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March 2022 – 7 Ideas and Views Newsletter by Van Mueller
Most of my prospects and clients and all of the agents I have contact with, ask me over and over again, “When will the crash begin?”
The correct answer is that no one knows. If the people who are in control of Wall Street and the banks and the people who are in control of the methods and policies promoted by our government and the governments of the world don’t know what is going to happen, how would we have any inkling of when these terrible occurrences would happen? In fact, if you have read this newsletter on a regular basis, I would have declared six years ago that “the crash” was imminent. So far, I have been wrong.
In fact, the day I am writing this month’s newsletter, Russia invaded Ukraine. The Nasdaq started the day over 400 points down and ended the day over 400 points up. That is a seven percent move in just one day. The S&P and the Dow Jones Industrial also moved down and then up almost seven percent in one day! That is real volatility. When will this market finally reveal its true colors?
The reason I am okay with owning that I have been wrong so far is that I was not in control of what our government is doing to delay the eventual crash. I used my words very carefully in that sentence. The government is only delaying not preventing the crash. The government’s policies have now created bigger bubbles in the stock market, bond market, real estate markets and commodities markets.
The reason I am okay with owning that I have been wrong so far is that I was not in control of what our government is doing to delay the eventual crash.
There is no way in my wildest imagination that I believed the government would employ policies that would be so detrimental to the American people.
Our government intentionally and purposefully destroyed savers and for that matter, the entire middle class of America by creating and then sustaining zero percent interest rates, which in reality were negative interest rates after inflation was applied. This strategy was necessary to recapitalize the banks, Wall Street and even the government itself.
Instead of these entities using the money to stimulate our economy, they used the money to repair and even preserve the many mistakes they had already made. The mistakes cover the gamut. They range from being too aggressive or too conservative. They especially include enormous waste and fraud that financially benefitted the very people who participated in creating that waste and fraud. Not only were these people not punished; they were actually bailed out by programs like TARP and Quantitative Easing.
All of these entities, the banks, Wall Street and governments were willing and continue to be willing participants. Let me give you a couple or examples. First, healthcare: Out of an economy that creates $24 trillion of GDP, which is a measure of the value of goods and services created by Americans annually, $5.1 trillion is spent on healthcare. In a recent study, the Institute of Medicine determined that out of that $5.1 trillion of healthcare, over $1 trillion is composed of waste and fraud. That is around 20 percent of the total expenditure of healthcare.
In a recent study, the Institute of Medicine determined that out of that $5.1 trillion of healthcare, over $1 trillion is composed of waste and fraud.
I explain to my clients and to agents that I am certain we will NEVER fix healthcare. I accomplish this by asking a powerful question rather than telling them. “What incentive do the people receiving this $1 trillion in waste and fraud have to ever want to fix anything? In fact, don’t we see politicians and health care leaders do everything in their power NOT to fix healthcare? Wouldn’t that turn off the spigot many of them drink from?
The Affordable Care Act or Obamacare is a prime example of this. It was not a fix for the healthcare system. It was COST SHIFTING! In other words, we do not deliver healthcare at an affordable price to everyone while encouraging healthcare professionals to maintain careers in healthcare. All we did was figure out a way to make a different group of people pay our ridiculous healthcare costs. We have less doctors and nurses than we have ever had, and healthcare costs continue to rise at a 6 to 8 percent per year rate. That means every nine to twelve years, our healthcare will cost Americans twice as much as it currently does. Ask your customers if they think the quality of their care has increased or decreased.
We expanded Medicaid without telling the American people that they would be eventually paying for that program with higher taxes or lower benefits or a combination of both. The Federal government who can print money started the expanded Medicare by telling the states they would reimburse the states 100 percent of the expanded cost for the first three years of the expanded program. In the fourth year the Federal government only reimbursed the states 98 percent of the additional cost. In the fifth year they reimbursed 96 percent. In the sixth year they reimbursed 94 percent. Last year it was 92 percent and this year and forever it will be 90 percent of the increased Medicaid costs.
