Distributor’s Summit
Niagara Falls, Ontario
June 6-7, 2012
Phillip C. Richards, CFP™, CLU, RHU
Chairman, CEO
North Star Resource Group
Minneapolis, MN USA
phil@northstarfinancial.com
NORTH STAR SNAPSHOT- Growing Leaders
MDRT MEMBERS = 82
COURT OF TABLE = 17
TOP OF TABLE = 10
Est. Revenue $50,000,000
Life Premium in 2009 = $25,000,000; Annuities 3M
Disability Income Premium =
$4,250,000
Assets under mgt. = $3,500,000,000, at 1%/year
Total assets under management $ $4,750,000,000
Team members- 150; Advisors 154; Fees $711,000
Offices = 31 in 16 states; GDC = $22,000,000 est.
Agency Strategy
I. To Be the Best and Biggest Client Oriented,
Independent Financial Resource Firm in the World.
C. Pinwheel Advantages
1.
Enables the BEST and Biggest (above)
2.
Client Oriented - Relationships vs. Transactions
(Product Driven)
3.
Total Financial Planning using the Pinwheel
4.
Diversification of Revenue (R E A D)
5.
Rainmaker – Internist (College Grads)
6.
Mayo Clinic Model
7.
Enables recycling of good agents who can’t prospect.
8.
Attractive to College Seniors
Review...
Why College Recruiting?
•
•
•
•
•
•
•
•
•
•
•
NUMBERS
LOYALTY
ENERGY
COACHABILITY-BLACK HOLES AGENCY
HIGHER Rewards 22-42
LOWER CAPITAL COSTS
CULTURE (C C C)
COMPETITIVENESS (Race)
COMPATIBLE AGES
SUCCESS
Sustainable (42 years)
Our Career
Advantages - 3 i’s
 Independence
 Income based on
efforts
 Impact—Service to
one’s fellow human
Independence, Income, Impact
Our Money
Media / Legacy
vs.
Disadvantages
 Telephone
(Prospecting is tough)
 Unequal distribution
of income (5 yr challenge)
 Non-glamorous
products to start L.I.
Your Blood,
Sweat, & Tears
1¢ Doubled 30 days
Thank you
Bob, Randy, George and Bill,
Thank you for the beautiful bouquet of flowers. I can’t
believe it has been 30 years. I can remember vividly
sitting in Phil Richards office and being offered the job.
Back then I was also interviewing with Proctor and
Gamble. Phil said I could either be selling financial
planning relationships or toilet paper, which would you
prefer?
Hope that gave you a smile, have a great day.
Ann (C O T)
FIRM MISSION
To be the BEST and BIGGEST
“Client Centered,” Independent,
Financial Resource Firm
“In The World.”
Drivers--- Same slide as 12 earlier!!
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
Vision : Changing Lives, Forever ; SRNSCF Foundation 10%
Client, Customer, Company
Cop, Coach, Consultant
High Performance / No Excuse (The Painting Elephants)
College Recruiting (3I’s)
Pinwheel
Specialization – Joint Work
Professional Markets – MD’s
Life Based Financial Planning
Mentoring – GAMA, MDRT
Recycle Advisors
Quarterly Targets
 North Star Year ~ June 30th
2nd Quarter
 March Madness ~
1st Quarter
 Chairman’s Challenge ~
3rd Quarter
 December ~ Securian – MDRT
4th Quarter
Reasons for Elephants
1. ACRES OF DIAMONDS; ONLY 2% OF THAI’S
2. INCREDIBLY INTERESTING PHENOMENA
- And, we’re hardwired to want what is
unavailable, ex: Life Insurance
3. I BELIEVE YOU PEOPLE CAN DO ANYTHING
– Chinese Table Tennis
– Psycho-cybernetics Dr Maxwell Maltz
Aimee Mullins
Kyle Maynard
• Freshman year 0-35
• ESPY Award
• Top Ten Outstanding Young Americans
• World record in modified bench press at 360lbs
• Runner up state wrestling champion, State of
Georgia with 35 wins during year
No
Excuses!
Kyle Maynard
17
Author Geoff Colvin
estimated that 2006
Olympic Skating Gold
medalist Shizuka
Arakawa fell on her
derriere 20,000 times!
“Landing on your butt
20,000 times is where
great performance
comes from”.
from “BOUNCE”, by Matthew Syed
p.86
Y O U R W O R L D T O D AY; LAMP 1995 T BURNS
DO MORE
GLOBAL
COMPETITION
TRUTH/
CONSUMERISM
DO IT BETTER
DO IT FOR LESS
INFORMATION
INTERNET
STRESS
Revenues reducing, expense, technology and regulation
costs increasing. Need for scale increasing rapidly.
LAMP
1995
GEN X
A.Q.
Change…
Top Problems Reported
by Teachers in 1940
Top Problems Reported
by Teachers in 1990

