Post interview thoughts and questions

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MrSmith's picture
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Hello, <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
This is my first post in this forum and I am glad to have an opportunity to share my experiences and gain insight from those who've played this game before.  I am a recent college grad. and am currently looking at positions in the Financial Advising role.  Having said that, I am having trouble picking out a firm, and I am starting to second guess whether I have been running into shady sales people, or if this is just the nature of the business throughout.  I was not a finance major, but have still had some very good success in the interview process...this is both exciting and troubling...either A) I'm not a half-bad interview, B) They'll take anyone with a degree and contacts that they can use long after you're gone, or C) Maybe a mix of the two.  I recognize that it is hard to judge entire companies via personal experiences with local groups...Clearly two groups that share the same company name could be very different.  Having said that, I recently interviewed at Northwestern Mutual and got an offer.  I do have a few reservations though...Red flags started going up when I heard that "the boss has never made an offer that quick to anyone before..." and after saying I would need time to consider, I was told "we'll definitely give you 24 hours to make a decision"...the training doesn't start for another 2 months however, making me feel like they want to rush the position onto me before I can 'figure out' what I'm getting into.  But I was reassured that even if I don’t take the position, they wish me the best of luck, BUT 'don't bother interviewing anywhere else because we're the best...' <?:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" />   I expect HR people to push their company, but this seems like a little much.  Also, answers to my questions about the company were vague...Q: "What is the turnover rate here?" A: "Lower than any other place..."  That tells me nothing.  To sum up, between some psychology courses in college and my gut feeling, this place sounds a little shady.  That is not to say that NW sucks, but maybe that this firm just isn't for me.  Also, this group appears somewhat limited to selling insurance, and I really don't want to go around telling people "If you get hurt/die/etc....." This is not the way I want to conduct business.  So, I am considering other companies now such as Morgan Stanley and Smith Barney.  I assume that non-finance majors are NOT discriminated against in this business simply because the business-aspect can be taught to most people.  So basically I am looking for any and all guidance that anyone might have...Company recommendations, career-path recommendations, and what to expect from a company support wise...I accept that some hardships of the business are unavoidable (prospecting FOR other FAs as a rookie in the business) but I want to minimize these hardships as much as possible, and I'm going to need to find the right company and the right firm.  So again, any experiences, advice, recommendations would be greatly appreciated.  Another point of order; @ NWFN, you're not really an "employee" but rather a private contractor (so you do have to pay a large amount of health insurance, no 401K, etc...On the flip side you might get lots of tax write-offs on business expenses) I’m trying to find the happy-medium between complete independence and security of a company, and as a private contractor (financial rep. @ NWFN) I feel like security is a bit low.  Is this common among all companies?  My previous questions of company reputation, career outlook, and past experiences that may shed some light on this dilemma take priority though.  Thank you very much for the help, and I apologize for being long winded!

maybeeeeeeee's picture
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Joined: 2005-02-24

Stay away from the Ameriprises, Northwestern Mutual, etc.  They offer anyone a job who can fog a mirror.  Work you like a dog, and take all the accounts of your friends and family.
Stay with the major firms like RayJay, SB, MS, etc.  If you DONT get an offer from them, they did you a favor.  Move on.  It means they just really don't think you have what it takes to be in the business.  If you do get an offer, you will be given a good chance to succeed.
good luck.

Dust Bunny's picture
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Joined: 2007-05-07

Aggggh!! My eyes!  Wall of text.
Try it again with some paragraph breaks.
But for advice.....what maybeeee said.

MrSmith's picture
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Joined: 2007-07-03

