00;00;06;21 - 00;00;08;20
Speaker 1
So do you think your current feeling right now, Steve?
00;00;09;04 - 00;00;09;28
Speaker 2
Pretty stressed.
00;00;10;09 - 00;00;13;22
Speaker 1
March 24. Not too bad yet. Give them a month.
00;00;13;23 - 00;00;29;11
Speaker 2
Yeah. Like it? Yeah. It gets worse, but I'm not. I'm kind of booking stuff in May 1st week in May, they always go on holidays, but booking for the first, second, third weeks of May for any calls and appointments. Yeah.
00;00;30;01 - 00;00;30;15
Speaker 1
I'm scared.
00;00;31;13 - 00;00;33;10
Speaker 2
They got a lot of burden on their backs right now.
00;00;33;17 - 00;00;33;26
Speaker 1
Working.
00;00;33;26 - 00;00;50;05
Speaker 2
Ahead. Yeah, that's a little point, though. I think there's a ton of opportunity because their clients are stressed just the same right now. People pay taxes. They hate going through the process. That's why they go to the council in the first place.
00;00;50;05 - 00;01;23;19
Speaker 1
Just go through a few things. Now that we've kind of thought that accounts could integrate this tax season. Just some quick questions that they can maybe ask their their clients as they prepare their tax slips they review with their clients. So just a few few things. So take it away, Steve when you start and I'll do the color commentary on the side.
00;01;24;13 - 00;01;47;17
Speaker 2
Sounds good. Well, yeah, to further point, I think a lot of people think they've got to understand insurance intimately in order to bring value. But you don't. You just have to ask some good questions. And hopefully these tips we give you will give you the platform to ask good questions for those clients. First off, when people are paying for their insurance, like their life insurance, a lot of people pay monthly just because it's a habit.
00;01;48;00 - 00;02;06;07
Speaker 2
But what they could do is just pay annually. As soon as you pay annually on your insurance, you generally get an 8 to 12% discount. Now, that's almost policies, but that's a quick little tip. So just ask your clients are you paying monthly or you pain annually and then they can work out with the advisor if they want to change it up.
00;02;06;26 - 00;02;20;13
Speaker 1
Yeah, that's obviously cash flow dependent rate. Some people are paying larger policies, smaller policies, but if they can afford the cash flow, then why not say, you know, 8 to 10% boom instead value as their account, You just saved them 8 to 10%?
00;02;21;05 - 00;02;46;27
Speaker 2
Yeah. Case in point, we had a client last month and his premiums about 108 grand He's paying monthly early professional didn't have the cash flow quite where he wanted but as soon as we flipped it to annual now a few years into the policy, it went from 108 down to like 99. So that's pretty significant amount of money to save for just monitoring the cash flow and making it work.
00;02;47;02 - 00;03;07;24
Speaker 2
So good point there, Neal. That's real life. That's when it's working. That's what gets you excited. Call. So another thing is you could ask the clients. So sometimes people bought a term policy for a short term, maybe ten years. But they've changed the length of time that they want that policy to last. But a lot of contracts out there.
00;03;07;25 - 00;03;31;19
Speaker 2
In fact, recently one of the big companies have made it so that you can switch from term ten to term 20 or longer term in the first 5 to 7 years. And so you could just say to the client, Hey, do you still need this insurance past that ten year horizon? If you do, let's switch it, switch it to a 20 year policy or to an age 65 or a 30 year term.
00;03;31;20 - 00;03;36;19
Speaker 2
Right. So quick little question that you can ask. I guess I'm thinking about the insurance.
00;03;37;04 - 00;04;00;10
Speaker 1
Yeah, I actually I'm doing the strategy now. Most of the new insurance policies, the term insurance policies that we've put in place, I love doing the term ten and then knowing that we're going to convert it later because we can we can lock in their insurance and a lower price on the term ten and then the 5 to 7 or maybe a little earlier in switch to the term 20 know, medical underwriting.
00;04;00;10 - 00;04;03;28
Speaker 1
We can save a few bucks in the early years, which is which is pretty nice for the client.
00;04;03;28 - 00;04;31;19
Speaker 2
Yeah. Maybe a third point when you get some of those old policies are older people and they'll have some contractual guarantees baked into their policies. So you have policies that have like a 4% guarantee plus a bonus on top of that of up to another one and a half percent. So we've seen policies that have contractual guarantees of five and a half percent return that people can get on their extra deposits or money going into the policy, which is big and huge.
00;04;31;27 - 00;04;53;09
Speaker 2
Yes, GSE rates have gone up, but they're starting to buffer back down and it's all tax sheltered growth. That's the big key. Right? So contractual guarantees, just say to your client, hey, if you have the value of your policy is going up and down, usually in a universal life policy, do you have any contractual guarantee?
