Endless Deficit Spending and Advisor Marketing to Seniors

You might see the near record federal deficits as a good news-bad news story for financial advisors.

The good news is might skinny with this story. Maybe it will lead seniors to take a second look at their government pensions. Maybe they’ll choose to save more money for retirement. Perhaps they’ll decide to seek out an advisor with some sound ideas on how to live off their retirement accounts.

The bad news is that government spending is totally out of control. The Federal Reserve Bank can’t raise interest rates without causing the interest expense on the debt to balloon even higher than it is today. So seniors get very little on their short term money. It takes a lot more money in the bank to get a livable income.

This article from today’s The Wall Street Journal lays it all out. The picture ain’t pretty.

Deficit in July Totals $165.04 Billion

The U.S. government spent itself deeper into the red last month, paying nearly $20 billion in interest on debt and an additional $9.8 billion to help unemployed Americans.

Federal spending eclipsed revenue for the 22nd straight time, the Treasury Department said Wednesday. The $165.04 billion deficit, while a bit smaller than the $169.5 billion shortfall expected by economists polled by Dow Jones Newswires, was the second highest for the month on record. The highest was $180.68 billion in July 2009.

The government usually runs a deficit during July, which is the 10th month of the fiscal year. So far in fiscal 2010, the government spent $1.169 trillion more than it made. That figure is about $98 billion lower than during the comparable period a year earlier.

For all of fiscal 2009, the U.S. ran a record $1.42 trillion deficit. Fiscal 2010 might run a little higher—the Obama administration sees $1.47 trillion.

Wednesday’s monthly Treasury statement said U.S. government revenues in July totaled $155.55 billion, compared with $151.48 billion in July 2009.

Spending was higher, totaling $320.59 billion. July 2009 spending amounted to $332.16 billion.

Year-to-date revenues were $1.75 trillion, compared with $1.74 trillion in the first 10 months of fiscal 2009. Spending so far in this fiscal year is $2.92 trillion, versus $3.01 trillion in the prior period.

Spending for benefits for the unemployed year to date totaled $121.4 billion; for July, the tab was $9.8 billion, the Treasury statement said.

Years of deficit spending by Washington have led to a mounting national debt. Interest payments so far in fiscal 2010 amount to $185.25 billion; by contrast, corporate taxes collected by the government during the same 10 months were $139.71 billion. Interest payments in July alone were $19.9 billion.

Source: http://online.wsj.com/article/SB10001424052748704901104575423601722830706.html?mod=WSJ_hp_mostpop_read

With interest rates near zero for short-term money, interest expense is $19,900,000,000 for July. So retirees depending on bank CD’s shouldn’t get their hopes up. You need to tell them about better ways to provide for their day-to-day retirement income.

Why Multi-tasking Destroys Productivity

Dave Crenshaw wrote a book you need to read entitled, The Myth of Multitasking: How ‘Doing It All’ Gets Nothing Done.

Here are some excerpts:

“There is an illusion. The illusion is that technology, cell phones, e-mail, faxes, text messaging, and whatever is latest-and-greatest all make us more productive.

“The reality, though, is that these things will only make us productive if we take control of them.

“They are the servants. We are the masters. If we do not protect our time, we will allow ourselves to be run over by the traffic of information.”

His book makes the point that our brains can really only do one thing at a time. What we really do is “switch-tasking” where we switch back and forth between two or more activities. He says this tires the brain thus lowering our overall productivity.

I fight this all the time when I’m at my computer. Constantly checking email, Skype beeps for chats, and incoming calls from my receptionist. This bestselling book, and it’s sequel, Invaluable: the Secret to Becoming Irreplaceable, should help.

I’m reading Invaluable chapter by chapter as I drive down the freeway. Just kidding, of course.

You will make points with your clients if follow one of my better habits. My cell phone is on manner mode 99% of the time and always during the business day. I guess 1% of the time I’m playing Ultimate Frisbee at the park and need to hear my phone ring.

You’d be surprised how appreciated clients feel when the manner mode goes off and I reach down to touch the button to put the caller into voice mail. Without even looking to see who’s calling me. Even after the client grants me permission, “Go ahead and take the call.” I tell them “I’m talking to you now” and they like that. And I let him know I’ll ignore their calls when I’m speaking with someone else.

This is the cell phone application of “Do unto others as you would have them do unto you.” Maybe that’s why they called it “manner mode” back in the early ’80’s when cell phones came out.

My wife and I have a signal that tells me it’s an emergency so take the call now. I’d tell you what it is but you might be tempted to interrupt me when I’m talking to another client!

Think about it. Let’s say I take the call from another client, prospect, vendor, or partner while I’m speaking to someone else. Either it’s a problem and I’ll be thinking of a solution. Or great news and I’ll be thinking happy thoughts. Or it’s simply a bother and I’ll be wondering why it couldn’t wait.