Ah, sorry for the wall of text...Didn't see it comming out like that.  Let me try again.
I am a recent college grad. and am currently looking at positions in the Financial Advising role.  Having said that, I am having trouble picking out a firm, and I am starting to second guess whether I have been running into shady sales people, or if this is just the nature of the business throughout. 
I was not a finance major, but have still had some very good success in the interview process...this is both exciting and troubling...either A) I'm not a half-bad interview, B) They'll take anyone with a degree and contacts that they can use long after you're gone, or C) Maybe a mix of the two.  I recognize that it is hard to judge entire companies via personal experiences with local groups...Clearly two groups that share the same company name could be very different.  Having said that, I recently interviewed at Northwestern Mutual and got an offer. 
I do have a few reservations though...Red flags started going up when I heard that "the boss has never made an offer that quick to anyone before..." and after saying I would need time to consider, I was told "we'll definitely give you 24 hours to make a decision"...the training doesn't start for another 2 months however, making me feel like they want to rush the position onto me before I can 'figure out' what I'm getting into.  But I was reassured that even if I don’t take the position, they wish me the best of luck, BUT 'don't bother interviewing anywhere else because we're the best...' <?:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" /><?:NAMESPACE PREFIX = V /> <?:NAMESPACE PREFIX = O />  I expect HR people to push their company, but this seems like a little much.  Also, answers to my questions about the company were vague...Q: "What is the turnover rate here?" A: "Lower than any other place..."  That tells me nothing.  To sum up, between some psychology courses in college and my gut feeling, this place sounds a little shady.  That is not to say that NW sucks, but maybe that this firm just isn't for me. 
Also, this group appears somewhat limited to selling insurance, and I really don't want to go around telling people "If you get hurt/die/etc....." This is not the way I want to conduct business.  So, I am considering other companies now such as Morgan Stanley and Smith Barney.  I assume that non-finance majors are NOT discriminated against in this business simply because the business-aspect can be taught to most people.  So basically I am looking for any and all guidance that anyone might have...Company recommendations, career-path recommendations, and what to expect from a company support wise...
I accept that some hardships of the business are unavoidable (prospecting FOR other FAs as a rookie in the business) but I want to minimize these hardships as much as possible, and I'm going to need to find the right company and the right firm.  So again, any experiences, advice, recommendations would be greatly appreciated. 
Another point of order; @ NWFN, you're not really an "employee" but rather a private contractor (so you do have to pay a large amount of health insurance, no 401K, etc...On the flip side you might get lots of tax write-offs on business expenses) I’m trying to find the happy-medium between complete independence and security of a company, and as a private contractor (financial rep. @ NWFN) I feel like security is a bit low.  Is this common among all companies?  My previous questions of company reputation, career outlook, and past experiences that may shed some light on this dilemma take priority though.  Thank you very much for the help, and I apologize for being long winded!

opie's picture
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Joined: 2006-06-15

I recommend removing every 3rd sentence before you post.  Or keeping every third one - your choice.
Insurance sales is not a bad way to cut your teeth right after college.  You'll have a place at a wirehouse if you can succeed in insurance.  Consider New York Life, for instance.  Also, consider forums like TGP.

MrSmith's picture
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Joined: 2007-07-03

Thanks for the feedback

deekay's picture
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Joined: 2007-05-15

maybeeeeeeee wrote:
Stay away from the Ameriprises, Northwestern Mutual, etc.  They offer anyone a job who can fog a mirror.  Work you like a dog, and take all the accounts of your friends and family.
Stay with the major firms like RayJay, SB, MS, etc.  If you DONT get an offer from them, they did you a favor.  Move on.  It means they just really don't think you have what it takes to be in the business.  If you do get an offer, you will be given a good chance to succeed.
good luck.

I stopped reading after the first paragraph.  To compare Ameriprise to NWM is like comparing dog crap to filet. 
Being as you are recently graduated, IMO you would be better off at a career agency like NWM, MassMutual, NYLife, or Guardian.  Even though you don't like the idea of selling insurance because of the supposed "scare factor", any planner worth their weight will tell you insurance is the backbone of any good financial plan. 
Not everybody (especially your peers) needs investments.  Almost everybody (including HNW individuals) need life/DI/LTCi.  You'll be compensated on insurance better than you would at a wire, and like it was mentioned, if you are successful at the agency, you'll be able to get a job at a wire no problem.  Plus you can still do investments like you could at a wire/regional and get about the same payout.  Before you dismiss the insurance route, I would seriously take a second look if I were you.

troll's picture
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Dust Bunny wrote:Aggggh!! My eyes!  Wall of text.
Try it again with some paragraph breaks.
But for advice.....what maybeeee said.I wonder if he talks like that, too!