00;04;53;09 - 00;05;28;03
Speaker 1
Next thing we had on there's contract, as Steve mentioned, contractual guarantees. That's a big thing when you have interrupted under opted compounding on a tax sheltered asset. So these policy's five and a half percent contractually guaranteed uninsurable rated compounding. You let that sit for a lot of years. You don't have any, you know, downside and in your return there's no fluctuation in your return five and a half percent can be massive when it comes to the overall cash value that it accumulates inside a policy just because you never have to make up for bad years.
00;05;28;03 - 00;05;41;24
Speaker 1
Right. So really cool. You can just ask, you know, does your your policy, your permanent policy have any guarantees? If you don't know, have you clean up your advisor yet another value point. So yeah. Steve, you want to jump in on next in your.
00;05;41;24 - 00;06;13;22
Speaker 2
Back for sure. Speaking of just investing, you know accounts are getting t5t3 slips and they're able to kind of see where your investment portfolio is, but they don't get any slips from insurance companies. But a lot of insurance policies, specifically universal life policies, they've got investments within it. And sometimes, unfortunately the investments haven't changed. So just asking your client, have you looked at the investments inside your universal life policy and have you changed that?
00;06;14;00 - 00;06;44;05
Speaker 2
Have you talked to the insurance advisor and actually looked at their performance, looked at their fees? Right. So just asked that question. I'm not saying that inside the insurance policy is going to always be the place for it, but you should compare it to your outside investments as well. And they probably just haven't changed the actual investment. Case in point, two weeks ago we had a client and we took a look at their portfolio and they still had like a tech fund from the year 2000 in it.
00;06;44;17 - 00;06;59;01
Speaker 2
And this is a new policy. We took over management of. They had some European equity funds that they bought like in the nineties. So nothing really changed on their platform or structure. So obviously no one's monitoring it. Just ask the question.
00;07;00;16 - 00;07;18;03
Speaker 1
You know, and it has got to just fit with the overall risk tolerance of the client, right? So yeah, when you see advisors doing their job, they should understand where the risk of the client is and then their, their universal life investment should just match that risk tolerance that to accomplish the goal right. So just another question that you can ask.
00;07;18;03 - 00;07;35;19
Speaker 1
You don't need to know the answers to these questions. You just can say, hey, this is, you know, something that I asked my clients, do you know about this or this or this? And then they can they can go find the answer. And you're just adding value to your client right there because no one's talking to your clients about this stuff doesn't.
00;07;36;04 - 00;08;02;28
Speaker 2
Yeah, that's the thing. You can also put triggers in your client's mind of, Hey, next time you get your insurance statement fired off to me, send an email to me. Because one of the things I notice on insurance investor insurance statements is policy loans. This is when the client at one point has taken out a loan against their insurance policy, and it's just been done internally with the with the insurance company.
00;08;03;13 - 00;08;26;22
Speaker 2
But if they don't watch it, there's an interest rate that's being charged. It's usually higher than what the prime or bank rate would be. But the policy loan can start accumulating and it degrades the cash value of that policy. But I had a a few years ago a case where a guy had about $60,000 policy loan and he wasn't even aware of it.
00;08;27;05 - 00;08;47;02
Speaker 2
They brought it up to the accountant and, you know, tried to work through it. And it it was kind of a damaged policy. But my point is, just tell your client, hey, next time you get those insurance statements, fire them off to me. Take a look and see if there's any policy loan values on it. Now.
00;08;48;01 - 00;08;51;17
Speaker 1
Perfect. Let's keep going and always said we're going to keep it short, so let's keep going. Okay.
00;08;52;26 - 00;09;17;19
Speaker 2
Collateral assignments. Just ask the client, you know, have you assigned your insurance policy to a bank? Maybe they did at one point. Maybe that bank covenant is now gone. You don't need to go through the hassle upon death of going through the bank and proving that there's not a loan. Try and take it off right now. So tell your client, take off the collateral loans if you don't need them anymore.
00;09;18;15 - 00;09;41;12
Speaker 2
Now, the quick hit beneficiary on it, just ask them who is the beneficiary of your policy? Who do you want it to be? And is that actually matching I mean, we're insurance advisors and we'll sometimes ask a question. Do you have a will a power of attorney personal directive? And if they say no to any of those things or if they have an update, we say, well, go talk to your lawyer.
00;09;42;05 - 00;09;59;03
Speaker 2
Same holds true is an accountant you can just say are the beneficiaries of your insurance policies lined up to your wishes if they are great. If not, you better talk to your insurance adviser and change up. Right.