Radios can be tuned to two different frequencies if they overlap slightly. You can hear 2 different songs or a song and a commercial. Tough to listen to. But possible.

Your brain can really only be tuned into one conversation at a time. Either with the person you’re speaking with. Or the person calling you. Or texting you. Or instant messaging you.

Dave Crenshaw say “background tasking” won’t hurt our productivity. Some examples of background tasking include:

• Eating dessert while watching a video
• Reading a magazine while doing 3 miles on the treadmill
• Listening to a how-to audio CD while driving
• Whistle while you work (Remember Snow White?)

Task #1: Give 100% attention to the person you are with. This could be a client, a prospect, a friend, an employee, your spouse or a child. Get ready to shock them!

Task #2: Give each task 100% attention until you get it DONE. Then move on to the next task. Tell your receptionist when you cannot be interrupted. Have her schedule call backs with clients. You’ll get more accomplished each day. Now get to work!

Estate Tax Confusion Keeps Advisors Busy & Wealthy Gifting

Summer approaches and Congress has yet to pass any estate tax legislation. Will they extend 2009 45% tax rate and $3.5 million exemption? Will they try to make it retroactive? Can they pass legislation after the Summer recess when the November election approaches? Or wait for the lame duck Congress to pass something after the election?

Does anyone know what Congress can or will do? Certainly not financial advisors and families with substantial assets. As this New York Times article points out, the resulting confusion has kept advisors busy this year. And wealthy families are taking advantage of the current law. I am not speaking of the Texas Billionaire who just escaped paying any estate tax!

June 11, 2010

Confusion Over the Dormant Estate Tax Keeps Advisers Busy

By PAUL SULLIVAN

THE disappearance of the federal estate tax this year has created confusion and frustration among the wealthy, even among those who stand to benefit from it. And this has sent them in droves to amend documents that they may have to change again next year.

Steven H. Goodman, an accountant and financial planner in Melville, N.Y., says he has not had a meeting recently without clients asking him what they need to do this year and for 2011, when the tax is set to return at a higher rate than when it expired. Yet for all the business this has brought his firm, the SHG Financial Group, Mr. Goodman says he is not happy. “It’s a pain in the neck,” he said. “Even though I do this for a living, no one likes to do this.”

This part of the story points one reason why the estate tax has been called the “optional tax” for a long time.

Those who work with the extremely rich say they, too, have been exceedingly busy, but for a different reason. The wealthiest are looking to take advantage of a short-term trust that allows people to pass money to heirs tax-free — what’s known as a grantor retained annuity trust — out of fear that the federal government could change the terms of these trusts. Cheryl E. Hader, a partner in the individual clients group at Kramer Levin Naftalis & Frankel, said she set up 30 of these trusts last month, up from six in a normal month. Daniel L. Kesten, a partner in the private client group at Davis & Gilbert, a law firm in New York, said he was working nights and weekends last month setting up the same type of trusts.

How this boon to tax advisers happened is yet another chapter in the partisan gridlock common to Washington these days. At the end of 2009, Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee, tried to extend for three months the existing estate tax laws, put in place in 2001. But when that motion failed, the estate tax expired for the first time since 1916.

What this has meant is that the heirs of wealthy people who die this year will owe no taxes. An extreme case, as detailed in an article in The New York Times on Tuesday, is that of Dan L. Duncan, who died two months ago with an estimated wealth of $9 billion. His heirs will inherit his estate without paying the 45 percent tax that was in effect in 2009, billions that would have gone to the Treasury.

But it is possible that next year will bring cases of the other extreme, when the amount exempt from the federal estate tax falls to $1 million, its 2001 level, from $3.5 million in 2009, and the rate rises to 55 percent, from 45 percent.

“Dan Duncan dies and pays nothing, but the guy who dies with his house worth $2 million next year and his estate is going to pay $550,000,” said Lance S. Hall, president of FMV Opinions, a firm that values estates. “Is that fair?”

While there were rumblings at the beginning of the year that Congress might reinstate the estate tax and make it retroactive to Jan. 1, it has made no progress on the issue. And the death of someone as wealthy as Mr. Duncan makes a retroactive tax unlikely.

“Now we’re way beyond that consideration,” Mr. Kesten said. “This single family could outspend the I.R.S. in litigating this.”

If you have ultra wealthy clients you should schedule meetings to find out if this is the year to gift money to heirs.

So what will happen? If Congress does not reinstate the estate tax this year, 2010 could be a bonanza for the nation’s richest. The short-term grantor retained annuity trust, whose possible end is separate from the fate of the estate tax, is one option. But other families are simply taking advantage of the lowest gift tax rate since 1933, 35 percent, to pass millions to their heirs.