GoingIndy????'s picture
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Joined: 2007-07-01

NWM will teach you to sell, and to ask your friends for referrals by writing 1-5 on a yellow pad and turning it around and saying "hey Joe, do you know 5 guys I can help?", or something like this.  The response from your buddy will be, "i know the same guys you know dumb ass" and "No, I don't need a $250k whole life policy for $500 a month, thats my drinking money". Just be prepared to sell your friends. Would recommend a wirehouse if you can get it.  Much better training and a LARGER PERSPECTIVE of accumulating, protecting, and transferring wealth.  Best way for a rookie.

deekay's picture
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GoingIndy???? wrote:NWM will teach you to sell, and to ask your friends for referrals by writing 1-5 on a yellow pad and turning it around and saying "hey Joe, do you know 5 guys I can help?", or something like this.  The response from your buddy will be, "i know the same guys you know dumb ass" and "No, I don't need a $250k whole life policy for $500 a month, thats my drinking money". Just be prepared to sell your friends. Would recommend a wirehouse if you can get it.  Much better training and a LARGER PERSPECTIVE of accumulating, protecting, and transferring wealth.  Best way for a rookie.
While I'm sure there are alot of wirehouse reps who do a good job in this department, his main focus will be to gather AUM.  He will get cursory training in insurance and estate planning.  In other words, if he wants to be an asset gatherer, a wire is good.  If he wants to do complex planning for wealth protection and transfer, the best training will be at an insurance agency. 

blarmston's picture
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DEEKAY- while I would agree with most of your comments, you statement above about being able to do the same investments as a wire is way off...
I would bet that NWM cannot provide SMA's, structured products, an ETF wrap program, Alternative Investments, etc. If they can- then I will shut my mouth on the subject, but I thought all NWM offered was the typical MF accounts and standard investment fare.....

GoingIndy????'s picture
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Don't forget with the wire you can use an outside general agent who represents multiple lines of insurance companies and products.  They only do insurance.  As long as you have the license, these guys will do most of the work once you put them in front of the prospect.  Find one you trust, present them as your insurance specialist and you won't have to be the expert. 

Dust Bunny's picture
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Don't forget with the wire you can use an outside general agent who represents multiple lines of insurance companies and products.  They only do insurance.
If you want to give your business to someone else, sure you can do that.   But you can't be involved in it or receive commissions.  Why would you want to do THAT?  
As long as you have the license,  What are you talking about? If you give the business away it doesn't matter if you are licensed or not. these guys will do most of the work once you put them in front of the prospect.  Find one you trust, present them as your insurance specialist and you won't have to be the expert. 
At a wire, either you do the insurance business yourself using approved companies that you have a selling agreement with or you walk away from the business and/or refer it to an outside agency.   You would be potentially exposing your clients to EIA sharks. Again I ask why would you want to do that?
In the independent set up, you must use the insurance companies contracted with your BD for variable products and you choose the companies you want to do business with yourself for the fixed life products.
I'm beginning to think that 1.) you are not a financial advisor and are a troll giving bad advice to people or 2.) you are a financial advisor and you don't know what you are doing.
I'm leaning to the first.  A troll.  A better one so far, but troll none the less.

anonymous's picture
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Blarnstorm,
Deekay is completely on target with his comments.  Sure, NML reps have a strong emphasis on insurance, but don't forget that NML reps are associated with the 5th or 6th largest Indy B/D and they have the ability to do everything that everyone else does.

anonymous's picture
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Mr. Smith,
Starting with an insurance company will give you a much better chance of succeeding in this business.  I actually struggle to see any advantage to starting with a wirehouse except that it may sound more prestigious and your cube may be in a nicer office. 
Do not accept a position with Northwestern Mutual without also talking to New York Life, Guardian, and Mass Mutual.   All else being equal, there are advantages to Guardian and Mass Mutual over Northwestern Mutual and New York Life.

blarmston's picture
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Blarnstorm,
Deekay is completely on target with his comments.  Sure, NML reps have a strong emphasis on insurance, but don't forget that NML reps are associated with the 5th or 6th largest Indy B/D and they have the ability to do everything that everyone else does.
Well, than I stand corrected... I guess I truly have no idea the NML capabilities- I have NEVER had to compete against them, let alone knew of a qualified prospect who had them...

