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Retirement Planning - The Opportunity and Responsibility. Credential Group Sales Skills Development - Spring 2001. Daryl Diamond CFP CLU CHFC Diamond Retirement Planning Ltd. THE POST-LUNCH DIP. www.personalfinanceseries.com. Monday of next week. AEGON Mission Statement. Make Money.

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Retirement planning the opportunity and responsibility l.jpg

Retirement Planning - The Opportunity and Responsibility

Credential Group

Sales Skills Development - Spring 2001

Daryl Diamond CFP CLU CHFC

Diamond Retirement Planning Ltd.



Www personalfinanceseries com l.jpg

www.personalfinanceseries.com

Monday of next week


Aegon mission statement l.jpg
AEGON Mission Statement

Make

Money

Respect

Others

Have

Fun


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Five Areas To Cover

  • THE OPPORTUNITY AHEAD

  • ILLUSTRATE OUR RESPONSIBILITY

  • THE CRITICAL ROLE OF PLANNING

  • THE VALUE OF WHAT WE DO

  • THE POWER OF “TEAM WORK”


Booming opportunity number of retirements year l.jpg
Booming OpportunityNumber Of Retirements / Year

Currently 225,000

By 2005 265,000

2005 - 2020 320,000

2020 - 2029 425,000

Source: Toronto Star, Aug. 1999


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Keys To Success

  • Understand and focus on their chosen market

  • Develop systems and procedures for that market

  • Possess conviction in the value of their work and love what they do

  • Become recognized for the work they do


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Processes That Focus On

Issues that are important and unique to them

  • Client education and awareness

  • Comprehensive planning

  • Investment portfolios

  • Risk management

  • Service


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Five Stages of Retirement Planning

  • Accumulation

  • Positioning

  • Income Structure

  • Disposition

  • Distribution


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Five Stages of Retirement Planning

  • Accumulation

  • Positioning

  • Income Structure

  • Disposition

  • Distribution


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I DECIDED NOT TO LEARN HOW

TO PLAY THE PIANO …

BECAUSE I HEARD IT TOOK TEN

YEARS TO LEARN TO PLAY IT WELL

… UNFORTUNATLEY, I MADE THAT

DECISION TEN YEARS AGO


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How Inflation Erodes Your Income

Future Purchasing Power of $1,000

at 2% inflation

at 4% inflation


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Inflation And Its Impact On Prices

MENU ITEM 1967 TODAY

Hamburger $0.20 $1.15

Cheeseburger $0.25 $1.25

French Fries $0.20 $0.95

Milkshake $0.20 $1.45

Soft Drinks $0.10 $0.99

Coffee $0.10 $0.75

Smiles Free

Still Free


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Canada’s Demographic Reality

Number of Births in Canada By Year

1994

Year


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Provincial Health Care Spending

by Age and Sex

Canadian Average, 2000

current dollars

age group

Sources: Canadian Institute for Health Information 2000


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Inflation and Political Issues

As all levels of government search for revenues

Utilities

Property Taxes

Income Taxes

Estate Taxes

Dental and Medical Costs


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Inflation and Political Issues

As all levels of government search for revenues

Utilities

Property Taxes

Income Taxes

Estate Taxes

Dental and Medical Costs

Prescription Drugs


Inflation and political issues18 l.jpg
Inflation and Political Issues

As all levels of government search for revenues

Utilities

Property Taxes

Income Taxes

Estate Taxes

Dental and Medical Costs

Prescription Drugs

Health Care “Premiums”

Long Term Health Care Costs


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Two Key Contentions

The Baby Boomers will use retirement assets

to pay for those services that, today, we take for

granted

The government will move to a system of

taxing assets as well as income


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Advisor Opportunity

  • Diversify assets by type, geography and

    tax treatment

  • Shelter taxable growth through

    Unrealized capital gains

    Investment funds set up as corporations

    Cash value life insurance

  • Position to receive varying types of

    taxable income


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The Quality of Personal Financial Advice

