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Editor's Notes

• #2: This presentation is designed for you to conduct in “workplace type” settings where you only have a limited amount of time with participants. The entire program should take about 20-25 minutes. Please make sure to distribute the companion handout that goes with this presentation. We also recommend you provide a copy of your agent brochure with the handout. Timing: You should spend a minute or two minutes welcoming the people and introducing yourself and spend 10-12 minutes conducting the main body of the seminar material. At the end of your presentation, you’ll want to reserve a couple of minutes to allow participants to complete the Follow-Up Information page. The Script: We’ve provided this script as a guide through the material. As with all sales language, you should first memorize this script through practice and repetition—then make it your own! (All script is in blue italic.) Hello and welcome to “Blueprint for Financial Success.” My name is (name) and I am an agent with New York Life Insurance Company based out of the (name) General Office. Before we get started I just wanted to advise you that neither New York Life nor its affiliates is in the practice of rendering tax or legal advice. If you have questions regarding those matters we recommend you consult with your own personal tax and legal advisors. My role here today is to provide you with information to help you with the basics of setting a strong financial foundation which will hopefully help get you on the path to achieving your personal financial goals. If at the end of the presentation you discover you have financial questions or needs that I can assist with—I’d be more than happy to help. I only have a limited amount of time with you today—so let’s get started.
• #5: Before we move into the main presentation, I just want to make sure everyone has a copy of the companion workbook. Is there anyone who hasn’t received the workbook? (Hold up the workbook and wait a second or two) Great. Please turn to the first page and we’ll get started. This workbook is going to be a key resource for you in today’s session, as it mirrors the presentation and can serve as a resource to you long after you leave today’s meeting. The workbook contains a variety of useful features including: • An area to take notes • Suggestions for becoming debt-free • Suggested legal documents • A budget preparation form. This form is designed to assist you in identifying your expenses as you prepare for your financial future. Please feel free to customize the form to meet your individual needs. Just a reminder that we only have a limited amount of time today—about 20 minutes. Because of those time constraints and also the sensitive and confidential nature of personal financial information, we will not be able to address questions regarding your individual financial situations during this session. However, I do realize that you may have questions or comments regarding the material we review and in some cases may even want to have a more in-depth discussion as to how these concepts relate to your personal scenario. Because of that, we have built in a follow-up session for anyone who would like to take advantage of it—even if you just have a question or two. I will be here today from (provide availability/location) for individual sessions, or if you feel you may need more time, we can also set up a more formal one- on-one appointment either here, at my office or any location you are more comfortable with. At the end of the presentation, you’ll be given an opportunity to request this follow-up session. OK, everyone please turn to the next page in your workbook and we’ll continue.
• #6: OK, let’s take a look at our objectives for today. You can find this information on page 3. First the purpose. As I mentioned, we want to help you get on the right track to achieving your financial goals. The most important step is ensuring you understand the value of having a strong foundation to build upon. Next we have the process. Essentially we are going to introduce you to some basic financial concepts. We’ll educate you about those concepts, and then illustrate—or show you how you can apply them to your personal financial situation. Finally we have the payoff—the “what’s in it for you?” Well, the payoff for deciding to address your financial house is that you are hopefully one step closer to personal financial security. You should all give yourselves a pat on the back just for being here today. Because what it says is that you are committed to building a stronger more secure financial future—not just for yourselves, but for those you care about as well.
• #7: Overview of the Financial House concept Today’s presentation is called “Blueprint For Financial Success” because if you think about it, building a strong financial future is very similar to building a house—you start from the ground up. First you have your plans or blueprint, then you lay a solid foundation. And you go from there. For our purposes we’ve segmented our financial house into a few core sections. We will get into specifics about each section in a few moments, but in general: At the foundation we have Cash Flow/Net Worth—two of the key components in building your financial strategy, because to get where you’re going, you have to assess where you are and what you are working with. Once we get that squared away, we move into Risk Management and making sure you are covered for the uncertainties in life. Then we can talk about the future—College Funding/Retirement Planning. And once everything else is taken care of, we move into what some may call “true financial freedom,” which is when you start accumulating wealth. Today’s session is very basic so we won’t be discussing the Wealth Accumulation section in significant detail. Further, we won’t be able to delve into great depth on the other components. So what ARE we going to do here today? What we are doing here today is giving you the BIG PICTURE of how the elements of each component fit together and providing you with the basic tools to help you begin mapping out your own strategy—whether you choose to do that alone or with the help of a professional.
• #8: The first level in our financial house is made up of two components: Cash Flow and Net Worth .