00;09;59;11 - 00;10;20;29
Speaker 1
And I'll just get Steve not only who is the beneficiary of the policy, but sure, the policies have contingent beneficiaries as well. Yeah. So basically what that means is maybe the husband has a policy and he says, Oh yeah, my wife's the beneficiary. She'll get the payout. The contingent beneficiary would be if the wife passes away at the same time, then who does the money go to?
00;10;20;29 - 00;10;41;11
Speaker 1
So a lot of times we'll see husband and wife that set policies up. Five years ago or ten years ago. And then they have children, but they never update that secondary beneficiary to add the children to the policy because they've just got the primary beneficiary. So it's super easy for them to fill out to just add those secondary contingent beneficiaries.
00;10;41;17 - 00;10;52;02
Speaker 1
Yeah, but then if there was something that happened to both spouses, the kids would then get the money. So just another tidbit that you can ask of this, the beneficiary and who is the secondary or the contingent beneficiary, Right?
00;10;52;13 - 00;11;12;21
Speaker 2
Yeah. Good point. Number one question you can ask so easy. Do you have enough life insurance? Just ask that they might have enough or too much or not enough. Simple question. Just ask them. Get them thinking about it. Yeah. Did you have something you want to say?
00;11;12;21 - 00;11;33;28
Speaker 1
Right was and you say, and every client's going to have a different definition of what enough is. Some people will say just cover my mortgage and my debts and leave a blank slate. Some people say replace my income for ten years. Some people say replace my income for 20 years. Some people want funeral expenses and kids education. And so that's that's up to the client to decide.
00;11;33;28 - 00;11;50;25
Speaker 1
But like Steve said, simple question, do you have enough life insurance? What does that look like to you? Okay, You don't have to go any further than that. Yeah, just to the client. Like you mentioned, Steve is understanding. Yeah, we've we've we've thought about what we're actually doing with this plan.
00;11;51;08 - 00;12;31;03
Speaker 2
Nobody's asking those questions like nobody. No account is asking those questions, but they're actually questions that can show some care and emotion to it, which leads into advisory work, right? Where you can actually do a more diverse planning with clients. But simple, simple task. Another one of my favorites is that is your insurance policy owned by the corporation or personally, You know, you can just ask that question and you can explain to the client you can use small business rate dollars or low tax dollars to pay for insurance policies super easy and people get it right.
00;12;31;03 - 00;12;36;28
Speaker 2
Save taxes, still get my insurance. It's cheaper to buy more bang for the buck. Super easy. Yeah.
00;12;37;11 - 00;12;57;07
Speaker 1
I. I. Maybe a further conversation we'll have later is the benefits of owning personally versus corporately which policies we typically like to see in the corporation versus personally. There are some some nuances in there where you might want to own some personally versus owning a corporate, but that's for a further discussion. Simple question. Like Steve said, you can just ask.
00;12;57;08 - 00;13;05;19
Speaker 1
Yeah. Are you also own personally or corporately and can we own them corporately if we're able to, to just save save some dollars?
00;13;05;19 - 00;13;20;01
Speaker 2
So the old simple, the whole goal is to get the client thinking right of the client gets thinking. Then they'll say, Well, what do you mean? Or can we can you go over that? It's, you know, if you're in a busy time, you say, you know what, let's set up another appointment for that. It's going to take a bit of time.
00;13;20;01 - 00;13;52;25
Speaker 2
Yeah. Now you've just set up your advisory work for, you know, two weeks, two months down the road, and you can actually properly bill for that time and be calm and collected during it. Right. So you know that if, if you're dealing with a business owner, a lot of them forget to cover their partner. Right. And whether they know they could cover their partnership agreement, they you could ask them, are they covering any key employees or maybe they're the key person of the operation.
00;13;52;25 - 00;14;03;15
Speaker 2
If they're not around, how is going to operate? So just saying, do you have key person insurance or do you have partnership insurance or shareholder insurance?
00;14;03;15 - 00;14;22;28
Speaker 1
Well, it's it's amazing to me how many shareholder agreements we see that say it's funded by life insurance, but there's no policy there. So so is it going to be fulfilled by what's going to be fulfilled by the life insurance proceeds? That's what the lawyer drafted. But there's no life insurance actually backing up that that document.
00;14;22;28 - 00;14;52;22
Speaker 2
So maybe the question there is, do you have a shareholders agreement? Is it properly funded the deal and how is the funding? If it's not through life insurance, it needs to be through some other way, Right. At this point, you know, sometimes clients, they're doing all the right things. The textbook clients, they listen, they take advice. And we had this happened about a month ago where dental professional came and said, what's next?
