David J. Murphy

Maybe at this moment you are sitting at a desk, or in a comfortable chair, motionless. At least you seem to not be moving when you look around at your surroundings. Or, maybe you are on a plane traveling at 500 Miles Per Hour. You know you are moving, even though you are comfortably seated. You can look down and see land passing beneath you. You are clearly in motion.

All speeds are relative. To measure speed you must measure the motion of other objects relative to an object at rest.

At the latitude where I live (36.3437 ° N) the earth is rotating around its axis at 800 MPH. That is crazy fast! Yet, I do not feel it. Then again, since the earth will complete one revolution in orbit around the sun in 365 days, a trip of 93,000,000 miles, I am on a spaceship moving at the speed of 66,000 MPH! Once more, I do not feel it.

The Sun revolves around the center of our Milky Way Galaxy, pulling along the orbiting planets with it (including earth) at the speed of 550,000 MPH. Mindblowingly (is that a word?) the Milky Way Galaxy is also moving, at the rate of 2,237,000 MPH.

Time to reach for the airsick bag. Time to hold onto something!

Speaking of time, it is integral to measuring velocity, as in, Speed = Distance/Time. Speed is also a factor in calculating time, as follows: Time = Distance/Speed.

Like our obtuseness toward speed, we are mostly oblivious to the passing of time.

Time always seems to flow perfectly normally for us, until we see the effects of aging and the changes in the society around us. When we attend a High School Reunion, it becomes clear to us that time is not uniform in its effects. We are occasionally jolted by the changes we see in others and in ourselves, but generally unperturbed by the incessant passing of time.

In a similar way, we are individually oblivious to the velocity of our money.

The Velocity of Money
The Velocity of Money is the rate at which money moves from one transaction to another. It refers to the rate at which people spend money. In day-to-day life, money moves at different speeds. For example, now that digital currencies are becoming more popular, the speed of that money transaction is quicker than anything we have known prior to its introduction. Appliances such as the Goldshell ck5 (goldshell ck5 buy now) allow cryptocurrency users to source more money, so transactions like this are of fast velocity – money is being passed between people and digital objects very quickly. It is used on a macroeconomic basis to refer to the money supply and its turnover in the national economy. It is a measure of how long people actually hold onto their money. Say for example you go into a poker room in a physical or Online Casino. You lose a bet of $10 to another person, then that person lost that money to another person, ect. The velocity of this little bit of money is going at an incredibly high speed because it has passed between several people in a short amount of time. Another example is if we are fearful for our jobs and thus hold onto our savings, this would mean that less money is circulating and thus the velocity of money is much slower. When we feel optimistic and confident in spending, the velocity of money will grow again. If we fear inflation coming on the horizon, and sense that the value of our money may begin depreciating quickly, we will increase spending now.

Therefore, the velocity of money simply means the movement and multiple uses of the same dollar. Just as it applies to the national economy, velocity of money is also the business model of banks. When we deposit money in the bank, the bank uses our dollars as leverage in order to borrow more money from the Federal Reserve. The bank utilizes our dollars, as well as leveraged dollars from the Fed, to extend loans to other people seeking credit or mortgages. As banks receive loan payments, they again borrow more from the Fed and consequently extend loans to more people. The banks are using the same dollars in multiple ways and making profits on the velocity of money.

Personal Money Velocity
Just as speed is relative, and time does not seem to impact everyone uniformly, so also do some people achieve greater financial success than others. Personal Money Velocity is one of the secrets behind wealth accumulation. The velocity of money concept that banks rely on can also be a valuable concept for us as individuals. We can make repeated use of our dollars to meet multiple needs.

It takes the assistance of a trained independent financial professional equipped with the right questions for most people to put the Velocity of Money concept to work for themselves.

According to Garrett Gunderson, the Money Velocity Equation* is simply our output divided by our input. Input is the hours people work in their careers, and the money they manage to set aside in savings and investments. Output is what people earn from their jobs and the returns on their financial accounts.

Money Velocity = Output ÷ Input
The goal is to increase the numerator (Output) faster than increasing the denominator (Input).

