Bryan M Kuderna

Every responsible financial advisor has been lectured on individual disability income insurance, and the good ones have lectured their clients on IDI.  We all know the statistics, the traumatic stories, and the ultimate need to protect your biggest asset—an ability to earn an income.  However, business owners often have an asset just as great if not greater in their enterprise.

To that point, when is the last time you asked your entrepreneurial clients, “How have you protected your business from illness and injury?”  I’d bet that question will be met with quite a dumbfounded look.  After all, when’s the last time you heard of a corporation breaking it’s arm or being diagnosed with cancer?

A disabled business owner can leave customers lacking the essential services they need and employees without a leader.  As a result, revenues will likely decline, but expenses will stay the same or perhaps even increase.  This can lead to a tragic sequence of events: Customers fleeing to competition, downsizing by terminating key employees, acquiring debt at the worst time possible, maybe even shutting the doors via bankruptcy.

Enter Business Overhead Expense (BOE) insurance.  This is a cost-effective solution to keep business operations intact, either for the return of the king or for sale at a deserving price.  The conversation is strikingly similar to that of individual disability insurance.  The same risks that face a family’s budget can impact a business.  Mr. Client pays a mortgage at home just the same as the lease for the manufacturing plant, similar auto loans, taxes, etc.  It’s also even easier to ask a client to cut a check from their business checking account than their personal, not to mention BOE is tax deductible as a ordinary and necessary business expense.

So the next time your client proudly states, “My business is my baby!”  Don’t forget to remind him or her that their baby’s health is just as important as their own.  Enjoy making more sales in the process of helping your clients protect their two biggest assets—income and enterprise.

I’ll never forget on the first day of my college internship as a financial sales representative (fortunately the same company I work for 10 years later), I was given the task of creating a “Dreamboard.” The board was to be made up of pictures of who I thought I could be 20-30 years down the road if everything went as planned… A mansion with a pool, Ferrari in the garage, membership at an exclusive golf club, little kids and a beautiful wife, exotic destinations for vacation, an ornate office decorated with awards, etc. Therein lay a Millennial’s vision of success.

So ask yourself: If you had it all, what could possibly go wrong? Lawsuit-$52,900 (average for personal injury claim, though this can vary, which is why seeking professional advice is important).1 House catches on fire-$203,400 (average home value in in 2017).2 Car gets totaled-$18,800 (average used car price).3 Unemployed-$25,000 (national average of 3 months unemployment and sample $100,000 salary).4 Death-$6,046,208 (assumed earnings to Age 65 for a 30-year-old making $100,000 with a three percent COLA). Divorced-there goes half.

Let that morbid paragraph sink in for a moment. Each one of these potential occurrences receives significant thought by the average household, and most come up with some sort of contingency. Which carries the greatest financial exposure? Premature death (typical industry jargon, as if we all reach a point where death is no longer premature and gladly welcomed). Fortunately, 80 percent of men and 86 percent of women will live out their career to Age 70.5 However, there is one more pitfall of catastrophic severity with surprisingly high probability that consumers are prone to forget-sickness or injury. Just over one in four Americans will suffer a disability before retirement,6 yet it’s often the least discussed item by financial advisors and consumers alike. This appalling reality is elucidated by pure numbers-as a reference point, there are about 290 million life insurance policies in force.7 As for disability insurance, 167,000 policies in force.8

The current state of disability Insurance begs the question, how did we get here and why are we staying here? It’s the customer’s age-old judgement of perceived value versus realized cost. Disability simply cannot happen to me! Neither can “premature death,” so why so many policies in the life industry? From an economic standpoint, term life insurance is a relatively cheap expense. The pricier alternatives like whole life provide a guaranteed death benefit to family and/or guaranteed cash value for our enjoyment-both can alleviate the idea of “expense.” Additionally, the finality of death leaves no hope. The only financial fix is life insurance.

