Not All Guarantees Are Created Equal

Not All Guarantees Are Created Equal – An Independent Review of the Brighthouse Financial Shield Annuity

financial comparison

Ever since Brighthouse Financial was established by Metlife, they have been on a marketing blitz.  I’ve seen Brighthouse ads pop up several times during various sports broadcasts.  Last summer, I was walking through the Charlotte airport and felt like there was a Brighthouse banner every ten feet – granted they are headquartered directly outside of Charlotte.

Every top selling product in the financial services industry has a good story to go along with it.  The Shield VA from Brighthouse is no exception to this principle and has been one of the company’s most successful product lines.  Right on their brochure it states, “Growth is realized in up markets… Protection is provided in down markets.”  Oh, and it comes with no annual fees.  If I didn’t know any better, I would think this is a brochure for their latest Fixed Indexed Annuity.  With that in mind, I set out to compare the Shield annuity to a run-of-the-mill FIA to determine if the product is as good as the story.

The way Shield works is fairly simple – there is an 11% cap on the upside of the S&P 500.  On the downside, Brighthouse will eat the first 10% of any loss for the contract year.  Any gain beyond 11% in the market will be forfeited and any loss below 10% will have a negative effect on the account value.  The annuity offers other term lengths and protection levels as well.  However, for the best “apples to apples” comparison, I am solely looking at annual resets based on the S&P 500 for both Shield and the FIA.  I did not use a specific FIA product, rather just made some assumptions based on what is generally available in the FIA space right now.  Current participation rates on FIAs are approximately 45% of the upside and, by definition, there is no downside risk.

FIA Return Difference by Period
Starting Year 5-year 10-year 20-year
1988 -5.4% -4.3% 0.2%
1989 -4.1% 1.5% 47.3%
1990 -5.2% -1.7% 45.0%
1991 -1.5% -1.5% 38.2%
1992 -3.9% 0.8% 37.1%
1993 1.1% 19.2% 34.1%
1994 5.8% 24.6% 42.1%
1995 3.7% 19.0% 34.6%
1996 -.1% 12.6% 29.5%
1997 4.9% 9.5% 25.4%
1998 17.9% 4.7% 19.7%
1999 17.8% 45.1%
2000 14.7% 47.5%
2001 12.7% 40.3%
2002 4.5% 36.0%
2003 -11.2% 12.6%
2004 23.2% 14.0%
2005 28.6% 13.1%
2006 24.5% 15.0%
2007 30.2% 14.5%
2008 26.7% 14.3%
2009 -7.5%
2010 -12.0%
2011 -7.6%
2012 -12.1%
2013 -9.8%
Average: 5.2% 16.0% 32.1%

(Values show in each of the 5, 10 and 20-year columns are illustrative and represent the hypothetical excess return (over the Brighthouse Shield Annuity) of a Fixed Index Annuity with a 45% participation rate when applied to a rolling period of S&P 500 index performance beginning January 1 of the starting year)

Going back 30 years, I looked at all the rolling 5, 10 and 20-year periods and determined the cumulative outperformance of an FIA compared to the Shield annuity.  As you can see from the chart, there were 15 periods – only 35% of the time – where the FIA underperformed the VA.  All of those periods were within the 5-year timeframes.  Put another way, as you stretch out the time horizon, there were only a few rolling periods over a 10 or 20-year timeframe that the VA even came close.

Before I move on to an explanation for the outperformance of an FIA vs. the Shield VA, I want to address what many readers may be thinking: “Is this comparison intellectually honest?”  After all, neither of these products were available for the last 30 years.  Furthermore, I am assuming constant cap and participation rates for both products.  True enough – varying interest rates and volatility would have had a significant impact on the options pricing behind both of these products.  But that’s the key here.  I’m more interested in the comparison on a relative basis, not so much on an absolute basis.  Any swings in interest rates and volatility would have had a similar effect on both products.