Helpful Questions for Use by Independent Financial Professionals
If you are an independent financial professional, your ability to help your clients improve their Personal Money Velocity is dependent on your skill in discovering opportunities by using right questions. Consider the following questions:

• Are you paying unnecessarily high interest on indebtedness? Is it time to restructure your debt? Should you cash out low-performing investments in order to pay off high-interest loans? Any reduction in interest owed goes straight to Output, thereby increasing the client’s personal Money Velocity.
• Are you paying too much in taxes? Who prepares your taxes for you? Have you ever sought a “second opinion?” Reducing a client’s tax burden moves money straight to Output, without increasing the client’s Input.
• What financial vehicles have you selected for your retirement accounts? Will every dollar of income be taxable? What will happen to your “nest egg” during market corrections? Guiding clients to alternative investments and savings tools can help them earn a much higher return and still provide liquidity. Not surprisingly, permanent life insurance can be a great fit if set up properly. Utilizing tax-free strategies to supplement taxable income sources increases Output without increasing the client’s Input.
• How long are you planning on being retired? Have you considered that you might run out of money? Utilizing deferred income annuity (DIA) products also known as “longevity annuities” extends the Output for life without requiring more Input.
• Do you have money sitting idle in an account getting .01 percent interest? Or is it moving? Maintaining emergency funds equal to at least six months’ worth of income is prudent. More than that amount means that resources are not producing income and are exposed to unnecessary taxation. Reallocating idle assets to tax-deferred products capable of producing tax-free income later increases the client’s personal Money Velocity.
• Are you contemplating purchasing a costly item (boat, luxury car, second home, etc.) that will, based on the principle of opportunity cost, take money out of circulation? Do you realize that once your money is spent, you’re missing out on the opportunity for that money to be invested elsewhere? Deciding not to spend on high-cost temptations frees up money to be invested for greater returns and increases the client’s personal Money Velocity.

Summary
We know that “it’s not what you make, it’s what you keep.” We are also all aware that it’s how much cash flow goes into our personal savings and investment accounts (after taxes) which develops wealth. Independent financial professionals can help their clients increase their personal Money Velocity by asking the right questions.

Reference:
*https://www.forbes.com/sites/garrettgunderson/2015/11/28/new-wealth-equation-reveals-3-ways-to-grow-richer-without-working-harder/#5f14a2dc640f

The April/May Issue of Hillsdale College’s Imprimis featured the text from a speech delivered by Senator Tom Cotton from Tennessee. The title was “Sacred Duty: A Soldier’s Tour at Arlington Cemetery.”

The 3rd United States Infantry Regiment is known as “The Old Guard.” In 1948 The Old Guard became the Army’s ceremonial unit. It this capacity, The Old Guard holds mission responsibility for performing military honor funerals in Arlington Cemetery.

Honorable Mr. Cotton served tours of duty in Iraq and Afghanistan. In 2007, between these tours, he served with The Old Guard. “While we often performed more than 20 funerals a day, we knew that—for the fallen and the family—each funeral was a once-in-a-lifetime moment, a lifetime in the making.”

Consequently, there is tremendous pressure to perform everything with precision and excellence.

“Each morning, casket teams practice folding the flag, even though they had folded thousands of them.” Also, “We talked through the key sequences and cues before each funeral, sometimes conducting the same talk-through six times in a day. Nothing was taken for granted.”

Question: In the work that we do, helping people prepare for the unexpected, should we give our work any less attention?

“Practice does not make perfect. Only perfect practice makes perfect.” (Attributed to Vince Lombardi)

Our Brains and Practice
In order to perform any kind of task, we must activate various portions of our brain. The brain develops a processing efficiency when specific actions and behaviors are repeated.

The human brain functions in a spectacular fashion. According to neuroscientists, neurons are the key to the brain’s power. A neuron is made up of:

1. Dendrites which receive signals from other neurons
2. The Brain Cell itself which processes those signals
3. Axons which are like long cables that reach out and interact with other neurons’ dendrites

Communication between neuron cells happens when they send nerve impulses (electrical charges) down the axon of one neuron to the dendrites of the next neuron in the chain. This process is repeated neuron to neuron, and eventually the nerve signals reach the intended destination. The whole process happens at an incredibly rapid speed.

When we practice skills over and over, we cause those neural pathways to work more effectively. The physiological process is called “myelination.” Myelination allows nerve impulses to move more quickly.

This effectiveness can be unfortunate and detrimental. Practicing the wrong behavior makes the brain’s process of performing the wrong behavior more effective. We can become really good at performing very badly.