The real problem comes for the merely rich — individuals worth more than $1 million and less than $3.5 million and couples with net worths of $2 million to $7 million who previously did not have to worry about the estate tax. If Congress fails to act again this year, the estate tax laws next year will revert to their levels before 2001, and that could snare a host of people who set up the estate plans on the assumption that there would be no tax when they died.

What’s the likelihood of Congress doing nothing? Based on the past six months of inaction on the estate tax, January 1 arrive with an estate tax rate of 55% on the first million in assets. Imagine what that will do to the popularity of living trusts?

“If Congress does nothing, there would be a sevenfold increase in the number of estates subject to the tax than if the exemption stayed at $3.5 million,” said John Dadakis, partner at the Holland & Knight law firm.

As the law stands, the heirs of a single person who dies next year with more than $1 million would be subject to a 55 percent tax. (For couples, it is $2 million.) Heirs of that same person, with a $3.5 million estate, would have paid nothing in 2009 but could pay as much as $1.375 million in 2011, depending on the level of planning. And while this wealth may seem high in many parts of the country, it has professionals on the coasts grumbling.

“In the Northeast, where people own their own homes and have owned them for decades and have money in their retirements, there tend to be a lot of millionaires,” Mr. Kesten said. “It would sweep a whole chunk of the upper-middle class into what used to be a fairly elite group.”

The only upside to the return to the 2001 level is clarity. Having no estate tax this year is saving wealthier people a lot of money, but at the cost of an added layer of complexity for both them and for many people who would not have had to worry about the estate tax.

That’s because the assets of people who died under the old estate tax regime were valued at the date of their death for tax purposes. Any capital gains on, for example, stocks purchased decades earlier — which would have been subject to tax if sold — were erased. That is no longer the case, and figuring out what is owed requires determining the original purchase price — however long ago that was.

Without an estate tax this year, the Internal Revenue Code grants an artificial step-up in basis, as it is called, of $1.3 million to be used at the executor’s discretion and $3 million on assets passed to a spouse. The only glitch is the Internal Revenue Service has yet to issue documents to record how this exemption has been applied.

Looks like the IRS is playing catch up on the estate tax laws as well.

“The absurdity of it all is there is not even an I.R.S. form yet to do this,” Ms. Hader said. “My client who died on Jan. 2. Even if we wanted to comply with the law as it exists now, we can’t.”

“We are aware of the increasing need for direction from the I.R.S. on this issue,” the agency said in a statement. “We will be working closely with the Treasury Department to provide answers as quickly as possible, and, if necessary, to develop a new form.”

While the tax would not be due until April 15, 2011, the problem comes when heirs need to sell something. If they received a long-held position of stock, they might want to sell part of it to diversify their holdings or raise cash. But they would incur a 15 percent capital gains tax on the appreciated amount.It is trickier for property. John Nuckolls, national director of the private client tax services practice at the accounting firm BDO, said a friend in Iowa inherited a farm from his mother that he wanted to sell. With a basis near zero, it was worth more than the $1.3 million that the I.R.S. step-up in basis would exempt but less than the $3.5 million exemption in 2009. If he sells it this year, he will incur capital gains tax.

But that is little compared with what heirs to a moderately wealthy person may pay if Congress does not act.

Source:  http://www.nytimes.com/2010/06/12/your-money/estate-planning/12wealth.html?src=me

How To Use Radio Advertising To Get Known As An Expert

Radio advertising is a great way to get known in your community as an financial expert and promote your upcoming events.

Your ad must lead with a attention grabbing headline to get the listeners’ interest. This keeps them from changing the station or just mentally tuning out.

Beware of letting your ad rep write your ad. Their goal is to sell ads and that’s their main skill. They may or may not be able to write ads which help you. Remember that the ad costs the same regardless of how it performs. You want a “direct response” ad so you know if your ad pays for itself or not.  These type of ads include a very simple way for listeners to contact you, like an easy to remember website address or super easy phone number (for example, 334-555-7777).  The most effective direct response ads repeat the website address or phone number at least 3 times in the commercial to enhance recall.

The time and cost of producing a radio commercial is far below the cost of producing an equivalent length television commercial. And if an ad doesn’t work you just record another one.   Most radio stations include free production as part of your advertising buy, which includes both the copywriting and voiceover assistance.

You must choose your radio station carefully. The listening audience’s demographics must match your target market. Not your taste in music. A great ad on the wrong station won’t build your practice.  Look for stations that have a large number of financially qualified listeners; some radio stations can supply you with that specific research data, especially in larger metropolitan areas.  You can also reasonably assume that stations that program a format that appeals to an older demographic will in general terms be more likely to utilize a financial planner, as opposed to stations that target listeners in their teens and 20’s.  Formats that perform especially well with a more affluent audience of adults over the age of 45 include news, talk, oldies, jazz and classical stations.

