InsuranceNewsNet Magazine - December 2019

2019 MOVERS & SHAKERS

Special Section • P. 28

Between The

End And The Beginning What will history say about 2019 in terms of financial regulation and health care reform?

PLUS...

Financial Services’ Long Overdue #MeToo Moment PAGE 8

PAGE 18

If Amazon Were An Insurance Agent, It Would Do This ...

PAGE 10

How Ned Ryerson Is Just As Cool As Gordon Gekko PAGE 48

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IN THIS ISSUE

View and share the articles from this month’s issue

» read it

DECEMBER 2019 » VOLUME 12, NUMBER 12

FEATURE

18

ANNUITY

Between The End And The Beginning

48 C ommentary: Ned Ryerson Is Just As Cool As Gordon Gekko

By John Hilton, Susan Rupe and Cassie Miller What will history say about 2019 in terms of financial regulation and health care reform? We break down a year that is the end of one era and the beginning of another.

INFRONT

8 F inancial Services’ Long Overdue #MeToo Moment

By Cassie Miller Why is the financial services world only now being held accountable for its actions and inactions?

28 Movers And Shakers 2019

10 If Amazon Were An Insurance Agent, It Would Do This John Rossman had a ringside seat as Amazon rose to prominence in the online retailing world. In this interview with Publisher Paul Feldman, Rossman imagines what the insurance industry would be like if it were “Amazonized.”

By Charlie Gipple How millennials can learn to ❤ annuities.

HEALTH/BENEFITS

52 Connecting The Dots: Life Insurance And Wellness

By Greg Poulakos Financial issues are a top cause of worker stress. Group life insurance can help ease their worries.

ADVISORNEWS

We look into the IMO, carrier, product and more that is changing the face of the insurance industry.

56 5 Reasons To Combine Health Care Into Retirement Planning

By Ron Mastrogiovanni Health care provides a unique opportunity for financial advisors to help address a key retirement need.

IN THE FIELD 38 F lipping The Script

INTERVIEW

online

www.insurancenewsnetmagazine.com

INBALANCE

By Susan Rupe Tony Lee was a successful Hollywood screenwriter before he found stardom in the insurance and benefits business.

60 Just Say Yes To Sending Holiday Cards And Gifts

By Bryce Sanders The holiday season is a great time to get your name in front of clients. But there are some pitfalls to avoid when sending cards and gifts.

LIFE

44 ‘Tis The Season To Look At Charitable Giving Via Life Insurance

By Barbara Rozgonyi Your client can multiply the dollars they give to their favorite worthy cause by using life insurance.

BUSINESS

64 5 Inexpensive Ways To Market Your Insurance Business

By Michael Z. Stahl Take time to establish marketing goals that are easy on your budget yet beneficial to your bottom line.

INSURANCENEWSNET.COM, INC.

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WELCOME LETTER FROM THE EDITOR

Et Tu, #MeToo

I

ndustry conferences offer valuable information, connections and camaraderie. This is especially true for insurance agents and financial advisors in small practices who do not have people in their daily lives who share their experience.

Conferences also bring some anxiety.

Social stress and just getting to the event can be a mix of excitement and trepidation. That stress can be exponentially greater if the attendee is also presenting.

It took me a long while to realize that women had another layer of difficulty on top of that. I learned that when someone who had attended meetings for decades told me that it was not unusual that men would proposition her by suggesting they go up to his room.

I was surprised because I knew her to be someone who worked at those meetings and not the type to be hanging around the bar until the wee hours. But that thinking was part of my own blinders — that I assumed women who were hit on were somehow inviting it.

The person who told me about her experience said that things had gotten better at conferences over the years. No doubt that times have changed, but perhaps not as significantly as she supposed.

At a subsequent conference, I was at a table with insurance agents during a meal break when the subject came up with two women who were new to the business. I asked about their experience and one described feeling like prey.

#MeToo Is There Too

In October, we all had a vivid reminder that things had not changed much.

Investment advisor Ken Fisher made a series of comments that offended many attendees at a conference. AdvisorNews Managing Editor Cassie Miller wrote about the aftermath in this month’s InFront column.

Fisher has the nation’s largest registered investment advisory with about $110 billion in assets under management.

Fisher Investments might have a bit less now because some significant clients such 6

as the New Hampshire state pension fund have pulled money from the firm.

Apparently, Fisher’s comments were nothing new for him or for financial conferences. It took someone from a far smaller RIA to call Fisher out in a video posted on Twitter. The explosive reaction showed that #MeToo had finally arrived in finance.

Maybe that time came to finance because of a wave of younger, more diverse advisors rising in the profession.

Insurance is still nearly as pale, stale and male as it has been for decades. The average age of insurance agents is somewhere in their 60s, as a glance around most industry events will attest.

I heard about the insurance conference environment when I worked for a regional property/casualty agents’ association in the early 2000s. And sure enough, I did see that conferences were an excuse for insurance agents to run amok.

The same was true on the life side, as dramatized in the 2011 movie, “Cedar Rapids,” which takes place at a regional life insurance conference. The movie is notable for two things in particular: It was the first leading role for Ed Helms and probably the first starring role for life insurance also. At least besides movies featuring insurance fraud, such as Double Indemnity. I have only heard disparagement about the movie from people in insurance, but despite the bawdy humor, the story is based on decency and a belief in insurance.

“Cedar Rapids” features sexist jokes and “sexual situations,” as the warning goes. Those situations tended to involve one common denominator — alcohol.

InsuranceNewsNet Magazine » December 2019

Instant Idiot Juice

Liquor loosens inhibitions and helps the flow of conversation, but usually at the expense of discretion. That sentence might seemed glaringly obvious, but why are we not talking about it? As we build the culture of our aspiration, excessive drinking always takes us down the low road instead.

Although it cannot be said that everybody who drinks at a conference gets in trouble, just about every trouble involves drinking.

I got a sense of that myself some years ago when I realized I was not at my best when I was drinking. Oh, I thought I was at my best, but, yeah, not even close.

Finally, I told myself that I don’t want to be that guy. And I stopped drinking. It’s been nine years this month.

I am not saying it was easy. I had eased off or stopped before. But then after having one or two drinks, I would soon be drinking more than I should and would have to cut back again — usually after a few bleary mornings of staring at my bedroom ceiling as I asked myself, “What did I say last night? What did I do last night?” And then wincing as the details floated up from my memory.

It was never anything horrible or actionable, just dumb stuff like talking too loud or guffawing like a hyena or thinking I was a freakin’ comedian. All around bad judgment. We have all been there, right? Or perhaps many of us have.

That was not the man I wanted to be.

That was not the man other people needed me to be. #MeToo refers to victims of bad behavior. But we can all think about #MeToo in relation to our own complicity. Just because we are not the bad guy does not let us off the hook — men or women.

It is up to us to keep a safe, respectful environment for everybody. Perhaps we should be asking ourselves, is the place that we are helping create somewhere that we want our family to be in?

If not, we should always remember that everybody is somebody’s family.

Steven A. Morelli Editor-in-Chief

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10.19

INFRONT

Financial Services’ Long Overdue #MeToo Moment Why is the financial services world only now being held accountable for its actions and inactions?

called the persistence of comments like Fisher’s in the financial world “frat boy culture.”

By Cassie Miller

Created in 2006 by Tarana Burke, a sexual assault survivor, the #MeToo movement saw resurgence in late 2017, making waves through the entertainment industry with the accounts of abuse and harassment from Hollywood producer, Harvey Weinstein. So, why is the financial services world just now being held accountable for its actions and inactions?

Krawcheck believes it has to do with non-disclosure agreements and mandatory arbitrations.

“This is the reason that we have not had a full accounting during the #MeToo movement of sexual harassment in financial services,” Krawcheck said. “This is why sexual harassment in the industry continues; it’s because so many of those who have suffered it are forced into arbitration, and so many who receive settlements are forced to sign confidentiality agreements.”

States have been quick to respond to the usage of non-disclosures in instances of harassment, legal experts say.

“In the wake of the #MeToo Movement, 16 states have introduced bills to address the enforceability of non-disclosure provisions relating to harassment. A few states have passed more than one statute, intended to target different types of contracts or underlying wrongdoing,” wrote Elizabeth Tippett, a University of Oregon law professor, in the American Bar Association’s Dispute Resolution Magazine.

Sonya Dreizler, is an ESG consultant

Y

ou’re welcome here … or are you? Individuals identifying as the fairer sex have a much different experience in the financial services world than men do, and crude comments are just the half of it.

What has come relatively quickly and hard-hitting to other industries — including media, sports, politics and more — has made its sluggish journey to the financial services world. In early October, Ken Fisher, founder and chairman of Fisher Investments, was called out in a Twitter video for a litany of offensive comments he made at this year’s Tiburon CEO Summit.

The condemnation and consequences came quickly for Fisher, with Tiburon CEO Chip Roame barring him from future conferences and several investors moving their assets out of Fisher Investments. So far, Fisher’s company has lost nearly $4 billion (as of print time) over his comments.

Captioned, “I’m truly disgusted.”

Whistleblower Alex Chalekian recounted Fisher’s presentation at the CEO Summit in a video shared to Twitter.

Chalekian recalls Fisher making comments about genitalia, picking up girls (girls, not women), taking acid and even Jeffrey Epstein.

In her op-ed appearing in Fortune magazine, Ellevest CEO Sallie Krawcheck 8

Why Now?

InsuranceNewsNet Magazine » December 2019

at Solutions With Sonya.

Dreizler also attended the Tiburon CEO Summit and confirmed Chalekian’s account of Fisher’s presentation.

Dreizler has come forward as an advocate and ally, sharing the stories of others in the industry who have experienced harassment and misconduct first hand through a blog on her company website called “Do Better.”

“In the wake of the #MeToo movement, we’ve seen many articles about why there are so few women in financial services, as well as surveys and statistics about sexual harassment and discrimination,” Dreizler wrote. “While statistics and surveys are helpful for measuring the issue, I want to share real stories of sexual harassment and gender discrimination. I am at a point in my career where I can safely talk publicly about some of my own stories and I put a call out to see if other women wanted me to share their stories, anonymously, on their behalf.”

The Do Better series kicks off with an introduction to sexual harassment, discrimination and assault in the financial services industry.

“I have many personal experiences with sexual harassment, assault, and discrimination and almost every woman I know who has worked in financial services for an extended amount of time has her own set of stories. When women in finance meet for the first time, our stories of harassment often come out quickly, sharing notes on pay inequity, degrading experiences at conferences, and inappropriate touching from colleagues and bosses. We share these stories privately, and it’s a relief to be able to talk about it.

We don’t share these stories publicly because doing so would endanger our jobs, get us labeled as difficult, passed over for a promotion, fired or ‘asked to leave.’”

Conference Culture

Fisher’s comments brought to light why

FINANCIAL SERVICES’ LONG OVERDUE #METOO MOMENT INFRONT

Stat Bank

Women make up just 32.9% of financial advisors.

National Bureau of Economic Research

53% of women do not have

a financial advisor. Of those under 40, 75% of women do not have a financial advisor.

Center for Talent Innovation

67% of women feel

misunderstood by their financial advisor.

Center for Talent Innovation

Women control $11.2 trillion of wealth in the U.S.

Center for Talent Innovation

women across the industry have felt uneasy about attending conferences.

In fact, inappropriate comments toward women spurred one woman to start an organization dedicated to uplifting and empowering women in the world of finance.

Sheryl Brown is the founder and CEO of Females and Finance, an online group of women and their male allies in the financial industry numbering more than 2,000 members.

Among Females and Finances’ members are Chalekian and Dreizler. Brown, who founded the group after she experienced misogyny at an industry

conference, said that she was, “very proud” of her members for speaking out against inappropriate behavior.

Just a week after news broke about Fisher’s conduct at the Tiburon CEO Summit, the Financial Planning Association hosted its annual conference in Minneapolis. In the first general session of the event, FPA President Evelyn Zohlen made clear the FPA’s stance on harassment and inappropriate conduct at the conference. FPA leadership encouraged attendees to report misconduct of any kind to conference security.

The FPA proclaimed on Twitter, “We want everyone to have a safe and welcoming experience at the FPA annual conference.”

While no one associated with FPA leadership mentioned Fisher’s comments, Twitter praised the FPA for taking quick and immediate action to prevent any similar incidents from occurring at their conference.

Pay Gap

If having to tolerate unwanted advances and inappropriate comments wasn’t bad enough, women in the financial services

world are also getting the short end of the stick — the shortest of any industry, in fact.

According to the Bureau of Labor and Statistics, female financial advisors have the largest pay gap of any industry, making just 58.9% of the median weekly salary for male financial advisors (just $979 to men’s $1,662).

Experts believe this gap exists because careers in financial services tend to be more likely to penalize individuals who need flexible work hours to accommodate their families and children. This, in turn, disproportionately impacts women in the financial workforce.

Whether the response to Fisher’s comments will spark the dawn of a new era for women in the financial world is unknown. What is known is that women are saying it is time for finance to #DoBetter.

AdvisorNews.com Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback. com. Cassie has an extensive background in magazine writing, editing and design.

Follow her on Twitter @ANCassieM.

December 2019 » InsuranceNewsNet Magazine

9

INTERVIEW

How Amazon makes decisions, moves fast and dominates business — and you can, too.

10

InsuranceNewsNet Magazine Âť December 2019

An Interview with Publisher Paul Feldman

IF AMAZON WERE AN INSURANCE AGENT, IT WOULD DO THIS INTERVIEW

WWJD?

Of course, that stands for “What Would Jesus Do?” But JOHN ROSSMAN often gets asked, “What Would Jeff Do?”

Jeff Bezos, founder and CEO of Amazon “Jeff” would be Jeff Bezos of Amazon, where Rossman was a key manager during the organization’s critical growth years between 2002 and 2005. Many other companies with .com after their name had folded during the dot-com crash in 2000-01 and in the ensuing recession.

In 2002, Rossman was among the dotcom casualties in Seattle when he heard about an opportunity at Amazon, a company which was heralded as the future of online shopping. But Amazon was still largely associated with books and had just started getting into other segments in the early 2000s.

When Rossman started, the company had yet to show a profit and had laid off 1,300 workers the previous year. So, joining the company was not the sure bet for success that it is more than a decade later.

Amazon was not yet The Everything Store.

Pretty quickly, Rossman realized the company was always thinking far bigger and further into the future than most companies do. And it was doing that while still obsessing over the day-to-day details.

He was witnessing The Amazon Way. After a stint as director of merchant integration and then enterprise services, he left the company in 2005 and has been preaching the Tao of Jeff, speaking and writing about applying the company’s methods of success.

In 2014, Rossman wrote his first book, The Amazon Way: 14 Leadership Principles Behind The World's Most Disruptive Company. This year, he released his third book, Think Like Amazon:

50 1/2 Ideas To Become A Digital Leader.

But what does all this mean to you?

After all, you aren’t looking to sell thousands of products in massive quantities.

You provide individual service.

Rossman says Amazon’s method of long-term planning while remaining focused on the day-to-day business is a successful model that scales down to the smallest operations. Thinking of the customer first and then building the service to meet that customer’s needs simply makes sense.

In this interview with Publisher Paul Feldman, Rossman reveals how Amazon manages to dominate so many segments, and he also answers the question “What Would Jeff Do?” if Bezos were to get into insurance.

FELDMAN: What are some of the top principles you found behind Amazon’s success?

ROSSMAN: There are 14 leadership principles at Amazon. When I was there, they weren't codified; they weren't formalized. But we were using them, and trying to refine them every single day.

The willingness to debate, and not just a topic or an issue, but really get at our first principles: “Why are we thinking this? Why is this the right approach to take on it? How would it reflect on broader things?”

At that point, clearly, the customer obsession principle was very pronounced.

But we were really working through some of these other ideas. It was some time after I left Amazon that the principles became formalized.

This book, Think Like Amazon: 50 ½ Ways To Become A Digital Leader, those were all the mechanisms that we were using at Amazon — the techniques, the mindsets and the things we would do to get results. And after I left Amazon in late 2005 and started working with my clients, I started to see the impact of all these little tools.

FELDMAN: What can insurance agents and financial advisors learn from Amazon?

ROSSMAN: One of the things to learn from Amazon is just about being deliberate in how you work in the future.

Everybody is always looking in the present — today's deal, today's results, this quarter's action and things we have to get done.

But Amazon balances both “How do we deliver today?” plus being deliberate about how we work in the future. It's about your own personal skill development and the research you need to do.

It's always so easy to push off and not dedicate the deliberation and the time for developing yourself.

The other thing that goes along with that is being curious – learning about new topics, future trends, ideas that maybe you aren't naturally inclined to pick up on. But, being disciplined and careful about digging into these future trends.

And it’s learning enough so you can help translate them for your clients and your business when the opportunity arises.

FELDMAN: I saw an interview with Jeff Bezos recently where he was asked about some current problems that Amazon had. And he said something like, “I’m lucky, because I don't work much in the present. I get to work in the future.”

ROSSMAN: As the chairman and CEO of Amazon, he needs to be planning five, 10 years out. But again, it's the concept of being deliberate about, “What do I need to deliver this month, this quarter?” But also be deliberate about working in the future. So that's exactly the concept that I'm referencing here.

I talk to a lot of audiences and leadership teams, and I'll always ask, “Who here believes that innovation is critical for their company's success over the next five to 10 years?” Everybody will raise their hand.

Then I ask the question, “Who here has a deliberate process for how you invest and how you innovate for the future?”

Hardly anybody ever raises their hand.

So it's that recognition.

We all say that we need to innovate and invest in the future, yet not many

December 2019 » InsuranceNewsNet Magazine

11

INTERVIEW IF AMAZON WERE AN INSURANCE AGENT, IT WOULD DO THIS

Amazon’s 14 Leadership Principles CUSTOMER OBSESSION

Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.

OWNERSHIP

Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job."

INVENT AND SIMPLIFY

Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here."

As we do new things, we accept that we may be misunderstood for long periods of time.

ARE RIGHT, A LOT

Leaders are right a lot. They have strong judgment and good instincts.

They seek diverse perspectives and work to disconfirm their beliefs.

LEARN AND BE CURIOUS

Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.

HIRE AND DEVELOP THE BEST

Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others. We work on behalf of our people to invent mechanisms for development like Career Choice.

INSIST ON THE HIGHEST STANDARDS

Leaders have relentlessly high standards — many people may think these standards are unreasonably high. Leaders are continually raising the bar and drive their teams to deliver high quality products, services, and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.

THINK BIG

Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.

BIAS FOR ACTION

Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.

FRUGALITY

Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing headcount, budget size, or fixed expense.

EARN TRUST

Leaders listen attentively, speak candidly, and treat others respectfully.

They are vocally self-critical, even when doing so is awkward or embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.

DIVE DEEP

Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdote differ. No task is beneath them.

HAVE BACKBONE; DISAGREE AND COMMIT

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

DELIVER RESULTS

Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.

12

InsuranceNewsNet Magazine » December 2019

organizations and leaders are actually willing to do the hard, systematic work. It’s working in the future in order to create that approach and that process we'll deliver as innovation.

We all think, “Oh, we're going to get lucky, and a great idea or opportunity will come to us.” Well, maybe that will happen, maybe it won't. But you certainly are letting others determine your fate.

FELDMAN: I’ve heard some signs of fear from insurance companies, as well as agents, that they're going to be “Amazonized,” and that Amazon or some big player is going to take over the insurance business. What are some things that we can do as an industry to thwart that?

ROSSMAN: The best way to do it is to deeply understand who your customer is. And, understand the full experience, much broader than just your product, or just your service. And truly understand, “What is my client’s real goal? What's a bad day like and how can I help make a bad day better?”

We all think of the customer experience being typically the discovery and buying moment. But the customer experience is actually much broader than just our product and service.

We always had this mindset at Amazon, and this is one of the chapters in the book, about Launch and Learn. Which is, if you see a customer need or opportunity that's adjacent to your core product or service, but you don't want to immediately tackle it, figure out a way to partner in order to do it. But then learn the business, learn the capability and figure out if there's an opportunity for you to expand into it.

