The 30 day war!

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Baba Booey's picture
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I've been in production for 15 months.  It's just dumb to talk about bringing in $23k.  Why in the hell would you even open a $7000 account?  Get paid $100 one time, spend your energy talking to people who have more money.

snaggletooth's picture
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Baba Booey wrote:
I've been in production for 15 months.  It's just dumb to talk about bringing in $23k.  Why in the hell would you even open a $7000 account?  Get paid $100 one time, spend your energy talking to people who have more money.
 
Here's a true story for you.  Guy walks into the office, says he wants to open an account for $10,000.  Broker of the day was a vet that passed on it, didn't want to deal with it, gave it to a rookie in the back.  The rookie serviced the account for a few months.  The guy later transfered in over $10MM.  He just wanted to see someone care about his account.

Baba Booey's picture
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Doesn't take much energy to accept a broker of the day walk in.....this guy is prospecting $7000 accounts.

BerkshireBull's picture
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Baba Booey wrote:I've been in production for 15 months.  It's just dumb to talk about bringing in $23k.  Why in the hell would you even open a $7000 account?  Get paid $100 one time, spend your energy talking to people who have more money.The whole point of it was that these were two accounts opened from prospecting calls and appointments set by dragging in from 8-noon on Saturday Morning.  I would never have found it if I hadn't gone in an extra day last week.  We were just sharing our successes from putting in a half day on Saturday, no one was bragging.These were just extra accounts I opened by working some extra hours on my own.  The FA I work for wouldn't be hustling to get accounts like this, and it wouldn't be much of a win to find them working on his dime, I found them making calls by myself Saturday and I'll get about $750 extra on my paycheck next month for finding them.  I'd take that for 4hrs of work EVERY Saturday.  It's just a success to share to get other people excited about working a little extra on Saturday.

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snaggletooth wrote: Baba Booey wrote:
I've been in production for 15 months.  It's just dumb to talk about bringing in $23k.  Why in the hell would you even open a $7000 account?  Get paid $100 one time, spend your energy talking to people who have more money.
 
Here's a true story for you.  Guy walks into the office, says he wants to open an account for $10,000.  Broker of the day was a vet that passed on it, didn't want to deal with it, gave it to a rookie in the back.  The rookie serviced the account for a few months.  The guy later transfered in over $10MM.  He just wanted to see someone care about his account.

There are always tales like this one to keep advisors from not taking small accounts.
"He only had $25K in his accounts, but refferred $8MM in additional clients"

I think it is good to set minimums, but a part of me also says if you can get an account and annuitize it(C shares, wrap) and not have to worry about it then great.

However I was talking to a big wirehouse producer who only has 85 clients but $500MM in assets, and says he drops off his lowest generating account everytime he adds a new one. He use to do $100K accts but through the years he is now up to $5MM minimums.

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B24
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I think the point is that when you are newer in the business, that is not the time to get picky about account minimums, unless you have a clear path to lots of new high-asset accounts.  Otherwise, you need all those small accounts to  (a) survive, and (b) get the occassional lucky referral or "guy that actually had $10mm".  You have the rest of your career to cull your book.

Squash1's picture
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Joined: 2008-11-19

Again i disagree(think we have done this before). You spend too much time with the small accounts and that's all your book ever is. Arthur Levitt who ran the SEC for a while, said that anyone under $50k doesn't need an advisor and they should just buy index funds until they reach $100K. And that is true, how much can you really help someone who only has $50K? Slap them in american funds c shares and the client ends up losing 1.65%/ year until they reach $100K.. Or have them buy vanguard and lose %0.35/ year until reach $50K..

Spaceman Spiff's picture
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I don't understand the mentality of not dealing with small accounts.  The average person knows 200 people that I don't.  (referrals)  They have kids (529 plans) and spouses (life insurance), they change jobs on average 7 times during their working lives (rollovers)(401k business), and meet new people at those new jobs (more referrals).  There are so many ways beyond the initial transfer of funds into our offices to make money, it just doesn't make sense to turn anyone away. 
 
