NAIFA's Advisor Today July/August 2020 Edition

FINANCIAL SECURITY FOR ALL

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The Advisor Today Blog

Available at https://at.naifa.org/

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!

AT Asks!

How has COVID-19 changed your marketing techniques?

• Using more mobile channels to market products and services

• Adapting marketing messages to reflect on-the-ground realities while staying true to my brand

• Using shorter and more flexible campaigns

• Focusing marketing on current and existing clients

Answer this question at https://at.naifa.org/.

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NAIFA’s Advisor Today Editor-in-Chief

Ayo Mseka amseka@naifa.org

703-770-8204

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 VP, Professional Credentials jboyle@naifa.org

703-770-8267

Suzanne Carawan VP, Marketing & Communications scarawan@naifa.org

703-770-8402

Judi Carsrud

AVP, Government Relations

703-770-8155 jcarsrud@naifa.org

Jennifer Cassidy VP, Finance jcassidy@naifa.org

703-770-8125

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

Alaina Faiello VP, Professional Development afaiello@naifa.org

703-770-8225

NAIFA OFFICERS

*President Cammie Scott, LUTCF, REBC, RHU, CLTC CK Harp & Associates

Cammie@ckharp.com

*President-Elect

Thomas O. Michel, LACP Michel Financial Group tmichel@michelfinancial.com

*Secretary Lawrence Holzberg, LACP Wealth Advisory Group, LLC Lawrence_holzberg@wagllc.com

*Treasurer

Brock Jolly, CFP, CLU, ChFC, CLTC. CFBS Veritas Financial LLC/MassMutual Financial Group jbjolly@financialguide.com

*Immediate Past President Jill Judd, LUTCF State Farm Jill.judd.jyro@statefarm.com

NAIFA CEO Kevin Mayeux, CAE kmayeux@naifa.org

Trustees

*Mark Acre

*Dennis Cuccinelli, LACP dennis@dcuccinelli.com

*Connie Golleher, CLTC, LUTCF connie@gollehergroup.com

*Stephen Good, LUTCF CLTC, CFBS stephengood@ohionational.com

*Win Havir, CPCU, CLF, LUTCF, FSS, AIC Winona.Havir@horacemann.com

*Bryon Holz, CLU, ChFC, LUTCF, LACP bryon@bryonholz.com

*Beth Jones, CIC bjones@dystewilliams.com

*Delvin Joyce delvinjoyce@prudential.com

*Ryan Pinney, LACP rpinney@pinneyinsurance.com

*Stephanie Rivas, MBA, CLU, ChFC, LUTCF stephanie.rivas@prudential.com

*Steve Saladino, LUTCF saladino@verizon.net

*John Wheeler, Jr., CFP, CLU, ChFC, CRPC, LUTCF obfsinc@aol.com

*Brian Wilson brianwilson@mutualofomaha.com

NAIFA SERVICE CORPORATION

OFFICERS AND DIRECTORS

President

Kevin Mayeux, CAE

Secretary Cammie Scott CK Harp & Associates

Treasurer

Brock Jolly, CFP, CLU, ChFC, CLT, CFBS Veritas Financial LLC/MassMutual Financial Group

Directors

David Beaty

Susan Wier, CFP, ChFC, LUTCF First American Trust

EDITORIAL ADVISORY COUNCIL

Laurie A. Adams, CFP, CLU, LACP, 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

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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. ©2020 National Association of Insurance and Financial Advisors Service Corporation. All rights reserved.

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Closing the Production Gap

By Ayo Mseka

If you are like most advisors, you are probably reviewing your production numbers and wondering how you will ever meet the goals you set for yourself at the beginning of the year — before COVID-19 turned everything upside down.

If you find yourself coming up short, don’t despair. From now until the end of the year, you have lots of opportunities to get back on track and still make 2020 a winning year.

You can take the first step toward hitting your numbers by carefully reading the articles featured in this issue of Advisor Today, starting with our cover story on lessons top producers learned during the heart of COVID-19 and how they are applying them to their practices. The article on NAIFA’s Impact Week is another article you do not want to miss — it highlights the strategies thousands of financial professionals learned during this one-of-a-kind online event.

After reading Advisor Today, don’t forget to check out the numerous professional-development programs provided by NAIFA to help you move ahead. These include the association’s popular Town Hall Meetings and webinars, which offer actionable information you can use to gain a competitive edge in today’s challenging business environment.

In a couple of months, you will also be able to take part in another success-building program — Life Insurance Awareness Month (LIAM). This is the public-relations campaign spearheaded by Life Happens each September to persuade millions of Americans to buy the financial protection they need for themselves and their loved ones. Visit www.lifehappens.org today and start preparing for this campaign to create positive outcomes for your clients and your practice.

WORDS TO LIVE BY

As you use these programs to meet or perhaps exceed your goals, I want to leave you with a few words of wisdom, courtesy of some of the top producers featured in past

issues of Advisor Today. The inspirational advice from these successful advisors will keep you on focus and on track as you move past the setbacks of COVID-19 and toward a more hopeful and promising future.

*Whatever products we use today, we build our businesses by connecting person to person, with one prospect at a time.

—John Enright

*Promises kept, deadlines met, little extra flourishes and small acts of kindness — add to happy clients.

—JoAnn and Joseph Calloway.

*If you deliver a unique client experience that is repeatable and easy to talk about, you will end the chase for new clients.

—John Enright

*Knowing that I can change lives through my passion and product knowledge is truly inspiring. —Daniel

Thompson

*Our products give people peace of mind and help them plan for the unexpected, while preparing a path for greatness for the future. —Kate

Kilgore Cihon

In this time of uncertainty, it is not easy to meet goals that were set in simpler times. But by using the resources provided by NAIFA to turn anxiety into action, you will strengthen your belief in a better future and help your clients live lives of meaning and gratitude.

Coming Together in a Crisis

By Kevin Mayeux, CAE

The COVID-19 outbreak forced all of us to adjust on the fly and pivot to new ways of doing business, connecting with others and living our lives.

As agents and advisors, you implemented strategies and technologies to serve your clients and communities when face-to-face meetings were out of the question. You really rose to the occasion and proved your worth as the essential workers that you are.

NAIFA, as your essential professional association, undertook a similar “pivot.” We responded quickly and effectively to address the needs of our members and the entire community of agents and advisors. This began almost immediately as the nation started going into lock down, with our virtual Town Hall Meetings.

These meetings brought us together and gave us a sense of community when many of us were feeling disconnected because of social distancing and the disruption of our normal routines.

They also afforded us the opportunity to get valuable information from our peers and some of our industry’s stalwarts: information on technology and on connecting with clients in a virtual environment; motivation and business- development ideas from the likes of Scott Brennan, Joe Jordan, Van Mueller and Tom Hogan; and deep dives into the details of the CARES Act and the Paycheck Protection Program.

We also hosted NAIFA Nation Impact Week to offer you top-notch educational and motivational programming, break through the isolation of social distancing that many of us were experiencing, and come together as a community of financial professionals.

Our lineup of speakers for this event was nothing short of extraordinary. We provided sessions on lobbying from your living room during COVID-19, the economic benefits of diversity and inclusion, and leading with confidence in a crisis. In just two and a half months, we had more than 15,000 people register for NAIFA’s online programs. Despite the pandemic, NAIFA members are as engaged and as active as ever. Open to all financial professionals, these events also galvanized and united the insurance and financial-services industry.

This issue of Advisor Today features highlights from these NAIFA programs, and if you missed any of the sessions from

NAIFA Nation Impact Week or the Town Halls, they are available for on-demand viewing on www.NAIFA.org.

PROVIDING STABILITY AND STRENGTH

As NAIFA members, you are providing a vital safety net and, in some cases, you are helping to stave off financial or health catastrophes.

You’re reaching out and forging closer bonds and stronger relationships with clients who need you today more than ever. And perhaps, most importantly, you offer those who are concerned and frightened comfort, reassurance and support. Thank you for all you did to help us through the COVID-19 pandemic.

Thank you

In times of crisis, everyone looks to sources of stability and strength. Your clients turn to you, as trusted agents and advisors, and you can turn to your colleagues and peers and your professional association. NAIFA doubled-down on our commitment to be here for our members and all agents and advisors during the COVID-19 crisis — and we will continue to do so in the months ahead. As ACLI CEO Susan Neely said in her remarks to our NAIFA Nation Impact Week audience and referencing a hashtag ACLI is promoting on social media: we are #MeetingTheMoment.

As your professional association, we owe it to you to be nimble and to quickly adapt to your needs and interests, and we will continue to provide you with a community where we can come together to pursue shared interests and work toward a common goal.

for all you did to help us through the COVID-19 pandemic.

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

Implementing Our Code of Ethics in a Difficult Time

Use phone calls, e-mail messages and online meetings to carry out this important task.

By Frank Bearden, PH.D., CLU, ChFC

Hopefully by the time this column is available, the spread of COVID-19 will be diminishing. However, at a time when face-to-face communication is difficult and sometimes produces uneasiness in clients and other advisors, how are we to implement our code of ethics?

Here are a few activities we can carry out to honor our code of ethics and our clients.

Initially, consider the second obligation of the code: To work diligently to satisfy the needs of my clients by acting in their best interest.

This obligation involves maintaining contact with clients, letting them know we are sensitive to their financial security. How could we do this when office or home appointments may not be possible? Consider conducting appointments online. Vendors such as Zoom provide a means to see, speak and interact with individuals and groups for a very low cost. You can schedule appointments

by email and then conduct meetings with clients regarding financial matters and concerns online. You can convey your active interest in client interests and be able to realize client reactions through their facial expressions, voices and stated responses.

I have been fortunate in being able to participate in these types of meetings for several years due to my work with financial planning graduate students. If you have not conducted online meetings before, when you do, you will find that the relationship and professional benefits for you and your clients will be impressive. And, your clients will appreciate your sustaining interests in their well-being.

OTHER TOOLS OF COMMUNICATION

Let’s also remember two other obvious tools of communication we have to communicate with clients and other people regarding their best interests: the phone and email. A key benefit of using our phones is immediate

communication while email provides a record of your communication for you and your clients. Of course, the use of regular mail via the U.S. Postal Service and other vendors should be used when needed to support the second and other obligations of the code.

A key benefit of using the phone is immediate communication, while email provides a record of your communication.

Now consider the third obligation: To present, accurately and honestly, all facts essential to my clients’ financial decisions.

You may wonder how you can convey “all facts” for your clients’ financial decisions in an online meeting. Clients often want to review and consider any paperwork related to financial recommendations. This information can be emailed to clients before the online meeting to give them an opportunity to consider it and then discuss it during the

meeting. Signature requirements for insurance, investments and other financial products will vary based on the organization involved.

Now consider the fourth obligation: To render timely and proper service to my clients and ultimately their beneficiaries.

Each of the above means of communication can and should be used in a timely and professional manner to provide the service we commit to our clients and to their beneficiaries.

