NAIFA's Advisor Today March/April 2017 Edition

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podcast series

Building a More Successful Practice

Available at www.AdvisorToday.com/podcasts

Interview with President of Women in Insurance and Financial Services

Evelyn Gellar, President of Women in Insurance and Financial Services, offers some tips and techniques for winning in insurance and financial services.

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NAIFA’S ADVISOR TODAY

Editor-in-Chief

Ayo Mseka amseka@naifa.org

703-770-8204

Circulation Manager

Tara Laptew tlaptew@naifa.org

703-770-8207

NAIFA

Kevin Mayeux, CAE, CEO kmayeux@naifa.org

703-770-8101

Michael Gerber COO & General Counsel mgerber@naifa.org

703-770-8190

Diane Boyle SVP, Government Relations dboyle@naifa.org

703-770-8252

John Boyle

AVP, Professional Development & Education jboyle@naifa.org

703-770-8267

Magenta Ishak VP, Political Affairs mishak@naifa.org

703-770-8152

Jennifer Cassidy VP, Finance jcassidy@naifa.org

703-770-8125

Sheila Owens VP, Communications and Marketing sowens@naifa.org

703-770-8112

Diane Powers VP, Professional Development and Education dpowers@naifa.org

703-770-8226

Mark Rogers VP, Information Services mrogers@naifa.org

703-770-8130

Brian Steiner VP, Business Development & Strategic Partnerships bsteiner@naifa.org

703-770-8220

Gary Sanders Counsel and VP, Government Relations gsanders@naifa.org

703-770-8192

Michele Grassley Clarke VP, Membership and Association Services

NAIFA OFFICERS

President Paul R. Dougherty, LUTCF, FSS, HIA, ALHC State Farm Insurance Companies paul@doughertyagency.com

President-Elect Keith Gillies, CFP, CLU, ChFC Ameritas kmgillies@aol.com

Secretary Jill Judd, LUTCF, FSS State Farm Insurance Companies jill.judd.jyt0@statefarm.com

Treasurer Matthew Tassey, CLU, ChFC, LUTCF Burwell & Burwell mtassey@scribnerinsurance.com

Immediate Past President

Jules O. Gaudreau, Jr., ChFC, CIC The Gaudreau Group, Inc. julesgaudreau2@gmail.com

CEO Kevin Mayeux, CAE kmayeux@naifa.org

Trustees

David A. Beaty, CLU, ChFC dave@heartlandfinancial.net

Aprilyn Geissler

ageissler@farmersagent.com

Todd G. Grantham, CFP, CLU, ChFC, MSFS todd.grantham@nm.com

Bryon A. Holz, CLU, ChFC, LUTCF, CASL bryon@bryonholz.com

Brock T. Jolly, CFP, CLU, ChFC bjolly@financialguide.com

Booker Joseph, CLU, ChFC, FLMI Bookerjoseph@uhc.com

Delvin Joyce, CLU, ChFC delvin.joyce@prudential.com

Thomas O. Michel tmichel@michelfinancial.com

Charles M. Olson, CLU, ChFC Charles@ociservices.com

Cammie K. Scott, LUTCF, REBC, RHU cscott@ckharp.com

Greg Toscano, LUTCF Johnson Insurance Consultants gttoscano@yahoo.com

NAIFA SERVICE CORPORATION OFFICERS AND DIRECTORS

President Kevin Mayeux, CAE

Secretary

Paul Dougherty, LUTCF, FSS, HIA, ALHC State Farm Insurance Companies

Treasurer

Matthew Tassey, CLU, ChFC, LUTCF

Scribner & Scribner

Directors

Brenda Doty, LUTCF, RHU, CLU,CPC

The Doty Group, Inc.

Connie Golleher, CLTC The Golleher Group

Susan Wier, CFP, ChFC, LUTCF First American Trust

EDITORIAL ADVISORY COUNCIL

Laurie A. Adams, CFP, CLU, LUTCF Country Insurance & Financial Services

Brian Ashe, CLU

Brian Ashe and Associates, Ltd.

Frank Bearden, Ph.D., CLU, ChFC

Frank C. Bearden, Ph.D., Consulting

Kevin Faherty, LUTCF

Faherty Insurance Services, Inc.

Greg Gagne, ChFC, LUTCF Affinity Investment Group, LLC

Lisa Horowitz, CLU, ChFC

LifeCycles

Michael Lynch

Metlife

John Marshall Lee, CLU, CFP, RHU

People Insurance & Investments

John Nichols, MSM, CLU

Disability Resource Group Inc.

Ike Trotter, CLU, CASL, ChFC

Ike Trotter Agency, LLC

PUBLISHED BY

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Editor: Tamára Perry-Lunardo

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Mark Ragland and Matt Wooten

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Published April 2017/NAI-S0217/9177

© 2017 Naylor, LLC. All rights reserved.

NAIFA’s Advisor Today (ISSN 1529-823X) is published bi-monthly by the National Association of Insurance and Financial Advisors Service Corporation, 2901 Telestar Court, Falls Church, VA 22042-1205. Telephone: 703-770-8100. © 2016 National Association of Insurance and Financial Advisors Service Corporation. All rights reserved.

Subscriptions: The annual subscription rate for individual non-NAIFA members is $50; institutions, $60. The international subscription rate for non-NAIFA members is $100 per year.

from the editor

By Ayo Mseka

Building Your Circle of Influence

In my search for articles to be featured in this magazine, I often ask top producers to share the reasons for their professional success. One of the common denominators of their success turns out to be the use of several groups of people they solicit, nurture, cultivate, and rely upon for advice, leads, and help in running a profitable practice. These people, who ultimately become part of their “Circle of Influence,” typically fall into five groups:

Centers of Influence: These include accountants, lawyers, bankers, estate planners and real estate professionals who provide leads and referrals.

Study Group Participants: These are agents and advisors they meet with regularly to discuss issues of common concern and solicit help with difficult client cases.

Board of Client Advisors: These are clients the advisors regularly ask about what is working and what is not, in the all-important client/advisor relationship.

Mentors: Younger advisors often turn to these individuals for help, counsel, and encouragement as they build their practices.

Professional Coaches: These folks counsel advisors professionally, help them maintain their focus on achieving success, and work with them to get the extra push they need to jumpstart their career.

Another group to add to your circle

As you work with these individuals, you should think of adding your fellow NAIFA members to your Circle of Influence. Why? Ask any successful NAIFA member the reasons for joining the association and he will likely mention the opportunity to gain access to other NAIFA members.

Access to NAIFA members is critical because when you reach out to them, you begin to see great things happen to you and your practice. You get the motivation you need to keep on keeping on when things are not going your way, and you get a pat on your back when things are. You get advice on some of your most difficult cases, as well as tips and techniques for boosting your production numbers. Whether your focus is on life insurance, multiline, retirement, financial planning or estate planning, one quick call, text, or email is all you need to get the inspiration and professional help you need to forge ahead.

So as you review your Plan for Success this year, make it a point to use all of the “experts” mentioned in this article. They will work with you to grow your business and teach you some powerful lessons along the way. y

By Paul Dougherty, LUTCF, FSS

NAIFA’s Congressional Conference

The coming months will bring us many challenges and opportunities as the Trump Administration carries out its agenda. An important part of this agenda is tax reform, which involves rate reduction and simplification, as well as pro-growth policies that promote U.S. competitiveness.

To achieve some of the Trump Administration’s tax-reform goals, lawmakers are looking at the entire tax code and proposing sweeping changes. For the first time since 2011, there are majorities in both houses of Congress held by members from the same party as the president; so, real action on tax reform is more likely than at any time in recent memory.

Fortunately, NAIFA is in a position to influence decisions that affect the success of every advisor, along with their clients and the entire insurance and financial-services industry. We are making a difference and will work with the administration as it seeks to eliminate burdensome regulations that harm your business.

NAIFA’s Congressional Conference

As the administration works on its agenda, we will work on ours, which is to let lawmakers know that millions of middle-income Americans are counting on our products to protect their families and provide them with long-term financial security.

NAIFA’s upcoming Congressional Conference provides us with the perfect opportunity to tell this important story. Scheduled from May 23 to May 24 in Washington, D.C., the meeting will bring together hundreds of NAIFA members who will educate their members of Congress about issues of concern and help shape national public policy.

Much has changed since 700 NAIFA members took our unified political-advocacy message to Washington, D.C., as part of the 2016 Congressional Conference. For one thing, we have a new Congress. There are seven senators and 52 House members who were elected for the first time this past November and who did not benefit from last year’s Congressional Conference meetings with NAIFA members. So this year’s Congressional Conference affords us the perfect opportunity to educate these new lawmakers about the important role our products play in the lives of millions of Americans.

Now more than ever, NAIFA needs you to attend the 2017 Congressional Conference to ensure that laws and regulations enhance, not restrict, the ability of middle-market families to have access to the products and services we offer — products and services that help them secure their financial future.

Your participation is critical to the formation of sound policies that benefit the industry and the clients you serve. So please register today for the 2017 Congressional Conference and join your colleagues from all 50 states and the District of Columbia. Together, we will make a difference.

Paul Dougherty, LUTCF, FSS, is president of NAIFA. He is with State Farm Insurance Companies in Hyattsville, Maryland. Contact him at paul@doughertyagency.com.

new products

New Dental Plan Enters the Market

TruAssure Insurance Company, a standalone, dental-benefits carrier, has introduced a comprehensive set of new dental plan options for small and large companies, as well as for families and individuals.

These new options offer employers flexible, standalone dental plan coverage with a focus on prevention, easy administration and access to a large, national network of dentists. Family and individual options offer hassle-free coverage focusing on prevention and flexibility, in many cases providing unique benefits such as teeth whitening and orthodontia.

The introduction of these plans is in direct response to the growing demand for dental insurance and preference for flexible, affordable benefits. According to the National Association of Dental Plans (NADP), three-quarters of employees expect their employers to provide dental insurance, with orthodontia and cosmetic procedures such as teeth whitening among the most requested benefits. NADP research has also shown that individual dental coverage is a growing market, rising from 2 percent of dental coverage in the U.S. in 2011 to 7.2 percent at the close of 2014.

With this rollout of plans, TruAssure is expanding its footprint and addressing these needs. The company now offers group plans and dental plans for individuals and families in more than 25 states, with other state filings pending regulatory approval. The company also offers dental savings programs, which are available nationwide.

“Dental insurance is a valued benefit that helps employers attract and retain the best employees. TruAssure’s flexible dental plans provide employers with straightforward, affordable options that keep their employees healthy and reduce administrative headaches,” said Bernie Glossy, CEO of TruAssure Insurance Company. “For small and large businesses as well as individuals, we reduce the complexities of dental insurance, making sure people have access to the dental care they need to keep smiling.”

The company’s new small-group plans provide employers with flexible options and a range of deductibles and annual maximums to meet the needs of businesses with two to nine eligible employees. Plans are easy to administer, providing the coverage employees want at the best savings. For employers with five to nine eligible employees, TruAssure’s Small Group Select plans have no employee-waiting periods.