Getting back to the reasoning, it seems as though the Shield annuity was designed around both recent history as well as the average return on the market.  If the S&P 500 has averaged roughly 9-10% historically, it should stand to reason that the annuity with an 11% cap rate would capture nearly all of the upside of the market.  Except that’s not even close to being accurate.  In fact, over the last 90 years, the S&P 500 returned between -10% and +11% in only 30% of the years.  For the other 70% of the time the client would have either eaten losses below -10% or forfeited gains above 11%.  More succinctly put, markets don’t move up in a straight line.

In case there are still questions about the pricing comparison of the annuities, Brighthouse initially offered a Shield annuity with 100% downside protection.  However, the trade-off is a lower cap rate of 2.8%. In essence,  this structure is  an FIA.  FIAs structured with a cap rate (as opposed to participation rate) have been in the range of 4%-6% over the last year.  Brighthouse has since stopped offering the 100% downside protection level, likely because it shed too much light on their poor competitive pricing.

As with all sales literature, it pays to dig into the numbers behind the brochure.


It is important to note that there are a number of important factors used in determining and calculating an annuity’s policy values. These factors can drastically differ insurance carrier by insurance carrier and product by product.

This hypothetical index annuity example used the following assumptions:

1) FIA product returns based on the SP500 Index generally use price returns.  Since the Brighthouse annuity also uses price returns, the historical S&P500 data used in the analysis are based on price returns, which do not include dividends.  SP500 values are for illustrative purposes only, since investors cannot directly invest in the SP500 index. Past performance is not a guarantee of future results. 2) Annuity performance is calculated using an annual point-to-point measurement. 3) The index annuity shown used a 0% asset fee.  4) The index annuity shown is calculated using annual participation rates on the interest that is credited, at 45%. Index annuity participation rates are based on a number of factors, including but not limited to: whether or not the policy offers any bonus, as well as the surrender charge percentage and duration of the surrender schedule.

In applying the information provided in this material, you should consider your clients’ other assets, income, and investments – such as the equity in their home, Social Security benefits, any IRAs, savings accounts, and other plans that may provide retirement income, as those other assets may not be included in this discussion, model, or estimate.

This analysis should not be interpreted as a recommendation or as investment advice. Before recommending any investment company product, please review and provide a copy of the prospectus.

The Distribution Problem Part 2 – Sequence of (future) Returns

A few weeks ago, I wrote the first in a series of blogs dedicated to the distribution problem that advisors and retirees are facing today.  Part 1 focused on the clarifying the unique challenge that comes with the distribution stage of investing.  Indeed, as investors begin to start liquidating their accumulated assets as a replacement paycheck after they stop working, the math changes.  Inflation and sequence of returns are two key risks associated with this investor stage.  Today, I am going to zero in on sequence of returns risk and shed some light on how many advisors are inadvertently setting inappropriate expectations for their clients in retirement.

Just in case anyone is wondering how the math changes in the distribution stage, allow me to illustrate.  The first chart that you see shows the growth of $100,000 based on historical returns of the S&P 500 Index (total return) since the beginning of 2000 in blue.  The orange line represents that same $100,000 growing over the last 18 years – except the order of returns have been reversed.  So, although the accumulation path is drastically different, both scenario’s end up with the same exact value today.  In other words, the order of returns does not matter.

Growth of $100k 

Now, take that same scenario but pull out withdrawals of 5% per year (with a 3% cost of living adjustment).  The original order of returns (2000 thru Q2 2018) runs out of money 15 years into the hypothetical.  The reverse order of returns (Q2 2018 – 2000) has a positive balance of $124000 at the end.  The order of returns clearly matters in the distribution stage.  That’s what we mean by sequence of returns risk.

