info for advisors & planners

thoughts on the CLU: underwriting the financial risks attached to a client’s “life"

Advocis — Fri, 04 Sep 2009 13:20:56 GMT

I had the occasion to revisit a December ’08 posting of Greg Pollock’s in the message board and came across a question about the CLU designation’s importance, relevance and name brand. A challenge was presented about the name and its apparent reference to insurance to the exclusion of other contemporary values and expertise that a professional financial services designation should stand for. The perception is that it’s one-dimensional, outdated, antiquated and irrelevant.

Some would argue that the term Chartered Life Underwriter is misleading. The term isn’t misleading. It is in fact quite accurate. The challenge is that the words within it are also ambiguous. And those whose agenda is to downplay the CLU for their own interests (i.e. competing designations) are intentionally exploiting this ambiguity to the uninformed. The uninformed, because they don’t know any better, are buying into it. We don’t need to change the name; we just need to explain the words beyond their current understanding.

Here’s my slant on it for consideration. What do the letters in the CLU designation stand for?

Chartered Life Underwriter is NOT the same as Chartered “Life Insurance” Underwriter. There is a perception that because Life Underwriter is part of the term, it automatically refers to the field level underwriting process behind life insurance. This perception is pervasive in the market and understandably so. Because of this ambiguity, inappropriate assumptions are made to the meaning of the words. Clear up the inappropriate assumptions by changing the slant and you change its perception. Change its perception and you change its value. There’s a reason why it’s called “Life” Underwriter and not “Life Insurance” Underwriter.

A CLU professional underwrites the financial risks attached to a person’s “life”, not the financial risks and obligations attached to that person’s life insurance. This includes the risks attached to an individual’s savings habits, investment strategies, pension programs, retirement income needs, human behaviour influenced through the emotions of greed and fear, investment risk profile, approaches to income protection, long-term care planning, challenges that come with a critical illness, estate wants & needs, lifestyle security, business dependencies, family obligations, wealth transfer, taxpayer responsibility, hopes & dreams.

A CLU professional’s value does not revolve around the sophisticated understanding of insurance products. A well constructed insurance program obviously plays an important role in a person’s security but it is not the whole meal deal. The professional CLU has the competency to handle the whole meal deal – which is a consumer’s entire financial “life” – hence the term Chartered Life Underwriter.

—Rick Johnson, CFP, CLU, CH.F.C., CSA, CFSB

important notice for current & future CFP students

Advocis — Sun, 30 Aug 2009 18:48:46 GMT

Not too long ago, the Financial Planners Standards Council (FPSC) has officially announced changes to its Certified Financial Planner® certification program, which take effect July 1, 2010.

Anyone planning to write the CFP certification exam in November 2009 or June 2010 should consider this preparation course.should consider prepping with Course 5 of the CFP® Education Program from Advocis® and CCH

If you fit one of the following categories, Course 5 can help you get the knowledge and confidence to succeed:

· you hold a CLU® designation

· you hold an approved prior credential

· you’re currently an in-stream CFP student

· you’re planning to take another attempt at the CFP certification exam

Click here to learn more.

originally posted August 4, 2009

some good news on the rhu

Advocis — Fri, 28 Aug 2009 18:07:27 GMT

spring is coming!

and that means it's time for you to think about signing up for the Registered Health Underwriter designation. keep your eyes on your e-mail inbox, or go to www.livingbenefitsrhu.ca to learn more

originally posted March 27, 2009

Update on regulation: the OSC, IIROC & the MFDA

Advocis — Fri, 27 Feb 2009 21:50:54 GMT

Advocis standing firm on behalf of financial advisors and planners

The Ontario Securities Commission (OSC) has been garnering a lot of attention in the financial press lately, much of which is not particularly complimentary. And the recent request by the Ontario Legislative Assembly's Standing Committee on Government Agencies for submissions on how to improve services means that the level of buzz is climbing fast.

