all of his community and businessinvolvement, without the close help of theiryoungest daughter, Kelli, whose officialtitle is that of “Barn Superintendent.”Every spring the mares are in foal, andboth Jack and Kelli get very little sleep.They can monitor the mares usingtelevision cameras connecting the barn tothe house and when a mare looks like sheis about to foal, then they rush to the barnto provide help.
Jack is a great lover of animals, both dogsand horses. He’s fond of saying, “Theoutside of a horse is good for the inside ofthe man.” His giant Belgian draft horsesfollow him around the barn yard, just asthe dogs do.
His typical workday starts at 4 a.m. when he reads or studies for about anhour, and then he goes to the barn to feed the horses. At the current age of 79,Jack has the vigor and work drive of aman 30 years younger.
Initially, Jack sold insurance to graduatingcollege students and returning veterans.But swiftly he moved to the sale ofdefined benefit pension plans.Unfortunately these plans have beendiscontinued because of pension reformlegislation and over-regulation — so nowonly three of the three dozen plans heinstalled still remains in effect.
What kind of a salesman is Jack? “I’mnot the kind of guy who develops complexproposals. I don’t even use computerillustrations to sell. Computers are tooslow! I describe the problem, explain thesolution, motivate action and ask for theorder. Of course, I deliver all theillustrations and disclosures — but most ofthat is after the real sale has been made.”
Today a large amount of his business isfrom established clients who continue to
Generational Success Jack Peckinpaugh and Beth Peckinpaugh-Beasley
The Register • November 2006 Page 3
continued on page 4
continued from page 3 Generational Success
achieve success as well as referrals fromattorneys. Jack has become an expert onMedicare and Medicaid regulations, andthis reputation provides a steady flow ofnew clients referred by attorneys in thesurrounding area, who are reluctant togive advice in this specialized area.
We asked Jack what it’s like to bring adaughter into the business as an agentand then into a partnership, “It is a realchallenge. You can’t order them to dosomething. You must be more subtle, butstill firm.” But while growing up theywitnessed his work ethic and professionalinvolvement, “A lot of directing others inbusiness is a bit like the principles taughtin OCS — lead and they will follow.”Daughters, Beth and Janie, saw Jack workhard and still be very client focused — soboth have adopted similar styles.
Now Jack settles about 25 death claimsper year. He also continues to dobusiness with his policy owners who havebeen successful and moved to other partsof Indiana and the Midwest.
After serving as a General Agent for more than 25 years, Jack decided to turnthe agency over to a successor, his cousinBill — and concentrate only on serving hisown clientele and consulting support forBeth. After continuing in the agency forseveral years, Jack and Beth openedPeckinpaugh & Beasley, Inc. in 1999 indowntown Muncie.
Over the past twenty five years, Jack and Beth have worked only a handful ofcases together. Beth is quiteindependent, and Jack helps her as aconsultant — a sounding board whenreviewing client situations and as anexpert in the areas of Medicaid, estateplanning and business continuation.
While they share the office building, theydo not share operating styles. Jack’s deskis exceptionally neat. Before he leaves theoffice each afternoon, his desk is clearedand the file folders are either tucked awayor stacked neatly on his credenza.
On the other hand, Beth’s desk featuresmany stacks of folders and documents.Most are client and product files, butothers involve her responsibilities to thestate and local chapters of NAIFA. But likeothers with such a mental filing system,she is able to locate any paper instantly.
Beth Peckinpaugh-Beasley, CLU, CSA,RFC® has been involved in the financialservices industry since 1981. Beth
graduated in 1976 from the University ofNorthern Colorado with a teaching degreein special education and she taught forfive years prior to starting a family in1981. She earned the Chartered LifeUnderwriter (CLU) designation in 1989.Beth has twice qualified for the MillionDollar Round Table.
According to Jack, Beth has a great mindand quickly latches on to good ideas andfollows through very effectively. She loveseducating clients, both individuals andgroups, which is why she is so effective inestablishing and servicing manyemployee benefit plans.
Beth has moderatedlocal classes forthose earning theCLU and LUTCdesignation. Sheis currently thechairperson ofthe ProfessionalDevelopmentCommittee forNAIFA–Indianaand serves in thesame capacity for her local NAIFA chapter.She is a 2006 graduate of the LILI Programsponsored by NAIFA. Beth has servedseveral terms on the Board of Directors ofthe East Central Indiana Association of theNational Association of Insurance andFinancial Advisors and one term on theNAIFA-Indiana Board of Trustees. Inaddition, she is past president of the EastCentral Indiana Estate Planning Council.
Jack is equally as proud of Beth’scommunity involvement as he is of hersuccess as an insurance agent. Beth hasbeen involved in many communityagencies in the Muncie area. She servedon the Board of Directors of HillcroftServices, Inc. for ten years, with theimmediate past three as President. Shehas also served on the Board of Directorsof the Muncie YWCA and The Boys andGirls Club. Beth specializes in workingwith business owners, professionals andretirees. She also enjoys working in theemployer-sponsored plan market. Bethand her husband, Mark Gray, live inMuncie where Mark owns a warehouseand manufacturing business. Beth is themother of three sons. Sam is in his firstyear of law school, Caleb is in his first yearof teaching with Teach for America, andLuke is a freshman at Depauw University.While growing a very successful business,she has been an active “football mom” —serving the Booster Club for her sons’football teams at Muncie Central High
School for nine years. She also servedthe track and swim team Booster Clubs.Their family also includes two dogs andthree cats.
Jack’s second oldest daughter, Janie, wasalso trained as a special educationteacher. But, she eventually followed herDad into the insurance business, althoughin a different niche — property andcasualty and general lines of coverage.She is an agent with Selby MartinInsurance Agency in Muncie — and one of
her best customers is Jack.
The service aspects of propertyand casualty business areappealing to Janie, and shedemonstrates the work ethicsof her father.
Janie is married to BrianAllardt and they have threechildren. Son Jack is marriedand lives in Florida where heis in management with theWhirlpool Corporation. Matt
is a sophomore at IndianaUniversity and Abbie is a
freshman volleyball player at MuncieCentral. They also have two family dogs.
When not helping Jack on the farm, Kellikeeps busy as a volunteer in a localnursing home transporting and assistingthe residents with various activities. Hergentle and patient approach is an asset tothe horses and nursing home residentsthat she cares for.
Jack has a distinguished leadershipbackground and his lifetime ofsubstantial production and extensiveprofessional service make his viewseven more valuable to readers of TheRegister. Therefore, we asked him thesethree important questions:
Are you optimistic about the future forfinancial advisors?
Yes, with all of the baby boomers needingour help, this profession should be goodfor many years to come. Prospectiveclients need the personal touch andcaring attitude that they cannot receivefrom an 800 number or the Internet.
If you were starting your practice today,what would you focus on?
I would focus on life insurance because itis the foundation of all financial and
Page 4 The Register • November 2006
continued on page 5
Forum 2007 Program. The program steering committee of Steve Bailey, VernonGwynne, Burnett Marus, Rosilyn Overton and Michael Zmistowski, has been verybusy confirming a top line-up of speakers for the Financial Advisors Forum to beheld at Bally’s in Las Vegas on May 15-17. Review the program details andregister now at the Conferences tab at www.IARFC.org.
Volunteers needed! Would you like to become active in the IARFC? One good way is to volunteer to help with the Forum. We would like for persons tohelp in the following areas: Registration: Checking in the attendees,distributing their materials, checking the badges. Breakout Moderators: Escortthe speakers, deliver the introduction. CE Monitors: Be certain each attendee completes a sign-in sheet. RFC® Exhibit: Distribute materials toattendees. Traffic Control: Signage for breakout sessions, providing direction.To Volunteer: Send your e-mail to: [email protected]
Get Your CE at Sea. Following the cruise this year to New England and Canada,we have negotiated a great 2007 cruise on the award-winning top-of-the-lineCelebrity Summit — going from Vancouver to Alaska. The full cruise scheduleprogram with speakers is available online at www.IARFC.org at the Conferencestab. We are particularly delighted to be joined by Jim Rogers, a financial advisorfrom Vancouver, BC, who is the incoming president of the MDRT.
LIFE School. This program is presented by Bill Nelson® in Dayton, Ohio. LIFE = Learning Institute for Financial Executives. Highly successful financialadvisors and stockbrokers come in for a five-day training session that hasstrong emphasis on estate planning, maximizing after tax retirement incomeand the most effective uses of variable universal life. Judith or I have attendedeach one as Bill’s guest, and a large number of his students have qualified forRFC. 801 572 1480 ext. 1355 or go on-line to www.lifeschool.biz
MDRT Top of the Table. Judith and I exhibited for the IARFC at this outstandingconference, that this year was lead by Alphonso Franco, RFC®, and held at PalmDesert, CA. We met quite a few RFCs who are also among the very elite of thelife insurance industry, including Marv Feldman, RFC® and Stephen Rothschild,RFC®. Many of these have or are making the transition to financial planningwhile continuing their stellar insurance production.
Hong Kong. I presented new RFC® certificates to recent graduates of the RFC®
curriculum, which is delivered for us at the Poon Kam Kai Institute of the HongKong University. We also had a full one-day continuing Education workshop thatfocused on Securing the Client Engagement. We presented all the attendees acomplete PowerPoint presentation and all the documentation that goes with it —in a 100 page manual.
Macau. Allan Wan, RFC® and I also took the jet-boat ferry from Hong Kong tothe former Portuguese colony of Macau (now part of the People’s Republic ofChina) to meet with the faculty at the Macau Inter-University Institute who willbe presenting the RFC® course in the thriving economy. The course is underdevelopment and scheduled for launch in the first quarter of 2007.
Next Stop — Indonesia. I am headed out to Jakarta for a graduation ceremonyin December, press conferences, a meeting with the Governor of the CentralBank of Indonesia and a briefing at the Jakarta Stock Exchange. From there Iwill fly with our Indonesia Chair, Aidil Madjid, RFC®, to Surabaya for a graduationand training session at the University of Petra.
RFC® Referror of the Month. We have just added this recognition. Please see the back cover of the Register where we list all the recent recipients of the designation. Send us some names and see your smiling face there next month!
From theChairman’s Desk...
The Register • November 2006 Page 5
retirement planning. Without lifeinsurance a long range financial plan cancrumble overnight.
What advice do you have for RFCs asthey try to improve their practice?
I would tell them to become a member ofthe National Association of Insurance andFinancial Advisors because NAIFA is theinsurance advocacy voice in Washington,DC. I would also encourage them tobecome active in their local NAIFAassociation and get involved in theleadership of the organization.