Personally, I would use an asset allocation fund for that $50K account.  I know I'm not going to be spending any time rebalancing and I can't justify using 10 different funds that I put together and manage.  So, find a fund that does what I would like to do, but won't, and let it go.  Call the folks, ask for referrals, hope you get some extra biz from time to time and move on.  It will realistically cost you about 5 minutes a year.  So, if you do an A share @ 4.5% = $2000 gross (dealer concessions) and service the account for the next 10 years = 50 minutes you made $2000 an hour.  Not a bad gig.  I'll take those accounts ALL DAY LONG.  So, squash, you get those folks, just let me know.  I'm sure you and I can work out a deal. 
 
volt & berk - keep up the good work guys.  In this climate, business is business.  Do it however, whenever, and as big or little as you can. 

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B24
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Yes, we have had this discussion before.  Here's my twist on what you're saying....I totally agree that most people with less than 100K should just buy indexes directly.  If they are retired, they should have a focus on fixed income indexes ("huh?"), some large cap, small cap, and international ("uh, OK").  It might also help to use some some niche market investments (real estate, emerging markets, commodities, etc.) ("uh, OK, now you've lost me").  Point is, most people with small sums of money are so unsophisticated at investing that to them, and index is the S&P 500, and that's it.  Msot people have neither the intelligence, experience, or discipline to buy the right indexes and keep them at the right times.  I can almost guarantee you that I can improve someone's return by $1300 per year over what THEY would have done without any help.  So it's great in theory, but doesn't happen.  It's like saying "people should just exercise and eat right".  OK.  Sure.
 
As far as taking up time, I don't think anyone goes in with the attitude of "let's see how many small accounts I can open today".  Starting out, you fish in an area, and you take what you catch.  Unless you are extremely committed to a niche or focus area (and it's working), I don't see how newbies can just turn away business.
 
But I totally agree that at some point you have to start "avoiding" the little fish. 

Squash1's picture
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Joined: 2008-11-19

It depends what type of business your are running. At jones(not a knock) you can't afford to turn people away because you are getting 25bps on the backside. So you need assets and accounts to keep it going. For some of us we run feebased accounts and aren't looking for quantity, but instead a minimum amount of assets.

Squash1's picture
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B24 wrote: Yes, we have had this discussion before.  Here's my twist on what you're saying....I totally agree that most people with less than 100K should just buy indexes directly.  If they are retired, they should have a focus on fixed income indexes ("huh?"), some large cap, small cap, and international ("uh, OK").  It might also help to use some some niche market investments (real estate, emerging markets, commodities, etc.) ("uh, OK, now you've lost me").  Point is, most people with small sums of money are so unsophisticated at investing that to them, and index is the S&P 500, and that's it.  Msot people have neither the intelligence, experience, or discipline to buy the right indexes and keep them at the right times.  I can almost guarantee you that I can improve someone's return by $1300 per year over what THEY would have done without any help.  So it's great in theory, but doesn't happen.  It's like saying "people should just exercise and eat right".  OK.  Sure.
 
As far as taking up time, I don't think anyone goes in with the attitude of "let's see how many small accounts I can open today".  Starting out, you fish in an area, and you take what you catch.  Unless you are extremely committed to a niche or focus area (and it's working), I don't see how newbies can just turn away business.
 
But I totally agree that at some point you have to start "avoiding" the little fish. 

I don't think we should be dumbing down investing. If you aren't smart enough to exercise and eat right, you will probably die before it's your time. Same for investing if you can't save $100K or read a book that says buy the S&P 500 index, In't Fund and a bond fund because you only have $5K then I don't want you as a client.

Full Throttle's picture
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I do need to up my game on new contacts though, I'm really failing here.
 
Me too, I'm putting in apps, but failing to add enough new contacts everyday.  I will starve if I don't immediately turn this around.  Time management is a bitch for me.

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Spaceman Spiff wrote:I don't understand the mentality of not dealing with small accounts.  The average person knows 200 people that I don't.  (referrals)  They have kids (529 plans) and spouses (life insurance), they change jobs on average 7 times during their working lives (rollovers)(401k business), and meet new people at those new jobs (more referrals).  There are so many ways beyond the initial transfer of funds into our offices to make money, it just doesn't make sense to turn anyone away. 
 