Radio consultant and station owner Burke Allen from Allen Media Strategies recommends that you always negotiate with the station account executive.  “Electronic media sales reps tend to have quite a bit of flexibility with their per spot rate and placement so don’t accept the first thing that is offered to you.”

The two main categories of radio stations are commercial and noncommercial.

Commercial Radio Stations

Commercial radio stations play all kinds of music which appeals to all ages and social classes. As I mentioned earlier, the demographics of commercial radio vary widely so choose your station wisely.

Radio spots are typically 60 seconds long which is about 250 to 300 words. 60 seconds is plenty of time to create an effective advertisement.  Remember to start out strong to keep your listeners attention.

Best to use the radio station staff to record the commercial especially when you’re promoting a seminar or other event. You want to be positioned as a financial expert not a used car salesman. “CFP” does not stand for “Certified Financial Pitchman”!

You can be the star if you use an interview format. You provide valuable information so people see it as a mini-radio show rather than a commercial. They pay attention and don’t change the channel. Here’s a simplified version of a commercial using this format:

1. The announcer begins with an introduction of you and your firm. “Time for today’s Money Minute with certified financial planning professional Bob Johnson.” This acts as the headline of the ad.
2. The announcer asks you a quick question, “Today’s question is ‘Does a will help me if my husband gets Alzheimer’s?’”
3. You provide a clear and concise answer: “No. Wills only go into effect upon death not disability. If your husband was mentally disabled, you would need to go to court to set up a guardianship. This is costly, time-consuming, and embarrassing. Many couples avoid this problem with a living trust.”
4. The announcer closes the ad with a call to action, “For a free report on estate planning essentials, call Bob Johnson of Johnson Wealth Management at 555-666-7777.” The announcer should include your USP if time permits.  Remember to have them repeat your contact information at least three times to enhance recall.

Noncommercial Radio Stations

Public radio stations tend to program either a News/Talk format or classical/jazz/world music.  These formats appeal to older and more affluent audiences. You won’t advertise, of course, you’ll be a “supporter”of noncommercial radio. In recent years, public radio stations have expanded what supporters can say about their businesses. For example:

“Bob Johnson and Johnson Wealth Management support the arts community and Jefferson Public Radio. With systematic planning and proven strategies, Bob Johnson helps families prepare for all stages of life from college savings accounts, to funding a busy and vital retirement, to handling long-term care needs. You can reach Bob in his Medford office at 555-666-7777.”

Listen to your local public radio station and get a feel of what they allow. Don’t be afraid to push the envelope. Somebody has in the past and you might as well push it a bit further. Perhaps they’ll allow a community announcement like this:

“Bob Johnson and Johnson Wealth Management support the arts community and Jefferson Public Radio. On Tuesday, July 5th, Bob Johnson will be holding a community seminar to help individuals and couple learn  how to avoid probate and minimize estate taxes. For more details and an invitation, call Bob Johnson in his Medford office at 555-666-7777.”

These underwriter announcements are short and to the point, and are helpful not “salesy”.  They work best if recorded by a well-known and well-liked station announcer, but are often read live at public stations.

When should your ads run? Morning and afternoon drive times are the most listened to time on radio, as about 70% of radio listening happens in-car. I helped one advisor who had a 15 minute “Financial Forum” every business day at 8 a.m. This time slot worked great. Another preferred time might be the noon news hour if the station has a large at-work listenership. Not all times are the same in terms of listening levels so try to get the best times possible.

In all cases, ask for a log of when the spots ran along with the spot name if you have several different ads running. You must know which ads are working and which ads need to be dropped.  If you run ads on more than one station you may find one station works substantially better than the other. In that case, drop the loser and double-up on the winner.

“Legacy for One Billionaire: Death, but No Taxes” Really?

Is the headline of this  6/9/2010 New York Times article misleading? Yes, 2010 is a great year to die, especially if you have lots of money. This Texas Billionaire was ranked 74 on the Forbes 400 with an estimated estate of $9 billion. Yes, that’s a number 9 with 9 zeros after it. So did he really escape paying taxes on his estate?

Texas is one of many states which tie its state estate tax to the federal estate tax. No federal estate tax in 2010 means no Texas state estate tax either. So far, so good. The family escaped the estate tax and saves billions of dollars in estate tax.

Let’s not forget that the failure of Congress to extend the 2009 federal estate tax rate and exemption levels dramatically increased capital gains taxes on families inheriting appreciated assets. Many families would be better off under 2009 tax laws.

This billionaire’s family would be better off in any case even if the $9 billion was entirely subject to capital gains tax at 15%. Texas has no personal capital gains tax because it has no personal income tax.

