A big thank you to our sponsors who keep this newsletter free to the reader:

Aegis Financial has developed a complete sales and marketing system designed to help advisors generate and close leads. (And make up to 13% commission on every case.)

👉️ Click here for a 2 minute video explaining how it works!

Save space for the things you love

Good morning all.

This week, I heard about this guy who stayed true to a centuries-old globe-making tradition — despite initially losing thousands.

It got me thinking: We should all reserve more time for the things we love.

The good news: He eventually made money.

But a love of the craft came first.

How’s that for a little Wednesday AM inspiration to enjoy with a cup of Joe?

Jeremiah “Do What You Love” Desmarais

CEO, Advisorist

P.S. (For more nerdy details about globe-making, including cool titbits about cartography, geopolitics, history and more, read the article. It’s great.)

In Today’s Issue:

• The Fed’s 3-headed monster worry

• Biden’s new student-loan repayment plan saves clients $$$

• Soon-to-rise healthcare costs — What you can do

Plus, a roundup of all the headlines you need to stay updated.

 👹A 3-headed economy monster…

Threat of a government shutdown, an autoworkers strike, and returning student-loan repayments could combine to give the Fed an inflation-flavored headache and heighten the risk of recession.

Goldman Sachs tempered its mostly positive economic projection, calling Q4 a ‘pothole’.

But you’ll probably be fine.

Let me explain…

Government shutdowns, with context

The last time the government shut down, from December 2018 to January 2019, it did so for 35 days. This cost the US economy about $3 billion.

The 16-day shutdown of October 2013 had “taken $24 billion out of the economy,” per Standard & Poor’s.

Not ideal, admittedly.

BUT…

Most government shutdowns, if they happen at all (just 21 times since 1980), last only a day or two.

The events of a few years ago were a one-off. It was the longest shutdown in US history.

The bigwigs at the Federal Reserve might need to treat this moment with severity, but the average person probably does not.

But what of returning student-loan repayments?

Biden’s new ‘SAVE’ repayment plan is much more generous than previous plans. Your client might consider signing up — millions already have. But more on that below…

But US autoworkers are striking

Union members in Missouri, Ohio and Michigan are striking for better pay and more favorable working conditions.

A full-scale walkout could involve around 150,000 union members.

The economic repercussions of that would be massive. A strike by itself probably won’t cause a recession, though.

What you can do

Your client will almost certainly be fine.

It’s the higher-ups’ job to worry, but on the ground, normal service should continue.

There have only been four government shutdowns that lasted longer than one business day. Your client needn’t worry.

There are many options available for student-loan repayment — like the new SAVE plan. (Keep reading for more on SAVE…)

Show them you’re on top of things.

Headline Roundup

🏠 Affecting Your Clients

• All of the predictions agree on one thing: Humanity peaks soon (NYT)

• UAW threatens to widen strike as talks resume in Detroit (WSJ)

• The Biden administration takes on the US drugs industry (FT)

📈 Markets & Economy 

• A Fed hike this year doesn’t matter. But rate cuts in 2024 do (BA)

• Fed keeps up inflation fight, but people not feeling the benefit (BBG)

• Because of reflation, buying bonds is a smart move (BA)

💼 Industry Roundup

• Lincoln, NE, named best US city to retire in (FP)

• 5 myths that stop women from becoming advisors (TA)

• ‘Opt-in’ marketing is your best bet (AP)

Editor’s Choice - Events this week

Today at 12pm EST / 9am PST, Chris Gaddis, a top advisor out of North Carolina, joins us to discuss:

• How to 2X your income without leaving your current BD, FMO, or IMO

• A workable implementation plan that shows you how to enhance relationships & build trust with clients

• How to get BOR letters…without even asking

This isn’t theory – it’s a strategy advisors are using RIGHT now. (And Chris has the case studies to show you.)

👉 Click here to reserve a free seat!

Sponsored

1 Seminar, 2 Clients, $8M Closed

Ever feel burned out?

Well, apparently you’re part of the “in” crowd.

An E-Lab and Deakin University study shows that almost 75% of advisors experience high levels of burnout from work.

Rewind to last year and Mike P. would have been part of that stat.

He was so burned out he was ready to sell his practice.

Luckily, he explored some new ways to breathe life back into his business.

The surprising ‘windfall’ pivot

One of the big changes he made was installing an end-to-end system into his business to unlock additional cash with a unique approach to selling LTC products.

Fast forward to today and not only is Mike still in business – he’s expanding his office and hiring more staff.