So many of Amazon's businesses have started as something like, “We're going to partner with somebody else in this.” But then over time, Amazon figures out their approach, and they creep into the category.

One of the businesses I ran at Amazon was the relationship with Toys "R" Us back in 2002, 2003. And that was exactly the playbook we were running, which is we were learning the toy business with a partner. And then, over time, we decided we needed to actually be in the toy category. And I think that mindset of Launch and Learn is a valuable one if you truly want to serve customers in a broader way than you're serving them today.

FELDMAN: The customer experience is really important in our industry, yet we certainly lag behind Amazon from a customer service perspective. How do we improve the process?

ROSSMAN: One of the things that always strikes me is we tend to be motivated just for those things that we think are accretive to the business — the revenue creation moment when we sell the order, when we write the policy. Then we tend to kind of go slow, or be reluctant, on those things that actually improve the customer experience.

In the retail business, that manifests itself in the returns process.

Most companies are reluctant to create a great process for returning products. Amazon takes a much longer, different view, which is the customer experience includes returns. And they continue, in so many ways, big ways and small ways, to innovate the returns process.

So recently we saw an announcement from Amazon that they are partnering with Kohl's stores to allow you to return any Amazon order, and it doesn't even have to be in a box, to a Kohl's store. All you have to do is drop it off, and they'll manage the return from you.

And it's so counterintuitive. Why would we make it easier? Why would we spend so much time and attention on making the returns

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INTERVIEW IF AMAZON WERE AN INSURANCE AGENT, IT WOULD DO THIS process easier? It's because of the insight that if you play the long game, if customers trust that they can actually understand the product they're buying better, use it better, return it better, have a better experience, over time, they'll actually buy more from you.

Everybody else tries to make it a little tough to do returns. So I think about other businesses and what's the equivalent to the returns process? Can we differentiate ourselves in these areas that, on one hand, you might not really want to make it that much easier for the customer but you actually know that is the right thing from a customer's perspective?

And if we really want to differentiate our brand, and if we want to play the long game, we could innovate in those areas and make it easier. Even though on a short-term basis, you might ask, “Why are we making that better?”

Decisions.” Understanding that making good decisions and speed are important in an organization.

A one-way door decision is a decision that once you make it, it's nearly impossible to reverse. Two-way door decisions are decisions that you could make, test, and if it's not the right decision, come back from it without a significant amount of cost or loss. You actually learn something by making this type of decision.

What most people do is they tend to not think about decisions in terms of “Is this a one-way door or a two-way door?”

And if you think about how to make a two-way door decision, try to make the best decision you can but then quickly FELDMAN: You said your book can be test it to know whether it was the right boiled down to What Would Jeff Do decision. And then, learn and adjust from (WWJD)? Which is a great question. it. That's a faster, more learning mindset What Would Jeff Do if he was going to on how we make decisions. sell life insurance and financial products?

Most organizations tend to make most decisions one-way door decisions when, FELDMAN: You talk about resetting ROSSMAN: He would deeply understand actually, it could be a two-way door deyour clocks and that no journey is the bigger problem a customer is trying cision. You could break it down into a going to be a straight path. I don't to solve with insurance. And then he smaller decision. And you could more think enough people in any business, would think about, “How would I scale quickly test the decision to learn whether it's the right one or not.

Just having a framework for Start with the end in mind and write things out to a level recognizing that not all things, of clarity. And clarity is a combination of both simplicity of not all decisions, are the same type. And that you need to be thought plus completeness of thought. mindful of, “Well, what type of decision am I making?” And whether it's insurance industry or not, well beyond a typical approach to doing that speed and testing of those decisions really look at their five-year or 10- that? How would I make it frictionless? is a critical part of the innovation and agyear plan. How do you start creating How would I bring much greater price ile mindset. a long-term plan? transparency? How would I make every aspect of the customer experience when FELDMAN: So many people are afraid ROSSMAN: That's part of working in the the customer wants it, how they want it? to make mistakes. Is that a self-limitfuture. Amazon's innovation technique is And then how would I build tools that ing belief? called Start with the Customer and Work would work for me, but I could let other Backwards. And it really is about asking people use those tools, too?”

ROSSMAN: One of Amazon's leadership questions like, “Where do we want to be Those are basically the techniques that principles is leaders are right a lot. So this in five years?” And then working back- have led Amazon's expansion. Oh and I whole “fail fast” concept gets misused. wards from that. forgot one, which is, “How would I partner Really what you're talking about regardStart with the end in mind and write with people to help serve a customer, but ing fail fast is you need to learn fast. things out to a level of clarity. And clari- then learn that business and expand in that The vast majority of your decisions ty is a combination of both simplicity of business, too.” That is Launch and Learn. need to be the right decisions. By breaking thought plus completeness of thought. decisions down into smaller decisions, The discipline of writing things out FELDMAN: You talk in your book and then testing those and adjusting, that forces a degree of thoughtfulness and about how Amazon makes decisions will help you make faster and better deciclarity that you don't get when you just better and faster. How do smaller sions. So that you're not failing as much. make a PowerPoint slide or make yourself companies and entrepreneurs apply You're actually progressing much faster, some bullet points. that to their businesses? and you're succeeding a lot more.

It’s the discipline of writing things out Failure is highly overrated. It's really on any topic: “I've got a new project; I've ROSSMAN: This is “Idea 42: One-Way or about learning and progressing as fast as got a new plan; I want to think about Two-Way Doors Make Better and Faster possible.

14

where I want to be in five years.”

Then work backwards: “Well then, where do I need to be in a year? Where do I need to be in a month? What do I need to get done this week? What do I need to get done today?”

That's how big things get done. That's how something like writing a book gets done. I always start with, “Hey, here's a story I want to tell. Here's what I want the audience to get.”

Then I dial it backwards to: “OK, here are the chapters. How do I get Chapter 1 done? How do I get the first sentence started?” And over a year, I have a book that's done.

InsuranceNewsNet Magazine » December 2019

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What’s The Price Tag Of ‘Medicare For All’?

It’s one of the biggest questions to come out of the

Medicare for All discussion: How much will it cost? Here’s an answer from the Urban Institute and the Commonwealth Fund. Their joint study found that the price tag for a full-scale single-payer health insurance program would be about $32 trillion over 10 years.

The study found $32.01 trillion in new federal revenue would be required to pay for the plan. The two organizations did not examine any exact proposal from any particular Democratic presidential candidate. But the plan they studied is similar to the one proposed by Sen. Elizabeth Warren, D-Mass., and supported by Sen. Bernie Sanders, I-Vt. While you are recovering from that sticker shock, take note that the study also found a Medicare for All plan would eliminate premiums and deductibles for American households, resulting in savings of $886 billion over 10 years.

And the plan would reduce the number of uninsured Americans from 32.2 million to zero.

The study did not look at which taxes would have to be raised to pay for the plan or who would be taxed under the proposal.

US DEFICIT HITS $1T

The federal deficit has been rising every year for the past four years, and is expected to hit $1 trillion for the 2020 budget year and remain at that level for the next decade.

What’s behind this river of red ink?

Revenues are up, but spending is up even more. For 2019, revenues grew 4%. But spending jumped at twice that rate,

Federal Budget Surges The federal deficit for the 2019 budget year surged 26% from 2018 to $984.4 billion. $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 0 2016

2017

2018

2019

2020

2021

2022

SOURCE: FactCheck.org

reflecting a deal that President Donald Trump reached with Congress in early 2018 to boost spending on military and domestic programs.

It’s not the first time the deficit has reached the 10-figure mark. The 2008 economic downturn produced the economy's first round of trillion-dollar deficits under President Barack Obama in 2009. Deficits decreased each year afterward.

WHAT’S TO BLAME FOR SLUGGISH ECONOMY?

Saving money is supposed to be a good thing, right? One analyst said the rising saving rate in the U.S. is actually slowing down the economy.

Blame it on the millennials, said a Raymond James research note. That generation was spooked by the Great Recession and is saving more than the baby boomers did before them.

It’s causing an economic imbalance.

The current U.S. personal savings rate, defined as income minus spending, was 8.1% as of August, the St. Louis Federal Reserve reported. By comparison, in 1996 the rate was 5.7%.

Although saving money is a good thing

DID YOU

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?

16

InsuranceNewsNet Magazine » December 2019

QUOTABLE We made the mess, we need to fix it.

— Dr. Wayne Johnson, former chief operating officer of Federal Student Aid for the U.S. Department of Education

for individuals, a slowdown in spending hurts businesses and therefore the economy. Since the recession “supply increases have continued,” which combined with a higher savings rate has led to “excess supply seemingly everywhere in the economy,” said Raymond James analyst Tavis McCourt.

Savings Rates Creeping Upward

5.7% 1996

SOURCE: St. Louis Federal Reserve

A BAD YEAR FOR IPOS

8.1% 2019

This year will go down in history as the year when initial public offerings were the least profitable of any year since the tech bubble. Uber went public in May, and reported a $1.8 billion loss ahead of its public debut. Lyft posted a $900 million 2018 loss before its March IPO. Both stocks are down more than 25% since their IPO date. WeWork pulled its IPO after reporting more than $900 million in losses for the first six months of 2019.

These depressing IPOs have generated attention from Charles Schwab, who spoke out about investing in money-losing companies. Schwab told CNBC he would stay away from money-losing companies going public.

“I would never buy a company like that that has huge losses and no sight ahead of you [about] how you are going to make money,” Schwab said. “You want to buy companies that have great values. That means No. 1 they have to be growing in revenue and they have to be making money. Pretty simple formula and a lot of these companies just don’t make money yet.”

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COVER STORY

Between The End And The Beginning This year was either post-one thing or pre-another.

It was post-vacated Department of Labor fiduciary rule but pre-National Association of Insurance Commissioners new sales standard. It was post“repeal and replace” and pre-“Medicare for All.” And post-Securities and Exchange Commission Regulation Best Interest approval and pre-Reg BI compliance.

The worlds of life insurance, annuities,

health insurance and finance all seem midturn from one reality into another. We are starting to see the dim outlines of what that new world looks like in 2020.

In the following three articles, we’ll see: » New York has forged ahead with its tough Regulation 187, which not only tightens the standard for annuity selling, it also brings life insurance under the same standard. Will that new standard guide the direction for the NAIC’s new model rules?

» Medicare for All is the rallying cry of some of the leading Democratic hopefuls on the presidential campaign trail. But what does it really mean? And are all the candidates singing the same tune? » Reg BI has been an enigma stuffed into a euphemism sandwich since it was prepared by the SEC. Is it really a best interest standard? Does it really change anything? If you were thinking it won’t, think again.

New York Epicenter In Fiduciary/Suitability Clash

Annuity sellers face increased scrutiny with new best-interest regulations — starting in New York, where Regulation 187 took effect Aug. 1. Is it the standard for things to come?

By John Hilton It’s not unusual for Larry Holzberg to be called on to handle an annuity sale for an already completed financial plan.

He refers to Wealth Advisory Group’s role in those transactions as being “a glorified order taker.”

But now that Regulation 187 is the law in New York, Holzberg must think twice about these sales. The new rules raised the liability standard and went into effect Aug. 1 for annuity sales and will take effect Feb. 1, 2020, for life insurance sales.

“I’m not necessarily going to be made available for all the investment planning decisions that were done by the accountant or the advisor or the estate planning attorney,” Holzberg explained. “I have to 18

ask them for information to make sure that what they recommended, essentially, is suitable if I’m going to be the one who is making the product sale.”

Based in Manhattan with offices in the shadow of the Empire State Building, Wealth Advisory Group might even have to change its name once Reg 187 is fully in place. The rule bans use of the terms “financial advisor” or “financial planner,” including in the firm name, without clear licensing.

Wealth Advisory Group includes insurance agents as well as a broker-dealer.

Firm executives have asked state officials if they can keep their name and are awaiting an answer.

New York is the central battle location for the fiduciary forces and the suitability

InsuranceNewsNet Magazine » December 2019

corps. Debate between the two sides has coalesced around a best-interest standard as regulators continue to seek compromise rules.

Still, both sides are continually pushing to pull best-interest language in their favor. New York put a stake in the ground for fiduciary with its tough rules. Although the word “fiduciary” is not mentioned, the state Department of Financial Services toughened its standard through several features.

Here are three important ones: 1. The Language. “Only the interests of the consumer shall be considered in making the recommendation.” Thirteen words that are unambiguous on what the producer must do in any transaction.

BETWEEN THE END AND THE BEGINNING COVER STORY 2. Life Insurance. While virtually every other regulation under discussion or on the books focuses on annuity sales only, New York is covering life insurance sales as well.

3. In-Force Policies. New York sparked a significant debate among state regulators nationally by extending its rules to in-force policies. Industry officials are adamantly opposed to the extension.

Not So Fast

As 2019 ends, New York has rules on the books — all annuity sales were covered as of Aug. 1, 2019, and life insurance sales will be covered on Feb. 1. New York regulators are heavily influencing deliberations over an annuity sales model law in a National Association of Insurance Commissioners’ working group.

But some national regulators are pushing back on that influence. New York charged ahead too fast, Iowa Insurance Commissioner Doug Ommen said during an October conference in Boston.

Ommen is vice chair of the Annuity Suitability Working Group, and he produced the draft annuity sales rule the group finalized Nov. 5 and sent to its parent committee.

“By going early they don’t have the benefit of what we’ve learned through our process,” he said of what New York could have learned from the committee’s 18-month deliberations. “Maybe by the benefit of time, they’ll find a different approach.”

Ommen is the catalyst behind a best-interest proposal based on suitability principles of care, disclosure, conflict of interest and documentation. It strengthens existing standards, he said, but it does not include the three New York features listed above. Nor does it prevent an agent from recommending a product with a higher commission.

The existing suitability standard for annuity sales has worked well, Ommen said, but regulators have to be realistic about the direction the Securities and Exchange Commission and the Department of Labor are taking.

It is best to have rules that harmonize across states, products and producers as

much as possible, Ommen said. He called it “a risk issue” for insurers and their partners in distribution.

“It’s very important for companies to be able to have some consistency in distribution so that they’re not in a position where they’re facing litigation and they’re held to a best-interest standard for their securities distribution and they’re trying to explain to a jury why they don’t give similar treatment to their distribution through independent insurance agents,” Ommen said.

A Whole New World

Like the NAIC model, New York ’s Regulation 187 applies best-interest standards to suitability obligations. Supporters equate it with adding some teeth to sales principles that have served the annuity

sales scenario to explain just how diligent producers will have to be to avoid trouble under Reg 187.

In this scenario, a producer has two life insurance products and they are identical from the consumer’s perspective: no differences in the benefits, the charges, the favorable and unfavorable features. Both are suitable and the consumer considers them equal products.

“But from the producer’s perspective, the products are not identical,” Currin said. “Perhaps the compensation differs in some way between the two. Maybe it’s the actual dollar amount that’s paid to the producer. But it could also be something like the method of payment or the speed of payment, or something that just is a smoother process from the producer’s perspective.”

“There at least was already a general understanding of what suitability means on the annuity side and of what a good process looks like...” market well for several years.

But those principles have not been a part of the life insurance sales process, and that has some concerned.

“There at least was already a general understanding of what suitability means on the annuity side and of what a good process looks like, and that gave them a considerable head start when it came to applying this regulation,” said Cailie Currin, CEO of Currin Compliance Services, speaking during a recent LIMRA webinar.

Phillip Held is licensed to sell insurance product and securities and is affiliated with the MassMutual Financial Group. He acknowledged apprehension about life insurance sales under Reg 187.

“What does the suitability process look like?” asked Held, of McDermid Financial Group in Buffalo. “Will it be so cumbersome that clients will get frustrated with the length and intrusiveness of the process and would ultimately decide not purchase the insurance that is meant to protect their families?”

Currin introduced a very common

If the producer considers any of these compensation factors in his or her recommendation to the consumer, they fail to meet their obligation to act in the best interest of the consumer.

The Great Unknown

As 2020 dawns, producers are still in the dark on what to expect. The NAIC Life Insurance and Annuities Committee is expected to discuss its annuity transaction model during their fall meeting Dec. 7-10 in Austin, Texas.

Some big issues remain unresolved with the model, such as whether it will apply to in-force policies.

Even in New York, with a final rule on the books, producers are skittish.

“The biggest unknown is almost this feeling of guilty until proven innocent,” Holzberg said. “We’re not sure what they’re going to look at, and what’s appropriate and still suitable is in the eye of the beholder. So there’s a fear of how to do business.”

Even clarification, via a set of FAQs issued by the Department of Financial Services, is

December 2019 » InsuranceNewsNet Magazine

19

COVER STORY BETWEEN THE END AND THE BEGINNING only partially reassuring. The DFS has said that producer sales volume and production is not an issue, Holzberg noted.

“I said to them, ‘You guys may understand what you’re writing, but the next regulator may have a different take,’” he said.

“The other part that’s dangerous is the in-force responsibilities,” Holzberg explained. “Everybody knows the retention rate in our industry is really bad, so it’s very common for people to not be here.

Do I want to take over what we used to

Turn to page 28 to check out the 2019 Movers & Shakers

call an ‘orphaned account,’ especially if it comes with increased liabilities?”

Penn Mutual Life Insurance suspended all new annuity sales in New York after Aug. 30 and will terminate life insurance product sales there after Dec. 31.

Holzberg fears it is just the beginning.

The rules might evolve, but for now, he is warning all producers he works with to be vigilant.

“One of the things I will be going over with my producers is anytime you’re looking at doing an annuity replacement,

you better dot every I and cross every T,” he said. “And make sure it’s not only suitable but without doubt.”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback. com. Follow him on Twitter @INNJohnH.

‘Medicare For All’ Edges Out ‘Repeal And Replace’

By Susan Rupe

In the health insurance world, 2019 will be remembered as the year when the Affordable Care Act was eclipsed by rising out-of-pocket costs, surprise billing, high prescription drug prices and single-payer health care.

This is the year when “repeal and replace” gave way to “Medicare for All” as a rallying cry in Washington.

Looking back on 2019, health insurance news came on two fronts: legislative and executive order.

House Passed Cadillac Tax Repeal

Congress hasn’t agreed on many things this year, but the House of Representatives voted overwhelmingly, 491-6, to repeal the ACA provision known as the “Cadillac” tax on high-cost employer insurance plans. However, as of press time, the Senate had yet to act on the measure.

Without Senate passage, the tax is set to take effect in 2022.

House passage of the Cadillac tax repeal “was a really big victory for us,” said Marcy Buckner, vice president of government affairs for the National Association of Health Underwriters.

A number of other health-related issues came before Congress in 2019 but have not been acted on. Despite that inactivity, Buckner said she considers it a legislative success that these issues have attracted Congressional attention this year.

20

Buckner

Buckner said two of the biggest health-related issues that at least got in front of Congress included surprise medical billing and prescription drug prices. Senators from both sides of the aisle

Warren

Trump

sponsored a bill that would delay implementation of the ACA’s health insurance tax — or HIT tax — once again, this time until 2021, although Congress has not yet acted on the HIT tax delay this year.

The Two Branches Of Health Care Change In 2019 Legislative Actions:

Executive Orders:

Cadillac tax repeal: Passed by House, awaits Senate action.

Expanded the Medicare Advantage program.

HIT tax repeal: Introduced in the Senate, no further action taken.

Improved health care price transparency.

End surprise billing: Introduced in Senate, no action taken as of press time.

Prescription drug price relief: Introduced in Senate, no action taken as of press time.

InsuranceNewsNet Magazine » December 2019

Expanded the availability of health savings accounts.

Expanded the use of health reimbursement accounts.

Permitted association health plans.

COST CUTTERS COVER STORY

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December 2019 » InsuranceNewsNet Magazine

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COVER STORY BETWEEN THE END AND THE BEGINNING

The Long Arm Of Executive Orders

In contrast to the lack of activity from Congress, the executive arm of government was busy in the health care world this year. President Donald Trump issued a number of executive orders that will be followed by rulemaking on the regulatory side. Here are some highlights: »A llowed small businesses to purchase lower-cost association health plans that do not meet the requirements of the ACA for their workers.