Personally, I would use an asset allocation fund for that $50K account.  I know I'm not going to be spending any time rebalancing and I can't justify using 10 different funds that I put together and manage.  So, find a fund that does what I would like to do, but won't, and let it go.  Call the folks, ask for referrals, hope you get some extra biz from time to time and move on.  It will realistically cost you about 5 minutes a year.  So, if you do an A share @ 4.5% = $2000 gross (dealer concessions) and service the account for the next 10 years = 50 minutes you made $2000 an hour.  Not a bad gig.  I'll take those accounts ALL DAY LONG.  So, squash, you get those folks, just let me know.  I'm sure you and I can work out a deal. 
 
volt & berk - keep up the good work guys.  In this climate, business is business.  Do it however, whenever, and as big or little as you can. 
 
I like this mentality.  No one is actually prospecting hoping to acquire 1,000 $25,000 households.  But if they're willing to give you the money, won't be a constant headache and will do what you say, there's no downside to taking them on (Unless you work primarily fee-based, in which case there is a downside).  $25,000 a day is $900 or so in GDC with A shares (avg. with breakpoints).  $900 per day is $9,000 per service period, and at 40% payout that's a $3,600 paycheck and comes out to $94,000 for the year.  Not a whole lot of newbies that wouldn't take that in their first few years before they are able to transition to fee-based.

voltmoie's picture
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Full Throttle wrote:I do need to up my game on new contacts though, I'm really failing here.
 
Me too, I'm putting in apps, but failing to add enough new contacts everyday.  I will starve if I don't immediately turn this around.  Time management is a bitch for me.
 
That's my issue.  Over the last three months I've opened 40 accounts but have not been replanting the field.  This month will be great (by my standards) but Sept. worries me if I don't get hustling. 
 
 
With respect to small clients.  I've gotten referrals and additional business out of almost everyone of them - for the most part they've been larger pieces of business.  I flat out tell them I need their help, ask them to hand out business cards for me and give me three names of people they think could use my service.  Also, Jone's reps get new account bonus so that extra 500-700 I've been getting is a nice incentive to help the small fries as well. 
 
LUNCH time and then back into call block.

noggin's picture
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I thought this thread was about Volt's 30 day war and I read about Modern Portfolio Theory and the making of a hypo. Fill up that funnel to replace the ones that you opened accounts for or that you kicked out of the funnel as a pretender. Good luck and have a good week!

Baba Booey's picture
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People with $7000 hang out with people with $7000.  It's pretty rare to get a good introduction from such a small account.

Full Throttle's picture
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This one is really going to chap your ass if you make fun of a $7000 account.  I have a 4pm meeting on Friday to set-up a $75/month Roth IRA contribution, no other business at this point.  22 years old, $5000 in a savings account (decent saver at least), in sales as a 1099'er, single, and no other real assets.  My commission = $41, I actually lose money on it.  There is no potential for a DI sale at this point as she has no established income history, no need or desire for life insurance yet, and only $150 per month to work with at this point.  I'm not getting greedy and trying to rob her of her necessary liquid money and I'm only using half of her small monthly savings to fund a Roth IRA so she can continue to grow her liquid savings. 
I would go broke if I prospected for these accounts, but I'll take the one's that come to me.  Why?
 
1. She is an established saver and I believe she has future financial potential.
2. There will be a DI sale in a year to three years.
3. Eventually there will likely be some life insurance sales.
4. She has older siblings that have families that I should get introductions to them.
 
I could be wrong about her potential, but I'm willing to give her a phone call on her birthday and once a year for an annual review (which can be done over the phone).  If she wasn't an established saver, responsible, and I believed she would always be poor, this would be a complete waste of time.

Baba Booey's picture
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I think that is a waste of time.  Instead of the two hours of prep time, talking on RR about the case, and the actual meeting.  Spend those 3 hours looking for people who have at least $250k to invest. 
 