The program that he implemented – which is called Care Forward, by the way – has become the largest portion of income in his practice.

So what is Mike actually EARNING from this?

Here’s what Mike’s doing now:

• One seminar he ran recently closed 2 clients (one at $6M and another at $2M).

• Prospects who previously said “I’ve got an advisor” are flocking to him because of his ‘Care Forward’ Hook

• With over 33M between 65-74 y.o. in US - only 3% – THREE! – are prepped for LTC.

• That means there are more than 32 million folks out there who need an LTC plan.

I’m not going to tell you how to run your practice – but that smells like a huge opportunity to me.

And with a program like Care Forward by Aegis Financial, there’s no reason any advisor in this business shouldn’t be crushing it right now with LTC….just like Mike.

👉 Click here for a short video + bullet points on the program

💰Should your client enroll on SAVE? That depends

After a COVID-induced hiatus, the student loan bill is about to come due again. But Biden’s new plan aims to soften the blow, especially for low earners.

Saving on a Valuable Education is an ambitious and generous repayment plan.

Those who enroll on the new ‘SAVE’ plan will pay 5% of their discretionary income, down from 10% on the REPAYE plan, if they have undergrad loans.

Those with postgrad debt will still pay 10%.

But to improve matters further, ‘discretionary income’ is now defined as 225% above the federal poverty line. (Before it was 150%.)

This means borrowers will pay less each month.

And the best part?

Slashed interest payments.

If Sally owes $100 in interest each month, but her monthly repayment, which is worked out based on income and family size, covers only $60 of it, the remaining $40 will be chalked.

So should your client enroll?

There appears little reason not to enroll, but talk to your client.

Establish a long-term vision for their loan goals. If they earn $32,800 or less a year, they won’t have to pay a thing.

Some borrowers, like those with $12,000 debt or less, can put themselves on a path to loan forgiveness within 10 years by signing up.

Consider using this template to text your client:

Hi [name]. You may have heard, but because you have student-loan debt, there’s a new repayment plan available to you. Whether you should enroll depends on a few things: your cash position now, how much you earn, how much debt you have left to pay, and so on. I’d love to go through everything with you on the phone. Is there a time that works for you today or tomorrow?

💊Medical costs will soon rise sharply. Here’s why — and how it might impact client portfolios

Since 2020, healthcare costs have seen major swings both up and down because of COVID. We’re about to see a major upsurge. Why?

It’s complicated.

Basically, the American government uses the year-end profits of health insurers to calculate how much healthcare prices are rising. (Read this piece for a lengthy, clear explanation.)

This formula usually works OK. During the pandemic, not so much.

Americans sought less medical treatment at hospitals and doctors’ practices for fear of catching COVID. Health insurers paid out less in benefits. Profits soared.

Then the pandemic faded, citizens returned, and health insurers paid out more. Profits dropped.

All of this means medical costs have fluctuated wildly, and we are about to hit another up.

Why this matters to FAs

As an FA on behalf of your client, you should consider two things:

• The direct cost of higher medical expenses (obvious)

• The indirect cost of higher inflation (less obvious)

Medical costs make up 8% of the Fed’s Consumer Price Index (CPI). Because of this, drastic swings can impact inflation in a big way.

Cause for optimism

The effect on inflation might not be as bad as some fear, though.

Prices are falling in other crucial areas, like housing and grocery prices — each of which account for more of the CPI than medical costs.

In any case, this issue of medical costs should be at the forefront of your mind. Don’t let your client sleepwalk into fatter bills unprepared.

Consider what sort of care is, and is not, provided by a medical doctor.

Long-term-care (LTC) insurance often allows for more flexibility than public programs and should be explored.

Work with your client to find the best solution for them.

The Best Thing I Saw All Week

65-year-old Karen Collinsworth, a longtime Starbucks employee and surrogate mom to hundreds of college students in Huntington, West Virginia, was having issues with her car.

Parts were robbed. It would frequently break down.

Her co-workers came up with a plan: start a GoFundMe to get her a new set of wheels.

The initial goal was $10,000. They raised more than $40,000.

More than 1200 people donated, including the president of local Marshall University who donated $5000.

Karen is thinking of buying a Subaru.

“I know those kids love me and that’s what makes my life worthwhile,” Karen said.

Sharing looks good on you.

When you copy that link at the bottom and share it with a few financial planning colleagues, you look like the smartest advisor in the room by keeping them informed.

Plus, you earn rewards. Sweet.