Turn to page 28 to check out the 2019 Movers & Shakers

»E xpanded the availability of health reimbursement accounts for workers to purchase their own coverage.

» I m p r o v e d h e a l t h c a r e p r i c e transparency.

» Expanded the availability of health savings accounts to be used with high-deductible health plans. »E xpanded the Medicare Advantage program to encourage new benefits and plan designs.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ i n n f e e d b a c k . co m .

Follow her on Twitter @INNsusan.

Where Does Everyone Stand On Medicare For All?

“Medicare for All” may be a rallying cry among Democrats running for president in 2020, but not all of the presidential hopefuls are in favor of a federally operated single-payer health care system. Here is a rundown of which candidates want to implement single-payer and which candidates want to expand on the current health insurance system.

Medicare For All — All The Way

• Bernie Sanders: Proposes the most far-reaching Medicare for All plan, with the government paying for everything from primary care, dental care, long-term care and abortion. Would eliminate private health insurance.

• Elizabeth Warren: Her Medicare for All plan would also get rid of private health insurance, in favor of a government-run single-payer system. Long-term care would not be covered under her plan. But she favors having the federal government manufacture (or contract a private entity to manufacture) generic drugs in the event of price hikes.

• Andrew Yang: Also favors Medicare for All.

Medicare For All — Or Medicare For Some

Some candidates support Medicare for All but are taking a more moderate view, favoring: an optional Medicare buy-in nationwide; establishing a government-run public option to compete with private insurers; allowing states to open Medicaid to all residents; and strengthening the Affordable Care Act. Candidates in this camp include: • Cory Booker • Julian Castro

Expand Coverage Without Medicare For All

Another group of candidates wants to see more Americans obtain health coverage without moving the nation to a single-payer system by expanding ACA subsidies, finding alternate solutions for those who are burdened by high health care costs, and by making a public option available for those who want it.

Candidates in this group include: • Michael Bennet

• Kamala Harris

• Joe Biden

• Amy Klobuchar

• Steve Bullock

• Joe Sestak

• Pete Buttigieg

• Tom Steyer

• John Delaney

• Tulsi Gabbard

Bullock

• Wayne Messam

Booker

• Marianne Williamson Biden Bennet Harris

Gabbard Williamson Sanders

Yang

Messam

Buttigieg

Castro Sestak

Steyer

Warren Delaney

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InsuranceNewsNet Magazine » December 2019

Klobuchar

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COVER STORY BETWEEN THE END AND THE BEGINNING

Turn to page 28 to check out the 2019 Movers & Shakers

Are You And Your Firm Reg BI Ready?

By Cassie Miller

Many questions still remain on how sellers will comply with the Securities and Exchange Commission’s Regulation Best Interest even though the rule was enacted earlier this year.

Advisors and their distributors have time before the June 30, 2020, compliance deadline, but it is clear that some significant changes are on the way next year.

Larry Rybka, president and CEO of independent broker-dealer Valmark, said B-Ds can and should expect a lot of emphasis on incentives from the SEC.

“Some practices that will need to change on day one include: Incentives, trips, bonuses and payouts based on specific products,” Rybka said. “This is right in the middle of the bullseye, and firms should expect this on their first SEC audit.”

With commissions under scrutiny, Rybka said that firms are also moving away from the commission sales model and into the fee-based space.

For advisors with a CFP designation, sit down, prop up your feet and relax because you’re ahead of the curve.

How To Reg BI DO:

Rybka

Clayton

1. Disclose, Disclose, Disclose. Form CRS goes a long way to provide pertinent information to investors about the nature of the relationship they can expect to have with you, but transparency starts and ends with you. Disclose in writing, electronically and in-person the nature of your relationship with the investor, expectations and conflicts of interest. If there are additional matters that could require further clarification in the future, address it now.

2. Train and prepare for Reg BI’s implementation. The more prepared your business is to operate in a Reg BI-compliant world, the fewer hiccups there will be along the way.

SEC Chairman Jay Clayton said during his opening remarks of the Reg BI vote that the commission would work to establish committees to assist firms with implementation of the adopted rules.So far, the SEC has rolled out a Main Street investor education campaign, aimed at helping investors understand the difference between broker-dealers and investment advisors.

3. Understand your title, licenses and the duties therein. It sounds self-explanatory, but it’s worth evaluating your own role and the licenses you carry and the obligations that come with those roles under the new rule. While the SEC did drop its planned restriction of the title adviser/advisor, certain rules and exemptions apply to those with certain titles, i.e. dual-registrants. Under Reg BI, dual-registrants are only subject to the fiduciary rule in the Investment Adviser Act when acting as an advisor.

4. Be familiar with state best-interest standards. Many states have already taken steps to introduce or have already enacted best-interest standards at the state level. Make sure you and your firm complies with both. This means reading the legislation and understanding what it means for your day-to-day conduct is crucial.

DON’T: 1. Attempt to waive or bypass compliance with Reg BI. Your compliance with the new rule cannot be waived, nor can an investor agree to waive their protections under Reg BI. 2. Expect Reg BI to be thrown out. While the best interest standard is already facing some legal challenges, including preemption with state-enacted laws, don’t anticipate the rule’s downfall prematurely. Odds are, another rule would likely fill its place and it won’t keep you or your firm from having to be compliant with the standards contained in the rule.

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InsuranceNewsNet Magazine » December 2019

The CFP Board, the governing body of the CFP designation, recently updated their Code of Ethics to include enforceable standards regarding fiduciary duty.

The new Code of Ethics went into effect on Oct. 1, but the board delayed enforcement of the new standards until June 2020 to coincide with the compliance date for Reg BI. Those standards not only comply with Reg BI, but supporters of the updates claim they go even further.

The newly minted Reg BI left the industry with a lot of unanswered questions about rule specifics and different scenarios, but as the rule rolls out, Rybka believes many of those unanswered questions will be worked out. These are just a few of the questions Rybka has heard from his peers in the industry: »W ill the disclosure requirements extend to advisors who were recruited to a new firm and offered up front money to sell certain products? Rybka offers, “I would think yes, but this would be a big change for the wirehouse business model.” »H ow would BI play out for firms that sell only illiquid private placements and do not offer a full range of products? »D o these Best Interest requirements extend to general account life and annuity products if they are offered though the B/D? “At an industry conference, many of our peer firms were moving this way,” Rybka said, “just because of optics and disclosure, not because it is required.”

While the industry waits for Reg BI’s rollout to answer some of these lingering questions, firms and professionals that still have questions that require immediate answers or need more clarification can visit finra.org for a complete checklist of Reg BI and Form CRS compliance requirements.

AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@ Adnewsfeedback.com.

Cassie has an extensive background in magazine writing, editing and design.

Follow her on Twitter @ANCassieM.

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InsuranceNewsNet Magazine » December 2019

IMO of the Year: Innovative Financial Group with Josh Benson, Tyler Rees and Ryan Strathmeyer of Innovative Financial Group PAGE 34 Distributors, Marketing Organizations and Financial Institutions Gain an Edge

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2019 Movers & Shakers • Broker/Dealer • Special Sponsored Section

Center Street Securities: Built by advisors, for advisors

W

ith all the options financial advisors have in the market, one firm stands out for their advisor-focused philosophy. In this conversation, JR Thacker, president of Center Street Securities, discusses why working with his firm offers a whole new way of doing business for financial advisors and their clients.

What are the challenges facing advisors in the current climate?

As an advisor who still meets with clients, I’ve got a fairly good handle JR Thacker on what we all deal with as reps. I would say the top challenge advisors always face is getting their message in front of new prospects — whom they can hopefully convert to new clients.

While robo-advisors, fee compression and other topics like that grab headlines, successful advisors understand that we are in the people business. We earn our clients the old-fashioned way: sitting down with them for a face-to-face meeting.

How does the Center Street philosophy differ from other firms’ philosophies?

We are the only firm I know of that was designed and built with the advisor in mind. We have what I call a “rep-centric” culture. We recognize that our customers are registered reps and advisors.

Because there are many firms to choose from, we set our standards high and focus on delivering what advisors need to best serve their clients. Advisors who work with us can deliver a level of service unlike any other brokerage firm, B-D or RIA out in the market.

With everyone having access to similar financial products, why should an advisor write their business with Center Street?

Mutual funds, ETFs and other products are carried by everyone.

Center Street sets itself apart with the types of products that aren’t available from other firms. We can recommend tax advantaged investments, specific tax strategies for private debt, and private equity offerings. These products can deliver strong returns for our clients, though they tend to be too small for wirehouses or big banks to pursue.

What really sets us apart is our philosophy on investing, which embraces a modified endowment model for individuals.

This approach comes from talking with my clients who were nearing or already in retirement. They wanted their money to grow at a steady rate and didn’t want big losses. In short, they wanted stability and predictability.

Then it occurred to me: Those are the exact same goals that pension funds, university endowments and large trust funds have for their money. They all want the money to grow

and generate steady streams of income. So we have taken the endowment model of investing and brought it down to where the typical client — who might only have $400,000 to $800,000 — can benefit from the same products and strategies that were once available only to institutions or ultra-high-networth individuals.

How do advisors benefit from the endowment model approach?

It’s really a twofold benefit. First, the advisor doesn’t have to stare at a computer screen trying to figure out what to buy and sell every day. Instead, they can better serve client needs and free up time for prospecting.

Second, no matter what happens in the market, if a client’s expectations are met and they aren’t worried about their portfolio, then client retention goes through the roof. By design, the endowment model tends to create more worry-free portfolios for clients and far fewer headaches for advisors.

Who are the types of advisors who can benefit from this approach?

The advisor who works with us usually has clients who are preretirement or in retirement. Their goals line up with the modified endowment model, which seeks stable returns and predictability.

We’ve had great success with a broad range of advisors, many of whom have advised primarily on insurance and annuities.

When they see how well the endowment model integrates annuities into a client’s overall portfolio, their practice begins to grow.

Some advisors have doubled, tripled and quadrupled their income within two years of starting with us.

How can an agent or advisor learn more about Center Street?

Advisors can learn more about us and receive a free copy of our report Remove the Emotion From Investing and Recession-Proof Your Client’s Portfolio at www.CenterStreetAdvisor.com.

December 2019 » InsuranceNewsNet Magazine

717.441.9357

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2019 Movers & Shakers • Product of the Year • Special Sponsored Section

Are your clients leaving gains on the table?

Learn about New York Life’s solution to protect the downside while maximizing your client’s upside potential.

When it comes to saving FIA with 4% FIAcap with 4% cap FIA with 6.5% FIA with cap 6.5% cap for retirement, it can be a challenge balancing growth and protection with risks and fees, yet there are solutions that address these considerations. A variable annuity with a guaranteed minimum accumulation benefit rider may provide more growth than fixed indexed annuities (FIA) Dylan Huang, SVP and without sacrificing downside Head of Retail Annuities protection, according to independent research conducted by Cannex on behalf of New York Life. In fact, “We focused on comparisons that included a principal the study showed that when the variable annuity (VA) guarantee. This is an important value proposition for those with guaranteed minimum accumulation benefit (GMAB) that are interested in accumulation rather than income, yet outperformed the FIA, the average performance was at least who want the security of knowing that they will end up with at 25% greater than the FIA’s in the same scenario. least as much as they started with,” said Tamiko Toland, head Because FIAs and VAs are fundamentally different of annuity research, Cannex. products, the research looked at certain characteristics that “Whe you break it down to how frequently the one contract allowed comparison through the same lens. Its conclusions exceeded the performance of the other, and then look at how can be helpful in determining the appropriate solutions for much of a difference there was when one outperformed the your clients. other, it’s very telling,” said Toland. “The GMAB on average “The Cannex study is important because it demonstrates outperformed the FIA rate cap. In the case where the VA did that you can have your cake and eat it too. That special blend outperform it, it outperformed by a very large percentage.” of uncapped growth potential — with the comfort of a safety The study incorporated a Monte Carlo analysis, which net — can only be found with a VA with GMAB,” said Dylan considers market history, considerations of future interest Huang, senior vice president and head of retail annuities, rates, predicted market volatility, and other factors to New York Life. simulate 10,000 iterations of the market.

“It’s the exact same sequences used in both products, and then you’re able to compare and see what happens based Comparing the performance of a VA upon the observed contract conditions for each of those with GMAB rider to an FIA products,” said Toland.

The March 2019 study, “Comparing the Performance of Annuities With Principal Guarantees: Accumulation Benefit on a VA Versus FIA,” evaluated principal guarantee and Are your clients leaving gains on the table? growth potential by comparing the New York Life Premier VA When investors are seeking a financial product for growth II with the Investment Preservation Rider 3.0 against two FIA and protection of their retirement savings, there are two strategies, one using a rate cap (an upper limit on the return) important points from the study to consider: and the other using a participation rate (the percentage of the index’s return that the insurance company credits). You can 1) The VA with GMAB is likely to have a higher upside find the complete study at https://tinyurl.com/yxdhklc2. than FIA strategies that use a rate cap. To exceed the

85% 85%

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InsuranceNewsNet Magazine » December 2019

76% 76%

2019 Movers & Shakers • Product of the Year • Special Sponsored Section

Hypothetical Example:

($) Annual returns

Amount earned with cap

Amount left on the table

30000 25000 20000 15000 10000 5000

10.4K

5.5K

2009

2010

7.2K

24.2K

9.7K

2012

2013 2014 Year

8.4K

24.5K

2016

2017

0

2011

2015

performance of a VA with GMAB on average, an FIA strategy using a rate cap must have a cap greater than 8.25%.

2) To exceed the performance of a VA with GMAB on average, an FIA with a participation rate strategy must have a participation rate of at least 42.3%.

New York Life supports advisor-client relationships with research and education

New York Life is the No. 1 provider of variable annuities with accumulation benefit riders, and it supports balance and independent research that helps advisors and consumers evaluate different solutions to best suit their needs.

“We’ve observed that investors who experienced losses in 2008 or were burned by the double bubbles of the tech and mortgage crises have a fundamental disconnect between their risk tolerance and risk need. They miss out on potential market gains and don’t get the growth they need to adequately fund their retirements because they fear losing their hard-earned nest eggs,” said Huang. “A VA with GMAB may be the right solution to get your clients invested but in a protected way.”

2018

“The key stat from this study is the 8.25% cap that an FIA must have to break even with a VA with GMAB. You just don’t see that in the marketplace,” said Huang.

mission as a mutual company and our aim to design products that are as simple, transparent, and flexible as possible so that they can efficiently meet the various needs of our customers.”

The tradition of consumer-first innovation continues with New York Life’s new variable annuity product: the Premier Variable Annuity−FP Series (Premier). It offers an optional GMAB rider that provides principal protection with up to 70% equity exposure.1 Plus, Premier offers a patented, level M&E fee option that is based on premium — the fee doesn’t go up, even if the account value grows.2

Many investors want to make money in the market without fear of losing it.

A New York Life variable annuity may be able to help. Learn more by visiting go.newyorklife.com/gains.

Data-driven analysis shapes New York Life products

“We take a consumer-centric approach to product development,” said Huang. “This perspective aligns with our 1. Principal protection is provided by an optional accumulation benefit rider called the Investment Preservation Rider-FP Series (IPR), which can be purchased for an additional fee. It guarantees all premium payments from a loss that are made in the first policy year (less any proportional withdrawals) after the completion of a holding period. The IPR does not protect the owner’s investment from day-to-day market fluctuations, or against losses that could be realized prior to completion of the holding period. The IPR is subject to certain allocation restrictions, so not all investment divisions offered under the VA may be available for allocation. With the IPR, the investment option choices include a variety of asset classes and styles. Among the investment options available with the IPR, the maximum target allocation to equity is 70%, so investors may not experience the full risk or return potential of the market.

2. Please note that in a flat or down market, a traditional fee structure, which is based on the account value, may be more advantageous. New York Life Variable Annuity-FP Series offers the option of a level mortality and expense (M&E) fee structure, where M&E charges are based on the amount invested (premium payments) and not on the account value of the policy. In an up market, the level fee structure may work to your client’s advantage, as more money stays in the account and potentially continues to grow. However, in a flat or down market, a traditional fee structure may be more advantageous. During the initial surrender-charge period of seven years, the level M&E fee structure costs 1.30% based on adjusted premium payments; the traditional fee structure costs 1.20% based on the variable account value. After completion of the initial surrender-charge period, the level M&E fee structure costs 1.10% based on adjusted premium payments; the traditional fee structure costs 1.00% based on the variable account value. Guarantees are based on the claims‐paying ability of New York Life Insurance and Annuity Corporation.

December 2019 » InsuranceNewsNet Magazine

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2019 Movers & Shakers • Financial Services Firm • Special Sponsored Section

Working Together for Everyone’s Best Interests:

How a Company Built by and for Independent Advisors Is Driving Change in the Financial Services Industry

A

commitment to innovation and collaboration is at the core of Lion Street’s foundation. Since the company’s inception nearly a decade ago, the vision was to create a contemporary platform for its elite life insurance, business insurance and wealth management advisors and help them provide the best solutions for their clients.

Back in 2010, the industry was just emerging from the financial crisis. The carrier and product landscapes were in flux, and many companies had left the life space, radically changing product prices or completely pivoting to new products with less capital strain. Lion Street’s independent producers were spending an excessive amount of time on what should have been simple tasks — quoting, application fulfillment and policy management — that were made more complex by varied processes across the carrier landscape, combined with having had no real technology advancements in quite some time, at least not for the high net worth clients that Lion Street advisors were working with.

Lion Street saw the need for change and set out to bring carriers, tech partners and distribution together to align product and innovations with everyone’s best interests.

Lion Street’s latest innovation is a collaborative application fulfillment platform

Scott Weber, vice president of practice management and technology, who has been with Lion Street since the beginning, states, “To date, carriers have focused much of their technology on higher-volume, lower-face-value transactions to reduce overall processing costs associated with each policy. Unfortunately, this leaves valuable high net worth clients looking at benchmarked quotes, disparate manual processes and paper applications. If carriers want to increase their market share of high-value transactions associated with larger-face, fully underwritten, complex sales of permanent life insurance products, they must provide producers with a better transaction and client experience — Lion Street is helping make that possible.”

Enter Multi-Carrier e-App, powered by Porch Software, which creates a single digital experience across multiple carriers that is designed to support the complex sale of fully underwritten, permanent life insurance products.

In a seamless collaborative effort from the carrier all the way to the policyholder, the e-App platform is designed to allow the advisor and client to work together in completing an application remotely. And it goes beyond being easy to use and understand; e-App was designed with the life insurance producers’ and their busy clients’ schedules in mind, supporting mobile interactions on phones and tablets.

The entire experience integrates full carrier applications and product illustrations along with applicant medical and

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InsuranceNewsNet Magazine » December 2019

financial records — all the critical components of a complex, high-face life insurance application package. And it accepts e-signatures, making the policy placement and issuing all the faster.

This game-changing solution, now available to Lion Street’s advisors, stems from “Lion Street honoring its commitment to innovation and gathering its key carrier partners, advisors and technology providers at the table, and the willingness, vision and support of leading life insurance carriers to see it to fruition,” adds Weber.

And this wasn’t the first time Lion Street delivered on its promise to find groundbreaking solutions for its advisors

Lion Street has tailored several technology solutions that were built for the mass market and has reshaped them for the specialized work of the advanced, high net worth advisor.

“Serving the demands of the high net worth family office market is much easier and rewarding when you have like-minded colleagues willing to share ideas and resources. Ownership in Lion Street enables producers to grow, share and control what is important to them.”

— Rod Sager, Lion Street Owner, IPS Advisors | Hub International

“Broad acceptance of our fully electronic application solution has proven independent advisors are ready for a contemporary solution. The Penn Mutual Life Insurance Company is pleased to collaborate with Porch Software and Lion Street to continue to advance the industry with new electronic application technology to better serve advisor-directed life insurance sales.”

— David O’Malley, President and Chief Operating Officer, The Penn Mutual Life Insurance Company.