Disability, however, need not be permanent. Such sad circumstances still leave the hope that even if one did become disabled, which can’t possibly happen, at least one can rebound from it and continue to work, right? Then the consumer asks, “Why pay a premium for anything more than term life insurance if the same alleged likelihood and expectation of never using the policy exists?” Couple that with the inability to purchase a participating policy with cash values and the consumer is left with apparently poor choices.

Therefore, individual disability insurance is not bought… it’s sold. The product is sold on stories that motivate the consumer to act in their best self-interests. Even as a successful insurance agent, individual disability insurance was admittedly the last financial product I added to my plan. I adhered to the same previously mentioned philosophies as the general public does. It wasn’t until I heard the following two stories that I took action.

Financial planning is not a science or we would all follow a textbook to prosperity. A senior partner at my firm posed it this way: If you were to go your entire career paying your disability insurance premiums at about one to two percent of your income (it’s not so expensive when the customer views it that way) and make it all the way to retirement age without a hitch, that lost opportunity cost would amount to a small mistake. Conversely, if you were to forgo disability insurance and one day wake up unable to perform your duty, with a family and business on the line, then it’s a catastrophic mistake. Financial planning boils down to trading small mistakes and big mistakes. I personally heard that anecdote and it made perfect sense to the economist in me. Yet I still passed up buying income protection.

It wasn’t until a mentor of mine shared an impactful story of his favorite client that the lightbulb went on. He served as the wealth manager to an iconic attorney making nearly $1 million per year. As an avid marathon runner and passionate lawyer, the client swore to practice law for life-even if from the confines of a wheelchair. It took a solid two years of convincing from my friend to seemingly force this client to buy disability insurance. Fast forward another year and my friend received an out-of-the-blue call from the attorney’s paralegal asking about any disability insurance. Sadly, this unstoppable lawyer lost his only son in a car accident. Two years transpired before he was able to walk back in the office, let alone practice law. During those two dark years the check that kept his household afloat came not from his firm but rather an insurance company.

It took this last story for me to realize that we never know what could one day derail our “Dreamboard.” Less than 10 percent of all disabilities come from an injury.9 The other 90 percent are not as visible. Stories sell disability insurance, not numbers. Being referred to a cardiac surgeon suffering from migraines and severe dry-eye following a popular Lasik surgery and blindsided by a denial letter from his insurance carrier citing an “Any Occupation Definition” he did not even notice-is a story. Providing checks to an Orthodontist, a father and husband, suffering from carpal tunnel while teaching at a renowned college because of his “True Own Occupation Definition”-is a story.

A client is not fixated on knowing that the product or plan are right, but rather on knowing that you are right. A financial advisor looking to succeed in the disability insurance marketplace must first become their own biggest customer. Then it is easy to relay those same stories that pushed you towards maximum protection along to your prospects. There are financial decisions and emotional decisions. Thoroughly understand both and unlock your potential to make the most ethical of sales-disability insurance.

References:

1. “Personal Injury Survey”-Martindale-Nolo Research. 2017.
2. “United States Home Prices and Values”-Zillow. 10/31/2017.
3. “Used Car Prices Increase 8% to Record High”-Edmunds. 08/20/2015.
4. National Bureau of Labor Statistics.
5. Social Security Administration.
6. Social Security Administration-Fact Sheet. 02/7/2013.
7. Statista-2017.
8. Statista-2017.
9. Council for Disability Awareness, Long-Term Disability Claims Review, 2012.

“In all things, success depends upon previous preparation, and without such preparation, there is to be such failure.”—Confucius

Financial institutions enjoy touting how little time Americans allocate to managing their money, as if that billboard or commercial will suddenly guilt us into responsibility.  You name the hobby and there’s an ad showcasing its victorious attention span versus financial planning…  People spend more time planning their vacations, taking selfies, looking at Facebook, playing Candy Crush, watching TV, and on and on.  If Americans know their retirement savings are more important than the next car they buy, why the opposite correlation between perceived value and applied effort? 

