Before we begin, I thought I’d share a little bit. Some of you I know. I see many people I don’t know in the audience. That’s great. I know there are a lot of people here who have attended MDRT meetings before and some who haven’t. I hope you all have enjoyed this format as much as I have. I think this has been terrific for all of us. I’d be remiss if I didn’t tell you a little bit about me. I’m not an overnight success. I am not a professional speaker. I’m an MDRT member. I’m just like you. I had the privilege of being MDRT’s President in 2011. Maybe one difference is that I got to sit in a different chair than some people do. You know, that’s all it is. It’s just a chair. It’s a place to learn.

For everything I present to you today, I want to focus on sharing. I am not going to speak at 50 miles an hour. We have 90 minutes. We won’t go 90 minutes, but I can’t talk that fast and I don’t think it’s great to race through it. I think this should be a session all about sharing. I want to share what I do with you. This has been 35 years in the making. This is just simply where I am in my life at this point in our great profession. With that, I will start. The title of my presentation is “Fee-based and consulting on life insurance policies.” I want to tell you about my practice first because it begins and then segues into how I actually got into this particular area.

This is my practice today from a compensation standpoint. I’d like to give and deliver the basics to you because this isn’t how it’s always been. In 2013, I made a change, a big change. It took me a long time to make that big change. I made the change from being a career producer with a major company in the United States and around the world. I finally did what I always had intended to do, and that’s to become truly independent. I have. Beginning in September of 2013, I formed my own independent firm and began my affiliation with an independent broker-dealer so that I could be truly independent and really more unbiased with all of my clients whom I’ve worked with.

That’s how a lot of this came to be. How does my practice look today from a compensation standpoint? Because it’s a dramatic change from where I was. Prior to the time that I moved and became independent, virtually 90 to 100 percent of what I did was insurance product-based compensation, commissions. I didn’t charge fees; I couldn’t charge fees. I could but the career company that I was with would have taken 50 percent of any fee that I charged. I thought, That doesn’t seem quite fair. I don’t think I’m going to give you that opportunity. I didn’t. Today, things have changed significantly.

Today, about 60 percent of what I do is still commission-based insurance products with a focus on life insurance. It’s life insurance, disability and long-term care. That’s about 60 percent of what I do. The other 40 percent has to do with fees. There are three different areas, three different phases that I work in. One is what many of you all do here. If you raise your hands, how many are involved in fee-based financial services? A good number, probably half of you all here are engaged in that. There are a lot of different ways to go about that. The second is fee-based wealth management or assets under care, assets under management, whatever you want to call it. Let me see a show of hands of how many people are engaged in that area. Again, I would say a good majority of the people here.

How many of you here are engaged in fee-based life insurance consulting? Got one. Great. I only know of one other person here who actually is. That’s my good friend David Pell from Boston, Massachusetts. That is how my compensation works today. If I have to break it down, the fee-based of the 40 percent is probably fairly evenly split between those three areas. I am doing the opposite. This is what I wanted to really bring to the forefront.

I’m going, “Here I am. I’m almost 63 years old.” You’re thinking, Man, you ought to be on cruise control now. You got your practice in place. You’re doing OK. You have no girth of referrals or prospects or anything. What are you doing? You are completely changing your business and completely changing your business model.

It’s always about growing. You have to stay green. You have to be growing. You come to this meeting because you wanted a growth experience. I think we all probably had that here. If you don’t keep changing in a constantly changing world, I don’t care how old you are, you will get left behind. If you think that we are through with a DOL fiduciary rule type of environment, my friends, you’re very wrong. It’s coming back. I don’t know how and in what form. Something is going to happen within the next couple of years. It’s got to. I’m sorry. That’s the way my practice is built today from a compensation standpoint. What about business development?

How do I develop new business? The reason I’m sharing it with you today, and I’m doing it slowly, is if you’re thinking, Wait a minute. You’re here to talk about how do you charge for your fee-based life insurance consulting, I’m not going to be able to explain that to you until you see how I got there. You have to see how anyone gets to wherever they are. As I said, it’s taken me a long time. I’m still a work in progress. There are certain things in business that don’t change. I have a consultative process of gathering and generating referrals from other centers of influence, from clients. They come from a variety of different places. I’ll do whatever I can to help people.

That’s what we’re in our business to do. I don’t care what type of business model you have. You’re in it to help other people. We’ve already heard that here from a number of people today. Thirty-six years ago when I started in business, just to give you a little bit about my background, I was afraid to cold call. I was 26 years old. I didn’t know many people. When you don’t know that many people and you’re talking to them and, of course, they’re thinking, Well, you just started out. I’m not going to do business with you, then what do you do? You have to begin asking for referrals. I did what anyone would do at that point. I had to develop a script. I did. I developed it from a number of different sources.

Asking for introductions to other people and businesses was the key to my success and always has been. In terms of developing new business, that’s nothing new. That’s something that is ongoing everyday. I’m very disciplined. I’m very consistent. I built up good habits over the years. I still have 10 to 12 appointments per week. A lot of people think, Wow, man. That’s a lot. Well, when you start out, and in the old days when I began, it was all about writing a lot of lives, putting enough business on the books and developing enough clients so that I could at least stay in this business. I got used to writing a lot of business. In order to write a lot of business, you have to have a lot of appointments.