2019 Movers & Shakers • Financial Services Firm • Special Sponsored Section

Back in 2012, Lion Street saw the opportunity to deliver something the market lacked but its elite producers wished they had. With the launch of Tracker, a multicarrier, single-entry product comparison, quoting and illustrations tool, the work of creating side-by side illustrations from many different carriers was shortened from hours or even days down to minutes. It was a software advancement that rapidly gained acceptance and eventually paved the way in the industry for a new class of solutions to handle simultaneous quotes and product comparisons across multiple carriers.

Next, in 2015, Lion Street introduced a multicarrier, inforce policy monitoring and management technology solution from Proformex. Again, driven by Lion Street, leading carriers are providing in-force policy data, which enables advisors to meet best-interest standards and fiduciary duties for in-force policy management.

“The thing our advisors consistently asked us for was solutions that focused on the unique needs of the specialized high net worth clients they work with. Lion Street is helping lead the way to bring multicarrier digital solutions to bear for our independent advisors in the affluent market,” states Weber.

Innovation and collaboration are inherent in the Lion Street culture

Lion Street was designed from the ground up to create an alignment of interests by making it an advisor-owned distribution company. This ensures that not only is every advisor

“We have continuously evolved and expanded our distribution strategy throughout our 150 years. We see the strategic importance of collaborating with an independent producer group like Lion Street to deliver an innovative, electronic application platform to serve this key market and our distribution partners.”

— Dawn Trautman, Executive Vice President, Life Insurance Division, Pacific Life Insurance Company

“The Porch multi-carrier platform is a modern way for advisors and clients to digitally complete and submit life insurance applications. Lion Street immediately recognized the value of a platform that brings leading life carrier applications into one digital experience that accelerates application submission time.”

“Lion Street supports the independent advisor and their valued clients through our commitment to innovation. By making it easy to engage and interact with multiple carriers, we help make it simple and efficient for advisors to maintain objectivity in carrier and product selection and provide their clients the concierge service they expect.”

— Bob Carter, CEO and Founder, Lion Street

a stakeholder in the company’s success, but also all are motivated to assist and support each other.

And it is a culture that values taking a holistic view, allowing Lion Street’s advisors to serve the broad needs of their sophisticated clients. Lion Street advisors deliver the most objective, creative and appropriate solutions for their clients because they can draw on the resources, leverage and expertise of the Lion Street community, referred to as the “Firm Behind the Firm.”

Proof that this approach is working is in what Lion Street has accomplished in less than a decade — creating a national footprint of nearly 200 independent firms, over $10 billion of insurance placed, 35%+ year-over-year growth in revenue and over 40% growth in assets under management.

And just this year, the firm was able to return $16 million in dividends and stock repurchases to its advisor-owners.

With Lion Street’s addition of the technology innovations to its advisors’ arsenals, the firm’s share of the high net worth and corporate spaces is projected to grow. A large contributor to Lion Street’s ensured future success is the architecture laid out when the firm was founded — a commitment to innovation and bringing people and ideas together for a shared purpose with a shared vision.

For more information regarding Lion Street’s groundbreaking platform, visit www.LionStreetInnovation.com.

— Grant Rowan, CEO and Founder of Porch Software

December 2019 » InsuranceNewsNet Magazine

33

2019 Movers & Shakers • IMO of the Year • Special Sponsored Section

IMO of the Year: Innovative Financial Group; Wilmington, North Carolina IFG’s millennial partners are disrupting the future of insurance with old-fashioned values

I

n the five years since Innovative Financial Group’s (IFG) founding, its total volume has ballooned from $1 million to $200 million, with staff and agent retention of over 95%.

The firm’s three millennial owners/partners — Tyler Rees, Josh Benson and Ryan Strathmeyer — attribute their success to their strong friendship and a dedication to respect and integrity that permeates all aspects of its operations.

“We went to high school together in central Pennsylvania and worked at the same brokerage,” says Strathmeyer, also IFG’s COO. “We took different paths at some points working in the industry, but we all came together at IFG.” The partners say that the time they spent in the insurance industry early in their careers was time well spent. In addition to learning about products and sales, they also took away a deep understanding of the pain points faced by the average agent.

“Based on our experience, we wanted to ensure that we’re transparent from A to Z. For agents, that includes how we educate you and how we compensate you,” says Benson, IFG’s CEO. “We take that desire for openness all the way to the end client. We want our partners and our agents to know the products and everyone along the way to understand and feel good about the sale.”

The partners say that they extend that respect and integrity to their agency partners as well, working to help them grow by connecting them with interested agents.

“We tried to create a model that gave agents an option that was more open, honest. That’s probably the number one reason for our growth,” says Rees, IFG’s owner. “I know it sounds very simplistic, but when we’re honest, upfront and fair, people know what our expectations are of them and what we’re going to provide.”

Josh Benson, Tyler Rees, Ryan Strathmeyer 34

InsuranceNewsNet Magazine » December 2019

IFG’s owners also stress that negative commentary about other carriers or agencies doesn’t mesh with their business model, recruiting or culture.

“We never speak badly about other opportunities or businesses, and we pride ourselves on the culture of our organization. We choose whom we work with. We want to work with good people who want to do the right things, and we’re cautious about other motivations. IFG is looking for people who want to help people.”

Expanding products at the request of advisors

IFG started in the life insurance space and has expanded into all product lines, including Medicare, annuities, property and casualty, and worksite/group benefits.

“In the early days, we ran into quite a few people who wanted to come work with us, but they had to leave a portion of their business because we didn’t offer all the products,” says Strathmeyer. “It made sense to become a one-stop shop for clients and agents.”

“We’ve really tried to empower our agency partners and agencies to do what they want to do in the industry,” says Rees. “We work to enable our agents to paint their own picture. We provide them with the paintbrush and the tools, but they’re the ones who are painting the picture that meets clients’ needs.”

“We can package together a plan where they are getting everything in one spot so they can come to us and work exclusively with us, which makes it easier,” says Benson. “It puts the agent and the client in the best position possible, and that has been very powerful. It is certainly the reason why we have so much growth in all the different markets.”

2019 Movers & Shakers • IMO of the Year • Special Sponsored Section

Education and collaboration

“If we’re not learning, then we’re not growing,” says Strathmeyer, referring to both his insurance marketing organization (IMO) and its agents. “Education is actually probably one of our biggest points, and we’re in the process of revamping our entire university with Lightspeed right now. Our goal is to help agents work with us successfully.”

The IFG team finds that many of their most successful agents start out as superstars in just one product line, such as group benefits, and want to branch out but don’t have the experience or training to do so.

“We are really excited about transitioning our university to Lightspeed, a state-of-the-art training platform that can walk our people through how to sell every single product we offer and that connects them to marketing resources,” says Benson.

The IFG partners say that they’d rather be thought of as an educational resource rather than an agency or a brokerage, with a focus on providing their agents and agency partners with access to expert human resources, such as national sales trainers, as well as remote options like webinars and online tools.

Qualified leads

IFG prides itself on offering every type of lead source, including its exclusive relationships with multiple mail houses and telemarketing vendors and a strong connection to social media.

“IFG is superior to anyone else I know, with more diversification when it comes to leads,” says Rees. “We help get agents in front of qualified consumers but also connect qualified producers that could help grow an agency.”

“We have relationships with 20 different lead vendors. It’s necessary because what works in Pennsylvania, for example, might not work for an agent who lives in California,” says

“We truly value our business relationship with IFG. The passion and dedication they bring to their field partners is reflected in the quality of their business.

We believe they have found the “secret sauce” of combining technology with traditional core values that gives their agents and agencies the best resources and support to be successful while placing the proper emphasis on client, agent and carrier.

It has been impressive to see their growth and we look forward to a prosperous and ongoing alliance.”

Darren Sliva Senior Vice President The American-Amicable Group of Insurance Companies

Benson. “Being able to develop a lead program that works for your agency in whatever part of the country you’re in is part of our value proposition.”

A bright future ahead for a young IMO

IFG’s partners all feel that their youth and energy are an asset for their IMO and their staff, partners and agents.

“We are never complacent,” says Strathmeyer. “We’re always trying to be on the cutting edge, whether it’s software technologies, lead generation or some other aspect that ensures we’re providing our agents with the best ability to get in front of the most clients.”

“Millennials focus on freedom and flexibility, and that’s reflected in our business and how we work with agents and partners,” says Rees. “We show them a road that they can travel; they choose how fast they want to go, the terms, what the trip looks like. Everything they do and everything they’ve created is theirs; they own everything that they’re building.

I don’t own it. They’re just using my vehicle to help them get there; it’s their business.”

“We have some exciting changes and new products under development,” says Benson. “Next year is going to be a big year for us, and we can’t wait to share more information in the coming months.”

Learn more about IFG

IFG, one of the fastest-growing brokerages in financial services, is built on integrity, service, excellence and teamwork.

Watch a video about its innovative outlook and growing team at IMOoftheYear.com.

“Innovative Financial Group has been instrumental in Prosperity Life Group’s entry into the Final Expense market. They are a true BGA that puts their agent’s success above and beyond their own.

IFG is dedicated to making sure that every agent coming onboard is given the training and resources to ensure success. Congratulations to the entire team — we look forward to many years of a successful partnership.”

Jack V Heller SVP Sales and Marketing Prosperity Life

December 2019 » InsuranceNewsNet Magazine

35

2019 Movers & Shakers • Technology • Special Sponsored Section

Distributors, Marketing Organizations and Financial Institutions Gain an Edge by Outsourcing Repetitive, Costly Tasks to Employee Pooling 24-hour support cycle and fractional staffing keep costs low and service standards high

N

ashville-based Employee reducing cycle times and meeting serPooling® (EP) provides small vice standards. and midsized American com“Scalability is what EP customers panies with innovative busidepend on the most. We guarantee the ness processing solutions and responsibilities given to us, regardless systems that simplify workflow, boost proof the volume — whether appointment ductivity, and drive revenues. EP founder packages, case updates, commission reand CEO, Tom Gray, was driven to find ports — will be done accurately and on solutions for obstacles that were getting time,” says Gray. “The benefit is that cyin the way of sales. Gray tapped his own cle times from submitting applications to experiences as a BGA owner with the obgetting them issued and everyone paid jective of strengthening customer relationare reduced dramatically. ships and driving revenue.

“What makes EP stand out are the de“I experienced many administrative and partmental dedicated specialists whose Tom Gray, Founder and CEO time-consuming obstacles firsthand and expertise includes agent appointments, decided I was going to find solutions for my own BGA,” says new business application processing and case management, Gray. “I founded Employee Pooling with the right people and and commission support,” Gray adds. processes that could deliver tools and options that had been Managing costs through an innovative model previously unavailable. When other BGAs saw the power of EP’s model is differentiated because customers are this model, they wanted to participate, and EP grew to accomcharged only for the services they use. EP offers fractionmodate the demand. al shares, selling full-time equivalents (FTEs) in slices of “We’ve grown in eight years from one client to more than time and not whole units, so customers are invoiced only 130, serving carriers, distributors, marketing organizations for services delivered. and financial institutions with solutions for every department, “A distributor may process 200 applications one month and we have evolved to deliver complete process management and 300 the following month, and the variable cost is that systems in a straight-through processing manner,” says Gray. we bill you for 200 this month and 300 the next,” says Gray.

Outsourcing repetitive daily tasks “Distributors can easily budget the cost of our services with “As an industry, I think we just accepted the status quo of no surprises.” certain tasks being difficult or time-consuming and there “During peak times and periods of growth, and when we was nothing that could be done,” says Gray. “I felt like a have special projects, we really appreciate the scalability of better way was attainable.” our relationship with Employee Pooling,” says Rodney Culp, Built from Gray’s knowledge of the industry and vision president, Empower Brokerage Inc. “It eliminates that confor more effective, efficient operations, EP supports organicern of having to temporarily hire or shift seasoned employzations in streamlining processes, increasing productivity, ees to handle added workload.”

2010 Tom scouts India, meets Harpreet Singh and decides to leverage outsourcing of new business.

1990 to 2000 Tom Gray joins CNA Life and is national sales leader 1997-2000.

2000 to 2013 Tom co-founds Netstreet Brokerage, which includes CNA Regional Life Sales Offices.

36

InsuranceNewsNet Magazine » December 2019

July 2011 EP approaches AIN members to try this overnight phenomenon.

January to April 2011 Employee Pooling (EP) is formed. Tom hires Harpreet to process new business during U.S. evening hours.

2013 Tom sells Netstreet, focuses on taking EP to independent life brokerages and expands into policy servicing. EP grows to 27 employees in New Delhi.

2012 EP grows to nine employees and adds commission processing and licensing and contracting.

2019 Movers & Shakers • Technology • Special Sponsored Section

Leveraging technology and a global workforce, EP offers businesses proven methods to remove obstacles that get in the way of nurturing customer relationships and increasing sales. Its skilled teams, headquartered in New Delhi, India, comfort customers with impeccable verbal and written American English.

“Even for our low-cost, hourly rate, you also have a connection with a product specialist in the U.S. So, you’re getting all of that for what I consider to be the price of an intern,” says Gray.

EP’s 170-employee New Delhi team can perform functions needed during normal U.S. business hours, such as running illustrations and creating spreadsheets, as well as after-hours tasks such as application processing — which means case managers can start their day with a to-do list that truly focuses on their skill set.

“We visited Employee Pooling’s office in New Delhi and spent a significant amount of time with the people that support us,” says Culp. “They have an exceptional culture that’s positive and energetic. The hardworking staff stays current in their knowledge so they can continue to provide great service with all the changes we face in the industry.”

“Our office in New Delhi is 11 time zones away. The benefit is that the EP staff is working during U.S. nighttime and aligning a case manager’s tasks for the next day. They can look in their own agency management system and know exactly where that case is; in addition, we will have provided them a list of relevant tasks that they can handle to move cases forward,” says Gray.

Gray notes that EP is a 24/7 operation, so resources are also available during U.S. business hours. “We take responsibility if the carrier or the medical record vendor needs to be called, for instance. Some carriers want submissions by 3 p.m. for same-day processing, and we accommodate that as well,” says Gray.

EP is not a staffing company

EP’s employees are assigned to the departments they support, enabling them to master systems, procedures and processes within that department. Each dedicated specialist is fully trained on the customer’s system and is managed by internal team leaders and operations directors.

“For instance, if we are managing commission statement processing and statement reconciliation for an agency using SmartOffice, the assigned processor will already be an

2014 EP partners with iPipeline and Ebix to enhance and market their commission systems.

expert on using SmartOffice and will already have mastery of commission processing. All that’s left is to customize processes to the customer’s preferences, but in most situations, our customers come to us for best practices,” says Gray.

The new frontier: Mining and minding the inforce book

Managing inforce business can be a daunting task for those who haven’t had the tools or time to effectively manage and capitalize on their books of business. Proformex and Employee Pooling executed a strategic alliance to offer a comprehensive policy management system that incorporates the best of Proformex’s Inforce policy management platform and EP’s highly trained human capital.

Proformex’s policy management software delivers inforce policy monitoring, portfolio consolidation and management, and reporting that creates great opportunities and revenue potential for the producer.

“EP’s knowledge and experience in working with hundreds of agencies has bridged gaps to ensure a complete policy management system for customers,” says Mike Pepe of Proformex. “EP has the ability to eliminate the work otherwise required of the agency that delays onboarding, integration, implementation, and ongoing training and system maintenance.”

EP’s staff can also provide research and sales assistance for numerous tasks including annual reviews, term period expirations, conversion details, paid-to dates and inforce ledgers.

Reduce your bottom line, boost your service standards and keep your business humming 24/7.

To learn more and view a video on how agents can approach policy owners for new sales, visit EPcanhelp.com.

2019 EP grows to 130+ agencies, direct marketers, FMOs and IMOs, with intimate knowledge of software systems and its 135 carrier partners.

India operations, led by CEO Harpreet Singh, grows to 170 employees to meet demand for services.

2016 EP has 80 agencies and direct marketing firms across every major IMO. EP opens first central processing center and begins delivering sponsored services to IMO members.

Future EP eyes growth in financial institutions. EP will continue innovation and commitment to helping clients remove obstacles that impact sales growth.

2020 EP continues to develop strategic partnerships with software companies.

Tom Gray honored by InsuranceNewsNet Magazine as a Mover & Shaker in the industry.

December 2019 » InsuranceNewsNet Magazine

37

the Fıeld

A Visit With Agents of Change

FLIP ING THE SCRIPT Tony Lee moved to Hollywood to find success and he did — but not in the way he originally planned.

By Susan Rupe

38

InsuranceNewsNet Magazine » December 2019

I

f there was an African American movie made during the late 1980s or early 1990s, chances are that Tony Lee had some involvement in it.

As a casting director, Lee worked on a number of films such as Menace II Society and House Party 3.

He also did the Los Angeles casting for Spike Lee’s film Malcolm X. Tony Lee’s work as a casting director was his entrée to a screenwriting career.

“I became very successful with both — during the day, I was casting,” he said.

“And at night, I was writing.”

He sold 10 screenplays in 10 years.

Three of those screenplays were made into films, the most notable being a cable film titled The Road To Galveston, starring Cicely Tyson.

But with a family to support, Lee left the film industry 22 years ago and eventually found stardom in the insurance industry. He went to work in his fatherin-law’s insurance brokerage, Dickerson Insurance Brokerage in Los Angeles, and helped grow it to become the largest African American-owned brokerage firm in the U.S. before its acquisition by Alera Group in 2018. Today, he and his brotherin-law Michael Wolff serve as the brokerage’s two managing partners.

Lee, 54, was honored by the National African American Insurance Association with its 2019 Agent/Broker Leadership Excellence Award. The award recognizes an African American insurance agent or broker who has demonstrated business success, as well as significant and positive impact on the industry and the community.

As a screenwriter, Lee was living his longtime dream. But in 1997, he found himself between projects and concerned about money as he and his wife were expecting the second of their three children.

“My father-in-law, Mr. Carl Dickerson, said to me, ‘Why don’t you come into the office and see what I do?’” Lee recalled.

“So I went in to sort of help him out and do some filing, and I never left.”

Lee’s insurance career began with him helping Dickerson “to organize his life” and eventually he started working for him full time in information technology.

After a couple of years working in IT for Dickerson, Lee said he floated around the agency for five or six years before helping

FLIPPING THE SCRIPT IN THE FIELD

insurance benefits and supporting brokers who serve that market.

But when the Affordable Care Act took effect, California established its own insurance marketplace, Covered California.

Under Covered California, agents were able to enroll individuals, families and small businesses in health insurance.

Dickerson Insurance Brokerage saw its individual health insurance business take off as a result “and now individual health is a big od ywo Holl ul essf Tony Lee was a succ role ing part of our core busilead a ed land he re befo screenwriter ness,” Lee said. s. ines bus e ranc insu the in Despite the brokerage’s Los Angeles loDickerson put together one of the cation, Lee said the company doesn’t do biggest deals the company had done. much business with the entertainment The deal was an employer-paid dental industry, except for what he called “a couplan for 160,000 home care workers who ple of movie houses.” However, when Carl were members of the Service Employees Dickerson first sold employee health benInternational Union. Later, Lee and efits in the early 1970s, Motown Records Dickerson implemented what was at that was one of his first clients. time the largest employer-sponsored Today, one of the brokerage’s biggest telehealth program for members of that client segments is the charter school insame union. dustry in California, which Lee described “From there, I sort of rose up inside the as a large and growing sector in that state. company,” he said.

Dickerson Insurance Brokerage has its headquarters near Dodger Stadium, about a 10-minute drive from downtown Los Angeles. The company is a general agency for individual and group health insurance and Medicare products, as well as employee benefits for large groups. The brokerage “There are 5,000-6,000 charter schools also has a property/casualty insurance in California, with a couple of hundred division. new ones coming online every year,” he The brokerage saw a time of what Lee said. “It’s a really big industry here and called “explosive growth” from the late definitely a market that needed to be 1990s until the time the company was served. We created the largest charter acquired by Alera two years ago. Revenue school employee program in the state in went from $10 million in 1997 to more 2008 and it has been a huge success for us.” than $30 million in 2018 while the broLarge nonprofit organizations are the kerage grew from 20 employees to 70. brokerage’s sweet spot in terms of their The company’s wholesale division is its typical client, Lee said. “The large nonbackbone, Lee said, selling small-group profit space has been good to us over the

years,” he said.