As part of this rollout of new dental plans, TruAssure is also introducing customizable dental solutions for large groups. Whether these companies are looking for fully insured or self-funded options, these plans make administration for groups easy and affordable.

TruAssure’s new suite of individual and family plans — Max Savings, Choice and Choice Plus — include a variety of options and benefits that many other carriers don’t offer, such as three teeth cleanings per year and composite (white) fillings on all teeth. TruAssure’s Choice and Choice Plus plans do not have waiting periods and allow individuals to choose from a selection of annual maximums. All plans are easy to understand and offer child-only options and no age limits for individuals older than 65.

TruAssure small group and individual plans are now available in 26 states. Additional states are pending regulatory approval.

To learn more about TruAssure Insurance Company and its dental insurance plans, visit www.truassure.com.

new products

Income Builder with Guaranteed Lifetime Withdrawal Benefit Debuts

American International Group, Inc. has rolled out Assured Edge Income Builder, a new fixed annuity product issued by American General Life Insurance Company (AGL). Appealing to investors who are looking for a low risk, long-term, retirement income solution, Assured Edge Income Builder offers clients a guaranteed lifetime income.

“Assured Edge Income Builder allows investors to maintain access to their retirement assets and have guaranteed income for life, stability in their asset value, plus a rising income opportunity – a highly valued combination for retirees,” said Bryan Pinsky, senior vice president, individual retirement products at AIG. “By allowing investors to predict retirement income and protect their principal from market risk, we are able to provide a product that offers both security and flexibility.”

Assured Edge Income Builder is intended to offer investors an income advantage through the following features:

• Lifetime Income: The contract currently offers investors age 65 at contract issue a guaranteed income up to 5.6 percent of the contract value. Higher percentages of up to 6.35 percent are currently available for older issue ages, and lower withdrawal rates apply to younger issue ages. Income rates are determined based on the age at contract issue. In addition the contract offers 7.5 percent (simple interest) income credit growth each year withdrawals are not taken until the investor elects to begin lifetime income withdrawals.

• Income Flexibility: Investors can elect to start lifetime income immediately or in the future. Investors can also start receiving lifetime income as early as age 50. Assured Edge Income Builder also provides certain contract provisions that allow investors to access money through “penalty-free withdrawals” without incurring a withdrawal charge or market value adjustment.

• Security: Investors can protect their principal from the ups and downs of market risk with guaranteed interest rates.

“As we designed this product, we worked closely with our distribution partners to understand what investors want right now,” said Michael Treske, EVP and Chief Distribution Officer, Annuities and Mutual Funds at AIG. “Time and time again, we were told investors want security, flexibility, access to money and guarantees. Assured Edge Income Builder delivers on all of these requests – for life.” The product is available in all states except New York.

For more information, visit www.aig.com/annuities. Financial advisors may also call 888-502-2900.

new products

New Fixed Indexed Annuity Launched

Ohio National Financial Services recently introduced a new fixed- indexed annuity designed to help customers reach their long-term retirement goals.

The ONdex fixed indexed annuity, which joins the company’s annuities and retirement product portfolios, provides customers the opportunity to accumulate assets by earning tax-deferred interest, subject to limitations, based in part upon the performance of a pricing index.

The ONdex fixed indexed annuity can be a good fit for someone who is retired or close to retirement age because it provides growth opportunities without the risk of losing principal from market downturns, according to the company. It may be a good option for customers looking for a fixed income alternative.

“It is a strong addition to our annuity line of business, offering additional product breadth for accumulation and retirement planning, and is ideal for those with a conservative risk tolerance,” said Michael J. DeWeirdt, CFA, FRM, Ohio National’s senior vice president, annuities strategic business.

Highlights of the new fixed-indexed annuity include:

• Participation in market appreciation

• Two versions for clients with different retirement time horizons and liquidity needs

• A contractual minimum interest rate guarantee that ensures the contract’s value never decreases as a result of losses an index may experience

The choice of three quality indices

For more information, visit www.ohionational.com

By Frank C. Bearden, Ph.D., CLU, ChFC

Ethical Practice in Times of Change

Today’s changing business climate should deepen our ethical commitment to our clients and steady our resolve to continue offering a high level of service.

With the introduction of the DOL Fiduciary Rule, much may have changed for many financial advisors. To add to this, there is some uncertainty about how the new Administration in Washington, D.C., will change the rule, if at all.

This introduces a strong element of uncertainty in the lives of financial advisors as they attempt to provide for their clients’ financial needs. In such times, ethical direction may seem harder to determine.

Fundamentals remain the same However, even with all that seems to be going on, we are still bound to conduct our practice from the same directives. This means that the NAIFA Preamble and obligations are as meaningful and helpful now as they have ever been, supported by our own personal ethical code.

We are still held to maintaining client confidence, working diligently to address their needs. The illustrations of analysis and product performance still must be accurate and honest and must consider all pertinent client facts. We are obligated to continue to enhance our professional knowledge and skills, and, of course, we have to obey all laws and regulations, in letter and in spirit. Finally, we still should conduct ourselves in a professional manner, to reflect well on our professional association and profession.

We must cooperate with adjacent professionals who also serve our clients’ interests, and we still must be political advocates for our clients’ financial interests, the financial products we use in their service, and our profession. So, in the most basic sense, our ethical “marching orders” have not changed.

You may well agree with the above, but still note that many aspects of our profession are in a state of flux, considering the potential changes in our level of service to clients, possible changes in the tax code, changes in laws that affect small-business owners, and other issues in transition.

You would be correct about the changes that may occur. But ask yourself this: Has there been a time since the founding of NAIFA on June 18, 1890, as the National Association of Life Underwriters, when we, our predecessors and all the clients we have served have not experienced change? And doesn’t such change provide much of the invigorating challenge our profession offers, with an increasing need for our services by those we serve?

So let’s take a note from our experience in sports, and let the challenges of today and the near future deepen

our ethical commitment to our clients and steady our resolve to continue to provide them with a high level of service.

Frank C. Bearden, Ph.D., CLU, ChFC, is managing member at Ethics Consulting. Contact him at fbearden@outlook.com or at 210724-1958.

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Doesn’t change provide much of our profession’s invigorating challenge, with an increasing need for our services by those we serve?

By Michael Riedmiller

The Benefits of Being a Holistic Advisor

Becoming a holistic advisor allows you to help your clients truly achieve their financial goals.

In today’s world of money and investing, it is more important than ever for financial professionals to offer customized solutions that truly serve their clients’ best interests since everyone’s situation is different. Each person has unique financial objectives and life goals. What might be best for one person or married couple might not necessarily be what’s best for another, even if they are of the same age and have a similar net worth. It’s also important to get to know each client as a real person to learn about his or her financial goals, family, hobbies and more. Therefore, it is unlikely an advisor will be able to truly help his clients meet their financial objectives without becoming a holistic advisor.

Becoming a holistic advisor

I recommend that an advisor become a fiduciary in order to serve a client’s best interests. This involves being both securities and insurance licensed, providing full disclosure of the pros and cons of each financial instrument recommended, and demonstrating complete transparency and disclosure of fees. Since an advisor can only recommend financial products or investments for which they are licensed, becoming dually licensed means they can help a client find the right balance of securities and insurance products to incorporate into their plan, which is what I call a “Total Plan”.

Some clients may feel comfortable having most of their assets in equities, such as stocks, bonds, mutual funds and variable annuities. Others may not want any of their assets in equities and would feel more comfortable with their money at the bank and in insurance products. Many clients prefer, and benefit from, the right “balance” of equities and insurance products.

The use of technology is essential to the holistic advisor. There are some amazing tools available, with more to come in the future. One of the many tools I use provides clients with the amount of risk that they have in their portfolio, which they might not be aware of. This utilizes a scientific framework for which the company has won awards.

Long-term-care planning is an important part of financial planning as well, because, on average, one of every two seniors will need some type of long-term care in the future. There are some good options available today, from traditional LTC coverage to “asset-based coverage,” which involves the use of special types of life insurance with LTCI riders.

Most of the people who become my clients do so because they want their advisor to be able to help them implement a plan that covers all of their real needs rather than just purchasing financial products from different advisors. For this reason, I have my Series 65 so I could be an Investment Advisor Representative and a Fiduciary.

In addition, I am licensed to sell multiple types of insurance (life, annuities, health, disability, long term care). To bring even more value to my clients, I also became a Certified National Social Security Advisor, because Social Security planning is another big part of retirement planning. Each year, I also attend numerous investment and financial conferences to continue my education. Never stop learning and always offer your clients the most up-todate and appropriate solutions for their financial needs.

Michael Riedmiller is a financial advisor with Pro Wealth and an investment advisor representative with Royal Fund Management, LLC, an SEC-registered investment advisory firm.

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Many clients prefer, and benefit from, the right “balance” of equities and insurance products.

By Ayo Mseka

Majority of Women Now Responsible for Household Finances

While most feel secure, many are uncertain about their financial decisions.

Women are taking the reins of their household finances but many are still hesitant to do so when managing their careers, according to the updated Allianz Women, Money, and Power Study from Allianz Life Insurance Company of North America.

The majority of women in the study (51 percent) claim they are the chief financial officer (CFO) of the household, and more married women (37 percent) report being the primary breadwinner of the family (compared to 31 percent in the 2013 study). Additionally, 53 percent of women report they either have a “great deal of responsibility” or they “do it all,” when managing the household’s long-term savings and investments.

Despite having such a large impact on household finances, the number of women who say they “have more earning power than they’ve ever had” has decreased to 50 percent (compared to 57 percent in 2013). Factoring into this perceived decline in earning power, less than half (44 percent) claim they have ’leaned in’ at work by asking for a raise or promotion they thought they deserved.

“Women are taking a larger role in managing household finances and are gaining more responsibility for the financial success of their family,” said Allianz Life Vice President of Consumer Insights Katie Libbe. “The savviness that women exhibit with their household finances can translate to being more assertive and having confidence to take risks in their careers.”

Financially savvy but uncertain about decisions

The survey also found that the majority (58 percent) of women feel they are more financially savvy than their spouse or partner, and nearly seven out of 10 respondents (67 percent) report that becoming more knowledgeable and involved in managing finances made a difference in their quality of life. However, while 68 percent say they feel financially secure, many still report uncertainty about their financial decisions. Sixty-one percent of women wish they had more confidence in their financial decision-making and 63 percent wish they knew more about financial planning and investing.

“While women may be satisfied with their current financial situation, having more financial knowledge can help build a better future and instill confidence,” added Libbe. “By utilizing available resources or working with a financial professional, women can gain the insight they need to achieve financial security.”

Fears and concerns

Even though most women claim they are financially savvy, nearly two-thirds report financial information and the various investment options available to them can be overwhelming. Additionally, running out of money in retirement and managing the rising costs of health insurance remain the top worries that keep women up at night.

Having the right support can make a major difference. Thirty percent of women report using a financial professional for guidance and 75 percent of those wish they had done it sooner.