5% Distribution Chart

The primary way that many advisors attempt to mitigate this risk for their clients in the distribution stage is to take some risk off the table and diversify the portfolio.  Here’s what a 60/40 mix of the S&P 500 and the US Aggregate Bond Index would look like in the same distribution scenario:

MS Hypo 60-40 SP500 US Agg 5% Withdrawal

Clearly, the diversification benefits the client in this scenario.  Instead of running out of money 15 years into retirement, the client has a little over $37,000 left after the full 18 years.  The assets won’t last much longer, but at least this is an improvement.  The problem I have with an advisor presenting this as a solution to a client for their income needs is that it’s all based on historical returns.  Yes, I get it – no one knows how stocks will perform over the next 10-20 years, so the next best thing is to use a long historical time period as a reference point.  I don’t have any better idea than the next person as to the performance of stocks going forward.  We could continue to see significant corporate earnings growth and valuation expansion that underpin high returns over the next 10 years,  or we could see a significant downturn due to any number of reasons.

The 40% allocated to fixed income is a different story.  We do have a better understanding of bond returns going forward relative to the past 15-20 years.  Either rates will continue to stay low and bonds will earn the yield they are paying.  On the flip-side, if rates increase that will increase the yield return, but will be partially offset by the decrease in the price of bonds that investors are currently holding.  In either scenario, it’s hard to imagine that the US Aggregrate Bond Index will average the 5% annualized return over the next 18 years that it has since 2000.  A more appropriate rate of return for the 40% fixed income allocation might be 3% going forward.  If we adjust to those expectations for “future” sequence of returns risk, here’s what that impact on the portfolio looks like:

MS Hypo 60-40 SP500 Cash 5% Withdrawal

As you can see, lower interest rates going forward will make it more difficult for portfolios to last through retirement compared to previous generations.  Here’s a quick read from FS Investments that I came across outlining the difficulty of the traditional 60/40 portfolio going forward.

History is a useful guide to the future when examining potential market cycles.  However, when it comes to conservative asset classes, advisors and investors should be careful to not expect the next 20 years to look like the previous 20 years.  Next time, in the final installment of this series, I will discuss some of the prevailing distribution strategies and present a viable alternative that income oriented investors should consider.

Even if you had a crystal ball…

Everyone who works even remotely close to the investment management industry inevitably gets asked the question, “So what do you think is going to happen with the market?”  A cute answer that I’m sure I’ve used along the way is, “Well, my crystal ball has a crack in it at the moment.”  In other words, no one is a clairvoyant with market predictions.  I’ll go one step further though, even if you had a working crystal ball that could foresee significant events that could move the market, you still wouldn’t be any better off.

Many financial firms have complex models with dozens of inputs, all with the goal of predicting the behavior of some niche area of the capital markets.  The difficulty with this forward-looking process is that even if you get the majority of the inputs correct, you are still under your own assumption of how the market will react to each and every input.

Here are some examples over the last several years of how even the foreknowledge of significant events could have led you astray.

2016 Election

If there’s one thing the stock market abhors, it’s uncertainty.  When outcomes of various events don’t go according to plan, the market must recalibrate in order to adjust for different inputs that were  initially forecasted.  We saw this with Brexit when the polls in the U.K. turned out to be wrong.  We saw this when Lehman Brothers filed for the largest bankruptcy in U.S. history, despite A-rated credit ratings the morning of September 15, 2008.

Enter the 2016 Presidential election where  Donald Trump was widely regarded as the most unpredictable candidate of our time.  He was down in the polls and there was no way he was going to crack the blue wall.  Then, once the dust settled early Wednesday morning, candidate Trump became President-Elect Trump.  What was the market’s reaction to this uncertainty?  The day following the election the S&P 500 was up 1.1% and a cumulative 5% increase over the following month.  So, unless you were one of the small fraction of investors who were trading futures on the night of November 8th along with Carl Icahn, the only volatility you experienced was to the upside.