Talking out of turn

Drug abuse

Making noise

Alcohol abuse

Running in the halls

Pregnancy

Cutting in line

Suicide

Dress code violations

Rape

Lingering

Robbery

Chewing gum

Assault
Ruts-Habits
Goals-Bike
Change is certain------------Growth is optional!
Years for media to reach 50 million audience
–Radio
38 years
–Television
13 years
–Internet
4 years
–Facebook
2 years
Less than 100 of S&P 500 existed in 1957
Timeless Lessons from Maury
1. Positive Attitude ONLY IN OUR CONTROL
2. BHAG’s – Big Hairy Audacious Goals
3. Activity Solved All Problems NEED FOR SCALE
4. Integrity wins the day
ETHICS
5. Practice makes perfect – drill, drill, drill;
SCRIPTS
6. Inspect what you expect; expect only what you
inspect. (Checklist Manifesto)
7. Empowerment – Forget the paper, Recycle People.
Manage things, lead people. (Grow Leaders)
8. The Miracle of Life Insurance.
REPEAT-REPEAT
Strategy #X – Vision, Mission, Strategies, Tactics
The Power of a Vision
• Vision without action is but a dream. Helen Keller
• Action without vision is treading
Lily pad
Priest
water.
• Vision with action, can change the
world.
M Meade
Michelin
Strategy #X – Vision, Mission, Strategies,
Examples of Vision:
• Cargill To improve the standard
of living around the world
• Wal-Mart To give ordinary folk the chance to buy the same things as rich people
• Disney To make people happy
Servicemaster
• Mayo The best interest of the patient is the ONLY interest to be considered
• Mary Kay Create unlimited opportunities for women.
• Merck Medicine is for the people not the profits. (Japan - TB)
North Star Resource Group
Our VISION..
Changing
Lives,
Forever.
Titles or Testimonies
...And What Do You Want On Your Tombstone?
Rest
in
Peace?
“Begin with the End in Mind.” —Covey
Managers, MGA’s and Home Office
He/She
Grew
People
Organic Growth
The Religion of Life Insurance
Physician
Clergyperson
She saved
Lives
He saved
Souls
Life Based Financial Advisor YOU!!
He/She
Changed
Lives
Titles or Testimonies
• Dr. Tony Compolo
• LAMP and MDRT platforms
• Do you want a title or a testimony?
• What ’s your legacy?
• Changing Lives Forever with Life Ins
With the stroke of pen
and ink, you instantly
create an
Explosion of Money
at Precisely the Right
instant… when it’s needed
When everyone is showing up to
pay respects, your advisors are
showing up to pay cash
CHANGING LIVES, FOREVER
Companies spared, jobs saved
Kids allowed to stay in their same
neighborhoods, schools, homes and
playgrounds and churches
Surviving parents able to be full-time when
kids need them most
…all because your advisors/brokers were there!
Passion
Ecclesiastes 9:10 “Whatever
your hand finds to do, do it with
all your might (for in the grave,
where you are going, there is neither
working nor planning nor knowledge
nor wisdom)”
Worst Case Scenario SLSC 2009
NS SWOT Analysis Threats
Commissions are illegal
Fiduciary standard
Major companies change
Tax law changes
2010 Business Model --8 Threat Responses
Problem- commission compression , first and renewal
1. Blue Ocean Exercise Disability Income Focus
2. Disability Income website, 11 Companies, females
3. ATLAS- Asset To Liability Allocation System
4. FPRC - transformation to fees , use of “Laser Fiche”
5. Brokerage The Marketing Alliance, Penn Mutual, Unify
6. AUM, $500,000,000 in 2011, $5,000,000,000 by 2014
7. NHSCA - National High School Coaches Association
8. Recruiting to Medical Markets, 31 offices/16 states
REVENUE ENHANCEMENT AND DIVERSIFICATION
R E A D INITIATIVE Reduce from 74% to 49%- 5yr
Revenue
Enhancement
And
Diversification
Ten Strategies to Sustainable Success
Be A The HONEYBEE; GROW HONEYBEES
How to Work Less and Earn More, And have More Fun
I. Never ask for names – give them
II. Billable hours, delegate the rest
III. Script Everything, 20 second elevator speech, telephone script,