If a state sees an increase of only one billion in Medicaid costs and that occurs regularly, that means the states would have to raise an additional $100 million in revenue. When that occurs in all 50 states that becomes an enormous amount of new revenue. STATES CANNOT PRINT MONEY! That means tax increases, a reduction of benefits, more borrowing or a combination of all those things. These costs are added on to an already unfunded liability in the trillions. How will this be possible?
Thirty-nine states and 61 of the 75 largest cities in the United States do not have enough money to pay their bills. Those bills include retiree Pension and healthcare benefits. Are services in your city increasing or decreasing?
Thirty-nine states and 61 of the 75 largest cities in the United States do not have enough money to pay their bills.
There’s more. Here is a little history. Most Americans do not know that America bailed out many banks around the world during the last downturn. We bailed out many European banks or we encouraged Asian countries and some Western countries to print more money and bail out their insolvent banks. Why did our country do this? Because the failure of those international banks would have cost the American banks hundreds of billions or even trillions in losses. It was reasoned that these banks were too big to fail. So, our government and all the other governments around the world determined their survival was of the utmost importance. They are continuing to print money and have no problem destroying the purchasing power of these fiat currencies around the world. It was the only way to save the banks.
Who got hurt and continues to get hurt? Isn’t it the consumer, who’s dollars now purchase less goods and services? Isn’t it the saver who makes zero return on their safe money investments because the government is providing money to the aforementioned entities at essentially zero percent? By the way, do any of these actions fix the mismanaged banks or Wall Street entities? In fact, couldn’t it be argued that these practices encourage the banks reckless behavior? Isn’t the benefit to those in power too overwhelming for them to act on behalf of the American people?
Also, please pay attention to 10-year U.S. government bonds. They verify how volatile all the markets are becoming and that even what are considered safe havens now carry great risk because of all the government manipulation.
Even what are considered safe havens now carry great risk because of all the government manipulation.
On December 2, 2021, a 10-year U.S. government bond had a yield of 1.34 percent. February 22, 2022, less than three months later, that same bond had a yield of 1.97 percent. That means that in less than three months a 10-year U.S. government bond had lost 6.3 percent. That was essentially five years of yield that was lost in less than three months.
Remember, a 10-year U.S. government bond is considered to be the safest investment on the planet. It is backed by the full faith and confidence, taxing authority and ability to print money by the U.S. government. What is happening to those bonds is not supposed to happen. That kind of volatility put tremendous strain on all kinds of financial entities. We could spend an entire year learning to understand the uncertainty being created by the governments of the worlds to BAIL OUT the governments of the world. It could be overwhelming to our clients and prospects. Please don’t let it. That is where the awesome opportunity lies for all of us in the business.
This is what is so great about being an American: We have the ability and opportunity to take control of our own lives. We can have financial freedom, financial success and retirement success and we can do it ourselves in spite of all the misrepresentations of government, Wall Street and the banks. Please understand this concept. It is vital. Most Americans feel like they have lost control of their lives, they have lost control of their retirement, their taxes, their healthcare, inflation, volatility and the thing they fear most… Longevity! They actually fear outliving their money in retirement more than they fear death. Let me ask you a question. Will you ever learn any of this information if you are telling about you and your product? Isn’t the greatest secret to a successful sales career asking great and powerful questions? Won’t our customers be willing to share everything with us if we are truly LISTENING to understand rather than listening to reply?
Really think about some of the greatest conversations you’ve ever had in your lifetime. Weren’t they when you asked questions because you really wanted to get to know someone? Weren’t they interested in you because you were really interested in them? Can this be accomplished by talking about ourselves and our products or can this be accomplished by asking our customers what they would like to happen in their lives. When you ask questions, you help your customer organize their thinking so they can articulate their needs AND WANTS AND DESIRES. Doesn’t that scenario create the perfect opportunity to inspire our customers to take action?
When you ask questions, you help your customer organize their thinking so they can articulate their needs AND WANTS AND DESIRES.
Now let’s return to where we started. The stock market and bond markets and real estate and commodities will crash. The PROBABILTY is increasing daily. Eventually, we will have to pay the price for this fiscal and monetary recklessness. Even though it could actually be very close, the government could still use strategies that could delay, even for another year, the eventual economic disaster we must face.