Jack and Beth may be contacted in their offices Peckinpaugh & Beasley, Inc.314 West Jackson Street, Muncie, IN47305. Phone: 765 287 8310 or by e-mail: [email protected]
Calendar of Events
Life SchoolNovember 28 – December 2, 2006Dayton, OH
RFC — Indonesia GraduationsDecember 7 Jakarta December 8 Surabaya
Organizational, Launch MeetingsFebruary 19-23, 2007 AustraliaFebruary 24-28, 2007 New Zealand
MarketShare Leadership ConventionMarch 6-9, 2007, Las Vegas, NV
Financial ExpoMarch 22, 2007, Tampa, FL
APfinSA ConferenceApril 13-15, 2007, Taipei, Taiwan
Financial Advisors ForumMay 15-17, 2007, Las Vegas, NV
MDRT Annual MeetingJune 10-13, 2007, Denver, CO
International Dragon AwardsAugust 11-13, 2007, Xiamen, China
IARFC Cruise/Conference — AlaskaAugust 17-24, 2007Vancouver, BC to Anchorage
RFC Forum — ChinaSeptember, 2007, Dalian, China
RFC Forum — MalaysiaSeptember, 2007, Kuala Lumpur
continued from page 4 Generational Success
Long-term-care insurance is poised tobecome a top voluntary benefit.Employers like LTCI because it can helpemployees stay productive at work insteadof having to take time off to care for theirparents and struggle with the additionalfinancial stress. And employee benefitLTCI is a wide-open field, as only a fewpercent of Americans have it.
Big organizations like large employers,unions and associations are courtedaggressively by large benefits brokers.But there’s a lot less competition forsmaller organizations with fewer than 100employees or members — and relativelyfew of them have voluntary plans. Thiscan spell opportunity for advisors whowant to target something new in 2007.
Of course, your own current client base,whether it’s made up of small or largebusinesses and/or organizations is theideal place to start. Perhaps many of yourclients don’t have LTCI as a benefit fromtheir employer. Perhaps some do, but fewemployees have signed up for thisimportant benefit.
How Group LTCI Works, How It’s Sold
When Group LTCI is available to theemployee, the employee’s spouse andboth sets of parents can also apply—soyou can potentially make six LTCI sales foreach employee. Most group policies arevirtually guaranteed issue. There’s nomedical exam; applicants just have toanswer a few questions confirming thatthey do not have conditions such asmultiple sclerosis or Parkinson’s ordementia. Some group premium ratestypically have a 10% discount from retail.The benefit is portable, so employees cankeep their policies when (or if) they decide
to leave the company. The renewalcommissions are usually a level 10% for aslong as the policyholder pays thepremiums — which can be many years,especially if he or she is in her 40s or 50s.
Selling group LTCI effectively takesseveral steps:
First, you should represent at least twocarriers that write group business. Lookfor carriers that have a recognizablebrand name. It’s best if one of thecarriers will take someone who is insulindependent too.
Next, you need to get the business owneror benefits administrator to want toinclude this benefit in their cafeteria planseach year. Even though in mostcompanies the LTCI is 100 percentemployee-paid, it still takes anappointment of selling to convince thedecision maker(s) to offer a plan to theiremployees. They won’t want to add a newbenefit unless they’re convinced that itwill truly benefit the business andemployees, and they hesitate to add moreexpense or administrative burden to thehuman resources staff. Make sure toemphasize that your plan will:
• Provide meaningful insurancecoverage for long-term-care expenses.
• Make the cost of insurance affordableover the long term.
• Provide flexible plan design andadministration to address theparticular needs of all your employeesor members.
You can reach business owners severalways. Start out by writing or calling yourcurrent clients to let them know about thenew service you’re offering. Pressreleases and advertisements innewspapers or trade publications cantake your message to a mass audiencebeyond your clients. Public speaking alsopays off. Business groups like theChamber of Commerce and Rotary arealways looking for speakers. Associationsalso look for speakers, both for their mainprograms and for special programs for themembers’ spouses.
To stay under the radar and avoidcompetition from national brokers, focuson companies or associations with 25 to200 employees or members.Organizations in this ‘sweet spot’ are
usually big and sophisticated enough torecognize the need for voluntary benefitsand have the internal systems to supportthem. (Smaller organizations than thismay not want to offer voluntary LTCI, butyou can sell individual policies to thebusiness owner and key executives. Thisis especially attractive now because LTCIpremiums can be 100% deductible as abusiness expense.)
Once the decision-maker at the companysays yes, you have gotten over the firsthurdle. Now, you need to sign up theemployees or members.
Running Effective Enrollment Meetings
When you’re ready to meet with companyemployees to talk about the LTCI plans,here’s a few tips that can actuallyincrease your enrollment figures:
Always warm up your group. Most people,at least initially, would rather think aboutanything else than insurance, especiallyLTCI. You need to get them to relate toyou as person, relax and get engaged.Now you can make the issue of LTC realand important to them. I start by askingthe audience, “How many of you aregetting mail about long-term-careinsurance?” Get a show of hands.
Then you can ask how many people havethought about buying LTCI but haven’tmade a decision yet. Ask how many haveactually bought a policy. How many haveparents who have bought a policy?
A crucial question is: Have you had anyexperience with long-term care in yourfamily? Has a relative had care at homeand then later had to go to a nursinghome?
Usually, a few people will raise theirhands. Pick out a couple and ask if they’llshare their experiences with the group.
When employees talk about what they’vegone through with their parents orgrandparents, it grabs everyone’sattention and creates a bull’s-eye onpeople’s foreheads. Their stories have alot more credibility and punch that yourexhortations about the need for LTCI.Most people think, “It will never happen tome.” Personal stories show that it canhappen. It makes them think—and that’sall you need for an opening.
Selling Group Long-Term Care Insurance Yet?
Wilma G. Anderson, RFC®
continued on page 7Page 6 The Register • November 2006
continued from page 6 Selling Group Long-Term Insurance Yet?
Look at the age of your audience. If it’spredominantly young, LTCI will be a moredifficult sale, and you’ll need to point outthat while the odds of needing care at ayoung age are low, they’re notinsignificant. A car or motorcycle crashcan turn anyone into an invalid in asecond. Point out that LTCI helps protecta breadwinner’s family, especially whenthere are young children to care for.
If it’s a mixed group, you’ll need to make your presentation have as broad an appeal as possible. Try to getemployees of various ages to share their stories.
Benefits brokers often find LTCI to be adifficult sale because there is so muchemotion around it. Vision and dental caredon’t evoke these emotions. They’reeasier to sell but also usually carry lowpremiums and commissions. But withLTCI, you’re talking about aging andbecoming infirm and dependent —subjects most people don’t want to thinkabout. LTCI is both an emotional and arational sale.
Because of this emotionalism, don’t try tomake any sales in the middle of a groupmeeting. Your goal is simply to createenough interest to get attendees to takethe next step and see you one-on-one,either by appointment or preferably rightafter your group talk.
Making the Face-to-Face Sale
Congratulations! You’ve gotten theemployee or member to sit down with you
to discuss LTCI. In a group situation, youhave an advantage because most peoplebelieve that group plans are better buysthan individual policies, though this is notalways the case. Additionally, theorganization’s implicit endorsementcarries weight.
And, since you’ve given your grouppresentation and elicited employees’stories, you’ve already done some of yourhomework to make a sale. But there’sstill much to do. You must create theneed in the employee’s mind. No need,no sale. It’s just that simple.
As mentioned above, the first step isbreaking down denial. Most people think they’ll die peacefully in their sleep;the nursing home or home care is forother people. Additionally, many folks are confused about Medicare andmistakenly think that it routinely coverslong-term care.
You’ll also need to expose and addressany objections to purchasing a policy thatthe individual may have. Objectionsaren’t to be feared or avoided. Probe andget them out in the open so you canaddress them as early in the interview aspossible. Objections only become sales-killers if you let them fester and grow.Again, remember that you’ll be dealingwith strong emotions.
Show young employees an unlimitedplan. The difference in price between anunlimited benefit plan and a 3-year paidbenefit plan for a younger buyer can be minimal.
With age, the difference widens. Witholder employees, show them threeoptions: three-year, five-year andunlimited plans. That way, you’ll be ableto show them a plan that meets theirbudget and avoids sticker shock.
Numbers can be convincing too. Aninterest on savings diagram can be persuasive. Point out what care costs today and how quickly costs have risen. By all means, find the money to pay for premiums BEFORE you show the employee the cost of theirLTCI premium.
Let’s say a plan provides up to $150,000in total benefits. The premium is $750 ayear. Divide the annual premium into theamount of available benefits that could bepaid under an LTCI plan. Ignoring interestand taxes, someone would have to paythat premium for 200 years before theycould pay IN more than the insurancecompany could pay OUT in long term carebenefits. Engineers and technologists lovethis kind of explanation.
For people in their 40s, 50s and evenearly 60s, emphasize that LTCI is acrucial piece of their financial planning.Buying the coverage during the time theyare accumulating assets for retirement isideal. With insurance, an employee canconcentrate on saving as much as theycan for retirement and not have to worryabout putting any of it at risk to pay forlong-term care.
Since the LTCI sale is different from otherinsurance sales, training can make a hugedifference in your closing rate. You canget good sales training cost-effectivelythrough group telephone coachingsessions, seminars, workshops, print andaudiovisual materials.
With the Baby Boom generationapproaching retirement, LTCI promises to be one of the fast-growing, mostlucrative financial products of the nextdecade — and a lot of it will be sold at the workplace. It’s a ground-flooropportunity for savvy advisors.
Wilma G. Anderson, RFC®, known as The LTC Coach (www.TheLTCcoach.com) is a leading LTCI national sales trainerwho offers sales solutions to insuranceagents, companies and associations. She reached at 720 344 0312 [email protected].
The Register • November 2006 Page 7
In a past issue of Public RelationsQuarterly Magazine, I wrote, “Asprofessional competition amonginsurance agents and financial plannersbecomes more crowded and moreintense, the professions will become farmore competitive.” The publisher, Howard Penn Hudson, asked me toexpand on this statement, so I added,“With more new and varied products onthe way, plus new media servingindependent financial professionalscoming soon, and greater accountabilitybeing gradually required by regulators,one dynamic becomes certain: all of this dictates that image branding will be essential for the success of any future provider of financial products and services.”
The future is already here for members ofthe IARFC. Your world has changed asexpected. Preecha Swasdpeera, RFC®, inBangkok, Thailand, says, “Today you caneasily see that everywhere, the financialadvisors who benefit from image brandingare advancing far ahead of the pack!They are becoming the top producers andare emerging as financial servicesindustry leaders.”
Image Branding Is Personal
Image branding enables you to effectivelycreate, establish and maintain the desiredpositioning in your market. It also createsa much stronger awareness, orunderstanding, of you and your services.You can even contribute toward aperceived appreciation for your skills. At the same time, your image brandingbuilds loyalty, especially if you skillfullymarket the results of your image to bothof your key groups — clients andprospects. Image branding even leads tomany desired two-way dialogues for you.
Your image branding determines howtargeted others perceive you. When youappear and match their perception onlythen is a “win-win combination” possible.If you do not match their perception of youthen you are rejected and they will selectthe financial planner with image brandingthat matches their reality. Imagebranding is how you communicate yourvalues to cultivate your prospects and toreassure your clients. Image brandingcommunicates your facts and the relatedinformation that reveals what is unique,
special (and even precious) about you.What precisely is a more exact definitionof image branding?
Delivering a consistent and focusedmessage to your key audiences.
Branding is the creation or development,then the establishment or management,and finally the maintenance ofimpressions and media relationships forthe purpose of obtaining exposures thatreach and influence the targeted marketsegments that can hugely affect yourbottom-line.