Here are the top reasons for negligence I see as a Certified Financial Planner:

1. “Financial Planning?  That’s for rich people!”
Sure, we would love to work only with people making millions a year, but if that were the case we’d all be sitting around scratching our heads.  If your clients really don’t think they are rich, why don’t you start preparing them to be rich?  They deserve it!

2. “I’ll do it myself”
With a YouTube video ready for any project, we’ve entered the Do It Yourself (DIY) era.  This group usually comprises engineers, introverts, people who might have been “burned,” or your classic know it all.  Scientists once believed the Earth was flat, not because they were ignorant, but rather the appearance of knowledge wrongly confirmed a falsehood.  The smartest people are those who can admit what they don’t know.  

3. “The Great Recession”
The media loves the hype of fear and negativity.  The recent recession provided an enormous crutch and opening for losers to say, “Everyone has it tough right now, and I don’t know if I’ll ever get a job or make money again.  But hey, at least we’re all in the same boat.”  Baloney!   Winners know that recessions have opportunity written all over them.  Buy when things are on sale rather than at a premium.

4. “I’m Confused”
The most legitimate of all reasons, promulgated by an endless stream of information.  In 1993 The American Academy of Pediatrics estimated that young adults see 3,000 advertisements in a day… Radio ads, billboards, TV, placemats, and the like.¹  That’s before we even had internet and spam e-mail!  Not to mention this content is meant to be sexy, not helpful.  TV stations gain advertising dollars by attracting viewers, not educating the public.  

So, how does one decide when they all seem so great?  In psychology, there is a term called “Channel Capacity.”  This is referring to how the brain can only retain so much information.  Perhaps this is why doctors are so brilliant, but seemingly dumbfounded by finance.  The knowledge of a trusted professional can allow them to use their transacted memory, permitting them to expand their horizons.

5. Bernie Madoff
Reason number five is also acceptable.  Bernie Madoff is scum that should be strung up from light fixtures in front of the NYSE, medieval style.  As the old saying goes, one rotten apple can spoil the bunch.  Hundreds of clients reject perfectly sound recommendations because they’ve got a story.  “Mutual Funds!?  Those things are a racket… I know someone who…”   “Annuities!?  You kidding me? My neighbor lost his shirt.”  “Life Insurance!?  What a waste! I got wrapped into one of those things way back when.”  When people feel as if they’ve been burnt in the past, it automatically eliminates any future consideration.  As if you had a bland pizza pie as a child and then refused to walk into an Italian restaurant the rest of your life.  He who suffers remembers.  A good story is worth more than the truth.

6. Procrastination
The worst reason of all.  It really is the only one that we can’t help our clients with, and they can’t blame us for it.  Many a false step was made by standing still.  If at any point the consultation becomes more important to me than the client, we have a serious problem.  

A conversation with Mr. and Mrs. NeedaFinancialPlan goes a lot like this: “We are so busy and with a new house and kids at home we really need a financial plan.  Except in the spring, my husband and I like to enjoy the park and warmer weather.  Except in the summer, we have vacations and hit the beach whenever we get a minute.  Except in the fall, the leaves change beautifully and we love to sit on the porch and unwind.  Except in the winter, we’re swamped with holidays and ski trips.  Then in the spring the sun breaks out and…” 

There is never a perfect time to start planning, and there’s always a great excuse to wait awhile.  But that’s how life passes us right by.  We are called the human race because we humans are always racing around.  If prospective clients can’t make time for a twenty minute conversation, they’re going to need two hours.

Remember that different isn’t always better, but better is always different.  Don’t be so afraid of change or that second opinion.  As the Buddhists say, “First intention, then enlightenment.”  Financial decisions won’t always be perfect, but that’s ok—the journey never is. You can help clients correct course as they go.

Footnote:

1.  “Ads Pollute Most Everything in Sight”, Albuquerque Journal- June 27, 1993.

