The 10 most powerful words ever uttered....

Just for a second, imagine you’re out golfing with a few members from your club. You’re having fun, telling jokes, getting to know each other. And, then it gets around to work.

“So, what do you do?”

“Oh, I’m a dentist.”

“I’m in the government.”

Pretty standard fare. But, then someone’s says:

“I help businessowners take money out of their company tax-free.”

First off, I have so many questions about this:

1. How do you do this? 

2. How can you do this for me?

3. And, when can we start?

Before I get to those answers, I do have some announcements for you.

1. Yours truly will be in Toronto (the center of the universe, right?) on June 3rd. My intention is to check out our lovely Blue Jays in action, but I don’t have tickets yet that night (as I have meetings the next day). If someone has tickets (or a box) let me know, I’d love to come meet you and watch the game at the same time.

2. PPI just posted a new role based in Southwestern Ontario (London/KW region). If this is something you are interested in or know someone who is, please let me know. It’s the same role I do, but there. 8-10 years of insurance experience necessary and good people only, obviously. I do believe we offer some kind of “reward” for a successful candidate as well.

Back to the topic at hand.

This is honestly the most powerful elevator speech I’ve ever heard. You can utter it in an actual elevator, on the golf course, at a BBQ or wherever it is you meet people.

Invariably, the next question is how does this work?

“Listen, it doesn’t work for everyone and I’m not sure if it works for you, but I’ll only know if we sit down one day and you tell me about your business.”

This is called the “negative stripline” approach.

What are “negative striplines” you may ask?

Why, I’m glad you asked.

Striplining, a concept popularized by lots of legacy sales training process says the following:

“Pushing against prospects just makes them push back harder… so that no one makes any progress. Instead of pushing them in the direction you want them to go, by asking a question like, “What kind of solution are you looking for?” try pulling them away from that direction and then letting go. Even positive prospects need to be “discouraged” a bit, so that they swing back in the positive direction.”

Essentially it means, striping away the reason for the product. Telling them that the product might not work for them or something to that effect.

Negative striplining is taking it up a notch and essentially being much more negative than the average client. There is obvious skepticism in any product or solution and clients should logically be skeptical of anything. But, there is a range of how skeptical the average client is.

Now, if you become an extreme version of a skeptic. In essence, you become the most negative client type, your trustworthiness will increase.

Here’s what it might sound like:

“Yes, I help businessowners take money out of their companies tax-free. But, it doesn’t work for everyone and actually, I’d say very few it does work for. But, if you feel you’re paying too much tax today and probably into the future, there are solutions that work in some cases eliminate or the very minimum, substantially reduce it. But, I can’t tell if you’re a candidate until I know more.”

Look at what’s being said here. We aren’t saying that this is a secret solution and you should buy it. We aren’t saying it works for everyone. We are being more negative than the average client would expect us to be in this situation. If we were selling something, shouldn’t we be telling them how great it is?

No, that’s old school thinking. People are justified in their skepticism. We should instead play into the skepticism.

And, this isn’t a ruse we are employing as some kind of Jedi mind trick. It’s actually factual. Using insurance to minimize taxes does work (as I’ll show in this email), but its not for everyone, at least how I present it. I’d say insurance is for everyone, but it may instead be term for most.

The one thing that you need to have is: money. ‘Mo money, ‘mo problems, as the great Mr. BIG would have said so eloquently.

Now by being so negative about our own solution, you’ll have these clients wanting to know about it even more. What can’t be had… is craved.

So, in all likelihood, that 30 second conversation can take a client from 0 to interested in most cases. And, then it’s all about follow-up, which I’m sure I don’t need to tell you is essential.

Now let’s spend some time talking about “how” we do this whole taking money out of a company tax-free.

Depending on your clients demographics, its going to tell us the best approach.

Let’s start with a younger, successful and growing business owner. This would be applicable for the 30-55 age group.

If we’re going to use life insurance, everyone needs life insurance. So, why opt for a permanent plan (be it UL or Par), when they could simply use term.

Simple: They can use the cash while living.

I’m going to run some numbers for you to show you how this works. Let’s say, you have a prospect/client with some money in their company and it’s growing.

In our example, let’s grab $50,000 per year for 10 years for a 40 year old – so over the 10 years, they’ll have invested $500,000 in the insurance policy.

What if they wanted to draw tax-free income out starting at age 65 for 30 years.

Now keep in mind, these numbers are based on a whole lot of assumptions, so take them with a grain of salt please. But, this will give you a flavour of what could happen.

With a life strategy, they could pull out about $1.7M tax-free in retirement (paid over 30 years) plus a net death benefit of $700,000 and a Capital Dividend Credit of $4M (worth about $2M in the hands of the kids or whoever inherits the company).

