|
|
|
The
Day Mañana Came
by Jim McCarty
CLU, RHU, LUTCF, RFC
|
The panoramic view from my window seat in row four was magnificent! Skies were
clear and I could literally see for miles. Enjoying my smooth, uneventful trip aboard
the Delta MD-88, I pondered how this 150,000 pound monster of transportation could
ever leave the ground, let alone soar so gracefully at 450 knots, seven miles above
the earth. This, however, is exactly what was taking place.
As we raced across the sky, my wandering mind traveled back to a time, years ago,
when I enjoyed some limited experience as a private pilot. These memories caused
me to speculate just how many miles we would glide from our current speed and altitude
if, heaven forbid, we suffered a complete engine failure and fell to earth. This
distance, according to flight instructors, can actually be determined if we know
our particular aircraft's glide slope.
Aviation textbook theory tells us a disabled aircraft will follow a pre-determined
angle and rate of decent as it heads towards the earth. This angle and rate of decent
are combined to determine the glide slope. After losing its power, the conjecture
is, the aircraft will follow that particular glide slope and, if all goes according
to plan, touch down in a spacious, level and wide open field. Hmmmmmmm!
The question that begs for an answer, however, is, "Do things always ėgo according
to plan'?" I expect your response is, "No!" A friend of mine is a
commercial airline pilot. He loves to talk about flying. When it comes to the discussion
of no power, "deadstick" landings, and glide slopes, he is fond of saying,
"It makes no difference what the glide slope of your aircraft is if the engine
fails while you are over downtown." According to him, textbook theory will take
you only so far and then you must rely on your God-given talents.
I often think of my friend's comments as I work with financial advisors developing
comprehensive plans for their clients. The primary focus of most of these plans is
to build assets toward a predetermined targeted level at retirement. Then, according
to the plan, when the client's earning power shuts down, his "engine quits"
as he retires, the plan places that client on a carefully charted "glide slope"
which provides for periodic income lasting until death eventually occurs. These plans
encourage one to think that as the client "falls to earth", he or she will
safely strike precisely at that magic spot of life expectancy. The very time and
place in life where they will conveniently exhaust both their time and money at precisely
the same moment. The problem, you ask? Well, things don't always go according to
plan, and, seldom, if ever do I see safety nets of life insurance built into these
programs. Safety nets to protect loved ones by providing income, if the client's
"engine fails while over downtown".
The truth of the matter is, there are only two things necessary for the successful
completion of any financial plan; time and money. Because most "engines fail"
at inopportune times, that is, the majority of people die unexpectedly, you cannot
guarantee your clients the time needed to achieve their monetary success. However,
your life insurance products can guarantee them the money! According to Research
and Review Services, "R & R", eighty percent
of what a person earns goes for living expenses, including taxes. Of the remaining
twenty-percent, seventeen goes into investments and the other three-percent pays
for life insurance premiums. The seventeen-percent that went into investments, however,
accounts for only fifteen-percent of total estate values when probated at death.
On the other hand, the three-percent that went into life insurance, provides over
eighty-percent of all that is left for surviving families and loved ones to live
on. These facts must be conveyed to all clients who engage in the comprehensive planning
process, and, substantial safety nets of life insurance must be installed in these
plans! Today's commonplace "investment only" approach to planning, which
fails to incorporate these safeguards, often proves disastrous. The following real
life example of such inadequate advice and subsequent devastation spotlights the
significant shortcomings of such an approach.
Wednesday evening, July 20, 1966, 63-year-old Edna entered St. Joseph's Hospital
in St. Paul, Minnesota, to have a hysterectomy performed; her female organs ravaged
by cancer. At the time, her two married daughters were living out of state and heavily
involved in their own families' activities of daily life. Her other offspring, a
24-year-old son, recently discharged from the Marine Corps, was living at home.
Prior to this date, Edna had led a rather uneventful life. Her husband of 37 years,
Fran, devoted 44 years of his working career to the Great Northern Railroad while
she remained at home and raised her three young children to adulthood.