Your image will increase the number ofclients you are able to help. It is a veryimportant part of your relationshipmanagement, but should not beconsidered as the total of your brand andrelationship marketing. Image branding isalso a very important part of yourrelationship marketing. My websitewww.CatoMakesYouFamous.com containsmore information about image branding.
Branding is Personal
Jim McCarty, CLU, RHU, LUTCF, RFC®, ofShow Biz Selling is an award-winningfinancial sales trainer. McCarty says,“There is no other way you can affectchange for the better and accomplish somuch that is essential to your marketingsuccess, and all at one affordable price,as image branding makes possible! Andby “so much” I mean massive marketingcommunications benefits for you. Thereare far more benefits for you than Catohas listed in this Register article.”
McCarty adds, “Of course maximumimage branding results cannot beobtained in five weeks or five months.Only an absurd jerk would demandunrealistic results from a skilled imagebranding practitioner.”
David S. Ayers of Faith Financial Plannersin Chattanooga, Tennessee, repeats, “Ittakes time, professional writing skills,agenting experience, media contacts, andmore, to weave your special make-up intoa tapestry appropriate for your markets.Because it takes time for the skilledimage branding techniques to take effectto perform his job, it would be unrealisticto expect results after a relatively shortperiod of time.”
Actual image branding is not likely toresult by amateur do-it-yourself efforts.An executive at Amazon.com reports, “Youcan always tell an amateur. An amateur isthe writer who, when he first lists his bookhere on Amazon.com, insists that his just-published book is already a best-seller!Such a person only fools himself andinsults all others.”
IARFC board member Constance Luttrell,RFC® of Franklin, Tennessee, explains, “If you are competing with someone inyour market area who has an effectiveimage branding program underway, thenyou might as well surrender your marketshare now! Your competition is going toeat your lunch! Your choices are either (1) move to another market area thatdoes not yet have similar competition, or(2) start working on your own image.”
In 1997, business consultant Tom Petersproduced an essay in which he could havebeen addressing each RFC®. Peters wrote,“Regardless of your age, regardless of yourposition, regardless of the business orprofession you happen to be in, you needto understand the importance of branding.You are CEO of your own company: You,Inc. To succeed in the future, your mostimportant job is to be head marketer forthe brand called ‘You!’”
If you do not define your image throughimage branding, then your competitionwill define you (to their advantage)through their image branding! I repeat,your competition will define you to yourdisadvantage! But, you can choose whowins in your marketing area!
Your Relationship With Computers!
I once wrote an article about why I hatecomputers. Like many others, I resistedcomputers as long as I could. Magazineand book publishers finally insisted that Ibecome computer literate. To this day Icontinue to underestimate the computer. Ihad to accept computers, or get leftbehind!
When I met Bill Gates I had mixed feelingsabout him. But reality is that thecomputer and the Internet are still makingmajor changes in how we live, operate,and do business. If you have a web site
Cato Comments – About Your Image...Who Benefits From Image Branding In Your Market?
continued on page 9
Page 8 The Register • November 2006
you are at least among the professionallyactive. If you have a blog then your imageis really exposed — to your clients, to yourprospects, and to your competition, toanyone in Thailand, Hong Kong, Malaysia,India, China, etc. You must embrace thecomputer or be left behind in yourprofession. You also have to embraceimage branding or be left further behindin your market.
Lew Nason, LUTCF, RFC®, founder of theInsurance Pro Shop, states, “Imagebranding makes many marketing effortsof the past look rather lame. In the past afinancial planner could get away withabsurdities! Those days are coming to anend because more-and-more absurditiesare failing to work. Any absurdities now place you at risk. With the help ofthe Internet, consumers are becomingmore savvy and can see through theexaggerations, embellishments, and false claims of many clown insuranceagents or financial planners. An absurdityor mistake made years ago can be pulled-up on the Internet tomorrow andharm you anew.”
Amateur Media Exposure Is Not WhatYou Need!
An elderly planner in Florida who is not an RFC® was recently ordered by the NASD to pay $315.000.00 to hisclient Marilyn McCarthy, a 71-year oldwoman in Deerfield Beach, Florida. Shehad accused this planner of beingnegligent in the supervision of herinvestment of a million dollars. Thisunfortunate event made the local,regional, and state news media —newspapers, radio and TV news, plus wireservices, some national magazines,financial industry newsletters, andindustry gossip (aka “word-of-mouth.”)
Did this planner have a skilled brandingprogram established and working for himto help him overcome this horrid “blackeye?” No! Instead he had a largecombination of do-it-yourself amateurpromotional efforts — actually a media“mish-mash” — that resulted in makinghim look largely like an egomaniac. Anongoing “mish-mash” of media exposuresis not an effective image brandingprogram and fails to ever gain the powerof a proper effort. Let’s compare thisplanner’s claims with reality.
This Florida planner billed himself as a “motivational speaker,” but this
was an obvious stretch! He also used the now dated term of “lecturer.” He called himself a “best selling author,”but has a ghost written book that wasnever a best seller. He says he is a “radioand TV personality,” but he purchasestime on local stations and also self-syndicates. He even bills himself as a“celebrity planner” but gives no indicationwhy he should be considered to be acelebrity, or that his clientele arecelebrities. Possibly he is a celebrity in his own mind… .
In his self-published (one issue) magazine he wrote that his credentialswere both “impressive and impeccable.”He went on-and-on about his commitment to financial planning, and his integrity. He wanted to evaluate reader’s annuity contracts. He used the not-too-brilliant slogan of:“Take charge of your financial future byputting us in charge today.”
When a crisis erupted this Florida planner did not have a reservoir of good will to help him. Instead heapparently had only ego-driven mediaexposures that were of little or no long-term impact with intelligent people.How much more effective he could havebeen had he allowed a professional tocreate, execute, and direct an effectivebranding effort!
Financial planning pioneer Vernon D.Gwynne, CFP, RFC®, who, as ExecutiveDirector, guided the IAFP (now FPA) during their major growth years, believes,“Personal image branding is not another opportunity to hustle people in a manner similar to false advertising!Image branding is not another way toinvent a brand that is not based on theprecise truths concerning you and yourplanning practice!”
Beth L. Blecker, CSA, RFC®, the respectedplanner with Eastern Planning Inc., inNanuet, New York, recently asserted,“Your Image branding must accuratelyreflect the real you. This means youressence, your core beliefs, andessentially, what you are all about. Image branding will not work unless itmatches the real you. Effective imagebranding must match reality! Imagebranding can not be faked or fabricated.Today most media exposures can beretrieved and easily examined foraccuracy. Every state and federalregulatory agency can do this.”
You Get To Make The Important Choice!
Lester W. Anderson, MBA, RFC®, author of You Are The Product, told this writer,“You get to make the decision about this! You either have a strong imagebranding program, or the leader in yourmarket area will take your prospects from you along with some of your mostdesired clients. It is very likely that themarket leader in your area has a strongbranding program.”
According to Anderson, “The logical wayyou can experience effective imagebranding is to retain a proven MediaAdvocate specializing in your field. A professional will build your imagebranding, making your profile strongerand “more firmly established” month after month. He or she will also generatevaluable media coverage about or for your brand.”
The most successful brands always try todo the right things and make certain thattheir key markets know they do the rightthings. They do this so that theirreputations will be solid and remainestablished and unblemished. Beyondthis, they grow, evolve, and get better withtime, while maintaining their specialqualities from the past. The positioningremains strongly established and grows ineffectiveness. You can accomplish thesame in your markets.
Forrest WallaceCato, RFMA, RFC®
has over 25-yearsexperience as a multi-nationalMedia Advocate forfinancialprofessionals. He is former Editor-In-Chief ofTrusts & Estates: The Journal of
Wealth Management and FinancialPlanning Magazines. Cato wrote theIntroduction to the classic book, How ToSell Your Way Through Life by NapoleonHill., author of the all-time best sellingmotivational book Think And Grow Rich.He presents The Cato Award at the IARFCForum. Contact: Intergroup II/Atlanta,Inc., Woodstock, Georgia 30188, Phone:770 516 9395web: www.CatoMakesYouFamous.com,E-mail: [email protected]
continued from page 8 Cato Comments
The Register • November 2006 Page 9
About a year ago I was invited by PamSaunders, a local Realtor, to help form anetwork group. Pam, a successful realtorin the Kansas City area, had a vision tocreate a network that would increaseeach participating member’s net worth.
Small business people are a good sourceof members. The group meets once amonth. Individually, each member meetswith one or two members per month forlunch — to get to know each other betterand to exchange leads. The group is inthe process of forming a book club and a“Morning Coffee Business Idea Exchange”every two weeks. Members pay $165 peryear to offset communication andadministration costs.
AIN “Adventures in Networking LLC” has now grown to 15 people. It iscomposed of business professionals thatare known and trusted by the person thatinvited them into the group. Our AINgroup is about trust; It is about buildingrelationships; It is about knowing eachother’s ideal client.
Significant results have been achieved asresult of this cooperative effort:
1. 15 trusted people are now helpingeach other grow their business.
2. In the last 6 months group memberscollectively as a whole, have generatedover $6 Million in new business.
3. Personally, I have completed businesswith three new clients and am working with six more who havemoved from the name stage, to theprospect phase, and are now well into the new client phase.
Forming the Group: To start with, you must have a clear statement ofpurpose and the Mission Statement of AIN is to Increase Each Member’s Net Worth. Each new participant isselected to be someone who is wellestablished, and positioned to help other members grow their business. We choose only one member per discipline. We are looking forsynergism between members, not just referrals.
Diversity of membership. Our organization,AIN, has the following members:
• Investment Planner• Realtor• Attorney • CPA • Book Keeper (Non-competing)• Real Estate Appraiser• Real Estate Mortgages• Sub Prime - Lending • Commercial Lending• Property and Casualty insurance• Computer Web Site and
Communication• Computer Repair and Security• Organizing• Photography• Marketing
Organize the group, in a solid fashion, justas you would any other business venturethat you expect to endure and deliversubstantial benefits:
1. Form an LLC, with by-laws, a board ofdirectors, members, and a plan.
2. Create a business culture ofincreasing each other’s net worththrough referrals and sharing bestbusiness practices. Institute rules for accountability. Everyone has to contribute.
3. Continually meet with members tolearn who is their best client.
4. Create a website that highlights eachmember and links each other. Theweb site is far more effective thanhaving 15-25 members’ businesscards and biographies.
5. Build relationships of trust.
6. Create a book club among the members.
Summary: As a Registered FinancialConsultant, forming your own localnetwork of 25 trusted professionalscommitted to helping you grow yourbusiness will help you focus your image ofyour ideal client, will provide a steady flowof highly qualified referred clients, and willincrease your net worth.
Joel Lawson, RFC®, is co-founder and co-chair of AIN “Adventures in Networking” inKansas City Missouri. After 33 years as amill manager and production supervisorfor Armco and GST Steel, a bankruptcyforced him to seek a new career. Hisfriend of 25 years and financial advisorMike Thiel, RFC®, in Chesterfield, MOhelped him get started. Joel is aregistered representative doing businesswith First Financial Planners offeringsecurities through FFP Securities andAdvisory services offered through FFPAdvisory Inc.
