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Being a Successful Insurance Agent (accounting firm)

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By Dillon Norris

 The successful insurance agent always stays informed on how he or she can improve themselves both personally and professionally. In these days of fast paced lifestyles and the quickly disappearing face-to-face communication styles of doing business, the professional has to adapt. First, your personal good health is an important component to the success of your business. Second, I’ll present some proven business and customer satisfaction strategies that will guarantee you a thriving business and continued success for the future.

Taking care of your personal health is very often overlooked. The daily life of the professional is fraught with burnout and responsibilities. Many of us juggle on a daily basis the demands of family, parenting and other essential duties. Even the regular duties of getting the dog to the vet, grocery shopping and paying the bills, to name a few, can become dreaded tasks. Eventually, we’re going to get burned out and possibly ill. There are strategies to keeping a healthy mind and body.

Start having a social life outside of work. Just like your daily “to-do” lists at work, start planning a social “to-do” list. In other words, don’t forget to have some fun. Listen to your favorite music for a few minutes each day. Take in a concert or musical affair. Go out to dinner occasionally.

Exercise. Start going to the gym or fitness club. A healthy physical body will give the hard working professional the energy needed to be both highly productive and active socially. Go for a short walk in your neighborhood. Get some fresh air and breath.

Manage your time wisely. Poor time management can be costly. Missing appointments or being late NEVER looks good. The client’s time is just as valuable as yours.

Aside from these tips to stay healthy physically, don’t forget your mental health. Be sure to take regular breaks away from your desk, the phone, the laptop or anything else keeping you chained to your desk.

So, you might ask, what does this mean for me? Many studies have shown that productivity levels significantly decrease for the professional that doesn’t take time for fun, a social life, rest and exercise. If you become both physically and mentally weary, your customers are going to notice.

Many professionals are keenly aware of the saying “presentation is everything”. When you present yourself to a potential client, be it on the phone or in person, it is important to be at your best. I don’t know about you but I would definitely re-think associating with any professional that was unkempt in appearance or tired and sluggish in communications with me. It is very difficult to convince your potential clients to accept your advice to stay healthy when you appear physically ill yourself. Be a role model of what you’re trying to sell. Now that you have some vital information to help you stay personally healthy, let’s examine some strategies to keep your business thriving and profitable.

Continuing Education

Many professional associations offer continuing education workshops, seminars or classes. If you are not a member of a group or organization in your field, then look into classes at an institution of higher learning. It is imperative that you keep up to date on the latest news or information regarding the type of insurance you provide. Don’t forget-classes in human psychology can go a long way in providing you an advantage to understanding your customers better.

Network! Network! Network! Experienced agents know that aligning themselves with a company that will appreciate their skills is a must. Building a customer base with a reliable and strong company that can bring the clients to you is valuable. Your reputation as an experienced, reliant and self-assured insurance agent will guarantee a successful business and many good leads for clients.

The Psychology Of It All

Building a relationship with your customer(s) is integral to your success as an insurance professional. People want quality service. They rely on you to guide them into making the best decisions around their insurance coverage needs. If they don’t trust that you know what you are doing (remember the continuing education and how you present yourself?), they will not buy anything you have to offer. How can we gain their trust?

First and foremost, if you have been informed of a potential client looking for insurance, contact them immediately. As mentioned earlier, people want quality service. A quickly returned phone call sets a good first impression. This action alone tells your customer you care about their needs and are interested in their inquiry.

Next, follow through with what you promised in a timely manner. For example, if you stated you would get back to them in 48 hours on a matter, then return your call within that time.

Be sure you are giving them the appropriate and best advice you can. Obviously, I can’t stress the “educational” component enough in this article. None of us knows the answer to everything and it is acceptable to say I don’t know to a client’s question. Let them know that you will find the answer.

A healthy, informed and experienced insurance agent that is genuinely attentive to their client’s best interests and communicates that effectively will have a successful business.

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The Real Effects of Inflation

By Dillon Norris

 In a series of speeches designed to defend his record, Alan Greenspan, until recently an icon of both the new economy and stock exchange effervescence, reiterated the orthodoxy of central banking everywhere. His job, he repeated disingenuously, was confined to taming prices and ensuring monetary stability. He could not and, indeed, would not second guess the market. He consistently sidestepped the thorny issues of just how destabilizing to the economy the bursting of asset bubbles is and how his policies may have contributed to the froth.