In 1947, Fran met with an advisor and set in motion a relatively conservative financial
plan for the future. The analysis made note of several factors, and the following
recommendations were made:
- Because Fran was
46 years old and had 19 years left until his retirement, an investment into Great
Northern Railroad common stock was encouraged and a systematic purchase plan was
begun to build assets toward that target date.
- Because Fran might
die before age 60 when his home mortgage would be paid in full, a $20,000 life insurance
policy was recommended and implemented to retire the debt of $6,000. The remaining
proceeds would pay final expenses and provide income to supplement that which would
come from his investment portfolio.
- Because Fran could
die after retirement, when the children would be fully grown and on their own, the
plan provided for Edna to own the house free and clear and receive Fran's full railroad
pension in addition to the income generated from proceeds of his $20,000 life insurance
policy. Edna would also receive dividends from Fran's common stock account providing
income to her for life.
Fran's "glide
slope" for the future was now in place. One critical question, however, was
never addressed. That is, would he be "over downtown" when his "engine
quit"?
In 1948, Fran's "engine began to sputter" as he suffered a heart attack
which kept him out of work for two months and rendered him uninsurable. Three years
later, his youngest daughter was diagnosed with a congenital heart problem and became
bedridden for almost two years. To help meet medical expenses, Fran liquidated his
investment portfolio and small savings account.
Thursday, July 21, 1966... "The Day Mañana Came". Edna's surgery
went well, which was about the only thing that did that day. At 2:00 in the afternoon,
her son, who worked nights, was awakened by the telephone. As he struggled to regain
consciousness, the voice on the phone announced, "This is St. Joseph's Hospital
calling with some bad news. I am sorry to tell you that your father suffered a heart
attack about one hour ago and we were unable to save him. We want to know what arrangements
you wish to make for the removal of his body."
Because Fran had died 3 months prior to his target retirement age of 65, Edna received
only one half of his defined benefit pension plan. Because real estate taxes, maintenance
and homeowners insurance had escalated to the extent that they exceeded the initial
mortgage payments on the house, Edna could not afford to remain in her home of thirty
years as originally intended. It had to be sold.
Because Fran's family group medical insurance died with him, and because he was forced
to deplete his savings and liquidate his common stock portfolio in order to meet
his own medical expenses and those of his daughter, there was no money left to pay
Edna's medical bills, which continued to soar after his death. Consequently, the
proceeds from the sale of her home were totally and instantly consumed.
Because the proceeds of his $20,000 life insurance policy were set up under a twenty
year certain, irrevocable settlement option, providing a whopping $55 per
month, the ruination was now complete. How do I know? Because, as you may have guessed,
I am the son. This tragic situation caused by shortsighted, theory based planning
happened to my family!
Several years ago a verse from a popular song promoted the thought that "mañana
is only a day away". Today, there are those, however, who are quick to point
out that tomorrow actually never comes, but rather, it is always today.
My father's financial plan was developed with a focus on tomorrow - mañana,
a tomorrow that lay nineteen years into the future. In reality, tomorrow does come,
whether we are prepared for its arrival or not.
This is where a conscientious, thought provoking, professional advisor, who thinks
beyond pure textbook theory, and summons his or her God-given reality based-talents,
becomes mandatory. You must do a better job of playing "what if " scenarios
in fact-gathering sessions. It remains your job to think of possibilities
that clients often overlook, because, mañana will come!
When the "glide slope" in your planning process is put into place - simulate
"cutting the engine" while your clients are "over downtown",
and take another look!
You
will be happy you did!
Jim McCarty, nationally recognized sales aficionado,
is author of several results oriented books on strategic selling techniques, including
his most recent highly acclaimed sales manuscript, "Above the Line". He frequently appears as
a main platform speaker and has been a presenter at three Million Dollar Round Table
annual meetings. He shares his expertise through dynamic speaking engagements, hard-hitting
audiotapes and informative, nationally published sales achievement articles. Jim
may be reached at 386-304-9684.
SIZZLIN' SALES SUCCESS
Contact
Jim through chersman@comcast.net
|