Still, many women feel left out of the financial planning conversation. More than half (51 percent) claim the professional treats their spouse/partner as the decision-maker, and this happens regardless of whether the financial professional is male or female. Choosing a financial professional who understands the needs of the modern family and can help sift through investment choices is a key factor for women.

When asked what type of advice women should pass on to their daughters or granddaughters about money, women thought future generations should focus on having financial independence and creating a good financial plan. The vast majority of respondents advised them to: start planning early (81 percent), not depend on others for financial security (72 percent), create a good financial plan (72 percent) and learn how to invest money (65 percent).

In comparison, a smaller number of women (56 percent) advise their daughters or granddaughters to advocate for themselves (or ‘lean in’) at work to get the salary they deserve.

“It is increasingly important to establish a solid financial foundation that can keep up with increased costs of living, and this all starts with earned income,” added Libbe. “As more financial responsibility lands on women’s shoulders, working women need to advocate for themselves to gain the equal earning power they deserve. Future generations of women who see this behavior will then be more confident to do the same, lessening the income disparity we see today.”

The study was commissioned by Allianz Life Insurance Company of North America in October 2016, with some questions resurveyed from the 2013 Allianz Women, Money, and Power Study. 1,416 women, ages 25-75 with household income of $30,000 per year or higher, completed the online survey. <pull quote:>

Top worries remain running out of money in retirement and managing the rising costs of health insurance.

By Curtis Cloke, CLTC, LUTCF, RICP

Managing Longevity Risk for Your Clients

Addressing longevity risk is critical because increasing longevity increases the likelihood that other risks will derail your client’s retirement plan.

ne-size fits all” is not a sentence that is typically muttered when talking about a financial strategy with clients. With the Department of Labor ruling looming over our industry, talking heads are trying to find a solution that can work for all Americans in the retirement-planning space.

But as most financial advisors understand, there is never a one-size-fits-all solution. However, there are risks that all Americans face, no matter their situation. Whether someone has $100 million or $1 million in retirement assets, everyone will encounter longevity risk at some point in their retirement planning.

In the past, you may have read articles about bullet-proof withdrawal rates and investment strategies that run until the age of 90. But will they work in perpetuity?

Longevity risk

Longevity risk is far and away the most important risk to manage. The vast majority of Americans don’t think they will live long enough for this type of risk to affect them, but they need to wake up out of their distribution daze. Longevity risk supersedes all other types of risk; in fact, it is not just a risk. It magnifies other types of risk like order-of- returns risk, market risk and long-term-care risk. Increasing longevity increases the likelihood that the other risks will completely derail your client’s retirement plan.

For the 78 million Baby Boomers who are retiring at a rate of 10,000 a day, there may not be one strategy that solves all of their retirement challenges, but understanding risk is the most important place to start.

Even the U.S. government realized the need when it created the Social Security System in 1929 (signed into law in 1935). It realized the importance of setting up a guaranteed income stream to last an individual’s entire life. This is where advisors should begin when trying to alleviate longevity risk.

The sentiment in the past two years is that since some strategies and loopholes have been closed, Social Security is no longer important. I will argue that it’s more important than ever to get the most out of your clients’ Social Security benefits. Once you have determined the best strategy for your clients’ Social Security benefits, it’s time to look at other income options that can lessen longevity risk.

Annuitization strategies

After your clients have reviewed their Social Security benefits, they need to start looking at annuitization strategies. There are many annuity strategies that can help to take longevity risk off the table, but keep in mind that every client has different income needs. So, it is important to work with the individual client to identify the specific income needs that should be covered.

Deferred Immediate Annuities (DIA), in concert with Single Premium Immediate Income Annuities and traditional investments, can be great tools to ladder increasing income, working alongside a Qualified Longevity Annuity Contract (QLAC) for the client’s later years. While these products may be unfamiliar to some advisors, they are products all financial advisors should understand if they want to manage longevity risk for their clients.

Regardless of how the DOL regulation plays out, managing your client’s longevity risk is one size that fits all. The insurance industry is uniquely situated to manage these problems. While your clients may want to wait until their qualified accounts grow a little more, they want to save some more money, or they just aren’t ready, you need to create a sense of urgency for them to take longevity risk off the table as soon as possible.

Once that is taken care of, your clients will be free to focus on his assets’ long-term growth and liquidity, while finding more reasons to enjoy life and pursue their passions.

Curtis Cloke, CLTC, LUTCF, RICP, is a Financial Planner and Retirement Professional from Burlington, IA. A MDRT and Top of the Table qualifier, Cloke has over 25 years of experience as an advisor, trainer, software guru and income distribution planning expert.

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Longevity risk supersedes all other types of risk; in fact, it is not just a risk.

NAIFA Member Profile: Garrett Chambers

In this interview, third-generation insurance professional Garrett Chambers shares some of the reasons for his family business’ continued success.

NAIFA member Garrett Chambers is a third-generation financial advisor who currently works with his mother, Dawn Chambers, in the family business, The Dawn Chambers Agency, in Manchester, New Hampshire. In this interview, Garrett explains why he chose to join the family business, the reasons for the firm’s success, and his plans for transitioning the business into the next generation.

Advisor Today: Describe your practice and your areas of expertise.

G arrett Chambers: The Dawn Chambers Agency partners with financial advisors and insurance professionals to protect their clients from death, disability and long-term chronic illness. We engage with our advisors by introducing insurance planning and case design and assisting with point-of-sale meetings. Offering these additional services allows our clients to focus on their core competencies.

AT: How long have you been working at the agency? Chambers: I joined the agency in 2004.

AT: What made you decide to join your mother in her practice?

Chambers: After graduating from college, I was looking at various career paths, most outside the insurance industry. My parents asked me if I had ever considered joining the family business. They explained all of the great reasons to be in the insurance industry, and how the industry had been so meaningful to them. They talked about how the insurance industry makes a difference in people’s lives, the flexibility of being your own boss, and the unlimited financial security it offers. At that time, it was certainly intriguing, but 13 years later, I now understand exactly what they were talking about.

AT: What is it like working for your mother?

Chambers: Working with my mom is great, and the reputation she has built in the insurance industry is something I am very proud of. I remember attending the first few industry events and thinking to myself: “Is there anyone she doesn’t know?” As I am thinking of how to respond to this question, I am laughing to myself because I just left an industry meeting in Texas, where I was told to say hi to my mom by about 20 people.

Family offices are a unique situation, but the advantages far outweigh the disadvantages. The biggest advantage is that it makes your business personal. You are 100% invested in the success of the business, and there is a passion beyond doing a good job. There is a passion to succeed because your family is counting on you.

One of the few disadvantages is that I tend to take things home with me. Over time, I have become a lot better

at leaving work at work, especially since my wife works with us as well and we have a strict rule about not talking about business at home.

AT: What are some of the lessons you have learned while working with your mother?

Chambers: Two important lessons my mom taught me early on are to think long term and to do what’s right. Her whole business is built on a foundation of integrity. She has a client-centric philosophy and always puts the needs of the client first. She always looks at the client relationship, not at a particular transaction. By looking at our business this way, she has found long-term success.

AT: You recently won the New Hampshire distinguished Advisor Award, which was also won in 2002 by your grandfather, and in 2000, by your mother. Talk about history repeating itself! Describe this award and its significance to you.

Chambers: To be acknowledged for my involvement in our industry in front of my peers, friends and family meant a great deal to me. It was an emotional day, as I reflected on how fortunate I am to be part of such a meaningful profession. I reflected on how I have forged strong friendships throughout our industry and how special it is to work with my family. But more than anything else, I reflected on how joining my family’s business gave me the opportunity to spend more time with my father before he passed away in 2008

AT: How has your NAIFA membership helped you in your career and in aiding your professional growth?

Chambers: After joining my family’s agency, I instantly joined NAIFA, which was essential to my professional growth. NAIFA allowed me to network with other like-minded professionals and learn from the best of the best in the insurance industry. When you work in an independent agency, it is essential to be part of a group like NAIFA. NAIFA keeps you informed about what is going on in our industry and allows you to share ideas and best practices with your colleagues. The membership fee is most certainly a small price to pay for the personal growth you will gain!

AT: You are set to become principal of your company in 2018. What is your agenda for the firm once you take over?

Chambers: Our agency has evolved with the landscape of the industry over the past several years. When I first joined the firm, our value proposition and core competencies were very different from what they are today. We primarily worked with agents who specialized in life insurance, and our mission was to process business efficiently and work with our carriers to obtain the best medical offer and product for the client.

While these are still the goal, our process is quite different. The majority of the advisors we work with today have a primary focus other than life insurance, long-term-care insurance and disability income insurance. They are focused on financial planning, P &C insurance or employee benefits. This shift prompted a change in how our office operates and the value that we deliver to the advisors we work with. Our agency now puts greater emphasis on educating our advisor partners and assisting them with client meetings. We have also invested heavily in technology to simplify the application process and maximize efficiency. Moving forward, we will evolve as we embrace new technologies and expand our distribution to protect more families.

AT: Do you have any words of advice for other young advisors who are working in the family business?

Chambers: Challenge yourself to grow and embrace change. It is easy to sit back on your heels and hope for the best. But if you really want to take your family business into the next generation, you need to have a proactive approach since hope is really not a strategy.

Garrett Chambers is a third-generation insurance professional. His team works to build a deeper and more meaningful business to business relationship with their advisor partners. His areas of expertise include estate tax planning, business- succession planning, and other-risk management strategies. He is the past President of NAIFA-NH and currently serves on the political action committee.

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“NAIFA’s membership fee is a small price to pay for the personal growth you will gain,” – Garrett Chambers

By Bryce Sanders

Study Groups: Are You Overlooking a Fantastic Opportunity?

Study groups offer many benefits, including the opportunity to address common concerns and learn from the best in the business.

As most of you know, study groups provide an effective learning strategy for many agents and advisors. Although they can be successful, they are not being fully utilized by many agents and advisors. As an advisor looking to grow your business, should you consider creating or joining a study group?

There are many reasons why you should. For example, everyone attends the same lectures and if they miss a class, they can share notes with someone else. Also, not everyone absorbs information in the same way. In a study group setting, participants can share key concepts by collectively reviewing notes. In addition, a group usually digests information better than an individual. If several reports are available, each member can review those reports and summarize them. Also, since people tend to learn at different speeds, members who learn quickly can explain complex concepts to other members in simple terms.

I recently sat down with Vita Trincali, formerly with MetLife and now a training director, to find out how study groups function in the insurance industry and some of the advantages they offer.

Bryce Sanders: What types of study groups have you organized?

Vita Trincali: Some are composed of top producers, while others have newer or experienced advisors who want to move to the next level of success. We’ve also organized study groups consisting of advisors from different levels.

Sanders: Which work the best?

Trincali: Homogenous groups tend to work better. Getting top producers together is amazing. They might have egos; yet, they respect what others have to say.

Sanders: Describe some of the study groups that exist today.

Trincali: Some groups consist of advisors who want to grow their business, while others are made up of smallbusiness owners. A common thread is that their target audience has similar values or needs and has the ability to pay for their products and services.