These means and any other means of communication that may be available enable us to carry out our code of ethics. COVID-19 has not required that activities and services to our clients stop, but rather that the means we use to implement the obligations has changed in some ways.

Frank C. Bearden, Ph.D., CLU, ChFC, is with Frank C. Bearden, LLC. Contact him at fbearden@outlook.com or at 210-724-1958.

FINANCIAL SECURITY FOR ALL

injustice on behalf of the life insurance community and to pledge to do more to address issues that divide our nation.

NAIFA MEMBERS SERVE ALL OF MAIN STREET

By Kevin Mayeux, CAE

There is no place in our society for racial injustice and the inequalities that have plagued — and continue to plague — this country. The death of George Floyd and ongoing protests spotlight problems that we have allowed to go unaddressed or under-addressed for much too long. We are opposed to any activities that threaten the security of our American communities, and we have a part to play by increasing financial literacy and helping more Americans prosper.

We understand that this applies to the insurance and financial services industry, as it does to our society at large. NAIFA has joined with the American Council of Life Insurers and other industry organizations to denounce racial

I often state, very proudly, that NAIFA members serve Main Street USA, but today’s headlines are a clear reminder that we must redouble our efforts to ensure we serve the needs of every member of our diverse Main Street communities. We simply cannot leave some segments behind because of a lack of trust or common understanding.

African Americans, like all Americans, deserve fair and equitable opportunities to achieve financial security. Opportunities to improve your financial literacy, mitigate risks, weather economic crises, retire comfortably, protect your family and leave a meaningful legacy should not depend on the color of your skin.

This is where NAIFA members and all financial professionals can address inequities that contribute to our

We must focus on providing financial security for all Main Street American individuals, families and businesses.

national divide. It’s no secret that African Americans have historically been under-represented in the financial services profession and are largely underserved by our industry.

We must change this. Let me be even clearer, we will change this.

As the association for producers, we can work to ensure that our field force accurately reflects America’s racial diversity. As we recruit the next generation of agents and advisors, it is imperative that we draw on the whole strength of our diverse population to provide career opportunities, recruit the most talented people we can, and expand our reach to better serve those underserved communities.

It is our job to offer a hand and pull talented advisors and agents into NAIFA because we know that membership in our association increases an advisor’s probability of succeeding in the industry.

communication and understanding of diversity and inclusion in our industry. During a corporate panel discussion, several high-level African American financial executives shared their suggestions for increasing the number of African American agents and offered helpful hints for serving diverse communities.

Over the past few years, we have also created and made available several reports to our members that highlight important strategies for increasing the number of African Americans in the financial profession.

And this magazine regularly features stories on growing the number of minority agents and advisors, such as the article in this issue by NAIFA member, Raymond Jones.

But we need to do more, and we will task NAIFA’s Diversity and Inclusion Task Force to explore new ways we can help our members better serve a changed Main Street USA.

Now is the time to come together and work to build a strong American economy whereby even more individuals, families and businesses have the right risk products, investments and financial plan in place.

PROMOTING DIVERSITY AND INCLUSION

As an association, NAIFA is working to create greater diversity and inclusion within the agent and advisor community. We provide advocacy and support to help agents and advisors of all races and ethnicities thrive. Our financial literacy program, which can now be delivered virtually, gives financial professionals the tools and resources they need to reach individuals and families everywhere.

Our most recent Diversity Symposium drew more than 1,100 participants working together to improve

I strongly believe that as financial professionals who have dedicated your careers to serving the best interests of all your clients, you are a vital part of our much-needed healing. We will continue to work with our association partners and lawmakers at the state and federal levels to advocate for financial security for all.

I am confident that through greater understanding, better communication and a lot of hard work, we will make progress together!

Kevin Mayeux, CAE, is CEO of NAIFA. He may be reached at kmayeux@naifa.org

Now is the time to come together and work to rebuild a stronger American economy based on the financial security of all our small businesses, families and individuals.

LESSONS LEARNED FROM COVID-19

these directives occurred and impacted their business models.

By Ryan Pinney, Danny O’Connell, Laurie Adams and Ike Trotter

During the past few months, many agents and advisors have faced a plethora of challenges as they tried to deal with the change and chaos caused by the coronavirus pandemic.

But amid this change and chaos, many have learned some valuable lessons — lessons they are now applying to enhance their financial practices. Here are the lessons some of these advisors shared with us:

(Ryan Pinney, LACP)

The coronavirus pandemic has taught us to be flexible and think ahead. Many carriers weren’t prepared for social distancing and stay-home orders or the speed with which

On the other hand, plenty of advisors and BGAs (including Pinney Insurance) have been working steadily towards a digital-first or digital-only workflow for years. Going digital requires a long lead time, especially if you have employees or a call center.

You have to consider things like remote workspace security, availability and compatibility of equipment, cloud storage, and VPNs. The advisors who planned for economic or environmental disasters are ahead right now because they’ve already figured out how to solve those problems.

In terms of the next potential disruption, now’s the time to start asking questions, such as:

• What happens if the new normal doesn’t involve traditional offices anymore?

• What if your primary marketing strategy involved a trade show, a convention or in-person seminars?

The insights these top providers gained as they faced the challenges of COVID-19 should help you map out your strategy for success.

• What if you never set up an email marketing list or social media profiles because you preferred to do business in-person?

Advisors who are able to make the switch to digital can always settle into a successful hybrid model once things return to normal. But those who aren’t may find themselves unable to compete with the original digital pioneers as well as with the new class of hybrid survivors.

keep their businesses running, talk about their retirement accounts, and how to keep their lights on. This, I believe, doesn’t stop at our solutions, but we must remember to educate and guide them in all manners of their affairs.

For example, our firm recently shared a webinar done by a CPA and a banker on the SBA loan because our clients’ success is our overall priority.

(Danny O’Connell, MBA, is the CEO of Next Level Insurance Agency in Addison, Texas. He is a past recipient of Advisor Today’s Four Under Forty Award.)

****

IMPACT ON UNDERWRITING

Another interesting lesson that’s still playing out is the way carriers are adapting the sales and underwriting processes. On the life insurance side, companies have waived in-person medical exams in favor of streamlined digital underwriting that assesses risk based on records found in databases for prescription drug use, driving history and more.

Companies have also quickly adopted electronic applications, e-signature and electronic policy delivery. Unfortunately, many of the insurance companies are unfamiliar with these processes and uncertain about the longer-term impact on their businesses.

As such, most will pull back on the current easing of requirements and processes once things return to a more normal business environment. The best ones will evaluate these changes, the impact they had, and ultimately, adopt the ones that worked best.

I think this is a good opportunity for the entire industry to modernize and become nimbler, going forward, and I hope it will result in large and lasting improvements for consumers and the life insurance buying process.

(Ryan Pinney, LACP, is president of Pinney Insurance in Roseville, California. He is a member of the NAIFA Board of Trustees and a past recipient of Advisor Today’s Four Under Forty Award.) *****

My most important lesson is the value of setting client expectations, which includes having a tangible plan based on their goals.

— Laurie Adams

(Laurie Adams, CFP, LUTCF, CLU, LACP)

My most important lesson learned during the COVID19 crisis is the value of setting client expectations, which includes having a tangible plan based on their goals. My clients with plans handled the economic uncertainly with considerably more confidence than those without.

The second lesson is that it pays to be prepared to learn. I teach my clients to rely on me as a knowledgeable resource, so keeping up with the shifting landscape in March was like drinking from a fire hose. If I wasn’t communicating directly with clients, I was reading, listening or attending webinars about the market, the economy and legislative responses. I attended four different webinars on the CARES Act alone to be sure I had cutting edge information to help clients. Bottom line: facts calm clients and lead to perspective.

(Laurie Adams, CFP, LUTCF, CLU, LACP, is a Master Agent with Country Financial in Peoria, Illinois.)

****

The actions I took this time are similar to what I initiated in 2008. — Ike Trotter

(Ike Trotter)

As advisors, I think we tend to focus on the products and solutions we represent, and we naturally would. However, it is important to remember that we need to look out for our clients’ best interests in every way we can, and COVID-19 has proven this.

While we are lucky to “keep our jobs” during this period of unprecedented change, it is up to us to help our clients

Over my 45-year career, I have witnessed several market pullbacks and recessions. What immediately comes to mind is the great recession of 2008. And for those who remember, the frightening day in October of 1987 when the market dropped 24% in one day is an unforgettable event. I will always remember a few years back when the economic effects of Greece’s shaky economy were being tested in the European Union.

I had taken my family to Florida for a beach getaway and received a call from one of my largest investment clients. The week had been a terrible one for the market due to Greece’s economy, and my client asked me what could be

I think this is a good opportunity for the entire industry to modernize and become nimbler, going forward.

— Ryan Pinney

We need to look out for our clients’ best interests in every way we can, and COVID-19 has proved this. — Danny O’Connell

(Danny O’Connell, MBA)

done. Certainly, times like these can cause stress for both me and the people I have the pleasure of serving.

What makes this market pullback so memorable are the pandemic effects of COVID-19 and how they have caused topsy-turvy with not just our economy and financial markets, but with the very fabric of our country’s social structure as well.

The actions I took this time are similar to what I initiated in 2008. My decision was to put all prospecting and sales activity on hold. I made a list of my major accounts, with special attention being given to those who were already retired or who would be retiring over the next five to 10 years.

This action made me call my major clients each week. The primary objective here was not to offer predictions of what the market could or could not be doing. Rather, it was to show empathy for my clients’ concerns and make reasonable changes to their accounts if such actions could possibly help relieve their concerns and provide stability to their holdings

I remember a call from one of my favorite clients who contacted me on a Saturday afternoon. This, in itself, was pretty unique. I suggested we talk the next day and discuss their mutual fund portfolio in detail and review possible means to help reduce the volatility they were seeing with their accounts. We talked over the phone at 10:15 on Psalm Sunday morning.

Going forward, and taking into account that the bulk of my clientele is age 55 or older, I will probably recommend annuity income more for a portion of my client’s retirement holdings. Building a portion of one’s retirement holdings — say 25% to 35% — into a floor of income structured to avoid market volatility can provide needed financial peace of mind about their regular monthly income. It also serves when coupled with social security as a base of monthly income for fixed regular expenses that are due each month.

Additionally, mutual fund holdings that generate retirement income through dividends paid either quarterly or monthly can offer a potential avenue of a more reliable income. Keep in mind, however, that dividends are not guaranteed and can fluctuate. In this situation, it helps to seek out companies or funds that have a good track record.

For those who prefer taking systematic retirement withdrawals from their mutual fund portfolio, I try to recommend that going forward, they create a portfolio matrix that can establish a portion of their monthly withdrawals coming from cash or money market funds. This can offer more security in times of market volatility.

(Ike Trotter is with the Ike Trotter Agency in Greenville, Mississippi.)