The lesson of neuroscience? Repetition is important, but repeating the right behaviors is critical.

Applications for Your Business
If you are an independent financial professional, this brain functionality has many important implications for your success. You only have so much time to speak face-to-face with clients or potential clients. In every client appointment you have a brief opportunity to present your concerns, recommend solutions and urge action. A great presentation should include context, drama, conflict, humor, and entertainment. A first-rate performance cannot be achieved without rehearsing.

Five Ways to Engage in Perfect Practice
First, you may not know how good or bad you currently perform. To improve, you first need to know what needs improving. The best tool for self-evaluation is to give a presentation or practice an actual client interview and have it videotaped. Things to look for:

• Purpose. Did you provide an agenda? Did you provide a preview of the topics that will be discussed? Did you introduce the purpose of the presentation, and then share why the presentation is important by reviewing implications and possible outcomes?
• Physical cues. Do you have proper posture? Are you slouching, folding your arms or making yourself appear smaller than you are? Do you maintain eye contact?
• Facial expression. Are you inviting to watch? Patronizing? Do you smile? Does your expression seem forced?
• Voice inflection. Are you sounding credible? Confident? Compassionate? Others-focused
• Hand gestures. Are your hands distracting? Do they accentuate your points?
• Content. Are you boring? Do you unnecessarily repeat words? Do you use humor effectively? Are you good at telling stories?
• Unintended communication. Did you sigh or yawn at any time? Did you look at your phone when it buzzed on the desk? Did you otherwise indicate that you wished to be somewhere else?
• Emphasis. Ask others to view the video. Can they correctly identify the points you were attempting to emphasize?
• Personality. Are you projecting the real you, authentically?

Practice your ability to speak enthusiastically, respectfully, with sincerity and conviction.

Second, choose a strong vocabulary. Words are not all equal in terms of impact. Words are cues. Words are triggers. The right words are capable of transforming an absolute “no” into an almost “yes” and a “perhaps” into “definitely!”

Practice using impactful, purposeful words. Words that engender an emotional response.

Examples:

• New
• You
• Proven
• Seize
• Limited
• Discount
• Profitable
• Authentic
• Reliable
• Assured
• Triumphant
• Admiration
• Authority

Start and end with key points and be certain to use the most impactful words in doing so.

Third, time yourself. It takes practice to communicate information succinctly without the fluff. Use shorter sentences. Pause with effectiveness. Trim your presentation so that you are neither repetitive nor superfluous.

Fourth, take notes. Whenever you notice that you stumble over your words, misstate something, make a mistake or have an uncomfortable moment, take note of the issue and consider how you will improve. After all, this is why you’re practicing in the first place. You can write down things like what you can cut out, ways to better emphasize certain parts, learning to enunciate important words or use better inflection. It will surprise you to discover a wide range of opportunities for you to become more effective when you take the time to look at yourself closely.

Fifth, seek feedback from existing clients. Ask them to rate you on these points:

• Are you relatable?
• Do you have a good sense of humor?
• Are you an active listener?
• Do you use effective analogies, metaphors or illustrations?
• Do you come across as fully “present” when with them?
• Do they feel talked “with” or talked “at?”

Practicing anything perfectly means seeing each skill as something new. At first, most things we do seem like old friends, familiar and comfortable. That feeling will never lead to improvement. Practicing perfectly means treating everything we do as if it is a new skill. Initially, it might feel stiff and awkward. But as we practice, our communication gets smoother and our presentations feel more natural and comfortable. What practice is actually doing is helping the brain optimize for this improved set of coordinated behaviors. Through the process of myelination our brains gain increased efficiency as behaviors are repeated. Practicing the right behaviors perfectly will cause us to perform perfectly.

We owe it to others to be effective in communicating and presenting. Through practice we can:

• Engage purposefully
• Listen patiently
• Communicate clearly
• Use stories effectively
• Create a warm atmosphere
• Speak in our own natural voice
• Properly use body gestures

Do clients deserve anything less?

Independent financial professionals have the power to exert a far greater impact on other people’s lives than any smartphone App or any device for the wrist. We shall soon see how.
Where my wife and I live there is a narrow mountain chain called “Big Ridge” that is part of the Appalachian Ridge and Valley range of East Tennessee. My morning routine involves a brisk walk up the ridge to about 160 feet below the top of the tallest kuppen. Now that we have brought new Fitbit accessories from sites like Mobile Mob to go with our Fitbit watches, we thought we might as well start using it properly this time and try and lead healthier lives.

