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Generate New Sales: Mark Borkowski

Its your call: How to generate new sales prospects.

Humor me for a second. Think back to the last deal you closed and ask you, “Who was the decision maker I had to reach and influence? How did I do it?”

The reason I asked you to think about that is because there will always be someone you will need to contact and influence to get the next deal and the one after that and all the deals you could ever possibly close in one lifetime. Your success doesn’t just happen. You make it happen, and it all begins with prospecting.

Prospecting is nothing more than the art of speaking with people who might do business with you, and engaging them in a meaningful conversation so that they will want to see you and talk further. Let’s not make it any more complicated than that. At the end of the day a telephone sales call is only a conversation between two people.

Make a list of everyone you just identified. It doesn’t matter if you need to speak with fifty people or only one; your focus is on precision not volume.

Once you have the names write down the main issues facing each person on that list. The reason I’m suggesting that is because you will have to address their issues, not yours.

If you start your conversation rambling on about your products and services you will sound like you’re selling something. When you talk about their issues you hit their Greed Glands which address what’s in it for them. Retirees are not waking up in the morning wanting financial products. (It would be nice.) They are, on the other hand, concerned about the rising cost of living.

Once you’ve worked out what you want to say you will have to get the person on the phone. The objective of your call list is not about making calls. Many financial advisors base their lists on volume, in other words the more names on the list the better because if they don’t contact someone there are plenty more to call. What happens with this approach is that most people end up leaving a lot of money on the table, missing up to 75% of their opportunities, simply by not contacting people. A call is not a commodity. It’s precious.
It would be nice if we were mind readers and knew where our biggest opportunity was, but we don’t so we have to speak with everyone. Your objective is to book appointments.

So whether you have twenty people to call or only one, get them on the phone. All of them. Without exemption.
Leaving a voice message doesn’t count. That only fools you into thinking you contacted someone when in fact all you did was leave a voice message. The easiest way is to ensure that you connect with your prospects is to simply find out when they are in, and then call at that time.

By planning your calls and your message you stay in control.
Once you get your prospect on the phone you will have the opportunity to speak for all of about thirty seconds at which time you will either ask for an appointment or ask a qualifying question. From the time you introduce yourself to the time you ask for an appointment there are less actually than thirty words. Make each word count. The words you speak paint images in people’s minds and you have complete control over what those words are.

Twice as important as what you say will be how you say it. Speak slowly and send the message that what you have to say is important. It’s so important that you will take a minute before the call to focus on how you can make the prospect’s life better, and that will bring out the passion in your voice.

At the end of each call you will either be sitting there with an appointment or you won’t. Either way self-assess to either see what you did well so that you can do it again on the next call, or look at where you need to improve.

If a call does not work out for whatever reason figures out if it was they or you. If there was something you could have done better, make sure to take correction action for the next call and then reward yourself for learning from your mistakes. When you consistently self-assess you stop repeating the same mistakes, and when that happens your performance benchmarks rise as like gravity.
By making yourself more effective you ensure that your next deal will be more successful than your last.

Mark Borkowski – is president of Mercantile Mergers & Acquisitions Corporation. Mercantile is a mid market M&A brokerage firm based in Toronto. Contact: www.mercantilemergersacquisitions.com

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Financial advertising, marketing and sales without the 56% google inefficiency.

Google admits that advertisers wasted their money on more than half of internet ads

By  http://qz.com/author/zwenerflignerqz/

Online advertising is a fickle thing. It accounts for 20% of the ad industry’s total spending, and over 90% of revenue for the internet giants Google and Facebook. That said, no one seems to have any idea whether it actually works.

That uncertainty reached a new high this week, as Google announced that 56.1% of ads served on the internet are never even “in view”—defined as being on screen for one second or more. That’s a huge number of “impressions” that cost money for advertisers, but are as pointless as a television playing to an empty room.

This is not a big revelation. The web metrics company ComScore reported last year that 46% of online ads are never seen. Spider.io, an ad fraud company acquired by Google in February, has pointed out that a large portion of ads are “viewed” only by robots, revealing that one botnet of 120,000 virus-infected computers viewed ads billions of times, running up the tab for advertisers without offering them the human eyeballs they sought.

Still, the acknowledgement by a heavyweight such as Google that ad viewability is a problem could shake up the industry by delaying possible IPOs of ad companies and requiring new ways for advertisers to gauge the effectiveness of their ads.

The nineteenth-century retailer John Wanamaker famously said, “Half the money I spend on advertising is wasted. The trouble is I don’t know which half.” In this case, it’s the obviously the half that pays for ads which are never seen, and now advertisers are looking for new tools to figure out which those are.