Or since you sound like an insurance guy - spend those 3 hours calling someone who can do $5000/yr in whole life premium.

Full Throttle's picture
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In the short run,
Two cups of coffee = $3.50
Gas = $5.00
*Mainly opportunity cost which is why the meeting is scheduled for my last slot on a Friday.
 
Leaves a balance of $35 profit before overhead expenses.  I had a manager tell me not to spend time with these accounts, send them to a bank or sell them life insurance.  His theory, you're targeting three sales per week and only have so much time, do you want a $43 sale to be one of your three for the week?  I see his point, but believe it to be focused entirely on short term thinking.  Also, if I made my money primarily from investments this would likely be a total waste of time as well.  Once again, I believe it comes down to future financial potential.  If it's not there, it's not worth the time.

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B24
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I'll give you another reason that I take small accounts....I just finished up with a lady that makes $200K per year as a Director of Clinical Pharmacology for a major pharma co.  She's 49 years old.  She was referred to me by a CPA I know in town, that knows I focus on clients of this particular company.  So right now, those are two big pluses - 200K income, referred by CPA.  How much was her rollover?  26K.  Why? She's an ex-pat from overseas that has worked all over the world.  She's got a few hundred grand in the UK, about 75K in liquid savings here (her "layoff" contingency fund), and some company stock and a few other little things.  So I won't make that much of this, but you know what?  She doesn't hang out with secretaries and the guy that does overnight security.  She hangs out with other Directors making 200K+ per year.  And Directors making 200K per year usually aren't 35 year-olds.  I have all kinds of clients like this, and they just build on themselves.  Smart, well-paid people just have a way of making good things happen.

So, I think the whole "don't take samll accounts" thing has to be taken with a grain of salt.  I DON'T take the 68 year-old lady living in a trailer that gives me the 25K settlement she just got because she slipped and fell at the supermarket.  But a highly intelligent, well-paid, well-connected professional?  The amount doesn't matter.  That's free advertising for me.

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The sad story is she's 49 with less than 300k in retirement money.  Probably loaded down with credit card debt, 70k vehicle, to big a house and now she's got money with ED JONES.  I hope she's hot.

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bspears wrote: The sad story is she's 49 with less than 300k in retirement money.  Probably loaded down with credit card debt, 70k vehicle, to big a house and now she's got money with ED JONES.  I hope she's hot.

I agree. She's screwed. Hopefully by B24.

chief123's picture
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I don't consider somebody with "a few hundred grand" "$75K emergency" "$26K rollover" a small client.. Maybe I didn't explain small client... see the example of the 18 year old in a couple posts before(that is a small client).. Someone with over $250K isn't small(for me)

Baba Booey's picture
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Chief is right on - we're talking about the 18 year old with $7000.....that is a small account.  Not someone with $200k in the UK.

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bspears wrote:The sad story is she's 49 with less than 300k in retirement money.  Probably loaded down with credit card debt, 70k vehicle, to big a house and now she's got money with ED JONES.  I hope she's hot.
 
OK, lots of incorrect assumptions out there.  She spent several years in the Peace Corps, she's from overseas (she's from Portugal, and never really understood investing), and didn't start her "real" career until later in life (she has BS, PhD and two masters).  She has no debt, other than a $140K mortgage on her condo, which is worth 400K (on the water, nonetheless).  She has no kids, so a pretty cheap lifestyle.  She maxes out her 401K. In addition to the cash overseas, she also has some real estate overseas.   And she's not hot.
 
You ARE right though, she's now got money with Eddie Jones.
 

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p.s. Actually Spears, you're assumptions are not that far off from many of the clients I have come in here.  It's actually pretty sick.  I have clients making 250K, but have like 400-500K in debt, massive house, two nice imports on loan in the garage(s), and can barely fund their 401K's.  I tell these people they are screwed when they retire.  I actually had one guy, a general counsel for a major F100 company, tell me flat out "I'd rather spend the money" than put more away for retirement.  Okie Dokie.  It's your life.  And this guy only has about $1.5m (about 800K with me, the rest in his 401K).  But he lives a 250K lifestyle, and just a small pension other than that.  62 years old.

