The nervous teenage driver has a white-knuckle grip on the steering wheel as she pulls onto the interstate highway for the first time. The drivers' education instructor at her side chooses this as the ideal moment to deliver some important advice. "Aim high," he says. "Don't just look at the road right in front of you -- look well ahead to anticipate what the traffic is doing and give yourself time to react."
Bob Anderson, former teacher, coach, and "drivers' ed" instructor, once made his living helping young people steer a straight line through junior high and high school. Although he changed professions 34 years ago, and now dispenses wisdom on financial matters rather than how to parallel park, he still advises people to keep a long view on the road of life. That core philosophy has helped the 67-year-old native Iowan build his company, Anderson Financial Services, Inc., into a long-term success story, working with clients in estate and retirement planning.
From their office in a sleek, low-rise commercial park at the northern edge of Cedar Rapids, Iowa, Bob and his team of financial advisors and administrative staff manage the insurance and investments of about 2,500 clients. Many of them are business owners who count on Bob, his son Scott, or one of the two other advisors on the Anderson team to analyze the facts and recommend common-sense solutions to basic financial needs. "We have a target profile as to the age range and the net worth of the people we want to work with," Bob says. "A lot of them are fairly high net worth -- not all are multimillionaires, but they are substantial people."
Estate planning, in particular, is the firm's bread-and-butter market. The uncertain future of the federal estate tax law has frustrated many producers and their clients, and while Bob's team is not immune to that, they overcome planning inertia by keeping themselves and their clients in a long-range frame of mind.
"Right now, we're shooting at a moving target with the estate exemption," Bob notes. "If all things hold true, which I doubt they will, in 2011 we'll go back to a $1 million exemption amount. This creates some additional challenges, particularly with people who have a tendency to procrastinate in the first place -- or don't like to face the fact that they're not going to live forever.
"As planners, we have concluded that there are always going to be taxes, whether you call them estate taxes, capital gains taxes, or income taxes. And there are a lot of reasons why people do estate planning, not all of which are to avoid taxes (see sidebar list). The opportunities are still there, if you see the big picture."
Bob chartered his company in 1995 after working as a producer for Life Investors Insurance Co. (now a subsidiary of Transamerica) for 20 years. Anderson Financial has followed the time-tested formula of building a client base to the "critical mass" required to generate growing revenues primarily from existing clients and their referrals. "We don't have to beat the bushes anymore, like we did when we were first getting going," Bob says. "I just got back from the Million Dollar Round Table meeting in Indianapolis, where one of the speakers said, 'In your first five years in the business, you're underpaid; thereafter, you're probably overpaid for what you do.' You build your clientele, and take care of them." The company recently hired Joyce Englert as its first client service coordinator and installed a new computer system to manage accounts.
Client segmentation has come into vogue for agency managers, but Bob doesn't subscribe to the "ABC" system. "A lot of people who believed in me when I was just getting started wouldn't be 'A' or 'B' clients, but they're good folks. So I have name equivalents. My A clients are Premier clients; then come my Blue Chip clients, then VIP clients, and then just regular customers.
"You shouldn't just look at the income you derive from these relationships," he continues. "Do you enjoy working with them? What's the relationship like? Some people have high net worth, but they're difficult to work with, and who needs that?"
Changing careers
Bob grew up on his family's farm in Victor, Iowa, about halfway between Cedar Rapids and the state capital, Des Moines. He graduated from the University of Iowa in 1964 and earned a master's degree in secondary education from the University of Illinois, launching him into a teaching career. "I was kind of a jock," Bob says. "I taught physical education, drivers' ed, biology, and physiology, and coached basketball, football and cross country." After a few years at the junior high and high school levels in south suburban Chicago, Bob moved back to Iowa, teaching and coaching for seven years at the high school in Newton, about 25 miles east of Des Moines. He was the head boys' basketball coach for four years, and also assisted in football.
Like most teachers, Bob didn't choose a career in education for its financial rewards -- or lack thereof. He took it as his calling, and even entertained aspirations of coaching at the college level. Then his perspective changed as he listened to his older teaching peers. "I'd go into the teachers' lounge and there would be people in there who had taught for 10, 20, 30 years, and the main thing they would do in there was complain -- about the kids, or the administration," he remembers. "That really made an impression on me. I thought, 'I don't want to be here 20 years from now, and do nothing but gripe.'"
He and his wife Lola also had three young children to raise, so there was plenty of financial incentive to find another line of work. Life Investors offered a split-time transition program for teachers who wanted to try a sales career. "I worked another year teaching on a half-time basis, still coaching at the junior high level," Bob says. "I worked every other day in insurance. It worked out really well."
