1. ABC Retirement Planning Study Group 101 February 9, 2015
Futurity First
ABC Retirement Planning Study Group 101
February 9, 2015
Good Morning, today I want to talk you about the prospecting programs available to you and your agents. I will give a brief overview of each program, explain to you how to plug in to each one and ask those MD’s who use these programs to share with everyone why they use them, what their experience has been and share a best practice.

2. ABC Retirement Planning
Increasing Your Production with the
ABC Planning Process

3. ABC Marketing Platform
One on One
Relational Marketing
ABC Snackshop Client Events
ABC Seminar
Intro to ABC’s
College Workshops
ABC Planning Model
ABC Planning Process
ABC Retirement Analyzer Software
The ABC Marketing Platform is a powerful resource to help you write more business. The foundation of the Platform is the ABC Selling Process and the ABC Planning Model. These are key to helping your clients understand where Index Annuities fit into their overall portfolio to help reduce the risk to their retirement monies. Along with them is our exclusive “ABC Retirement Analyzer” software that helps you explain in graphic detail where the risk is in their current portfolio allocation, what it might look like with more “green money” included, and how to avoid running out of money in retirement. It is a simple-to-use, yet very powerful software you can use in your practice.
In addition to the foundation we also offer suggestions for your practice including One-on-One Relational Marketing ideas, our 30 Minute Snackshop Presentation, ABC Seminar presentations for client events, dinner seminars, lunch & learn events and more. Then we also offer the ABC Retirement Planning Workshop program and our Income Planning program. We’ll be talking a little bit more about those later. The DBHC advantage is that we offer complete programs using the ABC Method that will take your practice to the next level and have you writing more premium and creating more referral business for your practice.

4. Where do Annuities fit into a client's total portfolio of assets?
If you can answer this question effectively, you will significantly increase your production!
Where do Annuities fit into a client's total portfolio of assets?
Page 48 of the Training Manual:
The foundation of increasing your Annuity business is based on answering this question. Better yet, your business will grow exponentially if your PROSPECTS can answer this question. There’s no doubt that FIA’s are an important part of a conservative portfolio, but the amount of “negative press” they receive (often biased and false) leaves people confused about what they are, how they work, and why they are a great place for SOME of their retirement money. The ABC Planning Process helps people understand how all of their assets fit together, and helps them understand where Index Annuities fit into their total portfolio.
While most agents are trying to sell “PRODUCT”, or trying to beat “an asset”, the process allows you to help them understand the concept and logic behind an FIA in their portfolio. What we are going to do today is take you through this process, step by step in clear, simple language so that you can begin incorporating it into your practice immediately. Once you have an understanding of this process you’ll be amazed at the impact it will have on your business, your clients, and your bottom line.

5. Explaining the ABC's

6. 10% 60% 30% 1% – 3% 3% – 7% +30% – -30% Taxable Liquid Bank CDs
Savings
Checking
Tax-Deferred
Moderately Liquid
Taxable
Liquid
401k
IRA's
Stock/Bond
The basis of the ABC Process is what we call “RED, YELLOW, and GREEN Money”. The most difficult thing for many of our prospects and clients is understanding how all of their assets fit together and where the real “risk” is in their current portfolio. For us as producers the challenge is finding a way to easily explain how and why FIA’s “fit” into their portfolio. We struggle with trying to explain the latest and greatest PRODUCT from our favorite carrier – talking about all the wonderful features it has, so we get caught up in “product puke”. This process takes the emphasis off of the product features, and puts it on what the benefits are of having GREEN MONEY in their portfolio. So, we start off by saying something like this:
“Imagine that all your investible assets are liquid and we could set them up anyway we like, starting today. Not where they were 10 years ago or last year, but from now on. This is important because you want to have your assets set up for your needs going forward, not le in accounts that will jeopardize your future. We realize that not all your assets are liquid and in a position to move to your ideal situation. This will just give us a glimpse at your “ideals” in planning.”
At the white board, draw the columns you see below while you explain... “Let’s divide assets into three categories, A, B, and C. The first column, A, represents assets that historically earn 1-5%. The principal is protected and you simply are adding interest to the accounts. They are typically taxable and liquid. They can also be set up as IRAs and tax-deferred. These are typically bank held assets like CD’s, Savings accounts, etc.
The second column, B, represents assets that historically yield about 5-8% with the principal guaranteed and all previous years gains retained as interest. They are typically tax-deferred and moderately liquid. These are indexed annuities where the interest is linked to the performance of a market index such as the
S&P 500, DOW, Russell M000, etc. We prefer short term annuities with no fees.
The third column, C, represents assets that historically go up or DOWN N0% or more. The principal isn’t protected, and last year’s gains may be lost in a downturn of the market. The accounts are typically liquid and taxable, although a large amount are in IRAs, 401(k)s, and tax-deferred. These are brokerage accounts, mutual funds, stocks, corporate bonds, etc. There are typically two types of risk in column C, stock type risk and bond type risk”.
“So, what percent would you like in column A?” (Write down their response in the first column)
“And, what percent would you like in column C, the risk column?” (Write down their response in the
third column)
“So that means you would like _____% in the B column.” (Write down the balance percent in the middle column) Turn and ask them, “So, does that look about right?” Repeat the column percentages.
“The assets we typically use in this column are Index Annuities. We ladder short term Index Annuities much like a money manager would ladder bonds or CDs in a portfolio. There are some obvious reasons for using an Index Annuity, and when we are following the process with our clients we will use our “Retain Your Gains” DVD to show them how FIA’s work.
10%
60%
30%