It’s worth noting that Google made this acknowledgement of the deficiency of the model it has profited richly from while also offering a new model to advertisers: In July it introduced its Active View product, which measures only viewed ads.

Tax Free Profit Extraction Using Life Insurance

A tax avoidance strategy has been growing in popularity in recent years. Although CRA has been aware of the strategy for over ten years, its increase in popularity and the Federal government’s current focus on reforming the taxation of insurance means that the life of the strategy may be coming to an end.

There are several good reasons for life insurance to be owned corporately rather than personally. A business owner is typically a key person of the business, and any buy-sell agreements or business interruption applications may require that the policy be owned corporately. Corporate ownership also allows for the payment of premiums with corporate dollars, which for small businesses generally have a lower tax rate than if the policy is owned personally.

There are of course also downsides. The loss of creditor protection, a potential impact to the capital gains exemption, additional complexity and accounting requirements, and the potential taxation of the death benefit are among the impacts to consider. Properly planned, these issues can be minimized, making corporate ownership an attractive option.
The corporately owned policy can be a newly issued policy, or could be a personally owned policy that is sold to the corporation. The latter may be the only option if health concerns make it costly, or even impossible, to obtain a new policy.

The sale of a policy from personal ownership to corporate ownership introduces a little used, until recently, tax savings opportunity. In exchange for the policy the corporation pays the individual the fair market value of the policy. The gain reportable to the individual is based on the cash surrender value of the policy rather than the fair market value, the two of which may differ substantially.

In many cases the taxable gain to the individual is zero, effectively resulting in a tax free disbursal of earnings from the corporation.

Overview of the transfer

A shareholder transferring a policy to his or her corporation is making a non-arm’s length transfer and therefore subject to Section 148(7) of the Income Tax Act. In exchange for the policy the company pays the shareholder the fair market value of the policy. The tax consequences consist of four parts:

  • Deemed Disposition – The shareholder who owns the policy is deemed to have disposed of the policy for the cash surrender value (CSV). The taxable income to the shareholder will be the CSV minus the Adjusted Cost Basis (ACB).
  • New Adjusted Cost Basis – Section 148(7) also deems the new ACB after the transfer to be equal to the CSV. The corporation has acquired an interest in the policy at the new ACB.
  • Payment for the fair market value – The corporation pays or provides a note to the shareholder for the fair market value of the insurance policy. There is no tax to the shareholder and the company has a reduction in retained earnings.
  • Payment of the Death Benefit – Upon the death of the life insured, the death benefit is paid into the Capital Dividend Account (CDA) to the extent that the benefit exceeds the ACB. The ACB will typically have enough time to decrease to $0, so the entire death benefit is paid into the CDA, which can then be distributed tax free.

Best Policies to Value

An actuary specializing in fair market valuation can provide advice on the potential value of a policy. The best policies to transfer will result in little or no taxable income upon disposition, and have fair market value that is greater than the cash value. There are several factors which contribute to a policy having a fair market value that is greater than the cash surrender value.

  • Deterioration in health – Any health problems that reduce life expectancy will increase the value of a life insurance policy.
  • Policies with guaranteed costs – Policies with guaranteed level premiums build up value over time, as the initial premiums exceed the cost of insurance in order to keep the premiums lower at higher ages when the cost of insurance exceeds the premiums. The reduction in interest rates has further increased the value of such policies, as they premiums were set assuming higher interest rates, and the premiums are guaranteed. Examples of these policies are Universal Life with level cost of insurance, term to 100, and whole life non-participating policies.

Government Position

Although the CRA has stated that they agree with the tax treatment described above, they also feel it is an anomaly and referred the matter to the department of Finance. This position has been confirmed several times in the past ten years. While Finance has yet to take any action, the issue does now appear to be on their radar. The next budget may very well put an end to this opportunity.

Ryan Wall
www.wallactuaries.ca

Should You Contribute to Your RRSP?

There are two advantages to RRSP investing. The first is tax deferred growth, which allows the effects of compounding to grow your assets far in excess of non-sheltered assets. The second is the assumed reduction in your personal tax rate at older ages when the assets will be withdrawn. Both of these benefits may not be as advantageous as they used to be.

RRSP funds should be invested in income generating assets, such as bonds and GICs, which would attract the most tax outside of an RRSP. Assets which return capital gains are best kept outside of the RRSP due to the more favourable tax treatment of those gains. With interest rates at multi-decade lows, and projections that these rates will continue for the foreseeable future, compounded growth will be severely hindered.