Greenspan and his ilk seem to be fighting yesteryear’s war against a long-slain monster. The obsession with price stability led to policy excesses and disinflation gave way to deflation - arguably an economic ill far more pernicious than inflation. Deflation coupled with negative savings and monstrous debt burdens can lead to prolonged periods of zero or negative growth. Moreover, in the zealous crusade waged globally against fiscal and monetary expansion - the merits and benefits of inflation have often been overlooked.

As economists are wont to point out time and again, inflation is not the inevitable outcome of growth. It merely reflects the output gap between actual and potential GDP. As long as the gap is negative - i.e., whilst the economy is drowning in spare capacity - inflation lies dormant. The gap widens if growth is anemic and below the economy’s potential. Thus, growth can actually be accompanied by deflation.

Indeed, it is arguable whether inflation was subdued - in America as elsewhere - by the farsighted policies of central bankers. A better explanation might be overcapacity - both domestic and global - wrought by decades of inflation which distorted investment decisions. Excess capacity coupled with increasing competition, globalization, privatization, and deregulation - led to ferocious price wars and to consistently declining prices.

Quoted by “The Economist”, Dresdner Kleinwort Wasserstein noted that America’s industry is already in the throes of deflation. The implicit price deflator of the non-financial business sector has been -0.6 percent in the year to the end of the second quarter of 2002. Germany faces the same predicament. As oil prices surge, their inflationary shock will give way to a deflationary and recessionary aftershock.

Depending on one’s point of view, this is a self-reinforcing virtuous - or vicious cycle. Consumers learn to expect lower prices - i.e., inflationary expectations fall and, with them, inflation itself. The intervention of central banks only hastened the process and now it threatens to render benign structural disinflation - malignantly deflationary.

Should the USA reflate its way out of either an impending double dip recession or deflationary anodyne growth?

It is universally accepted that inflation leads to the misallocation of economic resources by distorting the price signal. Confronted with a general rise in prices, people get confused. They are not sure whether to attribute the surging prices to a real spurt in demand, to speculation, inflation, or what. They often make the wrong decisions.

They postpone investments - or over-invest and embark on preemptive buying sprees. As Erica Groshen and Mark Schweitzer have demonstrated in an NBER working paper titled “Identifying inflation’s grease and sand effects in the labour market”, employers - unable to predict tomorrow’s wages - hire less.

Still, the late preeminent economist James Tobin went as far as calling inflation “the grease on the wheels of the economy”. What rate of inflation is desirable? The answer is: it depends on whom you ask. The European Central Bank maintains an annual target of 2 percent. Other central banks - the Bank of England, for instance - proffer an “inflation band” of between 1.5 and 2.5 percent. The Fed has been known to tolerate inflation rates of 3-4 percent.

These disparities among essentially similar economies reflect pervasive disagreements over what is being quantified by the rate of inflation and when and how it should be managed.

The sin committed by most central banks is their lack of symmetry. They signal visceral aversion to inflation - but ignore the risk of deflation altogether. As inflation subsides, disinflation seamlessly fades into deflation. People - accustomed to the deflationary bias of central banks - expect prices to continue to fall. They defer consumption. This leads to inextricable and all-pervasive recessions.

Inflation rates - as measured by price indices - fail to capture important economic realities. As the Boskin commission revealed in 1996, some products are transformed by innovative technology even as their prices decline or remain stable. Such upheavals are not encapsulated by the rigid categories of the questionnaires used by bureaus of statistics the world over to compile price data. Cellular phones, for instance, were not part of the consumption basket underlying the CPI in America as late as 1998. The consumer price index in the USA may be overstated by one percentage point year in and year out, was the startling conclusion in the commission’s report.

Current inflation measures neglect to take into account whole classes of prices - for instance, tradable securities. Wages - the price of labor - are left out. The price of money - interest rates - is excluded. Even if these were to be included, the way inflation is defined and measured today, they would have been grossly misrepresented.

Consider a deflationary environment in which stagnant wages and zero interest rates can still have a - negative or positive - inflationary effect. In real terms, in deflation, both wages and interest rates increase relentlessly even if they stay put. Yet it is hard to incorporate this “downward stickiness” in present-day inflation measures.