From my driveway, which sits at approximately 1040 feet above sea level, the course takes me to an elevation of nearly 1340 feet. This is the equivalent of climbing the stairs of a 27-story building. Given that stairs usually are built for each step equaling 6.85 inches at the riser, and assuming 10 feet per floor, it takes me approximately 1850 steps to reach my goal. (Then, of course, there is the walk back down.)

You may know that the world’s longest stairway runs alongside the Niesen mountain railway in Switzerland. According to redbull.com (https://www.redbull.com/us-en/worlds-longest-steps), “There are 11,674 steps in all, and it’s only possible to hike them one day a year during the Niesen Run. It’s only a two-mile run but there’s 5,475 feet of altitude to climb!”

My simple exercise course is miniscule compared with that!

10,000 Step Craze
People all around me continue to look at their wrists to see what their device records as their daily progress toward 10,000 steps.

In Japan, in 1965, an inventor created a pedometer called a “manpo-kei.” The Japanese word means “10,000 steps meter.” The 10,000-step count caught on and these days everyone is talking about getting in 10,000 steps daily.

According to Fitbit.com (https://blog.fitbit.com/should-you-really-take-10000-steps-a-day/), “Fitbit starts everyone off with a 10,000-step goal, and here’s why: It adds up to about five miles each day for most people, which includes about 30 minutes of daily exercise—satisfying the Center for Disease Control’s recommendation of at least 150 minutes of moderate exercise per week.”

There Are Many Benefits of Taking 10,000 Steps a Day

• Improved heart efficiency and aerobic capacity
• Less fat accumulates
• Lowers the blood glucose and insulin response after every meal
• Better brain health
• Improved discipline helps to form better habits
• Reduced stress
• Better sleep
• Improved balance
• Increased endurance

Steps to Financial Fitness
Question: Is it possible that something like 10,000 steps per day can be applied to a person’s finances to create a successful future?

Answer: Yes, there are simple strategies that will achieve positive results. Like 10,000 daily steps, the financial strategies that achieve predictable success all depend on the same principle: The cumulative effect of little things over a long period of time. This law, this universal principle, applies to all areas of life including physical, relational and even financial health.

For clients: Everybody needs to pay attention to universal principles. People need to know how to leverage the law of the cumulative effect of little things over a long period of time for their retirement planning, college planning and other financial goals.

For independent financial professionals: Properly presented, universal principles cause clients to make wise financial decisions. You need to help your clients make use of this law and, in so doing, build your success as they build theirs.

Step #1: Capture the power of time. Time is one tool most people neglect to use. When does it make sense to start a child’s college fund? At birth! When does it make sense to start saving for retirement? When earning the very first paycheck.

Example: Person A and Person B
Person A is 21 and starting her first job. She begins contributing $2,000 annually to a retirement fund. She does this for the next 40 years, never missing an annual contribution and makes a modest four percent rate of return over her working life until she turns 61. After 40 years, she has a tidy sum of $190,051.

Person B, also 21, delays setting aside money for old age until he turns 41. Knowing he needs to make up for lost years, he contributes $4,000 per year. After 20 years, again without skipping a year, and assuming a four percent return, he builds a retirement fund by age 61 equal to $119,112.

They each contributed $80,000 into their retirement accounts. What caused the $70,000 difference? It comes from starting early. The average person needs an independent financial professional to get them started before they feel the pinch.

Step #2: Leverage the power of the aggregation of marginal gains. I enjoy the writing and thought leadership of James Clear. His recent book, Atomic Habits, is something I would recommend to everyone to read, especially anyone who wants to make improvements in every aspect of his/her life.

Mr. Clear wrote:
“In 2010, Dave Brailsford faced a tough job. No British cyclist had ever won the Tour de France, but as the new General Manager and Performance Director for Team Sky (Great Britain’s professional cycling team), that’s what Brailsford was asked to do. His approach was simple: Brailsford believed in a concept that he referred to as the ‘aggregation of marginal gains.’

He explained it as the ‘one percent margin for improvement in everything you do.’ His belief was that if you improved every area related to cycling by just one percent, then those small gains would add up to remarkable improvement. They started by optimizing the things you might expect: The nutrition of riders, their weekly training program, the ergonomics of the bike seat, and the weight of the tires.”