Sanders: Where does a training director or manager fit into a study group?

Trincali: Study groups perform at their best when they are facilitated instead of when they are run. When

you run one, it tends to feel like a class, with someone presenting information. A good study group determines the goals and objectives of its members--specifically what they want to achieve. Four topics might be on the agenda. Each group member is responsible for one topic. The facilitator kicks off the session, draws people out if necessary and provides a summary of what happened during the meeting.

Sanders: Is there homework?

Trincali: Group members need to be prepared in order to present their assigned topics. They must take ownership of their topics. At the meeting, each member explains how they are going to apply their strategy and share results.

Sanders: How do you measure the success of a study group?

Trincali: Firms often use metrics; yet, results often don’t materialize immediately. Useful benchmarks to consider are if the advisor stepped out of his comfort zone, and if the group’s behavior has changed.

Successful Study Groups in Action

While many study groups are small, there are some large ones that work very well. Take the case of the African American Study Group, which has been led for more than 20 years by Tim Mackie, CLU, ChFC, Executive Vice President for the South Central Branch of AXA Advisors, LLC. The group, which has been in existence for over 30 years, has different subsets of agents and managers totaling about 200 members, each with an accountability partner.

The group has been very effective. It’s been trending at a 10 percent production growth, with a recent high point of 20 percent annual business growth. About seven and a half years ago, AXA Advisors recognized its success and spearheaded more culturally based study groups within the firm. Members convene at an annual conference, and the group attracts about 150 attendees. No qualification threshold is required to attend, which creates an environment in which newer agents can mingle with top producers.

Mackie explained, “We are drawing top producers who also happen to be African American. Members of the group share a cultural experience and ethnicity, but at the end of the day, we are all AXA Advisors financial professionals.” He is passionate about the success the group has achieved by learning from each other.

An all-female study group

Another successful group is the one that Debbie X, a financial planner in upstate New York, belongs to. Debbie first became involved with the group in 2003. About 14 years later, six advisors from Hawaii, Texas, Minnesota, California, New York and Colorado keep in touch regularly. Over a ten-year period, they have met annually.

“Involvement in our study group has been personally very helpful,” said Debbie. “We each have someone we can talk to, someone who knows the industry and will keep our conversation about strategies or challenges confidential.

Being spread across the country also offers some advantages. We freely share strategies used in our home markets because we aren’t running the risk of creating a local competitor.”

Everyone in Debbie’s group is a woman. “This makes sense for us,” she said. “Women share ideas differently from men and often have different goals for running their businesses. Women are often considered nurturing and we build on that in our group.” The group has been together for a long time, because, as Debbie noted, “We are still yielding results. We exchange great ideas about practice management and marketing. Our story is still being written.”

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor,” is available on Amazon. <pull quote>

A good study group determines the goals and objectives of its members—specifically what they want to achieve.

By Elie Harriett

Making the Sale in Health Insurance

The key is to be there after the sale — the person they call when problems arise.

Hello, fellow health insurance agent! Did you know you are useless? At least, that’s what I’ve been told. In my inbox every day are marketing pieces to “jump on the bandwagon! There’s no larger market right now than a senior looking for health insurance.” Every senior age 64½ and older is the most popular kid on the block, with lots of agents beating their doors down as they try to get them to buy something cheaper. Marketers on TV, radio, newspapers and websites, as well as those using direct mail, are encouraging your prospects to buy something with less premium. It appears as if the public you serve does not need you to sell health insurance.

Or do they? Senior health insurance is a highly commoditized product. The only difference from one company to the other is in the pricing. It’s the same product regardless of who is selling it. (If you think your product is superior to the dozen others being offered, I dare you to contact me and prove it.) Those selling senior health insurance are doing everything they can to sell it for as little as possible, and the consumer is going to buy it for as little premium as possible.

So what happened to you, the health insurance advisor? My point is that you are of not much use when it comes to selling. The market today is different from other insurance markets. People know they need health insurance, and it is only a phone call or a click away.

To solve this problem, you should stop selling senior health insurance. Where you are needed is after the sale — the person they call when problems arise.

Our approach

This is the approach we use: We tell prospects we know we aren’t the only ones they’re talking to. We tell them we know we’re one of many who are competing for their business and we’re bringing our A-game to the meeting. Then, at the meeting, we just talk. Usually, a presentation isn’t needed. After all, others have already given them a presentation.

If there’s no engagement that lets them see what is being offered, we’ll start with a canned presentation. When prospects ask questions, we can narrow our focus. This isn’t the sale — this is us establishing confidence and trust.

What’s different about us? We speak in general terms. We describe all options as equally positive. We help them come to decisions in terms of product selection. But we’re not done.

In health insurance today, the key is to keep the sale. We become their go-to contact for problems (Remember:

health insurance is still health insurance. There’ll be problems). Do they have questions about bills, letters or just plain questions? They can call, text, or email us. They can bypass us if they want but it is easier for us, the people who sold the insurance to them, to explain what’s happening. That’s a message that really resonates with consumers these days.

That’s not all. We also let them know that an aspect of their health insurance is going to change every year. We will proactively call them before these changes happen and offer to cope with these changes. They do not have to figure that out by themselves every year.

Basically, we’re encouraging thousands to call us with questions and concerns — not reach out to a secretary, but to us! We do as much work as we can and tell them to call the companies directly only as a last resort. If that seems like a lot of work, it is. But the payoff is great — referrals, repeat business, generational business and increased renewal compensation. Also, with this approach, the price of the product no longer becomes the most important factor.

Your clients really do care more about having exceptional service instead of getting the lowest price. You can pick the companies you think are easier to work with, pay yourself better and support your agency’s values and commitment to service.

A business guru once said that the problem with a pricing race to the bottom is that you might just win it. When large companies are forced to offer the same product, the only weapon they have is the price. Don’t play their game. Do more. Consumers can buy health insurance anywhere — what you bring to the table is you, and you’re going to be there when they need you the most.

And that, fellow health insurance agent, is why you will always be useful!

Elie Harriett co-owns Classic Insurance & Financial Services Co., an independent agency specializing in individual Medicarerelated insurance. He is a trustee of NAIFA-Ohio, a former LILI moderator and past-president of NAIFA-Mansfield. Contact him at elie@harriett.us.

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Where you are needed is after the sale — the person they call when problems arise.

By Doug Waters, CLU, RHU, REBC

Changing the IDI Conversation from Price to Value

Understanding your client’s income-protection needs and helping to picture the moment of not being able to work will move the discussion to finding the right solution for his problem.

In my conversations with brokers and advisors about selling individual disability insurance (IDI), I often get the question: “Where does your product hunt?”

What they typically mean is, “Where does your product have the lowest rates?” As an industry, it’s our duty to ensure the products and services we sell are in our clients’ best interests. Now, one could argue that asking where a product falls in regard to price is thinking of our clients’ best interests, but cost is just one factor. When it comes to IDI, I believe we need to recommend the coverage that provides clients with the best value — that is, a policy that best suits their income-protection needs in the long run, as well as their budgets.

Think beyond the initial sale

It’s no surprise that when salespeople go on sales calls, they’re thinking about making a sale! And it’s no surprise that the path of least resistance to a sale is through the lowest-priced product on the spreadsheet. When it comes to selling IDI, however, I want to suggest that advisors can have more success in the long run, and be more helpful to their clients, by focusing the client’s attention on the real value of an IDI contract: what will happen in the event of a claim.

Let’s not be naïve. Cost matters. And let’s acknowledge that an IDI contract doesn’t do a client or the advisor any good if it isn’t purchased. Clearly, an advisor’s goal is to get prospects and clients to make buying decisions, and this takes an intense and skilled sales effort. But, as the advisor, if your focus is on long-term value, your clients are more likely to focus there, too. And that sets you and them up for the best possible outcome: an IDI contract that has the best chance of performing well for them at claim time, and yet, is one they have kept in force because they could afford it.

So what’s the answer? How do we balance the discussion between meeting income-protection needs as well as clients’ budgets and spending tolerance? Here are some suggestions:

Rethink how products hunt. When you ask where a product hunts, have in mind finding out which products are the best fit for each client based first on protection: how well each contract will perform for each type of buyer should a claim happen. Based on a person’s occupation, demographics, financial resources, etc., where is the best possible intersection of protection and affordability? Advisors have an opportunity to match contract provisions to

each person’s unique needs, so that should a disabling illness or injury occur, a client will have coverage in place tailored to him or her.

The safest solution for any client is to buy the richest possible contract in terms of broad, inclusive provisions. That would be providing the broadest protection, but it would also be making the contract expensive — and possibly unaffordable in the client’s eyes. Let’s remember that the point of insurance is for people to transfer risk from themselves to the insurance company. The question always is how much risk do we transfer, and how much do we retain?

With auto insurance, people with cash-flow problems usually want low deductibles; in other words, they want to transfer as much risk as possible to the carrier. Others are willing to keep more of the risk through higher deductibles in exchange for lower premiums. That principle applies to any insurance sale, including IDI. But as we know, the variables with IDI are not as simple as deductibles in an auto policy. Your clients need you to help them find that balance between spending more to transfer risk versus spending less to keep more risk, based on their situation.

Match provisions to people. As an advisor, when you ask yourself where different products hunt, if you’re thinking about people as well as price, you’ll think about the specific needs of different kinds of buyers. Let’s look at some examples:

Highly specialized professionals. When working with surgeons, trial attorneys, or other highly compensated professionals with specialized skills, several things tend to be true. One, they tend to buy value over price, once they understand what is at stake. Two, they have invested heavily in education and training to build their careers, which means they will agree that they have a lot to lose should they no longer be able to work. People with the most to protect usually want the most protection available. Three, they can be declared disabled by conditions that might not disable people with less specialized skills.

What happens when a neurosurgeon gets a hand tremor and can no longer perform surgery? Or a litigator loses her voice and can no longer appear in court? If I’m advising this client, I know going into the appointment that the IDI policy needs to be as broad-based as possible, given the earnings potential. I’m going to look for a policy that has fewer limitations rather than more, such as the provision that covers mental disorders. Some policies limit coverage for mental disorders to 24 or 60 months, while others allow payouts for the entire benefit period. And I know that the definition of disability needs to provide Own Occupation protection with specialty language. With Own Occupation, a surgeon who is disabled from performing surgery may well be willing and able to do other meaningful work, but the benefit will not be reduced by earnings from another occupation. Compare a surgeon with a corporate executive with much more generalized skills. A less comprehensive definition of disability may be the most appropriate fit, given the far less specialized duties.

Young professionals just getting started. These clients are likely to have significant career growth and thus, growth in earnings over time. Also, they may be carrying heavy student loan debt. Priorities for them would be making sure the policy allows for future purchases of more coverage with no further medical underwriting, at the most efficient price point available, and seeing to it that their student loan obligations are accounted for.