US Debt Downgrade

In August of 2011, Standard & Poor’s downgraded their credit rating of US sovereign debt, marking the first time in history that the US did not enjoy the AAA rating from all thee major credit rating agencies.  Bond pricing models have to account for many factors including maturity, liquidity, inflation and credit quality.  When credit quality decreases, (i.e. the chance of default increases) the bond issuer must compensate new investors with a higher yield.  When the US Treasury received a negative outlook in April of 2011 and the formal downgrade in August from S&P, one would’ve thought that the yield on treasuries would have increased.  Instead, this is what 2011 looked like:

The 10-Year US Treasury yield began the year at 3.4% and had a steady decline to end the year substantially lower at 1.9%.

Nuclear War on Social Media

January 3, 2018

Donald J. Trump(@realDonaldTrump)

“North Korean Leader Kim Jong Un just stated that the “Nuclear Button is on his desk at all times.” Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!”

This was one of my favorite tweets from our President.  As little as a couple years ago one might have expected that a flexing of nuclear muscles on social media would have created quite a commotion in the market.  I can find humor in it and discount the seriousness because the market has done the same.  How did equities react to this tweet?  The S&P 500 was up for the first 6 trading days of the year and 7.5% through the first 3 weeks of January – clearly traders were not pricing in a potential nuclear conflict on the Korean Peninsula.


Earnings season tends to encourage water cooler talk around stock performance.  Sometimes the outcomes are confounding when a stock drops in value after the company reports better than expected earnings, revenue growth, and forward guidance.  We are left scratching our heads.  Perhaps analysts were looking for higher growth in a particular area of the company that they viewed as critical to long term sustainable growth (i.e. health care within GE, cloud services within MSFT).  Headlines are forced to come up with some kind of explanation – usually it’s something along the lines of “the expectations were already priced into the stock leading up to the report…” leaving yourself to ask, “what’s the point of analyst consensus earnings expectations then?”  True enough.

Federal Reserve Stimulus

I found this one most interesting.  If you knew in advance what the purchasing activity of treasuries looked like for the Federal Reserve during the 6-year period covering QE2 and QE3 (QE = Quantitative Easing), would that have given you an edge in the treasury market?  In the following chart I pulled the Fed Balance sheet info and overlaid that with the yield on the 10-year treasury.

FRED, Federal Reserve Bank of St. LouisSource: FRED, Federal Reserve Bank of St. Louis

Bonds 101 tells us that an increase in demand drives up the price of bonds, thereby decreasing the yield.  At first glance, the six-year picture does show an overall decrease in yield as the Federal Reserve purchased a trillion dollars’ worth of treasuries (roughly half the balance sheet is treasuries).  However, it gets more interesting when you look at the four distinct regimes of QE2, QE3, and the periods between and after, when the Fed was not purchasing assets.

Period Beginning Yield Ending Yield Change
QE2 2.50% 3.20% 0.70%
Between QE2 & QE3 3.20% 1.60% -1.60%
QE3 1.60% 2.30% 0.70%
Post-QE3 2.30% 1.50% -0.80%

You can see that during both periods of quantitative easing, yields actually increased.  Then in the periods where the Fed let off the gas (demand went down), yields decreased.  In a vacuum, this is the exact opposite of what you would expect.

But that’s my whole point; when it comes to capital markets, nothing ever happens in a vacuum.  There are always more inputs than you think, and the market reaction to those inputs is always more nuanced than expected.  Next time you catch yourself saying “if only I had known,” don’t sweat it.  It may not have helped you anyway.

The (Misguided) Active vs Passive Debate

“A great year in the markets, but few managers beat their indexes”

“Their long-term record is even worse, according to a report on indexes versus active managers”

Source: InvestmentNews, 3/16/2018

Every year  you can count on articles like this popping up like clockwork.  The short version goes something like this: active managers for the most part, underperform their respective benchmarks or indexes.  Typically, over the last one to three years, only 40% of active managers outperform the index.  So, in conclusion, why would anyone pay higher fees for active management when they could just invest in the index and have higher returns over time?

