Everything Old is New Again!

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.

                                               Industry Marketing example for Agents (Producers)

 

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.

 

Karl Schilling

321-250-1445 O

321-947-3220 C

Skype: karl.schilling5

www.theadvocacynet.com

 

Psychological Triggers Exposed

So far we have discussed the normalcy bias, the silver bullet syndrome and the dangers of conformity. These diverse discussions all fit together in forming a puzzle of psychological triggers. The big picture can come together when you have all the pieces starting to fit together.

Earl Nightingale in his classic audio series “Lead the Field” told a story that fits this best.

“One day, a man was watching a professional football game on television. His five-year old son kept bothering him. So the man tore out a page of the Sunday paper. It was a full page airline ad that showed a picture of the world – the planet Earth as seen from space. He tore up the page into a dozen pieces and gave them to his son. He said to him, “Here, put this picture together with this cellophane tape, and show Daddy how smart you are.” He then went back to watching his football game. In a surprising short time, the youngster had taped the picture back together. It wasn’t very neat, but it was a very good job, indeed, for one so young. “Hey, that’s amazing!” the father said. “How did you put the world together so quickly?” The little boy said, “There was a picture of a man on the other side. I just put man together, and then the world was all together.”

The youngster was no doubt surprised by the big, warm hug he got. “That’s right, son,” the father said. “When the man is altogether, his world is altogether, too.”

Becoming aware of how the big picture comes together is a key component in making smart decisions about money. The small pieces that are torn apart are psychological triggers that come together to form the big picture. The sense that everything will return to “normal” (normalcy bias) is tied to the overwhelming hope that everything will work out well (the silver bullet syndrome), which leads directly into the complacency of conformity. It is the end result of conformity that leads investors running like lemmings toward a cliff.

These psychological triggers are ingrained in an individual’s thinking process. Napoleon Hill discussed this in terms such as accurate thinking, critical thinking and straight thinking. Hill, spoke in terms of rarity when discussing this form of thinking. Let’s briefly look at what Hill had written about “straight thinking.”

“Two great forces are working in the minds of all men to make them what they are. One is social heredity, and the other is physical heredity.

Physical heredity is the law of nature through which the sum and substance of all characteristics, traits and physical aspects of your ancestors, through the ages, have been handed on to you. You are unavoidably a product of all your ancestors.

Social heredity consists of every influence with which you will come in contact, from the time you reach a state of consciousness until you die. Your mother’s and father’s influence, your education, the conversations you listen to, religious influences, political ideas, the newspapers you read, the shows you see – they all have and will help to make you what you are. They are your social inheritance. Very few persons have what it takes to pull away from these and do some independent, accurate thinking for themselves. A few cast off their social inheritance and dare to be different and individualistic. When this happens, the world has an Edison, a Ford, a Thomas Paine, an Ingersoll or a Jonas Salk. But the vast majority of people allow themselves to become victims of social heredity. This is why straight thinking is such a rarity.”  (Source: PMA Science of Success Course. Educational Edition. 1961. Pgs. 504 & 505

Independent, accurate thinking is the absolute benchmark for making smart decisions about money. The inoculation and insulation from scams, fraud and predatory sales tactics direct require you to learn how to become independent and accurate in your thinking process. The reality of victimization is that people are unaware of the natural bias they have formed toward conformity and the lack of independence in their thinking process. A major part of this redundant vicious cycle is the normalcy bias, the silver bullet syndrome and the ease of conformity.

 Karl Schilling

321-245-1445 O 321-947-3220 C

Skype:karl.schilling5

advocacybz@gmail.com

 

Victimization is all in the Behavior

Are you familiar with the concept of “the Mark”? A mark is slang for the identified victim of a scam or fraud. Most investors don’t think they can ever become a mark. Yet, the vast majority of high net worth individuals are easily identified and often targeted. The reality is stunning because this particular pool of victims is rarely recognized. The reason for this is these victims rarely report their losses. While there are many reasons for this behavior it is mostly related to the common emotions of shame and guilt.

All victims suffer shame and guilt, yet the higher the profile the greater the threat that shame and guilt is socially motivated. The social networks of High Net worth families are closed societies and life style is one of the highest priorities. They are targeted more not simply because they have the wealth, but even more importantly they will usually not publicize their losses and therefore become almost a victimless crime opportunity. Conmen love High Net worth marks.

This doesn’t mean that scams, fraud and predatory sales tactics are isolated to High Net Worth victims solely; unfortunately everyone is subject to being victimized.

One of the constant staples of victimization is your financial decision making process. This process is fully ingrained and it is behavior driven. The behaviors that determine your financial decision making process have been seared into your sub-conscious and can easily be identified and manipulated by scammers and fraudsters. In fact the reason that so many people are victimized is that they are simply unaware of the psychological triggers that make up their financial decision making process. This makes investors and consumers easy targets for predators.