7. Three Green Money Rules:
Rule #1: Protect Your Principal
Rule #2: Retain Your Gains
Rule #3: Guarantee Your Income
Read notes on the slide
Rule #1: Protect your principal. This is the KEY for most people. It isn’t a focus on the return ON their principal; it is a guarantee OF their principal
Rule #2: Retain your gains. Any interest you earn on your principal is retained and credited to your account. You can’t lose it. This is very different from securities
Rule #3: Guarantee your Income. Assets in this category work much like an old-fashioned pension; the generate an income stream that lasts as long as you live, even if the underlying principal runs out.

8. Three Red Money Rules: Rule #1: Must be tactical
Rule #2: Must be liquid
Rule #3: Must be long term
Read notes on the slide
Rule #1: Must be tactical – must have the ability to adapt to market changes. It isn’t “Buy and Hope”
Rule #2: Must be liquid – because of the sellable nature of securities you can liquidate, or sell, the asset in case you need the money
Rule #3: Must be long-term – even though there is liquidity in these assets we need to be thinking in terms of years

9. What is your client's greatest priority?
What is your client willing to give up?
Gains? Liquidity? Protection?
Risk Growth
Cash
Protective Growth
Potentially higher returns
Taxable or tax-deferred
Offer partial withdrawals or liquid
Potentially lower returns
Taxable or tax-deferred
Liquid
Potentially moderate returns
Tax-deferred
Offer partial withdrawals
Liquidity
Protection
Gains
Each column has advantages and disadvantages. Let’s look at each one;
If your goal in placing assets in Column C is GAINS, what do you give up? PROTECTION of the principle
Placing assets in Column A gives you LIQUIDITY, but you give up GAINS (lower, or no interest in the principle)
Placing assets in Column B gives you PROTECTION of your principle, but what do you give up? LIQUIDITY
Said differently, in Column A you give up GAINS to get more LIQUIDITY. In column B you give up some LIQUIDITY to acquire PROTECTION from risk, and in Column C you give up POTECTION for higher potential GAINS, as illustrated.
Understanding the Liquidity, Protection, and Gain goals of our clients, and helping them understand it, helps them allocate their assets correctly.
Gains
Liquidity
Protection

10. What if they just can't decide on percentages?
Sleepless Steve's Allocation of $600,000
Finally, your clients might not have a clue how much money they want in each column and need a little guidance. It might be helpful to picture money as being either GREEN or RED; GREEN for Safe and RED for Risk. GREEN Safe money is money not exposed to risk in the market. RED Risk money is just that, money in the market.
It might also help to picture my friend Steve the Sleepless Investor. He's a 65 year old retired salesman with $600,000 of investible assets. Steve's advisor suggests an often used formula called the Rule of 100 to help him determine how much he wants in Columns A, B, and C.
Very simply he used the formula of 100 minus his age, to determine how much money he wants in Green protected accounts and Red risk accounts.
Steve decides to put 65% in the first two columns. Mr. Sleepless first determines he wants 10 % or $60,000 in Column A for emergency fund, plus he's planning a “restful” vacation in Seattle. Next, he puts the balance of the green money portion from the Rule of 100 which is 55% or $330,000 in a laddered portfolio of indexed annuities in Column B. Steve has 35% or $210,000 left to be placed in Column C's Red Risk assets. He chooses a professional money manager who manages a conservative portfolio of funds.
Steve is finally able to find peace with his assets. Now he's on vacation, asleep in Seattle.