GoingIndy????'s picture
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Sorry Dust Bunny, no troll here. As an AGE FC we have agreements with outside agencies that link us up with the insurance companies (hartford, transamerica, metlife, ing, etc.).  Maybe you've heard of a Capitas, or Time Financial or any other third party that has an agreement with AGE/SB/ML/LPL, etc.  Not too mention Hartford and the other bigs come directly in as well.  We can get basic term quotes right on our system, and the harder stuff can call in back up. Did an insurance review recently for a client, came across a nearly paid up older WL contract and 1035'd the cash value to the new policy with a much higher DB to fit a more modern need, not one of 20 years ago.  Got paid on it, target production hits the AGE run and then normal split after that.  Sat on the same side of the table with client as we "interviewed" the insurance rep as he presented 3 different company rates.  Did they get paid, of course, but I got the same as I would have if I did all the work.  So, no troll here bunny.  I am looking to go indy and using this board to answer questions on the indy side, Obviously you're base is a little weak on the wire side. 

Dust Bunny's picture
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Sorry Dust Bunny, no troll here
Glad to hear it.
Obviously you're (you're/your.... learn the difference )base is a little weak on the wire side.
I do agree my base maybe is a little weak on the wire side since I have mostly been an independent.
If you are not a troll I do apologize. 
You have to remember we are inundated by idiot trolls and sometimes its hard to weed out the crap from the real stuff. 
However, as a future independent, I strongly suggest you don't farm your client's out to insurance agencies.  Going Indy...meet Annuity Shark.
 

GoingIndy????'s picture
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no problem bunny, i see the other posts of idiots on this site. no troll here.  apology accepted.  no foul. 

anonymous's picture
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Did an insurance review recently for a client, came across a nearly paid up older WL contract and 1035'd the cash value to the new policy with a much higher DB to fit a more modern need, not one of 20 years ago. 
1) What does it mean for the policy to be "nearly paid up"?  Does this mean that the client was "nearly 100"?
2) It is almost never in the client's best interest to 1035 the cash value of an existing WL policy into a new policy.
The problem with many reps who concentrate on investments, but sell some insurance, is that their knowledge level is just enough to hurt clients.
How did both you and the insurance rep get paid?

AllREIT's picture
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deekay wrote:I stopped reading after the first paragraph.  To compare Ameriprise to NWM is like comparing dog crap to filet. 

I think of it more like Whiskas to Alpo. NWM is a bit cultish and
wheras AMP is "Sell VUL ask questions later", NWM is "Sell WL, ask
questions later"

deekay's picture
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AllREIT wrote: deekay wrote:
I stopped reading after the first paragraph.  To compare Ameriprise to NWM is like comparing dog crap to filet. 
I think of it more like Whiskas to Alpo. NWM is a bit cultish and wheras AMP is "Sell VUL ask questions later", NWM is "Sell WL, ask questions later"
Do you even know how WL works?  If you did, you would not make it seem like a rep selling it is doing a bad thing.  Very Unreliable Life is one thing, but whole life insurance is the cornerstone of a sound financial plan.

deekay's picture
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blarmston wrote:
Blarnstorm,
Deekay is completely on target with his comments.  Sure, NML reps have a strong emphasis on insurance, but don't forget that NML reps are associated with the 5th or 6th largest Indy B/D and they have the ability to do everything that everyone else does.
Well, than I stand corrected... I guess I truly have no idea the NML capabilities- I have NEVER had to compete against them, let alone knew of a qualified prospect who had them...

Different markets, for sure.  Just like you normally won't hear of a NWM rep competing for a $1m investment case, you'll never hear, "Oh, thanks for the DI quote, I'm waiting to hear from my ML guy before going further."
The thing is, this guy is getting right out of college.  There aren't too many folks who are going to let him manage huge assets.  At the same time, he can help folks by placing badly needed insurance, and learn the ropes of investments at the same time.