This seems like a fair conclusion.  After all, fees will have an appreciable impact on performance over time.  Case closed.  Except it’s not because we live in the real world.  First, allow me to discuss a couple issues with these studies.  The tone of such articles seems to indicate that simply because an investment manager charges a fee, they should outperform the index.  There’s this notion that it’s possible for 100% of active managers to outperform the index.  The problem is that the performance of each index is not some arbitrary number pulled out of thin air.  The performance of an index is derived from the cumulative effect of active trades.  For every winning trade by an active manager, there must be a losing trade on the other side.  As such, we’ll never have 90% of active mangers beat an index.  I don’t believe we can even have 60% of active managers over time beat the index.  Add in the effect of costs and that number drops below 50%.

The second issue I have is that these reports aren’t asset weighted. A small startup fund with limited experience is treated the same as much larger funds.  So, when Growth Fund of America with $180B in assets outperforms the index by 4% last year, that means a whole lot of smaller funds are likely on the other side of those trades and consequently will underperform the index.

There is a more constructive conversation that I believe we need to pivot to.  Dalbar puts out a study every year that compares returns of the index (or sometimes actual equity funds) to the actual returns that investors experience.  Here is what that looks like over various time periods:Dalbar Investor Returns

Fees alone cannot come close to explaining the difference.  Dalbar cites investor behavior as the primary culprit for investor underperformance – specifically behavioral biases of loss aversion and herding.  Loss aversion simply means that the pain of a 20% loss is much greater than the pleasure of a 20% gain.  This bias typically leads to panic selling on the downside.  The herding effect is akin to chasing returns.  Investors will invariably follow the latest trends which perpetuates the cycle of buy-high, sell-low.

10% vs 4% over a 30-year time horizon – that equates to a greater than 5-fold difference.  Ultimately, that’s where a good advisor earns their keep.  You can have the best MoneyGuidePro, Emoney or name-your-software report, but if the client can’t stick to it, it’s just a 30-page pile of paper worth about 25 cents.  A good investment plan that a client can stick to is infinitely better than a perfect investment plan that they abandon.

Time Dependency of Volatility

Last year was certainly a smooth ride in the markets for investors.  Both the Dow and S&P 500 were up north of 20%.  Volatility was low.  But it’s not until you dig into the numbers that you realize what an outlier of a year 2017 was.

S&P 500 Index Realized Volatility by Quarter since 1990

Volatility chart

Source: Horizon Investments


Here are some data points to consider from last year:

  • Going back to 1990, we had 4 of the 7 least volatile quarters on a realized basis
  • Lowest realized volatility for the year since 1964
  • Lowest average daily VIX on record. 09.  Compare that to the historical average of 19.5
  • Lowest max drawdown since 1995. You could’ve invested in the S&P 500 last year at any point and not lost more than 2.8%

Quite a year to say the least.  Now when we compare 2017 to 2018 Q1, we see a complete market shift.

SP 500 Daily Range

This chart shows how range bound the daily returns were for 2017.  In fact, there were only 4 days last year that lost more than 1%.  By contrast, we had 11 days through the first quarter of 2018 that lost more than 1%.

However, my biggest takeaway from the first quarter is not all the fluctuations we saw, but how volatility is time dependent.  For all the hoopla we saw, the total return for the S&P 500 was      -0.76%.  Not every client watches CNBC every day.  If all of your clients do, God help you.  But for those clients who don’t pay attention to all the headlines, consider this: they have just received their quarterly statements and saw that, depending on their allocation, are virtually flat.  For those of us neck deep in this stuff daily, we see and feel the shifts in the market.  Just don’t make the mistake of proactively projecting any personal anxiety you may have about the market onto your clients – they will certainly pick up on that.

To Meal or Not To Meal? That Is the Question.