You can be sure that many submissions focus on introducing better policing power to deal with securities crime, including stronger methods of both detecting and deterring fraud. Indeed, the concept of expanded investigative and enforcement powers has been strongly advocated for at the national level, with much op-ed commentary calling for the introduction of a properly funded and independent Canadian securities crime regime, to tackle both the occasional rogue individual as well as systemic, larger-scale investment fraud.

What's behind this drive for a stricter regulatory regime? Many high-profile observers and analysts have concluded that self-regulatory organizations (SROs) like the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) cannot adequately monitor for illegal activities, much less provide either the OSC or the police with the information they need in order to act effectively.

Another body of critical comment asserts that the OSC and SROs like IIROC and the MFDA—both of which fall under the aegis of the OSC—are guilty of unilaterally introducing rules and regulations which wrongly penalize your typical financial advisor or planner.

That's why, in its submission to the Standing Committee on Government Agencies, Advocis recommended that the OSC and SROs adopt a uniform and consistent procedure before introducing new regulation, to better understand and lessen the impact of their actions on compliant individual advisors and planners:

We recommend the government impose requirements on the OSC and the SROs to ensure that before implementing any new major regulatory requirement that it develop a clearly articulated statement of the problem that the regulation is meant to address... Failure to identify problems that clearly require intervention, and failure to assess the impact on market participants and consumers in relation to the likely benefits, has led to ill-conceived regulatory initiatives.

In regard to IIROC's implementation of the financial planning rule, Advocis submitted that:

The proposed IIROC rule is an example of SRO regulation that is skewed in favour of large dealers with an employer–employee business model and is severely prejudicial to smaller, professional financial planners. This is also an example of an inadequate consultation process. The proposed rule was issued for comment in the summer of 2008 with a very short response turnaround timeline and without prior consultation with financial advisors.

At a time when consumers of financial services so obviously require the widest possible range of choice in selecting qualified financial advice, the OSC, the MFDA and IIROC are moving ahead with tighter and tighter rules-based regulatory initiatives. Their commitment to prescriptive, rules-based regulation tends to favour larger organizations which have the deep pockets needed to comply with such regulations. However, it is the consumer-responsive and fully compliant but smaller advisory practices which will increasingly pay the price for this style of regulation.

The paradox is that such a regulatory approach ignores or even conflicts with the basic principles which underwrite the mandates of organizations like the MFDA and the OSC. In specific, some of these basic principles which are now in harm's way include foundational concepts such as ease and security of consumer access to necessary services and the ability of the individual to freely choose from the widest range of competent service providers. What's more, in their broadest sense, these principles inform not just the raison d'êtreof our financial regulatory regimes, but also underpin the very basis of our system of political economy. At time when the ability of these organizations to enforce rules and ensure compliance are being called into question by experts near and far, it seems both impolitic and even short-sighted to introduce yet more rules and regulations until enough of the stakeholders arrive at a consensus of what's broken, what needs to be fixed—and, most important of all—what we are certain that we can and should fix.

Lipson, Part II: Singleton shuffle still on the dance card

Advocis — Fri, 30 Jan 2009 17:25:54 GMT

The Supreme Court of Canada dismisses the appeal of Earl and Jordan B. Lipson and upholds Tax Court's earlier decision that they breached the general anti-avoidance rule or “GAAR.”

Converting equity into deductible debt: what the Court said
One of the more comforting conclusions offered by Lipson is that the Supreme Court once again confirmed the general principle that interest on investment loans is tax-deductible.

Also of particular importance to advisors is the fact that the Court explicitly stated that the Lipson’s ploy is to be distinguished from the transaction at issue in the 2001 Supreme Court Case of Singleton, where the interest was ultimately found to be properly tax deductible.

You’ll recall that in Singleton, a partner in a law firm borrowed money that he had built up in his law firm capital account and used it to pay off his mortgage. He then borrowed that money back to pay off his capital-account loan at the firm and sought to deduct the loan interest. The Canada Revenue Agency challenged the transaction, but lost at the Supreme Court.

Moreover, in Singleton neither GAAR nor spousal attribution rules were issues before the Court, further reinforcing the conclusion that the Lipson decision should not affect financial planning which strictly derives from the fact pattern in Singleton.

