Brevity & Associates

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You Don't Deserve My Time, Dunning Kruger Observations

http://brevityassc.blogspot.com/2015/06/you-dont-deserve-my-time-dunning-kruger.html

Brian and I have noticed and discussed the inverse variation between our easiest and most difficult clients.  That is to say, that often our most difficult interactions are also the least profitable, while the easiest interactions are the most profitable.  .. See the Dunning Kruger Effect.  https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

People who make it difficult for us to help them do not easily trust our advice because they overestimate their understanding or knowledge in the subject of Insurance or other financial topics....or they are demanding of time.  Many times, these interactions which can be frustrating and time consuming for us also offer the least in potential return with regard to commissions/fees.  We make our recommendations based on need and budget like any good professional, and often times, we are recommending these folks pay incredibly low amounts of premium.  Sometimes we meet resistance from them on how low, in fact, as they have decided what they think is best for them based on some bias i.e. "my daddy had a policy like this."

Inversely, the clients who are the easiest with whom to work are typically financially independent and often wealthy, which means that the revenue from our work with them can be 10x - 50x higher.  These folks usually underestimate their relative knowledge in the subjects around insurance and finance.  In fact, they more easily understand the subject matter and can make decisions quickly when presented with one of our solutions.  These folks are also very gracious and even worry that they could be taking up too much of our time.  My most wealthy client rarely takes more than 15 minutes of my time before thanking me and shuffling me out the door with some encouraging words.  Sometimes he will ask if I have time for a quick anecdote (I always do) and I will listen for the 5 minute long story and remember the life lesson, because it may be profoundly valuable.

This is just a feeling and not based on what is most profitable, but I am happy to equally give my best work to everyone and enough of my time to get them pointed in the right direction... Agents/Brokers and Consumers alike.  I have learned though, that there are people who should be avoided.  Of course, you wouldn't know that until spending a little time with them.  No amount of good advice will help them and your time is probably not well spent.  It it is best to kindly bow out, still leaving them some suggestions on material they can seek out and use to educate themselves.  The people who can more easily recognize the value of good advice and act on it quickly are the type of people who become financially independent or wealthy, if they aren't already.

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Excellence in Business - Jennifer Coleman

http://brevityassc.blogspot.com/2015/05/excellence-in-business-jennifer-coleman.html

n previous posts, we have discussed examples of folks not producing quality work in our industry.  It could be in their lack of communication, their resistance to change, not properly reviewing a client's insurance policy, not bringing in experts in other fields to better assist with the client relationship etc.  Much of this was to bring to light the shortcomings we see so consumers can properly evaluate who they work with and if their advisors have any of those qualities.  From an advisor standpoint it was more of a call to action to assess the quality of their work and strive to continuously improve.

We would also like to highlight professionals who we see strive to do their best work.  From objectively reviewing a client's current situation, expert communication, and going above and beyond from a customer service standpoint.  Jennifer Coleman exhibits those traits.  Jennifer is a real estate professional but, has drawn from her experience working as controller in the construction that brings a unique perspective.  With the building industry as a backdrop it enables her to view the house from the other side of the table.  This niche really comes into play with buyers who are looking to purchase new construction homes.

Jennifer also brings a balanced approach to her clients whether they are buying or selling a home.  She is numbers driven and may look at pricing and market conditions four different ways to help her clients determine pricing.  As she sifts through the mounds of information on properties and location, Jennifer can present the best options from an analytical perspective.  Jennifer also embraces the emotional aspects of the home buying and selling process and can manage both sides so the client can makes the best decision possible.

We also advocate her speed in communication.  Jennifer is quick and responsive with her smart phone never far away.  As she indicated in today’s market, homes are coming on and going off the market in a matter of 1-2 days in some circumstances so speed is critical.  With her active buyers she makes a point to check in at least once a week to see how they are doing without coming across as pushy.

