Whenever I meet someone…

I tell them this story: “If you had $100,000 in the stock market in September of 2007, when the Dow Jones was at its highest, and then lost 50 percent by March of 2009, your $100,000 was worth only $50,000. Since then, the stock has recovered by about 90 percent. Ninety percent of $50,000 is $45,000, so you are back to $95,000 five years later.” 

Statistics verify this example. Our country’s net worth was $66 trillion in 2007. It fell to $49 trillion in the first quarter of 2009. It is currently $62.9 trillion. So the time value of that money has been lost for almost five years.

At this point, most agents and financial professionals make their biggest mistake. They assume that the prospect or client understands what you just talked about. This is where the sale is lost. We assume they know how bad that is. We assume they know about time value of money. They do not. Instead, they are thinking that they have dodged a bullet.

Build financial foundations

Then I ask, “Do you know that if you had given me that $100,000 in September of 2007 and we earned only 3 percent per year, you would have now had almost $116,000. Which would you rather have?” I ask them, “Can the $95,000 lose value again? Do you realize mine will be worth over $119,000 one year from now?”

We must build financial foundations based on guarantees for our clients. So ask a few great questions and watch your sales soar.

Help your clients understand the time value of money.

Van Mueller, LUTCF, (www.vanmueller.com) is an insurance agent, professional writer and speaker and Senior Market Advisor’s 2010 Advisor of the year. Responses and questions can be sent to [email protected].