One step becomes ingrained in you. It doesn’t leave. It becomes a habit. It becomes a behavior. Having a sense of urgency in almost every talk I’ve ever given, I’ve always talked about this. If you don’t have a sense of urgency about what you do and about the services you provide and the products and the people that you work with, I’m pretty much convinced, they need to find someone else to work with them. Because you have to show that you’re energetic, that you love what you do, that you actually love what you do. When people say, “Well, gee. How did you get here?” I say, “You know what? I found what I’m passionate about and what I love to do.” I don’t see doing anything different.

I don’t plan to retire. I don’t plan to slow down unless I’m forced to slow down just like many of you in here. Because if you love what you do, it’s not work; it’s having fun. Devoting time and attention to detail is very, very important. I’m a little bit unique perhaps that way. I pay maybe a little too much attention to details sometimes. I didn’t start out exactly being a good delegator of things for other people to do in terms of the systems and administrative folks, but I have gotten much better over time. The development of my practice today and the key going forward is because of the relationships that I’ve developed with CPA firms, tax and estate planning and attorneys.

Some of my clients are willing to help and to introduce me to other people. Also some employee benefit consultants actually refer business to me because they don’t do it themselves. In terms of building and improving those relationships over time, how does that work? What do you do? First, you have to offer something that no one else does. I have a real belief in teaching. I like to call it “financial literacy for whomever wants to listen.” You’ve got to be able to communicate. You must be able to have the ability to communicate complicated concepts simply and in a language that everyone can understand. Now, full disclosure. I was an English literature major in college.

I came out knowing how to read, how to write, how to analyze, how to understand things and how to look at things the way that certain authors do. What do they really mean? What is the meaning behind the meaning? From an analytical standpoint, that’s very important — the ability to write, the ability to say things simply. I think of Dennis Mosley Williams, those of you who heard him up here the other day remember. If you didn’t hear, one of the things he talked about was having an agenda. For those of you here, his agendas are just short bullet points. The ability to write has nothing to do with your ability to be able to write a long sentence. If you’ve ever read Ernest Hemingway, he wrote in very short sentences. He’s obviously one of the best authors who was ever produced in the United States or who lived in the United States.

I want to be a technical resource and be the resource to all my clients so that they don’t have to worry about it. Anytime they have a problem, I want them to call me. They may have a question about property and casualty, which I know nothing about. They may have a question about children who are coming out of college. They major in this. They have no idea what they want to do. They’d like to come. Would you mind talking to them? Giving them some advice? I do things like that. I hope you all do too.

It’s not just the money or the compensation that you earn from clients. It’s the trust that you’re getting from them and that you are earning from them. Private briefings: I have these one-on-one meetings with my centers of influence at least once a quarter. Now you don’t have to have a lot particularly in this area. You only need about four or five. If you have four or five centers of influence, particularly, we’re talking about life insurance consulting. That’s really about all you need. They just need to understand what it means, what it does and what you do for them. We talk about fees. One of the things that I will ask at the end and what I’d like for those here to share, which I think would be really good, is how do you charge fees.

Because everyone’s very different. Some do hourly. Some do flat fees. Some do retainer-type fee situations. Some are now charging a fee based upon a client’s net worth. What are you doing? What do you all think the future is? I’d like to know. I think that’s a good way to share. I keep saying “fees.” I think Dennis called it — I’m trying to think what term he used — yeah, the cost of doing business with me. The point is, this is an environment. This is not going away. We don’t know what’s going to happen in our profession. We don’t know what the companies are going to do. We don’t know what commission-based compensation is going to look like in a number of years.

Frankly, we don’t know how many U.S. companies or U.S.-owned companies there may be in five or 10 years. They’re going to be gobbled up. They could be gobbled up by companies from Japan or China. We don’t know what’s going to really happen. You have to always think ahead. I will say one thing about fees because some people charge really high fees. If you charge a lot, you better be able to back it up because if you can’t back it up, you’re going to lose people.

Let me get into life insurance consulting and how it’s developed for me. I know I went a little slowly through the other things. Like I said, you’re not going to know why I got into this until you know how I got there.

This has been a process. The process actually began about four years ago. I’ll tell you why. Four years ago, I don’t have to tell any of you here. You know what’s going on and what has happened to a lot of companies. I was affiliated with a company that deneutralized X number of years ago and became a stock company. Then it spun off another company through all their business into it. OK. Spun it off, and what have other companies done? They’ve sold out to private equity firms. We have a lot of life insurance companies that are now about private equity firms. What do you think they want to do? They’re not interested in you. They’re not interested in your policyholders. They’re interested in reaping whatever benefits they can before they then take that company and sell it to another private equity firm. Maybe another company in the future.

Some of the old one mutual companies may be able to outlast us. I say “may” because you never know what’s going to happen in a global economy. It is a global economy now. Our last speaker just talked about that. She said 2017 was the first synchronized global growth I guess in the world since 2008. It’s a global economy. Don’t think that things are going to stay the same. That is why I’m doing what I’m doing now. Because nothing is going to stay the same.