If you are an independent financial professional, how can you put this concept to work for your clients?

1. Encourage clients to slightly increase the principal in every monthly payment they make on their mortgage. This will save future interest payments and shorten the term of the loan. Assume you have a client who asks, “What if I pay $100 extra on my 30-year mortgage beginning with the first payment?” Assume a mortgage of $200,000, a loan rate of 3.5 percent and an extra $100 each month. The client will reduce the payments by 58 months and save $22,368 in interest.
2. Help clients achieve slightly greater returns on their savings. Consider the difference that one percent can make:
   • A lump sum of $10,000 earning four percent over 40 years yields $48,010.21.
   • A lump sum of $10,000 earning five percent over 40 years yields $70,399.89.
3. The timing of taxation can make a huge difference. Help clients take advantage of tax-deferral as one tool for bolstering returns. For example, if your client contributed $2,000 to a traditional IRA each year for 30 years and averaged a seven percent annual rate of return, assuming a 25 percent income tax rate, their traditional IRA would be worth $244,692 versus just $183,519 if the same amount was taxed along the way. (Of course, since a traditional IRA was used, your client will eventually pay taxes on the income deferred.) Tax-deferral and compound interest work magic over time.
4. Show clients how to eliminate the down years (those years when their accounts actually lose money). By utilizing indexed life insurance and indexed annuity products, independent financial professionals help their clients discover the value of missing the worst-performing days in the markets. True, these same clients will also miss the best-performing days. The trouble is, a worst-performing day that yields a 50 percent loss requires a best-performing day of 100 percent gain just to get back to even. There is comfort in knowing that the negative days can be eliminated altogether!

The average person needs an independent financial professional to leverage the aggregation of marginal gains.

Summary
People are attracted by the idea of improving their overall health by taking 10,000 steps per day. By keeping active, do you know what will happen? They will extend their lives.

Question: How are they going to afford all the steps ahead?

People seek these outcomes in their financial futures:

• Financial self-sufficiency
• Never running out of money
• Effective loan strategies
• Greater returns on savings
• Tax-advantaged growth
• Security
• Predictability

As an independent financial professional you can help your clients take advantage of core principles in order to make sound financial plans for their future. This includes capturing the power of time and leveraging the power of the aggregation of marginal gains.

Without your influence and coaching most people will not take these wise actions. Without you they will lack a proper plan, be less prepared, and may not be positioned to afford all the steps ahead.

You very well may prove to be more valuable to your clients than a device on their wrists!

Next steps:
Identify three clients you know who are not making use of the law of the cumulative effect of little things over a long period of time for their financial planning. Tell them you have been thinking about them, have a concern you want to address with them and need only 30 minutes of their time. Meet with those three, put the above concepts to work for them and then ask them to help identify three more people who are similarly ill-prepared for all the steps ahead.

“All ballplayers should quit when it starts to feel as if
all the baselines run uphill.”—Babe Ruth

I am a simple man. My exercise program for over forty years has consisted of jumping rope, doing push-ups, pull-ups, dips and stretches. I always jump rope outside, wherever I am. I throw the rope in the bag, get on a plane and go.

I do not encounter much of anything that prevents me from exercising. Snow, cold, rain, heat, wind, traffic noise, people staring, smokers using the same space outside the hotel…nothing changes what I do or how long it takes.

Now…if I was a runner, that would be another blister altogether.

According to what I have read, a person’s running performance is impacted greatly by such things as dew point, temperature, altitude, incline and even posture. Take temperature for instance. At 60 degrees, a person’s running pace suffers a two to three percent increase, meaning that someone who averages an eight-minute mile pace experiences an increase of about twelve seconds per mile. At 80 degrees, the runner’s pace slows by 12 to 15 percent, so that a mile pace becomes more like 9:06. (There is actually a temperature calculator at Runners Connect, found here: https://runnersconnect.net/training/tools/temperature-calculator/)

Or consider altitude. High altitudes decrease the amount of oxygen getting to the muscles, and for runners there is the added risk of dehydration. Table 1 is helpful.¹

Point: Runners are impacted by the physics of the environment, but they can make adjustments based on measurements and calculations.