• #9: To determine your Cash Flow, you must first determine your Net Income. You do this by adding up all your household income, or your gross income. This income includes your pay, spouse’s pay and any other income sources. Once you have that you subtract the taxes. This gives you your Net Income. Next, you look at all your expenses (housing, food etc.) anything you spend money on a regular basis and subtract that number from your Net Income figure. This is your cash flow. In your workbooks you’ll notice you have this same diagram, but with empty spaces so you can fill in your personal information. Let’s take a moment to give you some time to plug in some preliminary numbers. At this point estimates are OK. You may not know your exact tax bracket, so for our purposes let’s just assume 28%. You can fill this out more accurately at home. (Give participants 30-45 seconds) As a side note, one of our objectives in today’s session is to help you discover the benefits of adopting the financial habit of saving first and spending last. We’ll get into more detail on that later. But just remember, that is usually one of the main keys to achieving personal financial security.
• #10: Your Net Worth is what you look like, financially, on any given day. Your Net Worth is the difference between what you own (your assets) and what you owe (your liabilities). You’ll not be able to establish realistic financial goals until you know your current financial standing. Assets are what you own (Car, House, Permanent Insurance, Pensions, etc.) Liabilities are what you owe (Credit Cards, Current Bills, Taxes, Loans, Mortgages, Debts to individuals) Take a minute to start thinking about some of the things you own and what you owe, and plug those numbers into your workbooks. Again, for today’s purposes, estimates are fine. (Give participants 30-45 seconds) OK, let’s move on.
• #11: The next level in your financial house is “Risk Management.” Life is risky business; you need to be prepared. There are usually six elements to a risk management program. I am able to touch on everything except Auto and Home Insurance, as New York Life and its affiliates do not offer these products. However, they are important components of Risk Management that you should be aware of. While some New York Life agents are able to help you with Health and Disability Insurance, those policies are made available through our sponsored marketing agreements with other carriers—not New York Life directly. Availability is dependent on carrier authorizations and product availability in your state or locality. So now, let’s talk about the Emergency Fund. We recommend establishing the “Emergency Fund” first. You and your family should set a goal for your Emergency Savings Fund that best suits your needs. Most financial professionals recommend it be enough to cover at least three to six months worth of expenses. This is not savings for education. This is not savings for retirement. This is not savings for holidays. This is money set aside strictly for an emergency—a “rainy day” if you will. Examples of an emergency would be you or your spouse lose your job, you become disabled and can't work, unexpected large bills such as home repair, car repair, or large medical or dental bills.
• #12: Now, let’s take a look at the next important area of “Risk Management” and that is “Life Insurance.”
• #13: Most people are aware of two types of life insurance. The first is Group Insurance, which is owned by a company or employer, but provides coverage on an employee. The employer pays for some or all of the insurance and it usually doesn’t require any underwriting. Group Insurance is a type of Term Insurance, which I’ll talk more about in a moment. While it can provide basic coverage, since it is owned or controlled by the employer, the coverage can change at any time and it may terminate when you leave employment or when you retire. Another type of insurance is the type you personally own—we’ll call it Personal Insurance. Personal Insurance typically requires some form of underwriting, but because you own it, you control the coverage and any changes. There are various types of insurance that fall under this category. Two main types are Term Insurance and Permanent Life Insurance. In the case of both Term Insurance and Permanent Life Insurance, you are in control of the coverage because you personally own the insurance and as long as you continue to pay your premiums, the policies will stay in force. We don’t have time today to get into all the details of each type of personal insurance or the various types of Term and Permanent Life and what makes each more or less suitable for a particular person or lifestyle scenario—but this is something I could delve into greater detail about with you one-on-one.
• #14: Next we have Health Insurance. We aren’t going to spend too much time on this section except to note that due to the rising costs of Health Care it is important that you and your family have adequate coverage should you require hospitalization, or even routine care like medical check-ups and drug prescriptions.
• #15: It is also important to consider Disability Insurance. Consider what would happen if suddenly you or your spouse suffered a debilitating injury that prevented you from working. How would that affect your living situation? Do you have disability insurance to help replace some of your wages? If not, where will the money come from for your daily, weekly or monthly expenses?
• #16: The final component of Risk Management that we are going to touch on today is extended periods of care not covered by health insurance.
• #17: All too often, deteriorating health requires ongoing care that necessitates the assistance of others, such as in your home or in a facility. You can see the average annual charges here from a recent study. Since these are national averages, costs will be lower in some geographic areas and higher in others. For care at home, the national average hourly rate for home health aides provided by a certified home health care agency is $21 per hour. In a Medicare‐certified nursing facility, the average annual cost is $79,935 for a private room. Again, these are averages – expenses vary in different parts of the country. The high cost for extended periods of care may reduce or exhaust your savings and could even require that other assets be sold when accumulated funds are depleted. So, having a long‐term care product may mean that money will be available to help pay for care, helping to leave your savings—as well as other assets—intact. The result? Even if health care issues require significant cash outlays for extended periods of care, LTC products may help keep funds earmarked for building a strong financial future from being depleted. All data on slide comes from the following source: *2009 LTCi Cost of Care Survey (.pdf)
• #18: Now that you understand that your foundation is dependent on your net worth and cash flow—and we’ve discussed Risk Management—let’s move to the third level of your financial house, College Funding and Retirement Planning. You determine how much you can set aside in order to accumulate funds for these two areas. We’ll start with College Funding. You’re probably aware that college costs are escalating annually. There are many products out there to help you set aside money for college tuition. You should take into account any primary sources of funds. For example, savings you have thus far and any funds you anticipate in the future, such as grandparent gifting and other monetary awards your child might receive. Even if you haven’t started saving for your child’s college education, or you feel that your current rate of saving may not be sufficient, it is not too late to set aside potential other funds to help secure your child’s educational future. Potential funding options are one of the things that could be discussed at a follow-up session.