With growing government debt loads and lower projected growth rates, we also face the real potential for higher taxes. This may be especially true with respect to retirement assets, which will draw the attention of future politicians struggling to pay for the debt load which, as far as many voters will be concerned, was created by a wealthy retired class.

In analyzing a retirement strategy, it would therefore be prudent to consider the possibility of low investment returns, and higher tax rates. For instance, a 50 year old, earning only 3%/year, with a marginal tax rate increasing from 46% to 60%, by age 71 would have been slightly better off without an RRSP. Assuming investments are based on capital gains the RRSP effectiveness drops significantly.

Most scenarios for the future do still show RRSP investing to be beneficial, especially if it is likely that you will find yourself in a lower tax bracket at retirement. Nonetheless, based on age, investment return, and future tax rates, there will be a percentage of Canadians who would have been better off without registered assets. Those fortunate enough to expect to remain in the top tax bracket should consider whether deregistering all of their assets now would reduce their total tax bill, if tax rates do increase in the future.

Income Splitting Strategies

Mark Twain once said that the only difference between a taxman and a taxidermist is that the taxidermist leaves the skin.

For many Canadians the pursuit of tax avoidance strategies has become an obsession and over the years, I have seen some people do some crazy things to avoid paying income tax. In the end, the government has the upper hand and often we are limited to a few programs designed only to delay the inevitable.

However, for the truly savvy wealth planner, there are some strategies that are available to can help you reduce your tax bill through income splitting.

What is Income Splitting?

Income taxes are assessed on each individual at graduated rates. This means that as you earn more income, the tax rate gets progressively higher on each additional dollar earned.

Income splitting simply means that you transfer some of your income to a family member to have part of your income taxed in their hands.

Assume you have $150,000 of taxable income. If you live in Ontario, the basic income tax is $48,752. If you could split that 50/50 with your spouse, the combined tax bill would be reduced by more than $15,000!

In reality, it is not as simple as it sounds because there are a number of rules that limit or prevent a simple transfer of income. However, this does not mean that it is impossible.

Lend Your Spouse Money

This well-known strategy involves the higher income spouse lending the lower income spouse a substantial amount of money. The loan is documented and carries an annual rate of interest at the CRA’s prescribed rate (currently 1%).

The lower income spouse then invests the loan proceeds, and provided they make interest payments on the loan from their own funds (i.e. from the investments), the investment income is then taxable in the lower income spouse’s hands.

At the same time, the higher income spouse reports the interest received on the loan as income.

The Family Trust

A trust is a legal arrangement where one person (the settlor) transfers their property to another person (the trustee) who manages the assets for another person (the beneficiaries).

This structure has a number of characteristics that make them flexible tax planning vehicles.

One such feature is that the trust can allocate income to the beneficiaries and have it taxed in their hands. Of course, this is not always as simple as it sounds because of the various attribution rules in the Income Tax Act.

To help avoid attribution, you can extend a loan at the prescribed rate to the trust. The terms are similar to the spousal loan above, and since the loan is callable at any time, the settlor holds the right to recall the loan from the trust for any reason.

By structuring the trust with the loan the attribution of income to your spouse and children do not apply and you have the maximum income splitting potential without losing control of the assets.

The Corporation

The corporation is an often-overlooked tool to help reduce taxable income.

In this strategy, you establish a corporation and it sells its shares to you and your family members (be cautious if issuing shares to a minor child). To retain control, you should consider issuing non-voting shares to your family.

Next, you lend the funds to the corporation in exchange for a note payable at the prescribed interest rate following the same basic principle as we would for a trust or spousal loan.

Now the corporate tax rate on investment income is close to the top personal tax rate. However, when that income is paid out of the corporation in the form of dividends, there is a refund paid back to the corporation. When the income is paid to family members with low or no income, there can be a substantial tax benefit.

With the corporate structure, caution must be exercised when shares are issued to minor children since the dividends paid to minor children will be subject to an income splitting tax. With his tax in mind, the corporate structure is generally effective with your spouse and adult children.

Final Words

These strategies can produce dramatic savings in larger family groups with a substantial amount of wealth but implementing them does come with additional costs. Legal fees will be required to set up trusts and corporations and each would require additional tax returns and annual filings. It is important to consider these costs to make sure there is a net benefit of the arrangement.

Another important consideration is the so ensure that the structure is set up correctly to avoid application of the income attribution rules and in the case of minor children, the so-called “kiddie tax.” The application of this tax can eliminate any benefit of income splitting and you should discuss your situation carefully with your accountant.