The sandwich generation. Different carriers have developed hard-to-find or even unique provisions aimed at buyers with very specific needs. For example, The Standard has a provision called the Family Care Benefit. It is useful for all ages, but designed especially for IDI buyers with young families as well as aging parents. People who fall in the sandwich generation often have concerns about one day having to take care of a family member at the cost of missing work. The Family Care Benefit is able to pay a benefit if the insured is away from work and loses income while taking care of a seriously ill family member (parent, spouse, child or domestic partner).

Find the right protection, then the right price

If you start your IDI sales meeting by understanding the client’s particular income-protection needs based on demographics, occupation, family structure, etc., and then help that person picture the traumatic moment of not being able to work, the discussion will move naturally to finding the right solution for the problem. Which contract best suits this individual? How will specific provisions impact the client at claim time? The starting point is not necessarily the richest contract, but instead, the most appropriate contract based on that person’s situation.

If you and your client agree on the contract that is most suitable, but the cost is an insurmountable stumbling block, then you’re in a position to prioritize which provisions should remain as is, which might be modified to a less expensive version, and which pieces of the basic plan design might be altered, such as the waiting period or benefit period, so that the person can go ahead and get this important coverage in place. Once that is accomplished, you will have succeeded in helping your client make an informed decision about getting the best possible intersection of quality and cost in an IDI policy.

Doug Waters, CLU, RHU, REBC, is the second vice president of individual disability income insurance sales at Standard Insurance Company. He leads the IDI sales organization for The Standard and represents the needs of the field to the home office. He can be reached at doug.waters@standard.com.

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Advisors can have more success and be more helpful by focusing the client’s attention on the real value of an IDI contract: what will happen if there is a claim.

The Many Uses of Life Insurance

These uses of life insurance will work well with your wealthy clients.

By Richard Myerson, CPA, CLU, ChFC

While we advise our clients on protection insurance coverage, most of our practice involves the use of life insurance for purposes other than protection planning. We’re either building wealth for retirement and living benefits, utilizing the product’s cash value, or preserving and transferring wealth through the death benefit. Here is a small collection of our favorite uses of life insurance:

As an asset class for wealth transfer

When acquired for purposes of transferring wealth inter-generationally, the life insurance death benefit is unique. Products available today will guarantee the death benefit when one dies such that the resulting internal rate of return (IRR) to the estate, assuming normal life expectancy, is between 6 percent and 7 percent. Recognizing that this is an income-tax-free return (and if properly structured, should also be free of estate taxes), it is hard to conceive of any other product in this low-yield market environment, with the same exceptionally low level of risk, producing a similar return.

As a wealth-replacement trust

Appreciated assets, when liquidated, are usually subject to capital-gains taxes. For very high-income-tax payers (especially those living in high-income-tax states like California), the combined federal and state capital-gains tax rate can be in excess of 35 percent. One technique often employed by high-net-worth (HNW) individuals is the

transfer of appreciated assets to a charity through a device known as a Charitable Remainder Trust (CRT).

Prior to the sale of the assets, they are transferred to the CRT, and once in the CRT, they are liquidated for their fair market value. Because they are now contained inside the CRT, the assets are not subject to any capitalgains tax. Hence, the sale proceeds are then reinvested in (usually) income-producing assets, which will generate significantly more income than if the donor had liquidated the assets while personally owning them.

The CRT allows the donor to control the assets during his or her lifetime, and, subject to some strict IRS rules, allows the donor to receive the income from the assets (and potentially some of the principal, too).

Additionally, the donor receives an immediate tax deduction for the present value of the assets ultimately left in the CRT and transferred to the charity at the donor’s estimated demise. The impact of the tax deduction and the additional income received during the donor’s lifetime can be substantial, but ultimately, the remaining assets in the trust must be “lost” to the donor’s heirs.

Very typically, a small portion of the additional income and/or the savings from the tax deduction is sufficient to allow the donor to acquire a life insurance policy (usually established such that it is free of estate taxes as well as income taxes) to fully replace the assets that would have gone to the donor’s heirs, but are now going to the charity. This is known as a Wealth Replacement Trust, and when used with a CRT, is perhaps one of the most effective “triple pays” available: tax reduction, charitable giving and wealth transfer.

As an estate-reduction technique

Wouldn’t it be great if ultra-high net-worth parents could make loans to their kids prior to their deaths, and when they die, have these long-term, interest-only loans discounted in their estate, thus lowering the taxable value of the estate for purposes of calculating estate taxes? Unfortunately, the IRS does not allow for any discounts on loans to related parties.

Or does it? If the loan is made directly to an insurance carrier for the purpose of buying life insurance under a special so-called “split-dollar agreement” on another individual, and the loan is still outstanding at the time of the lender’s death, can the loan be discounted for purposes of the estate valuation? The answer is yes, and here’s how it works. The kids buy large life insurance policies on themselves funded with loans from Mom and/or Dad. These loans are made subject to a minimum interest rate set by the federal government and known as the Applicable Federal Rate (AFR).

The AFR has three rates: short, mid and long-term (more than nine years), and changes monthly. Under these arrangements, the long-term rate is used to calculate the minimum required interest on the loan, and the loan is to be repaid to the parents from the death benefit at the time of the insured kid’s death, invariably many years after the parents have passed away. Given the relatively low AFR – in February 2017, when this article was written, the rate was 2.81 percent – and the estimated number of years to the time of death and repayment of the loan to the parents’ estate, valuation professionals will take discounts to reduce the value of the loan, and if reasonable, the IRS will accept the valuation discount.

As a “golden handcuff ”

Many organizations are continually looking for ways to retain and reward key management executives. The use of qualified plans for many organizations is usually insufficient to incent highly-compensated key employees to remain with the entity. Hence, the use of “non-qualified” plans has become common with highly successful businesses as a retention tool. These plans are collectively called “non-qualified,” as they do not need to meet the stringent qualification standards set by the IRS in order to obtain a current tax deduction for the contributions. Instead, they can be designed for just a few select employees, have no limits on contributions, rules on vesting, or timing of withdrawals, and not be subject to any penalties for violating the qualified plan rules.

Essentially, the plan has two components: the agreement between the employer and employee, and the “informal” funding mechanism, almost always a specially engineered life insurance plan. The agreement will provide the terms under which benefits will be paid to the employee and usually contain terms that relate to years of service (handcuff) before the employee is entitled to the “pot of gold.”

The life insurance policy is designed to have sufficient cash at the time the employee fully vests under the agreement, and will also provide a death benefit in the event the employee dies prematurely. Most agreements include a provision whereby the employee’s spouse or family will receive the fully vested benefit if the employee were to die prior to the end of the service term.

As a specialized retireme nt plan

There is a little-known executive- retirement strategy that has been employed for a number of years and recently received national attention. In its technical form, the strategy is known as Employer Split Dollar and

has components that are similar to the family split-dollar plan mentioned earlier. Under this plan, the business organization makes interest-free, non-recourse loans to the employee via contributions to a specially engineered life insurance policy owned by the employee.

Because the loan is interest-free, it is handled under the “below-market interest” rules of IRC Sec. 7872, whereby interest must be imputed on the loan using the Long-Term AFR, as previously discussed. In this case, the employee is “charged” the interest as non-cash compensation from the employer, and must pay income taxes on the imputed amount. While the employee remains employed, arrangements can be made between the employer and employee as to how the tax on the imputed interest can be funded.

At retirement, the employee can withdraw tax-free distributions from the policy to both pay the tax on the imputed interest and for (usually substantial) additional retirement benefits. The only caveat is that cash withdrawals must be limited in order to maintain sufficient value in the policy death benefit to repay the “split dollar” component, i.e., the loan payments, back to the organization at the time of death of the employee.

Richard Myerson, CPA, CLU, ChFC, is President and CEO of The Myerson Agency. He formed The Myerson Agency in 1994, with a focus on engineering specially designed life insurance products, primarily aimed at tax reduction, wealth preservation and wealth accumulation.

David Szeremet, JD, CLU, ChFC, is second vice president, Advanced Planning, at Ohio National Financial Services based in Cincinnati, Ohio. Szeremet is responsible for the Advanced Planning team that provides estate planning, executive benefits, business insurance and life insurance planning. He can be reached at david_szeremet@ohionational.com or at 513.794.6389.

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The use of “non-qualified” plans has become common with highly successful businesses as a retention tool.

The Age Dichotomy

By Ayo M seka

Millennials and Boomers offer an opportunity to create financial products that respond to their aspirations and fears.

During LIMRA’s 2016 conference, the association’s CEO, Robert Kerzner, CLU, ChFC, told the audience how the demographic conundrum he called the “Age Dichotomy” should be part of every advisor’s thinking about growing a business.

Because of their huge numbers, Millennials and Baby Boomers are where the action is today, Kerzner pointed out. But their needs, concerns and buying patterns are very different, forcing companies to bifurcate and segment their strategies. For example, fewer Millennials are buying cars since they are all about the sharing economy and are looking for alternatives. But while Millennials seem OK with letting someone else drive, aging retirees aren’t. So self-driving cars could help Boomers stay mobile longer.

What works with Millennials?

These differences are affecting the financial-services industry, as well, Kerzner said. Millennials represent one quarter of the population in the U.S. and worldwide. Because they are the industry’s future, it is important to understand their expectations and preferences. For example, urgent-care facilities are popping up everywhere partly because of the changes in our healthcare landscape, but also because Millennials prefer health care clinics.

The good news is that as Millennials are getting older and taking on traditional responsibilities like owning homes and raising families, many are becoming interested in protection products. According to LIMRA’s ownership study, 70 percent of Millennial households own some life insurance – 10 points higher than it was in

2010 – and their ownership of individual life increased 48 percent, as well.

But they want to buy only what they will use and they only want to pay when they need it. However, Kerzner pointed out, that is not how our products work. But marketing the cash-value component could be very important and attractive to them because they get something back.

LIMRA studies also show that Millennials are interested in “combo” products because they benefit from the cash value, regardless of whether they will eventually need long-term care or not. But, he stressed, the industry needs to effectively engage them through social and mobile means because that’s where they look for information.

Millennials are also always on their phones and are being bombarded with ads and information from every possible source. So how does one break through the noise? Remember that they are value-conscious. Threequarters of them are more likely to buy something using a loyalty discount or rewards program.

But even how to communicate with Millennials is changing. You might think you are current because you have a strong social media strategy, he said, but you may need to change your thinking again. In 2015, more people were using Messaging than Social. Banks are using texts to confirm deposits, hotels to confirm reservations and even municipalities to let people know about storms and emergencies. “Could you be doing promotions to existing clients using messaging?” he asked.

In addition, Millennials rely more on word-of-mouth than other generations . What if someone were to design a program to reward policyholders who acted as brand ambassadors and referred their friends and family? Nearly half (44 percent) of Millennials are willing to promote products or services through social media in exchange for rewards. A lot of Millennials might be interested, he pointed out.

Although it is widely believed that Millennials are only interested in interacting online, that’s just not what the research says, Kerzner pointed out. For example, they are more likely to use real estate agents than prior generations did. And when LIMRA asked how Millennials want to buy life insurance and other financial products, they said they want to work with an advisor.

Pursuing the Boomer m arket

While the Millennial market offers significant future opportunity, Boomers represent opportunity now, since they control most of the investable assets. They are the other half of the dichotomy, Kerzner said.