This billionaire’s timely death may change history in two ways. First, the publicity might push Congress into bringing back the “death tax” in this election year. Second, Congress might not make the resulting estate tax rates and exemptions retro-active to January 1, 2010. This man’s family has billions of reasons to fight the constitutionality of any retro-active estate tax in the courts. We’ll see what happens.

You can read the article below to learn more.

Legacy for One Billionaire: Death, but No Taxes

By DAVID KOCIENIEWSKI

A Texas pipeline tycoon who died two months ago may become the first American billionaire allowed to pass his fortune to his children and grandchildren tax-free.

Dan L. Duncan, a soft-spoken farm boy who started with $10,000 and two propane trucks, and built a network of natural gas processing plants and pipelines that made him the richest person in Houston, died in late March of a brain hemorrhage at 77.

Had his life ended three months earlier, Mr. Duncan’s riches — Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world — would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher — 55 percent.

Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan’s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.

The United States enacted an estate tax in 1916, and when John D. Rockefeller, America’s first billionaire, died in 1937, his estate paid 70 percent. Since then, the rates have fluctuated, but this is the first time the tax has been repealed altogether.

Perhaps Congress will ask the executors of the 5500 estates which paid estate taxes if they are “unsettled” about the demise of the federal estate tax.

The bonanza in tax savings for Mr. Duncan’s descendants is sure to be unsettling to those who have paid estate taxes on more modest wealth — until Jan. 1 of this year, it applied to any estate valued at more than $3.5 million, taxing only the money exceeding that threshold, or $7 million for a couple’s estate.

Although the tax affects only about 5,500 estates a year, it is such an incendiary issue that when Congress unexpectedly let it lapse at the end of 2009, financial advisers warned that it might play a macabre factor in the end-of-life decisions being weighed by heirs of elderly Americans. Some estate lawyers worried that tax considerations might prompt their clients to keep an ill relative on life support through the end of 2009 to get the favorable treatment — or worse, resist life-prolonging measures to hasten a relative’s demise before the end of 2010.

The one-year lapse in the estate tax was signed into law by President George W. Bush in 2001, an accounting quirk in his package of tax cuts. Although Democrats pledged to close that gap and reinstate a tax for 2010 when they took control of Congress, they failed to reach an agreement last December. The Senate Finance Committee is now trying to forge a compromise that would reinstate the tax, but even if that effort succeeds, it is unclear whether any changes might be retroactive and applied to those who have died so far in 2010.

Many lawyers say Mr. Duncan’s heirs have the means and motivation to wage a fierce court battle to challenge the constitutionality of any retroactive tax.

Many advisors call the estate tax the “optional tax” because it can be avoided with proper estate planning.

The Treasury collected more than $25 billion in estate taxes in 2008, the most recent year for which data is available.Elaborate estate plans with sophisticated trusts are often made many years before death to reduce estate taxes owed by the richest.

It sounds like this billionaire used a trust to minimize estate taxes. And avoid the expense, delays and hassles of probate. Plus keep things private. Not to mention avoiding conservatorship in case of disability. This article raise awareness of living trusts as an important part of estate planning.

Mr. Duncan’s eldest daughter, Randa Duncan Williams, is serving as executor of the estate and is a voting member of the family trust that will now control her father’s interest in Enterprise GP Holdings.

Should the family trust sell these inherited shares, capital gains taxes would presumably be owed on the difference between Mr. Duncan’s original cost, which could be quite low, and their market value when sold. Capital gains taxes are capped at 15 percent.

If the estate tax is the “optional tax” then the capital gains tax is the “pay it when you want to tax.” Just sell the asset and pay the tax. At 15% rather than the 45% estate tax.

Ms. Williams, who has served as a director and general partner at the family’s energy businesses for years, was deeply involved in her father’s philanthropic efforts and is expected to continue much of that charitable work.

During his life, Mr. Duncan contributed to a wide assortment of wildlife foundations and community institutions like the Houston Zoo and Houston Museum of Science, and an assortment of medical institutions. The various medical centers at Baylor College of Medicine received more than $250 million from Mr. Duncan and his wife, with more than $100 million used to found the Dan L. Duncan Cancer Center.

Like Bill Gates and Warren Buffet, this billionaire avoids estate tax by contributing money to nonprofit groups and foundations.

Mr. Duncan’s will designates a handful of nonprofit groups and charitable foundations that will receive donations, all of which would have been tax-exempt even in years when the estate tax was in effect.

Ironically, this big-game hunter made his biggest kill by avoiding the federal estate tax.

An avid big game hunter — Mr. Duncan has more than 500 entries in the Safari Club International record book for killing animals including polar bears, rhinoceroses, bighorn sheep, lions and elephants — he made a $1 million donation in his will to the Shikar Safari Club International Foundation.

Read the rest of the story.