NAIFA IMPACT WEEK

By Ayo Mseka

Two months after NAIFA held its Impact Week, the event is still being talked about in industry circles — and for good reason. During the three-day online meeting, thousands of financial professionals learned some powerful lessons about managing their practices in a new and reimagined world.

The event was officially opened by NAIFA President Cammie Scott, who noted that COVID-19 has touched the lives of all Americans, some in a very tragic way. But she is confident that the nation will get through this crisis even stronger than it was before and that NAIFA will emerge as a stronger and more vibrant organization because it has been going strong for 130 years.

A MESSAGE FROM NAIFA CEO

Next on the agenda was NAIFA CEO Kevin Mayeux, who said that the idea of hosting NAIFA Impact Week was born because — after the cancellation of the Congressional Conference due to COVID-19 — the association needed to do something BIG to bring members and the industry together.

Despite the disruptions caused by COVID-19, NAIFA members are adapting to the new normal, finding new opportunities, providing a safety net to their clients and forging long-lasting relationships, Mayeux said.

“You offer those who are concerned and frightened comfort, reassurance and support,” he added.

— Kevin Mayeux, NAIFA

Beyond offering top-notch educational and motivational programs, the goal of NAIFA Impact Week was to come together as a community of financial professionals, he added. “That’s why the association has opened the sessions to NAIFA members and non-members alike.”

Mayeux encouraged non-members to join NAIFA. “Support your profession, invest in your career and be a part of something bigger than yourself,” he said. “Together, we can take on anything.”

MOVING THE DIVERSITY NEEDLE

Mayeux’s inspiring message was followed by several thought-provoking sessions on advancing diversity and inclusion in the financial-services industry. The panel addressing this critical issue consisted of several corporate leaders including Darlene Flagg with National Life Group, Kristen Hall Eskew with Consolidated Financial Planning, and Barbara Turner, president and COO of Ohio National Financial Services.

To promote D&I, these panelists advised attendees to:

• Believe that advocating D&I is the right thing to do.

• Be the change they want to see.

• Be intentional in their quest to promote D&I in their organization.

• Be willing to have courageous conversations about D&I.

• Realize that D&I must be part of the corporate culture.

• Realize that D&I must be a top-down initiative and be goalsdriven. When D&I is part of the corporate culture, all of them agreed, more people tend to opt into it.

This three-day event gave attendees the confidence they need to drive their businesses forward and persevere during COVID-19 — and in the months ahead.

“Despite the disruptions caused by COVID-19, NAIFA members are adapting to the new normal, finding new opportunities and providing a safety net to their clients.”

CEO

And to find success in doing business in diverse markets, advisors should:

• Be authentic and work to build trust.

• Spend time in diverse communities to find out their needs, aspirations and goals.

• Leave current assumptions at the door and listen carefully to what prospects are saying about what they want.

• Help clients solve their problems.

NAIFA ADVOCACY IN ACTION

Day two of the event was Advocacy in Action Day, chaired by NAIFA Trustee Wes Booker and hosted by NAIFA President-Elect Tom Michel.

During a panel discussion with Julie Herwig of New York Life, Susan Neely and Joyce Meyer of ACLI, and Laura Haines of Guardian, attendees learned how COVID-19 has changed the face of advocacy.

The biggest changes involve locations — advocacy is now being pursued online rather than in-person, the panelists pointed out. Other than that, advocacy remains the same — with a special place for agents and advisors.

“Agents have a unique lens on the local economy and on Main Street,” explained Haines. “These are two areas legislators are interested in. Taking a pulse of Main Street is important to members of Congress and state legislators, and that is something NAIFA members are well-positioned to do.”

Agents and advisors also often have an advantage over professional lobbyists. “Your member of Congress works for you, not for any of us,” Herwig said. “You are voters and centers of influence in their districts.”

Meyer agreed with that observation. “Agents and advisors turn policy issues into local and community issues,” she said.

Agents can talk about the direct effects of policies on local residents in districts back home. Agents are constituents, so contacts with them always turn into action items for Congressional staff. And those action items are what produce results.

According to Herwig, COVID-19 is shining a spotlight on the need for life insurance and “shows what we’re all about.” It amplifies the situations that life insurance was made to address.

Members of Congress know agents are there for people for many of life’s most important events, Meyer explained. This helps them see their good work. “Agents are there for families during happy and sad moments.

Advocacy in Action Day also afforded attendees the opportunity to hear from several lawmakers, including Rep. Tom Suozzi (D-N.Y.) and Rep. Tom Reed (R-N.Y.)

Both lawmakers said they share a strong appreciation for the insurance and financial services industry and recognize the importance of the products and services that agents and advisors provide.

“I know how important the industry is, and it makes a lot of people’s lives better,” Suozzi said. “I didn’t appreciate it when I was younger, and it wasn’t until my 40s and early 50s that I really realized how important it is.”

“Customers first, employees second, and you’re last. That’s the way it always should be.” —

Kevin O’Leary

LEADING THROUGH A CRISIS

The last day of the event was Leadership Day, during which participants were welcomed by NAIFA secretary, Larry Holzberg.

In a riveting presentation, Kevin O’Leary, billionaire investor and star of the hit TV show, “Shark Tank”, offered some insightful tips for investors. “I don’t hire advisors for performance. I hire advisors for preservation of wealth to force diversification,” said O’Leary, who is the founder of O’Leary Funds. Advisors need to help clients find opportunities but avoid rash decisions.

“Trying to time the market when it’s volatile is a huge mistake, which many people generally do once,” he added. “They realize how much they left on the table trying to do it, and they never do it again.”

The role of the advisor is to calm investors and prepare them to accept volatility. Clients are looking for a game plan, he pointed out.

O’Leary also shared some leadership traits that lead to success. Among them? Pivoting. “Great leadership is about pivoting,” he said. “It’s about saying, OK. I didn’t see that coming, but here’s what I’m going to do about it.’”

The COVID-19 crisis forced many businesses to reorganize and adapt — and great leaders made it possible for them to do so. Pivoting includes placing employees in different roles to adjust to new business environments.

For example, O’Leary said that during COVID-19, many of his companies were able to reassign employees to other tasks involving selling directly to consumers, engaging in social media campaigns and working on fulfillment logistics.

Great leaders also tell the truth, O’Leary said. They are optimistic, but they don’t offer phony optimism.

In addition, great leaders understand priorities. “If you’re the owner, you’re last on the list,” O’Leary said. “Customers first, employees second and you’re last. That’s the way it always should be.”

SERVANT LEADERSHIP AT WORK

Closing the event was Reginald Freeman, Fire Chief and Emergency Management Director for the City of Hartford, Connecticut.

Using the principles of servant leadership, Freeman said he was able to significantly improve the performance of the Hartford Fire Department. Response times are down, accountability is up and morale, along with pride in the department, has increased. Several members of Freeman’s

team have also obtained their professional-development certifications.

“Servant leadership is critical to the success of 21st century persons in positions of authority,” Freeman said. “With four different generations in the workplace, being able to lead and manage individuals from diverse backgrounds and perspectives is challenging. However, with an understanding of servant leadership, we can effectively communicate and accomplish goals. “

“Lead with confidence,” Freeman concluded. “Lead with integrity. Lead with passion.”

”Lead with confidence. Lead with integrity. Lead with passion.” — Reginald Freeman

UPHOLDING THE TRADITION

NAIFA continues its tradition of excellence in creating a favorable business environment for you and the clients you serve.

By the NAIFA Government Relations Team

As NAIFA celebrates its 130th year of protecting the interests of the financial services industry, the association is using its considerable power and influence to make sure that the issues that are important to you are heard by lawmakers and regulators and that your interests are protected and advanced.

Right after COVID-19 reared its ugly head, NAIFA made full use of this formidable influence to fight for a favorable business climate for you. The association advocated for small business loans, relief from payroll taxes and greater flexibility for workers to access retirement plan funds. All of these measures provided financial relief for many Americans and businesses.

But even before COVID-19, NAIFA had racked up numerous wins and victories. Here are a few of these accomplishments, which prove that when it comes to advocacy, NAIFA is second to none.

REGULATION BEST INTEREST

The Securities and Exchange Commission’s (SEC) “Regulation Best Interest” proposal has been finalized and went into effect on June 30, 2020, following NAIFA’s meetings with the chairman and with most of the commissioners’ offices.

As a recognized industry leader, NAIFA met with SEC Chairman Jay Clayton and several of the SEC commissioners and also filed formal comment letters to express our concerns with certain provisions of Reg BI. NAIFA will work with lawmakers and regulators to make sure that members can continue to serve Main Street families as they plan and prepare for a secure financial future.

THE SENIOR SECURITY ACT

The House of Representatives passed The Senior Security Act of 2019, which establishes an interdivisional task force at the SEC to investigate continuing issues that senior investors face.

THE SECURE ACT

The House of Representatives passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. This act provides small businesses with greater flexibility and incentives to offer their employees retirement plans and give workers greater access to retirement plans.

Fifty-one NAIFA members, one representing each state and the District of Columbia, signed a letter to congressional leaders in November urging passage of this act. “These financial professionals urging Congress to pass the SECURE Act show the strength of NAIFA’s grassroots army, which has members in every congressional district across the United States,” said NAIFA CEO Kevin Mayeux. “Insurance and financial services professionals are on the front lines, helping clients prepare for secure retirements. This is another way they are working on behalf of small businesses and American families to confront a potential retirement crisis.”

NAIFA exerts its influence to head off bad policies and encourage good ones.

ELDER ACT

New Hampshire Governor Chris Sununu signed a law that aims to protect seniors from financial exploitation. The law, based on model legislation developed by the North American Securities Administrators Association (NASAA), allows a BD to temporarily delay executing a client’s disbursement of funds request if the BD suspects that financial exploitation may be involved. New Hampshire securities regulators publicly thanked NAIFA for supporting this critical measure.

SECURITIES

The SEC proposed modernizing advertising rules for investment advisors, which have not been significantly revised since the 1960s. The proposal would allow advisors to use marketing and communications methods that have become standard tools elsewhere in the economy.

HEALTH

The Departments of Treasury, Labor, and Health and Human Services issued a final rule that will expand the use of health reimbursement arrangements (HRAs) and could encourage employers to offer workers access to health insurance brokers and private health insurance exchange programs. The House also voted to permanently repeal the Cadillac Tax.

STATE-LEVEL ADVOCACY

On the state front, NAIFA has been just as active in safeguarding your interests. To carry out this critical task, NAIFA has:

• A grassroots network extending through every statehouse and state regulatory agency

• Fifty state-level political action committees

• Professional advocacy staff in every state

• A proven track record of success on state issues affecting financial professionals and their clients across the country

To show the importance of state advocacy to NAIFA, the association’s CEO, Kevin Mayeux, began this year with a trip to Boston where he testified at a hearing before the Massachusetts Securities Division on some troubling aspects of the state’s proposed fiduciary rule for financial professionals. Along with colleagues from the ACLI, IRI and SIFMA, Mayeux spoke about how the proposal will impact Massachusetts consumers and make it more difficult for Main Street investors to obtain products, services and guidance.

