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Life Health > Life Insurance

Why It’s Called the Web, Plus How I Use Insurance to Update Clients’ Financial Plans

By Mike Patton

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In my posting last week, I discussed some changes I’m making to my advisory firm’s website. As the days progress, I keep thinking of additional items to include. Remember, a website should accomplish multiple purposes. It should serve to bring in new business, be dynamic enough to keep the visitor on the site and foster return visits (maybe even be added as a favorite to your clients’ and prospects’ browsers).

One key is to get your website's ranking high enough so when someone searches for a keyword or phrase, your site has a good chance to be seen.

For instance, if your site contains information about a specific topic, then you should use appropriate key words and phrases and even include an intra-site search engine. Then, when someone pulls up your site, they can search within the site to find the specific page where this information is kept. Another important ingredient is to link your site to other sites with a high ranking. Remember, that’s why it’s called a "web." When someone hits another site, if there's a link to your site, they may click and visit your site. This may have to be a two-way street with other sites. I'll cover more of how to do this in future posts.

Financial Planning Update

As 2010 comes to an end, it's time to gear up for clients’ financial plan updates. I like to update all plans during the first half of the year or at least by the end of August. Having developed my own planning software using Microsoft Excel and Crystal Ball, I have the flexibility to enhance it as I see fit. One of the things I added in 2010 was a quantitative methodology to determine the amount of life insurance needed. Here's how it works.

The software determines the lump sum needed today and in each successive year by summing the net present value of all future annual shortfalls (surpluses are assigned a value of $0). Each year, as the client ages, this lump sum is recalculated.

Naturally, as time marches on, the lump sum needed declines until the final year when death is assumed. I typically use age 95 as the terminal year. This is overlaid with another line which graphs the total resources which includes the clients’ financial assets and life insurance. If there's a shortfall between their need and their resources, then an increase in life insurance may be warranted. If a surplus, then perhaps they have more than they need. If you'd like to read more about this, check out my article entitled, "Carpet Balming" in the May 2010 issue of Investment Advisor.

Thanks for reading!

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