“Give Names” talk; Script all questions
IV. Vertical referred leads & more
V. State Farm letters
VI. Working smarter, not harder
VII. Hoard what you love, hire what you loathe
VIII.Partnership power, adoption, survivorship
IX Pareto Rule – Focus on the top 20%; Bottom 20%-God’s Humor
X Vision, Mission, Strategies, Tactics, Southwest Airlines Slide 10
The Relationship is Clear*
Face to Face Time
Hours Worked
MDRT
Time 19%
58 Hours
Court
Time 48%
54 Hours
Top of Table
Time 53%
51 Hours
“It’s Not About Working Harder. It’s About Working Smarter”
*MDRT Study
Keep the planes in the air (Marketing Asst Program)
Strategy # I –
Never ASK for Names; GIVE Them
1. Know what organization your client is part of
2. Obtain list of as many names in the organization
(Directory-Lobby, INTERNET, Company
Directories. SOCIAL MEDIA MAKES EASY
3. Place list of 20 or so names before client.
4. “I will be calling these people; which do you know
(K) or know well (KW). Please mark”.
5. “If any of them ask me, do you mind if I tell them
I work for you?”
Strategy # II – Working Smarter, Not Harder
• Time is the problem for the sole practitioner
Delegation, Mentoring and Scale are the solutions
• Your uniqueness is thru the “Miracle of Life Insurance”
THE 2% Rule - Hard to Easy vs Easy to Hard
• Vision, Mission Goals, and Execution using strategies,
systems, sub-systems tactics, procedures, and
checklists
Strategy # III - SCRIPT Everything
Script Everything-Purpose
20 Second Elevator Speech
Telephone Script fatal disjunctive
“Give Names” Talk
Scripts for Admin/Market asst
Nominator talk(if you use one)
Script QUESTIONS for interview
Strategy IV – Vertical Referred Leads & More
•
THE HONEYBEE
• State Farm Letters (Clients and Orphans)
• Before we hang up…
• Vertical Referred Leads Magic Word (Respect)
• Don’t ask for Referrals, Give Them
• I’m a life planner who specializes in finance
• Do you have enough confidence in your agent to allow
me to give you a FREE second opinion.
• Cold Calls, 20,000 rejections needed to succeed
Strategy # V – State Farm Letters –
Client Life Benefits Letter
As a service to our clients, we are contacting you to ensure you
have adequate life insurance coverage. Our records show that
you have $1,000,000 of life protection in force. This will provide
$6600 per month to your family in the event of your untimely
death. Is $6600 per month enough for your family to live on?
If you have more coverage than our records indicate, please let
us know so we can update our records.
If this amount is correct but you feel it may be insufficient to
cover your risks, please call us and we will set up a time to
review your needs and develop a solution.
I can be reached at «AdvisorPhoneBus».
Best regards,
DAVID GREY, Advisor
Strategy # VI – Working Smarter, Not Harder
Term Insurance
• Sell Term (The Aaron story)
–Lock in the client / convert the policy
in the future.
• Use conversion credits as a reason to
review current coverage . YRT is best!
• Negative Mortality Curve
Strategy # VI – Working Smarter, not Harder
Negative Mortality Cost
1,000,000
24,000 – Additive PX =
17,520
Eclipse
= 8.47% 8.76
6,480
Age 50 51
Cost:
$6,480/Yr. – 30 Yr. Term
Thinking Mutual Funds
71
76
30 Yr. Elite Term
80
Reasons:
Net amount at risk decreases
Using additive premium only
Inside tax free build-up
Strategy # VI – Working Smarter, Not Harder -
Disability Insurance (READ)
• Sell DI
– A plan is incomplete without
disability insurance.
– A disability is living death;
– Ability Insurance- It enables one to keep
one’s dignity when good health ends.
– Renewals (READ)
Female Anesthesiologist Comparison
Female Attorney
Strategy # VIII – Partnership, Power…
Meet on your Turf
You go to your medical clinic to see
your physician. Why should it be any
different in our business?
• Conduct 80% or more