Speaking At Local Events and Clubs

Another great way to get noticed in your community is to volunteer to speak at community clubs, schools, and other events. Every community has Rotary club meetings, square dance clubs, local colleges, seniors groups and retirement homes. You can find potential clients at these events and establish yourself as an expert in your field. These organizations look for new speakers to educate their members during their weekly or monthly meetings.

Your prepared words should never exceed two-thirds of your time slot. Never go over your time limit and always allow time for questions and answers. So a lunch meeting might require 15 to 20 minutes of prepared words plus some time for questions and and answers.

You can choose either a timeless topic or a timely topic. Timely topics include what’s happening on Wall Street, the latest tax law passed and what the impact might be on the folks in the audience, or the outlook on the economy. Timeless topics include providing for long-term care expenses, saving enough for retirement, and an introduction to financial planning.

These informal talks are great preparation for doing a radio show because you get your comfortable taking questions from the audience and talking in front of a live audience. What happens if someone asks a question you can’t answer? No problem. Just ask them for their name and number and promise to call them that afternoon with an answer. You’ll make points for honesty and get a chance to add that person to your mailing list. And you’ll be ready to answer that question at your next presentation.

You can get lots of names by having a drawing for a door prize. A $25 gift certificate to a local restaurant would be a nice prize. Another way to get names is to mention a free report in your talk. Perhaps your report is entitled, “The 7 Most Common Retirement Mistakes” and your talk only has time for the first 3. Just ask folks to take your card and call your office for a copy of the report.

What if you can’t fathom the thought of speaking in public? I recommend joining a local Toastmasters group.

At Toastmasters, you’ll improve your public speaking with good coaching and purposeful practice in a low-pressure setting. You’ll get the confidence needed to begin doing community talks at clubs, community seminars, and some day a radio show. You’ll improve how you communicate with a couple sitting in your conference room.

You’ll also meet other high achieving business owners, salespersons, and professionals at your Toastmasters meetings. These folks want to be more effective on the job and more successful in life. You’ll get to know these people as you work together to learn an important, and to many folks, terrorizing skill: Public speaking.

Advisor Marketing: Magazine Advertising

Your city probably has one or more high-gloss magazines targeting the affluent people in your region. Should you advertise in your region’s magazine? First, you must confirm that the readership of the magazine matches the demographics of your targeted clientele. Does the typical reader sound like someone you’d like to have sit across your desk?

One such magazine in Southern California is South Coast magazine, self-described as the “magazine of the California Riviera.” The magazine states “South Coast readers live in households with a median property value of approximately $950,000 with a median age of 41.5, and a median income of approximately $164,000. Our readers are predominately young, affluent, active, educated, well-traveled professionals, who seek challenge in their lives.”

Home value and income levels are high yet the median age is 41.5. Wonderful if you target professionals. Not so great if you target retirees needing estate planning.

The advantage of magazine ads over newspaper advertising is that magazines often will sit around for a month or two before being tossed in the trash. Newspapers come daily and are quickly tossed. These high-gloss magazines are designed to look good sitting on your coffee table. Which increases the chances of your ad being seen.

This advantage becomes a disadvantage if your ad is a dud. You’ll need to live with your ad for a whole month before you can tweak the headline or change the name of the free report.

What should your ad say? Resist the temptation to create a glitzy image ad showing how wonderful you are. Your ad should offer something of real value to get readers to contact your office. You need their contact information so you can follow-up with them later with your newsletter or e-zine. You could offer a free report on retirement planning pitfalls or an invitation to an upcoming community seminar.

Should you try a one-time test? Someone once said the most popular form of gambling for small businesses is advertising. This is especially true of magazine advertising. Don’t expect to make a big splash with a big full-page ad run one-time. Even a proven ad in a new publication may need time to work. For monthly magazines budget for 3 months and a weekly magazine budget for 4 weeks minimum to give the ad a fair test. Far better to run a quarter-page ad 3 times than a full-page ad just once.

What size ad should you start with? Many magazines have active classified sections in the back of the magazine. You can start with a small classified ad offering a free report. The ad won’t cost much and can easily pay for itself. Gradually increase the size of the ad as long as the ad is paying for itself. You can add a bigger headline and a splash of color to a small display ad to get more attention. Go to a quarter page ad and keep tracking the results. A half-page ad may pull better than a full-page ad. You won’t know if you don’t track the results.

Who should design your ad? Be careful if the magazine offers to design your ad at no cost. The graphic designers probably aren’t skilled in copywriting. Plus they have a tendency to try to design a beautiful ad versus an effective ad. You don’t want to win a design award…you want to win new clients. You want the ad to pay for itself.

Want to get free advertising? Take a look at the magazine and see if they have a financial columnist or not. Offer to write a monthly column in exchange for some display advertising. How much advertising should you ask for? Let’s assume that your hourly rate is $175 per hour and it takes you an average of 3 hours to write an article. You value your articles at $500 each so ask for twice that in free advertising in lieu of payment. If $1000 buys a quarter page ad, you could do a half-page ad every other month.