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AllREIT wrote: deekay wrote:
I stopped reading after the first paragraph.  To compare Ameriprise to NWM is like comparing dog crap to filet. 
I think of it more like Whiskas to Alpo. NWM is a bit cultish and wheras AMP is "Sell VUL ask questions later", NWM is "Sell WL, ask questions later"
By the way, NWM is one of the largest sellers of term insurance as well.  But of course, you'd never let some facts get in the way of your far-reaching generalities, would you?
FTR - I don't work for NWM, but they've got some advisors over there that are top notch. 

troll's picture
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anonymous wrote:2) It is almost never in the client's best interest to 1035 the cash value of an existing WL policy into a new policy.Why not?  Older client, higher rates?

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NWM is definitely cultish.  They are a phenomenal company.  There may not be a more financially secure company in any industry in the U.S.  This does not mean that they are a great company to have as your employer.
By the way, NWM is one of the largest sellers of term insurance as well.
Very true.  It is seldom that I run across someone who has NMW WL who doesn't also have significant amounts of NMW term insurance.  This, by the way, is the reason why they don't necessarily make a good place to be employed.  If you leave the company, it is very possible that you'll have tens of millions of term insurance on the books that would be easy conversion sales that you can no longer convert.  There are advantages to working for companies that accept brokered business.  NWM is not one of these companies.
Deekay is correct that many NWM reps are top notch.   They absolutely have the ability to work with the
I also don't work for NWM, but I will say that they are the firm that I least like to be in competition against.

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Why not?  Older client, higher rates?
Higher rates are on the new contract.  On the older contract, he is still paying the rates of a 25 year old, or however old he was when he purchased the coverage.
I guarantee that he is taking a WL and moving it into a UL and comparing the first year death benefit and using that to come to the conclusion that it makes sense to 1035 into a new policy.

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anonymous wrote:
Why not?  Older client, higher rates?
Higher rates are on the new contract.  On the older contract, he is still paying the rates of a 25 year old, or however old he was when he purchased the coverage.
I guarantee that he is taking a WL and moving it into a UL and comparing the first year death benefit and using that to come to the conclusion that it makes sense to 1035 into a new policy.

Well, it could make sense if this is purely a DB sale (i.e. the client is very old, GUL could make sense).  However, it sounds like the client has held the WL policy for a long time, thus has a significant CSV built up.  But to bring it to another WL policy makes no sense.  Hence, your comment about a little knowledge being dangerous....

AllREIT's picture
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deekay wrote:Do you even know how WL works?  If you did, you
would not make it seem like a rep selling it is doing a bad
thing.  Very Unreliable Life is one thing, but whole life
insurance is the cornerstone of a sound financial plan.

Especially when you are 25. Back to toy gun producers for you.

anonymous's picture
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AllReit, it even makes more sense at 24.

anonymous's picture
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Deekay,
Even if it is purely a death benefit sale, it probably doesn't make sense to 1035 an existing older WL into a GUL.

deekay's picture
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AllREIT wrote: deekay wrote:
Do you even know how WL works?  If you did, you would not make it seem like a rep selling it is doing a bad thing.  Very Unreliable Life is one thing, but whole life insurance is the cornerstone of a sound financial plan.
Especially when you are 25. Back to toy gun producers for you.
It's good to know there are reps like you out there.  It makes my job alot easier when I'm able to blow up your theories of financial planning.

troll's picture
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anonymous wrote:Deekay,
Even if it is purely a death benefit sale, it probably doesn't make sense to 1035 an existing older WL into a GUL.Why?Presuming one can lock in a higher death benefit, that is.Aren't the current mortality assumptions better(i.e. less costly) than they were years ago when the old WL's were writting?  Can't one use the CSV to pay for a nice death benefit?As you hopefully know, I've learned a lot about WL and don't worship Unreliable Life like some, but I'd like to explore your assertion further....honestly for my benefit so I can learn more.

FreeLunch's picture
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Is everyone talking about annuities again?