11. What if a bear market happens again? 2003 through 2012
The illustration above shows the S&P 500 returns for the years 2003 through 2012 on the left. The investible assets are $500,000. This example shows a typical investor who has about 10% in cash earning an average of 3% and 90% allocated to the market represented by the S&P 500. We use the broad market index to approximate what investing in the market in general was like over that period of time. Certainly an investor could have been in more or less risk than illustrated here. Yet, the illustration shows in general terms how the market performed from Notice, there are no monies allocated to Column B, which are Index Annuities.
The chart shows at the end of the ten year period this investor would have gained over $290,000. So it looks like a good decade in the market, but for that one glitch in 2008, a 35% loss.
Next slide

12. What if a bear market happens again? 2003 through 2012
$4,810
Using the same $500,000 over the identical ten years, let's allocate 60% to laddered maturities in indexed annuities. Using the same caps and interest rate in the previous illustration, the ABCs gain a little over $5,000 more in a pretty average decade in the market.
 Let's take a look at a couple of Bear market decades, remembering that you need to plan for 30 years in retirement.
Next slide

13. What if a bear market happens again? 1969 through 1978
The illustration above shows the S&P 500 returns for the years 1969 through 1978 on the left. The investible assets are $500,000. This example uses the same criteria for caps in the index annuities, but uses the 7% average CD rate for the decade. Wouldn't you love that again! We use the broad market index to approximate what investing in the market in general was like over that period of time..
The chart shows at the end of the ten year period this investor would have gained a little over $17,000. Look at all the red years in that decade! 5 out of 10 years were negative!
So, let's take a look at the ABC allotment.

14. What if a bear market happens again? 1969 through 1978
$126,219
The ABC allotment of 10/60/30 grows to over $143,000, which is a $126,219 difference! That's with 5 out 10 years negative! Very positive toward the ABC bear market strategy for retirement.
Now let's take a look at a really nasty decade. One we're all familiar with.
Next slide.

15. What if a bear market happens again? 2000 through 2009
The illustration above shows the S&P 500 returns for the years 2000 through 2009 on the left. The investible assets are $500,000. This example shows a typical investor who has about 10% in cash earning an average of 3% and 90% allocated to the market represented by the S&P 500. We use the broad market index to approximate what investing in the market in general was like over that period of time. Certainly an investor could have been in more or less risk than illustrated here. Yet, the illustration shows in general terms how the market performed from Notice, there are no monies allocated to Column B, which are Index Annuities.
The chart shows at the end of the ten year period this investor would have lost close to $100,000. I don't know about you, but a 20% loss in the market is devastating when it comes to retirement! Imagine if you were 52 years old in 2000 and planning to retire when most people retire at age 62. Would you do what many have had to do, which is work another 3-5 years in hopes of recovering those assets needed to retire?
And what if it happens again? What if the next ten years aren't any better than this decade? Can you afford to lose another 20% or possibly more? Can you continue to push off your retirement indefinitely?
When I show this graph to clients they tell me, “Yep, that's about what happened to us.” Yet, the same clients will surprisingly stay in this broken down Wall Street model attempting to recover with a hope and a prayer.
There has to be a better way, and I believe there is.
Next slide.

16. What if a bear market happens again? 2000 through2009
If the next ten years saw a 20% loss in the market, how would it affect your clients retirement?
$190,448
Using the 10/60/30 ABC split, this person gains $108,000 instead of losing over $80,000! Now that's a strategy that works for retirement years. IT does so because it obeys Warren Buffet's first rule of investing, “Never lose any money.” BTW, that happens to be rules number 2 and 3 also. And it has to be true, especially for retirees or those heading into retirement.
Simply putting some of your money in the green money column protects you from those down years and now with the tremendous guaranteed income payouts the green money column is even more a must for retirees. We don't want you to get totally out of the red, or growth money assets, but it's obvious that the green money column is perfect for conservative clients looking for alternatives to Wall Street's roller coaster rides.

17. ABC Process vs. Transactional Sales Models
Before we get into the ABC Process, it is helpful to understand something about yourself. It also helps us understand WHY the process works so well. Let’s get into that a little bit…

18. The ABC Planning Process Priorities:
The ABC Planning Process is
Brought to you by the letter “P”
The ABC Planning Process Priorities:
People
Process
Plan
Product
Page 53 of your Training Manual…

19. There are two types of planners, which one are you?
Transactional
Process
Event-oriented
Looking for one asset to put in an annuity
Looking for a “sale”
One and done
Stuck in the “Client Acquisition” mode
Few referrals
Process-oriented
Looking for the best financial plan for the client
Best interest of the client
Ongoing relationship
Service creates “raving fans”
Referrals come in on a regular basis

20. Five reasons people “put you off”…
They don't like you
They don't trust you
They don't see you as a valuable part of the process
They don't have or haven't expressed a compelling reason for change (Pain!)
They don't feel a sense of urgency
“Objections are the result of a poor selling process.”
Todd Duncan, High Trust Selling
“What I have found is when you connect with the consumer – if you do it right – you do not get objections that are really excuses and there is no “close” because the entire process is the consumer doing their own close.”
Jack Marion, Change Buyer Behavior and Sell More Annuities
Why people “put you off”…

21. Three Components of a Financial Decision
Logic
Emotions
Beliefs
Here are the three components of a financial decision. Let’s look at each one and see how they fit together.