The methodology of computing inflation obscures many of the “quantum effects” in the borderline between inflation and deflation. Thus, as pointed out by George Akerloff, William Dickens, and George Perry in “The Macroeconomics of Low Inflation” (Brookings Papers on Economic Activity, 1996), inflation allows employers to cut real wages.

Workers may agree to a 2 percent pay rise in an economy with 3 percent inflation. They are unlikely to accept a pay cut even when inflation is zero or less. This is called the “money illusion”. Admittedly, it is less pronounced when compensation is linked to performance. Thus, according to “The Economist”, Japanese wages - with a backdrop of rampant deflation - shrank 5.6 percent in the year to July as company bonuses were brutally slashed.

Economists in a November 2000 conference organized by the ECB argued that a continent-wide inflation rate of 0-2 percent would increase structural unemployment in Europe’s arthritic labour markets by a staggering 2-4 percentage points. Akerloff-Dickens-Perry concurred in the aforementioned paper. At zero inflation, unemployment in America would go up, in the long run, by 2.6 percentage points. This adverse effect can, of course, be offset by productivity gains, as has been the case in the USA throughout the 1990’s.

The new consensus is that the price for a substantial decrease in unemployment need not be a sizable rise in inflation. The level of employment at which inflation does not accelerate - the non-accelerating inflation rate of unemployment or NAIRU - is susceptible to government policies.

Vanishingly low inflation - bordering on deflation - also results in a “liquidity trap”. The nominal interest rate cannot go below zero. But what matters are real - inflation adjusted - interest rates. If inflation is naught or less - the authorities are unable to stimulate the economy by reducing interest rates below the level of inflation.

This has been the case in Japan in the last few years and is now emerging as a problem in the USA. The Fed - having cut rates 11 times in the past 14 months and unless it is willing to expand the money supply aggressively - may be at the end of its monetary tether. The Bank of Japan has recently resorted to unvarnished and assertive monetary expansion in line with what Paul Krugman calls “credible promise to be irresponsible”.

This may have led to the sharp devaluation of the yen in recent months. Inflation is exported through the domestic currency’s depreciation and the lower prices of export goods and services. Inflation thus indirectly enhances exports and helps close yawning gaps in the current account. The USA with its unsustainable trade deficit and resurgent budget deficit could use some of this medicine.

But the upshots of inflation are fiscal, not merely monetary. In countries devoid of inflation accounting, nominal gains are fully taxed - though they reflect the rise in the general price level rather than any growth in income. Even where inflation accounting is introduced, inflationary profits are taxed.

Thus inflation increases the state’s revenues while eroding the real value of its debts, obligations, and expenditures denominated in local currency. Inflation acts as a tax and is fiscally corrective - but without the recessionary and deflationary effects of a “real” tax.

The outcomes of inflation, ironically, resemble the economic recipe of the “Washington consensus” propagated by the likes of the rabidly anti-inflationary IMF. As a long term policy, inflation is unsustainable and would lead to cataclysmic effects. But, in the short run, as a “shock absorber” and “automatic stabilizer”, low inflation may be a valuable counter-cyclical instrument.

Inflation also improves the lot of corporate - and individual - borrowers by increasing their earnings and marginally eroding the value of their debts (and savings). It constitutes a disincentive to save and an incentive to borrow, to consume, and, alas, to speculate. “The Economist” called it “a splendid way to transfer wealth from savers to borrowers.”

The connection between inflation and asset bubbles is unclear. On the one hand, some of the greatest fizz in history occurred during periods of disinflation. One is reminded of the global boom in technology shares and real estate in the 1990’s. On the other hand, soaring inflation forces people to resort to hedges such as gold and realty, inflating their prices in the process. Inflation - coupled with low or negative interest rates - also tends to exacerbate perilous imbalances by encouraging excess borrowing, for instance.

Still, the absolute level of inflation may be less important than its volatility. Inflation targeting - the latest fad among central bankers - aims to curb inflationary expectations by implementing a consistent and credible anti-inflationary as well as anti-deflationary policy administered by a trusted and impartial institution, the central bank.