AIN has already proven its ability to help him grow the business. His motto is: Wishes come true when you manifest them, keep them in front of you, and work through what changes are needed to make them happen.Phone: 816 358 4966 or e-mail: [email protected]
The Power of Partners
Increasing Your Marketing Contacts
Joel Lawson, RFC®
Page 10 The Register • November 2006
Get Involved: We welcome thesubmission of articles from IARFCpractitioners. This is a great way tocontribute to the profession.
Professional Articles: The Journal ofPersonal Finance is seeking articlesby practitioners that may deal withthe application of financial planningtechniques, marketing and practicemanagement. These are expected tobe very high level papers or articles.
Publicity Opportunities: Naturally,we encourage published authors toadvise both their clients and themedia of their being published bysending a press release.
Contact Dr. Ruth LyttonE-mail: [email protected]: 540 231 6678
Call for Papers
In a recent issue of the Register we talkedabout steps that every RFC could takewhen the media did not mention theRegistered Financial Consultantdesignation along with others of historicalprominence. Often an article excludesinterests of the IARFC as a viable andgrowing member of the financial servicescommunity. We don’t want to be bettertreated, just equally.
But to some extent that is our own fault —the IARFC, its officers, and you — themembers. We haven’t told our story, orrequested equal treatment.
When any article, be it in a financialservices publication, the general media,or in a journal produced exclusively for therepresentatives of one insurancecompany or broker dealer, does notmention the RFC, what should you do?We answered, Write the Editor a politeLetter explaining your position, andattach additional information, or ask yourIARFC Director, Judith Fisette-Losz, toforward an information kit.
Many RFC readers of The Register maywonder, Will this really work?
Here is an actual example! On September11, Jim Pavia, the editor of the respectedInvestmentNews magazine wrote theeditorial you see on page 12. Jim Pavia isresponding to consumer concerns, plusthe expressed thoughts of some in ourindustry — that there are too manydesignations. Pavia created a well-writtenarticle. But where would any mandate toeliminate designations place your RFC?
Immediately I received calls about thisfrom some concerned members, and Igrabbed my copy of InvestmentNews.
Quickly, I sent my e-mail in response.About the top two thirds of my message is printed on page 13. I received aprompt response from Editor Pavia, whoasked, “But you didn’t propose anysolution, don’t you have one?” So I e-mailed back proposing a FinancialDesignations Council to be composed of association leaders for the purpose of establishing some “reasonablestandards” — to protect the well-run butsmaller organizations, and better protectthe interests of the public.
Like any other person responding to aleading industry editor. I had no idea whatwould follow. From past experiences withother publications there is always thesuspicion that part of the copy will beedited out, especially if you challenge theposition of the editor. What happenedcertainly rewards my faith in journalists.Editor Pavia took my two e-mails, blendedthem together very smoothly, withoutsubtracting any of my observations. He added a photo (he must have gottenthis pix from the Internet) and created anice article.
Was your IARFC well treated? Yes,absolutely! Did we get fair treatment?Without a doubt we did! Were weallocated reasonable space? Certainly we were! Will it make a difference? We don’t know, and we may never know,how many of their valued 150,000readers were able to learn about “our
concern.” There are two issues raised inthese two articles:
First is appropriate and reasonablemention of the IARFC and the RegisteredFinancial Consultant designation. We clearly received fair treatment in amajor publication.
Second is the concept we raised of a bodythat would establish reasonablestandards for designations in the field offinancial products and services. I haven’tbeen contacted by anyone, nor do I thinkhas the magazine. Possibly this is an ideawhose time has come — or maybe there issimply no interest.
What two points have we learned?
1. With a small effort on the part of any member of the IARFC, we canstart receiving more of the recognitionyou deserve.
2. We also learned that some financialjournalists are very willing to treat usfairly, if we will just make the effort.
Aristotle said, “We are what we repeatedlydo.” If you repeatedly take the time andeffort to politely communicate yourthoughts about RFC interests to theappropriate editors, you will indeedeventually receive the treatment you andothers deserve. You will see opportunitiesto do this in the days ahead.
Have you written your favorite editorlately? As you can see, it really works.But only if you make the effort….
Responding to the Media
The Register • November 2006 Page 11
Display the IARFC Code of Ethics Plaque
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There are too many designations andcredentials in the financial planningbusiness.
The list of professional designations,which largely are unregulated, has livedup to the term “alphabet soup.” Thegrowing number of designations isn’t inthe best interest of the industry, and ifnothing is done to solve the problem, iteventually will come back to haunt thefinancial planning profession.
Organizations are churning out a widerange of professional designations andcredentials. Some industry experts saythat many credentials or designations arebeing created with subpar training andmonitoring in place.
Advisers or planners then add the marksto their business cards, and the marksbecome just another meaninglessmarketing tool.
Imagine if a planning designation orcredential faced some regulatory scrutiny.It could lead to a black eye in the form ofa lawsuit.
The solution is twofold.
First, in order to maintain consumerconfidence, these designations andcredentials should be regulated on anational level. Second, in an effort tomake them less confusing to the generalpublic, a process needs to be put in placeto consolidate these designations.
Professional designations and credentials should require a certain levelof experience and an adherence to acertain code of ethics and educationalrequirements. Although some dorepresent a more in-depth understandingof the need for knowledge in a specificfield, others don’t.
Industry officials are coming tounderstand that fact. Indeed, fourfinancial services companies havebanned the use of the certified senior
adviser designation. Regulatory concernsand questionable educational substancewere cited as reasons.
In last week’s issue, InvestmentNewsreporter Charles Paikert wrote that onefirm, broker-dealer Waddell & Reed Inc. of Overland Park, Kan., reviewed the CSA designation and the materialsrequired to obtain it, and found that “there wasn’t enough educationalsubstance to the designation.
“What’s more, Genworth Financial Inc., aRichmond, Va.-based insurance firm, cited“regulatory concerns” as the reason whythe CSA “will no longer be allowed oncareer agent business cards or marketingmaterials as an accepted designation.”
The CSA designation is one of the mostpopular “senior specialist” certifications,therefore it is impressive that manyfinancial services firms are scrutinizingthe designation and conducting duediligence themselves. However, theindustry needs to go much further.
Regulation and creating oversight is agreat place to start.
To work, industry associations, securitiesregulators and financial services firmsneed to establish an organization that isresponsible for overseeing theaccreditation of industry designationprograms. These groups could form anational accreditation body that wouldcreate and enforce financial planningdesignation standards.
It would be in the best interest ofadvisers, planners and investors if such anational standard existed. It would raisethe level of the designations, whileinstilling more consumer confidence infinancial professionals.
The next step is consolidation ofdesignations. This eventually would leadto the general public’s gaining a betterand clearer understanding of designationsand hopefully make it all less confusing.
There has been a downside to the ever-expanding number of designations,according to Daniel Moisand, president ofthe Denver-based Financial PlanningAssociation. “The more there are, theharder it is for the public to assign propermeaning to them,” he said in an interviewwith Investment News.
It is up to the financial planning industryto work together and settle on a fewdesignations that make sense and don’tconfuse consumers.
If not, the industry will continue to swim inits own alphabet soup by offering this:AAMS, ABA, AEP, AIC, ARM, ATA, ATP, BCE,BCI, BCM, BCS, CAA, CASL, CCRA, CDP,CEA, CEBS, CEP, CFM, CFSSP, CFA, CFP,CFS, ChFC, CIC, CIMC, CISP, CLF, CLTC,CLU, CMA, CMFC, CPC, CPCU, CPhD, CRA,CRC, CRCM, CRFA, CRPC, CRPS, CRSP,CSA, CSOP, CSTSA, CTFA, EA, ELS, FIC,FLMI, LLM, LUTCF, MSFS, PFS, QFP, QPA,REBC, RFA, RFC, RFP and RHU.
InvestmentNewsThis is a weekly print publication forfinancial advisors, with editorialoffices in New York City, a division ofCrain Communications. The magazineis a 10 x 14 tabloid size with nicepaper, averaging 36 pages, with lotsof color illustrations and photos. Italso has very sophisticated on-lineservices — article summaries andarchival features and alerts. Single issues are $2, but as afinancial professional you cansubscribe for only $29, just by callingthe InvestmentNews subscriptionhotline: 888 446 1422Or online: www.InvestmentNews.com
Industry is swimming in alphabet soup
Page 12 The Register • November 2006
Reprinted with permission from —
Are there too many financialdesignations? Too many associations?Perhaps — and perhaps not. Ourpopulation of 300 million is vastlyunderserved by competent financialprofessionals. We need four or fivetimes as many high-quality, ethicalfinancial advisers.
But what criteria would you advocate be used to disallow some designationsor organizations? Size? Growth rate? Services to members?Understandable code of ethics? Cost to become qualified? (Is higherbetter than lower or vice versa?)Compensation or age of members,perhaps? Should designations beallocated only to those who serve the wealthy?
As the possessor of six designations, I am proud to say that I have benefitedfrom each one and have advanced myknowledge in the acquisition — andmore significantly, in the networking with the fine members and leadership —of each.
Although they do not grant designations,I deeply acknowledge the benefits I havederived from several of the acronymicorganizations, such as NAIFA, SFSP, FPA, MDRT, NTSAA, LUTC and the priorIAFP and ICFP. And I am convinced thatthey dutifully serve their members andthe public.
America is a great free-market economy,and we are proud of our independence.As the organization of which I amchairman, the International Associationof Registered Financial Consultants,extends its courses, practicemanagement and continuing educationto seven cities in China, five in Taiwan, two in Malaysia, two in thePhilippines, two in Indonesia, Hong Kong, Macau, Singapore, Thailand, Greece and now India, we are mindful of our responsibility topromote economic freedom and thefreedom of choice. We need toencourage organizations — notdiscourage them and their services.
Someone might say there are too manymagazines in financial services, toomany publisher e-mails, too manypublishing conglomerates, too many onthe East Coast. How would people feelabout letting a few schools ofpublishing, perhaps located in the Southor small Midwestern towns, decide toeliminate those they deem unnecessaryor not “suitable”? People would beoutraged, and rightly so. The publicshould decide, by purchasingsubscriptions and by spending theiradvertising dollars.
Members of the financial community arecertainly intelligent enough to decidewhich organizations deliver value. TheAmerican public is more seriouslyharmed by lack of advice, by the fraudsof companies and institutions, and bydownright crooks than it is by trying toweigh the qualifications of onedesignation over another. I have farmore faith in the people than I have inregulators and administrators.
The problems with designations beingregulated are, who would be theregulators, and how would they definethe criteria?
Some designations are strictly for the insurance community. Some are for investments. Some are about comprehensive planning. Some are about some aspect offinancial services: taxes, products,advising the elderly, estate planning orretirement plans.
Thus, there is no government agency, except perhaps the omnibusFederal Trade Commission or theDepartment of Commerce, thatembraces all those areas. But anInvestmentNews editorial (Sept. 11) did raise a valid point, because some of the designations do much less toqualify and prepare a designee, somedo not police their membership rolls,and some provide very little continuingsupport or education.
