Financial Services: Maximizing Our Opportunity. Industry Update In the groundbreaking report from...
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Transcript of Financial Services: Maximizing Our Opportunity. Industry Update In the groundbreaking report from...
Industry UpdateIndustry Update
In the groundbreaking report from the Mortgage Bankers Association's Council to Shape Change, several important trends were uncovered:
Consolidation – Strong get stronger Regulation – More (always)
Convergence
Industry UpdateIndustry Update
“The holy grail of the large integrated financial services companies will be the capability to cross-sell a variety of financial products…
The largest mortgage bankers will not operate as stand-alone organizations but will more likely operate as part of a larger integrated financial services firm…”
MBA Staff MapQuesting the industry October 3, 2006
We’re Living in We’re Living in Changing TimesChanging Times
3 Reasons:3 Reasons:
Consumer demandConsumer demand
Creates loan demandCreates loan demand
Attract, retain, and reward Attract, retain, and reward associatesassociates
Consumers Need HelpConsumers Need Help
Have little or no financial education
Understand little about debt management
Understand even less about asset accumulation and creating wealth
Have no real plans to achieve financial security
Consumers Need HelpConsumers Need Help
Consumer Debt is more than $2 trillion
College cost doubled from 1990 to 2005
Shift in workplace from pensions to 401Ks
Social Security isn’t so secure
MASSIVE DEBTMASSIVE DEBT
Consumers Need HelpConsumers Need Help
1980s = 10 %
1990s = 5%
2000s = 1%
WEAK SAVINGS HABITSWEAK SAVINGS HABITS
Savings as a share of disposable income:
Equity Management WorkshopsEquity Management Workshops
Client Workshops designed to educate and inspire
Debt Management
Equity Management
Asset Accumulation
The The ProblemProblem Household Expenses
Mortgage $2,000
Food/Bills $1,000
Car + Insurance $ 500
Credit Cards $ 500
Misc. $ 500
TOTAL BILLS $4,500
INCOME $4,500
DISCRETIONARY INCOME : -0-
SolutionSolution
New Cash Flow + $1,000 Without Cutting Back Lifestyle
Household Expenses
Mortgage $2,000
Food/Bills $1,000
Car $ 0
Credit Cards $ 0
Misc. $ 500
TOTAL BILLS $3,500
INCOME $4,500
What is it REALLY worth?What is it REALLY worth?
Save $500 per month for Emergency Fund
$6,000 saved for emergency use after 1 year
Invest $500 per month for 25 years
Could our clients use an extra Half Million Dollars at Retirement?
Growth @ 6%$346,000
Growth @ 8.5%$516,000
Asset AccumulationAsset Accumulation
What interest rate do you earn on equity?
Is Equity liquid?
Is Equity Safe from market Risk?
If we could earn a rate of return on Equity for our clients, would you want the extra money?
Federal Reserve Bank ArticleFederal Reserve Bank Article
By accelerating mortgage payments instead of stashing the money in savings, 1 in 3 Americans are “giving up potentially important arbitrage gains.”
Report calls it a “Misallocation” of funds, costing Americans up to $1.5 Billion per year.
Savings provide “a good hedge against a combination of housing price risks and liquidity risk.”
Solution #1Solution #1
Or…
$2,000
The difference is The difference is $500$500
If we invest $500 per monthIf we invest $500 per monthover 30 years @ 8.5% =$825,000over 30 years @ 8.5% =$825,000
Then pay off loanThen pay off loan --($300,000)($300,000)
The client has The client has $525,000 $525,000
LevelLevel
Interest OnlyInterest OnlyMortgageMortgage
$1,500$1,500
Loan AmountLoan Amount
$300k$300k
$300k$300k
Solution #2Solution #2
However, not everyone lives in their However, not everyone lives in their
home for 30 years. Assuming we home for 30 years. Assuming we
live in our home for 7 years.live in our home for 7 years.