Dalbar Inc Market Research

  • 85% Want investment advice

  • 80% Want advice on minimizing taxes

  • 70% Want the highest investment returns

  • 64% Want a complete financial plan

  • 63% Want help in defining their goals


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Source: Revenue Canada

Source: KPMG Consulting 1998


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The Reality contribution of any kind

Arecent survey of over 1,200 Canadians , by a major financial institution, revealed the following;

  • 21 % have not started to save for retirement

  • 51% have saved less than $30,000

  • 33% have saved more than $100,000

  • 7% have saved more than $400,000

  • 62% expect to work to age 65 out of necessity

  • 72 % do not have a financial plan even though

    48% use a “financial advisor”

Source: The Financial Post


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Five Stages of Retirement Planning contribution of any kind

  • Accumulation

  • Positioning

  • Income Structure

  • Disposition

  • Distribution


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What Is Different About This Market? contribution of any kind

  • Planning driven

  • Money driven

  • People are seeking our services

  • Client loyalty / retention is exceptional

AND …


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According To The contribution of any kind Globe and Mail

$700,000,000,000

of investable assets are in the hands of Canadians over the age of 55


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1. Income Structure contribution of any kind

2. Investment Portfolio

3. Health Risk Management

4. Wealth Transfer

5. People

The Retirement Income Market,Areas of Specialized Knowledge


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Year contribution of any kind

Life Expectancy

Income Factors

1965

1975

1985

Today

17.5 Yrs

2010

20 + Yrs

Changing Factors

Male Age 65

7.5 Yrs

Only a few retirement years to fund

CPP commences

10 Yrs

Appreciating real estate values

High nominal interest rates

14 Yrs

Excessive taxation

Excessive Government borrowing

None of the above apply in the

same manner


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Retirement Income Sources contribution of any kind


Opportunity l.jpg
Opportunity contribution of any kind

  • Concern over viability of CPP / OAS

  • Rarity of pension plans

  • There is an increased need for planned saving through RRSP and Non-RRSP vehicles …

  • This money MUST be intelligently invested if targets are to be reached


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The Two Factors contribution of any kind … From Two Perspectives

Accumulation

Retirement

Income

Return

Risk

Risk

Return

In the retirement market, there is an incredible opportunity

in risk analysis / risk management


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Becoming A Risk Manager contribution of any kind

Capital Loss

Investment Loss

Purchasing Power Loss

Health Related Loss

Tax Loss


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Investment Results contribution of any kind

Investment returns

Investor behaviour

+


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Our Consulting Role contribution of any kind

  • It is the same for investment portfolios as it is for structural planning …

  • We are simply trying to help the client reduce the number of “unknowns”

  • Involve them so they will understand


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Most Common and Costly Mistakes contribution of any kind Made by Investors

  • More time spent “picking funds” than on asset allocation

  • Lack of discipline / impatience

  • Unrealistic expectations

  • Trying to time the market


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Investor Vs. Investment Returns contribution of any kind

  • Mutual Fund Investors earn far less than reported returns, due to their behaviour

    • S&P return 1984-1997 = 17%

    • Fund investor returns = 6.7%

    • Average fund retention = 3 years

  • Conclusion

    • -In their attempt to cash in on impressive market gains, investors jump on the bandwagon too late and switch in and out of funds trying to time the market

    • -By not remaining invested for the entire period, investors do not benefit from the majority of market appreciation

    • Dalbar Inc. Investor Behaviour Study, 1997


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Most Common and Costly Mistakes contribution of any kind Made by Investors

  • More time spent “picking funds” than on asset allocation

  • Lack of discipline / impatience

  • Unrealistic expectations

  • Trying to time the market

  • Chasing returns, buy high and sell low


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Advisors Are No Better ! contribution of any kind