But what of Lipson’s impact on the larger issue of debt-swap strategies generated from the Singleton decision—which are commonly referred to as the "Singleton Shuffle"? These are strategies based on the proposition that one can arrange one’s financial affairs in a tax-efficient manner and make one’s interest on investment loans tax-deductible.

The law, as all advisors know, is that interest on a loan for commercial purposes is deductible. This means that investors may borrow money to acquire income-producing assets, such as shares or rental property, and then deduct that against income. However, when loan money is used for a personal purpose, like purchasing a house in order to live in it, no deduction is permitted.

As you know, this is where Singleton-style planning comes in, with its plethora of strategies designed to capitalize on interest deductibility. These strategies are used many Canadians who own non-registered assets: typically an advisor suggests they sell these assets and use the resulting proceeds to pay off their mortgage. The investor then gets a loan secured by his or her new home equity, and uses the loan for the purpose of earning investment income from a non-registered account. The result that interest on the loan is fully tax-deductible. This strategy of “shuffling” assets converts non-deductible mortgage interest into a deductible investment loan.

It seems safe to say, according to the text of the Lipson ruling, that Singleton shuffles are still permissible and will not invoke the application of the GAAR. In specific, the Court’s opinion was that the Canadian Revenue Agency:

has not established that in view of their purpose (the interest deductibility) provisions have been misused and abused. Mrs. Lipson financed the purchase of income-producing property with debt, whereas Mr. Lipson financed the purchase of the residence with equity. To this point, the transactions were unimpeachable. They became problematic when the parties took further steps in their series of transactions.

The Court found that both borrowing for the shares and the purchase of the house were "unimpeachable." The Court further found that the Income Tax Act’s interest provisions were not "misused and abused." Indeed, it was only the "spousal twist" and the reliance on the attribution rules that made the Court find the transaction to be abusive under the GAAR.

In other words: Singleton-style debt-swap refinancing still appears to be perfectly legal, minus the Lipson twist.

Further impact on advisors, planners and clients
Obviously Lipson is a key decision for tax planners, since it further refines the area of what constitutes acceptable tax planning that began in Singleton.

Whenever the Supreme Court rules on a matter of direct relevance to financial services professionals, a certain amount of uncertainty is bound to result. Indeed, the Court noted that:

the GAAR may introduce a degree of uncertainty into tax planning, but such uncertainty is inherent in all situations in which the law must be applied to unique facts … [but] the GAAR is neither a penal provision nor a hammer to pound taxpayers into submission. It is designed ... to restrain abusive tax avoidance and to make sure that the fairness of the tax system is preserved.

What is certain is that the Court’s decision in Lipson must be carefully considered in all financial planning strategies involving interest deductibility, and especially when spousal loans are proposed.

Looking ahead, the fact that the Supreme Court split 4-3 in a ruling that the Lipsons’ tax-planning strategy was sufficiently abusive to be captured by the GAAR will contribute to a further lack of certainty for advisors and planners involved in sophisticated debt swap schemes and family members.

The bottom line? For advisors and their clients, the decision is both good and bad, The positive side is that your clients can still borrow money against the equity in their homes and use the proceeds to invest in, say, the market, and reap the benefit of tax deductible interest. The negative side is that the case may mean it is now easier for the Canada Revenue Agency to invoke the GAAR, with further uncertainty in providing advice and planning the end result.

The full text of the Supreme Court’s decision in Lipson v. Canada is available here.

Lipson, Part I: Supreme Court says 'no way' to Lipsons

Advocis — Fri, 30 Jan 2009 17:21:19 GMT

Unlike the Singleton case, here the Court looks at the general anti-avoidance rule

The Supreme Court of Canada dismisses the appeal of Earl and Jordan B. Lipson and upholds Tax Court's earlier decision that they breached the general anti-avoidance rule or “GAAR.”

Most advisors and planners now know that on January 8, 2009, the Supreme Court of Canada released its decision on the Lipson appeal.