00;14;53;07 - 00;15;27;02
Speaker 2
Right? They've bought businesses, they've sold businesses, they've done well with investments. They say, what's next? Like, what can I do? And they're looking for more tax driven strategy and of course, open for another conversation. But you can you know, they might come up to the question with you. And then from there, you could just ask what kind of tax strategy you're looking for, what kind of risk tolerance are you able to handle and kind of have a more fulsome discussion around their That's going to obviously take a lot more expertise to run through.
00;15;27;12 - 00;15;41;06
Speaker 2
But if they're saying what's next, you could always say, are you willing to have me talk to your insurance advisor or someone like ourselves? Of course, to talk about more advanced strategies? Yeah.
00;15;42;13 - 00;15;44;12
Speaker 1
Good point. No comment on that. Nailed it.
00;15;44;20 - 00;16;05;26
Speaker 2
This this next question kind of is just life like in general asking your clients like, is anyone in your family? You know, you're asking usually how their family is. You're asking as anyone, your family or friends come down with any major illnesses or have anyone died. And if they have, I mean, that leads into a question of insurance, right?
00;16;05;26 - 00;16;31;18
Speaker 2
You'd say, well, yeah, I was thinking about you. And, you know, if you've been through that experience, have you taken the proper steps to make sure you don't have to have your family go through that same experience? And if they say, well, I don't know, or I should be like, well, I, I'm willing to help walk you through that process, but let's do it, you know, in a future time and let's book that meeting for that.
00;16;31;18 - 00;16;36;28
Speaker 2
So just taking care of what life happens, I think is the key point. Yeah.
00;16;37;07 - 00;17;01;02
Speaker 1
I saw me the other day and it was a picture and basically it was life insurance summarized and you picture the the meme where there's two windows like a sales like you're going to the movies. They got window tickets and over the one it says Go fund me page for someone that passed away and there's a line of you know a thousand people in that line the other window's empty and says life insurance.
00;17;01;02 - 00;17;21;12
Speaker 1
And I thought it was comical. But, you know, a lot of people are willing to line up to donate for, you know, tragedies that happen to people, but they're not willing to line up and actually take care of their family in that conversation if it was to happen. Right. So, Mister interesting, you know, thought provoking meaning that I like as an insurance guy.
00;17;21;12 - 00;17;24;16
Speaker 1
But then I thought that was an interesting way of looking at it.
00;17;24;22 - 00;17;45;07
Speaker 2
Yeah, for sure. Maybe one of my last ones is this. Last year, markets have been down. Lots of people like to complain about it and because they can see their money go up and down. Well, you could talk about insurance as an asset class. You just say, Have you ever considered using insurance as a stable asset in your investment portfolio?
00;17;46;19 - 00;18;00;05
Speaker 2
Yeah, they probably will say no. If they do, you could say, Well, let's have that conversation in the future. Or if you have time, you can say right there. But have you considered insurance as an asset class of your portfolio? Simple question.
00;18;01;16 - 00;18;26;08
Speaker 1
An insurance has got a it's got a valuable part in a in a portfolio. It's part of that portfolio that we need to be maximizing in every different way. But for for unique clients, there's there's opportunity for them to take advantage of some of the benefits that insurance has. And you as the accountant, know better than any other professional in your clients lives, their financial health and what that looks like.
00;18;26;19 - 00;18;54;27
Speaker 1
So you know a good conversation is life insurance is an asset class for for those that it's appropriate with. So you'll know your clients you'll know the people that you know have the cash flow and have the capacity. It's not for everybody to buy a permanent insurance policy and use it as an asset. But there are people that are are making good money and they need, you know, the security and the safety and the compounding and tax free growth and the sheltering that are offered from insurance policy.
00;18;54;27 - 00;18;58;20
Speaker 1
So you know better than anyone your clients and who that would be appropriate for.
00;18;59;10 - 00;19;21;02
Speaker 2
Maybe my last loaded question, have you gone through these questions yourself as an account? You need to ask these questions because if you can ask them and go through the process of answering them for yourself, you're going to be able to share that story in that journey with your own clients and say, Hey, I identified some gaps in my own planning.
00;19;21;19 - 00;19;42;09
Speaker 2
And when I look at your planning, there may be some of those same gaps. Are you willing to go through an advisory process to make sure that we're covering you, your business, your family, and you've gone through that experience, You've answered these questions for your own situation and you'll be a lot better positioned to answer for your clients as well.
00;19;42;16 - 00;19;45;01
Speaker 2
There you go. That would be my tidbits.
00;19;45;11 - 00;19;57;14
Speaker 1
There's some quick, quick hits for you. We said we'd keep it short and sweet. So few little topics for you that you can ask your clients this tax season. So thanks for joining us. Hope you found this valuable. We'll chat again soon. Thanks.
00;19;57;14 - 00;19;58;06
Speaker 2
Bye. Cheers.