Doesn’t that make giving advise very difficult? So, don’t give advice. Ask questions! Try asking these questions. If we took you out of the market and it still went up 10 or 20 percent more and you made 1 or 2 percent or we kept you in the market and the market and you lost 30, 40 or even 50 percent, would you be angrier at me and yourself if the first one or the second one happened? I ask my customers, “Isn’t that the easiest way to determine how you should proceed?” If they choose staying in the market, agree that you understand why they would do that. Ask them to remember that if the second option occurs that you can help them stop the bleeding immediately. Better still, ask them to remember that you could still put them in position to take advantage of the bad event that’s occurring. Why must we do this? Our customers are not always candid with us. They tell us they have an advisor, and they don’t and then when the markets get in trouble, they don’t know what to do. Many do have an advisor, but they learn very quickly that they are not the most important customer when bad things happen. Professionals Never Get Offended. If I don’t believe we will find common ground on the current visit I don’t get angry or offended. I shake their hand and thank them for their time and leave with those and other questions to consider. They will remember. You should remember you are not there to make a sale. You are building a career. This is how we can help our prospects and clients without making predictions. Most of the bad things we talk about and know about have already been factored into the markets.
You should remember you are not there to make a sale. You are building a career.
Isn’t it true then, that it will be something we don’t know about, like a foreign country hacking into our financial systems or infrastructure? What about China’s housing and debt bubble? Does China have a lot of transparency about their markets? What if there is another derivatives mess that no one is keeping a close eye on? Could we have a weather or geographic catastrophe that could cause the start of the serious downturn we all know will eventually come? Do you think it’s possible that Russia could consider starting a war in eastern Europe? What do you know, they have! How will this event effect the markets? We don’t know yet. What’s remarkable is that even if we don’t know what’s going to happen, our industry had the ability to build strategies that allow our customers to have success under any circumstance. Let me repeat that! We can build strategies that provide success to our customers under ANY circumstance. Don’t you believe your customers would enjoy hearing that? We must remain vigilant, and we must ASK our prospects and clients to declare their intentions by asking powerful questions. This is the most exciting time ever to be an insurance and financial professional. You provide such an amazing value. You have in your capacity the ability to save the financial lives of everyone you come across. You Matter!
Let’s get started with this month’s sales ideas.
Idea #2: I have negative self-talk. Do you?
Daniel Finley writes for the Advisors Solution column. The most important discussion in the article is the declaration that you cannot turn off negative self-talk.
I still have negative self-talk after 49 years as an insurance and financial professional. Mr. Finley explains that you can conquer these negative assertions that you have using positive self-talk and supportive counterstatements that help you to not only feel more positive, but to be more positive. We’ve become so analytical in our industry that we forget or even never understand that people very seldom buy what we say. They buy how we say it. I have adjusted that assertation to they buy how we ask it. If we can have an intelligent conversation with prospects and clients about issues that really matter it IMMEDIATELY builds trust. It takes our customer to the point where they ask for our opinion. What would we do? What would we recommend? You are no longer a salesperson; you become an advocate, an advisor, a resource and a counselor. Use this article to overcome your negative self-talk and you will see results soon.
Title: Conquering Negative Self-Talk
https://advisorsolutionsinc.com/ (Advisor Solutions)
Idea #4: Should people buy term and invest the difference?
This was a well written article in Insurance News Net that shared 3 reasons why cash value life insurance would be a better choice for our customers.
We always seem to be on the defensive when people bring up cost. Cost is actually the least important consideration when it comes to making a financial decision and our industry has not been well trained to counter the objection of cost. The real indicator of a strategy’s worth is what VALUE does it provide. Can we make one dollar do the work of many dollars? Does cash value life insurance take care of us if we die too soon or live too long? Is it self-completing if we become disabled? Can we use it to offset inflation, critical illness and long-term care? Finally, can it provide a tax-free income stream in retirement that you can’t outlive. That is value. That is value that cannot be provided by term insurance.
If our customers have less and less discretionary income, won’t it be important to have your dollars be provided with all the value a cash value life insurance policy can provide?
Title: 3 Reasons To Rethink The ‘Buy Term And Invest The Difference’ Strategy
https://insurancenewsnet.com/ (Insurance News Net, January 26, 2022)
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