According to S&P, no other force is likely to shape the future of national economic health as the aging of the world’s population. The cost of caring for the elderly will profoundly affect growth prospects and dominate public finance and policy debates worldwide.

“Are we really thinking about this as we develop our strategic plans?” he asked. “Are we creating products and services that will address their needs? Are we thinking about both ends of the age dichotomy?”

Thirty-seven million Boomers will have one or more chronic illness and six in 10 are managing more than one chronic condition. According to the World Health Organization, 47 million people are living with dementia today. Globally, LTC and hospice expenses represented $183 billion in 2011. That number is expected to explode to $2 trillion by 2030. And when people were asked about the scariest disabling condition, 53 percent identified Alzheimer’s and dementia. Yet, Kerzner noted, policy count and premium for stand-alone LTCI policies are plummeting. In fact, only 7 million Americans have LTCI today.

There are other reasons this will become a bigger issue, Kerzner added. Thirty states have laws that could hold family members responsible for long-term-care bills. These rules haven’t been actively enforced, but they might be.

And while many people know that they should have LTCI, few actually buy it, and more carriers have exited the market than have entered it. “But can we continue to ignore such a need and such a potential market?” he asked. “We need more and very different innovative solutions than we currently have.”

As a result of this need, some companies are looking at LTC through a different lens, which has led to a significant uptick in combo sales.

Also, Boomers and retirees represent 84 percent of total investible assets . Non-retired Boomers and retirees hold 84 percent of the total U.S. investable assets. Retirees will not be concerned about saving for retirement, few will be buying life insurance, and they will not be buying DI insurance. So if the industry wants to connect with this segment, he said, it should be thinking about products that address the concerns and fears they have.

There has been some industry innovation, he said. For example, Genworth has introduced an individually underwritten annuity to cover long-term care and John Hancock has created an LTCI product with a new way of looking at pricing, which provides an affordable alternative.

The next several years will be challenging for financial-service executives, he said. Disruption is here and the industry needs to embrace the reality that the world is different. So while there will be some carnage, many in the industry will view this change and see an opportunity in it.

“You will see the possibility to build innovative new products that do respond to the aspirations and fears of both ends of the age dichotomy,” he concluded.

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Disruption is here, and the industry needs to embrace the reality that the world is different.

By Brett W. Berg

Three Mistakes in Life Insurance Planning (and How to Avoid Them)

Here is how to avoid three common mistakes in life insurance planning.

All too often, advisors take for granted the ownership and structure of their clients’ life insurance policies. As in every other aspect of planning, mistakes can be made and they can be costly. Life insurance professionals and other advisors should carefully coordinate on policy ownership and beneficiary choices when setting up plans and continue to review with their clients to ensure plans are properly updated. This article covers how to avoid making common mistakes in three areas.

Take care in naming beneficiaries. Life insurance professionals should take particular care when naming beneficiaries. For example, in many cases, clients purchase life insurance seeking to avoid the time-consuming, expensive and public process of probate. Probate is a post death court process, which involves division of a client’s assets according to a will or, in cases where there is no will, according to state law.

In situations in which the estate is named as beneficiary, the proceeds from the life insurance policy will become part of the probate estate. If the client wanted to avoid probate with respect to their life insurance, naming beneficiaries could have saved much time and expense.

Of course, naming beneficiaries is just the first step; keeping them updated is just as important. Failing to readjust beneficiary information following marriage or divorce or following an update to an estate plan can also lead to problems.

The main point is that incorrect or stale beneficiary information can cause unnecessary mistakes that could have been easily avoided. That’s why it is critical that advisors work closely with their client’s lawyer to ensure that the life insurance beneficiary designations are updated properly and coordinated within the client’s overall financial and estate plan.

Remember to avoid the Transfer for Value Rule. Life insurance professionals should take care in helping clients avoid violating the transfer for value rule. While life insurance proceeds are generally income taxfree. When a client transfers a policy for something of value (money, property, etc.), the client may violate the transfer for value rule — subjecting the death-benefit proceeds to income taxation. This clearly would lead to an unwelcome outcome, transforming what should be tax-free death benefits into ordinary taxable income.

The Internal Revenue Codes does list five categories of transfers that will not violate the transfer for value rule. They are transfers to: (1) the insured, (2) a partner of the insured, (3) a partnership in which the insured is a partner, (4) a corporation in which the insured is an officer or shareholder and (5) any person where the

transferee’s basis in the policy is determined in whole or in part by reference to the transferor’s basis (i.e., carryover basis transferees).

So, for example, if ABC Company owns a key person policy on the life of Elliott Employee and transfers the policy to Elliott, then the transfer is to the insured; therefore, the transfer for value rule is not violated in that case.

The rules and exceptions can be very complicated. Again, the solution is to review any decision to transfer a policy with the client’s attorneys and tax advisors before transferring the policy.

Carefully coordinate policy ownership with the overall estate plan. When life insurance is owned individually by a client, the proceeds are includible in the client’s estate for federal estate-tax purposes. To avoid a taxable event, life insurance professionals should work with the client’s estate-planning attorney to ensure that the policy is purchased outside the client’s taxable estate.

For example, if the client properly establishes an irrevocable life insurance trust (ILIT), gifts money to the ILIT and the ILIT purchases the life insurance policy, the policy should be outside the estate and not subject to federal income taxes.

Of course, these are only a few examples of mistakes advisors can make and the repercussions for their clients. The important takeaway is that life insurance policy ownership and structure should be considered just as mindfully as any other part of the client’s estate plan. Advisors should carefully review policy ownership, beneficiary and transfer decisions and periodically review them to ensure that the life insurance policy is properly structured to carry out the client’s goals.

Brett W. Berg serves as Vice President, Advanced Markets, in Prudential’s Individual Life Insurance business. He can be reached at brett.berg@prudential.com.

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Life insurance policy ownership and structure should be considered just as mindfully as any other part of the client’s estate plan.

Blind Man Selling Insurance?

Jacquelyn S. Coy, CLU

This remarkable man was recently honored by Northwest-Jersey AIFA.

A blind man with a guide dog, selling insurance? Yes, indeed, and this same blind man, Morris Frank, founded The Seeing Eye, the first guide dog organization in the United States.

It is the inspiring story of this blind man that led us, the Northwest Jersey Association of Insurance and Financial Professionals, to dedicate our annual golf outing to Morris Frank and donate all proceeds to The Seeing Eye.

Morris grew up in Tennessee, where he was blinded in each eye by two separate accidents — the first involving an overhanging branch while horseback riding, and the second at age 16 in a playground brawl.

In 1924, being blind meant no job — no way to earn a living. Most blind people were offered work in a factory making brooms, which Morris declined. Instead he went from door to door selling insurance, led by young black men whom he paid to escort him. One day, one of those men demanded a raise while on the job, and when Morris refused, the man abandoned him in the middle of the city.

The founding of the Seeing Eye School

After that, Morris decided that there must be a better way to get around. His father read him a Saturday Evening

Post article written by Dorothy Harrison Eustis, who was an American residing in Switzerland and training German shepherds for the Swiss police.

Dorothy’s article was about a guide-dog program in Germany for soldiers blinded in World War I. Morris was int rigued and excited about the possibility of a guide dog for himself, and he wrote an impassioned letter to Dorothy, pleading with her to allow him to go to Europe and train with one of her animals.

She eventually replied in the affirmative, and Morris promptly boarded a ship to Europe. He returned some months later with Buddy, his first guide dog, and the first one in the United States. Together, Morris and Dorothy founded a school that matched blind individuals with trained guide dogs.

The first such school, The Seeing Eye, opened in Nashville in 1929, and after a few years it was relocated to Whippany and then to Morristown, New Jersey, where it flourishes today and where, coincidentally, the local life underwriters group would eventually have their monthly meetings.

But it would be years before our local association and Morris Frank would meet because Morris worked diligently at The Seeing Eye for almost 30 years, building a successful organization, developing a puppy- breeding operation and recruiting students from all over the United States.

His main job was fundraising, and he traveled far and wide by train with his dog, raising awareness of the predicament of the blind community and the independence and self-assurance that could be gained by training with a guide dog at The Seeing Eye.

Back to insurance

When Morris retired from the organization in 1956, he opened an office in Morristown and returned to selling insurance. There are people around today who remember being helped by him and his staff. There is the story of a poor/rich girl who was an orphan from New York City who owned a Porsche but could not get it insured. She was advised by a friend of a friend to travel to New Jersey and visit Morris, and the insurance was issued. There are also those who remember him from his attendance at meetings of NALU (now NAIFA), with luncheons held at the local country club.

Morris sold insurance until his death in 1980. He was eulogized by many at his crowded funeral service, and at the end of the final prayers, as his casket was loaded into the hearse, those looking from the doorway of the church saw, standing just behind the hearse, his dog, Buddy.

Morris will long be remembered in the Morristown community and far beyond. A statue of him, with Buddy by his side, stands prominently in the Morristown Green. Students with their guide dogs still walk the streets of Morristown with their trainers, getting used to the hustle and bustle of city life. They even used to ride the escalators of the now-defunct Macy’s Department Store to practice getting on and off a difficult conveyance. (The Seeing Eye has since installed an escalator in its parking garage).

So, with this history, it is no surprise that after several years of donating the proceeds of our outing to various worthy organizations, we decided to honor one of our own, Morris Frank, and the great organization he founded, The Seeing Eye.

Jacqueline Coy, CLU, has been a NALU (now NAIFA) member since 1978. She was president of her local association, Northwest Jersey, and subsequently president of the State of New Jersey association. She is also a past trustee of AHIA. Currently, she serves as executive for her local association.

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In 1924, most blind people were offered work in a factory making brooms, which Morris declined. Instead he went from door to door selling insurance.

NAIFA Rolls Out New Skill Builders Workshops

NAIFA has introduced two new workshops in the Skill Builders Series, Professional Prospecting and Time Management for Financial Professionals. Like the NAIFA DOL Workshop, these two new workshops are four hours long and are hosted by NAIFA’s state and local associations.

Professional Prospecting is aimed at agents or advisors in the first five years of practice, as well as at veteran advisors who desire to hone their prospecting skills.

This workshop will teach advisors how to:

• Improve their attitude toward prospecting

• Embrace the 3 Ps of Success to change within

• Set and achieve G.R.O.W.T.H. goals

• Maximize results using a Daily Score Card

• Discover their prospecting niche — cold calling, networking, seminars or referrals

• Determine what works and what doesn’t when prospecting

• Model what successful advisors do to grow their business

• Succeed by using tips and techniques that will help them to professionally prospect

• Create an action plan to jump-start their prospecting programs and move forward immediately

Time management workshop

Time Management for Financial Professional is ideal for advisors who struggle with time- management and organizational issues. It will help them discover what their time wasters are and teach them how to uncover hours of productive time each week.