If a Council on Financial Designationswere to be created with a balancedboard and a clear mission to act in theinterest of the public, rather than torestrict new designations fromthreatening those already established,that would be a good thing. Someminimum standard of disclosure couldbe developed, such as ownership,control, hours of classroom and study, texts, continuing education, etc.If a designation/organization did not initially qualify, it could “step up” to the recommended standards and disclosure.
There are educational councils thatprovide accreditation to colleges anduniversities, and these are composed ofeducators, not government regulators,who have developed fair and balancedprocedures in the interest of the publicthat provide a clear path for newinstitutions to become accredited. Ibelieve that approach could be veryeffective within financial services inserving the public and those seekingeducational benefits.
Perhaps InvestmentNews would host aconference to organize such a body fromamong the current designation-grantingorganizations and institutions.
Ed Morrow, CLU, ChFC, CT, CFP®, CEP,RFC®, is chairman and chief executive ofthe International Association ofRegistered Financial Consultants inMiddletown, Ohio.
Rx for alphabet soup:Unbiased, independent oversight
Ed Morrow, CLU, ChFC, CT, CFP®, CEP, RFC®
The Register • November 2006 Page 13
In 1997, Congress enacted the SavingsAre Vital to Everyone’s Retirement Act(SAVER Act) to heighten the public’sawareness and understanding of theimportance of retirement savings. Theact mandates that the Secretary of Labormaintain a public outreach program andconduct three bipartisan nationalretirement savings summits.
The U.S. Department of Labor contractedwith the International Foundation ofEmployee Benefit Plans (InternationalFoundation) in preparing for the Summit.Approximately 200 statutory andappointed delegates participated,including members of Congress andexecutive branch officials. Appointeddelegates included representatives ofstate and local governments,professionals working in the fields ofemployee benefits and retirementsavings, employers, unions, and otherprivate sector institutions.
The Common Goal
Summit delegates came together toachieve a common goal: to help allAmericans become better able to retirewith dignity and security. To reach thisgoal, the Summit focused on developingstrategies and programs to promptAmericans to think about long-termretirement and the critical importance of retirement savings to their future well-being; to inspire them to commit topersonal retirement savings strategies;and to facilitate the accumulation ofsavings for retirement.
Delegates sought to devise concreterecommendations to improve bothemployer-based pensions and individualretirement savings plans, to helpAmericans take advantage of existingsavings opportunities, and to create newopportunities to help Americans meet thechallenges of saving for retirement.
Today’s workers have more responsibilityto fund their own retirements thanworkers have had in recent generations.Unfortunately, despite this reality, manyAmericans are consuming more, savingless, and accumulating more and more
debt. Caught up in the immediatedemands of day-to-day spending, we havelost sight of the fact that planning for asuccessful retirement tomorrow requiresmaking savings a priority today.
To develop messages and strategies that can help all Americans, the 2006 Summit concentrated on fourgroups of American workers who faceunique challenges in saving forretirement. These groups are: 1) Low-Income Workers, 2) Small-Business Employees, 3) New Entrants to the Workforce, and 4) Workers Nearing Retirement.
By concentrating on reaching theseworkers and helping them to save forretirement, the delegates hoped todevelop strategies that would offerinspiration and assistance to allAmericans in reaching their retirementgoals. By making retirement savings apriority today, Americans can and will havea brighter and more prosperous tomorrow.
The State of Retirement Savings
It was pointed out that the nation is onthe verge of a tremendous demographicshift, as the first of 78 million babyboomers turn 60 in 2006. She warnedthat despite the overall strength of theU.S. economy, many Americans are notprepared for retirement: less than halfhave even calculated how muchretirement savings they will need.
Labor Secretary Elaine Chao describedsome of the challenges faced by the fourdemographic groups targeted by the2006 SAVER Summit. New entrants tothe workforce hardly think aboutretirement because it seems so far away. In addition, the average workerbetween ages 18 and 38 will have 10jobs before retiring — and only 43% ofworkers who change jobs preserve theiremployment-based retirement savings byrolling it over into an IRA or their newemployer’s retirement plan.
Low income workers find it challenging tobalance spending for today’s needs withsaving for tomorrow.
Small business owners, responsible forthe creation of 70% of new jobs in recentyears, may perceive retirement plans tobe too costly and complex, as about 80%of small businesses do not offer any typeof retirement plan for their employees.
Finally, workers nearing retirement havefewer options and little time to correcttheir course if they discover they have notsaved enough to provide them with asecure retirement.
Secretary Chao noted that those who donot start saving early for retirement missout on their greatest ally in achievingretirement security time. For every 10 yearsa worker puts off saving for retirement, heor she will need to save three times asmuch each month to catch up.
Secretary Chao maintained that evensmall sums set aside for retirement canmake a difference:
$100 saved at age 20 can grow to morethan $1,900 by age 65.
In closing, Secretary Chao noted thatsaving takes time, dedication, andplanning. “Americans can look forward tolonger, healthier, and more productivelives,” the Secretary said, “and building a diverse savings portfolio is the best way to ensure that individuals havelasting independence.”
Sylvester J. Schieber, VP and U.S. Directorof Benefits Counseling, Watson WyattWorldwide, provided a brief overview ofthe state of retirement savings in theUnited States today. “What makes theGolden Years golden?” he asked. Hisanswer: adequate retirement savingsand income.
Most experts agree that in order tomaintain a similar standard of living inretirement, households need replacementincome at a rate of 70-85% of pre-retirement income.
Social Security, however, provides only a portion of this replacement income:50% or more for those earning less than
The SAVER Summit Challenge
CONSUMER FOCUSPaul Richard, RFC®
Institute of Consumer Financial Education [email protected] 239 1401
www.ICFE.info
Page 14 The Register • November 2006
continued on page 15
$25,000 at retirement, but 25% or lessfor those earning more than $100,000.
The gap between Social Security and the replacement rate needs to be filled by the individual worker’s savings andinvestment, by employer-sponsoredretirement programs, or by acombination of the two. Given ournation’s demographics, Schieber said,about 9% of national income should besaved solely for retirement.
The nation currently has a record $11.5 trillion in assets in the individualand employment-based retirementsystem. Schieber insisted, however,that we should be adding to thoseassets. He contended that right now,we as a nation ought to be at our peakof savings. Yet in 2005, the nationalsavings rate fell below zero — meaningthat we spent more than we earned forthe first time since the heart of theGreat Depression in 1933. Thisnegative savings rate represents asubstantial drop from the 8.7% ofincome saved in 1992.
Future retirement security depends onsavings, which have becomeincreasingly important in recentdecades. The retirement system nowputs more of the burden of retirementsavings directly on the backs of workers.Heightened individual responsibility hasbeen successful in some ways: assetsin 401(k)s will soon exceed those in theSocial Security trust fund. But it hasbeen unsuccessful in others: Americansare not saving enough to meet thisresponsibility.
In part due to the continuing shift fromdefined benefit (DB) to definedcontribution (DC) retirement plans,younger workers are not participating inthe pension system today to the extentthat older workers are. This representsan enormous lost opportunity, sincesaving during the first decade of work iscritical to maximizing the power ofcompound interest to build up retirementsavings. A worker earning $35,000 whobegins saving at age 30, for example,may find that a 5% deferral will beenough to meet her retirement goal. Ifthe same worker waits until age 40,however, she will need to set aside 15%;and if she delays until age 50, she willfind it nearly impossible to save enoughto meet a reasonable retirement goal.
Schieber warned that low-incomeworkers — those most dependent onSocial Security as a source ofretirement income — would be hithardest if the threatened insolvency ofthe Social Security system forced cutsin benefits. The Health in RetirementStudy conducted by the NationalInstitute of Aging found that retirees inthe lowest 10th percentile of incomedepend on Social Security income tomeet 94% of their day-to-day spendingneeds. A cut of 25% in benefits wouldthus mean the loss of more than 20%of their spending power (while those inthe highest percentile would only lose2.5% of their spending dollars).
Reiterating the importance of saving,Schieber urged the delegates to findeffective solutions for the followingchallenges that face the four groups ofworkers targeted by the 2006 Summit:
1. How can we create more retirement saving opportunities for low-wage workers?
2. How can we offer opportunities tosmall-business employees? What can we do to make retirement plansviable for small employers to offer totheir workers?
3. How can we get young people saving sooner? How can we get them committed to participating in the system?
4. How can we facilitate extendedworking opportunities to thosenearing retirement age?
The author, Paul Richard, RFC® is theExecutive Director of the ICFE, foundedby Loren Dunton. Paul is also theauthor of the Certified Credit ReportReviewer and is a highly regardedidentity theft prevention specialist.
continued from page 14 Consumer Focus
The Register • November 2006 Page 15
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Go Ahead and Impress Your Clients
Paperless office strategies can reduceoverhead and improve efficiency. Ratherthan storing paper documents in agrowing number of bulky metal filingcabinets, those pages can be scannedinto a computer for much easier access.In addition, those computer files can bebacked up for storage off-site, for furtherprotection against disaster.
Of all the things to consider when makinga move towards paperless, one of themost important is the scanner. Scannersvary in performance and value, just likecomputers, PDAs, cell phones, and anyother electronic device. Taking time toconsider what type of scanner topurchase can save you significant time,effort, and money in the long term.
What Is TWAIN?
It is difficult to discuss scanners withoutalso talking about TWAIN, which is thestandard for connecting software andscanners. TWAIN is a set of rules thatscanners follow when delivering images tosoftware applications, and the mainbenefit of TWAIN is improved compatibilitybetween manufacturers and models.
Immediately upon hearing the term TWAIN,most people wonder, “What does theacronym stand for?” It is a commonmisconception that TWAIN is an acronymfor a group of words, but in actuality, it is aborrowed term from Kipling’s “The Ballad ofEast and West.” Before TWAIN wasintroduced, there was much frustrationamong developers bogged down by thedifficulty of writing software to properlyutilize the myriad of different scanners.This frustration was best summed up byKipling’s words, “Oh, East is East, and Westis West, and never the twain shall meet.”
Imagine two people having aconversation. If they speak the samelanguage, they are able to understand
each other. Otherwise, neither will be able to get much out of the conversation.Like two individuals using the samelanguage, a TWAIN-compliant scanner canspeak to TWAIN-compliant softwareeffectively and easily. If a scanner is notTWAIN-compatible, then a piece ofsoftware must be specially written thatunderstands the scanner’s language.
Most scanners on the market today areTWAIN-compatible, but there are still a fewthat lack this functionality. Scanners thatare not TWAIN-compliant will only beusable by special software included withthe scanner. You cannot use such adevice to send an image to MicrosoftPaint, Microsoft Word, or AdobePhotoshop, for example. TWAIN is theindustry standard, and you should onlybuy scanners that are TWAIN-compliant.
When considering a scanner, you can look on the packaging for the words“TWAIN-compatible” or “TWAIN-compliant”to ensure that the device fits the industrystandard. You may need to install a pieceof software, called a TWAIN driver, to getyour scanner to function correctly.