Let me tell you where I think there’s a great niche for all of us. If you want to be there and if you’re doing it, you’re already there. Some of this you may already be doing. I may be able to learn as much from you as maybe you get from me today. You already see the niche. About four years ago, what happened is I began to go out and market my new company and to visit with my centers of influence in particular. What I started noticing was they said, “Great. You’re going to do more consulting work.” Things started coming up.

Look, I’ve got a client. They keep getting these letters from their life insurance company or companies about some of the policies that they own. They don’t understand them. They can’t figure out why they’re getting them. I said, “Why don’t they talk to their broker agent who sold them that?” They’re not around anymore or they disappeared or they’re dead. They’ve retired out of business. I hate to say “dead,” but dead’s dead. They don’t understand. They’re fearful, and they’ve had this in place for 15, 20 or 25 years. They’re getting letters that don’t sound very good. “Would you mind reading this for my client?” I said, “Sure. I’d be happy to do that.” I did. I hadn’t even thought about charging a fee at this time. The problem is, it kept coming up over and over again. I thought, Are you nuts? You’ve been in business for this long. You’ve got some wisdom.

At this point, you have some knowledge. You need to get paid for it. And so, that’s exactly what I decided to do. Four years ago in the beginning — again, this is something that’s not new — I haven’t just started. I’m still in the growth stages. I think it’s just going to grow even more. What I ended up with now and the way it looks and what I ended up consulting on is life insurance, disability, long-term care and life settlement. I lead with life insurance. Frankly, that’s my favorite thing.

How many of you in the audience have got experience with disability income insurance, how many of you all do? How many of you all sold a lot? Great. How many of you have sold not just a little long-term care but a pretty good job of it so that you know what you’re doing? Let me tell you. There are problems out there with disability, policies and people not knowing what they have anymore because they haven’t looked at it in 10 or 15 years. Particularly with long-term care, I think everyone is aware of the issues and the problems that exist in that particular market right now and will continue to. In terms of what I’ll consult on, it can be either on fixed or indexed to variable products. Mostly life insurance, but it’s amazing how many annuities people want to understand.

They don’t even understand what they bought there. This I couldn’t even believe. They want you to look at individual group or association, particularly association and group disability, income. I said, “Why? That’s what your human resource people are supposed to be doing or the brokers. The employee benefit brokers are supposed to be doing this.” Every single person to a tee says, “No one’s explaining any of this to us.” OK. Just ask your clients. They said, “Look, I get hired here. I’m high paid. I’ve got a pretty high net worth. We get these benefits. They just give us this stuff.” I have no idea what it says. Then I’m thinking, So what if you do become totally disabled?

Do you know what’s going to happen to you and your family? Come on. This is just basic stuff. This is 101. These are the things that we all learn in the first couple of years of business. I’ve got to tell you. It’s coming up now. It’s coming up with 50- and 60-year-olds. They have no idea what they have. This isn’t even a financial planning part of it, which, of course, you can imagine what happens after something like this. There’s a lot of feeding into other parts of the business. Traditional and hybrid long-term care products.

Life settlements. I’m only going to mention life settlements for one reason. It’s because I’m affiliated with a broker-dealer where we have a proprietary process to deal with these and where we can actually offer a consulting service on it. I work very closely with them. Second thing is that I provide a customized template and proposal for each client. We all have to be efficient. I do use templates over and over again. I just simply adapt them for people. Round pegs have always got to fit in round holes. Customization, when you do that, means you treat your clients as if their problem had never occurred before. I want you to really think about that. Again, I can’t believe how much I’ve gotten out of this meeting. I really can’t.

I spent all my time the last couple of days with Dennis Mosley Williams. It’s no advertisement for him. My point is this. With the kind of intensive sessions we’ve had, it’s really allowed us to put things off as opposed to going to a 20-minute session or 45-minute session at the Annual Meeting and rush, rush, rush. Here, we don’t have to do that. We can really take time and let things settle in. Customization to me means making the people I work with feel as if their situation has never occurred before even though I’ve dealt with other things many times. These assignments have also led to other types of consulting assignments but not for me.

What ends up spinning off of these things are group benefits, nonqualified and qualified plans. What do I do? I have other people in my network, other professionals in my network. I refer to them. Where do you think I’m getting my referrals from? This is all part of what I’ve done. That’s why I talked in the beginning about the key to our business being prospecting and getting referrals from other people. If you can do that, you’ll always be successful. I don’t care where you are. I talk about that constantly with my own children, even though they’re not even in my business. It’ll help them one day.

The other thing I wanted to mention is I do not operate as an RIA. I operate as an investment advisor rep of my RIA because I really don’t have that much in terms of assets under care. Not like some of you all may have here. It’s not worth it to me. It’s another layer of responsibility. Frankly, I don’t want any more headaches. This makes it much easier for me. What are my hourly fees? I charge hourly fees. That’s why I really would like some input. Maybe a lot of sharing to go around here among everybody at the end. I choose to charge fees on an hourly basis right now. Why? Because most of the professionals whom I work with, that’s how they charge. That’s what CPAs do. Although sometimes, they’ll charge by the project.

A lot of attorneys still do that, although a lot of estate-planning attorneys charge flat fees for what they’re doing now. That’s what I do because clients seem to understand that. You will find that on the very back of the handouts that are on the table, which is this outline, which I thought would be helpful.

