Practice management: The financial sailboat

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Imagine four different sailboats - where the sail represents investments, the life preserver represents a life insurance program and the hull represents guaranteed dollars (like money in the bank or in a savings account).

Wednesday, November 25th 2009, 9:35AM

Our first boat is designed by an equity salesperson. It has a tremendous sail, a tiny hull and a small life preserver. In good weather, with the right winds, this boat can really move against the tides of inflation, but it can be unstable in bad economic weather since it might easily capsize.

Our second boat is designed by the person who, above all, wants safety in bad weather. With that huge hull, there's not much danger of capsizing in bad weather, but how is it going to move against the tides of inflation with that tiny sail?

Our third boat is designed by the life insurance agent. One's family will certainly be safe in case the boat sinks, but that tiny sail won't make much headway against the tide of inflation and that tiny hull is not going to be very safe in bad economic weather.

And then we have the fourth boat. Now here we have a boat that has a large enough sail to move against the tide of inflation, a large enough hull to be safe in a storm and an adequate life preserver to save the passengers in case the boat doesn't make it to shore. Isn't that the kind of sailboat you'd buy?

What's missing from this boat? The rudder is equal to your financial plan. The best financial plan involves an ongoing relationship between the client and the client's most trusted advisers. And just like vigilant attention to the rudder is necessary in sailing a boat, vigilant attention to the financial plan is necessary for the plan to succeed.

A sailboat's ability to move forward is in direct proportion to the amount of wind the sail is able to catch and properly harness. The skill then is turning the rudder and catching the wind just at the right time. In other words, you must be in a proper position in order for the wind to benefit the sailboat.

The same is true with a balanced financial plan. You must be in the correct financial position and have your financial portfolio balanced so that the financial and economic factors allow your investment portfolio to grow.

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Daniel O. Corrigan is a 38-year MDRT member and three-time MDRT Annual Meeting speaker. Corrigan has spoken at approximately 2,500 industry meetings and conventions. For his contributions to the industry, the National Association of Insurance and Financial Advisors honored Corrigan with the Harold G. "Bud" Horn award for lifetime achievement. Also active in his community, he is past president of the Willamette Valley Cancer Foundation and is involved in numerous local organizations, including Rotary Club and Citizens for Good Education. His entire 2009 MDRT Annual Meeting presentation is available at www.mdrtpowercenter.org.

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