meetings at your office.
– More productive
– See more people
– In control. No-shows, no problem, keep working.
– Fewer disruptions
– No show, no problem
– Weed out less serious prospects who won’t come in
Strategy # X – Vision, Mission, Strategies
•Vision, ex. Changing Lives, forever
•Mission, ex. Court of Table
•Strategies. See Southwest Airlines
•Tactics- See Southwest Airlines
Southwest Airline’s Unique Strategy
Democratize flying – Poor fly same as Rich: VISION
Fast 15 Minute Turnarounds (Notice All The Systems)
1. Planes flying longer than rivals
2. Frequent departures with fewer aircraft
3. No meals
4. No assigned seats
5. No interline baggage checking
6. No first class
7. Warm weather and uncongested airports
8. Automatic gate ticketing/Bypasses travel agents/commissions
9. Pilots experience all pieces of process and pay own training
10. Standardized fleet of ONLY 737’s. Efficiency
Southwest Airline’s Unique Strategy
At Southwest everything matters
– Southwest strategy involves a whole system of activities, not a
collection of detached parts
– Southwest’s competitive advantage comes from the way its
activities fit and reinforce one another (EMyth Orchestration)
– FIT locks out imitators by creating a chain that is as strong as
its STRONGEST Link
Stock 300% - 1990
Largest by 2010
Productivity 2xEE
1973 Profitability
•
•
•
•
•
Rainmaker Pinwheel
Cop, Coach, Consultant
College Recruiting
Recycling People
Medical & Small
Business
• Cross Selling Ideas
• MDRT/GAMA Strategic
• Client Comes First
• One Stop Financial
Supermarket
• Advisor is Customer
Ideas
Values
(Strategies)
(Vision)
2) Grow Leaders
Edge
3) Higher Moral
Plane
Mission
(Energize Others To Act)
•
•
•
•
Level 5 Servant Leader
MGA/BGA (figgs)
Commitment to Excellence
Mars Group
Accountability Mission
Written Goals
TEACH
1) Teach
(Tough Calls)
•
•
•
•
Deliverables
Accountability
Coach or Coax 53
Our Way or Highway
Strategy # IX – Pareto Rules
Transformation & Integration to a Financial Planning
Platform
1. Affluent dislike details on asset
gathering and expenses
2. A good in-time plan in infinitely better
than a perfect too-late plan. (2 week cliff)
3. Get pre-approvals, and avoid compliance
killing the sale
4. Your best prospect is a client
5. Sell advice and not product, Relationships not commodities
6. 20% of fee quotes must be turned down. 1-1; 2-4; 3-9
7. Service 1st; Service last; Service always.(10 yrs. Ago vs.now)
8. Affluent people require 2 things; Trust and Expertise
Strategy # VI – Working Smarter, Not Harder
Strategic Questions
1. If I ran a competing firm, how would I beat
me/us? What would Jack Welsh do?
2. If you cannot say what you do in 25 seconds or
less, don’t fix your script, fix your practice!
1. What is keeping you from getting your practice
to the next level? Be Specific, write it down.
Are you doing things right, or the right things?
Asset To Liability Allocation System
ATLAS #3 Nick Murray Y O Y O
56
Everything you need….
costs more over time
57
$16.00
History of inflation (1926-2010)
$8.00
Inflation…
the silent killer
$4.00
$2.00
$1.00
1926
1936
1946
1956
1966
1976
1986
1996
$0.50
$0.25
$0.13
$0.06
Cummulative Price Inflation
Dollar Devaluation
2006
ATLAS #3
58
...reflecting the sum total
of the parts.
ATLAS creates a logical
portfolio…
Stocks
Bonds
Cash
Distinct Portfolios
40 Retirement Portfolios
or “Lock Boxes”
40
37
34
31
28
25
22
19
16
13
10
7
4
1
0
10
20
30
Planned Liquidation (in years from today)
40
Reasons for Scale (Revenue and Expense Sharing Arrangements)
• Exit Strategy
• Family Time
• Consanguinity
• Idea Factory (Next slide on cost of insurance)
• Cost Saving Reductions
• H.R., Specialists, Office Management,
Receptionist, Technology
• Aggregated Compensation at the Margin
Cost of $100,000
Life to 100 Life to 121
Male age 45
1965
1975
1985
1995
2005
$3799
$3363