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B24 wrote:p.s. Actually Spears, you're assumptions are not that far off from many of the clients I have come in here.  It's actually pretty sick.  I have clients making 250K, but have like 400-500K in debt, massive house, two nice imports on loan in the garage(s), and can barely fund their 401K's.  I tell these people they are screwed when they retire.  I actually had one guy, a general counsel for a major F100 company, tell me flat out "I'd rather spend the money" than put more away for retirement.  Okie Dokie.  It's your life.  And this guy only has about $1.5m (about 800K with me, the rest in his 401K).  But he lives a 250K lifestyle, and just a small pension other than that.  62 years old.Am I missing something? He's got ONLY 1.5 million at 62 and he rakes in 250k a year and that's considered a bad situation, not to mention a pension??

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svm .. the moment that guy retires he still has the debt, still wants to eat lobster every night, still wants to take great vacations and drive German cars.  It's not bad if you live on 100k its ugly if you live on 250kHe's 62, prob. going to retire in three years and he'll take a 60% cut in income.  Still good living but he'll blow through 1.5 million like me through a cheerleader camp.

BerkshireBull's picture
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Spiff, you better slam that guy into a SPIA and take one more pop off that account before you lose it (not to mention you'd do him a favor saving him from himself).

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Full Throttle wrote:
This one is really going to chap your ass if you make fun of a $7000 account.  I have a 4pm meeting on Friday to set-up a $75/month Roth IRA contribution, no other business at this point.  22 years old, $5000 in a savings account (decent saver at least), in sales as a 1099'er, single, and no other real assets.  My commission = $41, I actually lose money on it.  There is no potential for a DI sale at this point as she has no established income history, no need or desire for life insurance yet, and only $150 per month to work with at this point.  I'm not getting greedy and trying to rob her of her necessary liquid money and I'm only using half of her small monthly savings to fund a Roth IRA so she can continue to grow her liquid savings. 
I would go broke if I prospected for these accounts, but I'll take the one's that come to me.  Why?
 
1. She is an established saver and I believe she has future financial potential.
2. There will be a DI sale in a year to three years.
3. Eventually there will likely be some life insurance sales.
4. She has older siblings that have families that I should get introductions to them.
 
I could be wrong about her potential, but I'm willing to give her a phone call on her birthday and once a year for an annual review (which can be done over the phone).  If she wasn't an established saver, responsible, and I believed she would always be poor, this would be a complete waste of time.

She's working and making money.  Is she showing income?  If so, she needs DI today.  Work your magic and get DI for her.
 
Can you promise that she'll be healthy a few years from now when she gets knocked up?  If not, she needs life insurance today.
 
She only has $5,000 in savings and only $150/month extra.  She needs more savings and not investments.
 
You can make $41 and do squat for her or you can get her the DI and Life insurance she needs and make 10x the amount for yourself while doing the right thing for her.

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Full Throttle wrote:This one is really going to chap your ass if you make fun of a $7000 account.  I have a 4pm meeting on Friday to set-up a $75/month Roth IRA contribution, no other business at this point.  22 years old, $5000 in a savings account (decent saver at least), in sales as a 1099'er, single, and no other real assets.  My commission = $41, I actually lose money on it.  There is no potential for a DI sale at this point as she has no established income history, no need or desire for life insurance yet, and only $150 per month to work with at this point.  I'm not getting greedy and trying to rob her of her necessary liquid money and I'm only using half of her small monthly savings to fund a Roth IRA so she can continue to grow her liquid savings. 
I would go broke if I prospected for these accounts, but I'll take the one's that come to me.  Why?
 
1. She is an established saver and I believe she has future financial potential.
2. There will be a DI sale in a year to three years.
3. Eventually there will likely be some life insurance sales.
4. She has older siblings that have families that I should get introductions to them.
 
I could be wrong about her potential, but I'm willing to give her a phone call on her birthday and once a year for an annual review (which can be done over the phone).  If she wasn't an established saver, responsible, and I believed she would always be poor, this would be a complete waste of time.Nobody has asked the important question about her, Is she hot? If so their may not be more revenue to generate but some serious savings on your expense account at the Tokyo Spa.