He also designed a life insurance program for the AME Church and its ministers around the world. In addition, his firm was one of the first brokerages to insure the cannabis industry in California.

Speaking Many Languages

Los Angeles is home to a multitude of ethnic groups, and Dickerson reflects that cultural diversity in its staff. The brokerage’s staff members offer customer service in 11 different languages, Lee said, and are a representation of the city’s many population segments.

He said the Dickerson brokerage was founded on the philosophy that the business would reflect the community. The company leaders wanted people of all colors and language backgrounds to be a part of their team. “We felt that’s our secret sauce in terms of either dealing with prospective clients or serving current clients,” he said. “We really pride ourselves on being, if not the most diverse company out there, close to it.”

Serving brokers who are either new to the United States or who are first-generation Americans is a niche that the Dickerson brokerage has carved out, Lee said.

“We’ve been serving the Korean communities, the Russian communities, the African American and Hispanic communities on a wholesale basis for many

“We really pride ourselves on being, if not the most diverse company out there, close to it.” years,” he said. “We have taught a lot of those agents about insurance and have really helped them up their game in terms of insurance and risk. We are very proud of that.”

He noted that one of his brokerage’s largest producers is a Russian immigrant whose entire book of business consists of fellow Russian immigrants who started businesses in their new communities.

“And we see the same thing going on among other ethnic groups — Korean

December 2019 » InsuranceNewsNet Magazine

39

the Fıeld

A Visit With Agents of Change

brokers serve the Korean community, Chinese brokers serve the Chinese community and so on. So it’s really been a neat model for us.”

Lee has some advice for those who want to serve the ethnic markets in their communities.

“People tend to like working with people who are culturally competent, who understand their sort of cultural needs and their cultural desires,” he said. “And I think that if you can speak a language and you have the skill set to navigate this really complicated health insurance industry that we're all trying to navigate every single day, that's the best way to do it. Just having a client or prospect know that you understand who they are and what they're what they're about.”

Falling In Love With The Business

Lee has spent about two decades in the insurance business, but admitted that he didn’t like it much when he started.

“It took me it took me a few years to actually fall in love with it,” Lee said. “But when you see Mr. Dickerson and how he is such a respected person in this industry and you see how the deals are put together. And you see the value that we can bring to an organization in terms of cutting health care costs and coming up with creative ideas, just sort of by osmosis I really began to

presents a challenge, Dickerson said, and he noted Lee is up to that challenge.

“You have to prove that you're not only as good as but better than the competition,” Dickerson said. “Tony is always able to come up with a creative solution for the prospect. I'm very proud to be his father-in-law and very proud that he has worked so hard and he certainly deserves all the accolades that he is getting.”

Health Care Is A Challenge

Lee cited the ACA as the biggest challenge and change he has seen in the insurance industry during his time in the business.

“Luckily, we’ve been able to weather this change,” he said.

Those who sell health insurance and group benefits must be more creative in order to prosper, Lee said. “We’re seeing a lot more ideas out there, especially telemedicine. I think telemedicine is going to the next level where services that can be provided through telemedicine will be enhanced over the next couple of years. We just hope that the legislators and our lawmakers in Washington don’t stifle the creativity so that we can put our collective minds together and try to figure out how to serve our clients.”

As for lawmakers in Washington, Lee has a direct line to the Capitol. His mother is Rep. Barbara Lee, D-Calif., whose district includes Berkeley and Oakland. “I keep telling her, ‘You’ve got to do something about drug prices, the drug prices are too high, this is not sustainable,’” he said.

Looking to the future, Lee said he and his staff “will just keep cooking along,” working with their clients and finding new markets to serve.

He and his wife are new emptynesters now that their youngest child is a college sophomore. With this new phase in his life, he is thinking about returning to screenwriting after he reaches a point where he is ready to wind down in the insurance business.

“I have a ton of stuff left in my head that I want to get out on paper,” he said.

Will there be a screenplay about the insurance business?

“Maybe,” he laughed.

“People tend to like working with people who are culturally competent, who understand their sort of cultural needs and their cultural desires.” understand what this is all about and really began to fall in love with this business.”

Carl Dickerson is 81 and founded the insurance brokerage that bears his name in 1965. He started out selling insurance door to door through ethnic neighborhoods in Los Angeles. He still plays an active role in the business.

Lee said his father-in-law taught him many lessons about how to succeed in the insurance world.

“As an African American man, he grew up in a different time than when I grew up,” Lee said. “He always had to be smarter and better than everyone else in order to succeed. He taught me to always look at partnerships, keep an open mind about working with other organizations, and bring in the best people who can be creative and look beyond the four corners.”

Dickerson described Lee as “an extremely intelligent man.”

“He’s very easy to work with. And I think he has that kind of special personality that people like to get to know. So when you add those elements together — people like him and he knows his profession and he’s reliable — that gives him an edge to getting and keeping the business.”

Despite the brokerage’s focus on ethnic diversity, only about 20% of Dickerson’s large group consulting clients are African American-owned. Working with Caucasian corporate clients 40

InsuranceNewsNet Magazine » December 2019

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com.

Follow her on Twitter @INNsusan.

Got a Story? Tell Us!

Do you know someone who would make a compelling profile story? Shoot us a quick email telling us who it is and why you think so. Send it to editor@insurancenewsnet.com, and put PROFILE in the subject line.

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41

LIFEWIRES

QUOTABLE

Buy Life Insurance When You’re Young Young adults are starting their working

lives with a number of competing financial priorities (Student debt! Buying a house!).

So it’s easy for them to put off buying life insurance. But postponing the life insurance purchase can hurt them financially in the long run.

Take student debt, for example. Life insurance that covers the amount owed on a student loan can be a way to keep those loans from becoming a loved one’s burden. Outstanding federal student loans are discharged when the borrower dies, but that isn’t always the case with private loans. When a borrower with a private loan dies, the co-signer may be on the hook for subsequent payments, according to SavingforCollege.com, which also reported that about half of private student loan programs do not offer death discharges.

And the life insurance price tag gets bigger the longer someone puts off buying coverage. Insurance premiums rise by an average of 8% to 10% for each year you postpone buying coverage, according to Policygenius. from MetLife in 2017, has always classified vapers as tobacco users in its applications, according to a spokeswoman.

INSURER TAKES AIM AT VAPERS

Life insurers are known for levying higher premiums on those who use tobacco products. Now one carrier is hiking premiums on those who vape.

Prudential plans to classify vapers as smokers instead of nonsmokers when applying for individual life coverage, Bloomberg reported. This could result in vapers being charged higher premiums than those who don’t vape or use tobacco.

Vaping has come under increased attention recently as the number of people with lung injuries associated with electronic cigarettes has crossed the 1,000 mark. Those cases could just be the tip of the iceberg, said Robert Redfield, director of the Centers for Disease Control and Prevention .

Prudential’s rates for e-cigarette users tended to be more favorable than others in the industry, according to Policygenius.

Brighthouse Financial, which was spun off DID YOU

KNOW

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42

INSURERS MUST ACT NOW TO LAND MILLENNIALS

InsuLife Co rance ~~ ~n~tract ~~~~ ~~~~ ~~~ ~~ ~~ ~~ ~~~ ~~~~ ~~ ~ ~

There’s no time like the present when it comes to attracting millennial clients, said Todd Silverhart, corporate vice president and director of LIMRA's Insurance Research. Silverhart led a session delving into the thoughts, needs and concerns of young people at the LIMRA 2019 Annual Conference in October.

The latest Life Insurance Barometer Study, conducted by LIMRA and Life Happens, that 51% of millennials say they own life insurance, which is slightly lower than the overall population's average of 57%. But the more interesting number is the 81% who agree they need life insurance, or if they own life insurance, they do not own enough coverage.

"The gap between the percentage that own and the percentage that think need some of 30% is really significant," Silverhart said. "If you look at it from the

Life insurance professionals need to check their own biases and models around determining coverage needs.

— Yaron Ben-Zvi, cofounder and CEO of Haven Life.

perspective of the consumers, these are individuals who recognize that they’re financially vulnerable. From the perspective of the carriers, it suggests tremendous opportunity to meet the unmet need."

INSURANCE EXECS TRY TO NAVIGATE CHANGE

Nearly one-third of insurance executives globally say developing the tools to successfully navigate change is their No. 1 internal concern. "Change management" topped the list in the latest global executive survey done by LIMRA and the Boston Consulting Group. The result marked a significant change from recent surveys. "Talent management" topped the list of concerns in the 2015 and 2017 surveys.

Regulation and technology were among the top three concerns in 2015 and 2017, respectively. Neither appeared among the top three this year. "Customer experience" ranked second and "growth" came in third.

But that does not mean that regulation and technology concerns have gone away, researchers said. In fact, executives were queried on "external" concerns, and 64% of all executives worldwide and 59% of CEOs/presidents cited technology as the No. 1 concern.

LIMRA, LOMA and the Secure Retirement Institute launched FraudShare, a new platform that will enable financial services companies to better detect and Source:New LIMRA Source: York State Department of Financial Services attempts. prevent account takeover

InsuranceNewsNet Magazine » December 2019

LIFE

‘Tis The Season For Charitable Giving Via Life Insurance Life insurance is a great way to maximize the dollars that will ultimately go to charity.

By Barbara Rozgonyi

L

ife insurance is a viable legacygiving solution for clients who want to provide funds to a worthy cause. But more than half of consumers don’t see life insurance as a vehicle for charitable giving.

In a recent study by Lincoln Financial Group, 15% of consumers see life insurance as one of the best vehicles for charitable giving while 33% view it as one possible, but not the best, vehicle. Fiftytwo percent don’t see life insurance as a means for charitable giving at all.

With more than 10 million nonprofit organizations in the world, according to the 2018 Global NGO Technology Report, there’s no shortage of causes to support.

Charitable giving is always in season.

Whether it’s school kids selling wrapping paper, clubs selling grapefruit, your alma mater’s annual fundraising campaign or even a Kickstarter campaign to fund a startup’s project, there are thousands of ways to give in the moment. But what about leaving a large legacy gift that impacts a charity, and the world, in a bigger way? That’s where you come in.

Charitable Giving In The U.S.

According to The Giving Institute, giving by individuals declined in 2018. At $427.71 billion, individual giving comprised less than 70% of overall giving for the first time in at least 50 years. Giving to foundations decreased the most, after experiencing strong double-digit growth in the prior year. Giving to international affairs showed the largest growth of any sector at 9.6%. Giving by bequest amounted to $39.71 billion.

How Does Life Insurance Fit In?

Options for charitable giving may include 44

Life Insurance Can Grow A Charitable Gift There are a number of ways life insurance can help clients leave a legacy to their favorite cause.

Charitable giving riders on life insurance Gifting a life insurance policy Name a charity as beneficiary Gifting policy dividends life insurance, annuities and retirement account assets.

There are many advantages to leaving a charitable gift through life insurance.

It is simple to set up and often does not require the services of an estate attorney. The size of the gift is set and is not affected by market fluctuations or economic factors.

Using a life insurance policy to benefit a charity allows the giver’s wishes to be carried out by directing a large gift to a specific charity or charities while preserving assets for the giver’s family members.

Life insurance also is a way to multiply the dollars that will eventually go to the giver’s choice of charity. The proceeds from the life insurance policy are larger than the amount of money that the giver spent to fund the premiums, enabling the giver to provide a bigger gift than they might have been able to make directly from their own funds. Simply put, small premiums fund large gifts.

If the charity is the owner of the policy, the premiums may be tax deductible. As with most tax issues, the guidelines may

InsuranceNewsNet Magazine » December 2019

Source: Investopedia

be complicated, so consulting with an accountant is advised.

There are several options for using life insurance as a charitable giving vehicle.

Your client can name the charity as the beneficiary of an existing life insurance policy. Or your client can contribute an obsolete or paid-up policy that the charity can cash in now. If your client purchases a new policy and gifts the premiums to the charity, your client may be able to claim a charitable deduction for income tax purposes. In addition, your client may choose to take dividends received from an existing policy and direct them to the charity.

How To Choose A Charity

Causes to consider include art, animals, fighting diseases, faith-based, children, education, environmental, parks, health, international relief, mental health, police and fire, veterans, social causes or youth development. A donor may choose to fund scholarships, nonprofit grants or even start a foundation to follow their vision.

Along with a list of best and worst charities by giving category, Consumer Reports offers these tips: Verify

CHARITABLE GIVING VIA LIFE INSURANCE LIFE tax-exempt status, give directly instead of through a professional fundraiser, request privacy, and be on guard for charities with names that sound credible, but with reputations that are not.

For more in-depth research, use Charity Navigator as a resource. You can set up an account and join 752,000 registered users. While you’re on the site, you can evaluate charities on a variety of criteria, see what causes are trending and even make a gift online. Charity Navigator is America's premier independent charity evaluator. They help charitable givers make intelligent giving decisions by providing in-depth, objective ratings and analysis of the financial health, accountability and transparency of America's largest charities. Use Charity Navigator's simple searchable database to find a charity you can trust and support.

Partnering With Charities

Adding a legacy gift specialization to your practice can start by asking your client this question: If you could leave a legacy gift, who would it go to and how would it work? The answer will reveal your client’s passion and vision.

To position yourself as a legacy giving partner advisor, consider partnering with charities in these ways: » Conducting charitable giving workshops in partnership with the charity’s donor relations team. » Requesting a link on the charity’s website under “donor options.” » Reaching out to significant donors with ways to fund the charity’s future dream projects.

Start by researching organizations you’d like to partner with to see what they offer now. For example, the National Parks Foundation has this giving information on their site: “A charitable lead annuity trust is a perfect instrument to make a generous gift to National Parks Foundation while reducing or eliminating estate and gift taxes. National Park Foundation will receive a fixed contribution each year.” This site even offers a Charitable Lead Unitrust Calculator to show how contributions may vary with investment performance.

The Legacy-Giving Team

Consider creating a legacy-giving team to grow your influence, and support. This team has five players.

1. Donor: The person who purchases the policy.

2. Charity: The organization that will benefit.

3. Accountant: Choose a firm with experience in advising about charitable giving deductions.

4. Attorney: The client’s estate attorney who can advise on any legal complications.

5. Financial advisor: The expert who manages the client’s investment portfolio.

Introduce Clients To Legacy Giving

The first step to introducing a client to legacy giving is to determine which charity they want to support. Get to know the organization and research their financials. Form a relationship with the charity’s donor relations team. Then work with the client to set a goal amount that they want to give.

Finally, set an example with your own charity-directed policy.

#GivingTuesday

Dec. 3 is Giving Tuesday, a global day of giving. Celebrated the Tuesday following Thanksgiving, Giving Tuesday follows Black Friday and Cyber Monday as it kicks off the year-end charitable gift-giving season. Last year, 3.6 million gifts raised more than $400 million – all in one day!

One of the best ways to get involved is in your own community. Go to givingtuesday.org to find charities and events in your community. Look for one or more charities you would like to support. And if you don’t see a #GivingTuesday event for your charity, start one!

Barbara Rozgonyi is the founder of CoryWest Media, and is an educator, author and speaker who develops customized sales training for individuals and companies. Barbara may be contacted at barbara.rozgonyi@innfeedback.com.

December 2019 » InsuranceNewsNet Magazine

45

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Class-Action Suit Targets Security Benefit’s Proprietary Annuity Index

Critics and regulators have been targeting proprietary indexes, saying they overstate performance in illustrations used to sell indexed annuities. Now one carrier’s proprietary index is the target of a lawsuit.

Three consumers filed a class-action lawsuit alleging that Security Benefit Life defrauded consumers by implementing a “fraudulent scheme” involving a proprietary index used in two fixed indexed annuities. The plaintiffs, from Illinois, Arizona and California, where the suit was filed, claim the company misrepresented returns.

The lawsuit targets two of Security Benefit’s FIAs, the Total Value and Secure Income annuities, both of which offer the Annuity Linked Trader Vic Index, which is based on commodities and currencies futures along with a volatility control. The index is offered as an option along with traditional indexes such as the S&P 500.

Michael T. Castino, director of public relations for Security Benefit, said in a statement that the company “believes that it has substantial defenses to the claims alleged and intends to vigorously defend itself in the action.”

STATE REGULATORS TACKLE ANNUITY SALES MODEL

State insurance regulators are getting to the fine details of a best-interest standard for annuities, and the parsing of words is destined to leave some unhappy.

The National Association of Insurance Commissioners’ Annuity Suitability Working Group is in an ongoing effort to nail down language of an annuity sales model law. The group took on the meat of the model — The Duties of Insurers and Producers — and started with Best Interest Obligations.

The most discussion followed a proposal from the Insured Retirement Institute to add this language: “the best interest standard set forth in this regulation requires a producer to adhere to a standard of conduct that does not guarantee an outcome.” The language is borrowed from Regulation 187, a tough annuity sales standard passed by New York, noted Jason Berkowitz, IRI chief legal and regulatory affairs officer.

After roughly 18 months of meetings, the group is in tentative agreement on a DID YOU

KNOW

?

46

best interest standard for annuity sales. It articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. But the group is still lacking a strong consensus on whether to extend the annuity sales rule to in-force policies, a point that has been debated several times. And a conflict with state exemptions for equity linked annuities was brought up at the last call and remains unresolved.

FORESTERS SELLS ANNUITY, LIFE BUSINESS

Foresters Financial is selling its annuity and life business to Nassau Financial Group.

The sale marks the final stage of Foresters’ strategy of exiting its North

Who Are The Foresters?

•T races its origin to a mutual aid society in 14th Century Britain.

• I ndependent Order of Foresters originated in Canada in 1874 and •M embership stands at more than 2 million.

SOURCE: Independent Order of Foresters

I think that we will end up in a good place with the 49 states. I don’t know about New York.

— Iowa Insurance Commissioner Doug Ommen, on the NAIC annuity sales model law

American Asset Management business, which began with the sale of its asset management and broker-dealer businesses earlier this year. Foresters officials said the organization will focus on its fixed life insurance business and on growing as a fraternal benefit society.

Foresters Financial includes The Independent Order of Foresters, the oldest non-denominational fraternal benefit society with members in the U.S., Canada and the United Kingdom.

SEC LOOKS AT ANNUITY SALES TO TEACHERS

The Securities and Exchange Commission is looking at possible questionable sales practices by a major provider of annuities to teachers. The Wall Street Journal reported that the SEC has opened an investigation into Valic, a subsidiary of AIG, to determine if agents were properly disclosing costs and fee structures, and whether or not agents received financial incentives to sell annuities over lower-cost mutual funds.

The spotlight is on practices in the 403(b) market, which are qualified retirement plans for teachers. In late 2017, the New York Attorney General’s office subpoenaed records from TIAA, a giant in the teacher annuity market, to follow up on complaints about its sales practices.

53% of Americans don’t believe their savings and investments will last if they live to be 90 years old.

Source: LIMRA

InsuranceNewsNet Magazine » December 2019

Source: LIMRA SRI

ANNUITY

Commentary: Ned Ryerson Is Just As Cool As Gordon Gekko The millennial generation may be prime prospects for annuities in the future, as they saw what the stock market crash did to their parents’ portfolios.

By Charlie Gipple

Y

ou can learn a lot from little kids. They are unfiltered and say what is on their minds because they have not yet been “polluted” by political correctness.

For example, as my family was on our boat a year ago and I donned my swimsuit, my 8-year-old son Matthew thought he would verbally express a profound observation. After staring at me for about 10 seconds, he said, “Daddy, you need to start eating at Subway instead of McDonalds.” I will say, when an 8-year-old tells you that you are fat, you are fat.

I have a wealth management practice in addition to running my marketing organization. Within my wealth management practice, I am a registered representative, an investment advisor and an insurance agent. Of the two businesses — securities and insurance — the one I have built my career around is the insurance business.