The thought is, how do you have these different fee structures? How do you have all these agreements? How does all that work? That must be a lot of legal documents that you had to draw. It’s actually not because I use my broker-dealer RIA. They have a proprietary, very flexible, consulting agreement that they had designed where it can limit, I can limit or expand the scope as I need to. I only have to use one document.

It makes it very easy. I’m not sure how those of you in here do it. Some of you who have your own RIAs, you have to have your own agreements if you’re IARs and your broker-dealers don’t have such an agreement. Believe me. They can put one together so that you can begin to do things like this.

This question always come up. You’ve done this consulting. You’ve done your job. Boy, I bet that leads to life insurance sales. A lot of times, it does. I have to follow a law in my state, in Louisiana. There was actually a license. I think it’s probably true in a lot of the other states, too. You have to have a license if you consult on life insurance.

What our law says is that I cannot be paid. I cannot earn a commission. I cannot begin. I can’t talk about what might be good for that client — if they need to purchase more, if they need to do something else or consider doing something else whether it’s with me or anyone else — it doesn’t matter. I can’t begin to talk about that until the end of the project, until I’ve been paid, until I’ve finished what I started. At that point, it’s then another transaction. The state considers it another transaction, and then I can do that. The clients have to ask me. I’m not going to ask them. Guess what? They always say they want to work with you. Spend that time with them because you were spending a lot of time with them doing this. All right.

Why has this part of my practice grown? I think it could grow for anyone in here who wants to get involved in it. The life insurance industry has disappointed policyholders for many years. Am I right?

I don’t think that’s a new problem. Guess what? That problem is going to continue. I mentioned, not by name, but I mentioned a career company that I had been affiliated with. It spun off companies and everything. Now when I call in or when my staff has to call in, or any customer service issue, that has all been outsourced to another company now. They’re not talking to people who have a background in what we do. It’s some other company. They have no idea what they’re doing. Things that used to take two days now take two to three weeks to happen. I imagine some of you in here are having these types of issues, too. If you’re not, you’re going to.

Lower credited interest rates and lower dividend scales on general attempt portfolios. [visual] One of the reasons so many variable universal life policies or even some whole life policies, if they’ve got term writers in there, begin to blow up and the reason people begin to get nervous is that they are not performing as they were intended to or as people thought they would. Because no one could understand or even think that we would go into a period of prolonged low interest rates. If the companies aren’t getting in, if they can’t earn money on the premium that’s coming in, what is it giving them the right to do? You’ve got to go back and read those contracts you sold because they have certain rights that they can go in and make certain changes. I think all of you have seen that. If you haven’t, not only will you see it, you will see it more. Those of you who are here — I know Rob is here from Canada. I don’t know what’s happened in Canada. I can’t imagine that they haven’t experienced similar situations.

The cost of insurance increases. [visual] How many in here have dealt with companies where you have sold life insurance and are experiencing cost of insurance increases? Anybody raise their hand? Not everybody’s raising it. That’s good. That happens a lot. It’s going to happen more. That is a primary reason that the whole idea and the whole reason that I got into this part of the business. This is what clients don’t understand. They thought they bought something where the cost of insurance was the same. You have the universal life policy. You have a variable universal life policy. How did they explain this to you? They just said pay the premium and you’ll be fine.

They sold it like traditional whole life. A lot of people sold it almost like a guaranteed product. If you don’t think that happened, it has. It’s happened a lot. That’s what I experience every day. Spinning off on profitable books of business, which is what a lot of other companies have done. That has really caused a lot of gyrations. When I say “spinning off,” these unprofitable books of business, to a degree, this is where a lot of these private equity firms have gotten involved. Agents and brokers leaving the business — there are so many people whom you will come into contact with who were sold life insurance or anything where the agent or broker, the original agent or broker, is no longer there.

They’re either not physically present on earth anymore or they’re simply out of the business or they don’t know where they are. They may even still be in existence, but they haven’t heard from them in 10 years. Clients and people whom I talk to simply don’t have anyone to talk to. The CPAs, the tax attorneys, tax and estate planning attorneys, they don’t have anyone to talk to. Many of you have done, I’m sure, a great job developing centers of influence over time. I’m sure many of you all have been very, very successful at it. Begin to ask them about this. Because I guarantee you, they’re getting this from clients. They have to be.

Another key reason, and a very important reason, is that companies are not monitoring life insurance policies at all. They don’t monitor them. They don’t give a bleep bleep about that. Policy management is something that you’ve got to look into in the future. There are policy management companies in the United States and in Canada or that do business in Canada. You’ve got to think about doing this particularly for your top clients. Anything dealing with a product that’s got any variable element in it, that’s not guaranteed, you better start thinking about this because this is something that I use. This is something that I can bring to CPAs and tax and estate planning attorneys.

Having the ability to give their clients the ability to have their policies properly managed and monitored by a professional organization, they’ve got to pay for it. That is something no one else is going to bring to the table. No one else is going to bring that to the table. You want to separate yourself? What is the point of being in our profession if you can’t dig your own niche and separate yourself from other people? This is what I’ve decided to do that separates me from everyone else in my community. I am the only one. I know that I’m the only one doing it in my community because I’ve asked all of these people.

