Savage Insights

Have A Happy New Year!

The dawning of a new year is a time for reflection, both on the past and on the future. One of my favorite blogs, which I read on a daily basis, is Presentation Zen by Garr Reynolds. His recent post reminded me about the value of personal reflection, or as he calls it, solitude — something few people get enough of today. Reynolds’ blog, which offers expert advice on design and creating great presentations, in this post he make the claim that many of today's bad presentations happen as a results of too much rushing, lack of critial thinking and not enough solitude.

A lot has been written over the course of 2006 about how we’re completely plugged in 24/7 and always on the go, multitasking at 90 miles an hour. Some people feel that if they’re not effectively accomplishing at least two tasks at once all day long, they’re not working hard enough or getting enough done.

In his most recent post, he emphasizes the necessity to unplug and take time for yourself, and he refers us to an article on the subject of solitude by renowned psychoanalyst and clinical psychologist, Dr. Esther Buchholz titled The Call of Solitude.

The article really struck a chord with me given I’m one of those always plugged in 24/7 multitaskers and yes a certified CrackBerry addict : ). I’ve printed it out and I plan to read it over the holiday break as I take time to relax and chill with my family. At first glance, it appears to have tremendous value and there’s no better time than now to reflect and think.

If you do read it, I’d really be interested in your thoughts and personal take-aways on both the article and on how the value of solitude helps improve the quality of your personal and business life.

Here’s a direct link to Dr. Buchholtz’ article:
http://www.psychologytoday.com/articles/pto-19980201-000034.html

Have a safe, healthy, happy and rejuvinating holiday!

Making Recommendations is Not Only Okay, It’s Our Responsibility

Richard Lovell, senior planner of 1 st Choice Mortgage, writes:

“I read the question from Cyrus and of course your response…I agree with you on asking great questions, LISTENING, not selling specific products, but recommending products based on the information received from the client. I take into consideration a lot of data before recommending a specific product, but with the recent increase in “mortgage planners”, I have adopted something from the financial planning world; 1) Prudency; and 2) Suitability.

[But] I would submit that we do make specific recommendations based on the answers we have received from our “great”, not good questions. I have adopted into my proactive [strategy] material from you, Jim McQuaig, Jim McMahan, Randy Luebke, Steven Marshall, Tim Braheem, Greg Frost, Kuiper, Mitchell, Union, and the list goes on.

So, shouldn’t we make recommendations considering we are to be looked upon as the expert in this field? Are they not coming to us because we are the expert in this field? Should they not be looking at us as the experts to provide them with expert advice that will help them achieve their short- and long-term financial goals through a better, smarter, safer way? Maybe I am just missing what you meant, but I believe my clients and referrals come to me for that expert advice.”

Richard,

Thanks for reaffirming my point and challenging me to drill a little deeper. I think you make a great point when you ask that, as experts, do people want us to guide them and give them recommendations.

Here’s my response:

I don’t think your job is to tell the client what to do or to sell them on specific mortgage programs. However, if you have a client who doesn’t have a history of saving money, you should ADVISE them to avoid using Option ARMs. If they insist on still using a non-amortizing program, it is your responsibility to make sure they clearly understand the risks, costs and consequences of perpetual debt, especially if they don’t prepay their mortgage or don’t invest outside the mortgage program.

On the other hand, if you have a client with a solid history of saving money who also has a financial advisor with a proven track record, you would want to work with their financial advisor to advise them of strategies that might help them achieve their Freedom Point faster by saving money in a freedom account vs. simply prepaying their mortgage.

The way to position it though, is, “Here is a great strategy for you”, then highlight the benefits, costs, risks and rewards of this specific strategy and say, “but it’s your decision”. Then follow that up with questions like, “What do you like best and least about this strategy?”

In summary, the job of an expert is:

1) To have extraordinary knowledge;

2) To ask good questions and listen with an open mind;

3) To have a solid process for making informed decisions that analyze unique
criteria for each client (use the Total Cost Analysis and/or Equity Repositioning
Analysis reports); and

4) At the end of the day, to give your clients sound advice and recommendations
with a detailed proposal clearly documenting the benefits, costs and risks of your
recommendations.