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voltmoie wrote: svm .. the moment that guy retires he still has the debt, still wants to eat lobster every night, still wants to take great vacations and drive German cars.  It's not bad if you live on 100k its ugly if you live on 250kHe's 62, prob. going to retire in three years and he'll take a 60% cut in income.  Still good living but he'll blow through 1.5 million like me through a cheerleader camp.

By blowing at the cheerleader camp are you referring to the males? I'm confused by your verbage...

Ron 14's picture
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He is definitely talking about a cheerleader camp for male cheerleaders. And he will be doing the blowing.

Still@jones's picture
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I'm glad the "30 day war" is now officially in the gutter...was voltmoie the blowjob queen from a male cheerleading camp?i realize we should be sharing ideas to improve our business...but i don't have a business anymore!!! 

voltmoie's picture
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Ron 14 wrote:He is definitely talking about a cheerleader camp for male cheerleaders. And he will be doing the blowing. Don't hate

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voltmoie wrote:
Ron 14 wrote:He is definitely talking about a cheerleader camp for male cheerleaders. And he will be doing the blowing. Don't hateDon't worry, voltmoie, the first 4 times are just technically experimenting.  You're not gay until you've done stuff with guys more than 4 times

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She's working and making money.  Is she showing income?  If so, she needs DI today.  Work your magic and get DI for her.
 

I agree, but I've been told it wasn't possible since she is brand new in her sales position, hasn't been there for a year, and is 1099'd.  If I could, I would.  Any suggestions?
 

Can you promise that she'll be healthy a few years from now when she gets knocked up?  If not, she needs life insurance today.
 
She only has $5,000 in savings and only $150/month extra.  She needs more savings and not investments.
 
I'm newer at this, so I appreciate the feedback.  Obviously I can't guarantee her health on the life insurance side.  What would you do in this situation?  Do a small permanent policy for savings and a death benefit.  Do a term policy for her full future need? 

BerkshireBull's picture
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Full Throttle wrote:She's working and making money.  Is she showing income?  If so, she needs DI today.  Work your magic and get DI for her.
 

I agree, but I've been told it wasn't possible since she is brand new in her sales position, hasn't been there for a year, and is 1099'd.  If I could, I would.  Any suggestions?
 

Can you promise that she'll be healthy a few years from now when she gets knocked up?  If not, she needs life insurance today.
 
She only has $5,000 in savings and only $150/month extra.  She needs more savings and not investments.
 
I'm newer at this, so I appreciate the feedback.  Obviously I can't guarantee her health on the life insurance side.  What would you do in this situation?  Do a small permanent policy for savings and a death benefit.  Do a term policy for her full future need? You can probably get her a small accident type policy, the way these work are if she is injured in an accident it will pay an upfront benefit of say $1000 and will then pay $500 per month for 6 months if she is unable to work.  Probably cost her in the neighborhood of $20 per month.  Not the nicest disability program on the planet but it's something and she can get it without having to prove income.On the life side I'd get her a $100,000 UL type policy and get her putting $40 per month into it, she will have the flexibility to stop or reduce premiums for a period of time in the future if she needs to, it should also provide her enough life insurance to carry her through marriage even home ownership to the point that she has dependents and needs to get some term in place.

Ron 14's picture
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BerkshireBull wrote: voltmoie wrote: Ron 14 wrote:
He is definitely talking about a cheerleader camp for male cheerleaders. And he will be doing the blowing. Don't hateDon't worry, voltmoie, the first 4 times are just technically experimenting.  You're not gay until you've done stuff with guys more than 4 times
 
Sorry Volt, I just have a tough time passing up a gay joke no matter how bad it is
 

fa09's picture
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Same goes for me. The thread was heading way offtopic anyway so might as well throw an easy gay joke out there after you set it up so nicely.