I said, “Is anyone else doing this? Is anyone else ever approached?” No one else is doing it. This may not be what you want to do. It doesn’t have to be. Here’s the transferable idea. It doesn’t matter if this is not what you want to do. It doesn’t matter if this doesn’t appeal to you. Find something that separates you from everyone else. Whether it’s in the asset under management business, if you’re more in the life insurance business, I don’t care what you’re doing, employee benefits, you name it. Whatever you’re doing, find something that separates you from everyone else because that’s the key to remaining in business and the key to being successful in the future.

This is the process that I use in my fee-based consulting practice. This is exactly what I do. My good friend Walton Rogers, who’s sitting in the front row, knows. There isn’t any BS in my body. What you’re hearing right now is exactly what I do. This is what my process is. The initial meeting that I have, let’s say I’ve been referred. I got referred by a CPA. I’ve been referred to one of their clients, and they said, “Look, we need to meet. Here’s what has happened.” I said, “Great.” That first meeting, the initial meeting, is going to be in their office. Not my office, but in the CPA’s office. Why? Because it’s their client. I want their client to be immediately comfortable with me.

Because it’s in a place where they’re already comfortable. It’s all about psychology. This is nothing new. It works. That first meeting is going to be in the center of influence’s office, where at that point you do all of your typical fact gathering. Now, it’s a little bit different than the normal fact finder. Am I using language that is difficult today or sophisticated or something that you never heard? That you’ve never heard or maybe that you’ve heard in the first year of business? No. You know why? Because it works. Why did people stop doing stuff that worked for them? I’m not a believer in that. I believe in just adding more spokes on the wheel of a tire. Because that’s what works.

Keep doing the things that have always made you successful. If you add something new, then it’s another spoke on the wheel that you’re adding. Don’t stop doing what got you where you are today. In this meeting, you’ve got to be able to tell and explain. Look, this is the rationale for what I do. This is what I think after a very brief conversation and reading or hearing a little bit about it. It doesn’t take long. I don’t know how many thousands of meetings I’ve had. Remember I said I have 10 to 12 appointments a week? I bet Fran Jakobi had done that for a lot longer than I have. OK. She’s here. She’s one of the legends in our industry. She’s here to learn.

I am so happy you’re here today. I’m very humbled. You do the same things that got you here to make you successful. This is just another fact-finding meeting. It is done on a different basis. You have to feel your way into it. The consulting agreement that I talked about — now this is interesting because this I didn’t really expect. Sometimes, the agreement is between me — or I’m going to say me, but it’s really the RIA firm with me as an IAR — and the center of influence. Sometimes the CPA firm or the law firm wants the agreement between me and them, and then they charge the client for the time. Now, I’m sure they put their little fee on top of it.

You know what? There’s nothing wrong with that as long as I get paid what I’m being charged. That is something I never expected. Typically, the agreement is going to be between me and the client most of the time. I have three firms, and that’s the way I work with them. I’ve been amazed. I really didn’t ever expect that to happen. I will tell you that when you have the agreement between you and a CPA firm or a law firm, well, I don’t know. We were talking about a firm here. We’re not talking about one person. My agreement is with them and all the other CPAs in their firm. What does that do? Now I have carte blanche to go and talk to every other member of their firm who is in the tax area or estate planning area or whatever. I get to go and talk to them.

Do you see where this is going? This is why this business has got a lot of growth potential. I always tell them upfront that I will prepare an itemized bill. I only charge for my time. I do not charge for my staff’s time at this point. I only charge for the time that I am putting in. I let them know upfront what I’m going to charge and how I’m going to charge because I have to get agreement. Because the objective of this meeting, this first meeting, is to get the agreement to work together and a commitment to the scope of the project signed. If I can, I want to get the agreement, which is very short, signed at this meeting.

I would say probably 75 percent of the time, it’s signed at that meeting. That’s the initial meeting. Then I execute the consulting agreement, which I said is really not that difficult. It’s put together very simply. It’s written so anyone can understand it because it’s actually written by an attorney who really understands how to write simply. I will not start work until it’s signed. I don’t ask for a portion of the fee upfront. The question is, is this wise? I’ll tell you my experience. Ninety percent of the time, it is. About 10 percent of the time, it’s not. I think 90 percent is OK. I just haven’t and again, it’s just me, but I haven’t gotten to the point where I’m going to ask for a retainer or something upfront or half the fee upfront.

I’ll tell you why. Because I never know how much time I’m going to really spend. Sometimes, I think it can be just not that much time. It blows up into something else because there are other things that happened. It’s also fascinating to me that there are so many people in the world who don’t understand a basic life insurance contract. They just don’t understand it. They don’t understand the terminology. They don’t understand the definitions. They don’t understand what a company can and can’t do. I’m doing this because I’ve spent my life, I’ve spent my entire career, getting good at something. Now, I get paid for that. The last part is reading, research and writing. What do you do?