GoingIndy????'s picture
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busy weekend. sorry for delay.client was 77 had 82k CV with a DB of 87k, not much leverage there.  IMO insurance is about leverage.  dividends were paying premiums and the DB was rising slowly each year.  Contract dated 1982 or so.  Also, client has with me 800k in stocks/bonds/cash in a trust and owns no other life insurance.  I saw three primary options, 1. keep existing policy for DB since no need on the CV side, 2. cancel policy, but the DB is ok, so ruled out quickly or 3. utilize the CV client does not need to leverage up DB.  Chose option 3 and 1035'd to a hartford GUL with little CV but 151k DB.had the outside rep show 3 quotes and another was better, but client went with the name recognition of hartford.  Of the insurance I 1035, most is these situations for older client with a more modern insurance need and the CV needs to be reviewed vs other assets.  The only other time I 1035 is on the younger, under insured client I see come from a NWM, massM, Countrywide with 250k term and a 50-100k WL, yet the real need is about 750k or more in DB protection.  When I re-run these quotes I often hear the client tell me something like "I told my guy I had X to spend and it came out about that amount".  Of course they solved the WL big commish first and sprinkled in some term to make it look better.  Should be the other way. I see a lot of this with friends of mine I avoided my rookie years.

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FreeLunch wrote:Is everyone talking about annuities again?
Did you even bother to read the previous posts?  Or are you going to spout off on yet another topic you are unqualified to speak of?

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GoingIndy???? wrote:busy weekend. sorry for delay.client was 77 had 82k CV with a DB of 87k, not much leverage there.  IMO insurance is about leverage.  dividends were paying premiums and the DB was rising slowly each year.  Contract dated 1982 or so.  Also, client has with me 800k in stocks/bonds/cash in a trust and owns no other life insurance.  I disagree.  Insurance is about protection, promises, and guarantees.  A nice by-product is that insurance enhances other assets a client may have. 
I saw three primary options, 1. keep existing policy for DB since no need on the CV side, 2. cancel policy, but the DB is ok, so ruled out quickly or 3. utilize the CV client does not need to leverage up DB.  Chose option 3 and 1035'd to a hartford GUL with little CV but 151k DB.
I am curious to find out why the client wants a higher DB?  Is this part of an estate planning issue?  had the outside rep show 3 quotes and another was better, but client went with the name recognition of hartford.  Of the insurance I 1035, most is these situations for older client with a more modern insurance need and the CV needs to be reviewed vs other assets. 
Define 'better'.  IMO, your client was correct in going with an insurer that has a strong financial foundation.  Even though I'm not sure he took that into account. The only other time I 1035 is on the younger, under insured client I see come from a NWM, massM, Countrywide with 250k term and a 50-100k WL, yet the real need is about 750k or more in DB protection.  When I re-run these quotes I often hear the client tell me something like "I told my guy I had X to spend and it came out about that amount".  Of course they solved the WL big commish first and sprinkled in some term to make it look better.  Should be the other way. I see a lot of this with friends of mine I avoided my rookie years.
I agree with you completely.  As an advisor, we need to first get the client the most amount of insurance the client qualifies for, THEN pick the solution that best fits into their budget. 

troll's picture
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deekay wrote:GoingIndy???? wrote:busy weekend. sorry for delay.client was 77 had 82k CV with a DB of 87k, not much leverage there.  IMO insurance is about leverage.  dividends were paying premiums and the DB was rising slowly each year.  Contract dated 1982 or so.  Also, client has with me 800k in stocks/bonds/cash in a trust and owns no other life insurance.  I disagree.  Insurance is about protection, promises, and guarantees.  A nice by-product is that insurance enhances other assets a client may have. 
I saw three primary options, 1. keep existing policy for DB since no need on the CV side, 2. cancel policy, but the DB is ok, so ruled out quickly or 3. utilize the CV client does not need to leverage up DB.  Chose option 3 and 1035'd to a hartford GUL with little CV but 151k DB.
I am curious to find out why the client wants a higher DB?  Is this part of an estate planning issue?  had the outside rep show 3 quotes and another was better, but client went with the name recognition of hartford.  Of the insurance I 1035, most is these situations for older client with a more modern insurance need and the CV needs to be reviewed vs other assets. 
Define 'better'.  IMO, your client was correct in going with an insurer that has a strong financial foundation.  Even though I'm not sure he took that into account. The only other time I 1035 is on the younger, under insured client I see come from a NWM, massM, Countrywide with 250k term and a 50-100k WL, yet the real need is about 750k or more in DB protection.  When I re-run these quotes I often hear the client tell me something like "I told my guy I had X to spend and it came out about that amount".  Of course they solved the WL big commish first and sprinkled in some term to make it look better.  Should be the other way. I see a lot of this with friends of mine I avoided my rookie years.
I agree with you completely.  As an advisor, we need to first get the client the most amount of insurance the client qualifies for, THEN pick the solution that best fits into their budget.  deekay, you haven't addressed the issue when I raised it a few posts ago....If this guy is in a position where he's unlikely to need the CSV, why NOT try to increase the DB?  (Presuming, of course, that it doesn't cause an untenable increase in premiums, or a future lapse in coverage.)  Essentially you're creating a bigger legacy for his heirs, or a favorite charity.  You can also potentially get the asset out of his estate given proper structuring and three years to escape the lookback period.

