Boomers, Investments & BlackJack

Most elite financial advisors I consult don’t educate. They don’t present, sell or close. They don’t run appointments or conduct seminars.  Instead, they tell stories (story-selling). It’s a successful method that’s been used for decades to relate to prospects, getting them involved and teaching at the same time. It shows empathy, care and comes from a place of strength. Done effectively, walls come down
Which leads me to the below script (shared by one of the highest profile FIA producers in the country). But today, it’s all yours. Think about using this in (1) Appointments (2) Seminars (3) Client Events or be creative. But I challenge you to internalize this and make it your own.

“John and Susan Boomer, congratulations on getting here. You’ve been saving money for decades to reach this exact moment in your lives. Retirement is here and you need to surround yourself with people you trust 100%. Those people need to understand what you’ve gone through and be equipped to navigate everything in front of you.

So before moving forward, let’s pause and spend a few minutes looking back. Together let’s quickly review how the stock market has performed over your investing life (the last 30 years) and what your experience has been during those times. While I am not here to predict the future, I hope you agree we can always learn from the past. And your “investment life” experiences can teach us a lot. Do you agree?

Let’s begin where most baby boomers started investing and saving for retirement. It’s somewhere around 1980 or 1981 and you were about 30 years old. You were probably into a career path, had some sort of steady income and saving for this far off retirement was at least in your head. Savings became a regular part of your financial regimen. And in 1981, the Dow Jones was around 1200.

For the next 10 years, during your 30s and up until about 40 years old, it’s slow and steady. One scare happens (Black Monday in 1987) but other than that, it’s all about buy & hold. Your savings are rising slowly, but everything’s working the way it should be. Around the age of 40, you start to dollar cost average into 401ks and other savings plans. By now you’re comfortable with the stock market, and it’s proven to be great for slow, steady and strong gains. Again it’s all about growth, return, invest, dollar cost average, slow and steady wins the race.

Around age 50 the markets take off and you’re thrilled to be along for the ride. You’re in the midst of (literally) the biggest gains and the biggest bull run in WORLD HISTORY. Over a 17 year period, the Down Jones has a cumulative rate of return at 1003.19%! Absurd, insane growth! The Dow reaches a peak value of 11,723 on January 14th, 2000. No matter where your money was invested, the market was making exponential gains year-after-year. At this point in your life, everyone is a financial expert because no matter where your money was, it looked like a great decision. Slow and steady is out the door. It’s now return, return, return, more, faster, now!

But unfortunately, all good things come to an end. 2 ½ years later, by October 9th, 2002. the dot-com bubble burst and the Dow is off 38% from its’ previous record high. You’re early to mid 50s and just gave back a good chunk of change to the markets. Retirement is on the near horizon and you’re asking questions like “why didn’t I take that money off the table?” And you’re forced to the fact that the incredible growth your investments just experienced couldn’t last forever. From 2002 on, the market is volatile, but start to show signs of recovery and you’re approaching 60 years old. The Dow even reaches a new high point in October 2007! But then the 2008 and 2009 market crashes happen and we’re more confused than ever. What is someone so close to retirement supposed to do?!?

Fast forward to March 2009 and most boomers are around 60. The Dow Jones is down over 50% (54% exactly) from its high only 2 years ago. You just experienced the bursting of the another bubble in housing and things are more volatile than ever. Take that same feeling out 2 more years from 2009 until today and things are undoubtedly more confusing than any other time in your life (US debt, EU sovereignty, political uncertainty, taxes, entitlement programs, etc.).

Which brings us to today and the question – what should we do now? You’ve been blessed to experience a truly historic time in the stock market. NOW WHAT?!? I’ll respectfully submit that today is a time for a change. Nobody likes change, but for the sake of you, your family and your hard-earned retirement dollars you have to be ready for it. The change is this: no longer should you be thinking

“What are the markets going to do?”, instead you need to ask “What is my money going to do?”

Ever been to Las Vegas ______? Imagine heading there next week and having $1000 in your pocket. You sit down at the blackjack table and quickly change your cash into $1000 in chips, in front of you on the felt. You start out betting slow, but win steadily. Your $1000 turns into $2000, then $4000, then $5000…slow and steady wins the race and you’re wearing them down. Then you go on the biggest run of luck you’ve ever had at the casino and turn your money into over $12,000 as you’re looking down at an enormous pile of chips in front of you! But uncertainty is now in the air. The table (AKA the market) feels more volatile than anytime you can remember and more variables are in play than you’ve ever experienced. I’d suggest you should no longer be thinking “How are the cards going to come out?” Instead you need to be asking “What should I be doing with my money?”