That’s right, I’m going to fuel the ever-burning fire of the meal vs. non-meal seminar debate!  This is one of the most common questions I get from advisors when they are planning out their seminar marketing: “Matt, why would I serve a meal?" Ok, so if you know me, you know I’m pro-meals.  That doesn’t mean that I don’t believe in non-meal seminars; sure I do.  I know they can work and they can be profitable; not denying that.  But here’s my point: If you put me in front of the two groups of people and I had the chance to conduct both a meal and a non-meal seminar, I would gather more new clientele and assets from the meal seminar, almost every time.  Here are 3 reasons why:
  1. More time.  This is the biggest and most important reason I’m pro-meals.  When you serve dinner (which you should ALWAYS do after the presentation, not during), you have locked down the room for at least 30 minutes.  A good advisor and a good team knows that they can accomplish a lot of appointment setting in 30 minutes. The best advisors I work with either stick around and work the room, or they have rock-solid staff that go table to table, strike up conversation, and BOOK APPOINTMENTS.  Yes, this works, and no, it’s not pushy.  As long as you do it the right way, it can be the most profitable 30 minutes of the entire evening.  Guess what, people can’t wait to leave the library after your non-meal seminar.
  2. Guilt.  More people are going to show up to the meal seminar, because you pre-ordered the food.  You can use this as leverage.  Think of it this way. Have you ever RSVP’d to a wedding and sent in the card saying you wanted steak?  Undoubtedly, the day of the wedding you find yourself poolside about 3 beers deep and suddenly realize you have to stop relaxing, go get on a suit, and go to the wedding or you’ll be late. And for a split second you consider not going.  “The bride and groom will be too busy to notice I’m not there… they’ll never know.” And then you remember the steak.  Boom.  You are going to show up to that damn wedding, whether you like it or not, because that lonely piece of meat on the table has your name all over it.  The same holds true for meal seminars.  You can accomplish the same guilt factor to boost your attendance ratio.  I’ve been tracking this for years, and that’s how it is.  I train staff almost every week on how to accomplish all of this over a 2-step phone process before seminar night.
  3. Meal venues are nicer.  Yes they are, if you do it right.  If you do seminars at public libraries or community centers, I promise you that the venues my best advisors conduct their meal seminars at are more comfortable, inviting, and impressive. They aren’t your garbage restaurants serving the rubber chicken dinner.  They are at nice places your affluent clients actually dine at, and they serve good food that people want to enjoy and savor throughout the evening.  All while they bask in the perfect environment you’ve created for them to mingle and talk about how great your presentation was.  Pretty sure this isn’t happening at the library.
You may have heard me say before that small hinges swing big doors. This holds true for these three small things that all positively impact seminar metrics.  Here’s how: Nicer venues + meal = MORE RSVPs (translation, more butts in seats) Meal + Guilt = HIGHER ATTENDANCE RATIOS (translation, more butts in seats) More Time = MORE APPOINTMENTS SET (translation, more people coming in to meet with you) It’s that simple.  If at the beginning of this blog I asked you if I could show you ONE THING that would get you MORE RSVPs, HIGHER ATTENDANCE RATIOS, and MORE APPOINTMENTS out of your next seminar, you would be clamoring for the secret.  And it’s that simple:  Serve a meal. Disclaimer: If the word “plate licker” is at all going through your mind right now, here’s what I have to say, GET OVER IT.  Your competition is having no problem with meal seminars! 

10 Simple Steps to Instant Seminar Success!

For years, successful advisors have worked the seminar marketplace to obtain new clients for their financial planning practices.  Seminars have been the marketing backbone of the majority of the best producers I work with on a day-to-day basis.  Over the years, I’ve compiled some basic tips and tricks to conducting the most effective seminar, and netting the highest appointment to household ratio possible.
  1. Dress to Impress! – Don’t forget, you are a financial PROFESSIONAL.  If you don’t consider yourself a professional, stop reading this article now.  Gentlemen, wear a suit and tie, and make sure it doesn’t look like you purchased it in the late 1980s.  You don’t ever want a seminar attendee to be able to say, “Nice suit! Who shot the couch?”  Yes, avoid plaid and “couch cushion” like patterns.  Remember, your tie should always be longer than your shirt sleeves.  No copy-machine repair man uniforms!  Ladies, dress professionally and keep it conservative.  I don’t think I need to go into detail here about what is not appropriate for a lady to wear.  Remember you are a professional.  Dress the part.
  2. Show Up. If You’re Not Early, You’re Late! – Plan on being at the meeting room, restaurant, or facility at least a couple of hours beforehand.  I’ve heard many horror stories about advisors having traffic issues, vehicle breakdowns, appointments running late, etc. Bottom line, these attendees have taken time out of their busy schedules to be on time for you. Make sure you do whatever you need to do to be there.  Give yourself a couple of hours of cushion so you can make sure the room is ready and the technology is in place.  Nobody wants to be “that guy” that can’t figure out how to get his PowerPoint open and has to have Joe Engineer in the audience to assist.
  3. If You Serve a Meal, Wait Until After the Presentation – I don’t care what anybody has told you in the past. Food and beverage service during the seminar is a distraction.  Instruct the facility staff to stay out of the room until the presentation is over.  Avoid beverage service during the event.  Let the attendees know on the phone when you are making confirmation calls that they should show up 15 minutes early to get their food and beverage selection ordered.
  4. Control the Room – As much as you want to show how quick you are on your feet and how you can handle any situation, I would advise AGAINST taking questions at the event.  I’ve found that the best seminars (when I say best, I mean those with the highest appointment request to household ratio) are the ones that don’t involve any Q&A.  If you don’t know the best way to position this at the beginning of the seminar, contact me directly and I will teach you how to set the stage.  I know one of the best stories in the industry that will actually lead to the attendees respecting you MORE because you DON’T take their questions at the event.
  5. Paint the Picture – It’s important to story-sell as many details discussed at the seminar as possible. When you are discussing different items in the intro and the close (who you are, what you do, how you help people, what the appointment is like), it is important to paint as descriptive a picture as you can.  The goal here is to eliminate as many barrier walls of fear as possible.  They need to understand and believe that you don’t work out of the trunk of your car and you are legit.  If you have pictures of your office, show them off!  I’ve been to many awesome offices and you should be proud of the environment you’ve created.  When you can show them a clean, professional, and safe environment, you will eliminate another barrier wall of fear.  You never know, they could envision you as having a dirty office in a bad part of town with a receptionist that collects stray cats and chain smokes behind the desk.  Show them, don’t just tell them. That’s not who you are.
  6. Have Somebody Introduce You at the Seminar – This could be done a number of ways. I’ve seen junior advisors/partners introduce, and I’ve even seen a CPA or an attorney do it.  Bottom line is, your credibility is boosted by a simple introduction.  Make sure you prep the introducer well in advance.  Give them time to perfect their script and don’t make it a last-minute decision, or you might as well introduce yourself to embarrassment.
  7. Step 1: Rehearse. Step 2: Keep Rehearsing – Don’t be lazy here.  Just like any sport, practice makes perfect.  But more importantly, “Perfect Practice” makes perfect.  Rehearsing doesn’t mean reading through your notes as fast as you can during TV commercials or reviewing your materials while driving to the seminar.  Rehearsing means actually giving the full presentation many times.  One of the best advisors I ever had the pleasure of working with once told me, “Matt, I give one seminar a week to stay sharp.”  Now I knew that he only conducted two public seminars a month so I was definitely curious.  When I asked him to elaborate further, he explained that if he didn’t have a public seminar in a given week, he gave the presentation in front of the mirror.  I don’t think I need to explain further as to how he became the best presenter I’d ever seen.  This is your seminar.  Own it.  Master it.
  8. Don’t Rush the Close – This is the most important part of your event. You likely paid thousands of dollars to get in front of a packed house. Your job is to convert as many of them as possible into appointments.  Make sure your close is filled with a sense of urgency.  Do your best to give generic examples of typical clients who you are able to create value for.  Quantify or “dollarize” the solutions you can provide.  Oh yea, and if you don’t have a packed house, rethink your seminar mail-house relationship.
  9. Don’t Be Stingy. Give a Door Prize! – As silly as it seems, the door prize can be used as an extremely effective appointment-gathering tool. If used correctly in conjunction with a good appointment request form, you will create a sense of urgency for them to book a time to come and see you.  If you don’t have a good strategy for doing this, contact me and I can tell you exactly how it works.
  10. Cut to the Chase – One of the biggest fears the seminar attendee has is, “What is this guy going to try and sell me?” It’s important to come right out of the gates (in your intro) with the “What’s in it for you, what’s in it for me” conversation. If you do this correctly it will allow the crowd to relax and enjoy the presentation, rather than having them sit on the edge of their seats waiting for the hammer to fall.

