First let’s dig into a man you have probably never heard of, John Kluge. His maxim in life was: make money and minimize taxes. When he died in 2010, he was worth $6.5 Billion; what makes him interesting are the lengths that he went to minimize taxes; here’s a sample:
- In 1981, due to some weird tax rules, he bought subway cars for the City of New York and immediately leased them back to the City for a $50 Million tax benefit.
- He combined the profits of his broadcasting company (an entity that would later become Fox Television) and combined it with his outdoor billboard advertising company that had massive depreciation charges, thus reducing his taxes to nearly zero.
- He structured one of the first Leveraged Buyout (LBO) in 1984 of his company Metromedia (which would later form the basis of Fox Television) with massive amount of debt and the tax-deduction that went along with it. This made him a billionaire!
- To top it off, he passed away in 2010, recently the only year when there was no estate tax. Had he died in 2011, he would have owed 55% on his estate.
“Why did you say, “I’m going to teach you to be rich” at the beginning of this article” you’re probably asking yourself. There are many ways to become rich; nearly all of them involve varying levels of risk. Tax planning is the closest you will find to a “free lunch”; you can magnify your after-tax returns with little to no risk. This is the easy part! The hard part is explaining it to clients in a way they will understand and take action the way John Kluge did.
For those of you who have been following my work you know that I’m a big believer in brand building and my favorite flavour is communicating the “why” to clients. Build your brand so clients know “why” you do what you do and they will follow you! My second big belief is that we need to consistently communicate with clients in an easy to understand fashion so that we are in “their world” and not “ours”. The best way to do that is to get visual on them: we need to draw! (read the articles on those topics below)
I read a book a few weeks ago called “The Cheat Code” by Brian Wong, a very successful Canadian Tech Entrepreneur who had some impressive insights, even more impressive is that he is only 25!
“The golden true relationships start when your goal is to not force anything, but to share some of yourself with people and learn from them.”
I’ve been in meetings where the Advisor I am working with will not stop talking. They are saying words, but all I’m hearing is “me, me, me, me” and if that’s what I hear, that’s what the client hears. This is not the way to go; we need to get in “their world”.
Instead let’s go back to our exercise of communicating the “why”. The quote I’ve highlighted above from Brian Wong’s book is so powerful; a lot of people go into a meeting thinking, “I have to close this sale today.” But you don’t, actually very few sales close that fast. Your goal instead should be to learn about your client and at the same time share your “why” and then demonstrate value by explaining how people save on taxes (like John Kluge or some other great financial planning concept). This is the way to build amazing long-term relationships; primarily so that we can do massive business at a later time. Think of it as a first date and not the first time they meet your parents!
This should be the golden rule of sales: Learn, Share, Win! We may not do business today, but it is very likely that in the near future we will start a very important business relationship!
How do we implement this into our business?
Here’s a quote from former President of the United States Woodrow Wilson on the topic of how long it takes to prepare for a speech:
“It all depends. If I am going to speak for just ten minutes, I would need a week for preparation; for fifteen minutes, then three days. If for half an hour, then two days. for only an hour, I am ready now.”
Words to live by! It is so difficult to reduce our important conversations down to a few minutes or a few words, but it is so important to do! If you aren’t practicing your speech out loud every single day, you need to start now! You need to be so comfortable in your “ten minutes”.
Let me share with you how not to this: I bought a car nearly 2 years ago now. As I was about to sign the paperwork the sales rep started telling me how great my car was; he went on to tell me the torque, RPMs, etc. Stuff I didn’t care about. This is what I call the “Data Dump” or worse, “Information Vomit”; do not be that person! Do the Woodrow Wilson and give a fantastic ten minutes of gold!
I started this article with a very ambitious point that I will make you rich! I believe for better than 90% of people, they would see massive gains to their long-term wealth by implementing tax strategies, such as strategic Life Insurance. The problem is that these strategies aren’t evident to the average person. They take some explaining. When you mention insurance, some clients just think about how much commission you will make. Which couldn’t be further from the truth (for the majority of us). This is why we need clients to understand our “why” (“to substantially improve your wealth”) and explain the ideas in easy-to-understand terms (read: drawings). This will allow us to move our clients closer to the John Kluge way of thinking. Which is: make money and minimize taxes.
Article by – Andrew McKeown is an Insurance Consultant at a leading Canadian Insurance Company. He writes about sales and insurance ideas.