If you have an existing scanner, and areunsure whether it is TWAIN-compatible,check any documentation that came withthe scanner for clues, or research yourdevice on the manufacturer’s website. Ifyou cannot locate documentation, andcannot find the manufacturer’s website,try typing in your exact scanner brand andmodel into any search engine. You maybe able to locate documentation anddrivers for your scanner this way.
Choosing The Right Scanner
The first thing to think about whenchoosing your scanner is volume. Howmany documents do you need to scan ona daily basis? In addition to your dailydocument needs, do you have a largestorage of paper documents that youwould like to scan as well? Will yourscanner sit idly on your desk most of theday, or be running non-stop?
Second, consider the speed of the device. If you will only be scanning a few documents a day, you may get by with a slow flatbed scanner. However, if your needs are greater, then you willsave money in the long run by purchasingone that can handle more documents inless time.
Third, when considering scanners withAutomatic Document Feeders (ADF), it isimportant to know whether the scannerworks in simplex (single sided) or duplex(double sided) mode. A simplex scannerwill only scan single-sided documents; toscan the second side, you will need toturn the pages over and feed them backinto the ADF. Our recommendation is toget a duplex scanner, since many of theitems you will want to scan may be printedon both sides.
And of course, as with anything, you willneed to consider the price tag. If you donot need to scan thousands of documentsdaily, then there is no need to purchase amulti-thousand dollar scanning device. Ofcourse, remember that a more expensivescanner may well be worth it if you aresaved time and effort. If a scanner savesyour assistant only fifteen minutes daily, itwon’t take very long for that device to payfor itself. For instance, saving fifteenminutes per day at $20 per hour amountsto $1300 yearly!
Our Recommendations
Below are four scanners that fulfilldifferent roles. Accompanying eachdescription, we have included anexplanation of why you might choose thatdevice, and what the benefits anddrawbacks are. The prices quoted areaverage prices at the time this article waswritten, October 1st, 2006.
Canon Canoscan LiDE 60
First up is the Canon CanoScan LiDE 60.We chose this scanner for two reasons; itis small and inexpensive. There arecheaper scanners on the market, such as the CanoScan LiDE 25, but they are significantly slower than thismodel. The CanoScan LiDE 60 is stillslow, however, as are most flatbedscanners. Another striking feature of thismodel is its small size. The scanner issmall enough to place in larger laptopbags along with your laptop, and itreceives its power through the USBconnection, so there is no need for anadditional power supply.
We would recommend the CanoScan LiDE60 to anyone who needs a cheapscanner, but does not require fastscanning speed. We would not
The Move Toward Paperless Operationby Patrick Farabee
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continued from page 16 The Move Toward Paperless Operation
recommend this device to anyone whohas a large number of documents to scan.
Price: $65 -$80Flatbed Scanning Speed: 9 secondspreview, 40 seconds for a full page B&W.
Pros: Rock bottom price for a trustedname-brand scanner. Compact design(1.6” High) with no additional power cablemakes it a great addition to a laptop. It isa flatbed scanner, so it can scan pictures,pages from books, etc.
Cons: Some users have reported awhining noise issue. As a flatbed scanner,it has speed constraints that plague mostscanners of that type. The small size isalso a drawback; it is letter size only andwon’t scan legal documents.
Hp Scanjet 5590
If you are in need of faster scanningwithout a serious hit to your pocketbook,consider a flatbed scanner with anautomatic document feeder. The HewlettPackard Scanjet 5590 is a good choice inthis category, and is one of the few flatbedscanners that we have seen that will scanboth sides of the documents placed in itsADF. It is also not terribly expensive,which is always a plus.
Price: $225-$275ADF Scanning Speed: 4 pages perminute (in duplex mode)Flatbed Scanning Speed: 7 secondspreview, 30 seconds per full page B&W.
Pros: As with many flatbed scanners, thismodel scans slides, film negatives, andpages from books. The most beneficialfeature of the Scanjet 5590 is that itsautomatic document feeder can scanduplex. (double sided)
Cons: Isn’t geared toward high-end photo scanning, but should be fine fordocument acquisition. Speed constraintsaffect most flatbed scanners, though thismodel is fast enough for most light home-office applications.
Xerox Documate 152
If you have a larger number of documents to scan, you will save a lot of time with a sheet-fed scanner like the Xerox Documate 152. Unlike aflatbed, a sheet-fed scanner cannot scan pages from books, slides, filmnegatives, etc. However, since it iscentered around the single task ofscanning documents, it performs that
task with admirable speed. The XeroxDocumate 152 had the most attractiveprice point in this category.
Price: $450-$500ADF Scanning Speed: 15 Pages perMinute (in duplex mode)
Pros: Sheet-fed means high speedscanning compared to flatbeds, Thismodel is also small compared to flatbeds,so it takes up a lot less space on yourdesk. Duplex scanning is a must-have inscanners of this type.
Cons: Without a flatbed, this scanner is not capable of scanning slides,negatives, or pages from books. The Documate 152 cannot scan a driver’s license, which is becoming an increasingly important task in many industries. Therefore, many firms will also want to have a flatbedscanner, such as the Canon LiDE 60 forthose tasks.
Canon DR-2580c
For even faster scanning requirements,the Canon DR-2580C is truly impressive.It burns through stacks of pages veryquickly, and is a great choice for an officewith fairly heavy scanning needs. Since itis a sheet-fed scanner, it cannot scanpages from books, slides, or filmnegatives. It has the ability to scan thickcards, however, such as a driver’s license.The optional flatbed attachment adds thebenefits of flatbed scanners, but at a veryhigh price.
Price: $650-$725Flatbed Attachment: $335ADF Scanning Speed: 25 Pages perMinute (in duplex mode)
Pros: The highest speed scanner in our list, and can scan driver’s licensesand business cards. It also comesbundled with Adobe Acrobat Standard 7.0($200 value).
Cons: No doubt about it, this scanner is pricey. Also, it has no flatbed, so can’t it scan slides, books, or negatives.The flatbed attachment is prohibitivelyexpensive; it would be much lessexpensive to purchase a separate device for that purpose, such as theCanon LiDE 60. Another drawback to this scanner is that you must place the documents for it to scan in front of the scanner on your desk, so you need clean desk space next to it, which could be a rare thing in some offices.
Conclusion
Remember, the units and pricesmentioned in this article are as of October 1st, 2006. Without a doubt,there will be newer, faster, and moreversatile models available in the future. Whatever your office needs,however, there is a scanner out there that should fulfill them nicely. Whetheryou require an inexpensive flatbed or a faster, more expensive model, it’s only a matter of determining what your needs are and getting yourpriorities in order.
Patrick Farabee has over 15 years of experience with computers, including computer programming, web design, and hardware support.After working for an Internet serviceprovider in Indiana, he began performingfreelance web development. To ouradvantage, Patrick moved to Ohio in the summer of 2002 to be near his family and is now developing help options for the IARFC database. He alsoprovides support to users of the PracticeBuilder and Plan Builder [email protected] 513 424 1656 ext. 24
The Register • November 2006 Page 17
On the other hand the tacky collateral,obviously printed with their office printers,created a contrary message: we arecheap and like to cut corners.
Together these two messages create asubconscious disconnect in the mind ofthe prospects. This disconnect can lead aprospect to mistrust the overall messagebecause it is confusing and obviouslyfalse. The firm could not be both a classorganization and one that likes to cutcorners at the same time. Once thedoubt or mistrust is created in the mind ofthe prospect, it becomes much harder toclose the sale — either an engagement fora financial plan or the purchase ofinsurance or investments.
Your solution: First consider your overallmessage and make sure everything, eventhe collateral, matches that message.Spend the money necessary to have yourcollateral professionally produced. Thisincludes retaining a quality design teamthat can professionally lay out yourmaterials and make it consistent with yourmessage. If you cannot afford to theprofessionally designed materials,sometimes it is better not to haveanything at all. This way the onlymessage the client gets about your firm isdirectly from your lips.
Stupidity #2: Illegal payments to third-party referral sources.
If I had seen this just once, I might havedismissed it as a fluke. However, we hadtwo different financial advisor clients, indifferent parts of the country, who wereinvolved in the same illegal marketingscheme. Both firms had found a verysympathetic center of influence that hadmany contacts into the financial advisor’smarketing niche.
At one firm, it was a sports agent closelytied to the golfing community. In the otherfirm, it was a professional marketingcompany that serviced large law firms.One financial advisor was very eager toget golfers into his stable of clients, whilethe other one focused on lawyers.
Both hit upon the same idea with littlethought to its legality. They agreed to paytheir referral source, the sports agent orthe marketing firm, a percentage of all the
Stupid Marketing Tricks of Million Dollar Financial AdvisorsBy Katherine Vessenes, JD, CFP®, RFC®
Even Superstar Financial Advisors, those making over a million dollars a year, can make some dumb marketingdecisions. During the past seven years,we have had the privilege of advising and coaching between two and threedozen superstar financial advisors. These men, (regrettably there is only onewoman in the entire group) clearlyunderstood the importance of having asteady stream of “derrieres in chairs.”They are absolute marketing machines.But even the best are prone to someexpensive mistakes. Although all thesestories are true, specific details have beenchanged to protect the identity of thefinancial advisors.
Here are just a few of the stupidmarketing tricks we have seen topadvisors make over the years:
Stupidity #1: Rich on the outside,Cheap on the inside.
“Collateral” is a term used in themarketing industry that covers the writtenpresentation of your firm and supportsyour brand. It can include business cards,seminar invitations, newsletters,brochures, or even the folders that youwould use to present your financial plans.The same financial advisor who wouldspare no expense on the décor of hispersonal office, suddenly became acheapskate when it would come to thecollateral. It was not unusual for thesedocuments to look like they had beenprinted on their back office computer bytheir 13-year-old. And that was not farfrom the truth.
Using tacky materials is incrediblyshortsighted since the collateral wasfrequently the very first impression theprospect had of the financial advisor,arriving in the mail before the firstmeeting. What the advisor did not realizewas he was creating great chasmbetween two different messages.
On the one hand the offices were veryplush, including hardwood floors,fireplaces and leather sofas. It was notunusual to see lavish Oriental rugs andfresh flowers adorning their officepalaces. The underlying message of the office: we are a classy organization —you can trust us.
commissions earned on cases referred to them for business. There was only one catch, neither the sports agent nor the marketing firm had a singleperson on staff that was a RegisteredRepresentative. Neither was eitherreferral source listed as a solicitor forRegistered Investment Advisory purposes. Therefore, it was illegal to pay a portion of the commission tosomeone who was not registered. It was also illegal for an unregistered person to receive the commission.
Both advisors got rather testy when Imentioned that what they were doing wasillegal. One even went so far as to try totell me that he was just paying “marketingexpenses” to his referral source. It isperfectly acceptable to pay marketing feesto outside individuals to help you developyour business. However, when thatpayment is clearly a percentage of thecommissions, the advisor has steppedinto very dangerous territory.
It is a crime to participate in this kind of securities business without beingregistered. Both the financial advisor and the referral source were flirting withthe law and could be subjectingthemselves to stiff civil penalties or evencriminal prosecution.
Your solution: Get registered. It isrelatively easy to be set up as a solicitorwith an investment advisor. However inorder to share commissions from the saleof securities, one needs to be aRegistered Representative.