Independent financial services professionals face an ever-more challenging environment. What should they measure in order to stay on pace, or even achieve improved performance?

Critical Success Factors
It is critical that independent financial services professionals measure the right things. The reason? They only have so much time.

“Time is the scarcest resource and unless it is managed, nothing else can be managed.”²—Peter F. Drucker

To improve time efficiency and business success, begin measuring these Critical Success Factors (CSFs):

• Time invested by you per client
• Revenue per client
• The 20 percent of your clients who give you 80 percent of your revenue
• Clients who provide you with referrals
• Clients who provide repeat sales

The remainder of this article will address each of these CSFs.

CSF #1 Time Invested by You per Client
Like running the baselines in baseball, the progression from prospect to client is divisible into clear phases. There are at least these seven:

• Uncovering a potential client through Prospecting
• Pre-appointment communication
• Scheduling the first appointment
• The Fact-Finding appointment
• The Closing appointment
• Product Delivery
• Annual Review

According to H. James Harrington, “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”

Measure » Understanding » Control » Improvement

Most independent financial services professionals I have met do not measure how much time is invested in each phase of the sales cycle. Here is a tool that I hope proves helpful. (Exhibit A)

What can be learned from analyzing the results in Exhibit A?

• An average of eight hours is spent per client from prospecting through review.
• The large disparity between clients in the amount of time involved in prospecting begs investigation. What controls could be implemented to improve efficiency?
• Scheduling takes half an hour and should be delegated to an assistant.
• Is the pre-appointment process well-understood? Can the process be improved through tighter controls?
• A fair question is, “How long should product delivery take?” Is there a set process?
• Should fact-finding take nearly as long as closing? Perhaps a well-designed agenda can be applied to both kinds of appointments to make the process more efficient.
• What is the correlation between total time spent per client and the revenue earned per client?

CSF #2: Revenue per Client
Even for the independent financial services professionals who work specific markets and have well-honed client profiles, there is always a disparity in revenue earned per client. It is important to measure revenue per client—not because it makes one client more important than another, but because it provides insight into how efficient the sales process is. First, we will look at Exhibit B.

These five clients returned an average of $4,870 in revenue. How does the revenue earned per client compare with the amount of time invested in each phase leading up to product placement?

Allocating revenue to each phase in proportion (Exhibit A) to the total time spent per client is found in Exhibit C.1.

A quick look at the chart reveals that the two most revenue-intensive activities are prospecting and closing.

Revenue per client is best measured against time spent resolving the financial concerns of the client. To truly understand efficiency in the process, it is important to measure revenue in terms of income per hour. Only then can controls be applied to generate efficiency improvements.

Observations and questions:

• There are only two ways to improve revenue earned per hour:
• Keep total time static but increase total revenue.
• Keep revenue static but decrease time required to make sales.
• To earn a higher rate per hour the independent financial services professional must work with a higher revenue generating client, or, become more efficient in allocating valuable time.
• The hourly rate for an independent financial services professional does not change by the activity, but by the client.
• A fair question is, “Why should revenue from smaller income-generating clients be held hostage to the same process that the independent financial services professional uses with every client?” The process must be adjusted as soon as the revenue can be estimated.

Example: If the only activities involved in serving Client B were fact-finding and closing, then the revenue per hour would be $375, a respectable rate according to the chart.

CSF #3: 20 Percent of Clients Generate 80 Percent of Revenue
I meet with many people in our industry who feel much like the aging Babe Ruth. Every step in the process seems to be uphill. I remind them that exertion is minimized through efficiency.

Efficiency is achieved in any business by innovating to the point where the process generates a maximum return. The most important innovation is to identify the ideal prospect and design the process to best serve that type of prospect.

In our example, Client C returned the highest revenue in the measured period. However, Clients C, D and E combined for 84 percent of the total revenue in our sample of five clients. Not quite the 80/20 Rule; however, the point can be made that by knowing the commonalities and similarities of the top three revenue-producing clients we could establish the profile of the ideal prospect.

Shared Threads to Discover:

• Industry
• Occupation
• Position
• Age
• Referral Source
• Affinity Groups
• Financial Needs Resolved
• Objectives and Dreams

Armed with an understanding of the kind of client that returns the highest revenue per hour invested, the independent financial professional can begin to control the referral process and improve the kind of prospect generated. For instance, instead of asking, “Who do you know that may need my kind of services?” ask, “Do you know any computer software and systems software engineers, between 35 and 45 years old, married with children, who enjoy the outdoors, especially golfing?”