Here’s the decision, in brief:

Earl Lipson and his wife Jordana Lipson entered into an agreement of purchase and sale for their family residence. Jordana borrowed $562,500 from a bank to finance the purchase of shares in a family corporation. She paid the borrowed money directly to her husband who then transferred the shares to her. Lipson and his wife then obtained a bank mortgage for $562,500. Later that same day, they used the mortgage loan funds to repay the entirety of the share loan. For a three year period—1994, 1995 and 1996 (justice moves slowly!)—Lispon deducted the interest on the mortgage loan and reported the taxable dividends on the shares as income whenever applicable. However, the Canadian Revenue Agency disallowed the deductions for those taxation years and reassessed the Lipson accordingly. The Tax Court of Canada dismissed the Lipsons' appeals (Lipson’s brother had also performed a similar set of transactions), ruling that the transactions constituted a misuse of ss. 20(1)(c), 20(3), 73(1) and 74.1 of the Income Tax Act and the taxpayers’ appeals were dismissed. The Federal Court of Appeal upheld that decision and at long last the case reached the Supreme Court of Canada.

In a 4-3 split, the Court dismissed the Lipson's appeal and confirmed the application of the general anti-avoidance rule or the GAAR to the transaction at issue. The Court noted that that there was no dispute regarding the general tax deductibility of interest expenses under s. 20(1)(c) and s. 20(3) of the Income Tax Act.

Rather, it was the spousal issue which caused the Court to rule that GAAR was applicable:

It has long been a principle of tax law that taxpayers may order their affairs so as to minimize the amount of tax payable. However, this principle has never been absolute, and Parliament has enacted the ... to limit the scope of allowable avoidance transactions while maintaining certainty for taxpayers...

The Court focused on was how the Lipsons handled the transfer of shares.

After determining that the GAAR did apply, the majority of the court found that the use of the attribution provisions of the Income Tax Act was abusive. In particular, the use of the attribution provisions let Lipson reduce his income tax from what it would have been had he and his wife been dealing at arms-length—that is, the rules resulted in a tax benefit to which Lipson would not have otherwise been entitled.

The Court reasoned that the series of transactions did not become problematic until Lipson and his wife turned to the spousal attribution rules, which resulted in Lipson applying his wife's interest deduction to his own income. That is, the attribution rule was used by Lipson to permit him to in effective deduct his wife's interest expenses—something he could not have done if he and his wife were not married. And therein lay the problem, for the Court found that the purpose of the attribution rule is to prevent spouses from reducing tax by attempting to use to their advantage their non-arm's length relationship when transferring property between them.

Before the shares were transferred from Lipson to his wife, dividends on the shares were taxable and Lipson could not deduct any interest expense. After the sale of the shares to Mrs. Lipson, income on the dividends was still taxable back to Lipson—but the employment of the attribution rules to the Lipson's advantage meant that the interest expense could be claimed by Lipson—a situation that frustrated the purpose of the attribution rules and therefore qualified as “abusive tax avoidance."

The GAAR's application was the focus of the appeals and was the proper basis for the reassessments of the transactions. These transactions are caught by the GAAR. Courts should avoid extending the GAAR beyond its statutory purpose. But, bearing this purpose in mind, where the language of and principles flowing from the GAAR apply to a transaction, the court should not refuse to apply it on the ground that a more specific provision—one that both the Minister and the taxpayers considered to be inapplicable throughout the proceedings—might also apply to the transaction.

Finally, in determining the tax consequences of the GAAR's application under s. 245(5), courts must be satisfied that an avoidance transaction has been found under s. 245(4), that s. 245(5) provides for the tax consequences and that they deny the tax benefits that would flow from the abusive transactions. Courts must then determine whether these tax consequences are reasonable in the circumstances. In the present case, the disallowance of the interest expense in computing the income or loss attributed to the taxpayer and allocation of that interest deduction back to his wife is a reasonable outcome.

In the next posting we’ll look at the specifics of the Court’s decision and what it means for advisors and planners moving forward.