The hearing was a showcase of NAIFA’s state advocacy strength. More than two dozen NAIFA-Massachusetts members packed the hearing room in support of Mayeux’s comments. Two clients of NAIFA member Adam Sachs, CFP, CLU, ChFC, testified at the hearing, and they provided compelling and well-received testimony. The next day, Gov. Charlie Baker wrote a letter to Secretary of the Commonwealth Bill Galvin citing many of NAIFA’s concerns and asking him to delay action on the proposal.

Adoption of the fiduciary duty regulation was viewed by most observers as inevitable, and the final regulation was adopted by the state in Feb. 2020. However, in response to the comment letters and hearing testimony provided by NAIFA and NAIFA Massachusetts, the final regulation does include several important modifications to the original proposal that will serve to lessen the adverse impact of this new rule on NAIFA members and their clients. These modifications include:

• The fiduciary standard of conduct will not apply to insurance producers or insurance products;

• Title restrictions, such as the presumption of a fiduciary duty being created by someone’s use of titles such as “advisor,” are no longer a part of the rule; and

• The instances in which the fiduciary duty will be an ongoing duty have been significantly narrowed down.

OTHER STATE-ADVOCACY EFFORTS

Meanwhile, advocacy efforts in other states are advancing at a rapid clip. A few examples from the early months of 2020 spotlight NAIFA’s state advocacy impact:

• NAIFA aided the effort to successfully discourage DC Council members from passing a troubling bill that would have broadly — and retroactively — expanded the coverage of business interruption insurance.

• NAIFA was instrumental in the collective charge for State Insurance Departments to issue temporary producer licenses post COVID-19.

• NAIFA helped lead the charge and was a key player in having Iowa and Arizona become the first states to adopt amendments to their requirements governing annuity transactions that will require producers and insurers to act in the best interest of annuity purchasers and to not put their own financial interests ahead of the consumers’ interest. The Iowa and Arizona revisions track amendments made earlier this year by the National Association of Insurance Commissioners to the NAIC Suitability in Annuity Transactions Model Regulation, which raises the standard of care required of financial professionals while preserving consumers’ access to valuable financial advice, services and products. NAIFA was an active participant in the development of the NAIC revisions and the adoption by the states of these amendments is a top advocacy priority for NAIFA.

• NAIFA helped to make key changes to an Indiana bill regarding the disclosure of agent commissions.

• NAIFA convinced legislators to make a critical fix to the Telephone Solicitation Act in Indiana.

• The New Jersey Governor signed into law a NAIFA bill that allows honorably discharged military veterans to have their initial insurance producer-licensing fee waived if they have passed the licensing exam.

• NAIFA played a significant role in an NAIC working group decision to not apply changes to permitted illustrations for indexed universal life policies to in-force contracts.

Federal advocacy victories, such as NAIFA’s work to pass the SECURE Act and see the Department of Labor’s fiduciary rule vacated, often garner bigger headlines, but many more issues affecting the success and prosperity of producers and their clients occur in the states. That is why NAIFA’s unique state advocacy prowess is so important and why the association will continue to make full use of this powerful weapon to produce positive outcomes for you and your business.

NAIFA works with lawmakers and regulators to make sure that you continue to serve Main Street families in their quest for a secure financial future.

TRAINING NAIFA MEMBERS

In addition to these major wins, NAIFA has been hard at work in providing advocacy training for NAIFA leaders and members. For example, the association’s leaders traveled to Washington D.C., for PAC and grassroots training last November. Attendees held about 200 meetings with key lawmakers and asked them to include the SECURE act in any year-end package and to utilize NAIFA as a resource for any health, tax and retirement reform efforts this year.

And earlier this year, NAIFA launched the Advocacy Action Center, which provides information on the association’s advocacy programs and the tools you need to become a politically active and involved advisor.

Through this site, you can:

• Unite your voice with thousands of other NAIFA members through IFAPAC to support candidates for state and federal office who understand the valuable role that advisors and agents play in securing America’s financial future.

WORKING WITH KEY PLAYERS

State advocacy begins even before legislators and regulators propose bills or rules. With this in mind, NAIFA participates proactively in NAIC’s and NCOIL’s committees, contributing expertise and helping to formulate model statutes and regulations that shape the industry. The association influences these models, which states often enact verbatim. NAIFA exerts its influence to head off bad policies and encourage good ones before they become law.

A new, formal state-advocacy partnership between NAIFA and ACLI builds upon years of cooperation and highlights both groups’ understanding of how state laws and regulations impact the industry.

This partnership is initially concentrated in seven key states: California, Colorado, Florida, Illinois, Maryland, Massachusetts, and New Jersey. As part of the effort, NAIFA has bolstered its state advocacy staff. It is already beginning to see results on issues ranging from fiduciary proposals and state-run retirement plans to senior investor protections and genetic testing and client security proposals.

• Take action and contact legislators on active issues important to your industry.

• Report your relationships with your state and federal legislators and join NAIFA’s advocate network.

• Visit www.naifa.org today and get the tools and resources you need to improve and enhance your advocacy skills.

Also, in May, NAIFA hosted NAIFA Impact Week, an online event where thousands of financial professionals learned how to “lobby from their living rooms “ because of the safedistancing rules many of them are adhering to because of COVID-19. During this important meeting, attendees also received messages from numerous lawmakers recognizing them for the good they are doing in providing financial security for Americans and encouraging them to keep up the good work.

APIC AND IFAPAC

A major contributor to NAIFA’s advocacy success is the Advisor Political Involvement Committee, the only industry program that has a constituent for every member of

NAIFA was instrumental in the collective charge for State Insurance Departments to issue temporary producer licenses post COVID-19.

Congress. APIC efforts get agents and advisors involved both in their home states and in Washington, D.C.

NAIFA members also organize district meetings, attend town hall meetings and host candidate fundraisers through the association’s Political Action Committee, IFAPAC.

LOOKING AHEAD

As lawmakers tried to do all they could to keep the economy from imploding during the first few weeks of COVID-19, they spent more than $2 trillion in federal relief legislation with more being considered. Regardless of the amount that is finally approved, one of the next steps from Congress will be figuring out how to pay for it all. And since this is an election year, the need for political engagement on your part has never been more critical.

As a key player in the industry, you need to be part of the conversations surrounding these issues, as well as other issues that will emerge. You need to show how your products and services provide financial security for millions of Americans and how your clients count on you for guidance and support.

As you take part in these conversations, rest assured that NAIFA will be with you every step of the way, using its expertise and influence to oppose harmful proposals that place undue burdens on you and champion those that protect and advance your interests.

This is what NAIFA has done successfully for 130 years, and this is what it will continue to do for the next 130 years.

Turning Young Investors into Long-Term Clients

Acquire the habits described in this article to start building long-term relationships with your younger clients.

By Bill McManus

The impact of COVID -19 has certainly brought many challenges for investors and financial advisors for much of 2020. Volatility and uncertainty have increased dramatically and are not likely to go away anytime soon.

These challenges can be especially magnified for young investors. Most members of the Millennial and even younger Gen X generations have never experienced these levels of volatility in the markets, let alone a full-on correction.

For the first time, they are experiencing some of the instinctual behaviors that are brought about by increased fear and anxiety in the market. Confirmation bias, the bandwagon effect and loss aversion can all affect decision making.

You add to that a surge in the volume, velocity and complexity of the information that is thrown at us on a constant basis, and we now have the recipe for a very difficult situation to navigate through.

OPPORTUNITY FOR ADVISORS

We also know that challenges create opportunity — in this case, the opportunity for financial advisors to usher in a whole new cohort of clients that they can help to reach

their long-term financial goals. As mentioned before, this is the first real challenging market for many investors in their investing careers. A more than 10-year bull market run may have had many of these people thinking they didn’t need the help of a financial advisor.

SEIZING THE OPPORTUNITY

We now know that the landscape has changed dramatically. Advisors who are looking to capitalize on this tremendous opportunity should demonstrate three pillars:

• Caring: Many Millennial and Gen X investors haven’t experienced a full market cycle and are undergoing increased stress and anxiety as they witness drastic market swings. As such, it’s more important than ever for advisors to be empathetic in their approach, offering emotional support in addition to financial guidance.

• Coping: To effectively help new clients navigate these turbulent times and alleviate financial stress, advisors must offer relevant educational pieces and actionable plans that will help these clients feel in control of their finances despite economic uncertainty.

• In command: Advisors need to demonstrate that they are a trusted partner during this time by utilizing their full teams and offering solutions beyond investment management, such as providing access to outside resources. Doing so highlights the value an advisor can provide post-pandemic, potentially leading to a long-term relationship.

Embracing technology and setting client expectations are critical at this time.

Building these three ideas into a value statement sends a clear and direct message to new or prospective clients that you are a trusted advisor who can help them through this current, and, as we know, future, difficult market. We can combine empathy and know-how to demonstrate that we have helped other people just like them. That is a great foundation for a long-term client relationship.

Communication is key to developing new client relationships. As we know, we were already moving to a more virtual world before COVID-19. We have now seen the gas pedal pressed down to the floor and the acceleration of this new way of doing business shift into overdrive. This is

especially true for these particular generations. Investing both our time and resources into understanding how to best embrace this rapid change is crucial for advisors who want to embrace this opportunity.

Like many of you, I cannot wait for the days when we are able to interact with clients in a more “normal” way. I do feel that at some point we will return to some semblance of that. However, there is no doubt that many of the adaptations we have made in response to this current crisis will become a part of our everyday efficient practices. Embracing technology and setting client expectations are critical at this time.

The challenging health and economic times brought on by COVID-19 have certainly disrupted all of our lives and our businesses. The uncertain long-term effects will undoubtedly add to difficult times ahead, but financial advisors who incorporate these ideas into their practices will certainly have tremendous opportunities to help more clients in a deep and long-lasting way.

Bill McManus is a registered representative of Hartford Funds Distributors, LLC.

Approaching Investments in the Current Market

Taking time to provide individualized assistance to all clients will make you a strong defender against the storm.

By Brad J. Myers

States are beginning to roll back their COVID-19 restrictions, and stock markets have started to recover from their post-crash lows.

But economic storm clouds continue to gather, and there is no quick end in sight to the pandemic. In this unique historical period, we must go above and beyond to offer clients as much information and empowerment as they need to make the best investment decisions for their individual financial situations.

OVERCOMMUNICATION IS KEY

While most advisors scrambled to reach out to clients at the start of the coronavirus crisis, some may be returning to a more typical cadence of more reactive communications. This reversion is premature, as we do not know how strong a second COVID-19 wave might be and what economic consequences it might have.

Overcommunication remains the order of the day — clients should still receive continual reassurance that we are here for them, and that their long-term financial game plans remain on solid footing.

Increased communication with clients will help you keep a pulse on their investment outlooks and ensure they have the information they need. As during prior recessions, some clients will want to acquire large amounts of commodities like gold or Bitcoin. Others will want to invest more than usual in stocks, convinced the market lows have passed, while some will want to refrain from investing altogether.

Advisors must check in with all clients to ensure their actions line up with long-term goals. More than usual, advisors should provide additional information to help facilitate informed choices. At the end of the day though, clients’ wishes must receive proper deference.

As the economic impact of COVID-19 continues to unfold, frequent check-ins will help rein in clients’ fear reactions and subsequent impulsive decision-making. Dividend cuts, bankruptcies and sector-specific challenges will continue into next year, and future expectations may need continual refinement. Other events, including the 2020 presidential election, will surely spark anxiety, and proactive education on what these events could mean for clients’ portfolios can help.

HELPING CLIENTS YOUNG AND OLD

Good financial plans are designed to withstand crises like this one, regardless of an individual’s situation, but older and younger clients may still need more specialized assistance.

COVID-19 may have forced some older individuals into an earlier retirement than they expected, so their financial plans will need adjustment. Others still approaching retirement may need to be taught why they should move their portfolio funds into safer assets, even though safer assets have less growth potential. Ideally, retirement is never a surprise, but investment strategy shifted years in advance can protect those who find themselves in that scenario.

Market lows allow younger investors to open portfolios at reduced cost with high potential rewards, especially if they haven’t invested before. The story changes for those who will need funds to buy a house or car in the next year or two — they need to secure their money, and the markets may continue to swing as society sorts through COVID-19 and its aftermath.

Any clients with high interest debt, such as credit card debt, or without emergency funds should focus on paying debt or saving before they put extra income into investing. Unfortunately, COVID-19 has demonstrated why everyone should have cash reserves on hand: there is no guarantee the markets will save them in an emergency.

Economic uncertainty is here to stay for a while, and advisors are poised to provide the reassurance clients need for their long-term plans and short-term choices as long as it lasts. Taking time to provide individualized assistance to all clients will make you a strong defender against the storm.

Younger clients who have a high risk tolerance, longterm horizons and no high-interest debt might benefit from investing right now.

Brad J. Myers is a founding partner at Granite Canyon Wealth Management and an 18-year member of MDRT. He is a current trustee of the MDRT Foundation and spoke at the 2019 MDRT Global Conference on financial planning. He lives in South Jordan, Utah.

Increased communication with clients will help you keep a pulse on their investment outlooks and ensure they have the information they need.

Re-Setting Your Goals

The steps outlined in this article will help you modify your goals in light of COVID-19.

By Robert Arzt, CLU, ChFC, LLIF

“Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit.”

— Napoleon Hill

COVID-19 has created the need for some advisors to modify their goals as they spent a lot of time and effort just trying to get through this difficult time. For others, there has been a varying degree of impact, from slight to severe.

Regardless of the extent of the impact, this might be a good time to review what you want to accomplish this week, month, quarter or year.

Focusing on Napoleon Hill’s quote above, think about the silver linings of this new, and hopefully temporary, way of life.

Many of us are still working and interacting with clients remotely, so how might that be leveraged for a greater good in the future?

• What flaws in your business processes have been exposed?

• What projects that stay at the bottom of your to-do list can you now take on?

• What changes can you make to your schedule to create a better work/life balance?

• In addition, during stressful times it is critical to maintain good health and a positive attitude. Do what works for you — exercise, meditate, reduce your consumption of negative news, etc.

• Be aware of your negative self-talk and monitor it. Substitute a positive affirmation whenever you catch yourself thinking of something negative.

• Maintain a deep-down belief that you will get through this and become stronger as a result.

Now is the time to set many short-term goals you can track.

FIRST STEPS

A good way to start to think about these questions and suggestions is to schedule time on your calendar to do so. This is time when you are working on your business and not in your business.

Here are some suggestions that can help:

1) Have Crystal Clear Goals — Perhaps the most important factor in achieving your goals is to develop the skill to write out your goals using very specific, clear and positive statements of what you want in your future. These statements need to be written in such a way that they are measurable and can be monitored and tracked on a concrete basis. You should also possess a deep desire to achieve them and have the utmost confidence in yourself that they are possible for you to achieve and you are worthy of achieving them.

2) Focus — Your life is complex, especially now. It is filled with many tasks and responsibilities. Your ability to separate the urgent tasks from the goal-achieving tasks will determine how successful you will be in achieving what you desire.

Here’s a “secret” question you can ask yourself each day to stay focused on attaining your goals: “What is the best use of my time today to move me closer to attaining my goal of…?”

I believe that now is the time to set many short-term goals that you can track. Completing each will give you positive reinforcement and the encouragement to continue.

3) Know the Score — Keep score of your progress towards your goals. Know what’s working and what isn’t and don’t be afraid to make modifications as necessary during these difficult times.

4) Have a Positive Outlook — We become the sum total of our thoughts, and we attract into our lives the manifestations of those thoughts. If you hold a positive outlook about your future and your circumstances, you will attract more positive results than negative ones. I’m not talking about wishing for something good to happen, but rather holding a positive expectation that by engaging in the correct activities consistently, you will produce the results you desire.

5) Ask for Help — Multiply your chances of success by asking for the help and support of others. Enlist the strengths of others to add to your strengths and natural abilities. Surround yourself with people who can support you and your desire to succeed. Seek the advice of people in business who have weathered other major storms and survived by talking to them, reading books about them or listening to them via audio programs.

Robert A. Arzt, CLU, ChFC, LLIF, is CEO of Polaris One. He coaches professionals who want to achieve more. Sign up for a free 45-minute coaching session and contact him at bob@polarisone.com.

A Safe Harbor in Today’s Economic Storm

Whole Life, Universal Life and Indexed Universal Life have traditionally maintained their values through tough economic times because they are designed with that very goal in mind.

By Marc Schecther and Jordan Smith, JD, LLM

In light of recent market challenges that have impacted the diversified investment portfolios we manage for our clients, many have asked how the cash values in their investment-oriented life insurance policies are weathering the storm.

Whole Life, Universal Life and Indexed Universal Life have traditionally maintained their values through tough economic times because they are designed with that very goal in mind. Today is no different.

When equity markets are up and the economy is running smoothly, it’s sometimes easy for your clients to overlook the value of the downside protection they get from using life insurance as an investment.

Life insurance will never be their best performing asset when things are good — it’s not supposed to be — but in times of turbulence, it can provide a stabilizing influence on the overall portfolio and a potential source of cash that can be drawn upon without having to incur market losses. When structured and funded properly, these policies are designed to provide moderate, steady growth with extremely low risk of loss.

INSURANCE COMPANIES VS BANKS

It’s important to keep in mind a few key differences between insurance companies and other corporations, including banks, to understand why insurance companies are generally more financially stable than banks, particularly during times of market volatility:

1) Investment Risk – Insurance companies invest the premiums that they collect from policyholders in longterm assets, such as bonds, to ensure that they can pay out insurance claims as they occur over time. The vast majority of life insurance company assets are required to be made in high quality investments, with approximately 85% invested in investment grade corporate bonds and U.S. Treasuries, which traditionally perform better than stocks when corporate finances weaken.

2) This means that insurance company investments are generally less risky when compared to the investments made by banks and their affiliates, whose structure and regulations do not limit their investment of lender deposits in a way that corresponds to their anticipated liabilities.

3) Insurance carriers are not allowed to use leverage. Unlike banks, investment funds and operating companies,

government regulations prohibit insurance companies from using leverage to enhance their performance. This prevents any losses from being compounded during market downturns.

4) Insurance carriers are heavily regulated. Insurance companies can become insolvent. However, these scenarios are historically rare. This is because the states that regulate insurance companies take poor performing insurance companies into receivership if/when their assets drop to approximately 90% of their liabilities.

In challenging economic times like these, our clients are even more appreciative of the slow and steady 4% to 6% tax-free compounded long-term returns that our insurance designs offer.

At that point they have approximately 90 cents on the dollar to pay off their liabilities. In contrast, most financially challenged corporations are left with an extraordinarily small amount of assets/value when they go bankrupt and creditors are typically fighting for a much smaller 10 cents or 20 cents on the dollar.

Insurance companies have failed in the past, but due to the state oversight and intervention, the companies and the industry ensure that payment of guaranteed obligations of the company is made to policyholders.

In challenging economic times like these, our clients are even more appreciative of the slow and steady 4% to 6%

tax-free compounded long- term returns that our insurance designs offer. Many of the dollars that our clients have allocated to these products are longer-term dollars that would otherwise have been invested in stocks or bonds.

Some of our clients own these contracts inside of their estate (in cases where they intend to access tax-free dollars during their lifetime), while others have invested dollars that they had already transferred to an irrevocable trust for the benefit of their children or grandchildren (where the death benefit component of these policies will ultimately enhance the amount of wealth that passes to the next generation).

In either case, it is in an environment like we have today that these policies are most appreciated because their value is unlikely to be impacted in any significant way by the volatility that is currently battering the rest of the economy.

While these are turbulent times, policyholders can rest assured that their assets at these life insurance companies are secure in an industry that has secured such assets for hundreds of years. We anticipate nothing different in the challenges to come over the next hundreds of years.

Marc Schechter is senior partner and Jordan Smith, JD, LLM, is vice president, Advanced Design, at Schechter. For 80 years, the company has been quietly advising wealthy families on financial matters including: Institutional quality investment advisory services, private capital and alternative investments, advanced life insurance planning, income and estate taxes, business succession, and charitable planning.

Most Americans Baffled by Annuities

To combat misinformation, find creative ways to teach prospects about the key features and benefits of annuities.

By LIMRA and SRI

As more and more Americans flock to products with guarantees in today’s unsettling business environment, it is interesting to note the huge number of people who find annuities baffling.

According to a Secure Retirement Institute ® (SRI) study, only one in four consumers can correctly answer at least seven out of 10 annuity-related questions. In addition, more than 40% answered “not sure” to each of the 10 questions.

“Our study revealed annuity owners go to the head of the class when it comes to understanding how annuities work,” said Matt Drinkwater, corporate vice president at SRI. “Almost six in 10 annuity owners achieved a high score on the annuity quiz, compared with just 21% of those who don’t own an annuity. We believe that knowledge likely contributes to annuity owners’ positive views of annuities. Twice as many annuity owners view the products positively, compared to non-owners (83% to 41%).”

The research also showed that Americans are confused about how to turn workplace savings into lifetime

guaranteed income. Based on the quiz, only one in four consumers understood that annuities could be purchased with money saved in workplace retirement plans, such as 401(k) and 403(b) plans.

In general, the study found that consumers who reported having greater financial knowledge in general scored higher on the annuities quiz. Almost half of consumers (49%) claiming to be very knowledgeable about financial products or investments had a high annuity knowledge score, compared with 35% of those who professed to be somewhat knowledgeable. Just 17% of consumers who said they were not very knowledgeable achieved a high annuity knowledge score.

To put this into perspective, fewer than one in 10 Americans consider themselves very knowledgeable about financial products and investments, according to a 2019 SRI study.

HIGHER ANNUITY KNOWLEDGE, MORE POSITIVE PERCEPTIONS

The study also finds that consumers who have a high level of annuity knowledge are more likely to have positive views about annuities than those who scored poorly. Sixty-three percent of consumers who answered at least seven of the 10 questions correctly had a positive view of annuities, compared with just 27% of those who answered three or fewer questions correctly.

Fewer than 1 in 10 Americans consider themselves very knowledgeable about financial products and investments, according to a 2019 SRI study.

“Greater annuity knowledge also translated into higher interest in converting assets into guaranteed lifetime annuities,” Drinkwater noted. “Nearly four in 10 consumers (37%) with high annuity knowledge expressed interest in annuitizing a portion of their retirement assets, compared with only 15% of those with low knowledge levels.”

EDUCATING CONSUMERS

SRI researchers suggest that consumers who have less knowledge about annuities may be more susceptible to negative press coverage of annuities, which could impact their views

To combat misinformation, financial advisors and annuity manufacturers should find creative and engaging ways to teach potential clients about the key features and benefits of annuities, the survey noted. Non-traditional forms of learning, such as online games and tools, can increase awareness and improve knowledge about annuities.

Other steps you can take to increase consumers’ knowledge of annuities include:

• Post facts about annuities or dispel common myths about the product via social media.

• Send out email blasts each week to share longer articles on annuities and their advantages. You can also provide case studies of how annuities are helping some of your current clients secure a sound financial future.

For more information, visit LIMRA at www.limra.com/sri.

Fear is the Most Dangerous Virus!

In challenging times, we must make decisions based on logic and rationale instead of being driven by fear.

By Vijay Eswaran

As we live through the once-in-a-century pandemic currently under way, fear of the unknown and the panic it generates is perhaps the most contagious virus of our time.

The thing about fear is that it can be transmitted instantly over the airwaves from smartphone to smartphone through group chats and social media feeds. Even more worrisome is that it can spread from one to many, almost at the speed of light.

The progression of the fear contagion is not merely mathematical or even geometrical; it is also astronomical, and that’s dangerous.

Today, fear has paralyzed the planet more so than the virus itself. Although we have every reason to be worried and must act with caution, it is imperative that during challenging times, we make decisions and choices based on logic and rationale instead of being driven by fear.

Fear has a tendency of overtaking the facts. It is fully capable of taking us on flights of nightmarish fancy. The danger lies in the two extremes when fear overtakes. One is being so paralyzed by fear that we freeze, and the other is being so trapped in a virtual euphoria of fear that we simply react without thinking. Both are equally dangerous. Fear has the peculiar tendency to remove the balance from our thinking. Now more than ever, the world needs to be balanced.

We have survived wars, earthquakes, floods and famine, the outbreak of SARS, MERS, Zika, Bird Flu, Ebola and the like, and arguably the most devastating pandemic of the 20th century, HIV/AIDS. Worse calamities have befallen the world, and there will be more. But we will prevail, as we have always done — just as long as we do not fall into a fearinduced frenzy.

In 1948, CS Lewis wrote about the atomic bomb in an essay titled “On Living in an Atomic Age.”

“This is the first point to be made: and the first action to be taken is to pull ourselves together. If we are all going to be destroyed by an atomic bomb, let that bomb when it comes find us doing sensible and human things — praying, working, teaching, reading, listening to music, bathing the children, playing tennis, chatting to our friends over a pint and a game of darts — not huddled together like frightened sheep and thinking about bombs. They may break our bodies (a microbe can do that) but they need not dominate our minds.”

These words bear some relevance to our situation today if you replace the words atomic bomb with COVID-19. Once again, I emphasize that I am not diminishing the very real threat we all face today, but Lewis’ words are a reminder that while the threat of death is serious, it’s not novel. Let’s not succumb to panic or allow fear to dominate our minds and paralyze our hearts.

THE NEED TO WORK TOGETHER

Now more than ever, we need to band together as one (figuratively speaking of course, in these times of social distancing). We cannot afford to lose our sense of goodwill and compassion for others in a desperate attempt to save ourselves.

The cost of all this panic is that the weak and vulnerable will feel its ultimate impact. Our humanity is being tested every single day and we need to prevail. It is only by caring for each other that we can come out on the other side of this relatively unscathed.

We are fighting a war, and the humane within us must emerge victorious in order for humanity to prevail.

Vijay Eswaran is an entrepreneur, speaker and philanthropist. He is the founder and executive chairman of the QI Group of Companies, a multi-business conglomerate with headquarters in Hong Kong, and offices in more than 25 countries.

We will prevail, as we have always done — just as long as we do not fall into a fear-induced frenzy.

FIAs Have a Bright Future

As investors seek safer waters in volatile times, many are turning to fixed indexed annuities.

By Doug Wolff

For all the focus that goes into determining how much to save for retirement — and the strategies that can help accumulate this figure — the issue of how to grow and maintain these savings as people near retirement tends to go overlooked.

Presently, there is a perfect storm of factors that are compelling financial professionals to rebalance their client portfolios. Mostly notably, market upheaval due to the coronavirus has investors even more vigilant to seek safer waters and protection from downside risk.

However, this crisis also comes as many clients, only a few years from retirement, were already looking for strategies to preserve their principal while still providing some potential for interest.

Faced with this rapidly changing retirement planning environment, it’s a good time to take a closer look at how Fixed Index Annuities (FIAs) may provide a solution

A BRIEF OVERVIEW

FIAs offer a variety of potential advantages to consider. They are a tax-deferred, long-term savings product, for one. They also represent a unique retirement solution that often offers multiple index crediting strategies, in addition to a fixed account option, that can help protect and grow account values even in turbulent times like these.

In addition, FIAs can serve as a bond fund alternative that offers with some equity-index linked interest potential. Unlike bonds and bond funds, when interest rates go up, the value of FIAs does not go down. This provides protection against potentially rising interest rates that bonds cannot match.

FIAs offer tax-deferred, interest potential from index accounts based on equity-focused market indexes. However, they have a floor, meaning clients don’t lose their principal, and their previous interest credits are protected too. As clients read headlines about potential market

downturns, they can rest easy as they are not actually invested in the markets.

Many clients may need to rebalance their portfolios this year to derisk given current market conditions and/or as they approach retirement. FIAs can help them balance their portfolios that require some recalibration: long-term risk tolerance versus target asset allocations. An FIA can be positioned to assist with its shift from equities to safer vehicles as well, giving clients interest potential while controlling for risk.

FIAs are being re-discovered as a tool for accumulating and securing savings to and through retirement — especially during times of uncertainty.

WHY FIAS IN THE CURRENT ENVIRONMENT?

FIAs are being rediscovered as a tool for accumulating and securing savings to and through retirement — especially during times of uncertainty. FIAs can function as a separate, non-correlated asset class in relation to equities. This allows for diversification of client portfolios away from equities while still providing potential for interest credits linked to a financial index.

Overall, FIAs offer client portfolios a powerful combination of tax-deferred accumulation potential, no

downside risk and diversification. And while FIAs can be looked at as a “safer” asset class, your clients don’t have to give up all accumulation potential by rebalancing to them. No wonder FIA sales shot up 25% in 2019, according to Wink Research.

The issue of continuing to accumulate and protect clients’ lifetime savings as they near retirement is often overlooked in today’s marketplace. Currently, multiple factors are leading financial professionals to rebalance client portfolios, seeking accumulation potential but with protection from downside risk. The need is even greater for clients only a few years from retirement. As demand has been shifting to FIAs that focus on accumulation and protection from market risk, we see these flexible products as likely one of the fastest-growing categories looking ahead.

And given current conditions, we believe they can be more valuable than ever in volatile market environments and for helping upcoming retirees transition into retirement securely and confidently.

Security Benefit Life Insurance Company is not a fiduciary and the information provided is not intended to be investment advice. This information is general in nature and intended for use with the general public. For additional information, including any specific advice or recommendations, please visit with your financial professional. Security Benefit Life Insurance Company issues annuities in all states except New York.

Doug Wolff is president of Security Benefit Life Insurance Company.

Finishing 2020 Strong

Increase your chances of finishing the year strong by following the steps highlighted in this article.

By Bill Cates

Imagine it’s Jan. 1, 2021. The year you will never forget, 2020, is now behind you. Did you have a miserable year? Did you never get on track and back into a growth mode?

Did you have a mediocre year? Did you get things going in the right direction but never seemed to get up to full speed?

Or did you have a miraculous year? Did you exceed your own expectations of what you thought might be possible given the perfect storm we all went through?

FINDING SUCCESS IN 2020

Finishing 2020 with strong growth starts with a decision to do so. Here are seven proven strategies that will serve you well from now through the end of your career:

• Define Your Target Market. The fastest way for you to create a reputation for yourself is in a narrowly defined market. The more targeted your market, the more relevant your messaging will naturally become. If you have more than one target market, your messaging needs to be geared specifically for each, or it will end up becoming watered down and ineffective.

The truth is that you will forego some opportunity by intentionally focusing on a specific target market, but if done correctly, your success in your niche market will more than compensate for any missed opportunities. See the side bar for all the benefits of focusing on a target market.

• Zero In On Your Bullseye. The bullseye in your target market is your Right-Fit Client™. A Right-Fit Client is one that is perfect for you because you are perfect for them. Your message will resonate immediately with Right-Fit prospects. In shooting sports, the bullseye almost always wins you the most points. In business, hitting the bullseye almost always wins you the most profitable revenue.

• Create Differentiation That Matters. Your prospects don’t care about what makes you different unless they understand exactly how that difference benefits them. While superficial differences may attract attention, if there isn’t an obvious, tangible value associated with that difference, your differentiation will not accomplish your goal of acquiring more Right-Fit Clients.

• Focus Your Messaging. No matter how much value you bring to your prospects and clients, if you don’t deliver a message that instantly grabs your prospect’s attention, shakes them

up a little and keeps them interested, you’ll probably never reach the level of success that you know is possible for you. By following steps one and two above, your marketing and sales messaging will natural be more effective.

• Get Comfortable in Asking for Introductions. While highly relevant messaging is foundational to your success, you will likely never achieve the level of success you aspire to until you start leveraging your hard-earned relationships. In other words, you need to get comfortable in asking for introduction to others who should know about your important work.

You will likely never achieve the level of success you aspire to until you start leveraging your hard-earned relationships.

• Turn Referrals into Introductions. There was a time when we could get a name and phone number, call that person up and actually reach them, but those days are behind us. As a result of Do Not Call regulations, marketing-message overload and all the other barriers to making a personal connection with a prospect, it is nearly impossible to reach

people these days. But don’t settle for word of mouth; instead, get introduced to your new prospect.