• #19: In planning for retirement, there are various options to consider. Two main categories are Qualified Plans and Personal Savings. For today’s purposes we will segment Retirement Planning Options into options controlled by the government (like qualified plans and social security) and options where you are in control (your personal savings). Qualified Plans include IRAs and 401(k) plans. These are designed to help you accumulate money on a tax deferred basis. Pretax money—this means you don’t pay taxes on the money you set aside in these plans until you withdraw the money. There are usually penalties associated with early withdrawal. Qualified plans are government-controlled. In essence, the government determines how much you can contribute. With personal savings, essentially you are the driver. In most cases, these savings are funded with after-tax money. With personal savings you can choose to be aggressive or conservative. Some options for personal retirement savings can include (but are not limited to) annuities, mutual funds and other investment vehicles.
• #20: We come to the fourth level of our financial house and that is Wealth Accumulation. As I mentioned at the outset, one of our objectives today is to help you understand the benefits of developing the financial habit of saving first and spending last. Well, everything we have done thus far in building our financial house is to help get you to this goal. When you get in charge of your financial house by taking a look at your net worth and cash flow, properly preparing for managing the risk areas, setting aside money for college and retirement, you may begin to start accumulating wealth in order to experience a higher level of financial freedom.
• #21: Let me share some interesting information with you. For every 100 people starting their careers at age 25, by the time they are 67 the following will have occurred: • 12 will have died • 13 will have incomes under $14,570 • 66 will have incomes between $14,570 and $65,000 • 9—and only 9—will be somewhat financially independent with incomes in excess of $65,000. Where would you like to be?
• #22: Why did this happen? These people didn’t plan to fail, they just failed to plan.
• #23: There are only two types of people in the world financially—those who spend first and save last and those who save first and spend last. Up to this point in time which have you been? Did you spend first or save first?
• #24: The second question you need to answer is—which do you desire to be? The desired, of course, is to save first and spend last.
• #25: Take a mental picture of where you are in regard to savings. This is ideally three to six months of gross income in savings. In your workbooks, you have this same chart. Check the box for the amount you currently have set aside. If you are not sure or have less than $1,000 set aside, select the last box. This is for your eyes only, so no peeking at your neighbors chart. Now, regardless of where you are on this chart, there’s good news—it’s not too late to put a strategy in place for where you want to be.
• #26: OK, let’s recap. We have taken you through all the levels of your “Financial House.” • Level One is the foundation, getting a realistic picture of where you are by examining your CASH FLOW and NET WORTH. • Next, we moved to Level Two: Preparation to manage risks by emergency savings, life, health and disability insurance and long-term care. • Then, Level Three: Contributions to college funding and retirement plans to help ensure a secure future for yourself and you loved ones. • Finally, Level Four, where we can start to accumulate wealth. Now, I have only had about 20 minutes with you here today, so we really have only scratched the surface of many of these concepts. But I hope I have been able to provide you with a better understanding of how these elements come together and at a minimum at least got you thinking about the direction in which you want your financial future to go.
• #27: Before we officially conclude, I want to say, “Thank you for your time today and thank you to (employer/organization) for allowing me to be here. It’s been my pleasure to share these concepts with you.” The workbook is yours to keep. I’d like to call your attention to several helpful items you may want to reference: ▪ Form for capturing your Monthly Income, Savings and Expenses ▪ Debt reduction suggestions ▪ Suggested legal documents everyone should have ▪ Evaluation Form At this time, I’d like to ask you to complete the information on the Evaluation Form. You’ll notice there is an area where you can indicate whether or not you would like us to follow up with you. Just to let you know, it is typically our policy to follow up with all individuals who attend a session like this to see if there are any questions or particular information you need. If you do want us to follow-up with you, please be sure to check off whether next week or next month is best for you and also indicate the best way to get in touch with you so that we make the most effective use of your time.
• #28: As I mentioned earlier, for your convenience I will be here today from (time and location) for anyone who has specific questions. If you are interested in scheduling a more formal complimentary follow-up consultation, please be sure and indicate that on the form. Again, thank you for your time.