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I'm that way with mom jokes so I understand.  Alright, my day ... Had a strong day on the phone, the strongest in weeks.  My conversations could be better but they were rough because I had slacked off and not done a true call session for a month. Sold some bonds to a guy that brushed me off a month ago, he uses another broker so my foot in now in the door for the rest of the stuff.  Got some solid leads on future business.  It's amazing, when you talk to people you do business...hmmm    Tomorrow will be 100% prospecting and f2f follow ups - 27 contacts in my goal.Also have a 2nd appt. scheduled for a guy that has a 210k rollover.  Plan to do a little VA and alot of Advisory Solutions with it.

anonymous's picture
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Joined: 2005-09-29

Full Throttle wrote:She's working and making money.  Is she showing income?  If so, she needs DI today.  Work your magic and get DI for her.
 

I agree, but I've been told it wasn't possible since she is brand new in her sales position, hasn't been there for a year, and is 1099'd.  If I could, I would.  Any suggestions?
 

Can you promise that she'll be healthy a few years from now when she gets knocked up?  If not, she needs life insurance today.
 
She only has $5,000 in savings and only $150/month extra.  She needs more savings and not investments.
 
I'm newer at this, so I appreciate the feedback.  Obviously I can't guarantee her health on the life insurance side.  What would you do in this situation?  Do a small permanent policy for savings and a death benefit.  Do a term policy for her full future need? 

For the DI, it really depends on what sort of income she can prove right now.  If there is income that can be proved, you'll be able to find someone who will offer coverage or they will soon.  It may not be enough coverage, but get her as much as possible with a rider to get more in the future without having to show good health.
 
For the LI, go with a large convertible term policy.  This protects her health while guaranteeing that she can buy permanent coverage at good rates when she can afford to do so.

anonymous's picture
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Joined: 2005-09-29

BerkshireBull, I have to completely disagree with the UL suggestion.  UL is a product that absolutely sucks long term.  The flexibility that is looked upon as a positive is one of the worst parts about the product.  Human nature gets in the way.  If a premium payment isn't necessary, one may get skipped.  Skipping premiums drasitcally increase the chance of lapse.  At $40/month for $100,000, ultimately, she will end up with no cash and no insurance when she gets older.   If her health changes, her family will have a Mom that is drastically underinsured.
 
At this point she is much better off buying a $500,000 term policy that is less than $20/month and putting the balance into savings.

Full Throttle's picture
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Joined: 2008-08-26

For the LI, go with a large convertible term policy.  This protects her health while guaranteeing that she can buy permanent coverage at good rates when she can afford to do so.
 
I understand your rationale and agree.  Selling a 22 year old on the idea of buying a $500,000 policy that just got out of school and doesn't have as much as a boyfriend seems like an uphill battle (I bought a similar policy for myself in the same situation, maybe I'll show her my policy and rationale).  Not saying impossible, just more difficult.  The good news, if she listens to me I have a client, not a customer.

BerkshireBull's picture
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Joined: 2009-06-10

anonymous wrote:BerkshireBull, I have to completely disagree with the UL suggestion.  UL is a product that absolutely sucks long term.  The flexibility that is looked upon as a positive is one of the worst parts about the product.  Human nature gets in the way.  If a premium payment isn't necessary, one may get skipped.  Skipping premiums drasitcally increase the chance of lapse.  At $40/month for $100,000, ultimately, she will end up with no cash and no insurance when she gets older.   If her health changes, her family will have a Mom that is drastically underinsured.
 
At this point she is much better off buying a $500,000 term policy that is less than $20/month and putting the balance into savings.

 
There is no way underwriting is going to let you write that much face value on a single 20 year old with no dependents making $15,000 per year.

3rdyrp2's picture
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Joined: 2008-11-13

BerkshireBull wrote:anonymous wrote:BerkshireBull, I have to completely disagree with the UL suggestion.  UL is a product that absolutely sucks long term.  The flexibility that is looked upon as a positive is one of the worst parts about the product.  Human nature gets in the way.  If a premium payment isn't necessary, one may get skipped.  Skipping premiums drasitcally increase the chance of lapse.  At $40/month for $100,000, ultimately, she will end up with no cash and no insurance when she gets older.   If her health changes, her family will have a Mom that is drastically underinsured.
 
