The NCAA college basketball tournament is just around the corner. It follows a single-elimination format with all games played at neutral sites. You can throw out computer rankings, sportswriter opinions and talk-radio hyperbole. The tournament is elegant in its simplicity and objectivity.
The insurance advisor practicing in the estate planning market could learn a thing or two from the college basketball tourney. As an advanced sales attorney consulting on hundreds of estate planning cases, I have drawn some parallels between estate planning insurance advisors and college hoops. Read on for five lessons that apply to both.
The full-court press is risky
Just a few college teams have enjoyed tourney success employing the full-court press. Arkansas brought the heat with “40 Minutes of Hell,” and Virginia Commonwealth is known for its “HAVOC” defense. No doubt, the full-court press can reap big rewards. It can also lead to easy points by the opponent and a burned-out defense. The stakes are high with the full-court press.
More than a few agents have attempted the estate planning full-court press. They often call me after their case has stalled. They explain to me how they completed several fact-finding sessions, gathered all relevant estate planning documents and identified the other advisors. (So far, so good.)
The advisor then proceeds to describe, in great detail, the gorgeous, personalized, leather binder they presented to the client with a comprehensive plan requiring five techniques and four insurance products. Every technique and product recommendation was directly on point. The advisor is surprised that the client wants to “think it over.”
See also: They’ll buy — if you don’t sell
With few exceptions, people are overwhelmed by the full-court press. Some are simply turned off. The advisor needs to back off the press. In nearly all cases, it is best to help your client see one dribble, one pass and one shot at a time. Gather data, discuss objectives and help your client prioritize.
Educate your client, one concept at a time. First, hit your lay-ups (e.g., estate liquidity and income replacement) and later move on to the tomahawk slam (e.g., discounting techniques, grantor trusts). Save the thick binder for all of the glowing testimonial letters you will compile from satisfied clients.
(AP Photo/Steve Helber)
Prevent turnovers; always play in the moment
A key turnover late in the game cost the 1982 Georgetown Hoyas a shot at a national championship. Chris Webber’s improper timeout sunk Michigan’s chances in 1992. In the 1983 finals, nobody from the University of Houston boxed out N.C. State’s Lorenzo Charles in the final seconds — the rest is history. Each incident was a simple mistake where a player took his head out of the game for just a split second. It can happen to insurance and financial advisers. Consider three common examples:
- Mom takes out a life policy insuring Dad. Mom is the policy owner. The death benefit is intended for their 9-year-old daughter, so they name their daughter the primary beneficiary. Foul: At Dad’s death, Mom is making a taxable gift to the daughter. This is the classic Goodman tax trap (different owner, insured and beneficiary).
- Facing potential estate taxes, Jane is in the process of establishing a life insurance trust. She is anxious to get the life insurance coverage in force, so her agent has the policy issued to Jane and explains that she can gift the policy to the trust after it is drafted. Foul: IRC Section 2035 three-year-rule of estate inclusion applies. If Jane dies within three years of gifting the policy, the death benefit is included in her estate.
- Joe’s mother passed away this year, leaving him her IRA. Joe’s mother was 84 years old. She had not taken her required minimum distribution for the current year. Joe has heard about the stretch IRA concept. His advisor explains that Joe may stretch IRA distributions over his remaining lifetime as long as he begins taking RMDs next year. Foul: Failure to take an RMD from the decedent’s IRA in her year of death results in a 50 percent penalty.
The good news is that most planning mistakes are easy to avoid and can be remedied if caught in time. Keep your eye on the ball and your head in the game.
Point guard excellence: A sweet 16 prerequisite
Bobby Hurley, Magic Johnson and Greg Anthony — all three point guards were champions. However, great point guards never play in a vacuum. They bring out the best in their teammates. Advisors who excel in the estate planning market have the ability to bring out the best in attorneys, accountants and other members of the planning team.
In my experience, the insurance advisor is usually the catalyst who gets the case moving. Why is this? I suspect it is because other advisors on the team (accountant, attorney, trust officer) tend to be transactional. By contrast, the insurance advisor often has a close, personal relationship with the client. Most insurance advisors I know are connectors. They are excellent at building relationships and finding common ground. In many cases, the client sees the insurance advisor as the go-to person for all types of personal, financial and estate planning questions.
Use your gifts and relish your time at the point, but remember to pass the ball when appropriate. I once had a case where an insurance advisor repeatedly asked detailed split-dollar drafting questions. I suspected the agent was assisting the client with drafting a homegrown plan and treading perilously close to the unauthorized practice of law. Although split-dollar appeared to be a sound planning choice, the case died when the client’s long-time business attorney got wind of what was going on.
You must learn the other players and respect long-standing relationships because they can make or break your case.