January 01 2001 - July 31, 2001

AGF Mutual Funds $2,000,000,000 net sales

International Value

70%

Fidelity Mutual Funds$1,000,000,000net sales


Slide39 l.jpg

Most Common and Costly Mistakes contribution of any kind Made by Investors

  • More time spent “picking funds” than on asset allocation

  • Lack of discipline / impatience

  • Unrealistic expectations

  • Trying to time the market

  • Chasing returns, buy high and sell low

  • Expecting all investments to perform positively at

    the same time


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Insight Pool Performance contribution of any kind 1 Year Returns To June 30, 2000

Canadian Value 49.57 % Global Equity -3.1%

Canadian Growth 21.54 % Global Equity RSP 2.82 %

Canadian Dividend 27.85 % Global Small Cap 24.37 %

Canadian Small Cap 19.84 % Cdn High Yield Inc -0.67 %

U.S.Value - 12.56 % Cdn Fixed Income 3.30 %

U.S. Growth 10.86 % Global Fixed Inc - 0.46 %

International Value 20.28 % Money Market 4.72 %

International Growth 37.51 %

Source: C.I. Mutual Funds


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Most Common and Costly Mistakes contribution of any kind Made by Investors

  • More time spent “picking funds” than on asset allocation

  • Lack of discipline / impatience

  • Unrealistic expectations

  • Trying to time the market

  • Chasing returns, buy high and sell low

  • Expecting all investments to perform positively at

    the same time

  • Expecting a manager’s investment approach to work

    all the time

  • Not enough proper diversification


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True Diversification Includes ... contribution of any kind

  • Different Asset Classes

  • Different Assets

  • Different Geographical Content

  • Different Management Styles


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High contribution of any kind

Return

Low

Return

Low

Volatility

Exploring the Efficient Frontier

You are not here !

High

Volatility


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The Three Most Difficult Things To Do contribution of any kind

  • Climb a fence that is leaning toward you

  • Kiss a person who is leaning away from you

  • Buy an investment fund that is flat or negative in recent performance


Investment returns l.jpg
Investment Returns contribution of any kind

Assuming capital of $200,000

Years before account is exhausted

Monthly 5.5%7.0%8.5%

Income

$1,500 16.8 20.5 28.5

$1,500 @ 2.5% 13.5 15.3 17.8


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How Long Will Your Investments Last? contribution of any kind

5%6%7%8%9%10%11% 12%

6% 37 * * * * * * *

7% 25 33 * * * * * *

8% 20 23 30 * * * * *

9% 16 18 22 29 * * * *

10% 14 15 17 20 27 * * *

Rate of

Return

Rate ofWithdrawal

Years

* Capital will never be exhausted


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What Are Clients contribution of any kind Really Seeking?

  • A Trust Relationship

  • Security and Safety

  • Peace of Mind

  • Care For Loved Ones

  • Remembrance / Legacy

  • Insight


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Use Our Expertise contribution of any kind

Most people plan only one retirement

How many things do people do well

that they do only once?


Use our expertise49 l.jpg
Use Our Expertise contribution of any kind

Most people plan only one retirement

How many things do people do well

that they do only once?

We plan 2.5 retirements each week


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Five Stages of Retirement Planning contribution of any kind

  • Accumulation

  • Positioning

  • Income Structure

  • Disposition

  • Distribution


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Your health is your wealth contribution of any kind

It may be your health

that destroys your wealth


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REASONS FOR RETIRING contribution of any kind

%

Source: Statistics Canada General Social Survey, 1994


Slide53 l.jpg

Major Causes of Death contribution of any kind

in 1900

Pneumonia

Tuberculosis

Enteritis

Stroke

Heart Attack

Nephritis

Accidents

Infancy

Cancer

Senility


Slide54 l.jpg

Major Causes of Death contribution of any kind

in 1993

Heart Disease

Cancer

Stroke

Accidents

Chronic Pulmonary

Pneumonia / Influenza

Diabetes

Chronic Liver / Cirrhosis

Arteriosclerosis

Suicide


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Critical Illness contribution of any kind

Major costs of dealing with an illness that are borne by you:

1. Adapting your residence for special needs

2. Paying for private care at home or for a care facility “per diem”

3. Seeking more immediate medical treatment

4. Paying for experimental or alternative medical treatments

5. Seeking the best physicians and facilities to treat your illness

6. Covering the costs of extended travel or relocation

7. Paying the costs of drugs and treatments not covered under provincial plans


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The Complete List of U.S. contribution of any kind Medical Facilities That TakeCanadian Money At Par

1.