Thanks, Richard, for challenging me to answer this question in more detail. If anyone else has a question about this or any other subject, please don’t hesitate to put it in the comments box below. I personally read them all!

“The Starbucks Experience”, and Other Great Books I Recommend That You Read

Over the holiday break, I reviewed and skimmed several books, including “Tough Choices: A Memoir”, by Carly Fiorina, former CEO of Hewlett-Packard (Portfolio Cover, 2006), “The Starbucks Experience”, by Joseph Michelli (McGraw Hill, 2006), “Now Discover Your Strengths”, by Marcus Buckingham (Free Press, 2001), and “Winning the Answers” by Jack & Suzy Welch (Collins 2006).

I found value in each of them; however, the Starbucks book was one that I just couldn’t put down and couldn’t stop taking notes on and thinking about. I found it really relevant to helping mortgage planners achieve higher levels of success and significance.

Below are a few takeaways I will be studying regularly to kick off the New Year.

The Starbucks Experience is built on 5 core principles for turning the “ordinary” into the “extraordinary”. Here is a brief explanation of each one.

PRINCIPLE 1: Make it your own. Leaders at Starbucks encourage their employees to fully embrace their work to give customers a truly inspiring and memorable experience. They call it the five ways of being:

• Be welcoming;
• Be genuine;
• Be considerate;
• Be knowledgeable; and
• Be involved.

They also present a series of questions/thoughts that help employees uncover whether they are doing all they can to improve a customer’s experience:

• What are you doing to encourage the discovery of the unique needs of those whom you and your colleagues serve?
• What can you do to invest more of yourself and to get others to invest more of themselves in the process of interpersonal connection and discovery?
• Are you taking action and following through on those discoveries?
• To be genuine means to connect, discover and respond;
• Listening is just one part of creating a connection with customers. Businesses also need to discover each customer’s needs and unique situation and then find ways to meet those needs.

Relevant quote: “This is the true joy of life, the being used up for a purpose recognized by yourself as a mighty one; being a force of nature instead of a feverish, selfish little clot of ailments and grievance, complaining that the world will not devote itself to making you happy.” by George Bernard Shaw.

PRINCIPLE 2: Everything matters. In my recent blog post “A Business Plan 2007 Round-Up”, I mentioned something called the “the mint test”, a simple experiment in kindness Dr. Robert Cialdini conducted that generated a 25% increase in tips by giving everyone at a table a mint along with their bill. The second Starbucks principle is a similar concept. It emphasizes that a simple act of kindness goes a long way, and that providing customers with an extraordinary experience is in the details. Michelli also reminds us that missed details produce dissatisfied customers who go elsewhere. He encourages us to:

• Ask customers what details they notice about your business;
• Acknowledge others, celebrate often and make work fun; and
• Remember that details affect the emotional connection others have with you.

Relevant quote: “Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around.” By Lea Buscaglia.

PRINCIPLE 3: Surprise and delight. This principle encourages us not to underestimate our own abilities to surprise and delight others. The author reminds us that our efforts can be a contagious force. He also says:

• Customer delight comes from surprise as well as predictability;
• When breakdowns occur, businesses can still delight customers by making things right; and
• Delight is the result of an unwavering commitment to creating a comfortable and trusted relationship.

Relevant quote: “I slept and dreamt that life was joy. I awoke and saw that life was service. I acted and behold, service was joy.” by Rabindranath Tagore

PRINCIPLE 4: Embrace resistance. To work with resistance effectively, Michelli says we must distinguish between people who want their concerns to be resolved and those who simply like to complain. When people’s concerns are resolved to their satisfaction, it has been proven that they can often become your most loyal customers and advocates.

My favorite relevant quote: “Don’t mind criticism. If it is untrue, disregard it; if unfair, keep from irritation; if it is ignorant, smile; if it is justified, it is not criticism – learn from it.” Author Unknown.

PRINCIPLE 5: Leave your mark. The value of a business’ brand is linked 100% to the trust people place in the company to do what it says it will do. Employee morale is three times higher in companies where community involvement is an integral part of the business model. People also want to do business with, work for and invest in socially conscious companies.