22. Don't Sell, Lead Think WITH people, not for them!
Think with people through a process that leads them to a better financial decision.
People are perceptive; much more so today than at any time in the past. We are jaded by “salespeople” who promise the world and deliver nothing!

23. Which statement better defines you?
“I sell people on what I think is best for them financially.” OR “I think with people through a process that leads them to a better financial decision.”

24. How to Lead? Ask questions to determine needs.
Illustrate solutions to determine wants.
Develop with them a recommended strategy.
Work with them to implement the strategy.
Review with them to improve over time.

25. The Power of the Process!
The problem with transactional sales:
“Buying” is an emotional decision.
Emotions are fickle and can swing either way, at any time.
“Selling or Closing” relies on the salesman's ability to control and lead the prospect's emotions.
“Transactional selling” creates an emotional ledge that the prospect has to “leap off”.

26. The Power of the Process!
A Planning Process allows the prospect to “close” him/herself:
It presents Logical reasons for purchasing an index annuity and where they fit into a client's portfolio.
It deals effectively with a prospect's “fictional beliefs”.
It allows the prospect to work through their emotional resistance to change by getting invested in the process.
Process will win more often than clever closing techniques ever will!

27. The Four-Step ABC Planning Process
The ABC Process is a Four-Step Process. Let’s look at each step briefly…

28. Four Step Process Investigation We investigate… Each other,
Their portfolio,
Any leaks, gaps, or deficiencies in the client's current plan, (diagnose)
Needs, wants, and goals,
Present sample solutions
This meeting is designed to solicit the client's ideas about investing and their needs, wants and goals. Set up next meeting by establishing a commitment by both parties.
In the first meeting clients will have brought their statements with them, so in addition to getting to know each other we look for any leaks, gaps, or deficiencies in their current plan. We then discuss their needs, wants, and goals for their retirement. We then talk about “sample solutions” that might fit, but we aren’t making any concrete recommendations in this meeting.
This meeting is designed to solicit their ideas about investing and their needs, wants, and goals. We’re using this meeting to identify if we have a real prospect, or a “tire-kicker”.

29. Four Step Process Recommendation We recommend…
Specific elements of the solution
Which product is to be used
How it will effect the strategy
We mold the plan to the client's suggestions
The Client will be asked to affirm the allocation and make the decision to move assets.
All the information needed to fill out any and all apps is taken and the third meeting scheduled.
This second meeting is to review what we discussed the week before, and present our recommendations based on their goals & needs. The important thing here is that we’re still checking to make sure we have a real prospect, not someone who is using us to get information to use with their broker, or for themselves.

30. Four Step Process Implementation
We begin the process of implementation by …
Going over each product thoroughly
Going over each application, especially disclosures and suitability forms
Procuring all needed signatures
Explaining the time frame and process of transferring assets
Preparing the client for conservation efforts
Setting up proper review expectations
The third meeting allows for ample time to explain applications, procedures, timeframes and set up realistic expectations for good client communication.
The third step is where we finally gather signatures! We establish expectations and timelines for what will happen.

31. Four Step Process Review & Adjust
We begin the process of Review/Deliver/Adjust by
Reviewing the ABC plan
Review/deliver assets
Annuity contracts review six months and then anniversary. Annually after that.
Security accounts review quarterly face-to-face the first year and semi-annually after that. It's still important to review quarterly, but you can do two of them over the phone in normal years.
Always give the new client a calendar of events.