Stupidity #3: Inadequate Due Diligence
One of our clients was a successfulfinancial advisor who became very wellknown in his local market of Chicago dueto a popular radio talk show. Over time hebegan to believe his own press releasesand actually thought he was a “star.”
What was the problem? All the successwent to his head. A few years into thissuccessful show, he wanted to expandnationally. He was quite thrilled when hegot a call from a radio station in Austin,Texas, one of the cities he had targeted toexpand his business. He was approached
Page 18 The Register • November 2006
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continued from page 18 Compliance-Friendly Marketing
with the idea of a one-hour radio show onThursday afternoon from 1 to 2. Thisadvisor did not bother to ask our opinionon this arrangement, and jumped at thechance of more exposure. He signed a16-week commitment, agreeing to the$6,000 per month charge by the Austinradio station. Quite convinced that hewas entirely responsible for all thesuccess of his local radio show, he madeno attempt to retain the services of a wellknown local radio personality, an “EdMcMahan”, to help launch the new showin Austin. Nor did he conduct duediligence on the demographics of theradio station, or its listenership.
The financial advisor burned through over$25,000 in four months. It turns out thatthe radio station was so small, it wasprobably operating out of someone’sbasement. The station did absolutely noadvertising to promote the show, andthere was no delightful sidekick to helpmake the program more interesting. Inaddition, the time of day was deadly. Infact in 16 weeks, they had only twolegitimate call-ins, requesting informationand both occurred when someone elsewas sitting in for the financial advisor!
Your Solution: Just because your currentmarketing program works in your city, youneed to do due diligence to make sure itis going to work in another location. Aradio program in Austin might have beenappropriate. However, it needed to be ona station that fit the demographics of theirclientele, advertised the program, had awinning format with an engaging co-host,and was broadcasting during a time ofday that was appropriate for the audience.
Stupidity #4: The Advertising Ego Trip
Gary Smart*, superstar financialadvisor in Boston, terrified hispartners one day when heannounced that he had justdropped a $100,000 of the firm’smoney on his latest marketingscheme. What was his brilliantidea? He had contracted to havea firm’s logo placed on a car inNASCAR races. He wasabsolutely convinced this was themost brilliant marketing idea heever had and could notunderstand why his partnerswere furious. Gary loved NASCARand he was sure they were goingto be able to pick up theaccounts of the drivers andpeople watching the races.
In truth this is near the top of my list of all-time stupidest marketing tricks. Gary’slogo was not even recognized in hishometown, much less across the country.If he had been American Express or ING,this might have been a fine plan. Thosefirms have spent millions and millions ofdollars getting their logos into the mindsof the consumer. The average sports fanwatching a NASCAR car with a AmericanExpress or ING logo might actuallyrecognize the logo. One hundred percentof the viewing audience, not to mentionthe racers involved with NASCAR, hadnever seen Smart’s logo — and thus itmeant absolutely nothing to them.
What did the financial advisor get out of this arrangement? Not a single client,but he did get a great boost to his ego.He loved NASCAR racing and this gavehim the ticket to hobnob with the leading racers.
Your Solution: Get some outside counselbefore jumping into a major promotion. Ifyou want to go on a vanity trip, buy abillboard with your picture on it. You willat least get your own photo in front ofthousands of local people.
Stupidity #5: Using Celebrities as a Draw
George Dean*, from San Francisco,envisioned himself as part of the sportcelebrity circle. Dean planned a hugeparty with Mr. Famous Golfer as thecelebrity draw. Dean rented a nicerestaurant in downtown San Francisco,hired a band and invited everybody theycould think of, including every possibleclient, every prospect, their mortgagebanker, their attorney, and even I wasinvited. The prestige party cost about
$110,000, and Mr. Famous Golfercharged them an additional $25,000 touse his name on the invitation and forshowing up at the party to press the flesh.
Everybody seemed to have a good time atthe party, with one exception, their guestof honor, their big draw. Mr. FamousGolfer was too famous to show up. I donot think they got a single piece of newbusiness out of this entire event.
Your Solution: Make sure your marketingplans are business and not ego-driven.Sometimes it pays to work with a reputablemarketing firm to help give you an insightinto what will work, and what will not workin your marketplace. Remember to makethe business work; you need “derrieres inchairs.” Hanging out with the rich andfamous may seem like a lot of fun, but itrarely brings in new clients.
Katherine Vessenes, JD, CFP®, RFC®, is anationally known author and speaker,focusing on sales, marketing, complianceand practice management issues forbroker/dealers and advisors. Look forher latest book: Become a MultimillionDollar Financial Advisor. She can bereached at [email protected]
Contact Vestment for scheduled dates
The Register • November 2006 Page 19
At the International Convention Centre,nestled in a curve of the Vemanad watercourse in the city of Cochin in the state ofKerala on the southwestern tip of India,we had a unique opportunity to introducefinancial planning to 350 members ofLIRT — the Life Insurance Round Table.Kerala calls itself “God’s’ Own Country”which is an interesting name for a statethat is governed by the Communist party.
Prior to LIRT we were hosted by veteran insurance agent Pal Kochhar on athree-day tour through the high teaplantations in Nedum Kandam and therubber forests in Thekkadi. Fortunatelyour trip coincided with the festival ofOnam, and everywhere we were greetedby gaily dressed families who smiled and wished us “Happy Onam” despite the fact that we were obviously not native. We joined a throng of thousandsclimbing Mt. Ana Mudi, the highest peakin South India, hoping to see thereincarnation of the legendary KingMahabali, a popular local king who athousand years ago promised to returnevery year to visit with his people.However, we had to settle for wild goats.The sides of the mountain were adornedwith a marvelous blue bush, theNeelakurinji, an exotic flowering plantwhich bathes the hills in bright blue whenit flowers — blooming only every twelveyears. Timing is everything!
During the ten day festival the ladiesdress in colorful Sarongs. The childrenare in bright shirts or dresses, with happy
dark eyes peeking out of colorful caps.Everywhere we saw Pookalam, six to tenfoot circular floral displays made ofblossoms spread in intricate patterns onfloors or the ground.
We enjoyed the traditional meal of Onam, the Onasadya — eleven courses of spiced vegetables, served on a large Pappadum banana leaf. We used our hands and nan (pancake-likebread) to cup the vegetables. Fortunatelythe old custom of 64 dishes has been discontinued.
One morning while breakfasting we weregreeted by a small group of monkeys whopounced from trees to the roofs ofbuildings and peered around walls —chattering and begging for food scraps.
As we drove in to the city of Cochin there was a lot of traffic: cars, vans,motorcycles and even buses swervingbetween lanes and jockeying for positionto gain an extra twenty feet. Suddenly theflow of traffic came to a halt. It was an
Reflections from Indiaby Mehdi Fakharzadeh and Ed Morrow
Page 20 The Register • November 2006
Tea bushes cover the hills for miles in plantation country
Mehdi Fakharzadeh, Jiti and Pal Kochhar and Ed Morrow
continued on page 21
continued from page 20 Reflections from India
much conversationamong those inattendance about thetragic event and subsequentinvestigations. Mostblamed Muslimterrorists encouragedby Pakistan-basedorganizations looselyaffiliated with Al Qaida.
At the start of theLIRT convention webreakfasted under acanopy on the bankof the river watchingthe brown water slowly flowing with giantcollections of river plants. Large birdsswooped through our tent to dive into theriver and emerge with struggling fish. Wegot a peaceful start at six o’clock in themorning having local Masala tea with milkand honey.
We were joined by two other non-Indianswithin the very busy LIRT program.Terence O’Halloran of Lincoln, England isan accomplished fee-based financialadvisor who also sells a lot of lifeinsurance. Terry is the author of atraining and support system for financialadvisors, FEE-PAC, and a comprehensivecourse and documentation for estateplanning, Trusts — a Practical Guide.
Frank Furness is a native of South Africawho now calls England home, but whodoes consulting throughout the world to corporate executives and insuranceorganizations. Frank is the author of aClient-Based Selling system and he hasproduced a Sales Marketing Toolkit. He is a very accomplished user of
technology to communicatehis creative concepts andFrank has already posted avideo interview made whileat the LIRT conference.
Both Terry and Frank havebeen MDRT Top of theTable producers — so they shared a globalperspective mixed with truelife insurance experience.All four of us each gavefour distinct presentationsto the very attentiveaudience during the threedays. Plus, we allparticipated in variousbreakout sessions —a very intense schedule.
On the second day of the event, held at La Meridian Hotel conference centre thesky was very clear — until suddenly darkclouds appeared, and there was atorrential downpour of rain. You couldn’tsee more than a hundred feet! Augustisn’t even the monsoon season, but wegot a clear picture of what it must be like.
Life insurance has only been offered forthe past 30 years in India, and at theoutset it was a monopoly — availablethrough the state-owned Life InsuranceCorporation of India. The first qualifier in1982 for MDRT was at the LIRTconference, J.P. Sharaf, and he still hasenthusiasm for the product and theimportant need it fulfills for Indian families.
Now there are twenty companies offeringlife and illness policies, includingpartnerships of such as Max New YorkLife, Met Life, Birla SunLife and naturallyAIG. There are 10 million agents, of which1.2 million belong to Life InsuranceCorporation of India. Of that many arepart-time — supplementing other incomesources. Approximately 20-25,000 ofthose representing Life InsuranceCorporation of India would be consideredfull-time agents.
Established agencies with LIC are large,some totaling over 150 agents, many ofwhom are part-time. The agencies withthe newer companies tend to be smallerand composed of predominately full-timeagents. Some have even started movingin the direction of financial planning, and they were proud to display theirorganizational and promotional tools.
Many Indians invest in savings certificatesoffered by Western Union and throughPostal Savings, which pay a small
continued on page 22
Mehdi Fakharzadeh and Terry O’Halloran
Cause of the traffic jam in Cochin IndiaThe Register • November 2006 Page 21
“elephant jam” caused by a large workelephant carrying a trunk full of greenbamboo. It seems elephants have theright of way.
The convention opened with a colorfulparade of agents, each costumed in theceremonial clothing of their region andproudly waving the flags of the sixteenstates of India. With the flags held highthere was a singing of a national anthem.
All of the attendees at the LIRTconference spoke English, but as acourtesy to those who understandcomplex terms better in their nativelanguage of Hindi, there were headsetsavailable for each attendee to receivesimultaneous translation provided byMulti-Lang International.
You wouldn’t expect a rather secularsession on such capitalistic topic such asinsurance and personal finance to bepresented in a Communist state, wouldyou? Then you’d have been even moresurprised by the opening speaker, JosephMenezes, who talked with great fervor ofthe benefits of prayer and service to God!Yes, he talked about the strengths,weaknesses, opportunities and threats offinancial advisors — describing the typicalSWOT evaluation in terms of ethicalperformance and service in a fashionapproved by God. Money and religion —in a city controlled, nominally at least, by Communists!
This moral attitude was welcomereassurance of the goodness of the Indiansociety — especially since in Malegaon, asuburb of Mumbai just to the north ofCochin, terrorists had recently explodedbombs in two Mosques causing 31 deathsand more than 277 injured. There was
continued from page 21 Reflections from India
commission to agents who place theirclient’s money there.