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Why You Must Plan for Retirement

By Dillon Norris

 Bob is a 65 year old graphic designer that is very financially secure. His colleagues, friends and family define him as a prosperous “fly by the pants” kind of guy. From as far back as he can remember, Bob has always hated planning and believes that his “spontaneity” and ability to think creatively while implementing new ideas has made him successful. For the past 30 years or so, Bob believes that his non-planning methodology has worked well for him. Well, Bob is now tired of the working rat race, and decides that it is now time to retire and have some fun. He doesn’t know what he’ll do exactly when he retires in 6 months other than have a good time. However, he knows that he won’t plan his days and will do whatever pleases him.

Let’s take Sam, a 60 year old attorney who is also financially secure. He is a “plan it to the bones” type of guy that loves planning and believes that his impeccable organizational skills have enabled him to accomplish all of his goals. Some might say that Sam is a bit anal but he disagrees and believes that his planning methodology has served him very well the past 35 years or so. His motto is “great planning makes a great man.” Like Bob, Sam is ready to retire. He’s had enough of the hustle and bustle of being a senior partner in a big law firm and is ready to retire so that he can pursue one of his lifelong dreams of becoming a volunteer for several organizations. Unlike Bob, Sam has already started planning out his goals, activities and has designed a “downsizing plan” that will enable him to retire in less than 6 months to pursue his dreams.

Now, let’s flash to the future. It is 6 months later. Bob is retired and is downright bored. Although he initially enjoyed not planning his retirement and found much pleasure in doing things on the spur of the moment, he is getting a bit bored with bar hopping, going on weekend fishing trips, and hanging out at the health club. He is also getting bored with himself and is starting to wonder if there is more to retirement than simply having fun. He is even considering going back to work or perhaps taking on some work projects to give him something to do. On the other hand, Sam is having the time of his life. He’s right on schedule. The first few months, he rested and relaxed and enjoyed himself immensely. Now however, he has transitioned to his non paid volunteer activities and has become a valuable resource to two prominent nonprofit organizations. Sam is truly enjoying his retirement and looks forward to a busy, scheduled day of providing volunteered activities.

So, what has this taught us? It has taught us that planning for your retirement is more than simply deciding that you have enough money to retire on a certain date. It is about planning how you’ll spend your time while accomplishing your goals. In fact, according to Christina Wright, a Retirement Specialist, “Many professionals don’t actually plan for their retirement. Although they evaluate their finances and are sure that they can support their lifestyles, they don’t plan how they’ll actually spend their time day in and day out. This “lack of planning” often leads to intense boredom and dissatisfaction with their newfound freedom. As a result, many of these professionals go back to work part or full time, not for the money, but to obtain some mental stimulation and excitement in their lives. This could have been avoided by simply planning out their goals and working hard to accomplish them”

With this in mind, we’ve talked to hundreds of successful retirees and found that like them, you can accomplish your retirement goals through the implementation of these five easy steps:

1. Have a positive mental attitude. You should have a positive mental attitude about this new phase in your life. You must know what retirement means to you and be willing to do whatever it takes to make you happy.

2. Be committed to your goals. You should make sure that you are 100% committed to living your life the way that you visualize it every single day.

3. Transition slowly and visualize success. You should be willing to transition yourself from a working professional to a retired person. You should visualize how great your life will be in a lifestyle that will give you the satisfaction you desire once you retire. For example, if you see yourself as lounging around all day, you have to ask yourself some hard questions like; will this truly make me happy? Can I see myself doing this for the next 25 or so years? If I find this isn’t fun, are there any activities that might make my days more fun? If so, what are they?

4. Plan your days. Regardless of whether or not you intend to lounge all day or are involved in many activities, it is always a great idea to plan out your days. This doesn’t have to be a mind-boggling task and you don’t have to use a fancy planner to be successful. Instead you simply have to think about your activities a day or week in advance, and plan how you’ll spend your time.

5. Find pleasure in accomplishing your goals. Find satisfaction in actually accomplishing your new life’s goals in retirement whether you are volunteering at your favorite organization or going fishing with a friend.

In conclusion, taking and maintaining control over your retirement is up to you. By having a positive mental attitude, being committed, transitioning yourself, planning your days and finding pleasure in your accomplishments, you can make your retirement dreams come true!

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Friday, April 30th, 2010 at 3:45 am and is filed under business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.