Our greatest advancements such as social media and communication on demand have made scamming and defrauding investors easier than ever. In the past cons needed to work hard to identify ideal marks, today in less than an hour they could come up with dozens of potential marks. They can also easily identify all the necessary psychological triggers needed to successfully manipulate their identified marks.

If you aren’t fully aware of your financial decision making process and how the psychological triggers can be manipulated you will have a total blind spot and never see the scam coming. Everyone believes the old adage “it can’t happen to me” and unfortunately they would be very wrong. At the Advocacy Network we provide our members with the information and tools necessary to completely inoculate and insulate investors and consumers against scams, fraud and predatory sales tactics. Wouldn’t you enjoy the peace of mind of knowing that were 100% protected from scams, fraud and predatory sales tactics? It is about prevention not reaction.

www.karlschilling.net  321-574-6562 O  321-947-3220 C

 

Mandatory coverages

The Administration is pushing mandatory coverages at all levels. In the recent Federal Regualtions legislation for Financial institutions the Adminsitration is seeking mandatory IRA contributions. WHile this appears to be a positive, in reality it causes two major concerns, first it chips away at personal freedoms. US workers already make mandatory retirement contributions with no access to investment choices, that of course is called SOCIAL SECURITY. As it is US employees now contribute 7.5% of income to a broken program that will not pay out to the largest % of contributors. The ceiling on income has risen consistently over the last decade and now dips into the top 5% of income earners, remember the ceiling for this program used to be $35K in annual income, it is now moving rapidly toward $100K. Of course this is totally out of control and now Pres Obama suggests that workers should also have to contribute more of their income to a MANDATORY IRA! this does nothing to help the economy of course as people will have less money in their take home pay, but of course the government will be creating another slush fund to offset SOCIAL SECURITY. The bigger issue is once again an elitist attitude that the US worker and citizen cannot control their own finances and make smart decisions about money. People can choose to contribute to an IRA and can also choose where those dollars are invested, this new mandatory program will take away BOTH choices. The Obama administration is also attempting to force the Health insurance issue. The plan is to make Health insurance mandatory either through an employer (we have already covered why this won't work) or personally. Of course once again this will cripple the economy as individuals will have less of their own money to use however they choose to. Every mandatory government program chips away at personal liberty, why is that so hard to comprehend? It also creates an economy that is controlled by the government and which decides for the people what they can and can't use their own money for. Who really wants this type of situation? Seems to me that those with any common sense and the ability to look forward would want no part of this type of Government control.

Unintended Consequences

I am constantly amazed at how so-called intelligent leaders can continually make knee-jerk reactionary decisions with little to NO consideration to the consequences. Now that the auto-scam program is displaying just how inept a government run program can be, it helps shed considerably light on the potential disasterous Government Health Care plans. There is not enough time to go point by point, but rest assured that every step in the poorly designed Health care bills will elicit incredibly bad unintended consequences.

Start with businesses and Health Insurance. Ask yourself what you would do if you were a business owner. Put yourself in the following position: presently you are the CEO of a company with 100 employees. Your company provides Health Insurance, Dental and a 401K plan. You also provide a medical expense account and the program is administered through a 125 plan. The costs to you for these benefits equal approx 37%or so of payroll. The health benefit portion represents 18% or so. The Health portion also takes up the largest amount of admin time in employee education, registration etc.. this would include the compliance issues with regards to COBRA. Because of COBRA it is very difficult to make decisions about lay-offs as an employee still has the modest parachute of COBRA. Are you with me so-far. Under the plan the Democratic leadership is so desperate to race through this CEO will be faced with the following NO-BRAINER business decision. If the company offers Health Insurance it will continue to cost them approx 18% of payroll along with time and many treachous compliance issues. Or the company can TOTALLY drop ALL Health Insurance coverage and pay an 8% payroll tax penalty. Also by doing this there is NO more COBRA issues to deal with so lay-offs become easier then ever. So you're the CEO what do you do, continue to pay 18% plus headaches or pay 8% with NO difficulties whatsoever? Save 10% of your payroll expenses by choosing the 8% penalty.

I can tell you this a vast majority of CEO's will choose the 10% savings. Why wouldn't they? So, the unintended consequence is YOU will NOT get to KEEP the PLAN you are HAPPY with! Sound familiar? The second unintended consequence is LOSS of JOBS. It will now be easier to rid your payroll of poor performers and vested high salaried employees (which can now be replaced by younger and cheaper alternatives)

For every action there is an equivalent and opposite reaction. This health plan will create numerous unintended consequences, not to mention out of control expenses, loss of qualified Physicians, less service providers, rationing of care, death of elderly and much, much more....