Based on these principles, here are some action items I recommend loan officers start following immediately:

• Distill your company’s “experience” into a single sentence and discuss ways it has led to your current levels of success.
• Attention to detail is a key factor in Starbucks’ success. How well is your company handling even the smallest details on a daily basis?
• Nearly all companies claim to pride themselves on quality service, but the Starbucks mandate, to “surprise and delight”, goes a step further. Rather than seeking to meet your customers’ needs, are there ways your service can go the next step by providing a uniquely positive experience that will create stronger loyalty?
• Every mortgage practice is nothing more than the sum total of the actions its loan officers and team members take.

Relevant quote: “How wonderful it is that nobody need wait a single moment before starting to improve the world.” by Anne Frank

Now, look at your business through the lens of Starbucks’ 5 core principles:

• Make it your own;
• Everything matters;
• Surprise and delight;
• Embrace resistance; and
• Leave your mark.

While still looking through this lens, consider your clients’ perception of your company and your brand identity. Which actions that you have taken have most strongly shaped them? And, what future actions can continue to shape them in positive ways?

I highly recommend “The Starbucks Experience” book for every mortgage professional in every department. Yes, even processors and underwriters should read this book. In fact, they should be REQUIRED to read this book.

Do you have a favorite book that you feel all loan officers can benefit from? If so, please tell us about in the comments section below.

Happy Holidays to All!

I would like to take this opportunity to wish everyone a very happy holiday and a healthy and prosperous new year.

To all my clients, partners, readers and visitors, I thank you immensely for supporting Mortgage Coach throughout the years. It has truly been our pleasure to help you achieve your goals, and we look forward to continuing to help you fulfill your needs in 2007.

Best,

Dave

A Business Plan 2007 Round-Up

I recently returned from Loan Toolbox’s Business Plan 2007 conference and I want to tell you about a few of the inspiring speakers and sessions I experienced. Below are some of the highlights that made a lasting impression on me.

Tony Robbins kicked off the event and he motivated me right from the start by reminding us that peak performance comes from being in a “peak state”, and that the single most important responsibility of management is to do a better job of managing the positive state of our team.

He also reminded us that the key to success comes from the power of influence.

Robbins’ Laws of Success:

1. Raise your standards — turn your shoulds into MUSTs;
2. Change your beliefs;
3. Get the best strategies and model what works;
4. Increase your emotional intensity; and
5. Give more than you expect to receive — the secret to living is giving.

Be aware of your feelings. Robbins said that “your focus equals your feelings” — what you focus on equals who you are and how you respond to others, and that “the emotions you live equal the quality of your life.”

Try this exercise he gave us:

• List your most common positive emotions.
• Now list your most common negative emotions.

Which way would you liked to be perceived? Which ones do you think obtain better results? He says:

• Progress equals happiness;
• Obstacles give us challenges;
• Success is a science, but fulfillment is an art; and
• The keys to fulfillment are appreciation and contribution.

This is Robbins’ success cycle:

Potential >> Action >> Results >> Beliefs/Attitudes >> Potential >> Action >> Results >> Beliefs.

Listening to Tony Robbins’ presentations made me want to revisit his book — “ Awaken the Giant Within: How to Take Immediate Control of Your Mental, Emotional, Physical and Financial Destiny!” I have read his books in the past and usually re-read them every three years.

Dr. Robert Cialdini is trained in the psychology of influence. His website states: “When influence is employed correctly, it efficiently moves people in positive directions.” The key point he tried to impress upon us was that becoming an agent of influence is the greatest power.

He teaches that success is based on five principles that govern the ethical use of influence:

• Reciprocation– You, then me, then you, then me. Be the first to give: service, information and concessions. And make it genuine. Reciprocation should be meaningful, tailored and unexpected. Most sales trainers think the golden rule of sales is to make the customer like you – but he suggests that the first goal is to “like the customer”, then get the customer to like you. He reminds us that 30 seconds is all we have to win trust and respect.
• Scarcity– The rule of the rare. Emphasize genuine scarcity, unique features, exclusive information. People will mobilize action faster if they are going to lose vs. gain—if I can’t have it, I want it. There is a 50% difference between “lose” language vs. “gain” language. There are 45% higher results with “lose” language.
• Authority– Showing is knowing. Establish position through: Professionalism, industry knowledge, your credentials and not admitting weakness first. People believe that if experts say it, it must be true. Credibility equals knowledge and trustworthiness. Start with weakness and then mention the top features.
• Consistency– The starting point. Start small and build, with existing commitments, from public positions, toward voluntary choices;
• Liking– Making friends to influence people. Uncover similarities, areas for genuine compliments, opportunities for cooperation; and
• Consensus– People proof, people power. Unleash people power by showing the responses of many others, others’ past successes and testimonials of similar others.