This means by using a life insurance policy, the $500,000 investment gave back $4.4M in total cash or nearly 9x their investment.

You’d need to contribute nearly 4x as much money in a balanced portfolio to get a similar return in traditional corporate assets.

Now, am I saying you shouldn’t have corporate assets? No, not at all. I’m just saying you should have insurance too!

And, if you use Par, here is how I’d put it to a client:

“You get corporate bond returns with the tax-efficiency of a TFSA with the liquidity of a money market account.”

Now, it might not be right for you. You need to have money. You need to not like taxes.
And you need to be insurable.

But, if you fit this bill, you are a candidate.

Listen, not everyone is going to go ahead with it, but presented the right way to the right client. They should be all over this.

Here’s another one, not as commonly used, but as effective in my opinion.

Using Split Dollar CI. I know there are some disagreements in the market, but its still a viable option for the right client.

I like to start the conversation as a key-person discussion.

“If you got sick, who’s ready to take over your company tomorrow?”

I know the answer in 99.999999999999999999999999999999999999999999999999% of cases:

No one.

They have no legitimate #2. Most companies are not big enough to do that. That’s why they are at the mercy of the labour markets. But even if they did, it wouldn’t go smoothly.

That’s why they may want some cashflow coming into the business to help hire a replacement, keep profits, give the company time to pivot until your return or sale of the company.

And, if you get them interested in this. Well, you can tell them about the Return of Premium.

It can be paid for by the company or paid by them the shareholder.

The math on this isn’t too difficult. It allows them to pull the company paid portion (the insurance cost) out to the shareholder tax-free (as we understand it today).

Now, if you’re going to implement this, check with your insurance support team to help you do it properly and get you all the facts. This is one of those transactions that CRA is auditing, but if done properly and the accountant is on board, its less of a concern.

But again, all this comes back down to this question:

“Are you more concerned about a CRA audit or paying extra taxes to government?”

For most clients, their pain points are not a CRA audit. Their pain point or at least one of them is paying way too much money to the government.

And for those who can’t get their noggin’ around that problem, I’ll let Australia’s once richest man Kerry Packer set you straight:

https://youtu.be/DBg7DnQjjcY?si=U2W10AeTbGCnJ0iS

And again, this a beauty. If you have a client who is say 40. The Return of Premium will be triggered in 15 years, when they are 55. The CI refund could fund their retirement tax-free for a few years, allowing them to keep investing tax-efficiently in their other vehicles.

And, you protect the business and cash flow (cash flow is king, as you know) until retirement. I’m not a big fan of presenting split dollar CI as a way to only get money out the company. It is a fantastic risk tool, but can be used by both.

Now let’s flash back to the top of my email once again.

You meet a guy on the golf course, country club, shopping mall, BBQ or wherever and you tell them you can get money out of their company tax-free while they’re still living.

You blow their minds with the life insurance strategy which shows they can lever their capital 9x with minimal risk and then you show them the CI strategy that can get money out tax-free early in their retirement and protect their business.

These ideas might all be foreign to them.

What question do you think they’ll be asking themselves?

“Why hasn’t anyone shown this to me before?”

If you aren’t their Advisor already, you might be on a sure path to become the go-to person. You might not even get them to buy the insurance right now, but you could end up taking over their investments or their group. Because, you did something someone else didn’t do:

You delivered value. And, I’d say, a mountain of value.

I know what you’re going to ask now:

Let me see all the numbers. How did you get to this? Or, that?

I’ll be honest with you, it doesn’t matter. Your most important role is to identify opportunities. Then to get clients/prospects interested in said solutions.

Then, you just bring in your insurance team to help either:

1. Educate you

2. Do the proposals

3. Go to the meeting with you and present the solutions

It can be one or all of the above. But, if you can set up the client. Your team can knock them down. You don’t need to be the expert on everything. But, you do need to know where the expertise lies.

That is in your insurance partners. If you don’t have any, find some. They know what they’re doing.

And, I know this because I’m one of those partners for the Advisors I work with.

I was going to have this email go a bit longer, but I’ll save the rest for next week.

So, enjoy your Saturday coffee. Think about what I’ve said.

Tell people that you can help get money out of their company tax-free (or minimize it with personal cases) and be extra negative on the solutions (it probably won’t work for you, but we can check).

They’ll both want to know more about it and crave for you to tell them.

If you’re in over your head with the solutions, don’t fret. Reach out to your team.

Don’t have a team, message me and I’ll connect you with people who I know can help you.

Until next week,

Andrew