So when Matthew tells his friends what his dad does for a living, wouldn’t you think he would tell them I am in insurance? Wrong. His friends know me only as an “investment advisor.” Clearly, even an 8-year-old thinks that an investment advisor is cooler than an insurance agent.

Apparently, my kids don’t go to school and brag about how their dad sells indexed annuities. Stocks and bonds are clearly more glamorous. I wonder if my kids have watched too many Ken Fisher commercials?

Although I believe Matthew favoring investment advisors over insurance agents is purely coincidental — because he is only 8 and doesn’t know the difference — that example is a microcosm of the perceptions of the general public. Everybody, 48

including my farmer cousin, wants to pretend to be a “Wall Street” quant instead of Ned Ryerson in “Groundhog Day.” OK, bad comparison. (Note: If you don’t know who the cheesy insurance salesman Ned Ryerson is, Google him.)

Many of my friends know me as an annuity and life expert, which may not make me the coolest guy in my group of friends.

Needless to say, they don’t choose to discuss annuities and life insurance with me very often. However, for those friends who also know that I work with securities, they always want to discuss stocks, bonds, funds, the economy, etc., with me.

Interesting dynamic, huh?

So, as I work with my friends’ financial portfolios, I am very cognizant of this anti-annuity dynamic and the standoffishness around these products. Therefore, I approach the annuity conversation with caution with my friends. Although my friends trust me, I do not want them to think that I am trying to push annuities and life insurance.

What If The Market Tanks?

A 50-year-old friend of mine sold a piece of his business recently and received a total of more than $500,000. I would consider this friend to be very savvy about stocks, bonds, interest rates, etc. He wanted to speak with me about his options.

When we talked, he expressed what many other clients feel today: that we are 11 years into a bull market that on average lasts only 48 months. He also believed the bond market and yield curve were signaling big trouble in our economy within the next couple of years. This made him uncomfortable with his normal choice, the stock market. He also understood that

InsuranceNewsNet Magazine » December 2019

bonds may not be a great choice because if interest rates rise, bonds are not so “safe.”

In short, he felt what many investors feel — nowhere feels safe today!

After I gave him many securities and nonsecurities options while keeping the notion of annuities silent, he said something that broke my silence. He asked me, “Is there anything out there that if the stock and bond market tank I am protected, but yet if the market rises, I am able to get more than the 1.6% the bank is giving me?” I could no longer stay silent!

I went on to explain what an indexed annuity does, without ever mentioning the “A” word. After hearing the story of what these products do, without ever mentioning the “A” word, my friend said, “That is exactly what I am looking for.”

I then explained that the solution I proposed was an annuity. I proposed that for a small portion of his portfolio — the fixed income part — this would give him what he is looking for, a little more upside potential than fixed alternatives, but with the downside protection of 0% in negative environments. He said, “Why have I never heard of this before?”

For those of you who have sold these products, you are probably nodding your head in agreement as you have experienced a situation very similar to this.

Many consumers like what annuities do, but they do not like the “A” word! Public awareness around annuities seriously lags the marketing heft of the multitrillion-dollar securities business (which I love as well). That, along with the fact that you have “money managers” with large budgets bashing annuities and calling them “scumbag products” (verbatim), results in annuities not being perceived as “cool” in the mindsets of consumers.

Millennials Could Learn To Love Annuities

This is an unfortunate mindset that has been created by some of these pundits and their negative marketing. However, I

NED RYERSON IS JUST AS COOL AS GORDON GEKKO ANNUITY believe this will change as the largest age cohort in the United States is more risk averse than their parents were at their age.

I am not referring to baby boomers; I am referring to the 82 million millennials.

The millennial generation came of investing age over the past 20 years when they saw the stock market lose 49% from 2000 to 2002 then 57% from 2007 to 2009.

This volatile period was different than the bullish 1980s and ‘90’s that their parents experienced and this experience is tattooed in the minds of these millennials.

Furthermore, even the baby boomers who experienced the bullish ‘80s and ‘90s are beginning to realize that annuities can do things that the securities companies cannot — provide guaranteed lifetime income that cannot be outlived.

And the level of lifetime income guaranteed to them many times is higher than the securities rules of thumb, such as the 4% withdrawal rule (which is now 2.8%, according to Morningstar).

As a matter of fact, the most popular indexed annuity my agents are offering to retiring clients today guarantees that when a 63-year-old client (for example) retires in two years, they will be guaranteed a lifetime income that increases to more than 7.2% of their premium per year for the rest of their life. How can a stock/ bond rep argue against this unless they are suggesting dangerously high withdrawal rates?

It’s not profound when I say to make annuities become “cool,” we as an industry need to explain the wonderful things these products do in an effective manner.

Explaining and selling these products is harder than selling stocks was in 1999.

This requires powerful marketing, storyselling, communication skills and subject matter expertise. Carriers and independent marketing organizations need to help financial professionals with this process.

The adage “customers want a hole, not a drill bit” rings true with annuities. For example, my friend hated (past tense) the “A” word, at least until I made him aware of what annuities do. If I had mentioned annuities at the outset, the conversation would have been over!

Baby boomers, after they are educated on what annuities can do (like my 7.2% example), will also realize that these products can be just as cool as the Wall Street-type stuff. But again, we need to be

able to educate and communicate the value in an effective manner because there are biases against these products brought about by certain marketing campaigns.

I will end with a story that I often share with agents and clients. This is in response to the prospect who says, “That level of guaranteed income seems too good to be true!” This story should be credited to national retirement expert, Moshe Milevsky, and explains how life insurance and annuity companies are able to provide the unique benefit of guaranteed lifetime income that can be higher than the securities “rules of thumb.”

There were five 95-year-old ladies sitting around the table playing bingo.

One of the 95-year-old ladies looked up and said, “This is very boring! We have been doing this for 30 years and it’s time to try something new. Let’s all put $100 on the table right now and whoever is still alive a year from now will be able to split the entire $500 pool.” They all agreed it sounded like fun so they each threw $100 on the table. One year goes by and, as the mortality tables showed, there were only four of those 96-yearolds still alive. One of them passed away.

What does this mean? This means that each of those four 96-year-olds gets $125 at that point in time, which is $500 divided up four different ways. It wasn’t even invested in anything over that year but they each got their money back, plus an additional $25, by merely living an additional year! Isn’t that magical?

To be clear: The point is not that anybody is going to get 25% on their money.

The point is, that like mortality credits with life insurance, longevity credits with annuities cannot be replicated by Gordon Gekko and the Wall Streeters.

Going back to Groundhog Day, maybe Phil (Bill Murray) should slow down and listen to what Ned Ryerson has to say. Of course, Ned Ryerson also needs to approach the conversation in a more effective manner!

Charlie Gipple, CLU, ChFC, is founder and CEO of CG Financial Group, an independent marketing organization that serves independent agents who sell life insurance, annuities and asset-based longterm care insurance. Charlie may be contacted at charlie.gipple@innfeedback.com.

December 2019 » InsuranceNewsNet Magazine

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HEALTH/BENEFITSWIRES

Could Health Plans Get The 401(k) Treatment?

Federal rule changes that take effect at the beginning of next year have

the potential to do for traditional employer-provided health insurance what the 401(k) did for worker pensions 40 years ago. A change to the IRS code, set to take effect Jan. 1, allows employers to stop providing insurance for employees — and instead give workers pretax funds to buy their own coverage.

The new health reimbursement arrangements, or HRAs, will allow employers to rid themselves of the task of managing health plans for their workers. Michael Kolber, a partner with Manatt Health, called the change a "401(k)-ization of employer health benefits."

But will employers rush to provide these HRAs for their workers?

Some analysts are not sure HRAs will have much of an impact on the employee health care scene, at least in the short term. One reason is that such a move may make companies less appealing to prospective employees in a time of low unemployment and high competition for workers. Another reason is that workers usually are not as knowledgeable as employers when it comes to finding the best health care plans for themselves.

MANULIFE BLENDS DIABETES SUPPORT WITH LIFE INSURANCE

EMPLOYERS MOVE AWAY FROM HIGH-DEDUCTIBLE PLANS

Is the high-deductible health plan on its way out? Some employers are backing away from the HDHP and taking another look at traditional group health insurance plans for their workers.

The percentage of companies that offer high-deductible plans as their only option will decline for the third consecutive year in 2020, according to a survey of large employers by the National Business Group on Health. A quarter of the firms polled will offer HDHPs as their only option next year, down 14 percentage points from two years ago.

Nearly one out of six covered employees worked at companies that offered at least one HDHP in 2019, according to an annual survey of employer health benefits released by the Kaiser Family Foundation.

DID YOU

KNOW

?

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Manulife’s John Hancock unit is offering the first of its kind life insurance designed specifically for Americans living with type 2 diabetes. The insurer’s John Hancock Aspire with Vitality is a collaboration with Onduo, a joint venture between Verily, an Alphabet company, and French pharmaceutical group Sanofi SA. Alphabet is the parent company of Google.

Aspire pairs life insurance with a technology-based program that provides coaching, clinical support, education and rewards designed to help manage and improve their health. All Aspire customers will also have access to an enhanced version of the John Hancock Vitality app, which is designed to reward steps customers take toward living longer, healthier lives, like exercise and buying healthy food. The enhanced Vitality app now is geared specifically toward those who are living with diabetes. Policyholders have the potential to save up to 25% on their premiums by following the Vitality program.

QUOTABLE On health care in general, we as consumers don't know how to shop.

— Deanne Kasim, executive director of health policy at Change Healthcare

Qualifying John Hancock Aspire customers with type 2 diabetes will be eligible to access Onduo's virtual clinic and receive a blood glucose monitoring device, which when used in conjunction with the Onduo app provides insights into the user's diabetes management. Onduo's virtual care team offers personalized guidance and support regarding diet, activity, lifestyle habits and medication management.

AMERICANS MOSTLY HAPPY WITH THEIR COVERAGE

Americans report they are largely satisfied with their health care plans, but they are unhappy about how much that coverage costs them. A survey by the Transamerica Center for Health Studies revealed 84% of Americans are very satisfied or somewhat satisfied with the quality of their health care.

But the cost of that care is a concern for a large percentage of those surveyed. More than one-quarter (27%) said they’ve canceled a medical appointment due to unexpected costs. More than one in five said they did not take medications prescribed by their doctor because the cost was too high.

Those who were uninsured also are worried about costs. Among the uninsured, 48% said they don't have coverage because of the cost, and more than seven in 10 (71%) said prescription drugs are too costly.

More than 50% of adults over age 50 said they would rather die than move to a nursing home.

Source: Associated Press

InsuranceNewsNet Magazine » December 2019

Source: Nationwide Retirement Institute

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HEALTH/BENEFITS

Connecting The Dots: Life Insurance And Wellness Surveys show workers are plagued by financial stress.

Offering group life insurance can help employees’ overall wellness.

By Greg Poulakos

E

veryone feels stressed from time to time. Many causes of stress in our world today can lead to numerous emotional and physical conditions impacting a person’s overall health and productivity. While stress can come at us from many different places, more and more people are now citing money as the main cause of stress.

PwC’s 2019 Employee Financial Wellness Survey found that nearly onethird of American workers said financial

Employers are doing more than ever before to help relieve workers’ financial anxiety and protect their overall health and well-being. This requires a thoughtful, comprehensive approach to financial wellness.

The financial stress revealed in the survey shows why life insurance should not be overlooked as a critical tool to provide financial support and security for the people who rely on us.

Not many people want to think about what would happen when they die, but lack of planning for this eventuality can leave families unprepared and insecure.

Even when people recognize the importance of life insurance, too few enroll in it. A recent Anthem survey found that although two-thirds of American employees said that life insurance is important to

Financial Issues Are The Top Cause Of Worker Stress

When asked what they feel causes them the most stress, more employees cited financial matters than any other life stressors combined.

59%

Financial or money matters/challenges

15%

My job

12%

Relationships

10%

Health concerns

4%

Other

Source: PwC 2019 Employee Financial Wellness Survey

worries have caused them health problems. Even more – 47% – said that worries about finances have distracted them at work while 10% said these problems made them miss work, causing lost productivity from missed days.

52

achieve financial well-being, only half said they are covered.

One key to encouraging Americans to protect their own peace of mind and their families’ financial future could be in explicitly connecting life insurance

InsuranceNewsNet Magazine » December 2019

coverage to overall wellness and tailoring its importance to an employee’s specific circumstances.

With nearly half of American households receiving life insurance through their workplace, employers have an important role to play in educating their workers about this benefit as an essential step in planning for financial wellness.

Anthem’s research has found that human resources professionals are a critical source of information for employee benefits, so a first step can be for HR leaders to tailor their communications based on employees’ life stages.

Perceptions Of Life Insurance Across Life Stages

To do this, employers should tailor their messages to different generations of workers, which our research has shown have different priorities with regard to financial wellness.

Millennials (ages 25-34): Although most millennials say they plan to marry, have a family and buy a home, they often do not prioritize life insurance as part of their long-term financial planning; Anthem’s research found that only 24 percent of millennials report that they are covered by life insurance. Instead, millennials focus on eliminating credit card debt and paying off student loans as important steps to achieving financial wellness.

With low incomes and significant debt, it’s easy to see why millennials might dismiss the cost of life insurance — after all, they are healthy, young and only in the planning stages of starting a family. However, it’s important for millennials, even those without dependents, to consider purchasing a life insurance policy to cover funeral expenses and any outstanding debts they may have. For example, if a parent cosigned their child’s student loan or credit card application, then the parent may still be responsible for paying off that debt.

CONNECTING THE DOTS: LIFE INSURANCE AND WELLNESS HEALTH/BENEFITS With this group, lagging enrollment is often attributed to common misconceptions about the cost of life insurance, which LIMRA research says is overestimated by nearly three times the actual amount. In reality, LIMRA says, the cost is often less than a gallon of gas per week. By working with HR leaders to educate millennials on the importance and affordability of life insurance, we can combat this perceived barrier to enrolling in coverage.

To reach millennials, benefits brokers should take the time sit down with this generational group and discuss their long-term plans, hopes and aspirations.

Many millennials have yet to develop concrete plans for their future, so it is important to provide a wide range of options to fit any number of future paths.

Describe how various types of insurance can support their aspirations while providing a safety net for themselves and their loved ones along the way. » Generation X (ages 35-54): Many Gen X employees are busy juggling family and work responsibilities, with little time to focus on other priorities. According to Anthem’s survey, this group is the most likely to say that finances have a big impact on their well-being, but they are the least likely to say that financial management is a top wellness goal.

Helping this group draw a clear connection between financial stress and overall wellness can encourage them to make proactive choices now that will provide peace of mind for the future. The unexpected death of a loved one could mean the loss of an income for many Gen Xers’ families, yet Anthem found only 58 percent of Gen Xers have life insurance.

By increasing this enrollment rate, life insurance can help more families focus on what’s important during a time of grief, instead of worrying about how to pay bills like funeral costs, college tuition for children or outstanding mortgage debt.

Gen Xers are typically working hard and stressed out. Benefits brokers can connect with them by being a sounding board for their financial concerns and responsibilities. Avoid taking up too much of their time, as they view time as money.

Prepare everything you want to present and accomplish with them in advance so that you can provide practical solutions for their financial concerns.

Which of the following have been affected by your financial worries?

1 in 5 employees admits that productivity at work has been affected by financial worries.

32% 32% 21% 10% 9% Health

Relationships at home

Productivity at work

Attendance at work

Other

* Employees could choose as many answers as applicable. Thirty-three precent say none of these.

Source: PwC 2019 Employee Financial Wellness Survey

» Baby boomers (ages 55-73): Life insurance becomes a greater priority as employees become older and approach retirement. Anthem’s research found that more than two-thirds of Americans older than age 55 said they are enrolled in life insurance.

At this point in life, emergency preparedness becomes more central to understanding of financial well-being. For baby boomers, this often means having an emergency savings fund and protecting their income in the face of catastrophic challenges. For this group, focusing on financial peace of mind as a way to enjoy their success and protect their loved ones is paramount to promoting higher enrollment in life insurance.

Baby boomers need someone to discuss life’s hardest questions with. What if I develop a serious illness? What happens to my family after I die? How do I go about organizing my funeral? Many people shy away from these questions. Benefits brokers are in a unique position to be able to explore these concerns with baby boomers and provide concrete answers to these questions.

Beyond Life Insurance

Life insurance plays a critical role in improving an individual’s health, well-being and financial security. Today, most insurers offer much more than simply a sum of money to be paid out upon someone’s death, but that is how most people view life insurance.

Benefits brokers have an important role to play in terms of educating clients about all the benefits that life insurance offers, not just following a catastrophic event but here and now. For example, some group life plans offer member assistance programs that provide telephone,

face-to-face, and/or telehealth counseling as well as legal and financial consultations and will-generation tools. Other services include identity theft recovery and travel assistance.

Take the time to get to know clients’ lifestyles, needs and priorities. Then review the services offered by different companies to find the right fit for your clients. Your clients may be surprised to learn that the life insurance they buy today can be part of a package that helps them cover educational expenses for their children or plan and insure the vacation of a lifetime.

When discussing the purchase of group coverage with employers, find out where their priorities lie. Is this a highly competitive industry where investing in workers’ financial peace of mind can help alleviate toxic stress? Is this a group of employees who hold education for their children as a high priority? What about wellness? What are the typical ages of the employees? Are most of them single or married? Having answers to these questions can help you direct employers to the insurance plan that benefits everyone.

Although it can be difficult to think about a potential loss, preparing for the unexpected is the key to preventing anxiety now and down the road. Life insurance is a significant step toward financial wellness and overall health. We all have a role to play in connecting with employees about its potential benefits, regardless of where they are in life.

Greg Poulakos is president of Anthem’s life and disability business. Greg may be contacted direcly at greg.poulakos@ innfeedback.com.

December 2019 » InsuranceNewsNet Magazine

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REWIREMENT TIPS: SPOUSAL BENEFITS

Financial Literacy Gap Climbs

Just 57% of U.S. adults are financially literate, said a S&P survey. The survey defined financial literacy as the knowledge and understanding of areas related to personal finance, money and investing. The U.S. total household debt increased this summer to $13.86 million. Around a trillion-and-a-half stemmed from student loans.

57%

Adults are financially literate, but …

71%

Think they are financially literate, even though …

59%

Cannot complete 2 simple interest rate and inflation calculations

Despite this, Americans believe they are more financially literate than they actually are. Nearly three-quarters (71%) have a high self-assessment of their financial knowledge. But the majority (59%) cannot complete two simple interest rate and inflation calculations and 38% could not calculate the compound interest of debt. joining a trade association. For advisors, there are numerous to choose from — some that have more niche membership and others that are general.

TWO WAYS ADVISORS CAN STAY CURRENT

1.) KEEP LEARNING The state-required 24 credit hours of continuing education is a great opportunity for advisors to brush up and learn new skill sets.

Outside of traditional CE classes, some producers allow advisors to earn their credits in other ways, such as teaching, legislative activities and journalism.

Planners can earn one CE credit for successfully completing the FPA and FFP online pro bono volunteer training course found online.

2.) GET INVOLVED It really is that simple! Advisors looking to stay current on industry trends and changes should look no further than DID YOU

KNOW

?

54

THE STATE(S) OF RETIREMENT

Retirees have 50 options to consider when deciding which state is the best option for them to retire in. There are factors to consider such as, proximity to family, climate, health care and taxes, among other considerations.

Taxes, in particular, can have a lasting impact on a retirees’ income. It’s also where states can vary the most, which is why when looked at comparatively, Kiplinger’s Personal Finance magazine found that these 10 states are the most tax-friendly for retirees.

10. Arizona 9. Georgia 8. Florida 7. Mississippi 6. Tennessee

5. South Carolina 4. Alabama 3. Delaware 2. Nevada 1. Wyoming

In 2018, there were 271,700 financial advisor jobs in the U.S.

InsuranceNewsNet Magazine » December 2019

Source: LIMRA

Spouses who worked in the home have earned Social Security, but it is gauged by the income of the spouse who worked outside the home. In these cases, the couple’s retirement income can be affected significantly by when either spouse starts receiving Social Security benefits. To learn the rest of the story, or see more Rewirement Tips, simply visit https://innmb.com/ rewirement. Advisornews.com is the exclusive home to Rewirement Tips, a weekly video series featuring Direction of Retirement Research at Carson Group, Jamie Hopkins.

NEWSBITS

Cringeworthy: A study from BNY Mellon Investment Management found that the majority of Americans don’t understand fixed income. Only 8% of those surveyed were able to identify the definition of fixed income investments. Another 36% said they did not know the definition of fixed income investments. Yikes!

Praiseworthy: Consumers who envision their ideal retirement aim to save more for retirement, a study from Lincoln Financial Group found. For Americans who haven’t saved enough, envisioning their retirement lifestyle could spur them to make better savings choices.

The study found that those who have a picture of what retirement holds for them are more than twice as likely to contribute 15% or more in their workplace retirement plan compared to those who have not given it any thought.

Source: Bureau of Labor Statistics

INSURANCE INVESTMENTS RETIREMENT

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1. After completion of the tele-interview. For eligible clients.

Statistics as of September 17, 2019. WriteFit and WriteFit Express are available under our WriteFit Underwriting program.

These statistics only apply to WriteFit and are based on Securian’s experience with WriteFit and traditional underwriting.

Insurance policy guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company.

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.

Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods.

These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course

Securian Financial Group, Inc. securian.com 400 Robert Street North, St. Paul, MN 55101-2098 ©2019 Securian Financial Group, Inc. All rights reserved.

F88056-16 12-2019 DOFU 12-2019 956782

of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products.

Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York.

Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. For financial professional use only. Not for use with the public.

This material may not be reproduced in any way where it would be accessible to the general public.

5 Reasons To Combine Health Care Into Retirement Planning For advisors, helping clients plan for the future cost of health care presents multiple opportunities to add value. • Ron Mastrogiovanni

P

aying for health care was named the No. 1 retirement concern by more than 70% of respondents in a 2017 American Institute of CPAs’ survey.

This will not be a surprise to advisors who have seen health care costs rise on the list of their clients’ concerns, driven by increasing awareness of the impact health care costs on retirement budgets. Paying for health care has become a critical planning issue.

Addressing these expenses requires advisors to develop an understanding of Medicare and supplemental premiums, and the range of additional out-of-pocket expenses clients will need to cover in retirement. Hearing, vision and dental costs are often overlooked in planning.

Other issues that will impact health care expenses also must be built into the planning process. Health status (and its impact on projected longevity), state of residence and Medicare surcharges — which kick in when annual modified adjusted gross income reaches $85,000 for individuals — are important considerations.

Retirees are often surprised that health care costs in retirement are much higher than they expect. Why? Because when they were working, their employer paid around 75% of their premiums. In retirement, they are responsible for 100% of their health care expenses. Premiums for Medicare Part B, Part D and supplemental insurance to provide equivalent coverage to an average HMO will actually be 80% greater than the premiums they paid when they were working. And, driven by health care inflation, total costs in 20 years will be 180% higher than today.

Since health is key to longevity — the most significant variable in the retirement planning process — it is essential to incorporate it into retirement planning.

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This requires reliable data for planning purposes. Drawing on 530 million medical claims, actuarial longevity and other data, advisors can project average health care costs and expected lifespans for clients based on health status, age, gender, income and state of residence.

Although it may seem like a challenge, health care provides a unique opportunity for advisors to help address a key need. They can do this by discussing investment strategies, increasing assets under management and potentially saving clients tens — if not hundreds — of thousands of dollars in retirement by optimizing portfolios for health care.

Our white paper, “Why Health Needs To Be Part Of Retirement Planning,” provided a consumer perspective. Drawing upon our health care cost data, here is context around five specific reasons for advisors to incorporate health care into the retirement planning process.

Reason No. 1: Driven by health care inflation, costs will be greater at the end of retirement than the beginning — and significantly higher for younger Americans.

In the white paper, we noted that total lifetime health care costs for a healthy 65-year-old couple (average projected life expectancy of 87 for the man, 89 for the woman) retiring this year are projected to be $387,644 in today’s dollars ($572,960 in future dollars).

This includes premiums for Medicare Parts B and D, supplemental insurance (Medigap) and dental insurance, as well as out-of-pocket costs related to hospitalization, doctor visits, tests, prescriptions drugs, vision, hearing and dental.

For advisors, helping clients plan for the future cost of health care presents multiple opportunities to add value. Here are two: First, our experience shows that simply sharing retirement health care cost data

InsuranceNewsNet Magazine » December 2019

with clients drives increased retirement savings. On a large scale, we’ve have seen increases to 401(k) contributions averaging as much as 25% at plan sponsors.

Health is a powerful motivator of investment behavior.

Second, since health-related expenses will rise through retirement, advisors need to work with clients on developing investment and decumulation strategies to ensure funds will be available to address this need.

In the first year of retirement, a healthy 65-year-old couple’s total annual premiums and out-of-pocket expenses will be $12,286. Driven by health care inflation, in 20 years at age 85, they will need $34,268 (future value) to cover these costs. This is before long-term care is factored in. For clients in their 40s and 50s, future health care expenses will be significantly higher both at the start and end of retirement.

A key takeaway for advisors is that portfolios will need to generate increasing cash flows through retirement to address health care expenses.

Reason No. 2: Healthier, longer lives will mean higher health care costs in retirement.

Annual health care expenses will be greater for retirees in poor health. But lifetime expenses will generally be higher for healthier retirees because they will, on average, live longer.

A 55-year-old woman with type 2 diabetes (projected to live to age 80) will pay on average $3,470 more per year in medical-related expenses than if she were healthy. However, with a shorter expected lifespan, her lifetime health care expenses will be $158,711 lower than a healthy woman.

Since health status and expected longevity have such a central role, advisors need to help clients understand projected costs for individuals based on their health conditions and lifestyle. While these conversations may not always be comfortable, actuarial projections of longevity

5 REASONS TO MERGE HEALTH CARE INTO RETIREMENT PLANNING

based on age and health condition provide a far better starting point for a discussion of savings goals than a one-size-fits-all assumption of living to 95.

With expected actuarial longevity as a starting point, advisors should discuss the impact of a shorter or longer lifespan on these expenses to help clients make informed planning choices.

Reason No. 3: Changing health-related behaviors will impact longevity and healthcare costs.

Half of the adult population in the U.S. suffers from a chronic condition, including high blood pressure, type 2 diabetes, obesity and high cholesterol. As many as half of those who have been prescribed medications do not take them as instructed.

Health care expenses are directly related to how well conditions are managed. A 45-year-old man with high blood pressure, who follows doctors’ orders and makes small health-related changes, would save an actuarial average of more than $3,600 in annual pre-retirement out-of-pocket health care costs. He’ll increase his expected longevity in the process by two years.

By sharing average annual projected cost savings from improved health, the value of those savings (if invested), as well as the additional longevity that can be achieved (which will mean higher lifetime costs), advisors can help clients frame health decisions in terms of retirement planning goals.

If this 45-year-old man manages his health properly and invests his out-of-pocket savings from improved wellness, assuming a 6% return, he would be able to increase the value of his retirement account at age 65 by more than $100,000.

For advisors, putting health-related behavioral changes both in the context of finances and the benefits in terms of more years with grandchildren creates an opportunity for the type of personal and value-added engagement that drives account

As The Retirement Years Roll On, The Cost Of Health Care Goes Up Total projected annual health care costs for an average healthy 65-year-old couple retiring this year.

Year

Ages

Cost

2019 2024 2029 2034 2039

65 70 75 80 85

$12,286 $16,155 $21,164 $27,000 $34,268

Source: Health View Services

retention, acquisition and increased assets under management.

Reason No. 4: Health-related investment choices matter.

Investment choices, portfolio mix, savings and decumulation strategies designed around health care have a significant impact on expenses and retirement income.

Advisors can help clients save thousands of dollars, by selecting financial products including Roth 401(k)s/Roth IRAs, certain life insurance and annuities products (including non-qualified annuities), as well as health savings accounts (with their triple tax benefits) for clients in high-deductible plans, to reduce MAGI and minimize Medicare surcharges and taxes in retirement.

With clients questioning asset management fees, discussions that incorporate health provide an opportunity to provide value-added advice to help maximize retirement income. Time and time again, we’ve seen advisors build deeper relationships with clients and gain additional assets as a result of this conversation.

Reason No. 5: One-time investments can help address retirement health care costs.

For some clients, a one-time lump-sum investment to benefit from compounding returns to fund future expenses — such as a nonqualified annuity, life products or mutual funds — may be the optimal solution to address future health care needs. Others may prefer making additional weekly or biweekly contributions to 401(k)s or other investment vehicles.

For a 50-year-old man, assuming a 6% rate of return and retirement at age 65, an investment of $111,816 today would be sufficient to cover retirement health care expenses including Medicare Part D, dental and supplemental insurance, as well as out-of-pocket costs relating to hospitalization, doctor visits, tests, prescriptions drugs, hearing services, hearing aids, vision and dental. To cover health premiums alone, the investment would be $80,850. (This does not include Medicare Part B premiums, which will be deducted from Social Security benefits.)

Making a lump sum investment to take all or part of future health care expenses off the table is an attractive option for clients with the means to do this. Allocating the funds required to cover these costs in a portfolio designed to generate the cash flow needed to address health care through retirement is a powerful way to deliver the peace of mind clients are seeking.

Our experience underscores the importance to ensure clients that their health care needs will be met. As we have seen, providing projected cost data is among the most powerful drivers of investment and savings decisions.

Drawing upon the data and tools needed to help clients plan for, manage, and even reduce these expenses, advisors have the opportunity engage with clients, save them money, grow assets, and engage in product conversations when health is part of the retirement planning conversation.

Ron Mastrogiovanni is CEO of HealthView Services and HealthyCapital. Ron may be contacted at ron.mastrogiovanni@innfeedback.com.

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December 2019 » InsuranceNewsNet Magazine

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INBALANCEWIRES How Do You Like Them Apples?

Apples may not keep the doctor away, but they are a good source of fiber and nutrients. A medium apple provides:

An Apple A Day — Does It Work?

95 calories

25 grams of carbohydrates

4 grams of fiber “An apple a day keeps the doctor away” is an 14% of daily Vitamin C adage we’ve all heard. But does eating an apple 6% of daily potassium a day really keep the doctor at bay? Researchers 5% of daily Vitamin K at the University of Michigan and Dartmouth SOURCE: Healthline College decided to find out.

After surveying adults who eat an apple a day compared to those who don’t, they found that people who consume more apples had other healthy habits. But they found no significant relationship between eating an apple and fewer trips to the doctor. Instead, researchers concluded that eating an apple a day “keeps the pharmacist away.” Apple eaters take fewer prescription drugs than their non-apple-consuming counterparts.

Researchers say the apple’s nutrients do help prevent medical conditions such as high blood pressure and diabetes, and contribute to a healthy diet. And a healthy diet likely means fewer doctor visits.

fats lurk in many of the foods that end up in our shopping carts, such as cookies, crackers, coffee creamer and frozen pizza.

PLEASE! WASH YOUR HANDS! TRANS FATS RAISE RISK OF ALZHEIMER’S DISEASE

Trans fats make processed foods taste so good, but they are so bad for our health. In addition to contributing to cardiovascular disease and diabetes, trans fats have been linked to a higher risk of Alzheimer’s disease and dementia. People with higher levels of trans fats in their blood may be 50% to 75% more likely to develop Alzheimer's disease or dementia, according to a study published in the journal Neurology.

Researchers tested the blood of 1,600 people for trans fat levels and found that people with the two highest levels of trans fats were 52% and 74% more likely to develop dementia than those with the lowest levels.

What are trans fats? Trans fats are created when hydrogen is added to liquid vegetable oils to make them more solid.

Semi-soft margarine and shortening are examples of trans fat products. Trans

Which is riskier to your health: eating raw or undercooked meat, or failing to wash your hands after using the bathroom?

Using the bathroom without a thorough handwashing afterward puts you at greater risk of spreading E. coli bacteria than eating raw meat, researchers found.

For the study, researchers from the United Kingdom tested samples of the drug-resistant E. coli from beef, pork and chicken and compared the results to samples from human feces and blood.

The Handwashing Song In the time it takes to sing one chorus of “Happy Birthday,” you can reduce the bacteria on your hands by about 90%.

Washing hands with soap and water for 15 seconds reduces bacterial counts by about 90%.

Washing for 30 seconds drops bacterial counts by nearly 99.9%.

SOURCE: Harvard University Medical School

DID YOU

KNOW Water intake can potentially improve an adult’s metabolic rate by 24-30%. Source: Medical Daily

?

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InsuranceNewsNet Magazine » December 2019

QUOTABLE So much of what's sold in the name of modern-day wellness has little to no evidence of working.

— Brad Stulberg, performance coach

The study showed that the great majority of E. coli infections that cause human infections aren’t coming from meat or anything in the food chain, but is spread primarily between humans.

The researchers urged people to always wash their hands after using the bathroom, handling diapers, touching animals, handling food, before feeding your children and any other time you see fit. Washing with soap and water for at least 15 seconds is best, but hand sanitizer with at least 60% alcohol will do if you’re without access to a sink.

LOSING YOUR HAIR? BLAME THE AIR

If you’ve noticed your hair is thinning, air pollution may be to blame. Scientists found that exposure to common air pollutants, known as particulate matter, could be linked to hair loss.

Researchers exposed cells from hair follicles to different levels of dust and diesel particulate matter for 24 hours.

Afterward, they measured different protein levels in the cells and found that the pollutants zap the protein that fuels hair growth from the follicles, which leads to hair loss.

Dermatologists recommended the best way to keep your hair strong against pollution damage is to shampoo and use exfoliating products on a regular basis to keep your hair and scalp healthy and free of toxins and pollutants.

NON-US RESIDENTS: A Growing & Largely Untapped Market If you are like many advisors serving the high net worth clients, you probably work with or have access to a several people who are non-U.S. residents. The United States has long been a top destination for worldwide millionaires, welcoming 10,000 new global millionaires in 2018 alone.

Foreign-born residents now represent 14% of the U.S. population or approximately 44.5 million people.

According to the latest U.S. Census Bureau data, the number of foreign-born people in the United States rose in 2018 to the highest share in over a century.

Not only does the sheer growth and demographic projections of the market segment make it an attractive, but non-U.S. residents share a common need for sound financial advice. They likely face unique financial, tax, and estate planning challenges.

A pervasive pitfall for non-residents is they do not realize that their physical presence in the United States may constitute residency for income and estate tax purposes. A non-resident may live outside the United States for the majority of the year. He or she comes to this country for work, school, sports, or to visit family, for example. The visit, however, is temporary. If a nonresident lives in the U.S. for a portion of the year for multiple years and derives income from a business or employment while in the U.S., such person may be considered a resident which can cause significant changes to income and estate taxes.

Regardless of citizenship status, individuals will likely owe estate taxes on anything owned in the United States, whether it is real estate, jewelry, cars, or businesses. So what is the biggest difference between being a resident or citizen and a non-resident for estate tax purposes? If one qualified as a resident, estate taxes will be calculated based on the value of all assets held … worldwide.

It has, however, gotten easier for non-resident individuals to protect and preserve wealth using U.S. based life insurance. Life insurance may be a compelling solution for non-resident individuals for multiple reasons, including the following: •Life insurance owned by a non-resident is not, under current law, a U.S. situs asset for estate tax purposes, so just owning a U.S. policy may not cause an individual to have a U.S. estate tax liability.

•The proceeds of a life insurance policy can help business continuity and succession.

•The cash value and death benefit is paid in U.S. dollars.

So what is the biggest difference between being a resident or citizen and a non-resident for estate tax purposes?

If one qualified as a resident, estate taxes will be calculated based on the value of all assets held … worldwide.

Historically, life insurance carriers have been somewhat reluctant to write policies on non-resident citizens, but given global migration trends, past restrictions have eased somewhat. Along with the typical underwriting review, insurers will seek information on the ties to the United States. Specifically, they will want to know how often the proposed insured travels to the United States, and the purpose of his or her visits. In addition to other potential items, the proposed insured will have to supply information about U.S. based property, investments, accounts, and business interests. The insurer will also likely ask the proposed insured to disclose their global net worth, not just their stateside investments. Keep in mind, every life insurance company has unique criteria. For some, the country of citizenship/residency plays a more significant factor than others. It’s also important to remember that some countries prohibit their residents from purchasing life insurance from non-resident (U.S.) carriers.

Life insurance is just one of the value-added solutions you may want to discuss with non-U.S. resident individual clients. Massachusetts Mutual Life Insurance Company (MassMutual) helps brokers address complex needs of their clients, particularly in this ripe marketplace.

For more information about MassMutual Brokerage, visit www.fifthavenuefinancial.com Melissa Teixeira, ChFC, CLTC a Vice President at Fifth Avenue Financial who has nearly 20 years’ experience assisting financial service professionals help clients establish the financial security they want for themselves, their families and their businesses. mteixeira@fifthavefinancial.com 212.642.4829

NWWealth: Global Wealth Migration Review, April 2019 https://www.migrationpolicy.org/article/frequently-requested-statistics-immigrants-and-immigration-united-states CRN202110-254304 1

2

INBALANCE

Just Say Yes To Sending Holiday Cards And Gifts Sending holiday cards and gifts can keep your name in front of clients. But you can’t send just anything.

By Bryce Sanders

S

hould you send cards and gifts over the holidays? Lots of questions come to mind: Are you sending them to clients or to friends? How old are your clients? What do you want to accomplish by sending something? If the roles were reversed, would you like to receive something? The answer to all these questions should be “Yes!”

The Case For Giving

You might think segmentation is the first step in deciding what to send. Are we talking clients, prospects, friends or family? Treat them as one large audience.

Let’s start with sending cards: It’s a sign of respect, a recognition the 60

relationship has value. It’s a way of keeping in touch with people you met long ago. It’s a way to stay on the radar. For clients, it’s another touch. Cards have a sense of permanence. They often stay on the mantle or a table for the holiday season. Some people save and store them after the holidays are over. If the recipients aren’t clients, friends and family are also prospects. Sending cards gets your name in front of them.

How about gifts? Who doesn’t like receiving a present? It’s something to unwrap with anticipation. In many cultures, gift giving is a sign of respect.

Gifts are nominal, yet not insignificant.

Although you might think your client has everything, there are gifts for people who seem to have everything. Your effort will be appreciated.

Four Tips For Sending Holiday Cards

Because we are a multicultural society, you may choose to send cards that have

InsuranceNewsNet Magazine » December 2019

a generic “Happy Holidays” greeting. Or you may choose to stick with the traditional Christmas theme.

Here are four tips to get the most from your holiday card project.

1. Get them out early. Someone once told me, “People remember the very first card they receive each season.” To shoot for an early December arrival, mail the cards immediately after Thanksgiving.

2. Make the cards as personal as possible. Many businesses send out cards with a typed greeting inside, sealed in an envelope with a typed adhesive label and a postal machine imprint. This screams “Untouched by human hands!”

It’s like a robocall. Write a greeting to the client on the interior of the card. Have your entire team sign the cards. Attach a holiday themed stamp to the envelope. Ideally, the card is hand-addressed, although that’s not critical if you’ve followed the other steps.

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INBALANCE JUST SAY YES TO SENDING HOLIDAY CARDS AND GIFTS 3. Keep a record of cards you receive. Match the names against your master mailing list. Keep extra cards handy. If one arrived from someone not on your list, send one out immediately.

Misaddressed cards will come back.

When that happens, go through the same process after rechecking the address.

Neither Rain Nor Sleet Can Stop The Holiday Card Avalanche

4. Just say no to e-cards. Sending cards sounds like lots of work. The idea of e-cards may enter your mind. Chase that idea away. The holidays are the season for renewing and making connections. A card that can be deleted with one mouse click doesn’t count. Neither do social media posts. Make the effort.