32. The Prospects’ Agenda (what they are thinking…)
Keep the perceived “salesman” at a safe distance
Get the information needed
Leave without buying or committing to anything
Being a professional advisor
Part One:
Mastering the body of information that is relevant to your niche
Part Two:
Mastering the ability to persuade people to move from point “A” to point “B”
When we start into the process we need to know what our prospects are thinking when they come in for their meeting.
Being a PROFESSIONAL ADVISOR has two parts; mastering the body of information that is relevant to your niche (Annuities). We are VERY good at learning product. We spend HOURS learning about all the features of every annuity product out there; all the bonuses, the indexing methods, the commission scales, etc. But that isn’t what the client wants. Part two is mastering the ability to persuade people to move from point A to point B.
That’s what this process helps you do. By following the steps in the process we engage the prospect and help lead them to make better decisions!
Let’s look at the steps in more detail. These details can be found in your Training Manual starting on page 58

33. Investigation 12 Step Process
90 Seconds: atmosphere of your office
3-5 Minutes: fit in, don't break in. Match their volume & pacing
Standard Disclosure
Explain Process
“Tell me what you were hoping I could do for you?”
Retirement Analyzer* snapshot of finances
Explain the ABC's
Retain Your Gains DVD
4 Year Graph
B-D or RIA
Sample Solutions
Close
NOTE to Lionel; really get to KNOW each of these steps – why you do them, and HOW to do them. This is THE SINGLE MOST IMPORTANT PART of the ABC Process!! The Training Manual explains this in detail. Take them through this line by line starting on page 58.
For example; why do you ask the question “What were you hoping I could do for you?” There is a VERY specific reason for asking this question and it sets the tone for what’s to come. YOU ARE LISTENING FOR “PAIN” RESPONSES. You need to begin asking open-ended questions and you are listening for words like frustrated, afraid, angry, (see page of the Training Manual for more information on this!) More questions, and a form for the agents is in the Appendix on page 101.

34. An FIA Simple Four Year Graph
12%+
8%+ 4%
10% 0% 4%
4% cap
Year One
Year Two
Year Three
Year Four 6%
-40%
15%
This four year graph shows a simple, base-model chassis of an index annuity. Let’s say that the market goes up 10% in the first year. The annuity company will cap your earnings in some manner, so let’s say the cap is 4%. Now, if the market went down the next year 40%, how much would you lose? Zero! So, would you be upset if the market went down 40% and you got zero? Of course not. Zero is your hero. In fact the 4% stays in the account unless you pull money out. In the third year, if the market went up 6% and the cap was still 4%, the company would give you 4% compounded on top of the first year’s earnings. In the fourth year, if the market went up a whopping 15%, and the cap was still at 4%, you would throw in another 4%. Now you are up 12 plus percent because of compounding, while the market isn't even back to where it started in year one!
Sounds too good to be true, doesn't it? So, let’s take a look at some negative aspects of the annuity. Once you deposit money in an annuity you will have limited liquidity, usually 10% a year of the account value, after the first year. The length of term can be anywhere from 3 to 16 years. You can choose a ladder of maturities that never go over 10 years or even less if you’d like. That’s why you develop liquidity in Columns A and C of the ABC Model. You need to find out about caps and other riders that can limit or enhance your earning power, which is something we discuss on an individual basis.
What would you say to your broker If he got this for you in 2008? Would you be upset if you didn’t get 4% when everyone around you lost 40%?
Has drawbacks. Sounds too good to be true? If you found it was true, would you want some of this?
Drawbacks…surrender charges
Liquidity options, 10% free.
Caps can go up and down…4% to 11%
How do you allocate money…25% fixed…want it to get something. Annual point to point, monthly point to point, etc….
Items to Consider:
___Surrender Duration ___Liquidity Options ___Caps ___Income Riders ___Crediting Methods ___Other

35. Second Session: Recommend
Create Comfort Level
Review: “There were probably some things that came up between last session & today. Would you mind telling me what they were?”
Ask: “Any further questions?”
Review the Plan
Go over specific numbers and quotes
Describe the process for Implementation
Prepare for Conservation Efforts! How to “battle the broker”
Set the appointment for the next week – Last words before they go out the door: “Just remember, no more worries about losing everything in the market.”

36. Third Session: Implement
Create Comfort Level
Ask: “Did anything come up from last week's discussion we need to address?”
Address questions
Go over applications and collect signatures
Give them copies of applications and checks
Go over transfer process – rehearse again the conservation efforts by brokers, agents, and companies. Tell them when you anticipate the next meeting to deliver contracts & review accounts

37. Fourth Session: Review & Adjust
Create Comfort Level
Review plan
Review/Deliver assets
Go over when you will have the next meeting to review accounts
Security Accounts: quarterly, face-2-face first year, semi-annually after that
Annuity Contracts: six months, and at one year, then annually after that
Give Calendar of upcoming events and invite them to be a client-partner with you

38. Resources and Next Steps
Homework:
Review and Study the ABC Model and Planning Process Script
Practice and role play ABC model and Planning process
Visit and order RYG DVD cost $2.50
Register for ABC Retirement Planning Study Group 201: