NAIFA's Advisor Today May/June 2017 Edition

Trends Shaping the Financial Services Industry

on the WEB

The Advisor Today

Available at www.AdvisorToday.com

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The Advisor Today Blog brings you the tools, ideas and techniques you need to build a successful practice. Fresh content is posted regularly, and we welcome your feedback and ideas in the comments section.

We look forward to hearing from you!

ATAsks!

How do your opinions stack up against those of other NAIFA members? To zero in on the topic of this issue’s web poll and find out, answer this question here.

What works best when working with Millennials?

• Be high-tech and high-touch

• Be available 24/7

• Be transparent—trust is key

• Help first, sell second

• Support social causes

podcast series

Building a More Successful Practice

Available at www.AdvisorToday.com/podcasts

Interview with President of Women in Insurance and Financial Services

In this interview, NAIFA member Laurie Adams, CFP, CLU, LUTCF, outlines everything you need to know about NAIFA’s new LACP certification.

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 MatthewTassey, 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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Published June 2017/NAI-S0317/4010

© 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. © 2017 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.

NAIFA Membership: Your Key to Success

By Ayo Mseka

All of us are keenly aware of the attributes of highly successful advisors: They have an innate desire to help others, are willing to do whatever it takes to get the job done, and demonstrate great fortitude in the face of adversity.

These are all admirable traits, but there is something else that leads to success in this business. That something else is NAIFA membership, and let me tell you why.

As a NAIFA member, you have exclusive access to an impressive line-up of first-rate programs, including: Political Advocacy. NAIFA is second to none when it comes to protecting your interests. The association’s talented and experienced government relations team engages decision-makers at every level of the legislative and regulatory systems, mobilizing resources to achieve the most favorable outcome for you and your clients. As part of your membership, you also receive regular updates on major initiatives, clear explanations of how they will affect your business, and action steps for defeating programs that might harm you or your customers.

A key component of the NAIFA Advocacy Program is the annual Congressional Conference, which took place last month in Washington, D.C. At this important event, NAIFA members were given a platform to communicate their expertise and concerns to lawmakers and let them know about the important role the products they sell play in the lives of their clients.

Professional-Development Opportunities. You will soon have another opportunity to showcase your expertise by obtaining the new NAIFA LACP certification, which will be launched in June at MDRT’s Annual Conference. This certification demonstrates the ability of agents to evaluate client needs, problems, and resources; identify insurance solutions that are appropriate for the client’s situation; implement solutions in accordance with legal and ethical standards; and follow up to ensure that the client’s needs are met on an ongoing basis.

The LACP certification is the newest addition to the long list of professional-development programs designed just for you, including the LUTCF designation, the prestigious Leadership in Life Institute program, and other benefits that help you manage and enhance your practice. Just visit www.naifa.org and start putting them to work for you today.

The Annual Performance and Purpose Conference. NAIFA has a long history of recognizing needs and opportunities and meeting them with innovation—and this is what the Performance and Purpose Conference is all about. It is about bringing together the best minds in the industry to help attendees grow, enhance the financial performance of their practice, and discover new ways to thrive in a changing marketplace. Register for this conference today at www.naifa.org and secure your place at the industry’s most valuable educational event.

Advisor Today. As a NAIFA member, you also receive this magazine, which never fails to inspire and inform with sound advice for finding prospects, converting them into clients, and providing them with the products they need to secure their financial future. Whether your focus is on life insurance, annuities, financial planning, DI insurance or employee benefits, you will find something in this issue that you can use today to move your practice forward.

And don’t forget our popular Advisor Today podcasts, available at www.advisortoday.com. Designed for the time-pressed advisor, these short interviews feature industry heavyweights who describe the steps they took on their way to the top.

With all of these compelling benefits, it is easy to see why NAIFA membership is the key to success for so many NAIFA members. So renew your membership today if you have not already done so, and encourage your friends and colleagues to do the same. This may be the most important step you take on your journey to success. g

NAIFA Advocacy: The One Constant in a Sea of Change

Kevin Mayeux, CAE

President Donald Trump took office in January promising to reshape our country’s regulatory landscape and tackle big issues like health care and tax reform. The 115th Congress includes 59 freshman members, many of whom were unaware of issues affecting NAIFA members and their clients. For the first time since 2011, the same political party holds the White House and majorities in both houses of Congress.

Amid all the change, one rock-solid constant remains: NAIFA is the preeminent advocacy group representing the insurance and financial-services industry, advisors, and their clients. And our influence is stronger than ever.

One of Trump’s early presidential memos led to the Department of Labor’s decision to delay the applicable date of the Obama administration’s fiduciary rule. The delay is a direct result of the efforts of NAIFA and our industry partners. We continue working with the DOL as it reviews the rule and with the administration as it does away with other burdensome regulations that harm your business.

NAIFA’s clout extends to members of Congress. Earlier this year, the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access sought NAIFA’s expertise for a hearing on cafeteria plans and pass-through businesses. NAIFA Treasurer Matt Tassey testified and urged Congress to expand cafeteria plans to permit long-term-care insurance plans and to reconsider rules prohibiting certain businesses owners from participating in the plans.

At the beginning of May, NAIFA’s ability to educate and influence Congress was on display once again when the Senate passed a bill, subsequently signed into law, which ensures that state-run retirement plans have to comply with the same consumer-protection rules as free-market plans.

NAIFA sent letters to all 535 lawmakers and urged advisors to contact their senators to support the bill. NAIFA key contacts also made personal phone calls to important congressional offices, while NAIFA representatives met with members of Congress. The result was a very important legislative win for NAIFA. It ensures that state governments cannot use an unfair advantage, to the detriment of consumers, if they choose to compete against the strong free-market retirement products already available to workers and provided by many NAIFA members.

While it’s satisfying to reflect on NAIFA’s accomplishments, our focus is fixed on the future. We remain vigilant as DOL reviews its fiduciary rule, committed to ensuring that regulations do not interfere with the ability of advisors to serve their clients. NAIFA is also poised to play a major role in tax-reform discussions to ensure that tax policy encourages people to prepare for retirement, look after their loved ones, and secure their financial futures.

No matter how the government changes, NAIFA will always look after your interests and those of your clients.

Kevin Mayeux, CAE, is CEO of NAIFA. Contact him at kmayeux@naifa.org.

new products | employee benefits

Group Accident Plan Offers Customized Lifestyle Protection

Recognizing that not every case is one-size-fits-all, Aflac has launched a new Group Accident plan with innovative benefits, higher payout amounts and lower premium rates. The new insurance offering allows brokers to provide clients with a customized plan that fits most budgets and directly targets the out-of-pocket costs that impact employees’ financial freedom, the company notes.

Given that 1 out of every 8 people seek medical attention for an injury each year,* having accident insurance as part of an employee’s benefits package is more important than ever in creating peace of mind for individuals and their families.

“Creating this new Group Accident plan demonstrates Aflac’s commitment to meeting the needs of brokers and their clients by providing more choice, tailored coverage options and Day One value with bundled services,” said Stephanie Shields, vice president of Product Innovation and Marketing at Aflac. “Since accidents are impossible to predict, clients can rest assured that adding this new plan to their benefits package will help prepare their employees for the unexpected at a price that fits most budgets.”

Innovative benefits

Responding to the ever-evolving market demands, the new plan has innovative benefits that extend beyond fractures and dislocations. These benefits include an organized athletic activity rider, which covers accidents that result from participating in team sports, as well as pain management, chiropractic treatment and alternative therapies needed as a result of a covered accident.

By offering this new Group Accident plan, brokers can provide clients with a robust benefits package bundled with services that deliver Day One value at little or no cost, according to the company. For example, Aflac’s health advocate program helps customers navigate the complex health care landscape by offering support for a variety of issues, including finding doctors, understanding a diagnosis, negotiating medical bills and helping reduce out-ofpocket costs.

With four flexible benefit categories, the updated Group Accident plan allows clients to fully tailor their coverage by choosing which categories to offer their employees and at what benefit level (high, mid or low). With more specialty benefits offerings, this mix-and-match plan gives clients more control over benefits spending without sacrificing employee coverage.

The four modules are:

• Initial Accident Treatment: Offering the most traditional benefits associated with an accident plan, this category provides coverage for treatment needed after an accidental injury, such as a concussion, fracture or burn. Prescription, pain management and telemedicine coverage are unique to this module.

Hospitalization: While some accidents may lead to a quick trip to the emergency room, others can result in a hospital stay. By covering hospital admission, hospital confinement and intensive care, the Hospitalization category provides protection if a more serious accidental injury occurs.

• After Care: The cost of medical care can continue after initial treatment, creating a financial burden. This category provides coverage for expenses incurred during recovery, such as follow-up transportation and alternative therapies.

• Life-Changing Events: Unfortunately, some accidental injuries, like paralysis, dismemberment and joint replacement, can significantly change day-to-day life. With benefits like prosthesis repair and replacement as well as residence and vehicle modification, this category provides coverage to help with out-of-pocket medical costs associated with acclimation to a life-altering injury.

These categories in the expanded Group Accident plan can be paired with optional riders that further enhance coverage to ensure clients and employees are able to craft a unique benefits package to suit their needs. For more information, visit aflacgroupinsurance.com

* Injury Facts, 2015 Edition, National Safety Council

benefits

Group Benefit Products Launched

With Almost 50 percent of small businesses planning to boost benefits, New York Life has dramatically expanded its offerings. The company recently introduced a new lineup of group benefit products specifically designed for small businesses with two or more employees.

The enhanced offering includes group term life insurance, and short-term and long-term disability insurance options, adding to the whole life insurance offering that New York Life agents have been offering since 1982.

Business owners are expressing optimism for growth in their business in 2017, and one aspect of that optimism is the ability to invest in their employees to cultivate a strong workforce, New York Life notes. In fact, 49 percent of small-business owners reported that they plan to improve their employee benefits package in 2017.*

With 75 percent of Americans either uninsured or underinsured, providing life insurance coverage at work helps both employees and the small businesses that employ them,** New York Life notes.

“Employees are the lifeblood of any small business, and helping them achieve financial peace of mind can drive benefits for the business — that’s the value New York Life intends to deliver with these new offerings. New York Life is not only a benefit provider; we are proud to have agents across the country who will offer one-onone financial guidance and assistance to small business owners and employees, many who will be getting this professional guidance for the first time,” said Bob Patience, vice president, New York Life.

“New York Life agents are in the unique position to offer small business employees and their families’ financial security at an affordable cost with these new product offerings. Launching these new options on Employee Benefits Day highlights New York Life’s commitment to educating and protecting small businesses and their valuable employees.”

The company’s group and voluntary products offer:

• Flexible options at a cost that fits both the strategy and budget of small businesses;

• A variety of voluntary and employer-paid funding options;

• An option that allows first-time buyers to pay low minimum premiums. For more information, visit newyorklife.com.

* Ipsos poll of 1244 small business owners conducted in December 2016 on behalf of New York Life.

** A New York Life study showed that 75 percent of Americans do not have adequate life insurance coverage. Forty percent are underinsured and do not have enough life insurance coverage in place and 35 percent have no coverage at all. The 2013 survey was conducted by The Futures Company, an independent third party research company.

practice specialties | financial planning

How High-Net-Worth Millennials Want to Manage Wealth

Read this article to find out the priorities and attitudes of HNW Millennials when managing their wealth.

By Ned Dane

The largest transfer of wealth in American history is already under way, and it’s brought along a critical challenge that should be top-of-mind for advisors everywhere: What must an advisor do to retain the heirs of their high-net-worth (HNW) clients?

Just like their Baby Boomer predecessors, Millennials want to work with advisors they know on a personal level. They desire a personal relationship with the individuals they take financial advice from and will look elsewhere after receiving their inheritance if they don’t know the family advisor well.

If you don’t have a relationship with your clients’ Millennial heirs, make getting to know them a top priority. Lean on your clients to facilitate introductions if necessary, and find out what makes their offspring tick. Learn their interests. Assess their knowledge of investments and finance. Educate them yourself if the opportunity presents itself, which will help you become a trusted voice over time.

This is an ongoing process that won’t reap dividends overnight, but it will pay off in the long run if you’re persistent. Over the last two years, we’ve conducted a pair of in-depth studies of wealthy Millennials in partnership with Campden Wealth. Through our findings, it’s clear that this generation will remain loyal to advisors who know them and support their interests.

Define their investment identity

So how exactly does the typical HNW Millennial look to invest their personal wealth, and what do they really think of the services that advisors provide?

We set out to answer these questions – and more – in our report: “Coming of Age: The Investment Behaviors of Ultra-High-Net-Worth Millennials.” The report examines how the wealthiest members of the Millennial generation are managing their personal investments. It also sheds light on areas of overlap and divergence in how Millennials approach their personal and family wealth.

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Just like their Baby Boomer predecessors, Millennials want to work with advisors they know on a personal level.

We surveyed a population of young adults who were born between 1980 and 1995. They’re now at an age where they enjoy growing influence over how their family wealth is managed. Through our conversations with them, we learned that their views on how to invest the family portfolio diverge in key ways from their parents’ and grandparents’ approach.

Only one-fifth of the Millennials we surveyed are fully satisfied with the objectives and guidelines of their family portfolio. A third of the Millennials we talked to said they plan to increase allocations to environmental, social and governance (ESG) investments.

Another third said they want to increase their family’s access to riskier, potentially less liquid strategies such as private equity or hedge funds. And 29 percent revealed that they plan to change their family’s long-term investment objectives.

As you work with Millennial clients, understand that you’re interacting with the most educated generation in American history. However, they still have much to learn when it comes to investing and wealth management.

Although they generally have a strong grasp of investment concepts and strategies, their interests and knowledge are largely concentrated in U.S. equities. There is an opportunity for advisors to educate Millennials on how to properly diversify their portfolio. As part of your value proposition, open their minds to the various ways different asset classes can benefit them in the long-run.

Millennials and risk

Although wealthy Millennials have a natural inclination towards preserving family wealth, we were surprised to learn how focused this generation is when it comes to investment deals. One-in-four HNW Millennials has been involved in more than 20 deals over the past five years, and a solid 65 percent have played a role in five deals.

But only 35 percent place a premium on a clear and structured approach to due diligence before any major transaction, the survey shows. In our view, this points to an opportunity for advisors to demonstrate their value to Millennials by stepping in and educating them on the importance of due diligence in the deal-making process. Advisors can step up and become trusted second voices in assessing the quality of potential deals.

The skeptical generation

Advisors should be heartened by the fact that a clear majority of the Millennials we surveyed seek professional advice before making investment decisions. They’re not interested in robo advisors either – they’re looking for holistic, unbiased advice from trusted experts. On the other hand, we found some uneasy dynamics at work between advisors and Millennials as well.

Older Millennials who have experience working in their family office or in financial services expressed skepticism about the value advisors provide as well as their motivations. We even found a level of cynicism among this cohort about the fees advisors charge and the product recommendations they make.

But overcoming these views isn’t an insurmountable challenge. Savvy advisors will recognize that they can build strong relationships with Millennials over time through education and personal relationships. Ultimately, taking the time to understand the attitudes and priorities of this generation can position advisors to retain their clients’ heirs once the family wealth officially changes hands.

Ned Dane is Head of OppenheimerFunds’ Private Client Group. Read an executive summary of the Coming of Age report to learn more about the investing identity of wealthy Millennials and check out his monthly column on advising wealthy families.

How to Schedule More Client Reviews

Use a customer-centered approach when asking for reviews and you will likely gain more appointments.

By Ray Vendetti, CLU, ChFC

Everyone agrees that reviews are beneficial to the client, the company and the agent. They help clients better understand their coverages and avoid difficult situations when they experience a claim and discover that their coverages are not what they thought. The company benefits by avoiding these same claim questions and by building stronger relationships with customers. And the agent benefits by gaining higher client-retention rates and renewal commissions, as well as the potential for acquiring high-quality referrals based on satisfied customers.

So why is it so difficult to get clients to sit down for a review? What goes through a customer’s mind when approached for a sit-down review? You often get responses like: “Nothing’s changed,” “I don’t have time right now” or “I understand my coverages.”

When approaching clients for a review, agents commonly tell them that it is time for their annual review or the company requires them to meet with clients to go over their coverages. Both of these approaches are weak and ineffective and rarely result in an appointment. This is because many clients think the agents are going to use pressure tactics to get them to buy something they may not need or understand. The clients have no ownership in this type of approach; so, they object to the agent’s request.

The customer-centered approach

Here’s how to make your next approach customer-centered, gain customer ownership in the process and obtain an appointment.

First, begin with a non-intrusive question: “How important is it for you to review your policies on a regular basis?” What’s effective about this question is that you are not attached to the answer you will likely receive, which is: “Very,” “Not Very,” “Somewhat,” etc. Your follow-up response to whatever they say is simply: “Tell me. Why?”

With this question, you are now letting your customer explain his answer. Once you have the answer, your next question should be: “Well, if you were to have a claim and found that you did not have the right coverages, how would that make you feel?” You will get a strong emotion from them to this question. They will be angry or upset, or even threaten to sue you.

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Reviews help clients better understand their coverages and avoid difficult situations when they experience a claim.

Your response to their reaction is to let them know that you do not want to anger or upset them. You then ask

them: “How would you feel about sitting down for a 20-25 minute review so that wouldn’t happen?” Again, you’ll receive an emotional response.

You then continue: “Now. How frequently would you feel it’s best to conduct these reviews so you wouldn’t have to worry about a claim?” They will give you a time range — yearly or even every 12, 18 or 24 months.

Then you say: “Great. I see from your file that we haven’t conducted a review with you in some time. What if we schedule one in the next two weeks so that we can get a baseline and begin your program of (xx months) regular reviews?”

Several things have happened in this short conversation:

1. The client has let you know how they’d feel in the event a claim was not covered to their satisfaction or understanding.

2. They have agreed to a time that is best for THEM to meet regularly.

3. They have expressed ownership of this program — it is now their program.

Not only will you schedule more reviews with this method, you will also find out that a very high percentage of your clients will actually show up at their scheduled time!

When I first began using this approach, I had a surprising revelation — about half of my customers chose 12 months for their reviews. The remainder chose 18-24 month schedules, or even wanted a review in less than a year. Several of the people who chose the shorter timeframes were those with mutual funds, interest-sensitive products, etc.

So if your approach is to schedule “annual reviews,” more than half of the people you reach will feel that “annually” is either too frequent or not frequent enough. No wonder it’s so tough getting them to come in for their reviews!

Ray Vendetti, CLU, ChFC, is with Vendetti Insurance Services in San Diego. Contact him at 760-443-1719 or at ray@rayvendetti. com

Divorce: What Your Clients Need to Know

They should cover all the bases by purchasing life insurance.

By Lisa Horowitz, CLU, ChFC

As a veteran insurance broker with almost 30 years’ experience, one maxim has always rung true for me: Knowledge is power. It has been my goal to bring the best available resources, tools and information to bear so that my clients can make choices and feel secure that they are making well-informed decisions.

Whenever I have given my clients relevant and practical information about products they could purchase to protect themselves and their families, decisions are made and the necessary insurance is put in place.

I have also provided my clients with important liquidity when it is crucially important. That’s what life insurance does: It keeps a family in a home, for example, and helps maintain a lifestyle the family is counting on.

Camp, school, college, vacations — all of these remain just a possibility if an unexpected death of a primary wage earner were to occur. When a client is facing a divorce, it is my job to bring these potential unbearable risks to light. It is my goal to make sure that all scenarios are considered, and that possible financial and/or insurance solutions are offered and implemented.

I have seen many clients and friends get married over the years, and I have wished them a long and happy life together. For many, however, it doesn’t end that way. Some relationships and marriages don’t last, and couples move toward separation and divorce.

This process can be emotionally overwhelming, scary even, for many people. Most of the fear is related to the idea of being alone and of facing a future without the security that being part of a couple can offer. This fear also comes from the sudden awareness that they might not have a solid understanding of the family’s finances or of their own, for that matter.

The recognition that the marriage is ending can be a crisis. It has been my experience time and time again that people become immobilized with fear when they don’t have the information they need to ensure that their financial “house” is in order.

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That’s where we, as insurance advisors, come in. Unfortunately, fear can potentially affect any decision making. We have listened to the objections some clients have to making decisions, and we understand that most of this pushback is due to a lack of understanding of the risks they are exposed to and the products that can be used to alleviate or eliminate these risks. Perhaps your clients feel bullied or pressured by ex-husbands, wives or partners, opposing attorneys/mediators, etc. Or they end up making poor decisions about finances because they don’t have

When a client is facing a divorce, it is my job to bring these potential unbearable risks to light.

the relevant facts and/or tools at hand. If they rely solely on professionals without having their own idea about what’s needed, such as the amount of income, child support, etc., that is needed, how can we help them?

Helping your clients

We can help by walking them through the process of assessing their financial needs. It’s not helpful or useful when their attorney tells them not to worry. As informed and experienced as the attorney might be, he or she is not part of the client’s daily financial life. As a financial advisor, you must be part of the process as well. This is a crucial area that requires your input as well as the client’s. We know that we succeed in selling insurance when the client is a full participant in the process. Understanding the role insurance plays in a divorce is vital to ensuring your client’s financial security and success.

Just because we know that the divorce agreement has been drawn up, the numbers are accurate and it seems as if all the parties are adequately provided for doesn’t mean all of our work as insurance professionals is done.

Clients are counting on their ex-spouse to honor the divorce agreement. But what if they suddenly were unable to do so because they die? I also ask my clients these questions: “Are you mandated to contribute to support the family? What if something unexpected were to happen to you?” “What happens to retirement and/or educational needs if the person who was required to put the funds away is no longer living?”

The primary answer to these questions is life insurance. As all advisors know, life insurance will protect all parties in the event an unexpected or untimely death occurs. The pieces of this puzzle are: How much life insurance is needed? How long is the coverage needed? Who pays the premiums? Who is the beneficiary? Who owns the policy, and why?

Below is an infographic that outlines the process one must go through to answer some basic questions about life insurance and its place in the divorce-agreement negotiations. I created it to help support the ideas mentioned in this article.

The content of this article should be addressed while your client’s Divorce/Separation Agreement is being drafted. Considerations of cost, availability of coverage, etc., should be part of any decisions pertaining to the final divorce agreement. While coming to terms about finances with an ex-husband, wife or partner is important, ensuring that the terms are actually carried out is just as vital.

Lisa Horowitz, CLU, ChFC, is founder of Lifecycles: Resource Management for Lives in Transition. Contact her at 718-352-1311

product spotlight | life insurance

What Consumers Want

When buying life insurance, they want transparency, simplified underwriting, and easy-to-understand product offerings.

By Ayo Mseka

American consumers expect the life insurance industry to remain innovative and continue to meet their needs and preferences, according to the 2017 Insurance Barometer Study. The study finds that 70 percent of Americans who would consider purchasing life insurance would be interested in doing so without a physical exam, also known as simplified underwriting.*

Now in its seventh year, the Insurance Barometer Study tracks the financial perceptions, attitudes and behaviors of consumers in the United States, with an emphasis on life insurance. LIMRA, a not-for-profit research trade association, and Life Happens, a non-profit educational organization, jointly conducted the study.

The current study looks at the life insurance buying process from the consumer’s point of view and finds that simplified underwriting may impact a consumer’s likelihood of completing the life insurance purchase. Those who are interested in purchasing life insurance through simplified underwriting are drawn to the speed and ease that it offers.

Other appealing benefits include:

• Risk and price transparency (67 percent)

• An unbiased application process (66 percent)

• No need for a medical exam (64 percent)

Closing the sale

The study asked consumers to rate the importance of various factors when purchasing life insurance. Having a product that is “easy to understand” received top ranking, with 83 percent. The “ability to chat with a person” was next (66 percent), while a “faster sign-up process” was very or extremely important to half of all survey respondents (51 percent).

“Our research shows increasing interest among consumers for speed, ease and transparency in the life insurance purchasing process, including an evolving trend to buy online,” said Marvin Feldman, CLU, ChFC, RFC, president and CEO of Life Happens. “It’s interesting to see that this desire is universal, across all generations. A Baby Boomer is just as interested as a Millennial when it comes to making the online buying process fast and easy.”

Everyday technology is shaping consumer expectations of life insurance. There is an increased desire to purchase financial products, like life insurance, online. In fact, online life insurance purchase attempts have tripled since the Barometer’s inception in 2011.

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Online life insurance purchase attempts have tripled since the Barometer’s inception in 2011.

Peer-to-peer buying—an emerging trend

The study expanded its reach and took a first-time look at peer-to-peer (P2P) insurance. P2P insurance is an emerging trend in the insurance industry. It utilizes P2P business models to provide coverage through a nontraditional experience geared towards online/mobile applications. Thirty percent of respondents say they would be open to purchasing life insurance via a P2P platform, if available.

“While P2P insurance platforms are still in their early stage, it’s a trend on the horizon that’s worth paying attention to,” said Jim Scanlon, senior research director at LIMRA. “Our research shows consumers value interacting with insurance companies in new ways such as simplified underwriting, P2P models and online sales. While the industry has been slow to adapt, we continue to see progress. For example, the percentage of completed online sales has increased by more than 15 percent in the past four years.”

Expectations and preferences for purchasing life insurance are rapidly evolving, the study notes. In contrast, consumers still lack an overall understanding regarding the cost of life insurance and who should own it. Having dependents still signals the need for life insurance.

However, according to the study, there is a gap regarding the marital status of those with dependents. Only 60 percent of respondents indicate that a single person with one or more young children needs coverage, compared to 80 percent of respondents who say the same of a married person.

Furthermore, consumers tend to overestimate the price of life insurance. This may deter those who believe it costs too much from purchasing. For instance, when asked how much a $250,000 term life insurance policy would be for a healthy 30-year-old, the median estimate was $500—more than three times the actual cost.

This lack of understanding leads to insufficient coverage. Nearly 40 percent of respondents say they wish their spouse or partner had more life insurance coverage. This has increased by 10 percent since the first Barometer Study in 2011. And while 85 percent of respondents agree that most people need life insurance, only 59 percent say they have life insurance.

Insufficient coverage has grave consequences for countless families. Four in 10 households without any life insurance would have immediate trouble paying living expenses if their primary wage earner were to die.

The 2017 Insurance Barometer Study was fielded in January 2017, using an online panel, which surveyed 2,031 U.S. adults ages 18-75.

* For this survey, simplified underwriting is defined as making use of publically available data for risk classification decisions for life insurance pricing, enabling purchase without requiring blood and fluids for medical testing.

product spotlight | employee benefits

Safety Awareness Month and the Value of Accident Insurance

There is no better time than now to approach your clients about accident insurance. It helps keep their clients happy because it helps ensure their peace of mind and financial freedom.

By Stephanie Shields

You’re likely reading this issue of Advisor Today from the comfort of your desk, sofa or even your dining table. Given your occupation, it’s a safe bet you don’t leave home — or your office — worried that today is the day workplace hazards will leave you suddenly injured.

Yet, many Americans don’t head to work with that type of reasonable certainty. Consider the concerns of those who hold the most dangerous jobs in the nation — for them, accidents and injuries are almost inevitable. According to a recent survey, construction workers, corrections officers, emergency medical technicians, nursing assistants and veterinarians face daily dangers ranging from electrocution and inmate attacks to back injuries and animal bites.1

June is National Safety Awareness Month

June is National Safety Awareness Month, and it is one of those times when all employees should pause to think about safety. This is a good time to urge clients to consider whether they’ve done everything possible to ensure their employees are protected from the costs of unexpected accidental injuries. While most jobs aren’t on the most-dangerous list, employee safety is always a primary concern for businesses. After all, on-the-job injuries aren’t rare. The Bureau of Labor Statistics reports that 2.9 million nonfatal workplace injuries and illnesses were reported by private-industry employers in 2015. 2

Protecting employees’ wallets and companies’ bottom lines

Naturally, smart companies do everything possible to eliminate workplace hazards, but accidents happen nonetheless. While common injuries like sprains, strains and muscle tears sound fairly benign, these minor injuries can still affect a company’s resources and productivity. In fact, they resulted in 421,610 days away from work in 2015.3

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Providing employees with benefits that help protect their finances from the oftendebilitating costs of illness or injury is a smart business decision.

Not to mention, the constant threat of the medical costs associated with unexpected injuries can distract employees and negatively affect their productivity while they are at work. Fortunately, including supplemental accident insurance in your client’s benefits package can help assist employees with the financial burden associated with unforeseen injuries, without negatively affecting clients’ bottom lines.

In addition to using National Safety Month as an opportunity to raise clients’ accident awareness, advisors can remind them that offering a robust slate of benefit options can affect their companies in other positive ways.

For example, employees surveyed as part of the 2017 Aflac WorkForces Report said a strong benefits package increases their company loyalty, productivity and job satisfaction — and also plays a major role when deciding whether to remain in their current position.4 In other words, providing employees with benefits that help protect their finances from the often-debilitating costs of illness or injury isn’t just the right thing to do; it’s also a smart business decision.

By proposing accident insurance, you, as a trusted advisor, can keep your clients happy with a cost-containment solution that helps control their companies’ major medical expenses without sacrificing employee coverage. At the same time, accident insurance helps keep your clients’ employees happy because it helps ensure their peace of mind and financial freedom.

This article is for informational purposes and is not intended as a solicitation.

1 Career Cast. “The most dangerous jobs of 2016.”Accessed April 12, 2017. http://www.careercast.com/jobs-rated/most-dangerous-jobs-2016

2 Bureau of Labor Statistics. “Employer-reported workplace injury and illness summary.” Accessed April 11, 2017. https://www.bls.gov/news.release/osh.nr0. htm

3 Bureau of Labor Statistics. “Nonfatal occupational injuries and illnesses requiring days away from work, 2015.” Accessed April 11, 2017. https://www.bls.gov/ news.release/osh2.nr0.htm

4 2017 Aflac WorkForces Report. The Report is the seventh annual study examining benefits trends and attitudes. The study’s sur veys, conducted by Lightspeed GMI, captured responses from 1,800 benefits decision-makers and 5,000 employees across the United States in various industries. For more information, visit AflacWorkForcesReport.com.

Stephanie Shields is Aflac Vice President of Product Innovation and Marketing.

product spotlight | disability income insurance Trends Affecting the DI Market Today

Streamlined underwriting platforms have allowed insurers to effectively market more affordable programs and expand their reach to Middle America.

By Joe Russo

According to last year’s Milliman survey of the industry, the disability income (DI) insurance marketplace is thriving and stronger than it has been in 20 years. Much of that success is partly due to the relatively soft DI market and the slowly increasing number of life companies that are expanding their portfolios and offering more DI insurance products.

Low interest rates and mediocre investment opportunities are forcing many insurers to battle for higher levels of gross premium. Consumers, whether they know it or not, are experiencing carrier competition that is generally driving DI insurance policy premiums lower and pushing benefits and participation limits higher along most underwriting categories. DI insurance underwriting is more liberal today than it has ever been, and we are seeing new trends affecting the market.

Today’s trends

Insurance companies have traditionally catered to preferable risk selection among classes like physicians, attorneys and the high-end, white-collar market. But DI insurance carriers have begun to expand their marketing reach to Middle America and are finding profitability in the more recently-defined and greatly-expending, gray-collar sector. Streamlined underwriting platforms have allowed insurers to effectively market more affordable insurance programs to occupation classes that in the past would usually balk at DI insurance premiums. Much of that streamlining directly correlates to technology evolution and advances in automation.

Embracing contemporary technologies, DI insurance carriers are finally making some inroads into the rest of the insurance industry by exploiting client receptiveness to digital advertising and social media marketing. Gimmicks like smart-phone apps and insurance calculators have become commonplace. And companies are beginning to offer user-friendly, online-enrollment platforms that provide quicker and easier underwriting and policy issuance.

Carriers and wholesale distributors are also working to make DI insurance sales more attractive to brokers and agents by putting quoting engines and policy comparison software in their hands. But many of these novel tech advances have also broken down barriers between insurance companies and the end-line consumer, allowing for increases in direct marketing and sales, which further weakens the traditional roles of independent insurance

agents in this country.

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DI insurance still doesn’t sell itself and client/advisor relationships still reign supreme.

The disability market is also seeing frequent back-office movement and changes in underwriting methodologies that make DI insurance sales more attractive to clients and easier processing for retailers.

Many domestic and international DI industry players have broadened their marketing of simplified-issue and guaranteed-issue plans on both group and individual chassis, allowing them to reduce their frequent use of expensive medical underwriting staff and save on costly and time-consuming, policy-paperwork generation. These overhead expense savings, theoretically, in turn, translate into lower premiums for the consumer.

Besides the hefty discounts associated with simplified and guaranteed-issue underwriting, insured persons enjoy comprehensive disability benefits with a fortuitous lack of medical condition exclusions. Furthermore, prospects are spared the inconvenience of intrusive paramedical exams and blood and urine draws.

As is evident from the popularity of plans employing simplified underwriting, insurance companies are more frequently utilizing comfortable risk pools to pass savings on to consumers while expanding their market reach. This pooling of risk has become beneficial even throughout the individual DI market, considering the recent uptick in association-sponsored DI insurance platforms.

Despite the immense volume of digital-based marketing and online enrollment programs found in the personallines insurance industry today, the reliable source of DI insurance sales remains in the hands of experienced agents and brokers. DI insurance still doesn’t sell itself, and client/advisor relationships still reign supreme. Much of the business world now takes place in the digital realm, but it seems that the DI insurance market, although certainly testing the waters, is not quite fully there yet.

Joe Russo is an underwriter and account executive at Petersen International Underwriters. He is a “specialty market” life and disability insurance expert and the editor-in-chief of Petersen International’s weekly publication, The Communicator.

product spotlight | long-term-care insurance

Long-Term-Care Insurance in the Post-DOL World

The tool portrayed in this article will help you talk through the journey your clients will take as they live with physical and cognitive frailty.

By Deb Newman, ChFC, LTCP, CLU

While listening to a presentation by Doug Lennick on the state of the Financial-Advice industry, I thought to myself: “How will this presentation apply to the delivery of long- term-care insurance?” I left the event with a new enthusiasm of how critical it is that we make a contribution to the advisory practice of the future.

We all know that consumer awareness and the Department of Labor regulations are changing the financialadvice industry, but I believe quality advisors have been acting in the best interest of their clients for years. So what’s new?

In his presentation, Lennick emphasized that to “remain relevant, advisors must enhance their value proposition, and that includes incorporating Behavioral Financial Advice: the connection between financial health, physical health and happiness.”1 Then, he mentioned the words that gave me inspiration: PREPARE CLIENTS FOR THE CERTAINTY OF UNCERTAINTY!

Simply put, the two risks are living and dying. The financial and emotional implications of death are areas most of you have well in hand, but let’s talk about the living. Here are the two components of living:

1. Sickness, injury and disability and/or living a long life with physical or cognitive frailty

2. Good health with market uncertainties

A tool for dealing with uncertainty

Again, the certainty of market uncertainty is a strong focus for most advisors; so, let’s talk about the first component and the very personal journey you and your client will take as a family lives with physical and cognitive frailty. The tool that follows is simple in concept and allows you to really talk through that journey with your clients. I think this tool, portrayed as the letters M and W below, can be used for every aspect of uncertainty, but let’s look at it as it relates to long-term-care planning.

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Source: Doug Lennick, think2perform, AdvisorNet Financial Education Conference in Minneapolis, MN, April 2017.

As you follow the arrows on the M, you will see that without a plan for the uncertainty of how a family will cope with long-term care, the expense begins the stress, and then the journey continues to irrational decisionmaking and ends with diminished physical and financial health. With long-term care, you could really create that M for not only the person needing the care but for all of the family members impacted. Quite frankly, the financial and emotional stress of caregiving really compounds the problems for the next generation.

Now, as you flip the M to a W, you can see that having a plan in place reduces financial stress; therefore, it also reduces the irrational decision-making behavior and makes both the financial and physical health stronger, particularly for the family.

The best word to add to your discussion with your clients is PERMISSION. If you have a plan in place that incorporates behavioral financial advice, it will give the family permission to intervene sooner with a plan for home care. Permission allows the journey along the W rather than along the M.

The advisory practice of the future will no doubt be team based; so, make sure to have a resource well versed in long-term-care planning as part of your team so that your client’s journey through life will end well.

Ashton Applewhite, who was named Next Avenue’s 2016 “Top Influencer in Aging,” put it well: “It would be great if we no longer see aging as a problem to be fixed or a disease to be cured, but for what it is: a powerful, natural, lifelong process that connects us all.” 2

1 Doug Lennick, think2perform, AdvisorNet Financial Education Conference in Minneapolis, MN, April 2017.

2 Ashton Applewhite, 2016 Influencers in Aging, http://www.nextavenue.org/showcase/influencers-aging-2016/, 2016.

Debra C. Newman CLU, ChFC, LTCP, is President of Newman Long Term Care. Contact her at 612-454-4402.

Using Annuities to Help Clients Prepare for a Comfortable Retirement

An important first step is to educate them about the various types of annuities available and how they can be used to help secure a comfortable retirement.

By Frank Medina

Many employed adults can envision the kind of life they would love to have after leaving the workforce, but how that lifestyle can be achieved is an issue that often weighs on their minds. In order to financially prepare for retirement so that we can live comfortably, it’s important that we know and understand the variety of options available to us. Annuities are one such option, and how they can serve as an investment tool that generates a sizable income for the future is something that financial planners must explain to their clients.

The following should be part of the information you share with your clients as you undertake the task of educating them about these valuable products:

What are annuities?

Annuities are insurance products that pay out an income to policyholders. Policyholders invest in an annuity, and on a future set date or series of dates, payments are made to them by the insurance company. The policyholder may receive payments every month, every three months, or annually. Another option is to receive an annuity in a single lump sum. Annuities are generally considered a form of life insurance because they provide a death benefit, and unlike equities, bonds or mutual funds, they are sold by life insurance companies rather than by stockbrokers.

The way they are paid out makes annuities an important component of retirement planning because they give retirees the comfort of knowing that they will continue to receive checks for as long as they live.

Advantages of annuities

There are several advantages to holding annuities, both from a tax perspective and an income perspective. There are no yearly contribution limits. This means that your clients can stow away large amounts of money while they have the means. Because they are tax-deferred, they don’t have to pay taxes on that money until after they retire. This means that their entire pre-tax investment compounds annually. And as stated, they have the flexibility to decide the frequency of the payout.

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Not only does an annuity ease anxiety and worry about retirement, it is also an

Types of annuities

There are two main categories of annuities: deferred or immediate, and within those categories, there are further options your clients can choose, such as fixed or variable. Below are the differences between the two options:

• Deferred annuities are annuities invested for a certain length of time until your clients are ready to withdraw. Payments are not made right away. Withdrawal usually occurs during retirement.

• Immediate annuities are annuities that release payment right after the policyholders make their first investment. As they get closer to retirement age, an immediate annuity may be more attractive.

• Fixed annuities: As the name implies, the payout is a fixed sum. They are annuities that increase in value based on stated returns within the written legal agreement.

• Variable annuities: The payout from variable annuities is tied to investment performance; as a result, the payout varies. Variable annuities allow policyholders to select from myriad investments, such as stocks and bonds.

Picking an annuity

When choosing an annuity, your clients have several factors to consider before signing any contractual agreement:

Cost

Cost tends to be the first factor people consider when choosing an annuity. How much does the annuity cost? Are there additional expenses? How are the investments scheduled? Is the total cost included in the upfront fee? Your client should ask these questions to ensure that the cost don’t outweigh the investment returns.

Flexibility

Your client should find out the extent of control they have over their investments. Some annuities cannot be changed.

Income Guarantees

The insurer may promise to make income payments, depending on the type of annuity.

Liquidity

Depending on the annuity, your client may be able to convert the annuity to cash with minimal or no loss in value. However, they may be penalized for doing so.

Longevity

This is based on the length of time withdrawals can be made and protection from longevity risk. Certain payouts will be higher or lower than others.

With the guaranteed income that annuities offer, it certainly makes sense for your clients to include them as part of their retirement planning. Not only does an annuity ease anxiety and worry about retirement, it is also an excellent way of maintaining one’s lifestyle after retirement.

Frank Medina is a life insurance and annuity specialist who has been able to help hundreds of clients plan out their future while being financially secure. Contact him at frank@frankmedinainsurance.com .

excellent way of maintaining one’s lifestyle after retirement.

Trends Shaping the Financial Services Industry

Regulations,

technology,

and

demographic shifts are forcing financial firms to redefine their customer relationships, products and services.

By Marc Silverman, MBA, CFP, ChFC

The financial-services market is continuing to undergo radical changes that are shifting the way business is conducted. From changing regulations to digital innovations, market shifts are forcing insurers to reinvent their

strategies, services and processes to better meet the needs of consumers. Here are a few of the trends that are shaping the financial-services market today.

Regulations

Aimed at stopping the billions of dollars the government claims investors waste in exorbitant fees each year, the proposed fiduciary rule by the Department of Labor (DOL) has been defined as the most significant industry game-changing development since the tax reform of annuities in the early 1980s. Beginning in 2009, the DOL commenced a multi-year project to address the problems with conflicts of interest in investment advice. With a focus on strengthening consumer protection, the rule broadly targets how annuity businesses are written and the models for compensation of advisors providing retirement advice.

While the rule does contain several concessions, advisors will have litigation to fear if they can’t prove their retirement advice put the client’s interests above their own. Under the DOL fiduciary rule, the ability to recommend specific high-commission products may become more difficult, creating a ripple effect on retirement sales and advice.

The interplay between the government’s need to raise the compliance cost and the need of annuity companies to comply with the proposed regulation is expected to increase the budget allocation of firms that are adopting technology to help them. While the industry will not know the direct effects of the DOL rule until much later, it’s undeniable that life insurance and annuity firms have to evolve their advice models and daily operations. As a result, staying informed on the potential implications of changing regulations is a top priority for all providers in this market.

Technology

The deepening use of mobile phones for nearly every aspect of human life has caused financial companies to rethink their delivery of services in order to keep up with the needs of the market. The same has also been required by the increasing uptake of life insurance products by Millennials and mass-affluent consumers who are seeking the latest digital tools for automated, algorithm-based financial advice. The ability to offer unprecedented access and self-service on multiple devices will be a growing focus for life insurance consumers who are accustomed to getting what they want easily and effortlessly from their smartphones. As a result, insurers need to turn their focus on creating a business strategy for the digital age.

Furthermore, robo-advisors, which younger investors are more likely to have confidence in than their Baby Boomer counterparts, are posing a challenge to annuity businesses that continue to follow traditional models. According to a recent study, about eight percent of top advisory firms now offer some sort of robo-advice, with another 20 percent expected to do so in the next two years.1

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Robo-advisors can never replace traditional investment and financial planning, especially in more complex areas like long-term tax planning and business investing.

In spite of their many attributes, robo-advisors can never replace traditional investment and financial planning, especially in more complex areas like long-term tax planning and business investing. These demanding tasks require an in-depth review to create a financial plan that truly meets the needs of every individual investor. Preferring a “low-touch” level of engagement, younger investors will continue to place greater priority on technology. As a result, online wealth-management platforms that provide algorithm-based automated services will continue to become more common in the life insurance industry.

Combined with cloud and on-demand technologies, these advanced analytics are providing insurers with the instruments they need to re-engineer their front and back offices. Focused on providing more customers support, insurers will continue to seek strategic partnerships and acquisitions. However, digital innovation carries greater risks, which makes insurers more vulnerable to privacy breaches as they gain wider access to sensitive financial and health information.

Cyber risks

As annuity and other financial companies focus on digital and technologically innovative solutions to keep up with competition, an essential component will be the collection and storage of customers’ data on their websites. Leveraging social media and other digital technologies exposes life and annuity insurers to greater cyber risks, including fraud and data theft. Due to possession of sensitive data, cyber-attacks can also be politically motivated to disrupt organizations. Moving forward, financial professionals will want to closely monitor the growing digital connections between their systems and those of outside parties to ensure protection from serious financial, legal

and reputational fallout.

As digital technologies continue to grow, established annuity insurers will experience greater competition from digital start-ups and new entrants looking to capitalize on market shifts, especially as innovation in financial services moves from the banking and payments sector to the insurance sector. Challenges will also come from non-traditional sources offering innovative digital solutions.

The rise of the Millennials

However, the biggest competition will be fueled by the changing attitudes and practices of consumers. Millennials are the single largest demographic group today. Companies that are reluctant to embrace the innovation that Millennials seek will have a difficult time acquiring and retaining them as customers. Insurers will need to focus on the preferences and demands of this emerging class to capitalize on the shifting insurance landscape. Fastmoving insurers will need to focus on redefining their customer relationships, products and services to address new market dynamics.

1 Investment News, Robo-Advisers Want To Plan Your Clients’ Future, 2015

Marc A. Silverman, MBA, CFP, ChFC, formed Silverman Financial in 1989. A 32-year MDRT member with five Court of the Table and 22 Top of the Table honors, Silverman has a diversified client base, including public corporations, closely held businesses, individuals, trusts and estates.

Making the Case for Individual DI Insurance

One way is to use real stories about recognizable scenarios to illustrate how a disability could affect your client personally.

By Stacy McCann

Earlier this year, The Guardian Life Insurance Company of America® (Guardian) released findings from a national survey that explored the link between financial confidence and life satisfaction. The Guardian Study of Financial and Emotional Confidence™1 revealed that while 78 percent of Americans are worried about their financial future, their behaviors often contradict the financial priorities they identify as most important in their lives. One of the top priorities cited was protecting your family financially if you die or are unable to work. While life insurance covers a death, disability income (DI) insurance is a crucial component to protect your income if you are unable to work due to an illness or injury. And yet only about 40 percent of respondents had some type of DI insurance coverage

Why do so many of our clients miss this integral part of their family’s financial safety net? Many clients appear to have a limited understanding of how DI insurance works, which contributes to low ownership levels, including half of all Millennials who have no disability coverage.

Disability statistics

Consider these compelling statistics from a 2014 study by The Council for Disability Awareness2:

• One-in-four of today’s 20-year-olds will become disabled before reaching age 67.2.

• Only 33 percent of private-sector workers have access to long-term disability (LTD) benefits through their employer, and 40 percent have access to short-term disability benefits (STD).

• At companies with fewer than 100 workers, only 29 percent have access to STD and 23 percent have access to LTD.

• The most common causes of long-term disability claims are not accidents but rather back problems, joint and soft tissue pain, cancer, heart disease, and mental health illnesses.

Guardian’s fourth annual Workplace Benefits Study3 found that 3 in 5 Americans could not live off their savings for more than six months if they were to become ill or injured and were unable to work. Employersponsored DI coverage is a decent foundation but generally offers only basic protection, with around 40 percent income replacement after taxes. Social Security Disability Insurance is also inadequate for most earners to maintain their current standard of living.

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Clients who have invested a great deal in their education and may have substantial student loan debt are particularly in need of protection to meet their financial obligations in case of a disability.

The IDI conversation with clients

For an agent or broker, this provides an opportunity to educate clients while customizing an individual DI policy to meet their unique needs. Take the time to explain what’s covered and what options are available. When people do not understand something, they often ignore its value and worry that they are paying for something they’ll never use. To combat this, use real stories about recognizable scenarios to illustrate how a disability could affect them personally.

Financial professionals can help consumers visualize the unknown and the possible.  In order to decide what coverage is “worth it” to purchase, consumers conduct vague probability calculations in their heads to determine the likelihood of something happening to them. Recognizable scenarios, whether illness or injury, resonate best and increase the perceived probability that it could happen to them.

Explain the importance of DI insurance in career-interrupting scenarios. Clients who have invested a great deal in their education, such as doctors and attorneys, and may still have substantial student loan debt, are particularly in need of protection to meet their financial obligations in case they suffer from a disability. Unlike many other kinds of debt, student loans cannot be discharged in the event of bankruptcy.

Many graduates assume that federal student loans come with exceptions in the case of disability, but the government’s standard is quite restrictive. And private loans may not have any provisions for disability at all. For these clients, financial professionals can now offer policies with riders that repay their student loans and protect them from default.

No one plans on becoming disabled, but the sobering reality is that nearly 25 percent of Americans will become disabled before they retire. Most disabilities are not caused by accidents but by illnesses. And that’s precisely why individual disability insurance is an integral part of your clients’ comprehensive financial product portfolio, especially for people who are in their peak earning years and who might not be able to afford the financial impact of a serious disability.

1 https://www.livingconfidently.com/research/

2 http://disabilitycanhappen.org/research/consumer2014/

3 https://www.guardiananytime.com/g

Stacy McCann leads the National Distribution Sales and Product Support teams for individual disability (DI) insurance at The Guardian Life Insurance Company of America. Her teams help agency staff, Disability Income Specialists, and producers with case consultations, illustrations, product training, sales and prospecting.

professional education & development

Demonstrate Your Excellence with NAIFA’s New LACP Certification!

Starting this summer, NAIFA members wanting to further showcase their expertise will be able to obtain the new NAIFA LACP certification. Life and Annuity Certified Professionals (LACPs) are agents who have knowledge and experience beyond the requirements for industry licensure.

The LACP certification will be launched in June 2017 during MDRT’s Annual Conference in Orlando. The LACP certification demonstrates the ability of agents to evaluate client needs, problems, and resources; identify insurance solutions that are appropriate for the client’s situation; implement solutions in accordance with legal and ethical standards; and follow up to ensure that the client’s needs are met on an ongoing basis.

NAIFA members have a broad scope of experience in the insurance industry and are dedicated to continuing professional development. The NAIFA LACP demonstrates proficiency in the following areas: product knowledge, consultative sales process, and ethical, legal, and regulatory requirements.

Eligibility requirements

There are a number of ways to become eligible for this certification. Candidates will need to be licensed in the jurisdiction of practice(s), attest to compliance with the NAIFA Code of Ethics, have three years of experience as an active agent (equivalent to 6,000 hours), hold a Bachelor’s or a higher degree granted by a college or university that is accredited by an entity approved by the United States Department of Education, or the equivalent. In lieu of the last requirement, individuals can possess an industry designation, such as the LUTCF, CLU, CFP or ChFC designations or have two years of additional experience for a total of five years of experience as an active agent. Other designations are subject to approval.

Additionally, candidates will need to obtain a passing score on the examination for the LACP certification. An alternative to the examination will be available through December 31, 2018. There are a few alternatives to the exam, such as membership in NAIFA or an approved international association for two years, one year of NAIFA Quality Award or MDRT qualification within the previous two years, or two years of additional experience as an active agent beyond what would be required for the candidate’s eligibility (5 or 7 years total). The exam content outline takes effect in 2017, and will first be used for the July 2017 exam.

For more information on the new LACP certification, please visit www.naifa.org/lacp.

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

SPONSOR A NAIFA WEBINAR

Support Professional Development and the Industry

Sponsoring a NAIFA webinar associates your company’s brand with our mission to provide valuable professional education and training programs to NAIFA members. NAIFA produces webinars that offer cutting-edge information and training giving members an edge in growing their knowledge and taking their business to the next level!

Our sponsors are recognized as partners and thought leaders within the industry. As a program partner and sponsor, your brand will be visible throughout the webinar, with dedicated slides that tell members who you are, and position your company as one dedicated to professional development.

CONTACT INFORMATION:

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BECOME

SPONSOR

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703-770-8225 | tshaw@naifa.org

Enhance Relationships Within the Industry!

Expand Your Visibility!

NAIFA government relations

NAIFA: Strengthening the Voice of the Industry

With its top-notch advocacy program and industry-leading PAC, NAIFA is uniquely positioned to serve as the voice of the industry.

By Diane Boyle

After the 2016 election, policymakers are listening to everyday Americans more than ever. There is a strong populist tone and rhetoric in today’s politics, which requires advocacy groups to convey the opinions, feelings, and viewpoints of Main Street America.

A National Journal’s annual study on advocacy and reputation—which sourced feedback from over 15,000 policymaker responses to draw insights regarding 100 prominent advocacy organizations—reported that associations are better positioned than their corporate peers to serve as the conduit between everyday Americans and Washington, D.C., policymakers.  This is particularly true for associations that represent professionals such as doctors, teachers, and financial advisors.

Associations are highly effective and efficient because they’re able to capture the perspective of different interested stakeholders, as opposed to hearing from the 182 different component companies that make it up.

Policymakers rate NAIFA’s grassroots efforts higher than all other financial-services associations and prominent corporations that are engaged in Washington advocacy. Senior government officials engaged by the National Journal have praised NAIFA’s annual fly-in to Washington, D.C., its local grassroots organization, and its ongoing representation of its state and local members.

As noted by a Senior Advisor on Capitol Hill: “NAIFA’s grassroots advocacy is strong. We hear from their stakeholders, and that has an effect. One of their officers testified here in Washington. She wasn’t a hired lobbyist or lawyer; she was an insurance agent and she was able to testify in front of a bunch of Washington bureaucrats.”

And as a Senior Advisor with the Executive Branch noted about the impact of NAIFA’s fly-in: “NAIFA does an annual fly-in. It’s a smart move because you meet with actual constituents and you are talking about the impact that they will have back home.”

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Policymakers rate NAIFA’s grassroots efforts higher than all other organizations engaged in Washington advocacy.

NAIFA is also a force to be reckoned with on the local level.  According to a Director with the Executive Branch, “On a local level, NAIFA has a formidable grassroots organization that they can, and did, mobilize very quickly, which I was impressed with.”

NAIFA’s advocacy strength is unparalleled in size and scope. NAIFA members are insurance professionals from every Congressional district in the United States.  NAIFA is the largest insurance and financial-services association. Having 15 times as many members as the next largest insurance advocacy association allows the association to have a more influential presence across every Congressional district.

Industry-leading PAC

NAIFA also has the largest insurance and securities industry Political Action Committee (PAC), contributing $2.3 million in the last cycle to 392 federal candidates and four committees. NAIFA members contributed almost $5 million to support federal and state candidates. This allows members to engage at in-district events and bolsters grassroots strength before policymakers.

NAIFA members more successful than others

With the support of NAIFA’s programs, NAIFA members are also flourishing.  They are 2 times as likely as other professionals to be high earners, and they produce 52% more premiums in their first year alone than their nonNAIFA counterparts. In addition, while 85% of new advisors leave the financial-services industry in their first 5 years, NAIFA members are twice as likely to make it past the 5-year threshold.

Diane Boyle is Senior Vice President of NAIFA’s Government Relations Department. Contact her at dboyle@naifa.org

sales and marketing

Three Ways to Hold on to Your Clients

Do client reviews, show up, and reach out and touch them.

By Toni Harris Taylor

The financial-services business is a balancing act. You must spend a good portion of your time marketing, selling and processing paperwork for new clients while also spending time on retaining your old clients. On many occasions, because our existing clients have expressed their love for us, we tend to take them for granted and think they will be with us forever. Unfortunately, that’s not the case. If we are not careful, we can spend so much time acquiring new clients that we forget to “love the one we are with.”

Here are three methods you can use to hold on to your clients:

1. Perform client reviews. Your clients should expect and receive an annual review. It is imperative that you sit down with them and review and update their portfolios. If a client goes too long without a review, he will begin to think you wanted his business just for the initial commission. If you don’t review their portfolio, someone else will; so, be sure to set up a system to begin reaching out for their review at the nine-month time frame. This allows them to schedule the meeting with you in advance and gives you time to truly review their account and provide valuable advice, which helps to keep their trust in you.

2. Show up. One of the keys to my success when I was an advisor was that I always showed up. By this mean I mean that you should attend their special events. Many times, my clients invited me to their family gatherings, retirement parties, special events, kids’ events, weddings and funerals and I made it a point to attend. Your clients want to feel special and one way to make them feel as if they are your only client is to show up at their events. One of the benefits of attending these events is that they will most likely introduce you to their family and friends, who will soon begin to think: My advisor doesn’t care enough about me to show up at my events. These friends and family are likely to be your next referrals; so show up.

3. Reach out and touch them. When I was an advisor, I rolled over millions of dollars because the clients complained that had not heard from their advisor. By the time the old advisor finds out about the transfer, the client does not want to hear from him. So don’t let this happen to you. Make sure you “touch” your clients several times during the year. A phone call, a card, a regular email newsletter—all of these count as touches.

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If a client goes too long without a review, he will begin to think you wanted his business just for the initial commission.

I also encourage you to use social media to touch them. I know that every compliance department has its own guidelines and you should follow them, but most allow you to connect with your clients. I specifically encourage my clients and audiences to use Facebook.

Before you shut me down, please hear me out. Facebook allows you to build real relationships with your clients (and their adult children), which you can’t do on Linked In. Let’s say you connect with your clients on Facebook. They see you, and more importantly, you see them. You comment (not just like) the pictures of their cute grandkids. You comment on how much fun they seem to be having on their vacation. You congratulate them on their anniversary. They know you have seen them and are more likely to reach out to you when they need you. Also, life events like illness, death, job promotions, job changes, and marriages are all triggers for you to pick up the phone and touch them. Staying connected is the best way to keep your clients.

Remember that as you are mining the field for new clients, you should not forget your old ones. They need love and attention. It is not enough for them to know that they can call you anytime. You must take the initiative to keep the relationship fresh and alive.

Toni Harris Taylor is a motivational speaker, marketing strategist and certified coach. She helps her audience and clients take drastic steps to achieve drastic results. You can reach her at www.toniharris.com.

Growing Your Annuity Practice

A key step is education, which helps clients understand how annuities fit into their portfolio and will make them feel more confident about buying them.

By Kyle Atkins

As an agent, you spend a great deal of time persuading prospects to buy annuities. The most effective way of doing this is to educate them thoroughly.

Although a secret formula for the perfect way to sell annuities doesn’t exist, there are some methods that yield more favorable results than others. On the whole, the annuity sales process should be about simplifying the complex to highlight how annuities could be a natural fit for your clients, and helping them to feel confident about their choices.

One of the most essential parts of the annuity sales process is to ensure that clients have a comprehensive understanding of annuities. The best place to start is an overview of the terminology and process of an annuity before you determine the specifics of whether or not annuities are suitable for the client’s portfolio. This includes education on how they will pay for the annuity, the existence and purpose of certain fees, and the pros and cons of the annuity in question.

Once the client has a comprehensive grasp of what an annuity is, highlight the area of their portfolio where annuities may be the right fit. Then ultimately, help them review which company and product are best suited for their needs. Education will help clients understand how annuities fit into their portfolio, and in turn, will allow them to feel more confident about purchasing an annuity from you.

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If you have educated your clients thoroughly, and an annuity is a natural fit to solve a problem within their portfolio, the annuity will sell itself.

Annuities are shrouded in misconceptions, which creates an interesting challenge for us to sell them. Lack of adequate financial education is one of the biggest causes of these misconceptions, since on many occasions, the only exposure investors have with annuities is through radio or television talk shows.

Because of this, clients have often formed strong opinions about annuities being inherently good or bad without gaining any knowledge of the whole picture. In reality, annuities are only “good” or “bad” based on whether or not they are the right fit for a particular client. Like any other tool, the best choice for a client’s portfolio is the option that best fits a client’s particular needs. This guidance and education can help overcome common misconceptions.

In annuity sales discussions with your clients, avoid being a product pusher; instead, be a problem solver. As a comprehensive financial advisor for your clients, you should work to identify the best possible solution in each

unique scenario rather than pushing a particular product based on the size of the commission. Whether or not the Department of Labor’s Fiduciary Rule progresses, we should always do what’s in the best interest of the client. The techniques I have outlined in this article make selling annuities to your clients a much easier and more positive experience for all parties involved. If you have educated your clients thoroughly, and an annuity is a natural fit to solve a problem within their portfolio, annuities will sell themselves.

Kyle Atkins, CFP, CLU, ChFC, is founder and president of Kyle Atkins Financial Group, Inc. He has more than 30 years of experience in the financial-services industry and is a frequent speaker at educational workshops. Atkins is a 20-year MDRT member with six Court of the Table qualifications and five Top of the Table qualifications.

Coming Soon in NAIFA’s advisortoday

July/August 2017 issue

COVER STORY:

What Top Producers Sell

FEATURE:

NAIFA’s Advocacy at Work for You

Product Spotlights: Annuities

Long-Term-Care Insurance

Financial Fitness

The spokesperson’s message for LIAM 2017 is about maintaining financial fitness, starting with life insurance.

By Marvin Feldman, CLU, ChFC, RFC

Danica Patrick is once again the spokesperson for Life Insurance Awareness Month (LIAM), which takes place in September. But instead of concentrating on protecting against risk, her message will be about financial fitness.

Why do we think this is important? Let’s review some of the consumer research from the 2017 Life Happens/ LIMRA Barometer Study:

• The most common financial concern of consumers today is the ability to afford a comfortable retirement. Does this fit into our marketing plans? Absolutely! And life insurance is the foundation where this planning needs to start to protect and replace income if the consumer dies too soon.

• People see the need for life insurance, particularly for parents of young children. Eight in 10 say that a married person with one or more young children needs life insurance. We will discuss why they don’t buy later in this article.

• What people say and what they do are two different things. Seventy percent say they need life insurance, but only 59 percent own life insurance. And only four out of 10 people who own life insurance own individual policies. Are you seeing a “disconnect” here?

• People who own life insurance are more interested in other financial products. The research shows that individuals who own both individual and group life insurance own between four and five additional insurance products, and between two and three types of product warranties. Once you make the person a client, you have the ability to go back and talk with them about their other financial concerns. Give them what they want and then show them what they need.

• Retirement is now a top-five reason for owning life insurance; over half of life insurance owners cite saving for retirement as a reason to own the product. Permanent life insurance is superb for a life insurance retirement plan. If the product is properly structured, it can provide tax deferred growth with tax free income.

• Over 20 percent of life insurance owners say they do not have enough coverage, and 39 percent of respondents in the research wish their spouses or partners had more life insurance. So, here is the question. Are you calling on these people? Better yet, are you following up with your own clients? If the answer is no, why not? These people are ready to buy.

Does the consumer recognize they may have financial problems if the primary wage earner were to die? The results of the research show that sixty-nine percent would have trouble paying living expenses in two years or less if they were to lose their primary wage earner. Talk about financial fitness! Could there be a better fit than using life insurance to replace the lost income, and, per our research, those who own life insurance only have enough to cover three years of income. LIMRA suggests people own seven times their income in life insurance, plus final expenses, plus outstanding debt. I don’t think this is anywhere near enough. With today’s low interest rates, 15-20 times income is probably more accurate.

• Millennials overestimate the cost of life insurance by as much as five times the actual cost, and that is one of the reasons they don’t buy our products. Another reason is they have other financial priorities. Really! If they have other financial priorities, how is their family going to pay for these if they have no financial resources or life insurance?

• All this leads back to LIAM and Danica Patrick. Her message is all about maintaining financial fitness, proper financial planning, starting with a base of life insurance to protect income and assets and perhaps leave a legacy for family and community. Go to www.lifehappenspro.org to check out the resources available to you for 2017.

Marvin H. Feldman, CLU, ChFC, RFC, is principal of the Feldman Financial Group in Clearwater, Fla. He is president and CEO of Life Happens and a member of NAIFA-Pinellas.You may contact him at 727-723-9020.