Magazine ads should be considered when you know the magazine’s readers match your targeted niche, you have proven ads with tested headlines and offers, and you have the budget to test an ad for several issues in a row.

Get Your Own Radio Show For Advisor Marketing Success

Getting a local radio show is a great way to get known in your community as a financial planning expert. Let’s look at the “6 C’s” of having your own radio show:

Contact. A radio show gets you in contact with hundreds or thousands of prospective clients all at once. You build chemistry, establish yourself as an expert and as brave. Not many folks would like to be put on the spot every day or every week. Your clients will enjoy hearing you on the radio and will brag on you so you’ll get more referrals.

Content. Now you’ve gotten a radio show. So what do you talk about? You could do a series of topical shows on various investing and planning areas. You could do a few shows on explaining common investment jargon. You could answer listeners’ questions. The questions could be sent in by email, folks could call your office with questions or you could take them live on air. What do you do if someone asks you a question you can’t answer? No problem, just say, “Great question. Let me do a bit of research and come back tomorrow with a complete answer.” Listeners will appreciate that you admit you don’t know it all. Live Q&A is best and you can do it after you’ve done several shows.

Counsel. You need to give general advice only. You can’t give specific advice because you don’t have the facts of their personal situation. This is a good reason for them to visit you in your office. You also need to be careful not to provide tax or legal advice. Share some air time with your lawyer and CPA and you might see some more referrals down the road.

Controversy. Be especially careful when a listener asks a political question. Your opinion might alienate half your audience. Remember most elections are decided 51% to 49%. Many listeners (and potential clients) will be adamantly opposed to socialism while equally adamant against any cuts to Social Security or Medicare! Emphasize personal responsibility and not wanting to be dependent on the government in your old age. You can take stronger positions when it comes to financial planning matters. Why? Because you are an expert and should know certain planning approaches are better for “most people.” Example, “For most people who own their own home and have over 100,000 in financial assets, estate planning with a living trust is a better option than relying upon a will.”

Cost. Small towns have smaller audiences so the cost is less. One advisor I help pays $1000 per month for a 15 minute Financial Forum show every business day. Another advisor pays $250 per hour for a one-hour weekly show in a big city. In both cases, they get some advertising spots and can cross-promote their seminars and other events.

Communication. You must learn to be clear, concise, and confident when you talk on the radio. Speak in plain English or people will tune you out! And toss in a bit of humor to be more likable and approachable. Imagine you’re speaking to just one person and you’ll be more effective (and less nervous).

How do you get started? Talk to your best clients and find out which radio stations they listen to. Contact these stations and speak with the station manager about starting your own radio show. Whether you do a 3-minute “Money Matters” or a 15-minute or one-hour “Financial Forum”, you can use radio to build chemistry and trust with thousands of people while establishing yourself as an expert in your field.

UPDATE: My friend Burke Allen has over 20 years in PR and the radio industry. He put together a program called Get Your Own Radio Show to help individuals get started in radio.

Advisor Marketing Success OR “You’re Fired!”

This Wall Street Journal article points out that many Regional Broker/Dealers are raising minimum production amounts. If you’re feeling some heat from your broker/dealer, you have two choices. Improve your marketing to raise your production…or fire your BD! After the article you can find ideas on both of these choices.

Regionals Raise Broker Production Minimums

By Kristen McNamara
The barrier to entry for would-be brokers at some regional firms is getting higher. And brokers already working at those firms are finding they have higher hurdles to clear, too.

Financial advisers who move to regional broker-dealers from large Wall Street institutions often generate more in fees and commissions than regional incumbents. Some of these new arrivals want to work at smaller organizations while others are pushed out by wirehouses which are trying to shed what are, for them, lower producers.

The amount of client money wirehouse brokers oversee, and their corresponding pay, is generally much higher than that of the regional brokers. That means low-producing wirehouse brokers can still generate more revenue than the average regional broker.

The average amount of money overseen by a wirehouse broker was $71.9 million at the end of 2008, according to research and consulting firm Cerulli Associates’s most recent data. That’s more than double $31.9 million in average assets per regional financial adviser, according to Cerulli.

The number of brokers migrating to regionals from wirehouses jumped between late 2008 and the first half of 2009. Several Wall Street giants that merged focused on keeping their biggest brokers — generally those producing at least $500,000 a year — by offering them big retention bonuses, while discouraging lower producers from staying with pay cuts.

While the movement of wirehouse brokers to regional firms has slowed considerably in recent months, the influx of wirehouse brokers prompted some regional firms to begin raising production requirement for employees and recruits.

