The Advocacy Network is focused on inoculating and insulating investors, consumers and businesses against scams, fraud and predatory sales tactics. As an investor, consumer or business entity the most evident threat is predatory sales tactics. After all even scammers and fraudsters need to sell their propositions. Eliminating the scams and fraud is the easiest part of our work; the difficult aspect is continually identifying and eliminating the predatory sales tactics used by entire industries.
Financial services are a vital part of any individual’s personal financial health and one would expect to find safety in an industry created to protect your financial well-being. Unfortunately the industry is awash with gimmicks and predatory sales tactics. Yet you must be able to integrate such financial tools such as Life Insurance, Annuities, and Health Insurance along investment vehicles into your financial plans.
The risk protection of insurance products is the foundation upon which a strong financial lifestyle is created. The insurance agent has a crucial role in you and your family’s financial well-being.
Having spent over 20 years in the Financial Services industry as an agent, manager and sales trainer I can attest to the myriad of manipulative sales practices that are taught and perpetrated against an unsuspecting public. Many of these tactics have been around since the 1920’s and certainly there are several that have been staples since the 1980’s. Let’s review just a few of the most common marketing gimmicks used to entice you into a bad decision about money.
· The ticking time bomb of taxation on life insurance and annuities. This has been a very common tactic since the early 1980’s and the Reagan tax changes. Since that time Congress has continually sought ways in which to gain tax revenue from retirement based usages in these products. Life Insurance continues to have a tax-free privilege through the proper usage of loans against cash values. This has long been one of the most effective means of creating tax-free income, yet the reality in planning is that this should never be the major purpose in developing a life insurance plan. Of course if this is the only reason people purchase Life Insurance then Congress would certainly put an end to this process. As to annuities there is no better vehicle to provide an income one can never outlive. For the concern of living too long annuities create a guaranteed stream of income and of course are a vital tool in proper retirement planning. The difficulty is that the industry has made these products so complicated that many times the agents who sell them have no idea of what is going on little alone educate an unaware public. In reality the annuity is a very simple concept and can be easily explained to you the consumer. SO why has it become so extraordinarily complicated? It seems that the creation of mass confusion works to the benefit of the insurance carriers. This confusion can hide the fact that not everyone needs an annuity. That’s right annuities are not right for everyone. There are circumstances where the financial benefits and restrictions of an annuity do not fir. This is called “suitability” and the insurance industry has made it more complicated the never in this arena.
· Seminars, freebies and other manipulations. The most common marketing tool over the past 15 yrs. or so has been the use of seminars. Now there is nothing innately wrong with an educational seminar, in fact it is a good thing. But the industry has manipulated an educational event into a predatory sales hunt and certainly a product pitch. Life Insurance planning and Annuity planning is a personal issue and needs to be individually programmed. It is never a one-size fits all remedy. So. While information in a seminar setting is useful, it is only useful in general terms and once it moves into one size fits all generalizations it becomes manipulative. Your safest move is to avoid seminars as you can get all the general information you need through totally independent sources.
· Social Security optimization. Another oldie but goody. This used to be known as pension maximization in the 80’s-2000’s. Now with the economic crises surrounding the government programs it has focused itself on Social Security. The reason for this is less people have pensions now and therefore the biggest market place exists in Social Security. With 10,000 Baby Boomers turning 65 every day the market is abundantly plentiful with those who are Social Security eligible. Once again there is solid and useful information to be had about your Social Security; unfortunately it doesn’t need to be used as a manipulative sales tool for you to purchase more financial products. Being fully honest at this point in time how many of you actually believe the Social Security system will last long enough to actually make good on its payouts to the entire universe of baby-boomers? It would seem that delaying your social security check for a larger payout from a system that may well be bankrupt in less than a decade is not a very prudent financial decision.
· Retirement planning. Long the holy grail of the Financial Services industry, this concept has left a long a brutal trail of predatory sales tactics and manipulations. Once again we have a very individualized personal scenario that is treated with a one-size fits all mentality. Such issues as life-style, Life-experience, Life-expectancy and legacy desires are all vital parts to a congruous retirement plan. This also has to have flexibility in its design as life is never a totally linear event. Making smart decisions about money today and tomorrow require a consistent mental and emotional approach to these factors. You have to ask yourself some very crucial questions and acknowledge what has happened in the past along with what is probable in the future. The normalcy effect will not serve you well in today’s ever-changing society. One simple concern is any existing ERISA qualified retirement savings you now have (IRA’s, 401k’s, Keogh’s SEP’s etc...) as all these plans could well be targets of the government’s debt concerns in the near future. Would you be comfortable if the government determined that these funds should be in a GRA (government retirement plan) which would simply annuitize your balances and make payments much like Social Security? It is not only a possibility it has been discussed on Capitol Hill and will continue to get more traction as the runaway debt continues to grow exponentially. Over $17 trillion dollars is presently in these types of accounts. You have serious decisions to make.
The stark reality is that in marketing and sales everything old is new again, yet in today’s economic arena nothing old will ever be new again. There are many other areas of concern when it comes to predatory sales tactics and the marketing tools used to attract investors, consumers and businesses. The Advocacy Network is an organization that keeps our members educated and aware of all these manipulative behaviors. Our only concern is your best interest.