• Build a Network of Referral Partners. A Referral Partner (or Center of Influence) is someone who may never become a client but can introduce you to high-level prospects. The beauty of Referral Partners is that they essentially serve as your own personal sales force — and you don’t have to pay them a penny. The best way to meet these people is through your current clients.

What you do today, tomorrow and the next day will show results in three to nine months from now. If you want to finish strong, you better get started now.

(Bill Cates is offering our readers an expanded version of these strategies. For your complimentary copy, go to: www. ExponentialGrowthGuide.com.)

Bill Cates is the author of Get More Referrals Now!, Beyond Referrals, Radical Relevance, and the founder of The Cates Academy for Relationship Marketing. Subscribe to his free referral tips and other free resources at: www.ReferralCoach.com/ resources.

8 Massive Benefits of Narrowing Your Target Market

1. Easier to identify your prospects. In this digital age, finding targeted lists of prospects has become relatively easy.

2. You will bring more value. You have more insight into their challenges and opportunities than a generalist.

3. You deliver a more relevant marketing message. The narrower your focus, the more exacting your messaging — on your website, LinkedIn profile, emails to prospects, etc.

4. You become referable more quickly. Since you’ve developed processes geared to your target market, you can create better results more quickly. You exceed expectations.

5. Referrals and introductions are easier to create. Your clients know people like themselves, and introducing you to others validates their decision to work with you.

6. You’ll leverage others targeting the same market. You can create powerful reciprocal referral relationships with these strategic alliances.

7. You’ll create a reputation for yourself. Creating visibility is much easier when you go from a scattered approach to a well-defined target.

8. Your business will be more profitable. By combining the power of a great reputation with bringing more real value to top prospects and clients, you can often charge more and/or work more efficiently.

“Buy Low, Sell High for Insurance Advisors”

This article offers three planning considerations based on the “buy low, sell high” principle and how life insurance fits into the picture.

By David Szeremet, JD, CLU, ChFC

“Buy low, sell high” is the Golden Rule of securities investing. It’s easy to see why because finding a bargain and turning it for a profit is the American way. The spirit of the rule also can be applied to wealth transfer and life insurance planning applications. There may be no better time than today for individuals and families to “buy low, sell high.”

Today’s favorable planning environment is the product of three factors: (1) tax laws; (2) economic (market) conditions; and (3) interest rates.

Has there ever been a more favorable tax environment? Income, gift and estate tax rates are all historically taxpayer friendly. On the economic front, the COVID-19 pandemic shocked the economy, resulting in depressed market values for many asset types. (Just ask anyone who owns commercial realty, securities, a retirement account or a business.) And interest rates remain at historic lows.

THREE PLANNING OPPORTUNITIES TO CONSIDER

Let’s consider three planning opportunities based on the “buy low, sell high” principle and how life insurance fits into the picture:

* “Convert low, distribute high.” Without question, equity markets recently took a beating. With many retirement account values lower, the opportunity to complete a “discounted” Roth conversion is a silver lining. It’s all about income taxes — now, during retirement and at death.

Converting to a Roth IRA generally triggers income taxes; therefore, the tax burden will likely be lower when account values are lower (today) and income tax rates are favorable (today). Without required minimum distributions during the owner’s life, the Roth IRA will have more potential recovery time than if the asset is left in a traditional IRA. Roth IRAs provide income tax-free, qualified distributions — both during lifetime and as a legacy to heirs.

— Life insurance opportunity. Life insurance may be purchased on the life of the IRA owner in an amount estimated to replace the value lost to taxes when the Roth conversion takes place. This helps replenish the amount of wealth passing to heirs and protects the wealth transfer amount against premature death.

* “Gift low, distribute high.” The lifetime gift tax exclusion is at an all-time high (in 2020, $11.58 million individual/$23.16 million married). Combine that with current market conditions and you have a prime opportunity to leverage gifts by capturing a “discount.”

Suppose your client has income producing securities worth $1 million. They were valued at $1.5 million prior to the pandemic. If your client were to gift these securities today, they would realize a $500,000 “discount” because the reduced value would require $500,000 less of gift exclusion than a pre-pandemic gift of the same securities.

After consulting with his tax and legal advisors, he decides to gift the stock to an irrevocable grantor trust, using only $1 million of his lifetime exclusion amount, preserving the $500,000 reduction for other planning purposes. If the securities recover value, all post-gift appreciation escapes transfer taxes.

— Life insurance opportunity. Take the previous example to the next level. Your client could purchase and personally own permanent life insurance with access to policy cash at his discretion. Assuming the trust includes a substitution (swap) power, the trust-owned securities can later be swapped for the life insurance policy.

The swap instantly removes the life insurance (including the entire death benefit) from the grantor’s estate. Better yet, as a sale, it avoids the pesky three-year-rule of estate inclusion that applies to gifts of life insurance. Ultimately, the personally-owned securities will receive a stepped — up basis at the owner’s death.

Not only does this strategy instantly remove the entire death benefit from the grantor’s estate, it also creates a stepped-up basis for the personally owned securities — doubling the tax savings.

* Selling the family business — in trust. In certain cases, selling assets makes more tax-sense than gifting them — even if the transferee is the same. This is especially relevant in the context of family-owned businesses.

Suppose your client owns a business that has experienced a downturn due to the pandemic (hopefully, a temporary setback). She is interested in gradually transitioning ownership to her children. To preserve her gift and estate tax exclusion, she could sell the business to an irrevocable grantor trust in exchange for a promissory note. The sales price would be at today’s lower value. Business income would service the promissory note.

As the business recovers value, the appreciation is gift tax free and passes outside your client’s taxable estate. It is a tax savings win as long as the business growth rate meets or exceeds the promissory note interest rate, (relatively easy considering today’s low interest rates). With this strategy, your client finances her own buy-out using company dollars while minimizing wealth transfer taxes — preserving her gift and estate exclusion for other uses.

— Life insurance opportunity. Life insurance is generally recommended on the business owner’s life to pay off the note in the event of her premature death. It may also be advisable to insure the key employees of the business — often the children who are the successors. There are also a variety of non-qualified fringe benefits plans available that use life insurance, including split-dollar, executive bonus and supplemental executive retirement plans. Finally, additional coverage may be indicated for estate liquidity needs.

When it comes to wealth transfer planning, we may look back on 2020 as the beginning of the golden age of buy low, sell high. Help your clients seize these opportunities and they may forever view you as a thought leader.

David Szeremet, JD, CLU, ChFC, is vice president, advanced planning, at Ohio National Financial Services. Szeremet is responsible for the advanced planning team that provides general education and marketing support, including estate planning, executive benefits, business insurance and life insurance planning. He can be reached at david_szeremet@ohionational.com, linkedin.com/in/ davidszeremet or 513.794.6389.

Life insurance and disability income insurance products issued by The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Issuers not licensed to conduct business in New York. Life insurance, disability income insurance, and medical insurance policies have exclusions, limitations, reductions of benefits, and terms under which the policies may be continued in force or discontinued. Contact the issuing company for additional information.

Using Housing Wealth to Address Common LTC Issues

This article explains how a reverse mortgage can help your client address some common LTC issues.

By Shelley Giordano and Launi Cooper

Long-term-care insurance (LTCI) policies are often difficult to sell. Despite the introduction of hybrid products that minimize loss of premium, the industry continues to languish even in the face of the risk coming from the rising cost of long term care. And of course, if the client waits too long, he faces underwriting rejection or premiums that would unduly strain the household budget. Finally, some existing policyowners face premium cost increases that result in policy lapses — a sad affair for advisors doing all they can to help clients manage risk.

In the basket of hard-to-sell financial products, reverse mortgages fit the same profile. Home ownership in retirement is exceedingly high, estimated to be over 80%. The uptake in this population for taking advantage of the roughly $7 trillion in senior home equity is growing but is still proportionally small. Like annuities, reverse mortgages rely on mortality credit-like actuarial principles so that no borrower can ever owe more than the value of the house regardless of how long he lives or what housing values do.

This is accomplished through FHA-insurance premiums that accrue on the loan balance but provide absolute nonrecourse status to the eventual outcome of the loan.

Retirement researchers extol the value of creating secure income with annuities to cover essential needs in retirement. Likewise, experts in the field recommend managing the risk of needing expensive, or possibly ruinous, long term care. Nothing new there. What is new is the growing interest in using the housing asset to assist in managing the risk of what Wade Pfau, PhD, CFA, lists as longevity, market volatility and spending shocks.

Coordinating the use of a reverse mortgage with other resources puts a dead asset to work and potentiates their resiliency. Simply put, using a reverse mortgage, depending on the client circumstances, can increase cash flow, reduce monthly outflow, substitute for portfolio draws in down markets (Sequence of Returns Risk), and/or function as a shock absorber in retirement years for unexpected spending drain.

CHOICE ARCHITECTURE

More specifically, would a more coordinated approach with long term care needs be effective in helping advisors manage risk for their clients in the LTC arena? Rather than a binary choice of “purchase LTCI or not,” the advisor may better serve his clients with an array of options, commonly known as “choice architecture.” The idea behind presenting choices is to provide the client with a sense of control, but with a “nudge” in the right direction. In other words, the advisor is giving the client choice, but their attention is directed toward doing something to address long term care risk, not just ignoring it.

The chart below demonstrates a decision tree to assist advisors in nudging clients to a course of action that integrates a reverse mortgage with LTC planning when the client perceives the cost is prohibitive, or the client will not qualify.

CLIENT WHO CAN BE UNDERWRITTEN FOR LTCI

For the client who can be underwritten, the sting of draws on savings can be mitigated by turning to an alternate asset, the home. Because a reverse mortgage does not require mandatory monthly payments, there is less pressure on the monthly budget. This is especially important in market downturns so that the client is not spending undervalued assets. Generally, the cost of setting up a reverse mortgage would not make sense if the client plans to move within a short period of time. A minimum five-year window is suggested as a “Rule of Thumb.”

• Reverse Mortgage Lump Sum

The client may choose to buy a policy with a one-time Single Pay using reverse mortgage lump sum.

• Reverse Mortgage Tenure Payment, an “Annuity” (as long as he remains in the house)

Provides monthly cash flow for household budget to accommodate continuous pay.

CLIENT WHO CANNOT BE UNDERWRITTEN (OR WILL NOT BUY)

For the client who is denied, or refuses to consider a policy because of budget demands, reverse mortgage offers a powerful alternative that allows the client to self-insure.

• Reverse Mortgage Line of Credit

With this strategy, the client opens a reverse mortgage line of credit as early as age 62. This form of line on home equity possesses unique benefits.

1. Unlike a traditional Home Equity Line of Credit (HELOC), the lender cannot cancel, freeze or reduce the line even if the home value drops.