Not long ago, I was catching up with one of my best friends over a delicious enchilada at the one and only Jose Tejas.  Despite being financial advisors at rival companies, we are like shrinks to one another.  This one time all-night party animal is now a proud, and exhausted, parent.  I asked him how his outlook on work has changed since becoming a daddy.  He made a comment I didn’t see coming from a cocky and ultra-competitive personality, “You know something I’ve realized?  In our business you can work to make a lot of money, or you can work to make a lot of time.”

To define dollars as the shackles which hold you down is to simultaneously appoint money as the key to set you free.  The first step to sheath this double-edged sword and achieve financial liberation is working where you want to work, not where you must.  Gallup conducted a worldwide poll in 189 countries that showed only 13.3 percent of workers liked their job.  Prosperous people agree that money is only a byproduct of winning.  Winning at what they love is the true goal.

Are You Excited?
If you find yourself asking what job you love, look no further than your passions.  If you find yourself asking what your passions are, look no further than what excites you.  Excitement is the biological synonym of passion and happiness. It’s a cure all.  When you find boredom, run!  Positive anticipation is the spoon that stirs your Froot Loops.

If you still can’t pinpoint what excites you, look no further than your curiosities.  The fear of death is caused solely by unsatisfied curiosities.  Self-help books abound that implore that your Sundays should feel like Fridays, from the exhilaration of the week to come!  That might be a little excessive, but it drives home the point that the workweek is where most hours are spent, and it should be looked forward to with eager anticipation.  Excitement is when you’re already planning your goals for the day on your drive in, rather than drifting off to the music and saying to yourself, “Make it another nine hours and Monday will be done.”  If you are not enjoying the journey of a career, then what is the point of the money anyway?

Do You Have The Three i’s?
When I interview a Financial Advisor candidate, I often bring up what I call the “3 i’s.”  The three i’s stand for Income, Independence, and Impact…  

To the point of impact, Masonic luminary Albert Pike once said, “What we have done for ourselves alone dies with us; what we have done for others in the world remains and is immortal.”  This component is often missing in behind the scenes positions, such as the analyst.  The employee who works his own schedule and makes high six figures, but halfway through life implodes crying, “All I ever see is this computer screen and I don’t know what the point of it all is!”

Independence goes back to working where and when you want.  Is it a job in which you can still coach your son’s soccer game?  Or is it a job in which you’ll be traveling the world and forgetting what grade your kids are in?  “Thanks for your tireless service the past twenty years Mr. Employee, but we’re relocating headquarters and you’ll be moving out to Idaho in February.”  This is routine for the Big Four Accounting firms; ambitious college grads proudly take their staff job only to lose their twenties to eighty-hour work weeks.  Millennials are fortunate enough to live in the Golden Age of Telecommuting—we hate offices and that’s become okay.

Finally, there is income.  Unfortunately, countless individuals love where they work and feel it’s a worthy profession, but they are forced out of a career because the income won’t match their lifestyle.  Smart financial planning can keep more of these happy workers right where they are.  This seed of discontent is often found in teachers and cops for example.

Are You Good at Work?
If you’re lucky enough to find a career which satisfies the 3 i’s, get really good at it and don’t lose it!  I’ve asked and researched these guys that walk on water about what separated them from the pack and launched their careers.  The common impetus is exactly that—they separated themselves from the pack.  It’s imperative to stop the zombie walk found in the rat race and take a step back.  As professionals say, “Stop working in your practice and take a second to work on your practice.”  It is astonishing how often, in that period of calm, you can achieve an Aha! moment—a small tweak to your work that fixes all the bugs.  Work hard, but also work smart.

The magic that keeps any productive worker going is momentum.  It can devastate us or carry us far beyond our wildest dreams.  Momentum is the Emotion Multiplier.  However, like any emotion, it can be a positive or a negative.