You got this agreement signed. You’re putting things together. Now, what do you do? The first thing, of course, is to get a copy of the life insurance contract or contracts, a complete copy of it, if I can, with all the annual summaries, any illustrations, any proposals and brochures, anything the clients can find at their home or their office about it that they have received. Sometimes, people are pack rats and they bring me all kinds of stuff. Sometimes, they throw everything away and I have to write letters, draft letters, that the client signed. We have to order and get everything from the companies. The time that it takes to do a project can really vary. It can vary a lot. Suitability.

Where they sold the product that we’re now talking about today. [visual] Today is 2018. I have to go back to 1992 or 1995 when that policy was sold. You’ve got to look back at that time. Was it the right product for the client? Was there a temporary or permanent need? Because I don’t know. Sometimes, this is about term insurance, believe it or not. Was it a temporary or permanent need at that time? Was it affordable for the client? Just very, very simple suitability issues to talk about and to gather. The company history because I mentioned at the beginning, what I end up doing a lot of times is to actually do a diagram of a life insurance company’s history to show them events that have happened.

I don’t have to go back to the company’s founding. I go back 40 or 50 years and show what’s happened over a 40- or 50-year time frame and then give them just a very simple chart, which I know everyone can get, whether it’s an Ibbotson chart or anything else about what the market has done over a 40- or 50-year period. It’s pretty damn easy to explain about low interest rates and about why cost of insurance has taken place and why these companies have made the changes that they did. It’s just simple economics. Why they had problems with books of business, etc. Complexity becomes a key issue. Does the client even understand what they purchased at the time?

If it’s been such a long time, they can say, “I have no idea why I bought it.” I’ll say, “Why do you think you purchased it? At that time, 1992, tell me about your life.” You all, this is not a little fact-finding exercise. You’re going to be getting in as much depth here as you do when you’re working with any other client when you’re doing their financial planning. When you’re gathering everything, all those feeling, emotional types. I’m asking and doing the same thing I’ve done for 35 years. I don’t even remember anymore, 36 years. I’m just doing it in a different way. It’s like doing a fact finder, a different way every time. It’s just asking different questions.

You’ve got to get those answers. Particularly going back to the affordability issue. They’re older now. Cash values have come way down. In order for them to keep it in force, the premium is going to go up to an incredible level. Do they have the resources to pay future premiums? Will the client need to purchase something else? Do they need to just face the music and say, “Look, there’s a provision in here where you can elect a nonforfeiture provision.” It’s called “reduced paid-up.” You may have to do that. You may not want the result, but it’s going to save and keep this in force.

You and I would say, “What is that?” That’s life insurance 101. We all learned about nonforfeitures the first few months we were in the business. This is simple stuff. There isn’t anything complicated about this. It’s just that no one else knows about it. They don’t have that knowledge. The other thing is, if it’s a variable product and it’s in trouble, are they going to have time to recover if they make certain decisions? Do they have time to recover from the future market decline? Do they have the ability to deal with long-term market volatility if it’s a variable-type product? I don’t care if it’s an annuity or if it’s life insurance.

The point is you’re asking lots and lots of questions. Another important thing is, will this drain too much of the client’s assets? Some other things include in-force illustrations. [visual] We all get them. I have a rule in my office. We get in-force illustrations on all products, believe it or not, with the exception of guaranteed level term. We get in-force illustrations on everything I’ve done about every two years. I might get a practice to do it every two years because things are changing too rapidly, because I want to study the history of a company’s dividend scales, of their interest assumptions, their cost of insurance increases.

What does an in-force illustration tell you? What doesn’t it tell you? Because whatever it doesn’t tell, then I’ve got more that I’ve got to do. I’ve got more research I have to do. I may have to talk to someone at that carrier.

Ethical considerations. [visual] If somebody’s asking me for an expert opinion, I have an ethical and fiduciary obligation to tell the truth based upon my experience. I didn’t write a book. I wasn’t some academic who wrote a book and can quote a line and verse from it. The point is, I’m basing everything on my own experience, that I will disclose that to them.

The other thing is that I want to find out what the client was told by the selling agent or broker in the very beginning. If they had other meetings over time, if they had any notes from them, any proposals, any reviews, anything they ever did, I want to be able to get and gather all of that information. If the original agent or broker is still in business and didn’t stay in touch with them, and if things proceed down the trail that maybe doesn’t look so good for them, that’s their problem, not mine. Has that happened? I can’t really talk about that. Let’s just say some people should have dotted their i’s and crossed their t’s a little bit more.

I will strongly advise everyone here to consider using or engaging a policy management company for those policies that you have that you think would be good to have managed and monitored over a long period of time because you may not always be here. Let me just quickly address that. How many of you are getting questions now about what happens if you don’t make it home tonight? Who am I going to work with? Come on. Be honest. OK. Hands are going up. In April of this year, I merged another independent advisory firm into my operations. I have three other advisors working with me. Why did I do it? One of the main issues in our whole profession is succession planning.

I have to have a succession plan. I’m not going to leave my clients in the lurch if one day I don’t make it home. I need to have backup. I need to be able to keep the promises that I made to them and their families to the best of my ability. Otherwise, building trust and client relationships, my friends, that’s all BS.

Audience: The question I have is, in a typical situation, how many hours does it take you to complete and deliver the analysis per policy?