2. No monthly debt service is required.

3. Whatever the loan balance becomes is satisfied by the home value, whatever it may be.

4. If the line is not used, there is no loss in equity beyond the lending costs.

5. All remaining equity at loan’s end belongs to the borrower or his heirs/estate.

6. And most importantly, the line of credit compounds in borrowing power as the client ages.

The last feature is the “killer app” in reverse mortgage lending and what makes the reverse mortgage so attractive as self-insurance for LTC. Rather than earmarking savings or reducing spending to account for an eventual LTC event, the dead asset, the house, is deployed to create an ever-growing pot of cash (as long as it serves as the principal residence for at least one of the borrowers). The line of credit functions as “put” on long term needs. Unlike other insurance policies, it is not a use or lose proposition. If the line of credit is not used, it just reverts to the equity available to the homeowner or his estate.

The impact of having set up a reverse mortgage line of credit proactively is illuminated by an unsolicited email from a Mutual of Omaha Mortgage client:

“You may not remember me, but we did an HECM LOC about seven years ago. In these unprecedented times of health and financial uncertainty, my LOC (line of credit) now grown to $540,000, provides me with the comfort I might not otherwise experience.” FB, Orange County, March 2020.

Not many advisors have put their clients in a position to enjoy a half-million dollar liquid emergency fund. Clients whose advisors helped them mobilize their home equity in a growing, compounding, reverse mortgage line of credit faced the March 2020 market volatility and possible health ramifications with greater peace of mind.

CONCLUSION

In the financial planning community, the housing asset is rarely used to provide a long-term care solution. Advisors have tended to leave the house as a last resort, a disproved strategy that does not account for market volatility,or for future health spending shocks for the vast majority of seniors who wish to age at home. Finally, the reverse mortgage provides the means for expanding the inflow budget to purchase LTCI or prevent policy lapse without imposing a monthly debt obligation.

DISCLOSURES

The reverse mortgage discussed in this paper is the Home Equity Conversion Mortgage (HECM) insured by FHA. One of the homeowners must be at least 62 years old. The mortgage requires that the homeowner be responsible for tax, insurance, HOA fees, and maintenance, and that the home be the principal residence.

Shelley Giordano is the Founder Academy of Home Equity in Financial Planning, University of Illinois. sgiordano@ mutuamortgage.com. Launi Cooper is with Mutual of Omaha Mortgage. lcooper@mutualmortgage.com.

1Wade Pfau, Ph.D, CFA, Safety-First Retirement Planning, The Retirement Researcher’s Guide Series, McLean, Virginia, 2019.

Dealing with Sales Rejection

These words of wisdom will help you sail through days when prospects are refusing to sign on the dotted line.

By Brian Haney, LACP, CLTC, CIS, CAE, CFS, and Aamir Chalisa, MBA, LACP

Rejection is a way of life for many agents and advisors. They make professional sales presentations to well-qualified prospects and then face rejection and disappointment when these prospects decide not to work with them. This forces many of them to wonder: Why does this keep happening to me? What am I doing wrong?

For advice on coping on days like these, we recently spoke with two NAIFA members — Brian Haney and Aamir Chalisa, and this is what they shared with us.

Advisor Today: What tactics do you use to cope with sales rejection and stay positive?

Brian Haney: There have been several powerful things I’ve learned that help me stay focused, positive and always moving forward.

The first was the basic truth that a no from a prospect or client only means I am one person closer to a yes.

While having a prospect decide not to work with you shouldn’t ever feel good, it certainly doesn’t mean the

end of the world and is something we don’t need to take personally.

The reality is, I am not a fit for everybody. Nor should I try to be! The “no’s” I get only mean I am weeding out those people who aren’t ideal fits for my practice, getting me closer to those who are.

The second truth is: Mastering your process solves a lot of ills. Sometimes getting a no isn’t really a no, it’s a sign you may have missed something in your process with the client that is keeping them from being able to commit and say yes.

Whether you adopt Sandler as I have done or another high-level sales process, mastering your language and taking the same consistent approach with each client will

Perhaps the last and possibly most critical thing to any sales success I have is a daily commitment to a positive outlook.

— Brian Haney

help you determine what a client may really be saying when they say no.

I’m comfortably equipped with many “reversing” techniques to help handle objections or no’s, when what they really are indicators that I may not have done as sufficient a job in my process, and I just need to address that with the client. This helps me turn objections around fairly easily to win the opportunities I should win and also helps me get to the real no’s much faster so I can move on.

Rejection actually makes you a better salesperson. In my 30 years of experience in the financial services industry, I have dealt with rejection many times and every experience has taught me more and made me even better.

It is as if rejection has taught me to get better and to provide better answers to my clients’ objections.

Keeping a positive attitude has been the key, though. I have found that creating a positive situation out of a negative one is the key to a successful career in sales.

Working in the financial services industry allows us to serve the American public and help them become financially secure. There is no better career in the world that allows you both to help people in times of need with insurance products and assist them in planning for their retirement.

Perhaps the last and possibly most critical thing to any sales success I have is a daily commitment to a positive outlook. It’s not cliché to say, “how you start your day matters.” There’s significant psychological evidence that a bad attitude or less-than-positive outlook hinders your performance for the entire day. So be sure you have an early morning routine designed to have you walking in the door excited, hopeful and positively charged each day so you can adapt, respond and handle whatever comes your way!

Aamir Chalisa: When you are in sales, you learn over time to deal with rejection from prospects and clients. Staying positive and knowing that rejection is never personal has helped me overcome adversity and allowed me to still be at the top of my game.

So always keep this in mind when you feel rejected after receiving a bunch of no’s from prospects: It is the prospect’s loss and you tried your best to help them. Keep your head high, move on to the next prospect and remember that there are people who need your advice, your help and your guidance.

“Rejection actually makes you a better salesperson.”

— Aamir Chalisa

Brian Haney, LACP, CLTC, CFBS, CFS, CIS, CAE, is vice president of The Haney Group in Silver Spring, Md.

Aamir Chalisa, MBA, LUTCF, LACP, is Managing Director at the Futurity First Insurance Group in Illinois.

Increasing the Number of African American Advisors

The industry must be fully committed to hiring more African Americans—and this commitment should come from the top.

By Raymond Jones, ChFC

African Americans remain under-represented in the financial-advisory business. According to industry estimates, they make up less than 10% of the advisory work force. Here are a few insights on what I believe should be done to attract and retain more African Americans in the industry.

I have over 40 years of experience in the financial services industry in the capacity of advisor, trainer and corporate vice president. As an African American, I have often felt like a lone wolf when it comes to seeing people of color in various positions in the field and home offices.

The reasons for this lack of representation are complex and are mainly the result of factors that have been in place for years. These include:

1. It is difficult to enter this industry if one has not had adequate educational opportunities early in life. The academic playing field has not been equal for many of us. Strange as it may sound, schools are still separate and unequal, and the entry-level exams required by the securities industry, for example, are often difficult to pass — even for the most educated.

If securities firms are really interested in hiring more people of color, they need to provide coaching and exam preparation to help these candidates prepare for and pass the Series 7 and other required exams.

Compared to their white counterparts, many African Americans have not had a long experience with securities and other financial instruments. For example, my parents,

It is difficult to enter this industry if one has not had adequate educational opportunities early in life.

like many other African American parents, did not know about stocks and mutual funds and did not explain the importance of owning a financial portfolio. We didn’t have conversations about investing around the dinner table. My parents simply had to put food on the table and did not have time to worry about 401(k) plans. I never heard of options, puts and calls before I joined the industry.

2. The industry must be fully committed to hiring more African Americans and this commitment should come from the top. Recruiting needs to be incorporated into the compensation bonus formula for leaders who are responsible for hiring and training financial advisors. Leaders should visit high schools and colleges, promoting a career in financial services and explaining the economic and emotional rewards of working as a financial advisor. And they need to celebrate the successes of African American advisors in company memos and articles.

3. The turnover rate and retention of all advisors, regardless of race, have long posed a challenge to the industry. Leads and assigned clients need to be distributed to African American advisors throughout the community,

not just focused on areas within the black community. African American advisors need to be exposed to affluent prospects in order to be on a level playing field with other advisors if they are expected to meet a company’s production requirements.

4. African Americans do not occupy other positions in the industry. During my time in this business, I have had only two African American wholesalers or product specialists visit my office to promote their products or services.

All of us need to be invested in increasing the number of African Americans in the industry. We have made great strides in increasing the number of women in the industry, and this effort should be applauded. African Americans have made tremendous progress in attaining a higher level of education; consequently, there is currently a larger pool of candidates now than in years past. We just need to be committed to recruiting and training this pool of potential financial advisors.

Ray Jones, ChFC, is a financial advisor in Columbus, Ohio.

Chapter Profile: NAIFA-California

NAIFA-California is ahead of the pack in hosting events that inspire and inform its members.

By Emily Cabbage

NAIFA-California started 2020 with a lineup of events designed to enhance the professional development skills of its members and inspire them to take their practices to a higher level of success.

In February, the chapter hosted the first NAIFA 130th Anniversary party while NAIFA CEO, Kevin Mayeux, was in town for NAIFA-Los Angeles’ annual Will G. Farrell Award lunch.

After this well-received event, the chapter was ready to roll with its Day on the Hill Event on March 25. This was to be followed by a new offering of the California Roadshow in early April.

When COVID-19 reared its ugly head and brought with it mandatory shelter-in-place orders, NAIFA-California did not slow down. In fact, it was the first chapter to launch a new website using NAIFA’s webinar platform. This fresh new look was perfectly timed, as the association looked to drive more traffic to its website as the world shifted to virtual experiences and embraced technology to conduct

business, organize meetings, and connect with friends and family.

As a prelude to the highly popular NAIFA Nation Impact Week held in May, NAIFA-California hosted its own Impact Hour Zoom Event. Since members were not able to gather together in Sacramento, they welcomed NAIFA’s Vice President of Government Relations, Diane Boyle, and California Lobbyist, Shai McHugh, who shared with them the latest legislative updates.

In addition, board members gave updates from each of their respective areas, including IFAPAC, membership and an overview of the new NAIFA-California and Advocacy in Action websites. NAIFA President-Elect and past NAIFACalifornia President, Tom Michel, LACP, got the attendees pumped up for the upcoming NAIFA Impact Week.

NAIFA-California has really come together as a state in these challenging times.

Happy Hour at NAIFA-California’s Zoom Event.

In addition to launching a new website and hosting an Impact Hour, NAIFA-California launched a new blog site and held virtual happy hours (including one with a guest magician).

The California Annual Meeting, Engage, Empower, Explore, was scheduled to be held in August in San Diego. Through the power of Zoom, attendees will still be able to gather, gain valuable information from amazing speakers and celebrate all they were able to accomplish in spite of COVID-19.

NAIFA-California has really come together as a state in these challenging times, proving that like all of NAIFA Nation, together, we CAN take on anything — even COVID-19.

NAIFA-California is one of NAIFA’s largest chapters, with more than 1,300 members. It was founded in 1934 and its mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.

Emily Cabbage is NAIFA’s Director of Marketing. She can be reached at ecabbage@naifa.org.

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