Preferred Greetings On Holiday Cards

Tips For Holiday Gift Giving

The holidays are the season for giving. Gifts are a sign of your respect for the relationship. A gift with a personal touch shows your interest in the individual. A gift can also be a reminder of your relationship.

Here are some gift-giving tips.

Let’s start with cost. The industry and your firm have rules. You need to be in compliance, lest your gift look like a rebate on fees. Clients cannot give you lavish gifts either, lest they appear to be a payment.

Ideally, gifts are presented personally.

Let’s say your client invites you to their holiday party. Your gift is clearly marked, so it’s not another anonymous package on the hall table. It’s wrapped, not brown bagged. Your gift is a statement about yourself. It will likely be opened in front of others.

If the gift can’t be presented personally, it will need to be delivered. Saying “come to the office to collect your gift” is not an option. This means the gift and shipping may be two distinct expenses.

You might find a great gift item, but if it’s bulky and heavy, shipping is an issue.

Many online companies offer free shipping. Amazon is an example of a firm that allows you to easily ship to different addresses when ordering online.

The more personal the gift, the better.

It shows you put thought into its selection as opposed to buying a one-size-fitsall gift.

Your gift represents you. It speaks to your professionalism and the value of your relationship with the recipient.

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More than 2 billion holiday cards are sent in the U.S. each year. Christmas card sales make up 61% of U.S. sales of greeting cards annually.

Merry Christmas: 53% Happy Holidays: 21% Season’s Greetings: 12% Other: 14% SOURCE: TheFreeLibrary.org; GreetingCard.org

Let’s start with food items. Clients have office lives and home lives. Cookies, coffee, pretzels, popcorn, chocolates and candy can easily be shared. If they entertain at home for the holidays, you might recognize your gift when you visit.

Gifts for their children are an idea for the person who has everything. People want to give their children the best life possible. You might have set up your client’s college savings plan. A gift for the child is a way of acknowledging that relationship is important.

Books are another route. Your client might have favorite authors. New cookbooks are released for the holidays.

Books about the economy or investing have an audience. Visiting your local bookshop when the author is signing copies is a brilliant idea. So is writing a message inside the front cover, so your client remembers who gave the gift.

Magazine subscriptions are another easy gift. You can go online to order the subscription. Then buy the latest copy of the magazine. Tie a ribbon around it and include the subscription confirmation.

Does your client have a Christmas tree? A unique ornament is a gift that will be saved and displayed year after year.

Flowers are a simple, yet overlooked

InsuranceNewsNet Magazine » December 2019

gift. If your client entertains, they always need extra home decorations. Flowers can highlight their buffet or dining table.

Another idea is to make a contribution to your client’s chosen charity. The cause means a lot to them. Your gift acknowledges “you get it.”

Wine and liquor are popular gifts, but you need to understand sensitivities. Is someone cutting back on their alcohol consumption? Assuming that’s not an issue, champagne is a festive choice.

Make the effort. Send holiday cards.

Buy gifts for clients and friends. Your generosity will be appreciated.

Bryce Sanders is president of Perceptive Business Solutions, New Hope, Pa. He provides high-networth client acquisition training for the financial services industry. He is the author of Captivating The Wealthy Investor. Bryce may be contacted at bryce.sanders@innfeedback.com.

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BUSINESS

5 Inexpensive Ways To Market Your Insurance Business Simple ways to get your name out there in the midst of a crowded marketplace.

By Michael Z. Stahl

R

unning an insurance agency or business is no small task.

The industry is competitive and ever-changing, and for many, insurance in its many forms can be confusing.

So, first of all, kudos! You’re running a challenging, yet incredibly rewarding business. It takes patience, empathy, skill and endurance. Within this competitive world, it can be difficult to put your name and brand ahead of others. The following tips can help you do just that easily and with more financial efficiency.

No. 1: Be Present And Active On Social Media.

A social media presence is a must-have these days. People turn to various social media channels — be it Facebook, Instagram or Twitter — and the plethora of product/ brand review sites out there for the latest updates and news on anything, including services or businesses they’ve used.

Receiving a negative review online or via social media is concerning. But don’t let that hold you back. If your business receives a bad review, address it thoughtfully and quickly. Creating social media accounts for your business helps build your brand, connect with others in the community (hyperlocal or more broadly) who may need your services, and find prospects via your friends or followers.

With an average of 2 billion monthly active users and 1.32 billion daily users throughout the world, Facebook is the No. 1 social media platform. In fact, 40 million small businesses have pages on Facebook, and 75% of brands use the social network to promote their posts. If your business isn’t on Facebook, jump on board.

There are opportunities for paid digital 64

Younger Consumers More Likely To Read Reviews

Younger consumers are more likely to read online reviews when looking for a business or service provider, but older consumers check the reviews occasionally.

54%

50% 39% 29%

28%

22%

25% 15%

16%

6%

Yes, always

5%

Yes, regularly

Yes, occasionally

SOURCE: Bright Local Consumer Review Survey 2018

marketing through social media and online ads. But most small businesses (approximately 47%) spend less than $10,000 on digital marketing, with the majority using social media (62%) and a website (61%) to market themselves, according to Clutch’s 2018 Small Business Survey.

If your budget allows, try some paid advertising on these media channels. But it’s best to make use of the “free” advertising social media platforms can provide by promoting your business’ products and services.

No. 2: Buy Local … Really Local!

Aside from digital marketing, advertising in your local community is a great way to get your name and services out there. But depending on where you live and the type of advertising you’re interested in, it can be a drain on your budget.

So, think smaller and localized. An agent I know places print ads in the programs for his local high school athletic activities, music programs, theater productions and more. The cost is relatively inexpensive, and you can pretty much guarantee a number of those holding the programs will go through it page by page while waiting for their son or daughter to

InsuranceNewsNet Magazine » December 2019

12%

No, never 18-34

35-54

55+

take the field or stage. This agent has received hundreds of leads throughout the years, with prospective clients saying they saw his ad in the program and decided to reach out with some questions.

Think about other local businesses or organizations that could offer the same type of inexpensive exposure. Are there local youth sports teams you can sponsor at a low cost? What about community events that need sponsors and/ or advertisers? Can you run an ad in a local church bulletin or a homeowner’s association newsletter? Look for various options to support others throughout your community. In turn, you’ll gain their appreciation, respect and business!

No. 3: Network, Network, Network!

You’re not the only small-business owner or employee out there, so connect with others who are in your same boat — albeit a different industry, product or service. Learn how they market, sell and grow their business. You might discover something you could implement into your business.

There are a host of professional organizations out there seeking new

5 INEXPENSIVE WAYS TO MARKET YOUR BUSINESS BUSINESS

Small Businesses Have Small Budgets For Digital Marketing Despite their limited budgets, the majority of small businesses engage in digital marketing. Well over half of all small businesses currently market through their website (62%) and social media (61%).

47%

25%

11% 7%

8%

Less than $10,001- $100,001- $500,001- $1 million+ $10,000 $100,000 $500,000 $1 million SOURCE: Clutch 2018 Small Business Survey

members or supporters. Consider your local chamber of commerce, Small Business Administration community groups and industry groups. Take advantage of events with opportunities to speak to an audience. This is a perfect way to let others know who you are, what you do and how you can help them.

This requires time and effort. But these events are relatively easy — and free — ways to put yourself out there, lend your expertise and build your book of business.

No. 4: Generate Market Referrals

Reach out to your existing customers — especially those who have been thrilled with your service. Ask them to share three to five names of friends, family or associates who they think will benefit from your services and products. Also, see if they’d be open to posting their review or recommendation online. In fact, 86% of consumers

read reviews for local businesses, and 91% of 18- to 34-year-olds trust online reviews as much as personal recommendations, according to a 2018 Bright Local study.

But don’t forget the customer base you already have. Studies show it can cost between four and 10 times more to acquire a new customer than it does to keep an existing one. Make sure you have practices in place to check in on your existing clients to see if they’ve had life changes that warrant different insurance products. This is a proactive way to build your client base.

No. 5: Get Involved and Give Back

Volunteering with a local nonprofit organization — or financially contributing to one on behalf of your business — is a great way to put your name and services out there. More importantly, it’s an impactful way to give back to others. And giving back is good for business, as a SCORE survey showed 85% of consumers have a more positive image of a company that gives to charity. Giving can not only help create a positive image for your personal brand, it can lead to more people wanting to do business with you.

Your contribution doesn’t have to break the bank. There are so many worthy organizations that are grateful for any amount of money, and others need extra sets of hands at events. If you can find the time or budget to do either, you’re doing good for everyone involved.

We live in a fast-paced world with a barrage of messages telling us what to buy or who to call. And that’s just within the insurance industry! Take time to establish marketing goals that are easy on your budget yet beneficial to your bottom line.

Do this, and you can continue to thrive in the industry — and help others, too.

Michael Z. Stahl is executive vice president of HealthMarkets, an independent insurance agency in the Medicare, individual and supplemental health, life, and small group insurance markets. He may be contacted at michael.stahl@innfeedback.com.

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December 2019 » InsuranceNewsNet Magazine

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This guy really knows how to find Revenue Streams

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INSIGHTS

The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.

The Life Coach Your Client Needs Walk your clients through the emotional aspects of protecting their families and planning their financial futures.

By Bryson Milley

C

ompleting a life insurance application is never just a simple process for a client.

Clients entrust you with personal information they rarely share with their best friends, and you play a significant role in guiding them from a financial standpoint. To honor these relationships, I recommend a holistic approach to understand how finances affect individual lives. The more experience I gain, the more hats I begin to wear, and the more I can compare being an advisor with being a life coach.

Evaluate Client Trends

Consider the trends you observe among clients to identify how you can enhance their lives through comprehensive planning. For example, four of my key clients, who were building businesses and growing their assets for decades, experienced large “liquidation events” and an influx of wealth this past year. Their lives changed significantly and very quickly. They were already successful individuals, but they immediately saw a concentration of money they had not realized would come their way.

After identifying trends or major events in clients’ lives, take a life coach/ financial advisor approach and develop a framework to serve as a guide. For example, if your clients experience an influx of wealth or are approaching retirement, start by asking what expenses and responsibilities are non-negotiable and should not change. Then, explore what they want to add or accomplish in terms of time or money, and outline the larger bucket list items to be checked off each year.

On the other hand, you may be working with clients who are facing a life change, such as an expanding family, that requires them to save more money. Either 66

way, you should begin by gathering an understanding of who they are as a person and what they prioritize in life before using your technical knowledge to build their wealth structure.

Invest In Relationships

No matter what, you will always find that developing strong personal relationships with each client is the key to successful holistic planning. To make meaningful connections and gain a comprehensive outlook on your clients’ finances, ask the right questions and invest in learning about their lives over the course of your time with them. Spend the first 20 minutes of each meeting catching up on their personal lives, learning about their family and friends, and taking mental notes of even

that a conversation like this would not happen if all I did for them was give advice on their insurance.

Confront Your Comfort Zone

If you would like to move from insurance agent to comprehensive planner, confront your comfort zone. You don’t have to go through an intimidating practice change alone when you are not confident in the expanded skillset. Instead, consider leaning on another professional who has the expertise you need (i.e. investment management). You may have developed a specialty, such as in life insurance, and you don’t have to give this up. Partnering with the right person will allow you to keep your niche and allow you to serve clients holistically in an ensemble-type practice.

When we explore clients’ recent life changes, tears of joy or sadness are common in my office, and these moments are invaluable to develop our trusting relationship. the smallest things that may be relevant for their financial plan. When we explore clients’ recent life changes, tears of joy or sadness are common in my office, and these moments are invaluable to develop our trusting relationship.

The irony is that as we become more of a life coach, we are often coaching clients how to spend their money wisely without compromising their financial stability.

For example, I have a long-standing client relationship with a retired couple from Holland who often returned to visit friends and family. During a recent meeting, with tears in their eyes, they mentioned their previous trip was probably their last because they were no longer comfortable on long flights. We reviewed their investment portfolio and income needs, and I helped them see that small indulgences such as flying business class would not break their “retirement bank.”

Working together on this gave them the permission they were seeking to spend their life and money in meaningful and fulfilling ways. I can say without question

InsuranceNewsNet Magazine » December 2019

As I continue to take more of a life coach approach to my practice, I find myself referencing my father’s perspective; he would say, “As much as money is an objective item, it will always have a subjective response. Then, when you add the emotion of a major life event, the response will go to extremes.” He prepared me to navigate through the emotional responses associated with financial planning and to honor client relationships.

When you foster a trusting relationship, you can positively affect a client’s financial stability and confidence, which relies on your support as a comprehensive financial planner — and a life coach.

Bryson Milley, BA, CFP, CIM, FCSI, is a financial advisor with RGF Integrated Wealth Management, Vancouver, British Columbia, Canada.

He began working in the financial planning industry in 1993 after graduating from Simon Fraser University. He is an 18-year MDRT member. Bryson may be contacted at bryson.milley@innfeedback.com.

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

INSIGHTS

The Power Of Storytelling On Display At NAIFA Conference Conference attendees heard the stories of those who are leaders in the industry, and learned how to tell stories of their own.

By Ayo Mseka

J

amie Fleischner grew up in an insurance household, and learned a lot about the profession in high school and college. She decided to join the industry, attracted by its limitless potential for anyone willing to work hard.

Like other young agents, however, her first few years in the business were not exactly a bed of roses. But after a series of setbacks, she refocused her energies on the business. One bright spot that helped her refocus? The disability insurance policy her mother had bought helped her go through a tough period in her life.

So Fleischner decided to focus on DI and life insurance. In 1998, she attended a NAIFA meeting, where she received critical success insights from some of the association’s top advisors. The following year, she decided to go out on her own.

She obtained her LUTCF designation, hired staff for her office, and has never looked back. Today, she is the proud owner of a thriving financial practice which is 100% referral-based.

One of the secrets of Fleischner’s success was learning how to deal with rejection. All along, she said, she knew that the financial services industry is highly rewarding both personally and professionally, and that all she had to do was to stay the course in order to reap those rewards. “This business has brought me a lot of joy,” she said, “and I wish all of you a premium life.”

Fleischner’s story was one of many insights and ideas that were shared during NAIFA’s 2019 Performance + Purpose

Conference in September.

Scott Mann, retired Green Beret and warrior storyteller, had a tough time after leaving the military. Mann went through a transition period during which he dealt with a lot of stress and confusion. All of this led him to consider committing suicide. But he made the choice to live and he pressed on. Mann used the power of storytelling to heal himself. “You can use it with your clients, team members, prospects and others,” he told attendees at the conference’s LILI 7 presentation.

that led to his success in the financial services industry. Baker, managing director of BTA Advisory Group in Irvine, Calif., received NAIFA’s highest honor, the John Newton Russell Memorial Award. He described the three C’s that propelled him to new heights.

Community

All of us have a sense of community and we quickly realize that growth occurs only in our communities.

“You can’t fake character.

It comes from the depth of our being.”

Mann then gave the attendees an opportunity to tell their own stories and told them that they must incorporate two aspects of storytelling into their efforts: 1. The development of the story

Consistency

This quality gets us through toug h t i me s , he s a id .

Without consistency, he said, we will have to start all over again when we experience a setback. “The end of the journey is just one step away if we choose consistency.”

Throughout the years, Baker has learned to be consistent in everything he does, including prospecting. “Prospecting was the only thing I could control,” he said.

Character

2. The telling of the story As the attendees carried out this exercise, Mann emphasized, they should write stories that describe a defining moment in their lives, they should describe the struggles or the journey, and the stories must be relatable. In addition, attendees should demonstrate how their lives changed and what they learned from their experiences.

After the exercise, Mann reiterated the fact that all human beings are hardwired to engage in storytelling, which he describes as the transfer of images from one human being to the other. All attendees should lead their presentations with stories because, he said, “you have earned your stripes to help other people.”

The conference was also the place for Guy Baker to share three important traits

This is the real measure of success, he said. “You can’t fake character. It comes from the depth of our being.”

The NAIFA 2020 Performance + Purpose Conference will take place Oct. 1-4, 2020, in Boston, NAIFA’s birthplace.

Ayo Mseka is editor-in-chief of Advisor Today, the official publication of the National Association of Insurance and Financial Advisors. Contact her at Ayo.Mseka@innfeedback.com.

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December 2019 » InsuranceNewsNet Magazine

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More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.

INSIGHTS

Blurred Lines: How To Connect Client Value To Revenue Value Traditional metrics, such as number of clients served or amount of premium written, tell only part of the story when it comes to measuring your practice’s success.

By Peter DeWitt

A

s agent and advisor practice models continue to blur, advisors who have traditionally focused solely on insurance solutions now have an opportunity to be top performers in their markets by expanding their offerings.

The types of products and services offered by insurance advisors have expanded over recent years to include investment solutions, estates and trust planning, and retirement planning.

LIMRA and EY research finds that the most successful insurance advisors have incorporated these solutions into their practice.

What Is Success? How Is It Measured?

In an industry that has traditionally relied on the volume of transactions to drive sales, advisors must rethink their approach to truly grow their business.

Advisors need to ask themselves, “Should I focus on increasing the number of clients served or would it best serve me and my existing clients to take a holistic approach for each of them?” The latter has shown to have impactful results for insurance advisors.

Traditional metrics, such as number of clients an advisor serves or amount of premium written, only tell part of the story. To get a better picture of success, advisors must consider how efficient their practice is, the depth of their advisor-client relationships and, most importantly, their areas of potential growth.

Gross revenue per client is one metric insurance advisors who are looking for 68

strong and sustainable growth can use to measure success.

How Can GRPC Measure Success And Drive Growth?

Gross revenue per client is a measure of how much revenue is derived from a client. The average GRPC of an advisor’s book of business is calculated as total gross revenue divided by total number of clients. GRPC can be applied on an individual or a firm level.

Advisors must first understand what segments of their clients and prospects can be better understood by using GRPC. Three of the most impactful areas include: Identifying clients with low GRPC: Advisors can target these clients for additional products/solutions by reviewing their current situation, and reevaluating plans and goals with a holistic approach.

Identifying clients with high GRPC: In these situations, advisors want to ensure that they keep these clients by focusing on maintaining a strong relationship as they are the most profitable clients.

Creating an ideal client profile for prospects: Advisors can evaluate prospects based on potential GRPC. Identify prospects with similar characteristics of high GRPC clients.

Once advisors are able to identify potential areas of growth, they can consider the following three approaches to help facilitate GRPC growth.

Attain professional designations.

Designations earned by an advisor reflect skill, expertise and, more importantly, imply the advisor’s competence to offer multiple products and solutions.

Top performing insurance advisors, based on GRPC, have earned more professional designations than other advisors. For example, top independent insurance advisors average 1.11 designations compared to 0.48 for those advisors with the lowest GRPC. A majority

InsuranceNewsNet Magazine » December 2019

of low-performing advisors hold no professional designations.

Successful insurance advisors are most likely to have earned Certified Financial Planner, Chartered Financial Consultant, Chartered Life Underwriter, and/or Retirement Management Advisor designations.

Offer more specialized and varied services. Traditional insurance practices are no longer isolated regarding the products they sell or the markets they serve. As these lines continue to blur, successful insurance advisors are expanding their services and products to meet clients’ needs for investment, retirement, insurance and estate planning.

These solutions enable advisors to deepen relationships with their clients while maximizing GRPC. Insurance advisors who are maximizing their GRPC have incorporated these services into their practices at higher rates than their peers.

Do more retirement income planning. There is a clear connection between offering retirement income planning and GRPC. Insurance advisors who offer retirement income planning to all clients typically reap 2.5 times higher average GRPC than those that do not offer to retirement income planning to any clients. Retirement income planning provides an opportunity for advisors to learn more about a client’s total assets and potentially consolidate a greater share of those assets under their discretion.

Today’s financial services landscape is more competitive than ever. Advisors who can position themselves to most efficiently meet client needs will gain success. GRPC is one metric advisors can use to help facilitate that success.

Peter DeWitt is an analyst in distribution research at LIMRA. Peter may be contacted at peter.dewitt@innfeedback.com.

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