After breaking in as an agent in 1975-76, Bob served as a regional field recruiter for Life Investors from 1976 to 1978. He went back into full-time production in 1979, and sold enough business that year to qualify for the Life Investors incentive trip. "I wasn't Top of the Table, but I did qualify for Europe -- now that was different from when I was teaching! Some companies, in recruiting agents, look for teacher-coaches because many of them are seeking additional income, and they have name recognition in the community. I knew a lot of people, especially teachers, administrators, and former students. We had some good products, and I just built a referral system from there."
That system includes good relationships with several local estate planning attorneys and CPA firms, who regularly exchange referrals with Bob and his team. Two of the CPA firms they work with are in the same office building with them. Bob also attributes part of their success to their structured-but-simple sales development process. "We collect data, and then analyze and strategize -- looking at what we can suggest that will help the client," he says. Bob typically holds a second interview in his office, using an easel flipchart to take the client through his analysis and suggestions. The third stage is implementation, driven by a checklist of recommended actions, each with boxes for Yes, No, and Person Responsible for the action.
"All four of our advisors are investment advisor representatives, so they can do fee-based planning or sell products, or some combination of the two," Bob says.
Earning through learning
Another factor Bob cites in his success is agent education. "Some people have 10 years of experience, and others have one year of experience 10 times because they don't make an effort to grow. In our firm, we want people to be credentialed." For most of the past 20 years, he's been the lead teacher of an annual intensive three-week estate planning course. Life Investors/Transamerica sponsors the school for up to 10 experienced producers from around the U.S., who come to Cedar Rapids in the early spring. "It's a progressive school, very hands-on," he says. "We take them through three phases: Textbook, practical application, and business philosophy, including how to effectively work with other professionals. If you look at the top producers at Life Investors/Transamerica, probably 75% of them have been through that school."
Bob is a 27-year Life and Qualifying member of the MDRT -- including nine years in the Court of the Table -- and has attended the last 22 annual meetings. "I talked myself out of going for the first five years, saying I couldn't afford it, or I was too busy," he says. "But once I went to my first one, every year I say, Lord willing, I'll keep going. The MDRT is such a great melting pot of ideas."
On the wall behind his desk, Bob displays a large steel sword with a gold hilt and a silver scabbard. The inscription below it reads, Society of the Silver Saber. Bob earned it as Life Investors' top producer in 1995, the same year his son, Scott, joined the firm; Scott became its president four years ago. "Now I can look clients in the eye and say, 'We have our succession plan in place,'" Bob says. He ranks both milestones among the proudest moments in his career. He also received the Life Investors Community Service Award in 2003 for his many years serving on the board of almost every civic organization in the Cedar Rapids area, including the YMCA, the Linn-Mar Schools, and the Marion Water Department, as well as several charitable organizations, among them his church and the United Way. Bob also has gone through the chairs of the local chapters for NAIFA, the Society of Financial Service Professionals, and the Estate Planning Council.
"Everybody has a duty to pay their civic rent," Bob says. "Of course, you have to learn to say no, too. I was on five boards at the same time once, and I was starting to meet myself coming and going from meetings."
The company logo on Bob's business card features an eagle's head thrusting through the "A" in "AFS." It was Bob's idea to personify the company with this majestic bird, known for seeing dinner or danger a long way off. He got the idea from Robert Hales, JD, one of his mentors in estate planning. "The kiwi, a bird that can't fly, just trots along, seeing only what is in front of him. But the eagle sees from above and adjusts," Bob says. "That's the process of estate planning -- you're looking down the road, not just at what happens if you die today. It's our philosophy, to see the big picture. I love that." The Anderson Financial team should see many big pictures for years to come, thanks to a simple principle even a teenage driver can learn.
Estate planning opportunities when there are no federal estate taxes:
o Income tax issues caused by the elimination of "step up" in basis
o Wealth replacement needs when dealing with large qualified plans
o Income replacement
o Estate equalization
o Buy-out funding
o Wealth replacement used with charitable trusts
o Long-term care insurance
o Second marriages -- funds for children of first marriage
o Charitable maximization ex: endowing your support (church, etc.)
o Debt clearance
o Special needs trust
o Wealth accumulation (over-funding variable life)
o Asset protection (environmental issues) -- funds to pay associated costs
o Funding college savings plans (529) for grandchildren
Gordon Bess, CLU, FLMI, is a former editor of Life Insurance Selling. Prior to LIS, he spent 26 years in various marketing and communications positions at General American Life and its parent company, MetLife.
Bob Anderson is an Investment Advisor Representative with Securities and Investment Advisory Services offered through InterSecurities Inc. (ISI) member FINRA, SIPC and a Registered Investment Advisor. Non-securities products and services are not offered through ISI.
