Finding Funds for Food & Fun in Your Client’s Financial Future

Unless today’s advisors get their client to connect emotionally and intellectually, their client remains forever vulnerable to “the next shiny thing” that comes along in the form of a competitor’s ideas on retirement. Your clients need to understand what’s on the line for them as well as the science and math behind the recommendations. Crafting a compelling and confident financial future for your clients is key to your success and theirs.

This article will highlight some clever language, anecdotes and simple conceptual examples you can use to both intrigue clients and gain their commitment at the same time. Utilizing these unique and engaging dialogues will help engage your clients into action – which could mean more food and fun in your clients’ future.

What’s the “Secret Sauce” in Your Plan?

When you meet prospects socially and professionally, ask them this question: “Does your current retirement plan contain mortality credits?”

It’s an instantly captivating, and yet unsettling, strategy that gets them listening to you. It is the mortality credits that allow life insurance companies to guarantee income. Banks and mutual funds and the stock market cannot do that.

Mortality credits are the “secret sauce” in any robust and sustainable retirement plan.

Show your clients on your iPad the online articles about where Ben Bernanke, past Chairman of the Federal Reserve for over a decade, holds his wealth. In life insurance annuities, that’s where. “If it’s good enough for the guy who printed the money in the U.S.A. for a good while, then it’s good enough for you and I, Mr/s. Client!”

Become the Joneses instead of trying to keep up with them.

Use this language with your clients:

“Look around at your friends. Are they so busy keeping up with the Joneses that they’ll never become the Joneses? Break away from the pack and set yourself up for guaranteed income success when it’s hardest to create in the decades ahead. Your leverage is greatest when your kids are young and while your career is not yet old. Don’t leave dealing with “getting old” until you are “old.” The miracle of compound interest can be acquired by anyone financially savvy enough to delay gratification with a small sacrifice each year. Then you’ll get to sit back on your retirement porch and focus on playing with your grandkids instead of nervously checking the stock market or your bank account each day.

There comes a point when we all need to shift our attention from working to make money to making money work for us. Annuities are the only guaranteed asset class that insures your income flow in the decades ahead. Even if it means stepping down a notch to a mid-sized vehicle or buying quality second-hand, find the money today to secure a golden tomorrow.

Let’s Annuitize Your Lazy Assets

Use this language with your clients:

“Lazy money” lying in low-yielding bank deposits makes bank shareholders wealthy, not bank customers wealthy. It is a fallacy that you need a fat “emergency” fund available in a savings account. Your great credit record and a decent credit line on a Platinum Visa/MasterCard or American Express are just fine in an event of an unforeseen financial emergency. Money sitting fallow in a savings account is losing purchasing power relative to inflation every day – especially in a low interest-rate environment.  Just think about it! What is it costing you to give away the extra growth on your money that annuities deliver – over the next 10 years? 20 years? How about if you end up living to age 100? Chances are that you will. There’s a 50 percent chance of a 65-year-old living to age 92, a 25 percent chance of them living to age 97 and a 5 percent chance of them living to age 100.

The Pot Script

(Name of client) Would you like me to tell you what’s going to happen when you retire or would you rather have me show you? (Most people choose show.)

When we retire, we take all of your assets and put them into one big pot –  (Draw the pot & Draw 4 arrows downwards into the pot) – to create a certain level of assets (Draw the level line indicating a “water level” conceptually).

(Label them, saying “For example let’s use these asset classes.)

Arrow 1: Cash; Arrow 2: Guaranteed Income products/Annuities/Company Pension; Arrow 3: Individually held shares/Mutual funds; Arrow 4: Income-producing property.

The “game of retirement” is to make sure that you run out of years before you run out of assets and income and still leave something behind for the kids.

On the day of your retirement, we open a tap on the side of the pot. (Draw the tap near bottom right of the pot) and allow income to trickle out. (Draw the crooked arrow to indicate income flowing out.)

The Big Question We Face Is:
How much income can we allow to flow out of the pot to ensure that you run out of years before you run out of assets and income and still leave something behind for the kids?

Our company is fundamentally conservative! We recommend a maximum 5% annual withdrawal off the asset base in the pot. (Write down 5% next to the tap.)

We know that you can achieve around a 10% average annual return across a wide enough variety of asset invested in and held over a long enough period of time. (Write down 10% at the top of the page.)

The client may debate you on the 10%. Show them that by investing 10% down on a rental property of $100,000 value and having the tenants pay the mortgage, maintenance and rates and taxes over a 20-year period – with an eventual selling price of $200,000 (5% annual growth), they could have turned $10,000 into $200,000…a return much greater than 10%. Their bank deposits, on the other hand, would have only grown by 1-2% a year. Hence the word average.

We know furthermore that we need to deduct an allowance for tax. (Write down – tax)

We also know that we need to deduct an allowance for inflation which typically runs between 2-4%. (Write down – 2-4%.)

So we remove tax and inflation from an approximate 10% return and we end up with a net 5%.

(Name of client) How much income do you want for your family every year throughout your retirement?

Write the number down. Do you want this number to stay the same all the way through your retirement? (Draw a straight horizontal line as you say this.)

OR can we allow this number to decline as you get older and less healthy? (Draw a line horizontal, which curves downwards to the right, as you draw it from left to right under the straight line.)

Most clients will choose stay the same. For those who say that the number needs to increase, point out that we already allowed for inflation/cost of living increase in the top line of the gross calculation. We are dealing with a net figure.

Well, (Name of client) if you want x dollars to flow out of the pot every year throughout your retirement, making sure that you run out of years before you run out of assets and income and still leave something behind for the kids, how much money needs to be in the pot on the day we open the tap? (Have a BIG calculator on hand to allow the client to do the math – this provides essential “drama” and engagement.)

X income divided 5% = (a large number) x 100 = The amount they need in the pot
Example: $80,000 /5% = $16,000 x 100 = $1,600,000

Write down the answer inside the pot. Draw numbers 1,2,3 under the answer, push the illustration page towards the client, place your pen next to the page and ask the client to list the top three sources of that number in terms of their current financial plan. And then shut up. Don’t say a thing.

In most cases, you will be sitting there watching them squirm or just enduring the awkward pause as they try to think of what concrete financial plans they currently have in place to make that required amount a reality.

If they hesitate, tell them that you have some powerful ideas, if they would be willing to take a careful and considered look.

Good luck with this model – works as equally well on a flipchart at a seminar as on a napkin at a restaurant meal with your prospect.

Find more styles of engagement, including an “Anonymous Family Survey” and “The Two Card Challenge” at