As we are huge proponents of customer service, Jennifer keeps that mantra as a top priority.  Of course everybody says that, but how do you know if it’s true?  We took a gander at some of her unsolicited testimonials and were blown away.  All of her clients are her friends.  They may not have started that way when they met but, they are now.  Off the record, Jennifer told about meeting a client one Sunday night around 10pm in the rain to review some of the measurements of the house a client was considering purchasing.  In the end, she was able to get to the root of the problem and address the questions the client had about square footage.  Who does that?

https://www.youtube.com/watch?v=pMciiv8JnPw

www.brevityus.com

p: 919.415.1322       f: 919.653.4920      

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The Help (Case Managers).... Kind, Smart, and Important.

http://brevityassc.blogspot.com/2015/05/the-help-case-managers-kind-smart-and.html

They is kind, they is smart, and they is important.  I do not mean to degrade their work in the least.  I happen to have who I consider to be the best case manager in the business.  I have been working with her for over 10 years and she makes my life better.

She is kind.  She knows how to handle my partners and me.  She knows that we are out in the field and need a little encouragement from time to time.  Some aspects of the insurance business can be frustrating.  It is nice to speak with someone who you can tell enjoys her job and is happy to speak with you when you need her help.  I have worked with case managers in the past who are just going through the motions.

She is smart.  She knows who to speak with at the insurance companies.  She has been in place long enough that she knows who to contact at the carriers to get our business underwritten at the offer we need.  She also knows to ask the right questions so that she can help us the best way possible.  In other words, she often challenges my requests by saying things like "this carrier has an online application, would you rather use that?".. or .. "Maybe this case should go in as an informal because it looks like it could be table rated."  She doesn't see the client but she knows her way around her side of the insurance business.

She is important.  We, who see the client face to face need only to be thinking about those interactions.  Every moment wasted on paperwork, parameds, APS, etc. is a moment we could have spent with a client to improve his or her experience.  We should be able to pass off everything that isn't related to seeing clients to someone who we trust.  Most financial professionals could not say that they are completely confident that the case manager can handle that task with no oversight.  We at Brevity and Associates are completely confident.

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Quoting the Best Rate

http://brevityassc.blogspot.com/2015/05/facts-of-life-insurance-quoting-best.html

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All of our LTC and disability are all handled by my husband's office

Let me explain.

http://brevityassc.blogspot.com/2015/05/all-of-our-ltc-and-disability-are-all.html 

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Facts of Life Insurance - Trust Fiduciaries

http://brevityassc.blogspot.com/2015/05/facts-of-life-insurance-trust.html

https://www.youtube.com/watch?v=ICJ2H3RfUis

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Policy Review

https://www.youtube.com/watch?v=0el97k2ZHoQ

www.brevityus.com

http://brevityassc.blogspot.com/2015/04/facts-of-life-insurance-policy-review.html

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Facts of Life Insurance - Policy Review

How different was your life 5 years ago?  How about 10 years ago?  Family.  Technology.  Job.  Investments.  Gas prices.  The only thing certain in this world is change.

We meet clients all the time that don’t want to think about reviewing their insurance situation or think everything is fine.  As an advisor you are doing a disservice if you aren’t asking those questions.

 Reviewing your existing life insurance is something that should be done every few years.  You aren’t going to mess up your current policy by requesting an inforce illustration.  It may not be performing the way it was designed to run or there simply may be a better product available now that wasn’t before. 

New surrender charges - That could be a factor but, if a new policy is still a better fit then that shouldn’t deter you from making a switch.  There are policies now that have a high early cash value option where your premium money is guaranteed available from year 1.

New contestable period – You weren’t worried about that when you first bought the policy so it shouldn’t be an issue.  If you don’t materially misrepresent(lie) on the application then you have nothing to worry about.  Even still the issuing company could come back and tweak the policy to represent what you should pay for the same coverage if they find out.  The insurance company really isn’t in the business of doing that.

Bad decision - Many times captive agents will use fear mongering to try and keep policies on the books to enhance their numbers.  Don’t let that sway you.  Get an unbiased perspective.

Analogous to mortgage rates – If you have ever refinanced your house then you realize how important the interest rate variable is to the equation.  There are interest rates in life insurance as well as mortality tables.  Back in the 1980’s when interest rates were drastically higher cash value projections were based on double digit returns.  Now 3-4% is more likely.  You wouldn’t keep paying a higher interest rate on your mortgage if you could drop your rate enough to reduce your payments or trim down your time period for paying off your house.

Along with interest rates mortality tables have changed with people living longer.  Insurance companies have updated their policies to reflect that which in turn lowers the cost of insurance.

Family Dynamics – As people age the amount of coverage changes as well.  When you are first married you may primarily be looking to replace income for the deceased spouse.  Fast forward 10 years later and maybe you have 3 kids to factor in along with a bigger house and college.  There is a need for more coverage.  Fast forward another 10 years and the kids are out on their own.  You have funded retirement accounts and good portion of your house is paid for.  Maybe now you need less coverage.

Conclusion – Reviewing your insurance needs just like any other asset shouldn't be ignored.  The insurance landscape is ever changing.  If you aren’t elbows deep in it(and why would you) then you wouldn’t know if you can improve on what you have or if it is just fine.  Beyond the insurance industry reassessing your own financial situation as it pertains to risk management is equally important.

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Facts of Life Insurance - Do As You Say Not As You Do

Why would you say do what you say you're going to do?  Is there any value to it?

People can recognize excellence.  It starts with doing what you say you are going to do.  We run across too many people that take this simple exercise for granted.

Examples:

1. Client asks us for a term insurance quote and we tell them we will get them something before the end of day.  We better do that or we are starting off on the wrong foot.

2. Answering emails in a timely manner -  24 hours has been the status quo for a response even though now that is considered slow.  If we don't know the answer or can't solve the problem we pride ourselves on responding back the same day or the following morning if it was received late in the day.

3. Phone calls - We work with too many individuals that aren't great at returning phone calls.  The response is we'll call you back in 15 minutes or tomorrow.  Then....nothing.  Who does business that way?  We aren't cold calling.  We're calling because there is something we are working on that we need your help with addressing.  Next time just tell us you aren't going to call us back or better yet do so in a timely manner.

We partner with business professionals and bring an expertise to the table to help their clients.  We aim to enhance and broaden the experience the client has with their advisor.  We strive to assist that client as if they were our own and when we accomplish this that client's experience is top notch and the advisor has done even more to solidify their relationship.

It shouldn't be such a rarity that people you partner with do excellent work and do what they say.  It makes us stand out.  We have agents and advisors that come to us because of that very reason.  Even if you strive for perfection you can't expect it.  There are things we can't accomplish but one of our goals is to be upfront and explain everything.  What a concept.

Enjoy our video.....

https://www.youtube.com/watch?v=WifdF1EsXZM

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We're pretending.

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Facts of Life Insurance - Do As You Say Not As You Do

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New Logo

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What To Do

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Life Insurance with Long-Term Care Explained

Protecting yourself against the potential threat of long-term care seems to be the topic clients dislike discussing the most. With health care costs on the rise and long-term-care insurance premiums climbing by double digits several insurers have exited the business in the past three years. Many families are turning to an alternative: using life insurance with long-term-care benefits.

One reason life insurance policies with long-term-care riders have taken off is that they overcome one of the biggest hurdles for buyers of long-term-care policies—writing a sizable check for a product you hope you will never use. By pairing long-term-care benefits with life insurance, you can lock in a payout for your spouse, children or other heirs, even if you don’t use the long-term-care benefit. As with traditional long-term-care insurance, hybrid policies kick in when the policyholder needs help with two activities of daily living, eating, bathing, dressing, toileting, transferring (walking) and continence.