How do you want the future of the CLU to look?

Advocis — Fri, 23 Jan 2009 20:49:09 GMT

A Mack truck is closing in on you quickly and you can now count the number of bugs on the grill.

Here’s the question you have a split-second to ask yourself: Is it too soon to get out of the way, or should I stand fast?

Now let’s freeze that Mack truck for a moment.

Stephen Covey, author of The Seven Habits of Highly Effective People, offers the following insight: “Don’t engage the research if you are not prepared to go where it leads.”

The CLU Institute has a Mack truck closing in on the CLU designation. The marketing research we’ve conducted within Advocis’ demographic data tells us that—as of June 2008—there were 761 members who are eligible to register for CLU program courses.

Now some will argue “That is not possible?” (They may be some of the same folks who may argue that the earth is flat).

As we all know, Advocis membership is a necessary condition for obtaining and maintaining the CLU designation.

When Advocis membership was a condition of employment in the agency system, there was no membership problem. But Advocis has not had a similar source of membership growth for the last decade. Within Advocis the number of CLU members and CLU designees holding the CLU has remained strong, constant and consistent.

The average age of the CLU designate is 61. This means no new market opportunities have emerged, which leaves the current market niche disabled, retired, successioned or dying.

What does this mean? Well, there is a possibility of 10 or so years of life left in the CLU brand. But there also exists the possibility that the brand as we know could eventually be vapourized.

What if the Institute could market the CLU designation to non-members of Advocis?

Doing so would require changing the pricing, licensing and membership rules—to name just a few of the speed bumps.

Right now in this country there are some 14,500 CFP designates who are not members of Advocis. This represents a lucrative niche market that would immediately be eligible for the CLU Designation.

That’s why, throughout 2009, the CLU Institute will conduct research which will include analysis, price modeling, legal requirements and further investigate the members/non-member issue.

This is your blog. The CLU Institute would love to hear your thoughts, pros and cons.

Ask yourself this: How do you want the future of the CLU to unfold? What should it stand for?

That Mack truck is bearing down on us.

I welcome your feedback.

Richard McKenster, CFP, CLU, CH.F.C., RHU

Advocis, advisors & planners, and Dwight Duncan

Advocis — Tue, 20 Jan 2009 19:51:17 GMT

Regulation and the upcoming provincial budget

The current issue of Investment Executive has an article by Megan Harman which outlines Advocis’ position on the need to reduce the regulatory burden faced by advisors and planners in Ontario.

You’re probably aware that Advocis is urging Ontario Finance Minister Dwight Duncan to use this year’s provincial budget as a platform to deal with the regulatory hurdles advisors and planners face.

Advocis’ pre-budget submission to Duncan made the case for the Ministry of Finance to increase its oversight of provincial regulators, especially in regard to the regulation financial advisors and planners routinely experience, as well as the need to protect Ontario consumers with regulation that does not adversely affect their ability to access competent and efficacious financial planning and advice.

Greg Pollock, Advocis president and CEO, is quoted at length in the article:

We are not asking for a handout or a subsidy… Our members simply want to do business in a regulatory environment that not only protects the public, but also ensures that advisors and planners are not hampered by unnecessary and inefficient regulation…

In addition to smart regulation—not one-size-fits-all regulation, we need to see more and better proof of the need for additional regulation. Our members see the regulation but seldom see any indication of an understanding of the size of the problem the regulation is intended to address. A cost-benefit analysis from the regulator about the benefits of protecting the consumer against the increased burden of compliance costs to the financial advisor or planner would go a long way.

Smarter regulation that’s backed by a convincing cost-benefit analysis in the consumer interest: we can think of no better time that the right now for this concept to gain purchase in the Ministry of Finance’s offices. For the moment, we will await Duncan’s budget and see what he does.

Click here for to read the entire article online at Investment Executive.