When success becomes obsession, the effects can be as harmful as they may be helpful.  This realization provoked me to ask several of my colleagues at a conference what they would do if they closed their “case of the year.”  The answers: “Go on a cruise…fly out to Vegas…treat my girlfriend to a long weekend…”  But the top producer in our company defiantly said, “Work some more!”  That time when we are on Cloud Nine is when we’re at our best—you’re on the heater, make the tough phone call and schedule your biggest client.  Taking off then would be like LeBron James sinking back-to-back 3’s with the game on the line and then asking the coach to take him out.

So when should you take that vacation to Fiji?  At the point in time where you feel like nothing’s going right.  This might sound like throwing in the towel—opposed to a winner’s hymn of “When the going gets tough, the tough get going.”  The concept of R&R is one of hardest for successful people to grasp.  That feeling that if we miss a week our competitors will blow right by us.  A “stop at nothing” attitude is crucial to long-term success, but recharge the batteries when they’re empty, not full.

When it’s time to stimulate some missing momentum, begin analyzing your strengths and weaknesses.  Good companies find the flaw in the mirror and try to cover it up.  Contrarily, rejecting perfection may be half the battle toward happiness.  Great companies also try to make their weaknesses good, but they try much harder to make their strengths great!  It is our talents that really separate us.  Have you ever seen a Cy Young winning pitcher also bat .300?  Act like the pro’s do and exploit your gifts.  It makes one feel better about oneself and increases the Money/Emotion Multiplier—Momentum!

Balance and harmony are coveted terms which have been thrown around for over a thousand years.  It’s your individual decision to define their meaning.  The perfect mix of excitement, impact, independence, income, momentum, and personal reflection are guaranteed to bring them into your life. 

Reference:
“Worldwide, 13% of Employees are Engaged at Work”, Gallup- 10/08/2013

“He who sows sparingly shall reap sparingly.  He who sows generously shall reap generously.”  – Paul to The Corinthians

I leaned back in my worn leather office chair, took a deep cleansing breath, and gazed out the window while my computer booted up.  It was a typical cold, gloomy New Jersey day in late January.  OK, the year is off to an average start, but I’m not after average.  Where is my next round of business going to come from?  I restored some confidence by visually noting each plaque and award that hung on my office walls, reassuring myself that every year I harbored these same feelings, but things ended up alright.

I snapped back to reality when my laptop prompted me to enter my Username and Password.  I bucked my normal routine of opening e-mails and entering the rat race.  Instead, this morning I logged onto Facebook to touch base with the world.  The messenger notification blinked.  I clicked the icon and was taken to a message from a vaguely familiar face, but definitely not one of my pals.  “Hey Bryan!  You probably don’t remember me, but I listened to those Financial Planning Lunch N Learn’s you used to give at my hospital during residency.  Anyway, I’m an attending physician now and for the first time in my life I have money in my pocket.  First, would you still be willing to help me?  Second, I live in Virginia now, and can you still help me?”

One month later, I had quickly placed a $15,000 premium life insurance policy, rolled over a small old 403(b), and opened a nicely funded brokerage account.  This began a wonderful relationship with a client I can now call a friend, not to mention several introductions to his physician buddies in Virginia and California.

Welcome to the world of Millennial Marketing.  Millennials comprise the generation roughly born between 1980-2000.  There are about 77 million of us, making up 25 percent of the American population.¹  Forty-three percent of us are non-white, the largest share of any generation.²   We touch our smart phones on average 45 times per day.³  Just 26 percent of us are married, compared to 65 percent of our grandparent’s generation at the same age!⁴  Needless to say, we do things a bit differently.

When you meet with a Millennial household, be prepared to be selling to a breadwinning mom and stay-at-home dad, a young couple not born in America, perhaps two mom’s or two dad’s, or a traditional Leave It to Beaver family.  We are unique and proud of it.