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My apologies deekay-it was Anon who said it was "almost never" good to 1035 CSV out of an old WL policy to increase the DB.I'd still like to know what is wrong with that.  Not trying to confront, per se, but rather to learn.

anonymous's picture
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client was 77 had 82k CV with a DB of 87k,
These numbers don't sound kosher.  I have no idea how the CV and the DB can only be within 5K of each other on a 20 year old policy.
Joedabrkr, the reason is that if you look at the #'s, they won't work.   Don't forget that the death benefit of the WL policy will keep growing every year.  In other words, you are only increasing the DB if the person dies well before life expectancy.   Conceptually, if the numbers do work and the person has no use for the CSV, then I don't have a problem with it.
That being said, I believe that the CSV has tremendous value and should be used.   For example, if someone has a CSV of $82,000, they can look at that as conservative money which in turn will allow them to take an additional $82,000 and invest it aggressively.  Wouldn't it help Goindy's client to take the money that is in cash and invest it more aggressively since he can access the life insurance CSV?

troll's picture
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Thanks anonymous!

GoingIndy????'s picture
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Joined: 2007-07-01

those were the numbers, the CV was that close to the DB.the DB was going up each year, but slowly.  I ruled out surrendering policy for the CV since already had enough investments and didn't need the cash.  Biggest bang for the dollar day one was the leverage of more DB.  It would be hard for me to totally surrender a policy on someone in their upper 70's. 

deekay's picture
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anonymous wrote:
client was 77 had 82k CV with a DB of 87k,
These numbers don't sound kosher.  I have no idea how the CV and the DB can only be within 5K of each other on a 20 year old policy.
Modified pay WL?  It a shot in the dark as I normally don't work with this kind of product.
Joedabrkr, the reason is that if you look at the #'s, they won't work.   Don't forget that the death benefit of the WL policy will keep growing every year.  In other words, you are only increasing the DB if the person dies well before life expectancy.   Conceptually, if the numbers do work and the person has no use for the CSV, then I don't have a problem with it.
That being said, I believe that the CSV has tremendous value and should be used.   For example, if someone has a CSV of $82,000, they can look at that as conservative money which in turn will allow them to take an additional $82,000 and invest it aggressively.  Wouldn't it help Goindy's client to take the money that is in cash and invest it more aggressively since he can access the life insurance CSV?

I'm beginning to see your point, anon.  In a vacuum, moving the CSV to the GUL makes sense.  However, the longer he lives, the worse the strategy looks.  If the client lives another 20 years, all he needs is around 5% on his $80k to outperform the DB of the GUL.  However, if we're assuming the $80k would be invested in a retail account, we've got to take into account taxes every year.  Is he liquid enough to pay the compounding taxes?  I dunno - maybe I'm missing something as well, but in this case it doesn't seem like that bad of an idea.  Certainly, I get very skeptical anytime someone suggests 1035'ing a solid WL policy for a UL or even GUL.  However, this might be the rare exception to the rule.  Could you clarify, anon?

BigRed's picture
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Joined: 2007-04-15

Here are a few things to be aware of about NMFN. First, its a good company for the most part, however, there are a few issues that must be addressed to anyone interested in joining.

1. When you first start out, you are not allowed to call yourself a financial planner or advisors, only a financial representative. The stupid thing about this is that if you work at a wirehouse where you gather assets, you can be an advisor, but at NMFN, where you are actually being involved in wealth accumulation, preservation, and distrubtion, true planning, you are only a representative.

2. You cannot get a series 7 right away which, if you have you can call yourself an advisor.   The office managing partner makes you get a series 6 first, a rule that is pretty inefficient if you ask me.