We invest $500 per month over We invest $500 per month over
7 years @ 8.5% :7 years @ 8.5% : $ 57,122 $ 57,122
After 7 years, the home may After 7 years, the home may
appreciate to appreciate to $400,000 $400,000
The client owes:The client owes: - ($300,000) - ($300,000)
Profit on sale of home is: $100,000Profit on sale of home is: $100,000
Client nets:Client nets: $157,122 $157,122
LevelLevel
Interest OnlyInterest OnlyMortgageMortgage
$1,500$1,500
$2,000
Loan AmountLoan Amount
$300k$300k
$300k$300k
Marketing WorkshopsMarketing Workshops
LO invite existing clients
Flyers available for clients
Speakers educate and inspire clients to take action
Financial Services rep and LO jointly bring client forward
“Combining the offerings of mortgage and insurance products is common sense when you consider that as a Loan Officer we collect all the financial data upfront, giving us a clear picture of clients’ insurance/investment needs.”
Mike RadiBranch ManagerCharter Funding, San Diego
“Our first client investment seminar resulted in 5 new loans…‘three for one client!’ I can definitely see how Charter Insurance is going to be a key to our long-term growth in a changing market.”
Mike RadiBranch ManagerCharter Funding, San Diego
“As a result of the seminar, I have generated 3 new loans for a total of $931,500. Thanks for introducing me to these amazing concepts!”
Nick DawsonLoan OfficerCharter Funding, San Diego
The Charter, Great Southwest The Charter, Great Southwest Career OpportunityCareer Opportunity
Future productsMortgage ServiceRefinance
Purchase
ELOC
Primary Residence
Investment Property
OPPORTUNITY
InsuranceServices
Term-ROP TermUniversal Life
Equity Indexed LifeWealth
AccumulationProducts
P and CHomeowners
Insurance
Umbrella Policies
CompensationCompensation
Participate in workshops and additional income through increased organization
You can BE the advisor
You can TRAIN with an advisor
You can REFER to an advisor
Income SplitsIncome SplitsBased on a Level Of InvolvementBased on a Level Of Involvement
Referring Agent
25%Producing Agent
75%
Participating Agent
50%Producing Agent
50%
Producing Agent
70%Plus applicable management overrides
Based as a percent of filed payout
Compensation: Field PayoutsCompensation: Field Payouts
70% Producing Agent
9% District Agent/Branch
4% Regional Agent
Compensation: Agency BuildingCompensation: Agency Building
Agents
(20% O/R) 14%
2nd Generation(20% O/R) 2.8%
CompensationCompensation
Refinance
$400,000 Loan Amount
x 2% (points)
$8,000
x 60% Commission
$4,800: x 3 Clients
Equity Indexed Life
$ 500 per month
x12
$ 6,000
x70%
$4,200: x 3 Clients
$14,400 Mortgage Income $12,600 Financial Services Income
$27,000 Monthly Income
$324,000 / Year potential
Referring Agent CompensationReferring Agent Compensation
$14,400 Mortgage Income $4200 Financial Services Income$18,600 Monthly Income
$223,000 / Year potential
$ 500 per month
x12
$ 6,000
x70%
$4,200: x 3 Clients
25/75 Split with advisor
Initiate and introduce
Advisor manages the relationship/process
$1050 per client (example)
Take the Next StepTake the Next Step
A tremendous need in marketplace exists for solid financial advice
Excellent earning potential as an Advisor or Manager.
Opportunity to help others while helping yourself and your family
Creates more loan originations
Four major reasons to expand into Financial Services…
Producing/Sr. Agent Producing/Sr. Agent CompensationCompensation
$ 500 per month
X12
$ 6,000
x70%
$4,200: x 3 Clients
$14,400 Mortgage Income $12,600 Financial Services Income
$27,000 Monthly Income
$324,000 / Year potential
CompensationCompensation
We are looking for Leaders/Agency Builders
As a Managing Advisor you supervise 10 Advisors
$15,000 Businessx 10 Advisors$150,000 Totalx Management Override$21,000 Monthly Income Potential
$252,000 annual potential
Plus renewal commissions
Plus IRA/401k Rollover and annuities business
Additional path to grow profession
Additional service to provide more complete package
Rise above the crowd
Consumers Need HelpConsumers Need Help
Most of America is under-insured!
Average death benefit in 2000 per LIMRA report was less than $12,000
UNEXPECTED LOSSUNEXPECTED LOSS