2.

3.

4.

5.


Using your own dollars for critical illness costs l.jpg
Using Your Own Dollars contribution of any kind For Critical Illness Costs

  • To get $1.00 U.S. requires C$1.50

  • From RRSP … it requires $2.00 to get

    $1.00 After Tax

  • To get $1.00 U.S. , after-tax, requires

    $3.00 from your RRSP

  • So, an $80,000 U.S. procedure will take

    $240,000 of RRSP assets


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Some Points To Address healthcare system for 4 or 5 dollars a day, would you be interested?

  • What do think of the current state of the Canadian Health Care System?

  • This is as good as it is going to get.

  • There is a two-tier system already in place. Get care here or go the U.S.


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Providing You With A Choice healthcare system for 4 or 5 dollars a day, would you be interested?

When Critical Illness Strikes

Your Only Choices to Cover Expenses May Be:

1. Use retirement asset (RRSP’s, Savings etc.)

2. Sell fixed assets ( House, Cottage, Valuables)

3. Settle for what treatment is available and when it is available

4. Impact other family members financially and emotionally


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Critical Illness Coverage healthcare system for 4 or 5 dollars a day, would you be interested?

1. Allows people to make choices

2. Protects lifestyle of you and spouse

3. Refunds all premiums at death if no prior claim has been paid

The Canadian Health Care System is not going to get any better !


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Always be nice to your children … healthcare system for 4 or 5 dollars a day, would you be interested?

… because they are the ones who will choose your rest home

Phyllis Diller


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Do The Following Reflect Your Feelings and Priorities? healthcare system for 4 or 5 dollars a day, would you be interested?

I DO WANT TO

  • Continue to enjoy a certain quality of lifestyle

  • Ensure my spouse can enjoy retirement

  • Be able to make choices

  • Maintain my independence and dignity

  • Be able to have access to the amount of care and the type of care that I will need


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Do The Following Reflect Your Feelings and Priorities? healthcare system for 4 or 5 dollars a day, would you be interested?

I DON’T WANT TO

  • Be a burden to my spouse or on my family

  • Be forced to accept the lowest form of care / facility

  • Have to go on long waiting lists

  • Reduce or exhaust my retirement assets by paying for my long-term care

  • See my children’s/grandchildren’s inheritance reduce

  • Create emotional and financial hardship for my spouse or family


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Who Is Buying LTC ? healthcare system for 4 or 5 dollars a day, would you be interested?

  • Average age is 65

  • 75% of buyers are between 55 and 74

  • Approximately 60% male, 40% female

  • Average premium is $1,400 / year

Source: Munich Re Canada


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We Need To Communicate healthcare system for 4 or 5 dollars a day, would you be interested?

  • Health risk does not mean dying

  • May not result in you losing your life but in losing your life savings

  • What is and what is not covered by government programs


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The True Cost For Coverage healthcare system for 4 or 5 dollars a day, would you be interested?

- A claim validates purchase decision

- Refund of premium options

- Give up the net, after-tax return

Is it better to give up potential investment returns or lose capital?

Using insurance vehicles to cover “risks” allows

you to have greater discretion with your capital


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Two Excellent Reports healthcare system for 4 or 5 dollars a day, would you be interested?

  • Will The Baby Boomers Bust the Health Care System - C.D. Howe Institue

  • Home Care

    What We Have, What We Need

    - Canadian Healthcare Coalition


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There Are Only Three Things That You Do With Money healthcare system for 4 or 5 dollars a day, would you be interested?

1. SAVE

2. SPEND

3. LEAVE


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Insurance Company healthcare system for 4 or 5 dollars a day, would you be interested?