If you want to build a thriving financial services practice with staying power, your marketing plan must include at least some connection to Millennials, just as the Silent Generation targeted Baby Boomers, and each forward-thinking generation has done before that.  Let’s start by gaining an understanding of the psychology behind these inimitable up-and-comer’s.  Briefly hop into my frontal lobe to realize the Who, Why, Where, and How of my (sample Millennial) buying decisions…

• Who – I feel overwhelmed.  I recently graduated from college.  It took me longer than expected to land my first job and now I’m not even sure how long I plan on staying here.  My student loans feel like a noose around my neck.  My parents are bugging me to move out, constantly comparing me to their generation and how much they had already achieved by this age.  Rent seems like a ridiculously expensive waste, but I don’t have the money for a downpayment on a condo yet.  I’m not sure if I should settle down or not, some of my friends are married with kids, while most of them are on the other side of 30 and proudly single.  If worst comes to worst, I’ll hit the online dating circuit.  I know money plays a role in all of this, but I was never taught about it and it’s too confusing for me.
• Why – I will hire an adviser for the same reasons any other generation would, you must satisfy my wants and then my needs.  I want to get rid of my student loans ASAP. Don’t talk to me about 401(k)s and life insurance if we haven’t addressed my loans first.  I want a new car. If your plan isn’t willing to meet me halfway and balance short-term and long-term goals, I’m out.  I want you to teach me how to move out and what my finances will be like when I’m on my own.  I need to plan for retirement in case the media’s dire outlook of Social Security, pensions, and other “entitlements” comes true.  I need to control my credit card debt and FICO score.  I need to understand Roth options and diversifying a tax bill that is decades off.  I need to build a rainy-day fund and create a budget congruent with my personal goals.  I need to recognize my insurance options while young and healthy.
• Where – I want solutions to these concerns, but I’m not sure where to look for a competent and trustworthy adviser.  There are two sources I’m going to consult-Google and my friends.  If I need some more opinions, Facebook is at my beck and call.  I don’t need to know you, I don’t need to meet you, frankly I might even prefer just communicating via GoTo Meetings while eating ice cream in my pajamas.  If I do decide to meet you at the office, please don’t take offense by my sweats and flip flops.  But beware, I’ve lived under my parents’ roof for 90 percent of my life thus far, so before I pull the trigger I’ll probably need their stamp of approval.
• How – I found you and I want your advice, but I didn’t study business so please slow down.  Don’t bore me with statistics about underfunded retirement, life expectancy, potential disabilities or threats to my financial plan, because they don’t apply to me.  If you share a real-life story, I might reconsider.  I’ve never had to make this many independent decisions so please hold my hand through this process.  I want to stay in contact with you now that you’re “my guy.”  However, I check my mailbox once a week-usually only if I pass by it.  I don’t pick up phone calls from numbers I don’t know, so you’d better be saved in my contacts.  If I didn’t pick up, don’t try leaving a message because my voicemail is full and I have no intention of listening to them.  I used to be really good with E-mails when I synced them up to my iPhone, but now that’s overloaded with spam.  Your best bet is to shoot me a text message.  If I forget to respond to your text message, be sure to reach out on Facebook or LinkedIn.

You don’t have to be a Millennial to market to Millennials.  While we certainly like to share business with those who walk, talk and act like us, there is a healthy dose of respect for those who’ve paved the way as well.  Millennials may be quirky in our own way.  Yes, there is a good chance you’ll ask for a check to seal the deal, only to face a reply that we don’t have a checkbook.  You’ll likely respond by telling us to go to the bank, we’ll reply that we don’t know where it is, we just go online.  Stories like this will become par for the course.  Nevertheless, once you empathize, you will capitalize.  Be patient as we are just seeds, but Millennials will grow quickly and we won’t forget who helped us get to where we are.

Footnotes:

1. Nielsen- Millennials: Breaking the Myths (01-27-2014) 
2. Pew Research- Millennials in Adulthood (03-07-2014) 
3. SDL (03-19-2014) 
4. Pew Research- Millennials in Adulthood (03-07-2014)