Do Not Call List—Part III

Advocis — Fri, 31 Oct 2008 20:41:39 GMT

Some final thoughts on telemarketing and preliminary ones on Web marketing for financial pros

When it comes to do-not-call lists and consumer registries, the experience in jurisdictions outside of Canada is that businesses will adapt fairly quickly and employ other media to reach consumers who don’t want to receive telemarketing calls. Further, most businesses do continue to use telemarketing, but on a smaller scale.

Anecdotal evidence indicates that telemarketing actually becomes more effective for some companies as they’re able to concentrate their efforts on target groups who are more receptive to telemarketing.

The same result is expected to obtain in Canada. In an interview with the CBC, Wally Hill, Vice President, Public Affairs and Communications for the Canadian Marketing Association, observed that the new Do Not Call List (DNCL) rules might lead to an initial "downturn" in telemarketing while business adjusts to the new legislation. However, Hill believes that the DNCL will eventually make for more productive marketing efforts, since "They will not be making dead-end calls to people who don't want to receive them. There will be more focus on existing customers." So, as we discussed in Part II of this series, those advisors and planners with the wherewithal will still find telemarketing to be a profitable endeavour.

Looking ahead: Social network marketing and younger audiences

Giving the amount of noise and clutter one’s marketing efforts have to cut through, it’s no surprise that that tech-savvy marketers are using social networks to complement or, in some cases, even drive their marketing campaigns—especially when targeting younger generations.

In one case south of the border, a now famous—or infamous—Atlanta mortgage broker named Kal Wayman posted a commercial video for his services on YouTube. Wayman's company, F1rst Discount Mortgage, is licensed in several states, including California. (I won’t bother linking to Kayman’s videos, since he uses bikini-clad women; his tag line is “Putting the Vice in mortgages advice.”) Every video Wayman posted, whether on YouTube, MySpace or other venues, quickly generated thousands of hits and dozens of postings, many disapproving, but many more laudatory, especially from those explicitly identifying themselves as under 30 years of age.

The bottom line? The majority of comments on Wayman’s videos reflect a consensus that ironic viral marketing with an edge works.

Sites like MySpace.com let users build free profile pages—which typically contain personal information and photographs. Users then ask another user to become a "friend" and link to their page. After they’re linked, the users or “friends” can post comments on each other's pages. For example, in MySpace the Wendy's mascot is listed as having more than 81,000 "friends"—MySpace users who have linked to this cartoon character’s page and posted comments. Similarly, anyone who has seen Volkswagen’s recent TV commercials featuring the engineer named “Helga” may not be too surprised to learn that she too now has her own MySpace profile.

What can a financial advisor or planner do?

Obviously large corporations have the money to budget for paid profiles of fictitious characters on social-networking sites. But professionals can post their own profiles on these platforms, as long as they don’t become so overtly commercial that administrators seek to remove them.

So what a practitioner needs to do is create a profile that has a sense of realness and authenticity, and doesn’t contribute to the cascade of commercialism that’s beginning to appear on social networking sites. The content should try to personalize the advisor and his or her team, outline services provided and specialized practice areas of expertise, and, above all, be interesting!

And while the goal of marketing profiles is to draw in other users and convert them to “friends" and to generate buzz, one must accept the risk that not all of the buzz will be positive. Paradoxically, negative comments and feedback tend to make social media profiles appear even more genuine.

A final note: the Canadian Marketing Associations’s Code of Ethics states that marketers should not disguise the purposes and agents of their communications. So always be upfront about who you are and what you do.

Down the road…

Social utility sites are still developing new applications and functionality at a rapid rate. To reach younger markets advisors should become familiar with what’s out there—and anyone with children likely has an in-house expert at hand. As for regulation, just remember: where there’s a will there’s a way. One hopes that we are still a few years away from calls for a government-run "Do Not Text or SMS" registry…

The Do Not Call List—Part II

Advocis — Tue, 21 Oct 2008 20:40:22 GMT

In light of the DNCL, other ways to market your practice

By this time we all know about the CRTC’s new Unsolicited Telecommunications Rules and the National Do Not Call List, and by now you should have consulted some of Advocis’ very useful explanatory pieces. Please be sure to read and become thoroughly familiar with Advocis’ comprehensive centrepiece on the DNCL, entitled Special Report, The Do Not Call List, September 2008.