Let the Insurance Company pay Revenue Canada

Pass FULL Estate Value to Family

Preparing For The RRIF Tax


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Insurance Company healthcare system for 4 or 5 dollars a day, would you be interested?

Let the Insurance Company Provide the Inheritance

Spend What You Have Saved

OR . . . . . . . . . . . . . . . . . . . . .


Taxation of registered assets l.jpg
Taxation of Registered Assets healthcare system for 4 or 5 dollars a day, would you be interested?

Remember …

This is not a potential tax,

it is an ultimate tax

Any taxable residue could be directed to

a church or charity


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We’re spending our childrens’ healthcare system for 4 or 5 dollars a day, would you be interested?

inheritance

But replacing it with joint, last-to-die insurance


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We do not inherit the world from our ancestors … healthcare system for 4 or 5 dollars a day, would you be interested?

We borrow it from our children

Chief Seattle


What line completes these client sentences l.jpg
What Line Completes These Client Sentences ? healthcare system for 4 or 5 dollars a day, would you be interested?

I wish I would have known that …

I wish I would have met you ...

I wish I would have done that …

TEN YEARS AGO !


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The Marketing Shift healthcare system for 4 or 5 dollars a day, would you be interested?

Customer

Needs

Satisfied

1:1 Marketing

Mass Marketing

Customers

Reached

Martha Rodgers


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The Future Markets healthcare system for 4 or 5 dollars a day, would you be interested?

  • Critical Illness

  • Health Insurance

  • Long Term Health Care

  • Elective Procedure Coverage

  • Wealth Management

  • Estate Transfer

  • Tailored Planning and Advice


Institutional benefits l.jpg
Institutional Benefits healthcare system for 4 or 5 dollars a day, would you be interested?

  • Name recognition

  • Instant credibility

  • Consistency of service and services

  • Succession planning / continuity

  • Alliance with other specialists

  • Not customers but members


Advantages for you l.jpg
Advantages For You healthcare system for 4 or 5 dollars a day, would you be interested?

  • Training

  • Development and promotion from within

  • An existing client base with which to work

  • Delivery of a financial planning service consistent with credit union culture

  • MemberCare resources

  • Investment research / Portfolio Selector

  • A total team effort


What are you selling l.jpg
What Are You Selling? healthcare system for 4 or 5 dollars a day, would you be interested?

  • Yourself

  • Your systems

  • Your services

  • The relationship

Products are simply the commodities that follow


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More Knowledgeable healthcare system for 4 or 5 dollars a day, would you be interested?Consumers Require

  • Access to the best products

  • Focus on insight vs information

  • Greater emphasis on “The Total Picture”

  • Greater commitment to communication

    and education

  • Higher standard of service

  • Clear focus on value


Why we are worth 1 year l.jpg
Why We Are Worth 1% / Year healthcare system for 4 or 5 dollars a day, would you be interested?

  • Increase investment returns by 1%

  • Save people at least 1% from mistakes

  • Save them time, stress, worry

  • Save them $______ yr in income taxes

  • Preserve 10’s - 100’s of thousands of $ in estate value through conservation

  • We can manage the risks for them

  • Provide continuity for spouse and heirs


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Opportunity Knocks healthcare system for 4 or 5 dollars a day, would you be interested?

  • Demonstrate your value as an advisor

  • People DO want to hear from you

  • Pick up existing accounts by having

    a process

  • A great time to ask for referrals

  • Get more money into the market

  • While everyone else is hiding, get going


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Controlling Your Own Destiny healthcare system for 4 or 5 dollars a day, would you be interested?

  • Know the competition

  • Focus on a market and continue to grow

  • Show your clients that you truly do care

  • Be planning driven not product driven

  • Combine “High Tech” with “High Teach” and “High Touch”

  • Pursue your work with a passion


Aegon mission statement85 l.jpg
AEGON Mission Statement healthcare system for 4 or 5 dollars a day, would you be interested?

Make

Money

Respect

Others

Have

Fun

Respect

Yourself


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