Good: I’m going to get to that in a minute, but I will tell you, sometimes, it can take a couple of weeks, particularly if there’s a rush on it. Sometimes, there is. I’ll tell you where the rush comes in. You have the meeting. You’re with the center of influence. You’re with the client. You’re reading the letter. The letter says, “Your policy is about to lapse in two or three weeks.” It’s going to lapse in two or three weeks. What does that mean? It means you’ve got to get all over it really quickly. That has happened. That happened to one of my very best clients, who is a plaintiff’s attorney but not a typical guy. He does all maritime work. He’s got this incredible education, etc.

I have this meeting and I’m literally reading a letter where it says, “Your policy is going to lapse.” It was about maybe four weeks, but it was three or four weeks. I’m freaking out. I’m thinking, How on earth are we going to do this? We managed to contact the carrier. I’m not going to name the carrier. It’s not appropriate. We called them. I said, “Look, we can’t talk to you.” Get the client on the phone. We did all of that. I said, “Look, we have got to get this thing saved.” What can we do? He can either pay a phenomenal amount of money to keep it in place, or you could put it on a reduced paid-up basis. By the way, he’s uninsurable. He needs a lot more life insurance right now for estate planning purposes.

He will never be able to buy any more. At least we were able to put it on a reduced paid-up basis. Thankfully, the company was very, very nice about it. They said, “Look, we thank you for getting in touch with us and being as much of an advocate for your client as you have been. We’ll give you a little extra time. We won’t lapse it on that date.” Let me tell you. It was put on a reduced paid-up basis. It took about six weeks. OK. That reduced paid-up is about $1.3 million or $1.7 million. It was a very, very large contract. He needs the life insurance. He will never be able to purchase any more because of his health issues. Just imagine walking into a situation like that.

You go in and you’re talking to your best center of influence. “You know what? A client of mine just called me and said he got some weird letter from the life insurance company about his policy. He doesn’t know what it is.” You look at it. Supposed it’s the same thing. How do you think it made me look? I’m a hero. I’ve now got a pretty good amount of assets under care from this client. He loves me. He just can’t imagine. What did I do? All I had to do was what I was trained to do, what I’ve learned to do over all these years. This is not rocket science. So, to answer your question, it could be very quick or it can take four to six months. A lot of it depends on how long it takes to get information.

Audience: A couple of questions. One, do you use private actuaries to do the in-force illustrations? Do you call the carrier every case and get the in-force? I had a problem with the same company I think you’re talking about and a couple of other ones. Now I can’t run my own in-forces like I used to.

Good: Yes.

Audience: I have to ask them, “I need this. I need that.” If you run it with this much or that much, can you give me eight different scenarios because I can’t run them anymore? We used to be able to just play with it. Do you have that software that you can run them yourself?

Good: No.

Audience: Is it still the arduous, “Hey, I need you to add another $300 a month to this and tell me what it does” OK, $500 a month.

Good: We have to order in-force illustrations. They can take, depending upon the carrier, three days. It could be three weeks.

Audience: You mentioned earlier that the law in Louisiana says you can’t sell a product while you’re charging a fee. What if the best choice is to replace that with something that actually works for them?

Good: Then I make that recommendation, which is in my report that I do. If you look at page 10, that’s really the rest of it. [visual] That is going to be in the recommendation report analysis that I do for the clients. In other words, I make specific recommendations as to what I think they should do. No. 1, I write it in a way that they can understand. No fancy language. I am very, very simple. I’m an Ernest Hemingway. I believe in short sentences. That’s how I think. That’s how you keep it simple with people. It’s all in the report that I do.

Audience: You’re able to do, for example, a 1035 exchange into this new product. Here’s the new illustration versus the old. [visual] You’re basically doing a sale.

Good: Yes, except one of the disclosures, and all this is important. They’re paying me a fee for my time. This does not obligate them. It does not obligate them to work with me any further.

Once I’ve done what they’ve paid me to do, they can go work with anyone else they want. You know what? That’s fine because I got into this because I wanted to consult and help people. If they end up working with me, that’s a bonus, but that’s not why I got into it. I will tell you that’s a byproduct. It’s not rose-colored glasses. I know what I’m doing. It does generate a lot of new business. I do keep those reports. I keep those very, very simple.

I always put all of the backup of where the information came from — all the opinions and recommendations that I make. I have a lot of resources that I can go to outside of just me and my office to get assistance. I basically put it all in there so that the client can see where it’s coming from. The other thing that I do, which probably is weird but I don’t mind, is when I make the presentation to the client, when I’m making the recommendations, that is in my office. If the attorney, CPA, whatever, can be there, I would love them to be there. Sometimes, they can’t be available. Sometimes, they’re available by phone. It’s always in my office.

I’ll tell you why. Because once we review the presentation — and I always tell this in the initial presentation — I don’t know why but there’s always something else that pops up at these meetings. There’s something else that needs to be done. “I forgot about this. Can you help my sister who’s got the same policy that I bought in 1995?” It’s just incredible. They get so excited because someone has taken the time to explain to them what they have, to explain it to them in a language they can understand. I know it sounds trite. People don’t understand life insurance. They know what it does. It pays a death claim. It pays money. It pays for pennies on a dollar when a family or a business needs it the most, but they don’t understand the contract itself. They don’t understand all the moving parts. That’s what you’re there to help them understand. They keep it simple. How many times have I said that today? I’m not trying to be a teacher or a professor or anything. Keep everything as simple as possible.