The laws do not prohibit a life agent fromoffering securities independently of theirlife company, so a number of agents arenow adding this to their product offerings.However, the volume of securities sales isstill small, and the emphasis is on steadyinvesting, rather than asset allocation,diversification or portfolio management.The LIRT attendees were very interestedin financial planning, since it offers a wayto encourage their clients to start makinginvestments and it is a pathway to reach more affluent prospects andbusiness owners.
Insurance sales include endowmentpolicies, whole life, term, critical illness,and disability income protection. Becausethe industry is fairly young, there are novery sophisticated products or complexselling techniques.
The sale of life insurance to corporationsis quite limited. Because of misuse of theproduct by some purchasers as a way toavoid tax, the regulators restricted thesale of permanent insurance tocompanies. Term coverage may bepurchased, and the premium is generallydeductible. However, the death benefit isalso subject to income tax — which is nota desirable provision. This effectivelymakes life insurance unavailable as along term holding of corporations, sincethe term premiums continue to escalate —with no cash value.
There’s a real need to educate theregulators and legislators of India on theproper uses of permanent coverage as anappropriate funding mechanism for:
• Buy Sell Agreements• Stock Redemption Plans• Executive Deference Compensation
• Officer Retention Plans• Corporate debt coverage
We were surprised at how many Indianscommented, “You know, India has asmaller population (1.1 billion) than China(1.3 billion) but we are gaining on them.Our country should become the biggestnation in the world in about 15 years!”
When we were in China last month thereseemed to be no conscious awareness ofcompetition with India. The Chinese arejust racing ahead, not to pass others, but to achieve greater business orpersonal success.
The sheer size of India really qualifies it tobe a continent, bordered on theSouthwest by the Arabian Sea and onSoutheast by the Bay of Bengal, both partof the Indian Ocean. India is bordered onthe Northeast by the giant HimalayaMountains and by the Great Indian Desertto the Northwest. So it is geographicallyas well as culturally a separate entity.
Everywhere you see the same emphasison education as its rival, China. Many ofthe states of India are proud of their100% literacy rate and there are schoolseverywhere — technical, scientific,academic and industrial. In fact anumber of local residents volunteered,“You know, here in the State of Kerala, wehave a 100% literacy!” There is a lot ofnational pride among the Indians andboth of us found this to be very refreshing.
However, India is beset by terrorism —which may be in-fighting among Muslimsects — or attempts to influence localgovernment. But the police and courtsare diligently pursuing the culprits. China does not seem to have the samedomestic violence problems, but it may be more oppressive of free speech.Frankly, it isn’t easy for Americans
visiting these two countries to make anaccurate judgment or comparison. But, everywhere in India, as in China —(except on a more modest scale in India)you see building activity. Roads are being widened, new bridges are beingbuilt and all types of buildings are underconstruction. Commerce is king andAmerican know-how, advice and capitalare welcome.
As we left the smiling members of LIRT itwas much easier for us both to understandthe true meaning of the motto of the Stateof Kerala, “God’s Own Country.”
It isn’t the land — beautiful though it maybe. It isn’t the expanding technology orthe graceful structures. It is not thefestivals or the brightly colored décor andclothing. It is the people — and their openaffection — for their families, for theirfriends, for their business associates, andfor two visiting Americans….
Ed Morrow, CLU, ChFC, CEP, CFP®, RFC® isChairman of the International Associationof Registered Financial Consultants whohas established financial trainingprograms in nine Asian countries.
Mehdi Fakharzadeh, CLU, RFC® is a non-retired agent and the leading producer ofMetLife who has addressed MDRT andmany other national conferences manytimes. He has traveled to China seventimes and addressed agent organizationsin 49 countries.
Both Mehdi and Ed spoke at LIRT — LifeInsurance Round Table in Cochin, India inSeptember. It will lead to new RFC®
classes in the second most populouscountry in the world.
Page 22 The Register • November 2006
Bamboo thatched river boat in Karala — our home for two days
The Register • November 2006 Page 23
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Loren Dunton Memorial Award
IARFC Financial Advisors Forum ♦ Bally’s Las Vegas 2007
Donald Haas2001
Ben Baldwin2000
Alex Armstrong2003
John Keeble2002
Liang Tien Lung2004
Vernon Gwynne2004
Jeffrey Chiew2005
Ed Morrow2005
Jeffrey Chen2006
Bill Carter2006
Nominee’s Name: ___________________________________________
Address: ___________________________________________________
__________________________________________________________
__________________________________________________________
Please comment on why this person is an appropriate candidate toreceive the Loren Dunton Award:
__________________________________________________________
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Your Name: ________________________________________________
Phone: ____________________________________________________
Award Nomination Form
Page 24 The Register • November 2006
Please fax to: 513 424 5752IARFC • P.O. Box 506 • Middletown, OH 45042-0506www.IARFC.org
Generally regarded as the father of financialplanning, Dunton organized financialprofessionals in the late sixties and withtheir help created the financial planningmovement — including the formation ofassociations, magazines, colleges, universityprograms and foundations. Some personsbelieved then that “planning” was totallyseparate from the “sale” of insurance andinvestment products, but Dunton alwaysrecognized that they were but different rootsof the common tree.
Dunton was able to use his experiences tofrankly explain what all of us now recognize.Having been a successful businessman, butnever a financial advisor, his commentswere obviously from the heart. Duntonrealized and publicly espoused thatsalesmanship is taught by the managersand trainers of the financial servicesindustry, and that the ethical sale offinancial products and the delivery ofcompetent advice is a noble calling.
In 2000, at the Financial Advisors Forum inDallas, the first annual Dunton award waspresented to Ben Baldwin. It has beenfollowed by presentations to those, whoearly embraced the financial planningprocess, and have written, spoken andserved widely in the financial community. In 2004 the Award was also made to aperson outside of the U.S.
In commemoration of the founder offinancial planning, the InternationalAssociation of Registered FinancialConsultants will each year honorprofessionals who have made significantcontributions to the industry and the public,presented at the Financial Advisors Forum.
Nominations responsive to the criteria mustbe made in writing. Notice is provided toIARFC members and other financialorganizations, outlining the qualificationsrequired, and soliciting nominations to bereceived by Dec 31 yearly.
Dunton Award Criteria
• Must hold a professional designation(such as ChFC, CFP®, CLU, RFC®,CPA/PFS, CEBS, MSFS, MSFM orDoctoral degree).
• Must have been published onfinancial topics (articles, journals,books, etc.)
• Must have provided outstandingservice or leadership in the financialservices industry.
• Must have promoted or participatedin some aspect of financialeducation, either to the public or tomembers of the profession.
• Must have demonstratedeffectiveness in carrying themessage of responsible financialstewardship to the public.
• Must have the highest ethical andprofessional standards.
Financial Advisors Forum 2007 Early Bird Raffle Registration
Bally’s Las Vegas ♦ May 15 – 17, 2007
♦ Registrant Information (please only one attendee per form)
Name _________________________________________________
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Designations ___________________________________________
Company ______________________________________________
Address _______________________________________________
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Phone_______________________ Fax ______________________
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♦ Registrant Tuition
Very Early Bird, Before 12/31/06 $450
Early Bird, Before 1/31/07 $495
Regular Rate, after 2/1/07 $595
Spouse/Companion Rate $250
Dunton Award Dinner $ 30
Dunton Award Dinner, companion $ 30
♦ Save on your tuition with “Sign-Up-A-Colleague”
Receive a $50 rebate for one nominee who signs up for theFinancial Advisors Forum. I hereby nominate:
Name _________________________________________________
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♦ Convenient Registration
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♦ Hotel Accommodations
Receive special room rates by calling Bally’s and using our Forum code: IARFC
Phone: Bally’s Reservations — 800 523 9126Online: https://www.harrahs.com/
CheckGroupAvailability.do?propCode=BLV&groupCode-SBIAR7
Reserve your room for only $125 per night.You may extend your stay to enjoy the same low ratefor additional days.
♦ Additional Conference InformationRegistration Location: South Tower, Second Floor.
Registration Includes: Continental breakfasts, Luncheons,Reception and admission to all session, workshops, and Exhibits.
Continuing Education Credits: Each state has different insurance and securities CE regulations. This event has not beenpre-registered for CE. Varying credits will be available for IARFC,CFP, PACE, and state credits, depending on sessions attended.
Recommended Attire: Business casual is appropriate. For yourcomfort, we encourage long sleeves or a light sweater as insidetemperatures can occasionally fluctuate. No jeans, tennis shoesor T-shirts please. A jacket is optional, but recommended, for theDunton Award Dinner held on Friday evening.
Cancellation: A refund (less 20% administration fee) will be madeif notice of cancellation is received in writing three weeks beforethe event. We regret that no refunds can be given after this period.A substitute delegate is always welcome at no extra charge.
Disclaimer: The program may change due to unforeseencircumstances, and IARFC reserves the right to alter the venue and/or speakers. IARFC accepts no responsibility for anyloss or damage to property belonging to, nor for any personalinjury incurred by attendees at our conferences, within theconference venue.
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Financial professionals helping people do a better job of spending, saving, investing, insuring & planning
the
International Association of Registered Financial ConsultantsFinancial Planning Building - 2507 North Verity ParkwayP.O. Box 42506 - Middletown, Ohio 45042
phone800 532 9060
fax513 424 5752
webwww.IARFC.org
Members WhoRecommended New
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I. David CohenKevin KlugLew NasonJeff Rattiner
Referror of the MonthI. David Cohen
New RFC, RFA and RFM
Members
S. Ivor Alleyne NJBurns Barr PA
Myles L. Burggraf OHSamuel F. Castronuevo HI
Jerry R. Citarella CAJohn Anthony Costa CA
Marvin R. Curtis UTChristopher D. Dantin LA
Vicki M. Diggles WICarmen C. Garcia TX
Gerald G. Ginwright ALScott T. Gross MN
James M. Hayden CTWarrick G. Hoopes AZSteve M. Hudziak WI
Jeffrey Richard Jones ILWillialm F. Jones MEDavid R. Kennedy WAElizabeth McNeilly NJ
Glenn W. Mehl NYJeffrey H. Miller TN
Steven C. Mooney COMary T. Moose NCKyle M. Morton TXChad L. Nehring WIDenise J. Palmer CA
Jose Ramon Perez FLRichard Wayne Rogers CADavid Bryan Romero LAJames F. Rudolph OHElizabeth K. Smith CA
Marvin L. Stanford BarbadosDavid Wayne Varisco LAWarren G. Woodham ARChao-Long Wu Taiwan
Get Your CE at Sea!IARFC 2006 Cruise Attendees
7 Day Canada/New England
From bottom left: Don David, Ed Morrow, Edwin Demeritte. John Grable, Clifton Callahan, Jim Lifter. Danny Proulix, Michael Fisher, Arliss Francis. Joyce Pool, Marie Bullemor, Judith Fisette-Losz, Dick Miller. T.J. Pool, Linda Brown. Chuck Foster, Ron Stair, Ken Wilkinson. Dave McCullers, Roy Henry, Lou Bortoletto, Lloyd Lowe. At the top, Steve Bailey.