$2650
$2107
$1392
idea factory
3.8%
1.4%
Best Available ~ Preferred Non-Smoking
From 3.8% to 1.4% of Death Benefit in 40 yrs.
SUCCESSION PLANNING
using
SCALE
61
3 PROBLEMS
SOLUTIONS
 LOSS OF MONEY
 50-50 OR 75-25 SPLIT
 LOSS OF CONTROL
 CLIENTS REVERT
 DIVORCE INCLUDED
 6 MONTH EXPIRATION
 REFERRALS TO ASKER
 Bottom 20% of clients
 5 letters / week (130)
 Free financial plans
 Service Fees continue
Cash Flow from Your
Career Agent Contract
713 Contract Income Sources
While
Living
After
Death
PAID
PAID
PAID
PAID*
PAID
X
PAID
PAID
PAID
X
X
X
First Year Commissions
PAID
X
Renewal Commissions
Bonuses
Service Fees
PAID
PAID
PAID
X
X
X
Referral Fees
PAID
X
Individual Life & Health
First Year Commissions
Vested Renewal Commissions
Renewal Commissions
Bonuses
Service Fees
Agent Expense Allowance (AEA)
Group
Cash Flow from Your
Career Agent Contract Agent Contract
713 Contract Income Sources
While
Living
After
Death
First Year Commissions
PAID
PAID*
Renewal Commissions
PAID
X
Bonuses
PAID
X
Expense Allowances
PAID
X
PPN
Retirement Services
First Year Commissions
PAID
PAID**
Renewal Commissions
PAID
X
OAS Fees
PAID
X
Bonuses
PAID
X
Service Fees
PAID
X
Referral Fees
PAID
X
Cash Flow from Your
Career Agent Contract-BGA or often in brokerage
While
Living
After
Death
First Year Commissions
PAID
PAID***
Trailers
PAID
X
Bonuses
PAID
X
Fees
PAID
X
SECURITIES
*
Excludes variable product commissions
** If Security Builder or 401(k) product within first year, commissions will be paid. No
other products are vested.
*** Commissions processed prior to death will be paid. Commission processed on or
after date of death not paid.
Keep What You Love, Hire What You Loathe
Phil Richards
1. Visionary
2. Growing Leaders
3. Industry Relations
4. Institutional Memory
5. Strategic Planning
6. Selection
7. Recruiting
8. Marketing
9. Management
10.Supervision
11. Legal
12.Human Resources
13.Meeting Coordinator
14.Employee Benefits
15.Client Relation Management
16.Compliance
17.Accounting
18.Financials
19.Technology
20. Detailed Paperwork
21.Sales
#26 on your bookmark
21 Key Functions of an Agent
Shaun McDuffee – Perennial Top of the Table
Marketing – Dinner
Presentations
12. Answering Questions
2.
Sales/Selling the Plan
14. Cold Prospecting for Dinners
3.
Strategic Planning
Developing Marketing Plan(s)
15. Setting/Rescheduling Meetings
1.
13. Continuing Ed/Stay Current
16. Meet w/Staff & Assistants
4.
Setting & Reviewing Goals
5.
Annual Client Reviews
6.
Tracking Activity
7.
Teleconferences
8.
Gathering Referrals
19. Compliance Related Duties –
Reviews
9.
Follow-Up Emails/Notes
20. Completing/Processing Apps
10. Case Preparation
11. Proactive Check-in Emails
Proactive Servicing
17. Office Administrative Duties
18. Client Servicing – Return
Emails/Calls
21. Placing Stock & Mutual Fund
Trades
Be Creative HONEYBEE examples
• Cold Calls —20,000 to Succeed
• Before we hang up…
• Vertical Referred Leads ; secret word
• Never ask for referrals, give them
• Elevator Talk, I BUY LIFE INSURANCE
• I’m a Life Planner who specializes in Finances
• Do you have enough confidence in your advisor to allow
me to give you a FREE second opinion?
Strategy # I –
Never ASK for Names; GIVE Them
1. Know what organization your client is part of
2. Obtain list of as many names in the organization
(Directory-Lobby, INTERNET, Company
Directories.
3. Place list of 20 or so names before client.
4. “I will be calling these people; which do you know
(K) or know well (KW). Please mark”.
5. “If any of them ask me, do you mind if I tell them
I work for you?”
LAW of 72 – Not the interest % one.
Behavioral Psychology
What is not executed in 72 hours is lost.
“If you know and you do not act,
you do not know.”
—Chinese Proverb
The Good Life
Live where you want…
With the people you love…
Doing the right thing…
ON PURPOSE. (Our Business)