As well, be sure to have visited our free Continuing Education Session: The National Do Not Call List—What You Need to Know, which reviews the impact of the new DNCL rules on the advisor’s practice and the pursuit of new business opportunities in light of the new rules. It’s worth 1 Ethics (Technical) CE credit upon successful completion of a quiz.

As you likely know, two years ago the issue of launching Do Not Call List (DNCL) rules began to emerge as a major issue before the Canadian Radio-Television and Telecommunications Commission (CRTC).

Since that time, Advocis has continually acted in the best interests of Canada’s financial advisors and planners, as well as the public. Advocis’ efforts have helped ensure that the voice of our membership is heard and our position advanced in an effective manner.

With that said, I’d like to offer some thoughts about what one might consider doing if one’s practice previously included telemarketing as part of its marketing mix.

But first a word of caution: before contacting anyone on the DNCL, be sure to think about it from the point of view of the CRTC—that is, ask yourself what your real motivation on contacting this person is: if it's really a sales call, then that's a violation!

try offering helpful information by way of mailing lead cards

If you have the budget for it, you may wish to mail out what marketers call a “lead card.” For example, you send prospects a flyer on, say the upcoming Tax Free Savings Accounts (“TFSAs”), and ask that the recipients return to you the enclosed postage-paid reply card for free information on TFSAs. Be sure to explain clearly in the reply card that by returning the card the recipient understands that he or she is giving you express consent to call them about the product or service at issue. Then, when your prospect sends back that card, he or she has given you the permission you need to call them, even if the prospect is on the Do Not Call list.

Obviously launching your own direct mail campaign could be time-intensive and costly, so it’s not advisable unless you’re targeting a smaller, higher-end group about a product or service that strikes you as highly suitable for your audience (or if you happen to have very deep pockets!). That’s why you might want to try our second alternative to the DNCL:

e-mails, not phone calls

Consumer surveys have shown repeatedly that a majority prefer e-mail to telemarketing. And when you have prospects on the DNCL, you can be sure they’re not fans of telemarketing. Plus online marketing offers you benefits telephone calls don’t:

a. e-mail marketing is precise: a properly written e-mail can eliminate any chance of “human error” on your part, so you’ll never get caught off guard by an objection or question and you have total control that your message is correct and reaches the right target market.

b. e-mail messaging is easy to segment into groups: i.e., if you want to propose TFSAs to your clientele, you can send out e-mails to young people promoting the use of a TFSA from the position that they can put money into it, and save their RRSP room for later on, when they’re earning more. And then you can send a different e-mail to your retired clients indicating that TFSAs are a way to protect extra income and ensure their benefits are not clawed back. The result is that each group receives a tailored message that’s stripped won so it speaks to them, without wasting their time on unnecessary words.

c. e-mail enables you to “stay in touch” with your clients and prospects. If a prospect “opts-in” to receive e-mail from you, you can legally send periodic e-mails on new services and products — or anything else you might wish to tell them. For example, to keep your practice “top-of-mind” among your higher-end prospects and clients, you could try an online newsletter.

d. e-mail doesn’t hurt your bottom line: Have you ever asked yourself how much it costs you to cold call? Have you ever calculated your cost per close? E-mail lets you decrease your costs to close a sale and, if done properly, can increase your response rates and overall sales. In short, your ROI with e-mail can be much more lucrative than what you’ve gotten in the past from cold calling.

e. Online marketing can be visually appealing, telemarketing can’t: If you’re willing to put the time into it, or hire someone to do the technical work for you, you can send out e-mails with full color graphics, informative charts. And links to product sites, such as the company whose service or product you’re proposing to your prospects.

f. And finally, you can always ask your e-mail recipients to send back an e-mail indicating that they’d like to talk to you over the phone in more detail about the product or service you have in mind for them. Prospects can give you a time to call them – or they can call you – on their own terms and at their own timelines.

Next time: some thoughts on the future of financial advisors and planners marketing efforts.