The above notes on principles were taken from a pocket guild that Dr. Cialdini passed out to everyone.

The value of the mint
This was one of my favorite stories he told. It was really cool because he explained the impact in a real world sense using a common situation that everyone could understand. Dr. Cialdini was testing how wait staff could increase their tips. He chose a restaurant that wasn’t doing anything for the customer other than basic good service. Then, at the end of the dining experience, he had them add one mint to the bill tray. That simple act increased tips by 6%.

Then, he had them add two mints. This extra little act increased tips by 12%. I was thinking to myself wow, it’s amazing how simple little things can create immediate impact. However, he was just getting started. Next , he had the waiter approach every person at each table and say, “for you nice people”, and individually place a mint in front of every person. This increased tips by 25%! This is a WOW moment!

This simple act of kindness generated huge results. Why? Think back to Cialdini’s principles. Customers were given something, so they felt the need for reciprocity. It was personalized and it was unexpected. It surpassed their expectations and it demonstrated they care. Ask yourself, what simple and easy things can we implement that will create impact using the principles in the story?

The closing keynote was Benjamin Zander , the conductor of the Boston Philharmonic. He is an absolutely amazing individual. He made me think about life and success in a different way.

Here are some of the notes I took:

• “Everything is invented.” Our personal reality and state of mind are invented based on what we focus on. Happiness is always invented — and obviously, if happiness is invented, so is every other emotion.
• In the Universe of Possibilities, the adventure of life is to never know what is going to happen, but to believe that something amazing is going to happen.
• Rule number 6: We should never take ourselves too seriously. (There were no rules 1-5, but he calls this “rule number 6” because it helps people remember!)
• Give an A to everyone. (This is code for give everyone the benefit of a doubt, expect the best in people if you want to see the best.)
• When there is a breakdown in a relationship, it is because one or both isn’t giving the other person an A.
• We should apologize if we haven’t been successful at enrolling others, rather than being mad or disappointed with them. Take personal accountability for the buy-in you get from others…don’t blame them..blame yourself.
• The role of the leader is to remind the players on the team what the rhythm should be.
• When you make a mistake, say out loud “how fascinating”. (This is a positive way to communicate with yourself.)
• One of my favorite quotes is from his father: “There is no such thing as bad weather — just inappropriate clothing. (I love this…don’t think I won’t be saying this one to my kids and wife all the time! J .)

I was so inspired after this session I went straight to the book store on the way home and purchased his book, “The Art of Possibility: Transforming Professional and Personal Life”, by Rosamund Stone Zander and Benjamin Zander . I strongly recommend that you read it. I hope they’ll inspire you, as they did me.

Recommended Reading for All Loan Officers

I highly recommend that you read “Exceptional Selling: How the Best Connect and Win in High Stakes Sales”, by Jeff Thull (Wiley, 2006). It’s one of the best sales books I have read in years.

What you will learn from it:

As one who is an advisor, you realize that not every client is a perfect fit for you. This book focuses on the language and mindsets you use with clients. With the right mindset and approach, you come off far more credible and actually sound like an advisor — rather than just saying you are one.

Further, the book focuses on first diagnosing (like a doctor would) before prescribing solutions. Again, taking this approach creates a true advisor relationship — rather than just saying you’re an advisor.

Secondly, when approaching referral sources like Financial Planners and CPAs, they are going to be very perceptive in sensing if someone is presenting them with a hard close and pressuring their clients. Their relationships are the life blood of their business and they will not jeopardize them by referring them to someone they may perceive as a wolf. Again, the “maybe, maybe not” type approach in the book is essential in building relationships that demand both professionalism and credibility.