During this workshop, advisors will learn how to master the steps to achieve change, identify the six categories associated with poor time and organization management, assess their greatest time wasters, employ a six-step process to get back on track, develop an ideal work week schedule that can be implemented immediately, identify the highest and best uses of time and engage in breakthrough thinking that is designed to take their practice to the next level.

Serving your clients with fiduciary compliance

The first workshop in NAIFA’s Skill Builders Series, Serving your Clients with Fiduciary Compliance, continues to be offered by NAIFA’s state and local associations.

Judi Carsrud, NAIFA’s Director of Government Relations, issued the following statement regarding the Trump Administration and how it will affect the DOL Fiduciary Rule, “While the Administration has expressed concern and possible action with the DOL Fiduciary Rule, the paths to delay/modify or pass legislation still include many obstacles. Litigation is pending, but because that process is lengthy, it remains important for NAIFA members to be fully informed as to the rule as written and to begin preparing for implementation. The workshop also includes excellent ‘best practices’ that will be relevant in any possible future changes; so members should be encouraged to participate.”

Visit www.naifa.org for the schedule of upcoming NAIFA Skill Builders Workshops. For information about a workshop in your area, contact your NAIFA State or Local Association. The program cost per student is $195 for NAIFA members and $295 for non-members, to be collected by the host association.

Tara Laptew is Marketing & Program Manager, Professional Development & Education, NAIFA. Contact her at tlaptew@naifa.org.

FINRA Fines Financial Firm for Advisor Data Breach

Like other federal agencies exercising regulatory power in the data privacy and security arena, the Financial Industry Regulatory Authority (FINRA) is cracking down on firms that fail to meet required data security practices.

Recently, FINRA imposed a significant fine upon a firm after a financial advisor with the firm lost a laptop containing confidential customer information, even though the lost data had not yet resulted in any known identity theft or customer financial loss. FINRA reached a settlement with the financial-services firm located in Alabama.

The firm agreed to certain sanctions, including public censure and a $225,000 fine. FINRA’s enforcement action stemmed from the firm’s loss of a laptop computer that contained unencrypted customer confidential financial and personal information. FINRA concluded the firm’s “written supervisory procedures were not reasonably designed to protect confidential customer and proprietary information.” (See Financial Industry Regulatory Authority Letter of Acceptance, Waiver and Consent No. 2014041619501.)

Although the firm had previously established policies relating to data management, access controls, confidentiality and integrity, infrastructure, acceptable use, threat and vulnerability management and education and awareness, it failed to follow through on a key data-protection protocol: encryption of its laptop computers that contain confidential customer data.

Are you prepared for a data breach? Data breaches and cybersecurity have become a major concern over the last few years as hackers have penetrated the IT infrastructure of small to medium businesses with increased frequency and sophistication. The growth of mobile and IT devices and lack of data security and training have increased exposure of protected data, as well. Advisors need to prepare by complying with data- protection laws and regulations for putting proper IT security in place and mitigating the risk of a breach through cyber security insurance. If you and your staff haven’t made this your number-one priority during the past 12 months, then you have fallen behind.

Consider the following:

Facts:

1) Cost of a data breach — up to $215 per record.

2) The financial-services industry is second to healthcare in reported cyber insurance claims.

3) Nearly 60 percent of small to mid-sized businesses go out of business after a data breach.

Solutions:

• Assess compliance with state laws and federal regulations.

• Put together an information security plan with training.

• Implement and test proper IT security.

• Maintain in place a comprehensive cyber insurance policy.

The NAIFA Cyber Security Program

You might want to consider utilizing the NAIFA Cyber Security Program designed to help you make the process simple and affordable. Options available through the program include:

1) Comprehensive data security compliance program with training

2) IT security software and penetration tests

3) Cyber security insurance coverage for insurance and financial advisors

• Access to 24x7 data breach hotline

• Premiums start as low as $200 a year

• A 4-question online application — immediate coverage available (pay with credit card or electronic check)

(Sources: Poneman Institute Cyber Research Report; National Cyber Security Alliance and Symantec; BreachLevelIndex.com; FINRA Financial Industry Regulatory Authority.)

James Harrison is the founder and CEO of INVISUS, a leading cyber-security and identity-theft protection risk management company. He is the creator of the InfoSafe data breach compliance program and other cyber-security and identity theft protection programs. For more information, visit http://www.naifa.org/practice-resources/prp/naifa-cyber-security-insurance-program

Apply for the 2017 LUTCF® Scholarship Award Today!

Two lucky winners will be announced in June!

NAIFA and the College for Financial Planning (CFFP) are proud to announce that submissions for the 2017 LUTCF® Scholarship Program are now being accepted. Each scholarship recipient receives tuition credits for each of the three courses that comprise the LUTCF® designation program.

Applicants must:

• Be a NAIFA member in good standing

• Be under 40 years of age and have been licensed for fewer than five years as of May 1, 2017

• Have the endorsement of a member of NAIFA

Here’s what prior LUTCF® Scholarship recipients have to say about their LUTCF® designation program experience:

“The LUTCF program provides a solid foundation of knowledge from all aspects and really does a good job at incorporating what you need to do to be successful in this business.” (Michael H. Baker, CFP, of Rock Hill, SC)

“Being in the business for 10 years, I didn’t think I’d learn anything, but boy was I wrong!” (Jason E. Carter of Texarkana, TX)

The deadline for submissions is May 1, 2017. NAIFA will award two scholarships by June 1, 2017. For more information and to apply, click here.

Deadline for 2017 NAIFA Quality Award is May 31st

May 31 is the deadline for applying for the 2017 NAIFA Quality Award. This year, NQA recipients will again be provided with the ability to import their NAIFA Quality Award badge into the Credentials Section of their LinkedIn profile.

Since 1945, the NQA has recognized NAIFA members for quality service to their clients. More than a measure of sales, the NQA demonstrates your professionalism and dedication to helping your clients meet their financial goals.

The NQA provides advisors at any stage of their career and in any practice specialty with the opportunity to demonstrate a commitment to exceptional:

• Professionalism through education and earned designations

• Production measured by performance metrics customized for each practice specialty

• Adherence to the NAIFA Code of Ethics

• Service to your industry association

Apply in one or more of the following practice specialty categories:

• Life Insurance and Annuities

• Multiline Insurance

• Health and Employee Benefits

• Financial Advising and Investments

If your practice spans more than one specialty area, the unique bonus multiplier credits allow you to build credit toward your production qualifications by combining production across specialties. A demonstrated commitment to professional education and association leadership also earns you qualification credit.

The NQA is a continuation of the former NAIFA Industry Awards. Previous recipients of the NAIFA Industry Awards will carry over their years of achievement to the NQA.

The following companies submit NQA applications and application fees on behalf of their agents and advisors:

Country Financial

Kansas City Life

Modern Woodmen of America

Securian

Southern Farm Bureau Life Insurance

Thrivent Financial for Lutherans

Western & Southern Financial Group

If you are a NAIFA member with any of these companies and you meet the award criteria, you do not need to apply for the NQA. Your company will apply on your behalf.

For more information about the NQA and to apply for this prestigious award, visit www.naifa.org/membership/ awards/quality-award.

Brendan Bernat is Director, Professional Development & Education Programs, NAIFA. Contact him at bbernat@naifa.org.

2017 DIVERSITY SYMPOSIUM: DIVERSITY DELIVERS!

The National Association of Insurance and Financial Advisors has a bold vision for its future, and a vital part of that vision includes empowering diversity within our organization and industry. With the support of our corporate and strategic partners, NAIFA strives to make a greater impact on the communities we serve, by investing in the professional success of the very agents and advisors who are dedicated to the financial well-being of all Americans.

Featuring David Bugea, Diversity & Inclusion Training Manager for Arvest Bank Group, who will discuss the impact of diversity on the bottom line.

NAIFA DIVERSITY ALLIANCE RECEPTION

May 22, 2017

6:00-7:30 PM

NATIONAL HARBOR

(details to be provided)

Come meet NAIFA leaders, corporate and strategic partners for a light evening of good food and conversation before the symposium.

Sponsored by Prudential

NAIFA DIVERSITY SYMPOSIUM

May 23, 2017

8:00 AM – 12 Noon

GAYLORD NATIONAL RESORT & CONVENTION CENTER

• Learn how to better serve diverse communities.

• Uncover new ideas and resources to implement corporate diversity.

• Establish objectives and targets for industry collaboration on diversity.

May 22-23, 2017

GAYLORD NATIONAL RESORT & CONVENTION CENTER

National Harbor

Oxon Hill, Maryland 20745

NAIFA 2017 CONGRESSIONAL CONFERENCE

May 23-24, 2017

GAYLORD NATIONAL RESORT & CONVENTION CENTER | CAPITOL HILL (WASHINGTON, DC)

Stay for the Congressional Conference to get a taste of the NAIFA advocacy experience. Along with hundreds of NAIFA members, you’ll be able to meet with lawmakers on Capitol Hill, to advise them on how their decisions affect agents, brokers, and their clients.

NAIFA GOVERNMENT RELATIONS

By Gary Sanders

The NAIFA Advantage: Working with State Associations

NAIFA’s advocacy is enhanced by the coordination and cooperation that exists between NAIFA’s state associations and NAIFA-National.

Advocacy on critical federal issues is an important part of both NAIFA’s mission and the value proposition that NAIFA offers to its members. And while congressional activity gets most of the headlines and is often the lead story on the nightly news, we need to always remember that insurance is still primarily regulated by the states. With literally thousands of bills dealing with insurance and investment issues being introduced in the states every year, what happens in state capitols and at state insurance departments has a direct impact on our members’ day-today lives and livelihoods.

With a state association, members and advocacy representation in every state, the NAIFA federation is extremely well-positioned to respond to state legislative and regulatory challenges. This “NAIFA Advantage” on state advocacy is enhanced by the coordination and cooperation between NAIFA’s state associations and NAIFA national on state advocacy issues.

Regardless of whether an issue arises at the state or federal level, NAIFA’s individual members — and their political contacts, PAC contributions and outreach to lawmakers — are the bedrock reason for NAIFA’s many advocacy successes. However, there is often a degree of confusion among the membership regarding “who does what” when it comes to state advocacy.

State-level advocacy

Unlike NAIFA’s federal advocacy program, where strategy and tactics are developed and coordinated through NAIFA’s national office, when it comes to state-level advocacy our state associations take the lead. Among other things, it is the state association that decides what issues to engage on, whether to submit statements and/or testify at hearings, if and when to conduct grass-roots campaigns and what other groups to work with.

The reason for this is fairly simple — our members and state association staff who are “on the ground” in a particular state know the political and legislative landscape better than anyone else. And state legislators and regulators want to hear from — and learn from — their constituents rather than from someone who lives 1,000 miles away.

NAIFA’s national office, through its state Government Relations staff, provides valuable backup and support for the advocacy activities of our state associations. The types of support that NAIFA provides to our state associations on state-level advocacy include bill analysis and drafting assistance, help in developing policy and position statements, and coverage of national legislator and regulator organizations such as the NAIC and NCOIL.