3. You have your "own business", as its said at the firm, yet people around the office hail the managing partner (formerly general agent) as though he is their savior.

4. The head of the office is called a managing partner. To me that implies that there is a hierarchy and that there are multiple parnters in an office, and he is the administrator in the group. Additionally, managing directors oversee satalite offices. These are respectible titles in other businesses (law, accounting, consulting, ibanking) but seem to be misused marketing titles in insurance.

5. Managing partners will encourage you to be in some debt somewhere to help grow your business.

6. You know its a cult when you are told to pay your own way to go to Milwaulkee, but its a cool trip nonetheless.

Look, I worked for NMFN as an intern for a year but got hired away to go to a wirehouse. I start their September 1. They are giving me a salary that NMFN wouldn't, plus I haven't seen all the oddities there I noticed earlier. Finally trying to sell whole life insurance to your irresponsible friends who have no dependents and want fast cash is not very fun. Shop around.

BigRed's picture
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Joined: 2007-04-15

I am sorry I forgot a few points to my post above.

#2. Even if you have a series 7, you are still not allowed to trade stocks or bonds, only mutual funds. The firm pushes Russell and American Funds, but you can trade anyone, and the BD is fairly reputable. But back to stock and bonds, those can only be traded by an investment specialist and there is only one of those in each office.

#3. Back to having your own business. If you truly had a business, you would have a book to sell when you retire. All of your accounts are given to others in the office. From what I am told, at a wirehouse, you can usually sell your book.

Frankly, if you don't think you can make the AUM requirements at a wirehouse, go to NMFN, learn, make some money and most importantly make contacts. Nothing can replace the sales training NMFN will give you, the Granum system is pretty good if you don't mind being as obnoxious (at times) as they tell you to be when trying to get meetings. Then a few years down the road, go to a big wirehouse, and get your clients to move their investment accounts with you.

anonymous's picture
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Joined: 2005-09-29

I'm failing to understand if this is a participating WL policy how the CV can almost be the same as the death benefit at age 77.  I'm even assuming that all of the dividends have been taken in cash. 
Is it possible that the face amount of the policy and the death benefit are being confused?  At the very least, I would think that the policy has to be a MEC.
A 1035 exchange may very well make sense if the DB and the CV are close to the same number, but like I said, I don't know how this is possible.

BigRed's picture
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Joined: 2007-04-15

Anonymous:

The cash value can never be equal to the death benefit cause then you have a MEC. However, It can be very close with the divedends paying into it. That is how whole life works and why people by it aside from the estate planning considerations and the fact that is protected by ERISA.

anonymous's picture
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Joined: 2005-09-29

BigRed, it sounds as if you need another internship. 
Please enlighten us on ERISA and how this pertains to whole life insurance. While you are at it, please explain how a policy that probably endows at age 100 would have the death benefit and the cash value so close together at age 77. 
Also, you don't need the death benefit and the cash value to be the same to have a MEC. 
A little knowledge is a dangerous thing.

trisyn's picture
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Joined: 2006-08-25

Big Red,
I don't know which office you're in but many of your points are just plain wrong. First of all, a rep can take either the 6 or 7 ( I am one of those who chose the 7). Once you have the 7 you CAN trade individual stocks or bonds (although it's not commonly done).

GoingIndy????'s picture
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Joined: 2007-07-01

I'll say it again, they were very close and it was not a MEC.  The dividends were paying in and staying in the contract.  They were pushing up the DB each quarter, but not a ton.  You are right on one thing though, if he does live into his 90's the WL would end up being better since the DB keeps going up.  But for the next 12 years the new policy is higher.  Would not have surrendered policy with the taxes due on it, better option was the 1035 or keeping it to pass along tax free.  Maybe if he was younger I would think about cashing in, but not at 77, too much of a risk I think.  I'll try to dig it up tomorrow and post it.

anonymous's picture
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Joined: 2005-09-29

I'm interested in hearing the details.  Typically, if someone is reinvesting the dividends, the DB will equal the CV + the face amount of the policy.   (It won't really equal it, but it will be in that ballpark.)  That is why I don't understand how the CV and DB are so close together.

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