But don’t just take my word for it. Check out the reviews at Amazon.com. If you do purchase the book, let me know what you think after you read it.

Sell CPAs Advice, Not Specific Loan Structures

I was recently asked a question from a loan officer and Mortgage Coach customer named Cyrus Julian — he was having problems connecting with CPAs and financial planners he was approaching who were not familiar with equity repositioning.

They weren’t taking his advice and, in some cases, weren’t returning his calls after the first conversation. After talking to Cyrus, I found out he was approaching them with very specific equity management strategies that recommended that borrowers harvest equity and invest it in the market.

First, let me give you two main takeaways from this post that apply to all loan officers and Mortgage Planners:

STOP selling specific mortgage products and START delivering a process to make the best possible decision; and

STOP assuming you know what is best for others and START asking good questions and then actually listen and learn.

Below is my specific advice to Cyrus…

LOs shouldn’t be calling financial planners to sell specific financial strategies — they should be calling advisors to learn about the types of strategies they typically recommend and then explain to the planner how their approach to liability management helps the advisor integrate the mortgage and other liabilities into their clients’ plans.

Too many loan officers are approaching planners with equity harvesting strategies and losing credibility and trust before they even get their foot in the door, because they are leading with a specific strategy vs. explaining the practices and processes they deliver.

Mortgage planning, by definition, is designed to help the homeowner make the most informed decision possible, by integrating the mortgage decision into the overall financial plan — it’s not recommending and selling specific strategies.

Recommending a traditionally amortized mortgage to a borrower with the financial strategy of prepaying their mortgage is as much of a mortgage planning strategy as recommending an interest-only mortgage and investing the difference in a side account. The difference is that, in one strategy, you are building your wealth in your home and, in the other, you are accumulating your wealth outside the home. Of course, these two strategies also have different risk factors and different potential for return on investment — but they are both mortgage planning strategies.

The goal of every Mortgage Planner is to help the homeowner select the mortgage that:

• Helps them make the most informed decision possible;
• Is suitable based on their historical savings and earning history;
• Dollarizes the total cost of different debt structures over time;
• Helps them reach their freedom point within their desired goals; and
• Gives them peace of mind.

This is a very important question and I’m glad Cyrus brought it up. If he’s challenged with this situation, then many others who are NOT asking me the same question could also be having similar problems, as well.

Thank you Cyrus, for helping to teach your peers about the best way to build relationships with financial planners!

New Blog From Industry Expert Brian Koss

Brian Koss is one of the most successful mortgage originators and managers in existence today. In a previous blog post, I mentioned how he and his two assistants closed $149 million in production in 2005. Not to mention my recent Strategy Alert that I recorded with him.

Brian was also one of our featured speakers at the Mortgage Coach Users Summit in Vegas recently. If you attended, you may have had the opportunity to listen to him speak and experience his powerful presentation.

Brian has recently launched a blog, which I strongly encourage everyone to sign up for and to read regularly. You can be sure he’ll offer great ideas and strategies that will help all loan officers generate new business.

Access Brian’s blog at:
www.briankoss.typepad.com

Access Brian’s website at:
www.yourloansherpa.com

Mortgage Coach Sales Library Grows

The past few weeks have kept us very busy. Of course, busy for us is good for you because it means there are now many more new resources for you to download. In fact, we’ve added 70% more content and information to The Mortgage Coach Sales Library.

Here’s a sample:

• The Mortgage Coach Power Users Summit Presentations
• Jim McMahan’s Scripts and Sales Process Guidelines
• The LoansNow Presentation from Sales Mastery 2006

One thing we have learned at The Mortgage Coach is how incredibly creative and innovative our users are. Going forward, we plan to host even more user content.

And as an added incentive, twice a year we will award $2,500 to the best Mortgage Coach user implementation, idea and/or strategy. To become eligible, just email your best sales scripts, letters, strategy or marketing piece to: [email protected].

New MAC Attack!

Learn the best resources for understanding the "Big Four" market factors and build your own opinion so you'll be able to confidently discuss the interest rate market for 2007 and the effect it will have on your client's overall financial strategy.

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