Have You Made These 3 Seminar Mistakes?

I’ve been bombarded lately by countless examples of advisors wasting their money on a seminar.  Why do you ask?  Well, it’s because most of them invested in a system that didn’t follow the basic rules of seminar marketing.  We all know, there are Do’s and Don’ts in this business, and when it comes to seminars there are some rules that shouldn’t be broken … unless you are OK with flushing your marketing dollars down the toilet.
  1. Seminar mistake #1: Letting somebody else give the presentation.  Don’t get me wrong, there are a lot of good speakers out there, and arguably, there are folks that understand the subject matter of your next seminar better than you do.  Putting them up at the podium is a mistake.  Your positioning is destroyed.  They may make an attempt to put you in the spotlight as the “guy to go see” with any other questions, but at the end of the day, if they gave a compelling presentation, the audience is going to be drawn to the main speaker -- not you.  The solution:  Give the presentation.  Better yet, have somebody introduce YOU as the main speaker!
  2. Seminar mistake #2: Giving away a freebie just to get the appointment.  Have you ever attended one of those timeshare presentations JUST to get the free tickets to the local amusement park or dinner show?  If you have, then you undoubtedly remember sitting on pins and needles through the “Tommy Boy” hack job of a sales presentation.  “Get me to the end of this thing, I just want two free tickets, and please God, don’t let this guy go get the "Manager” so I have to listen to his sales pitch too!”  Imagine what prospects think sitting in your office if you are positioned as the sales pest that is going to show them the next magic investment or product, all with the bait of a software-generated report that they get just for sitting through the meeting.  If you give somebody an out, they usually will take it, especially if they have even an inkling that you are trying to sell them something.  The solution: Create real value at the podium.  Give them a REAL reason to come and see you, not some hokey freebie that you automatically devalue the instant it is offered up for nothing.  Create differentiation as to “WHY” they need to meet with you.  There are plenty of compelling ways to bring people into the office and have the positioning be in their favor, AND yours!
  3. Seminar mistake #3: Being a one trick pony.  I understand that most seminars have a main topic or theme.  It’s important that the audience knows and REMEMBERS that it’s not the ONLY THING that you specialize in!  OK, I’ll address the elephant in the room -- Social Security.  Everybody and their brother is doing Social Security marketing, and many are doing seminars.  If somebody is attending one of your events, and they leave thinking you are the Social Security planning guy/gal, then you’re done for.  Good luck transitioning them into a new planning client.  I’m not saying you can’t; I’m just saying if you do, it will be more difficult.  The solution: If they leave the room remembering that you are a comprehensive financial planner,” and Social Security is just one of the arrows in your quiver, the positioning is extremely different.  These prospects will be more apt to start talking about EVERYTHING in their financial life first, rather than just wanting to come in and talk to you about Social Security.
Let’s be honest.  Marketing isn’t cheap.  And if it is cheap, you should probably run for the hills because you typically get what you pay for.  Next time you are going to run a public event, make sure you are plugged into the right system, and make sure that system is tested, tried and true.