Audience: We’re curious about the range of fees because a client will ask you what it’s going to cost. How many hours does it take you to review one policy, on average? Is it four hours you’re charging for? Or two? Or 10?

Good: It’ll depend, but it could be between two and four.

Audience: What do you tell the clients if they have three policies and a returning [inaudible]?

Good: I’m going to tell them that based on what I have found out in our meetings, I’m going to estimate that it’s going to take me about 10 or 12 hours or whatever it is.

I’ll tell them that’s not guaranteed. I don’t know what I’m going to find. I don’t know what potholes I’m going to fall into. You’ve got to just make sure that you don’t guarantee it, that they understand that it may be more, but it also could be less.

Audience: You’re not scaring people away when you say it’s $2,000 and $5,000?

Good: Not at all. Not when you’re dealing with the kind of policies that I run into. This isn’t little stuff. This is normally big stuff.

Audience: Your consulting agreement, does it infer that this is a one-time review? Meaning if you have them sign a servicing representative form, that’s my understanding that we’re now on the hook to provide service going forward.

Good: Yes.

Audience: How do you avoid being the guy who does it and then disappears for the next 10 years like the last one?

Good: First of all, the consulting agreement is, I’m going to say, open-ended, meaning it can be ended by the client or me at any time. Once it’s signed, we don’t have to do it again unless the terms of it change. If I change my fee, it would have to be signed again, but otherwise it keeps going forward. Inevitably, what happens with cases like this, not 100 percent of the time but I’d say 90 percent, nine out of 10 people whom I end up working with do become clients. They’re going to be properly serviced. I’m going to have meetings with them just like I do all of my other clients. I don’t know what they’ll end up being, but that’s part of what happens. It’s written very well.

Certainly, I don’t take credit for it. It’s just written very well. Again, I don’t prepare my first bill until after I make the first presentation. Even if I have to go back and we have to do more things, I’ll prepare the first bill then. I just send it by email to the client or sometimes by snail mail if they like to get bills that way. It’s OK. I am really sorry it’s not attached, but we’ll make sure I get that to you. It’s a simple, easy-to-read format that we’ve developed.

Audience: It’s a small community, those who truly write insurance. If the previous and original writing advisor had retired, do you ever consult with them?

Good: Yes. That’s a great question. You have to be very sensitive to it. I don’t know where you live, but New Orleans is about 400,000 people. It’s pretty big. I know everybody. I know all the other producers. I know everybody who’s been in business certainly as long as I have been. I would probably know if it’s somebody who’s older. I’m going to know whether they’re even living now. If there’s an issue, I will bring it to their attention. We try to work together. What I don’t want to have happen if at all possible is that I don’t want to see somebody else incur any or no claim or a lawsuit or whatever.

I’m not into that. We’re all professionals. Sometimes, mistakes get made. I don’t want to see that happen. I will tell you, though, a lot of the policies that come up that this happens with were sold by wire house brokers. Do you ever come across policies? Do you ever come across any type of universal variable? Any type of permanent coverage? Ever sold by a wire house broker? Look at it. I guarantee you there’s a problem with it.

Audience: Julian, my question is, you said that most of the times when you end up consulting with a client, they become your client.

Good: Yes.

Audience: Do you then charge a fee for the annual review, or do you have an annual review?

Good: Yes. Yes and yes. And I do as I think many people do in terms of classifying the types of clients that I have. I’ll see every client whom I have at least once a year. It’s changing. Some a little bit, not every year, but some people I see two times or four times a year depending upon what it is. Do I charge for every meeting? Yes. Any review meeting, I am now charging.

Because here’s the thing: I’m doing it because I need to get paid for what I’ve spent my entire career learning. Look, I told you, I was not a quick start. I wasn’t an overnight success. I have made mistakes. I’ve had big-time challenges in my life. I’ll tell you what. I am going to get paid for my expertise now just like the other professionals do. That’s how you have to think because you’re in a different business. No, we didn’t get a law degree. No, we don’t have an accounting degree. We have an expertise that nobody else does. They don’t want to get involved with it. They will pay you for your time. I don’t care what we’re there to talk about. We might be there to talk about their kids or their family or some type of issue. I’m still getting paid for my time.

Audience: We started charging fees a few years ago. The reason we grew phenomenally is because of great people like you whom we could collaborate nationally with. My question to you is, are you open for consultation and collaboration with any other MDRT members?

Good: Yes.

Audience: You are.

Good: Yeah.

Audience: Thank you. Thank you so much for the privilege.

Good: One other thing I did want to mention, I mentioned my friend David Apell earlier. David did a session at the 2018 Annual Meeting that we just had in Los Angeles. He did an excellent session on this subject. The way that he does it is different from the way I do it. If you’re interested, you might want to get or find a copy of that talk and look at it. It’s excellent. He didn’t know I was going to plug him, but it is very good.

Julian H. Good Jr., CLU, ChFC , is a 35-year MDRT member with nine Court of the Table and four Top of the Table qualifications. He served as MDRT President in 2011.