Close Close

Retirement Planning > Social Security

Get Clients Emotionally Involved To Take Action On INsurance

Your article was successfully shared with the contacts you provided.

Get Clients Emotionally Involved To Take Action On Insurance

Kansas City, Mo.

In order to better serve prospects and clients, its important that agents get people emotionally involved in the decision to take action regarding their life insurance and annuity holdings, according to Van Mueller, a registered representative with New England Financial in Milwaukee, Wis.

Speaking during a breakout session at this years National Association of Insurance and Financial Advisors annual meeting, Mueller said there is a paradigm shift that agents need to explain to their clients before getting started in their sales presentation.

Agents need to help clients understand that in the future the government will not be able to care for the elderly, he said. Currently, there are approximately 38 million older people collecting Social Security. Considering the almost 80 million baby boomers and the 41 million GenXers, there are over 120 million people paying to support those 38 million collecting Social Security.

The country is headed for a crisis, he said. “Do the math.”

Looking ahead 10 years when the baby boomers start retiring, he said that if you assume half of the 38 million that currently are collecting Social Security are still alive, there will be about 100 million people getting Social Security. Adding the echo boomer generation, estimated at 74 million, to the GenXers, results in 150 million taxpayers paying to take care of 100 million people, he said.

“There will be higher taxes and lower benefits coming soon to a country near you,” he said. “This is going to be a huge problem and you need to start talking to clients about it.”

Making this situation even more difficult is the fact that people are living longer than ever before, he explained.

Mueller said the products insurance agents offer can help solve all these problems for their clients. “Youre the only people that can create money from nothing.”

Mueller shared a number of ideas during the session. “I take two fact finders,” he said. “I take an emotional fact finder and a factual fact finder.”

The emotional fact finder only has four questions. Mueller uses this with clients to help him understand what they want to do, but more importantly, it helps his clients realize what needs to be done to meet their goals.

The first question he asks on his emotional fact finder is, “What do you want to happen when you die?”

A discussion typically ensues that addresses follow-up questions such as: Do you want the kids to go to the same school? Do you want your spouse to go back to work? What do you want to happen to your business?

The next question he asks is, “What do you want to happen when you become disabled?” People usually dont feel they will become disabled, he said, but “statistically, almost everyone in America becomes disabled for some period of time, and some for a long period of time.” Mueller asks people to tell him everything they would want to happen if they couldnt work for one or two years.

The next question he asks is, “What do you want to happen when you go into a nursing home?” Given the current demographics of the population, people shouldnt expect much from Medicaid down the road, he said. Mueller asks, “Do you want the government to get your money; do you want the nursing home to get your money; or do you want your family to get your money?”

People will usually say they want their family to get their money, he said, but often “the way they have it set up now, its not going to happen.”

The final question on Muellers emotional fact finder is, “What do you want to happen when you retire?”

The ensuing discussion involves where they want to live and how much money they may need to maintain the lifestyle they want to lead.

After going through all these questions, Mueller has a full understanding of what his clients want, and his clients have started to think about what they want given all these situations.

Another tool Mueller uses to gain insight into his clients desires is to present them with a list of items. “I ask where do you want your money to go?” The list includes a nursing home, the IRS, their children, their grandchildren, a special person and a charity. “Please put these in order of your preference,” he tells them.

Mueller explains to his clients that unless they take some action, their wishes will not come true. He tells his clients he can help them make these wishes happen.

Another idea involves how he explains the power of compounding and tax deferred compounding to his clients.

Mueller first makes a few assumptions to illustrate this to clients. He assumes someone who is age 40 has $100,000 to invest, assumes a 9% return, and also assumes a 33% tax bracket. Even though in his example Mueller was using a 9% return, he noted that this concept holds true for any return used.

Looking at a taxable investment earning a 9% return, which nets to 6% after tax, the $100,000 will grow to $200,000 by age 52. By age 64, that amount will grow to $400,000. “If clients just did this, it would be spectacular. This shows the miracle of compounding,” he said.

Next, taking those same assumptions and applying them to a tax-deferred vehicle, the $100,000 will grow to $200,000 by age 48. By age 56, it will grow to $400,000, and by age 64 to $800,000.

Compared to the taxable illustration, “you have twice as much money in the same time frame,” he said.

Even though the $800,000 is subject to taxes, and Mueller assumes an aggressive 50% tax rate at retirement, the tax-deferred account totals over $400,000 at age 64.

Mueller asks his clients, “Which would you rather have?”

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.