We consulted with top advisor Michael Zmistowski, president of First Gulf Advisors, for his take on useful steps to get prospects to feel comfortable enough to sign on the dotted line.

1. Always discuss the No. 1 concern: Running out of money. “You know the reasons, including lack of accumulation, longevity, inflation and over-spending. It’s going to be extremely unpleasant. They and their adult children are going to be looking to blame you in any way they can. “Be proactive,” he says. “Write about it in their financial plans and retirement income plans. Write big warnings like ‘Do Not Retire Now’ with easy-to-understand explanations such as, ‘Based on your current spending, you will run out of money.’ Use software with quality Monte Carlo simulation to support your warning.

2. Communicate! “Often today, the articles we read about communications with our clients are geared to customer satisfaction, client loyalty and building trust. Nothing wrong there, but go farther by keeping in mind your communications are the foundation upon which your future business is built,” Zmistowski says.

3. Protect yourself: Put it in writing. “Many of us are taught by compliance and experience to put as little in writing as possible for our protection,” Zmistowski says. “That’s not true and not safe. Follow FINRA’s lead. Follow states’ departments of insurance regulation. They want more and more forms signed and initialed by clients and by those being regulated. It’s an energy drain. But if you want to experience a real energy drain, try talking your way out of complaints and lawsuits which will only be increasing.”

4. Have the client sign off on rejections. A billboard asked, “Do you have long term care insurance? If not, call this number.” When the curious client calls the number and says no, he is then asked if he has a financial advisor. If he answers “yes,” then the lawyer says, “You have grounds for a lawsuit against the financial advisor.”
“When you communicate a recommendation, put it in writing. If the client rejects your recommendation, have them write and initial a big “no.” Later, when their adult children, see that billboard and sue you because their elderly parents aren’t protected (and their inheritance is being destroyed by LTC expenses), you have proof that will protect you.”


5. Always be extremely cautious of new or alternative investments.
“Think about the complexity to seniors of reverse mortgages, life settlements, hedge funds and any non-marketable security,” Zmistowski says. “Their memories of the details are short. Remember, going forward, even life insurance must be considered as an asset that can be bought or sold and is, therefore, subject to fiduciary standards. In publications, FINRA warns consumers that a reverse mortgage can jeopardize their financial futures. Pay attention. Show your clients your thoughtful awareness. They’ll have first-hand evidence of your expertise.”

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