At this point she is much better off buying a $500,000 term policy that is less than $20/month and putting the balance into savings.

 
There is no way underwriting is going to let you write that much face value on a single 20 year old with no dependents making $15,000 per year.
 
I think I'd beg to differ on this one.  I think she's 22, but you can get a half mil term policy on someone earning $15,000.  Their human life value is over half a mil if they have the SAME salary until age 65.  Underwriters will understand too based on age that within a year or so that person will be earning much more than $15k.

hotair1's picture
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Joined: 2009-03-12

You insurance guys are idiots.  This chick does not need 500k in life insurance.  She MAYBE needs disability insurance.  Set her up a nice little roth, a small amount of disability insurance, and make sure she is using her 401k at work.  You'll get business down the road and hopefully she'll refer you to her parents.  With no dependents and at 22 she does not need freaking life insurance and won't be able to vizualize her future need for it so she is likely to cancel the policy at age 23 anyway.
 
My god, 500k term insurance.  IDIOTS!
 
ANANOLOSER, save me the drama of your long winded hypothetical reason she needs it.

3rdyrp2's picture
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Joined: 2008-11-13

hotair1 wrote:You insurance guys are idiots.  This chick does not need 500k in life insurance.  She MAYBE needs disability insurance.  Set her up a nice little roth, a small amount of disability insurance, and make sure she is using her 401k at work.  You'll get business down the road and hopefully she'll refer you to her parents.  With no dependents and at 22 she does not need freaking life insurance and won't be able to vizualize her future need for it so she is likely to cancel the policy at age 23 anyway.
 
My god, 500k term insurance.  IDIOTS!
 
ANANOLOSER, save me the drama of your long winded hypothetical reason she needs it.
 
Here's why you're the idiot:
 
At age 22 how much will a $500,000 term policy cost?  $30 a month?  If she decided not to get life insurance where would that $30 be going?  Starbucks?  The mall?  Something that doesn't make her financial situation better?  More than likely that same $30 wouldn't be systematically being saved somewhere, and even if it was, its $30 freaking dollars.  In 3 years the girl is married and is buying a house.  Now she has an insurance need of anywhere from $500,000-$1,000,000.  2 years after that she has a kid, and now all of a sudden her insurance need is an extra $500,000-$1,000,000.  Please explain the rationale why it is insane to buy a small insurance policy a couple years before you actually need more than that?  You're locking in future insurability knowing that within a couple of years it will be imperative to have that coverage in force.  How much do you think we make on a $30/month term policy?  I would make $200 GDC on that, and net $75 payout on that.  We ain't getting rich off the stuff, its doing whats best for the client.

Moraen's picture
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Joined: 2009-01-22

hotair1 wrote: You insurance guys are idiots.  This chick does not need 500k in life insurance.  She MAYBE needs disability insurance.  Set her up a nice little roth, a small amount of disability insurance, and make sure she is using her 401k at work.  You'll get business down the road and hopefully she'll refer you to her parents.  With no dependents and at 22 she does not need freaking life insurance and won't be able to vizualize her future need for it so she is likely to cancel the policy at age 23 anyway.
 
My god, 500k term insurance.  IDIOTS!
 
ANANOLOSER, save me the drama of your long winded hypothetical reason she needs it.

hotair - ever know someone who died at 25? 30? What is her parents' situation? What is her debt situation? Does she have $200k in student loans because she went to Harvard or Duke?

I know someone who died at 30, and the life insurance saved their parents from going into debt.

What if she had a kid? What about the kid's standard of living?

hotair1's picture
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Joined: 2009-03-12

Your both are making WILD assumptions. She might need 100k, that's it.  500k is over kill to fill your pockets with an extra dime.  9 times out of 10 there is no damn 22 year old in the world that needs 500k. 
 
Her saving for retirement early is a much better decision.  She can buy more term when she get's older.
 
PLUS .. you insurance guys always try to over insure people.  ALWAYS.  "you need 10x you annual salary"  Right.... forget to mention the tax free nature of insurnace and that salary she would have gotten was taxed did ya?  Good for you for being honest. 

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