You can make a fortune using seminars as a marketing tool. Smart financial advisors, attorneys, CPAs, real estate agents, mortgage brokers and other professionals and business owners use seminar marketing to pack a room of potential new clients and turn them into business. Rather than prospecting one person at a time, you have a room of 50 people.
First, do your research and know what your market wants. Call potential attendees and ask them:
What’s the biggest challenge in your business?
If there would be one thing you could change about your financial situation, what would it be?
What aspect of your life is most out of balance?
Or send a survey or do a teleconference but you must gather this information.
Too many professionals and business owners dive into seminar marketing and choose a topic based on their perceptions rather than asking their market. Okay, now that you have your topic, you must convert it into a message that packs the seminar room.
The next mistake in seminar marketing is not putting enough effort or applying enough expertise to the seminar invitation. AS THE MINISTERS SAY, YOU CAN’T SAVE SOULS IN AN EMPTY CHURCH. So if your attendance is poor, you’ve lost money and missed an opportunity to help potential attendees with your wisdom, product or service.
Your seminar invitation must be a super compelling, motivational piece that would sell ice to eskimos. You’ve got two choices—either develop the skills to write great copy or hire a copywriter to write your seminar invitation. To develop the skills, study books like Cash Copy by Jeffrey Lant, Magic Words that Bring You Riches by Ted Nicholas or any books by John Caples. Alternatively, hire a copywriter and simply pay them to do it. A good copywriter is about the best seminar marketing investment you can make.
Just to give you an example of the difference that copy makes, which seminar would you rather attend:
“What’s the Stock Market Doing This Year”
Or
“Five Ways these Wealthy Investors Make Consistent Profits in the Stock Market”
Is it any surprise that the second title will gain far greater seminar attendance?
Now you know what your target market wants and you’ve created a seminar invitation with compelling language. Attendees show up and they love the presentation. So what? How will you turn this successful seminar event into business? Just because you give a great and enlightening presentation does not mean anyone will call you. That’s our third common mistake: failure to have a mechanism to convert attendees into clients.
The seminar must end with an invitation to meet with you (or a colleague). Even though your presentation was great and showed your attendees several great ideas, you still need the final killer offer so that they make a commitment to meet with you before they leave. You must have such a process before they leave because if you think you can call later and set appointments, forget it. Your prospects will have cooled off.
Your final killer offer ties back to what you learned when you did your initial research. Let’s say you’re an estate planning attorney and you learned that a common and frequent concern was that your audience is worried that their heirs will spend their inheritance foolishly. In that case, your final offer sounds like this:
“You’ve learned a great deal about how to plan an estate well and I’d like to show you how to put these techniques to work in your situation. So I have set aside some free consultation times for which I normally charge $300. But for those of you who were nice enough to put up with me today, I can offer you those consultation hours for free. At that meeting I will answers any questions that you have about your estate plan and additionally, I will show you three ways to keep heirs from spending their inheritance and how to protect those assets from their creditors. Since I have fewer consultation slots available than people are here today, please check off a time and date right now…..”
Now, you have created a hungry audience for your scarce time and to get information that’s important to them. From a crowd of say 50 people, you can get appointments with at least half and 90% of those will become clients. Now that’s successful seminar marketing.
Friday, October 13, 2006
Wednesday, October 04, 2006
The next evolution in how planners get paid
The last 15 years has seen a craze by the financial services industry: using fee-based accounts as a way to smooth out income fluctuations and insulate against fluctuating commission income. Additionally, fee-based compensation supposedly enhances trust as it positions the advisor as the investor’s advocate. However, the fee-based account is a false industry panacea for several reasons.
Most investors don’t care how they are charged. If they trust their advisor, they don’t worry about their advisor acting against their interest. They are interested in doing business with a trusted human being and are not focused on the mechanics of how they pay. To use a fee structure as a way of communicating concern with the client’s best interest is weak ethical footing at best. As an example, the medical industry charges on a “commission basis” (your doctor gets paid more when he sells you an operation), yet the medical profession does not suffer from a lack of public trust as does the securities industry.
Fee accounts may not even provide insulation from income fluctuation. I hear from advisors that their clients are leaving after years of zero return yet being charged a fee year after year. Clients are tired of the system “one for the advisor, none for me.” (The evidence of tired clients is anecdotal, as the industry does not break out separate account fee revenue from mutual fund asset fees).
The industry assumed that fee accounts had lower liability than commission-based trading accounts. While that might be so regarding client liability, the regulators have now fined at least one broker/dealer for inappropriately placing clients in wrap accounts when the client’s overall costs would have been less in a commission-based account. Although any financial planner knows that more money is made for clients by not trading and value is often created by telling clients to “sit tight,” the regulators seem to believe that value is created only when a trade occurs and that’s when the client should be charged. In other words, the regulators seem to favor turnover and justify its value even when the evidence shows that turnover reduces investment returns.
It takes years for industries to evolve but eventually, the underlying economics of the industry will form the industry’s most efficient revenue model. The underlying economics call for us to charge the client for value created. Currently, there is no correlation between client fees/commissions we receive and value we add. Enter the hedge fund. Here, the fee paid by the client can largely be based on gains (hedge fund charges are typically 1% of assets plus 20% of gains). So why isn’t this the dominant model in the industry?
As I understand it, the SEC’s rationale is that the investment manager who is motivated by a percentage of gains will take large risks. Therefore, the only people who may participate in incentive-based fee arrangements are rich folks, i.e., accredited investors ($1 million+ of investment assets or $200,000+ annual income). However, the problem of too much risk for the little guy is easily solved and thus we can forecast the next stage of evolution in the investment industry toward its underlying economics.
Specifically, the SEC could set prospectus guidelines for activities and ratios of any fund thereby limiting the potential risk. For example, if a fund states that it only buys or shorts stocks from the S&P 500 index and that not more than 5% of the fund may be invested in any one security, then the SEC and the investor now has assurance that the manager cannot take too much risk. These funds could be made available to the little guy who would pay incentive-based management fees. Of course, evolution is always slowed by those who like the status quo—investment firms, brokers and mutual funds that deliver no value, yet charge for it anyway. Eventually, the public demands a fair shake and the wall to a market-based system, like the wall in Berlin, comes tumbling down.
Most investors don’t care how they are charged. If they trust their advisor, they don’t worry about their advisor acting against their interest. They are interested in doing business with a trusted human being and are not focused on the mechanics of how they pay. To use a fee structure as a way of communicating concern with the client’s best interest is weak ethical footing at best. As an example, the medical industry charges on a “commission basis” (your doctor gets paid more when he sells you an operation), yet the medical profession does not suffer from a lack of public trust as does the securities industry.
Fee accounts may not even provide insulation from income fluctuation. I hear from advisors that their clients are leaving after years of zero return yet being charged a fee year after year. Clients are tired of the system “one for the advisor, none for me.” (The evidence of tired clients is anecdotal, as the industry does not break out separate account fee revenue from mutual fund asset fees).
The industry assumed that fee accounts had lower liability than commission-based trading accounts. While that might be so regarding client liability, the regulators have now fined at least one broker/dealer for inappropriately placing clients in wrap accounts when the client’s overall costs would have been less in a commission-based account. Although any financial planner knows that more money is made for clients by not trading and value is often created by telling clients to “sit tight,” the regulators seem to believe that value is created only when a trade occurs and that’s when the client should be charged. In other words, the regulators seem to favor turnover and justify its value even when the evidence shows that turnover reduces investment returns.
It takes years for industries to evolve but eventually, the underlying economics of the industry will form the industry’s most efficient revenue model. The underlying economics call for us to charge the client for value created. Currently, there is no correlation between client fees/commissions we receive and value we add. Enter the hedge fund. Here, the fee paid by the client can largely be based on gains (hedge fund charges are typically 1% of assets plus 20% of gains). So why isn’t this the dominant model in the industry?
As I understand it, the SEC’s rationale is that the investment manager who is motivated by a percentage of gains will take large risks. Therefore, the only people who may participate in incentive-based fee arrangements are rich folks, i.e., accredited investors ($1 million+ of investment assets or $200,000+ annual income). However, the problem of too much risk for the little guy is easily solved and thus we can forecast the next stage of evolution in the investment industry toward its underlying economics.
Specifically, the SEC could set prospectus guidelines for activities and ratios of any fund thereby limiting the potential risk. For example, if a fund states that it only buys or shorts stocks from the S&P 500 index and that not more than 5% of the fund may be invested in any one security, then the SEC and the investor now has assurance that the manager cannot take too much risk. These funds could be made available to the little guy who would pay incentive-based management fees. Of course, evolution is always slowed by those who like the status quo—investment firms, brokers and mutual funds that deliver no value, yet charge for it anyway. Eventually, the public demands a fair shake and the wall to a market-based system, like the wall in Berlin, comes tumbling down.
Tuesday, January 31, 2006
The Mistake Financial Planners Make with Life Expectancy
(You may download a copy of the Life Expectancy Table)
Planners use the wrong numbers for life expectancy and it means that much of the planning that’s been done needs to be revised. Planners typically consult life expectancy tables published by the IRS and most are well aware that these are the average life expectancies. A person reaching age 70 will live 17 years longer on average, with half dying before age 87 and half living longer. A planner adds a few more years for a margin of error (let’s plan to age 94 Mrs. Smith) and completes their plan. And that’s where most planners stop.
Stopping at this point presents a double jeopardy. Financial instruments may not perform for a sufficiently long period and the client may live too long. We could burn the client from both ends. The first danger we have already encountered with life insurance policies whose premiums did not vanish and variable investments (mutual funds, variable life, annuities, IRAs) whose balances collapsed insuring they would not last a lifetime.
We already make the second mistake with Social Security and in a minute, I will show you how to avoid this same error with your clients. Here’s a snippet from the Social Security web site to illustrate the problem:
If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.