CSF #4: Clients Providing Referrals
This leads naturally to something many independent financial professionals fail to measure. Not all clients provide good referrals. The ones who do should be rewarded. In addition, there was a reason that they were willing to make introductions to new prospects. It is important to understand their motivation and learn how to control the process of asking for referrals in order to improve overall results.

The fact is, most independent financial professionals simply lack good tools and processes to ask for and collect referrals. The best tool in my experience is a simple survey presented to new clients at product placement.

Have you heard the phrase, “Happy customers make happy customers?” Clients who are satisfied with the process and the acquired products will refer more people. Therefore, whenever independent financial professionals meet or exceed the expectations of the client, and receive affirmation to that effect (perhaps through a survey), that is the exact moment when the request for referrals should be made.

CSF #5: Clients Providing Repeat Sales
F.J. Raymond said, “Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” Similarly, better than receiving referrals from existing clients is getting repeat sales from them. Yet many independent financial professionals do not measure the frequency of this occurrence, nor the circumstances.

Repeat sales can be measured by calculating a repeat purchase rate, which is the percentage of clients who make another purchase. There is never a better time than right now to begin calculating a repeat purchase rate.

It’s equally important to measure and understand how receptive existing clients are to subsequent appointments to discuss additional financial needs. The most important factor is time between purchases.

Time between purchases shows how long a typical client goes before making a repeat purchase. This is a good metric to know because it aids in tailoring the optimal client review process to their behaviors.

Time between purchases and the repeat purchase rate are critical metrics for increasing purchase frequency among existing clients.

Practical Tips:

• Always send “Thank You” notes after each sale and each referral.
• Take great notes during every appointment and send them out in a summary email that includes “Next Steps.” These should always include the areas of planning that remain unaddressed.
• Use a survey to secure a client’s written satisfaction with the process and product.
• Send articles addressing the needs that are yet to be resolved.
• Conduct annual reviews if only via Skype or FaceTime.

Summary:
Every independent financial professional requires a defined process to turn prospects into clients. For those experiencing “uphill” climbs along each phase of the process, the answer is not to quit or slow down. The answer is to measure in order to understand, and in understanding eventually to control and improve the process.

References:
1. https://www.runtothefinish.com/sea-level-to-high-altitude-running-how-it-impacts-running/
2. “The Effective Executive,” New York: Harper Business, 2006, p 51.

What do the following have in common?

Tony Dungy (Author, two-time Super Bowl champion and NFL analyst); Scott Simon (Author, American journalist and the host of Weekend Edition Saturday on NPR); Greg Thornbury (Author, Vice President of Development at the New York Academy of Art in New York City and former Chancellor and President of The King’s College in New York City); David Taylor (Author, Assistant Professor of Theology and Culture at Fuller Theological Seminary); Karen Swallow Prior (Author and award-winning Professor of English at Liberty University); Eric Metaxas (Author, speaker, and radio host); Jason Barger (Author, speaker, leadership consultant); and Daniel Pink (Author of six books about work, business, and behavioral science, four of which are New York Times Bestsellers).

You say, that’s easy. They are all authors! True. And yes, I have read their published works. Yet there is something else that they have in common. Although I have never met them and not one of them could pick me out of a line-up, they have each participated with me in conversations through Twitter.

I sent them each messages regarding what I was reading in their books and they replied. I sought clarification and they helped me. I asked questions and they answered. I complimented them and they expressed gratitude.

Through their writings, they have each participated in helping me have a better understanding of the times in which I live.

These men and women have replied to me at commercial breaks during their broadcasts, while on a yacht on the Aegean Sea, while in the hospital recovering from an accident, and immediately following the death of their family member. I have interrupted their lives and they did not resent it. They graciously communicated with me.

I love being able to have a real-time conversation with people who author the books I read.

Here is the first point I want to make: No one needs to be a stranger to you. Seek to learn from other people constantly and be willing to share what you have been given in terms of experience, training and talents.

You are most likely in the insurance industry since you are reading this wonderful magazine. (I have never seen Broker World on the coffee table at the dentist office.) You have a purpose for your life that is somehow connected with helping the unprepared plan for the unexpected. Are you running full speed in the direction of your purpose?