Janney Montgomery Scott, for example, increased last year its minimums for prospective hires to $500,000 in annual fees and commissions and $60 million in assets under management. That’s above the firm’s average production now, which is approaching $450,000.

It also raised to $200,000 from $150,000 the minimum brokers must generate each year or have their payout reduced. It expects to gradually move that minimum higher.

The relatively small size of regional brokerages compared with wirehouses fosters a more collegial culture, according to consultants and recruiters.

“Regionals are certainly looking to raise average production,” says Mindy Diamond, president of executive search firm Diamond Consultants. “At the end of the day, they’ll do it differently” than wirehouses.

Beginning next year, Edward Jones will raise its production requirements for the first time in more than a decade. Brokers who have been with the firm for more than 10 years will need to generate at least $30,000 a month in fees and commissions, and $32,000 if they’ve been with the firm 12 or more years. That compares with a requirement of $27,000 for eight-year veterans today.

The firm says it’s giving brokers plenty of advance notice and has improvement plans to help struggling brokers. Still, those who don’t improve within months may be fired.

“Regional firms don’t have the same level of ruthlessness as large wirehouses,” says Mark Elzweig, founder of executive search firm Mark Elzweig Co.

Read the rest of the article

“Don’t have the same level of ruthlessness….” That’s comforting…not!

Time To Panic?

An old USP for Federal Express was “Don’t panic. Call Federal Express!” Likewise, if you’re below minimum production numbers for your broker/dealer you need to take action now but you don’t need to panic.

What should you do? You should click the “Productivity” link above and implement enough ideas to free up some time to invest in your marketing activities. You also need to free up some cash so you can invest some money in your marketing activities.

You need high return without high risk marketing ideas because you must grow your practice this year.  So don’t even consider getting creative and developing your own marketing system. You simply don’t have the time (and probably the money) to create and test advertisements, content, offers, etc.

You need to investigate proven, turn-key, marketing programs designed specifically for financial advisors. Find one you’re comfortable with and go for it! Just resist the temptation to get too creative…when you buy a marketing program you need to stick with the program.

Should You Fire Your Broker/Dealer?

This puts an entirely different spin on this topic. Maybe you’re tired of your BD’s compliance standards and unpredictable approval process. Maybe you’re producing enough for your lifestyle but not enough for your BD’s higher production standard. There are alternatives out there to consider who have lower production minimums.

Contact me and I’ll give you some suggestions. Got a great BD? Add your comments below and let us know all about them.

Client Appreciation Dinners for Advisor Marketing Success

Feeling neglected is the #1 reason people leave one company for another. Not price. Not service quality No Product features. Everyone wants to feel appreciated and remembered. Hosting an annual client appreciation dinner makes your clients feel appreciated and reminds people why they do business with you.

Client appreciation dinners help you build your practice as well.

FINRA prohibits financial advisors from advertising a list of clients or using client testimonials. You lose a powerful tool for promoting your practice and proving your expertise. Imagine adding these quotes to your website:

“Bob answers my questions patiently so I always understand what I’m investing in and why.”

“Bob got me out of the stock market 3 weeks before the crash!”

“Bob showed my why working for 2 more years would add 10 more years of retirement income!”

“Bob invests my money for my best benefit and not to maximize his commissions.”

“Since moving my money to Bob, I’ve averaged 17% per year and never had a losing year regardless of the stock market.”

What does this have to do with a client appreciation dinner? Your invitation to your clients should encourage them to bring another couple with them to enjoy the evening. Generally speaking, Someone’s social circle usually include people in a similar economic situation. People who live in expensive neighborhoods have neighbors who need a qualified financial advisor. Like you.

During the event you allow a time for people to say nice things about you. You tell a few close clients about this ahead of time so they come prepared to wax eloquent about you. Others will get the idea and you’ll be praised and (perhaps a bit roasted) by people who appreciate what you’ve done for them.

All the prospects will learn about you in a fun, relaxing environment. You leverage your time by building chemistry with lots of folks at the same time.

When should you hold this event? This depends on where you live and who your targeted clientele is. However, there are 2 main times. You can hold a BBQ for families in the Summer or a dinner in December.

You want to make the event nice and worth the time of your clients and their friends. Don’t go cheap on the food or the place because you only have one chance to make a good first impression with your prospective clients.

Consider having a well-know guest speaker for the event. Limit their talk to about 20 minutes maximum because it is a party after all. And encourage your guests to speak with him during the event.

Your event could follow a program like this:

1. Welcome and words of appreciation. (You)
2. Dinner served
3. Guest speaker talk during dessert
4. Words of appreciation by your clients
5. Your look ahead to the upcoming year.
6. Informal social time to meet one another and speak to the guest speaker.

When you hold your client appreciation dinner in December, you thank your clients for their business, make them feel appreciated and connect with their friends and relatives. Do it right and you’ll have a very busy January and February!

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