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Put The Emphasis On Keeping Things Simple

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My philosophy when meeting with a client has always been twofold. First, it is important to respect his or her time–accomplish this by being direct, to the point and prepared.

Second is to impact them in the brief amount of time you share. This can be done through an anecdote, personal story, or a statement directed at the heart of the issue you have come to discuss.

For example, in presenting an estate planning concept I will open by saying, “I am sure you have worked very hard to accumulate the present estate you possess. God forbid if anything should happen to you, you dont want it to go to the government.”

Most professionals building their business spend a great deal of time away from their loved ones, and find it difficult to find the time to plan their estate accordingly. I suggest to them to find time on a Saturday, or a Sunday for 1 or 2 hours, somewhere they can be alone and unstressed for a short period of time.

I tell them to write down all the assets that they own: real estate, investments, collectibles, the business, etc. Then compile a list of their debts. Subtract the debts from the assets and tell me the result–and I will tell them what they should do.

By doing this I have helped by offering a solution with an issue that plagues many of us–procrastination. I am building a relationship by presenting a casual but direct approach to gathering the data necessary to move forward. I am working one-on-one with the prospect and avoiding premature intervention by his lawyer and/or accountant.

Its not that I am averse to working with his team, I simply desire to have my time with the client to present need and offer a solution. My approach is non-confrontational, direct and to the point. I have established with the prospect what is at stake–the potential loss of a large part of his estate. And, I have offered a solution to how he can put the information together.

Place an emphasis on how to get clients to better understand the story of their life in building their estate and the danger in spending minimal time in managing its distribution.

Open Doors

Some time ago I was invited to speak at a board of directors meeting. The topic of my conversation was the value of purchasing life insurance for children.

I explained how when my grandchildren were born I gave them each a $1 million policy. I paid approximately $34,000 for each of them. The policies were sold not for the immediate death benefit but rather for the beauty of the tax-deferred growth.

To summarize the concept, if I pay the premium for 10 years I will have contributed approximately $34,000. Taking into consideration the fluctuations of dividends, when the children turn 65 there is over a million dollars available to them.

At the conclusion of this meeting a gentleman approached me to thank me for the information and to tell me he was interested in seeing me for his grandchildren. I asked for his card and read he was an attorney on Park Avenue in New York City. He invited me to his office.

Once there, prior to sitting with him I learned he had 2 floors in the building and another location. Approximately 150 attorneys worked for him with a support staff of nearly 800 people. Once we sat down I told him I wished to ask him a very strange question. He looked oddly at me and I asked him, “Do you have a will?”

He became defensive and said, “Of course I do.” I then asked him when it was reviewed last, he said 2 months ago. I congratulated him and went on to explain I could offer him a plan that for just 3% of his estate would protect his assets. At the time of his death the entire premium he had paid would be refunded to his beneficiaries and I would still pay all the taxes.

I knew he did not believe me until he viewed my proposal. This resulted in a large sale. To make a long story short I can tell you this developed by presenting a simple idea of insurance on a grandchild. By meeting with the client, asking a few questions, and listening to him I was able to uncover a need and offer a solution.

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Premium Quotation

Once the prospect understands and recognizes the need, the issue of premium quotation is next. How do you quote a premium without scaring the prospect into changing his or her mind?

My position has always been, dont quote. Simply tell the prospect the premium is 2% of whatever the face amount may be. I offer 3 reasons why I do not quote premium:

1.) Psychologically, 2% is a small amount. If the client were to borrow money at the bank, what would the rate be, 8% or 9%? If he looked at his credit card interest what might that be, 12% or 14%? If I say $19,400, however, the impact may be dramatic.

2.) What rate should I quote him? Preferred? Standard? I can safely tell him it will be 2% rather than run the risk of an inappropriate quote based on the wrong classification.

3.) I can eliminate the competition. If I quote $19,400 then my competitors know exactly what I am offering and it allows them the opportunity to bring in their own quotations.

We are selling the concept to people who can afford the premium. Remember, we have done our fact find, we know their assets and liabilities, and we understand their cash flow. We do not know their classification, and we do not know if competition will become an issue. Our primary objective is to get an approval and review everything at the time of delivery. The bulk of our work should be done prior to the application.

Public References

Even people who thought they have done a good job and feel they have taken care of everything often times leave their beneficiaries with an estate tax problem. When they die and the estates are settled, the beneficiaries learn their intentions were not fulfilled.

A vivid example of this is Jacqueline Kennedy. When she passed away all the media, newspapers, television magazines, and radio emphasized what a good job she had done planning her estate–and that was true. However, after her death when the IRS had calculated the amount of taxes due it proved her planning was not sufficient.

Her family was forced to sell her jewelry and other assets in order to raise the cash to pay the taxes. Of course in this case since she was so well known and so loved by the public there was no difficulty in selling the property at auction.

Now then, if it were ordinary people and they wanted to do the same they would get one-fourth, one-fifth, or one-sixth of the value. Any person forced to sell would never get the value the property was worth. Taxes would have to be paid with below market value proceeds. This compounds the death and loss of the loved one. Just think of how our product eliminates the threat of more loss through forced liquidation.

I can give you a few other examples. One concerns Jay Gould, the famous railroad builder in New York. Before his death he had debts of $261,699. But after his death his estate owed, due to taxes and other expenses a total of $52,549,682 with 77% shrinkage.

The famous J. P. Morgan had debts before his death of $581,367. However after his death the estate owed $11,893,691, with 69% shrinkage.

Conrad Hilton owed at death $4,412,278, after his death the total owed amounted to $105,782,217, with a 53% shrinkage.

I could mention many more cases, such as Nat King Cole, Gary Cooper, Dwight D. Eisenhower, Franklin D. Roosevelt, Howard Hughes, Malcolm Forbes, etc, but I follow an Iranian proverb, which says, “An ounce is a sample of a ton.”

Mehdi Fakharzadeh of Paramus, N.J., has been a member of the MDRT since 1967 and has 14 COT and 20 TOT honors. He can be reached at [email protected] This is an abridged version of a presentation he gave at the MDRTs meeting in Nashville.