When you put your money into the markets 30 years ago the Dow Jones was at 1200, now it’s around 12,000. Just like in blackjack, you can take your money off the table and let it work for you or you can keep gambling. It’s time to transition your thinking. It’s time to change your mind-set.

Your investment life is no longer about what returns you might make, it’s changed to become about predictability and guarantees. It’s about how do you keep this money safe and working for you? It’s about saving what you’ve worked hard for and walking away from gambling. You deserve to spend with confidence and I’m an expert at helping retirees do exactly that.

(White Board Drawing) To sum this up we should address one final point – that’s the difference between an investment and a savings plan. The criteria most people use to make financial decision is based on accumulation and investments. For most, that means a priority list that ranks Rate of Return (ROR) 1st, Income/Dividends 2nd and finally Safety 3rd. Think about bonds, stocks or mutual funds and this is how you’d look at one, isn’t it? That’s fine when you were 35 years old; but not today. The priority list of a savings vehicle is opposite. That list is Safety 1st, Income/Dividends 2nd and Rate of Return (ROR) 3rd, right? Think about a bank CD or money market account and that’s how you’d judge it.

My challenge to you is one of transition and maturity. Retire yourself from the accumulation and investment stage of your financial lives. Quit thinking “What rate of return can I get on my money?” and start thinking “What rate of return can I get FROM my money?” Savings vehicles, where safety is paramount and income is top priority; guaranteed and predictable is the new you. It’s time to walk away from the table and spend with confidence.”

Nothing happens without action and this is incredible stuff; worth its weight in gold towards future relationships and sales. Have at it, have a blast implementing and  share with me your success stories.
~ Matt

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Sales Script — 3 Stages of Money

Proven producers, proven ideas, proven sales scripts. Quit being the lab rat for suspect ideas that will never work!

Today I’m sharing immediate ideas (and potential access) to a remarkable call from a friend of mine and fellow top-advisor of yours, Mike Reese. As you may know, Mike is one of the top IRA experts in the country and runs a phenomenally successful planning practice. His book-smart CFP concepts combine with  street-smart marketing savvy; making a lethal combination. He’s always improving…

Today I want to share Mike’s latest addition to the appointment process, detailing his NEW “3 Stages of Money” conversation.  To summarize:

  • Stage #1: SAVINGS – This is when you’re Young, needing Safety & Liquidity (think BANKS).
  • Stage #2: INVESTMENTS – We’re into Adulthood, introduced to investments. Risk and Return are paramount. This stage is about Accumulation (think BROKERAGE/WALL STREET).
  • Stage #3: INCOME – This is when we’re Retired, needing Contractual Guarantees (think INSURANCE COMPANIES).

Stage #2 (BROKERAGE/WALL STREET) ran wild during the 1980s and 1990s; running investment balances sky-high! Not only did retirement balances run sky-high, but so did expectations! Creating today’s perfect storm. Many retirees and soon-to-be retirees are trapped with lofty, false expectations about what’s realistic with their investments. They’re fighting themselves to leave money in stage 2 too long!!! But now the people who prospered most don’t need growth; they need income. And what’s wrong with staying in Stage 2 for Income Planning?

  • If equity markets perform well — nothing!!!
  • If equity markets remain volatile and perform poorly — everything!!!

Many reputable asset allocation managers still apply the 4% Distribution Rule to client portfolios. If you withdraw only 4% of your assets each year, they say you won’t go broke 90% of the time. First of all, who wants to only withdraw 4% of their savings during retirement? Clients worked very, very hard for decades to retire – let them enjoy it!  Contractually
guaranteed, Stage 3, insurance strategies can allow you to withdraw upwards of 6%? Take advantage!

Second of all, if the 4% Distribution Rule works 90% of the time (and I’d argue that premise) is that good enough? Would you board an airplane if it landed safely 90% of the time? Would you eat something for dinner if it didn’t poison you 90% of the time? But it seems like 90% is supposed to be okay for your life savings and retirement. It might be okay for Wall Street retirements. But it’s not good enough for plane flights, dinner and it’s not good enough for your clients. Quit thinking the 1990s are going to happen again! Clients need to transition quickly to stage #3 thinking and protect their hard-earned money with contractual guarantees of income.

Comment below if you’d like instant (recorded) webinar access to Mike Reese’s full explanation! It’s powerful and will undoubtedly help you close more sales.
Make it a great week.
Matt