The living benefits in these hybrid products are typically limited to the amount of the death benefit. Several options include receiving between 2-4% per month of the death benefit. The insurance carrier either pays you a set amount each month or reimburses the long-term-care expenses. The premiums are locked in, unlike a traditional long-term-care policy but, you also have to factor in a lack of inflation protection.

Advantages

One Asset For Long-Term Care: Families don’t always make plans for long-term care and all of a sudden they’re in a situation where they’re liquidating IRAs and paying huge taxes. The markets may not be on their side at the time. Even for clients who already have enough savings to cover long-term care you can use the life insurance to create a tax-free bucket. This way the family is not out there trying to figure out which asset to liquidate first to pay for the costs.

Avoiding Premium Increases: We have heard stories of a client’s long-term-care insurance bill climbing more than 30% within the last year. With the hybrid products, the rates are guaranteed to stay the same. You don’t have to worry about the insurance company coming back and raising the premiums.

Older Policies: This could be ideal for clients that purchased permanent policies 20+ years ago with a healthy amount of cash value. Chances are their financial situation has changed. The kids are on their own, the house is paid for, and now the client is retired living on a fixed income. First off you can analyze their policies to make sure they are still appropriate and running properly. Secondly, it could make sense to consider merging their existing policy into one with long-term care and take advantage of their cash value. They may never need the long-term care but it is nice to know it is available in case the need arises.

Estate planning: If the long-term-care rider is what is called an “indemnity” benefit, not an expense reimbursement, you generally are allowed to put the insurance policy in an irrevocable trust and still use the accelerated death benefit for long-term care. When you pass away your heirs get whatever benefit is left tax-free, and it isn’t counted as part of your estate. You have to have the indemnity rider to do this. With an indemnity plan, the benefit is paid to the owner of the policy, which is the trust. If the benefit is paid directly to the insured person, the trust could be disqualified.

www.brevityus.com

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A Trust Sounds Too Fancy For Me

I’m not wealthy, why would I consider a trust? This is meant to lay out what a trust can do and why it may be beneficial to consider. There are two broad types revocable and irrevocable. Revocable allows for changes throughout but, it also stays within someone’s estate, meaning it is not excluded from estate taxes. Setting up an irrevocable trust limits the ability to make changes but, any assets used to fund this trust will be excluded from someone’s estate.

 Benefits to Revocable Trust

Bypasses probate

Assets go straight to beneficiaries(similar to life insurance and retirement accounts)

Maintains privacy

Allows for more control of assets after your death

For property owners it can add an extra layer of liability protection

Benefits to Irrevocable Trust

Assets are not subject to estate taxes

Easier to gift to charities

Income producing assets are not subject income taxes

Within those two broad trust types there are quite a few variations. Below are some of the most common that I deal with working with clients.

Special Needs Trust – Helps map out financially what happens to a family member who is disabled(mentally or physically). Can protect assets such as a home and still allow the individual to receive any government sponsored income they are entitled to obtain. It allows the trust to determine who they want to manage the assets as well as who would care for this individual.

Spendthift Trust – Mostly used in the case of minor children or for heirs that have not shown the ability to manage their money. You can stipulate the recipient receives a certain amount when they turn 18 or graduate college, etc. You can determine a regular monthly or annual amount they would have access to as well.

Charitable Remainder Trust – Provides tax advantages during your lifetime of gifting money to a charity and provides you with income. For example if you gift 25,000(preferably something with low cost basis) to a charity. That charity will receive that $25,000 once you pass away so it is considered a gift now and deductible. You also receive the income from that donation every year while you are living.

The estate planning world has a vast array of platforms to help families implement what they want to happen to their assets. As estate tax laws change financial planners must stay abreast of different nuances and how they impact a client’s financial situation. The key is periodically discussing your intent with your family and your trusted advisors to see if your goals match up with what you have in place and if there are estate planning vehicles that can benefit you.

www.brevityus.com