….the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).
In other words, Social Security’s fundamental problem is based on life expectancy estimates that are too short and we as planners have made the same error. We have consulted data that often leads us to plan for too few years of retirement.
It’s always bothered me that the life expectancy tables and the averages tell me little. What I want to know is the probability of my client living to age 94 once the client has already reached age 70 (a table that shows life expectancy at birth is of no value). Your client wants the same information but probably doesn’t know the proper question to ask.
Why do we go to such lengths selecting our asset classes and using the standard deviation from the appropriate time frame for our Monte Carlo simulations and then just “wing it” with life expectancy? Why isn’t life expectancy one more factor that we input to our simulations with an average and standard deviation? After all, life expectancy, a natural phenomenon, adheres better to a normal distribution and the underlying statistics than do investment returns.
There are some crude attempts to provide this information to investors and advisors. On Fidelity’s website, buried in their pages on annuities, is a probability-based calculator (http://personal.fidelity.com/products/annuities/income/income_intro.shtml). However, it shows only the 25% and 50% chance of living to selected ages. It will not answer the client’s question “How can I be 90% sure that my money will outlive me?” So I created the table to help you answer that question.
I took the data from the Center for Disease Control Vital Statistics report, February 2004 and constructed a probability table just to see how surprised I might be. Using the table, I can quickly see that my client, age 70 has a 13% chance of living to age 94. At least now (before the programmers add this to their simulation software as I recommend), I can ask Mrs. Smith, “With high comfort, your portfolio can generate $xx per year until age 94 but there’s a 13% chance you’ll live longer. Can you do with less so that we can further decrease the probability of outliving your money?”
The client may then ask, “If I want to reduce the risk of outliving my money to 10%, how much do I need to reduce spending?” First, I can look at my life expectancy table and see that someone age 70 has a 10% chance of living to age 95. I can then use this forecasted age in my planning software or calculator to determine how much Mrs. Smith can spend.
Yes people are living longer. And that makes us responsible for informing clients of more accurate probabilities of outliving their money.
Planners use the wrong numbers for life expectancy and it means that much of the planning that’s been done needs to be revised. Planners typically consult life expectancy tables published by the IRS and most are well aware that these are the average life expectancies. A person reaching age 70 will live 17 years longer on average, with half dying before age 87 and half living longer. A planner adds a few more years for a margin of error (let’s plan to age 94 Mrs. Smith) and completes their plan. And that’s where most planners stop.
Stopping at this point presents a double jeopardy. Financial instruments may not perform for a sufficiently long period and the client may live too long. We could burn the client from both ends. The first danger we have already encountered with life insurance policies whose premiums did not vanish and variable investments (mutual funds, variable life, annuities, IRAs) whose balances collapsed insuring they would not last a lifetime.
We already make the second mistake with Social Security and in a minute, I will show you how to avoid this same error with your clients. Here’s a snippet from the Social Security web site to illustrate the problem:
If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.
….the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).
In other words, Social Security’s fundamental problem is based on life expectancy estimates that are too short and we as planners have made the same error. We have consulted data that often leads us to plan for too few years of retirement.
It’s always bothered me that the life expectancy tables and the averages tell me little. What I want to know is the probability of my client living to age 94 once the client has already reached age 70 (a table that shows life expectancy at birth is of no value). Your client wants the same information but probably doesn’t know the proper question to ask.
Why do we go to such lengths selecting our asset classes and using the standard deviation from the appropriate time frame for our Monte Carlo simulations and then just “wing it” with life expectancy? Why isn’t life expectancy one more factor that we input to our simulations with an average and standard deviation? After all, life expectancy, a natural phenomenon, adheres better to a normal distribution and the underlying statistics than do investment returns.
There are some crude attempts to provide this information to investors and advisors. On Fidelity’s website, buried in their pages on annuities, is a probability-based calculator (http://personal.fidelity.com/products/annuities/income/income_intro.shtml). However, it shows only the 25% and 50% chance of living to selected ages. It will not answer the client’s question “How can I be 90% sure that my money will outlive me?” So I created the table to help you answer that question.
I took the data from the Center for Disease Control Vital Statistics report, February 2004 and constructed a probability table just to see how surprised I might be. Using the table, I can quickly see that my client, age 70 has a 13% chance of living to age 94. At least now (before the programmers add this to their simulation software as I recommend), I can ask Mrs. Smith, “With high comfort, your portfolio can generate $xx per year until age 94 but there’s a 13% chance you’ll live longer. Can you do with less so that we can further decrease the probability of outliving your money?”
The client may then ask, “If I want to reduce the risk of outliving my money to 10%, how much do I need to reduce spending?” First, I can look at my life expectancy table and see that someone age 70 has a 10% chance of living to age 95. I can then use this forecasted age in my planning software or calculator to determine how much Mrs. Smith can spend.
Yes people are living longer. And that makes us responsible for informing clients of more accurate probabilities of outliving their money.
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