NAIFA also provides education and information regarding national trends and developments, data on how other states have dealt with specific issues, help in developing effective strategies and tactics for promoting the state association’s position on specific issues, as well as assistance in building effective coalitions of like-minded groups.

Additional support for our states

To supplement the types of assistance outlined above, NAIFA has also developed two new tools that will further the federation’s goal of having our state associations be the most effective possible advocates for their members’ interests.

First, NAIFA has developed and provided state associations with a State Advocacy Planning Guide, which is designed to assist state associations in organizing, planning, and operating a state advocacy program that is efficient and effective and keeps members informed and politically engaged. The State Advocacy Planning Guide covers topics such as how to host a state Day on the Hill, how to activate grassroots, how to develop and document relationships with key legislators and regulators, and many other topics.

Update on the NAIFA Capital 50 Fund Program

In addition to this guide, for the past year, NAIFA has been developing the NAIFA Capital 50 Fund Program, and we are excited that this program will soon be moving from the development stage to actual program implementation.

The Capital 50 Fund Program is a new NAIFA initiative in which strategic partners will invest resources in NAIFA’s state-advocacy efforts as a means to leverage NAIFA’s structure as a federation to improve our ability to positively influence state-level legislative and regulatory activity on issues of importance to NAIFA and its members.

This new program will allow state associations that meet certain prerequisite requirements to apply for financial grants that will be used to improve the effectiveness of the state association’s overall state-advocacy program, rather than to advocate with respect to specific issues. Possible appropriate uses for program grants include improving the effectiveness of a state association’s Day on the Hill event, upgrading a state association’s system for developing and documenting relationships with legislators and regulators, enhancing the state association’s ability to become aware of, and evaluate legislative and regulatory proposals, and to improve the association’s ability to activate its grass roots system.

Working together, with each partner doing what it does the best, NAIFA and our state associations are highly effective advocates for our members’ interests in the states.

Gary Sanders is counsel and VP, NAIFA Government Relations. Contact him at gsanders@naifa.org.

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Working together, NAIFA and our state associations are highly effective advocates for our members’ interests in the states.

By Brian Greenberg, Eszylfie Taylor and Sandro Forte, DipPFS

Building A Profitable Practice

These ideas will help you meet and exceed your production goals, year after year.

Every successful advisor knows that acquiring prospects and converting them into clients are at the heart of what it takes to build a thriving practice. Follow the advice of these high-performing producers who have mastered these skillsets, and watch your practice grow!

Use your “social proof” to grow your business

I have grown my business by implementing a “soft sell” approach, in which customers often come to me rather than the other way around. One of the main reasons I’ve been able to succeed with this approach is that I’ve built trust through social proof. Third-party review sites offer an excellent opportunity to leverage and expand your social proof.

These days, most consumers will go online either to find or to verify the legitimacy of an advisor. If you have not yet created profiles on social media review sites, you are missing out on an easy and effective way to increase your business.

When customers look up my company, True Blue Life Insurance, not only will they find five-star reviews on my website, they can also see recent reviews from happy customers on the Better Business Bureau’s website and on Google Business Pages. Most professionals would be extremely surprised by how much new business they can generate with a great listing on these sites and others, such as Yelp.

In fact, I’ll go so far as to say that if you’re an insurance or financial advisor, it is essential to have a listing on at least one of the major review websites. If you do business locally, you should definitely look at Yelp and Google Business listings. Claim these free listings and take the time to fill out every section. Upload images, list your physical address, email address, phone number and business hours, and provide a description of your practice. Then, begin emailing your satisfied customers and ask them to write a review for you on these sites.

Website marketers call this strategy “barnacle SEO,” because what you are doing, essentially, is marketing your practice off a larger entity. These review sites bring in an immense number of visitors; so, they provide a fantastic means of gaining more exposure.

Trust is obviously a huge factor when prospective customers are shopping for an advisor or agent. No matter how persuasive and articulate your sales pitch might be, some customers will need more to convince them that you’re the right choice. As you build social proof and establish your reputation online, you’ll soon find that you’re attracting new prospects and closing more sales. Take it from me—it’s time well invested.

Brian Greenberg started his financial career working for MetLife Insurance Company. Using his internet skills, he decided to pursue a better way to provide customers with life insurance by building a life insurance quoting engine and underwriting the fulfilment process. He is an MDRT member. Connect with him on LinkedIn

Sell the value proposition, not the product

In working with clients, advisors often lead with the product name and get caught up in selling the product. This sales-focused approach can be a turn-off for many clients. The best approach for you and your client’s success is to lead with the value or protection the product offers.

For example, I’m sure many have had this experience: You call a client or prospect and say, “I’m calling about [insert insurance product].” The person likely responds with, “Oh, I have that. I don’t need it.” Alternatively, if they don’t have that product, they may have a preconceived notion about it and say they don’t want to have it. At this point, you could redirect by asking them what they need and work backwards to tell them which offering would provide that protection to them.

Instead of taking this approach, we should be highlighting the value of our products to our clients. Tell them how this product will help them and eliminate the product name from the conversation. Tell that that you specialize in, or offer “asset protection,” “guarantees of income,” “income tax reduction strategies” and more. See how that sounds different from “I sell life insurance”?

This way of speaking with your clients helps to get rid of perceptions they may have and allows them to evaluate if what you are offering would provide them with the protections they need.

With the value-proposition process, clients are buying in to the belief that you’re providing something of value and solving a problem for them, rather than just selling a product. This helps them think in terms of the consequences they could face if they do not have this product.

For me, life insurance is the only product that’s guaranteed to be used. However, a lot of clients have preconceived notions about it and decline coverage when it is offered. I like to relate this to a “drowning man” scenario. If you’re stranded and in need of a life preserver, you don’t care what color that preserver is because you need it to survive. When presented in this manner, if what I’m giving you puts you in a better position, you’re going to say, “Yes. Give me that life preserver.”

Eszylfie Taylor is the founder and president of Taylor Insurance and Financial Services. He has been an MDRT producer since 2011. In 2015, he received Advisor Today’s 4 Under Forty Award. You can reach him at 626-356-7637.

Follow these steps to make effective use of personal recommendations

Getting the first meeting with your prospects should be easy because they hopefully came through a strong personal recommendation from a friend or client. However, you still may have to make the odd “cold call,” whether it’s through a first-time contact with a personal introduction, or because you wish to build bridges with a new source of business.

To use your strong personal recommendations as your key to a new client, the easiest thing to do is to have your friend make the introduction for you while you’re with them in person. Let them make the initial call, introduce you by name, and then pass the phone back to you.

Most financial advisors think this idea is not workable because few of them deal with personal introductions in this way. But this approach automatically sets you up for a better situation than getting the name of the referral and waiting until you are back at the office to call them, which is a relatively cold call.

Use the “Dynamic Phone Path” to improve your sales calls

Every call, regardless of who it’s to or who is involved, has a set of dynamics. I can tell a poorly conceived sales call a mile away. The caller speaks in a formal, somewhat unnatural way, in almost a staccato voice, and keeps using my surname more than they should. They ask impertinent questions and can come across as patronizing or arrogant. The “Dynamic Phone Path” helps to eliminate all of this by linking a suggested set of “dynamics” to an outbound call.

It goes something like this:

1. The Apology

The majority of people attempting to sell to me on the phone overlook the fact that they are selling something by starting the call with “Sorry to trouble you.” To start with an apology, you need to be completely genuine. Also, use the prospect’s first name, followed by his or her full name. This is a way of subconsciously asking their permission to be on first-name terms.

2. The Promise

Here is a script you can use to let a prospect know that you are keeping one of your promises: “I’ve recently taken on Client XYZ as a client, and your name came up in conversation with them a couple of times. I promised to call you to offer my help, because I make it a professional business practice to work with the friends and families of my clients before anyone else.”

3. The Message

The difficulty most advisors have is figuring out what to say to get prospects interested in what they are saying. If they say too much, the prospects tend to make excuses. If they say too little, they become suspicious and cynical. The best way is to have a powerful statement that serves as your “hook” to capture their attention and hopefully open their minds at the same time.

For business prospects, this statement could be: “I am a profit- improvement specialist helping business owners create powerful financial strategies to increase their bottom lines. The help I give is much more than financial planning and I offer an initial assessment without charge. Would this be of value?”

For non-business prospects, this could be: “I am currently helping individuals improve their personal wealth in ways that provide more disposable income for them. Would more funds for you to spend or retain as you choose be useful?”

Sandro Forte, DipPFS, is a 19-year MDRT member with 19 Top of the Table honors. He has built one of the United Kingdom’s most successful and highly respected businesses. His book, Dare To Be Different, has sold over 400,000 copies in more than 60 countries and is now published in 8 languages.

May/June 2017 issue

Annuity Trends That Benefit Your Clients

Feature: New Approaches to Selling DI Insurance

Product Spotlights: Long-Term-Care Insurance

What’s Hot in Life Insurance?

By Brian Ashe, CLU

Make Life Insurance Great Again!

The market, the products and the tools put great results within our reach.

As noted by many sage philosophers, with challenges comes opportunity. And I think that the many challenges we face in the life insurance business today present us with an unprecedented opportunity to make life insurance great again — great to own, great to manufacture, and great to sell.

Why do I think this way? Well, studies have shown that life insurance ownership in the United States is at a 50-year low. About 40 percent of the adults in this country have ZERO life insurance. And of those who do have coverage, they only have of what is enough to replace about three times their income. Is this a mature, oversaturated market? Or is this a market that is ripe for a re-education program about the value of life insurance to protect their families and businesses?

The recent and prolonged low interest rate trough has challenged company reserves and made it more difficult for product manufacturers to make new policies more attractive through lower premiums, higher cash values or both. The converse hope is that now, slowly improving interest rates will make the products more attractive and company balance sheets healthier.

Company concerns about the Department of Labor regulations compressing profits on qualified money are also, I believe, causing companies to re-look at life insurance as a reliable profit line. And past studies have shown that life insurance, not annuities or mutual funds, contributes the largest embedded long-term company profitability per dollar of premium.

But what about those of us who are advisors in the field? Well, we now have more products, with more features, at a lower cost, and with less competition than we have ever had. The number of households with dependents, our prime prospects in the middle market, is about 20 percent higher than it was 15-20 years ago. People are living longer and, by so doing, extending their dependency periods. And as we hitch our stars more and more to digital marketing, we have tools like LifeHappens Pro — your own personal digital marketing platform. This tool is flexible to Home Office compliance concerns and is available at discounted prices if you are a member of NAIFA or one of the other LifeHappens sponsoring organizations.

So, what will it be for you? The market, the products and the tools put great results within our reach. Opportunity or challenge? As said by pundits long before me, “It’s often your attitude, not your aptitude, that often determines your altitude.”

Let’s choose to make life insurance great again!

Brian Ashe, CLU, is president of Brian Ashe and Associates, Ltd., in Lisle, Ill., and the 2012 recipient of the John Newton Russell Memorial Award. A past president of MDRT and a past chair of LIFE, he may be contacted at bashe29843@aol.com. <pull quote:>

We now have more products, with more features, at a lower cost, and with less competition than we have ever had before.