 

November 11, 2012 Lest we forget – The Price of Peace and the cost of War

The Arithmetic of War: $9 Million Compared to $9 Billion for Next Generation Fighter

The cost of War and the price of Peace

Canada has a long history of service to international human rights, diplomacy and democracy.  Technology equips every soldier, tank, battleship and fighter jet. The need to be at the forefront of weaponry and innovation is a fact.

Prime Minister Stephen Harper, Finance Minister Jim Flaherty, Minister of National Defense Peter MacKay and Veterans Affairs Minister Steven Blaney continue forth on the procurement of $9 billion F-35 contract, while Veterans have had their funeral and burial benefits frozen since 2001. The current thinking is Canada can afford $9 billion for upgrades to its airforce but in doing so can justify slashing the operational budget of Last Post Fund by some 29% (or $1 million in 2013-2014). This is why the Last Post Fund, which delivers the Veterans Affairs Funeral and Burial Program, had to launch a national fundraising campaign to the tune of $9 million in order to fully fill its mandate towards modern-day veterans not eligible for the Canadian government’s Program (those who served after WWII and Korean War). Other projects for which donation monies are required include the perpetual care of the National Field of Honour where more than 20,000 persons are interred, and the provision of permanent military-style markers for eligible veterans who lie in unmarked graves (between 20,000 and 30,000 across Canada).

Therefore $9 billion is 1,000 times the $9 million it would take to allow the Last Post Fund to meet all veterans’ needs, be they traditional or modern-day veterans.

Write your Member of Parliament

 

 

  • You can read about the Last Post Fund capital campaign here.

 

  • You can donate online here.

We ask fellow Canadians to honour Veterans’ Week November 5 to 11, culminating in Remembrance Day services at your local cenotaph.  Show your support for Veterans by letting your MP know your vote means remembering Veterans – especially in death.

Contact Jean-Pierre Goyer, Executive Director

lpfinfo@lastpost.ca   Toll Free: 1 800 465-7113

Our mission is to ensure that no eligible Canadian or Allied Veteran is denied a dignified funeral and burial due to insufficient funds at time of death.

Tax Free Savings Accounts explored

TFSAs have now been around for 4 years – introduced in 2009.  Let’s look at the background for their introduction.  The Canadian and world economies had just been through a major collapse in 2008.  People were pulling money out of capital markets.  With money removed from markets, investment capital became very scarce.  Our Federal Government needed to do something to get people investing again – TFSAs were their solution.

But why create something new?  We already had a couple of special tax-preferred plans available – RRSPs and RESPs – what was different?  Much public (and Opposition Party) opinions were that RRSPs really benefitted upper-middle class and wealthy Canadians so raising the annual limit wasn’t very politically palatable.  The same feelings applied to RESPs.  So something new was needed.

Enter the TFSA.  Conceptually, it treats all Canadians equally – the maximum annual contribution limit is a flat $5,000 and it is a cumulative limit.  Miss a year, or only make a partial contribution, the unused portion is carried-forward for use in the future.

While the Government wanted to stimulate investing, its own tax revenues were falling steeply due to the same market collapse and subsequent recession – so allowing contributions to be deductible was a non-starter for Finance Minister Jim Flaherty.  The only thing left was to allow the value of the investments to grow tax-free and let people withdraw money – original deposits and growth – tax-free.

So the workings are fairly simple – you deposit money when and as you wish and don’t get a tax-deduction.  Once deposited, the money grows, based on the results of your investment choices, and you don’t pay tax on the growth.  You can withdraw any portion or all of the funds in your TFSA at anytime without tax consequences.  So far so good!

The follow-up question is not as easy however – in what financial products or instruments should you invest within the TFSA?  From an economic perspective, the government wants to encourage more investment in capital markets – stocks and related securities – but are these the best investments for a TFSA?  I suggest not – and here is why.

If I invest in our capital markets outside an RRSP, RESP or TFSA, I don’t pay tax on all of my capital growth and if there is a loss, I at least have the opportunity to claim all or part of the loss as a deduction against other capital gains.  Not so if the investment is inside these products.  Dealing strictly with TFSAs, any loss on my investments inside the TFSA is non-deductible at any time – on the other-hand, gains are never taxed.  So, on the upside – things are great, on the downside, things are not so good.

As a general guideline, investments that would be taxed higher outside a TFSA should be used inside – such as interest income and dividend income – which tells me that GICs, Term Deposits, Bonds, Money Market Funds, Bond Funds and blue-chip Dividend Funds make more sense while higher-risk, capital-growth-oriented funds MAY be better held personally as non-registered investments.