Mary Oliver was an American poet who won the National Book Award and the Pulitzer Prize. She passed away on January 17, 2019. She was 83. To my knowledge, she was not on Twitter. If she would have had a Twitter account I would have asked her to tell me more about some of the lines in her poetry.

In her poem entitled, The Summer Day, she wrote these lines:

“Doesn’t everything die at last, and too soon?Tell me, what is it you plan to do with your one wild and precious life?”

Here is the question I would have asked Ms. Oliver. Since everyone dies, and it almost always seems “too soon,” what do you recommend that people do? In asking, I would of course be ready to discuss the vital importance of owning life insurance.

Let’s stop there for a moment. Since everyone you know is mortal, what if you started quoting these lines from The Summer Day and made a habit of simply asking the people in your life, “What have you done to protect those you love?”

H. Howard Wight addressed the assembled producers at the 1991 MDRT Meeting. Here are a few quotes from his presentation entitled Sales Sizzlers Breakfast:

• “Caring, responsible people buy life insurance. It is the best solution to certain problems that occur when they die.”
• “Assuming your client cares, the logic of life insurance in most situations is fairly clear.”
• “If your death will create an economic loss for your family, you probably need some life insurance.”
• “The amount of life insurance needed for income replacement is determined by asking, ‘How long are you intending on being dead?’”

I believe these straightforward statements will resonate with people today just as they did in 1991.

Mary Oliver battled lung cancer although hardly anyone knew about it. She thankfully lived several years after it was successfully treated. (She never quit smoking!) She rarely wrote about it in her poetry, but she did write four poems in that specific vein. Here is the first of the four, entitled, The Fourth Sign of the Zodiac (which is, of course, Cancer):

“Why should I have been surprised?/ Hunters walk the forest / without a sound. / The hunter, strapped to his rifle, / the fox on his feet of silk, / the serpent on his empire of muscles—/ all move in a stillness, / hungry, careful, intent. / Just as the cancer / entered the forest of my body, / without a sound.”

Let’s stop there for a moment. According to Medical News Today (https://www.medicalnewstoday.com/articles/282929.php) cancer is the second leading cause of death in the United States. In most cases, does it not enter “without a sound?” Is it not always “hungry, careful and intent?” So then, shouldn’t all the people in your life own some kind of long term care insurance, critical illness and/or chronic illness insurance, and, yes, life insurance?

In the second of her poems regarding her experience with cancer she asked, “Do you need a little darkness to get you going?” If Ms. Oliver was accessible to me on Twitter, I would have asked her, “Why do you suppose it takes darkness to get us to act logically and lovingly?”

Let’s stop there for a moment. In my career of nearly four decades in the life insurance industry, it never fails that the moment people are most apt to actually apply for life insurance, or long term care insurance, is when some “little darkness” has come into their lives personally or into that of a dear friend or family member. Now, if it weren’t for underwriting, that would be a fine time. But if mortality creeps into a person’s life, it is generally too late to apply.

Another line in a Mary Oliver poem is this: “The end of life has its own nature, also worth our attention.”

If you are in the life insurance business, the nature of the end of life should be absorbing your attention.

Do you suppose there are people in your life who have yet to take the logical step of applying for life insurance for the benefit of their loved ones? Will they come running to you when it is too late? What excuse will you be prepared to give for not having broached the subject yourself?

In a rare conversation and interview that the poet Mary Oliver had with Krista Tippett on a broadcast called On Being, she said, “There is something that has to do with all of us that is more than all of us are.” That something is the whole of humanity, the great big family that we all comprise. Each of us needs to ask ourselves, “What is my specific purpose in the whole picture? What is it I can do to benefit others?” Well, if you are in the business of life insurance, long term care insurance, critical and chronic illness insurance, ought not that purpose be to not keep these magnificent products a secret?

In other words, what is it you plan to do with your one wild and precious life?

Applications

• Ask yourself, “Am I representing life insurance simply, understandably and straightforwardly?”
• Make the client’s needs the subject. Not the product you represent.
• Find clients who care.
• Make the decision to buy life insurance a logical one.
• Replace as much future income as possible in order for the client’s family to remain in comfort.

One of my favorite lines from a Mary Oliver poem is this:

“I saw what love might have done / had we loved in time…”

I hear ticking. Suppose it’s a clock?