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IN THIS ISSUE

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APRIL 2022 » VOLUME 15, NUMBER 04

FEATURE

Reaching Out, Lifting Up By Susan Rupe How members of the industry are sharing their knowledge to boost Americans’ financial literacy.

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ANNUITY

30 C ould FIAs Be A Cure For Dropping Bond Prices? By Doug Wolff Most bond funds suffer market value losses in a rising interest rate environment, while most annuities do not if they are held for certain time periods.

HEALTH/BENEFITS INFRONT

4 L awsuits, Rules And Money

By John Hilton The Department of Labor investment advice rule took effect Feb. 1, and a pair of lawsuits in federal courts quickly followed.

34 Broker Comp Disclosure ‘Will Change The Game’

IN THE FIELD

By Susan Rupe Commission disclosure is an opportunity and not a problem, an industry veteran said.

10 F rom Single Mom To ‘Legendary’ Advisor

By John Hilton Robelynn Abadie’s combination of grit, charm and willingness to learn led her to become an industry leader and a champion for women.

LIFE

26 A Term Alternative In Business Succession Planning

6 INTERVIEW

6 Sailing On That Blue Ocean

By Ryan Mattern and David Bauer Term insurance can be an effective tool in business-related planning if the benefit is received at a desired time. However, this rarely ends up happening.

Joe RoosEvans discusses how he discovered the way to set himself apart from all the other advisors out there, describes the way he mastered the art of marketing, and reveals why losing his first job was the best thing that ever happened to him.

Paul Feldman Susan Rupe John Hilton Susan Chieca Melissa Clark Jen Wingard

38 Help Clients Spring-Clean Their Financial House By Eddie Gill The turn of the season is a good opportunity to assess your clients’ financial literacy.

MULTILINE

42 Sea Level Rise Could Significantly Affect Property Insurance By Susan Rupe A NOAA report sparks fears of more frequent high-tide flooding, extreme storm surges and saltwater infiltrating coastal infrastructure.

BUSINESS

44 What It Takes To Have A Million-Dollar Day By Rebecca Korn The perfect day for your practice depends on how you align all the factors that lead to that big sale.

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Copyright 2022 Insurance & Financial Media Network. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 125, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 125, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein. Address Corrections: Update your address at insurancenewsnetmagazine.com.

InsuranceNewsNet Magazine » April 2022

LETTER FROM THE EDITOR WELCOME

Knowledge That’s Worth Having

’m sitting in grade six math class, doing the workbook exercises I hate. I’m asked to solve this problem: Two trains are 396 miles apart and are heading toward each other. One travels at 95 miles per hour while the other travels at 85 miles per hour. How long will it take for the two trains to meet? My first thought: Who cares? It’s not as if I’m going to grow up to become a railroad logistics expert. And then another problem: Kathy’s mother is ordering lobster salad for a party. If she expects 16 guests at the party, and each guest will eat 1 cup of lobster salad, and there are 4 cups of lobster salad in a pound, how many pounds of lobster salad must she order? You lost me at “lobster salad.” Read the room, people! I’m sitting in a classroom in a rundown school building in the middle of western Pennsylvania coal country. None of my classmates has ever tasted lobster salad, let alone had their mother order it for a party. Parties around here mean someone throws some hot dogs on the grill. If they’re feeling especially fancyschmancy, they might put out some chips and dip. But lobster salad? Not happening here. Perhaps asking students solve the following problems would be more relevant: » Jeff’s part-time job pays him $12.50 an hour. He has his eye on a used car that costs $15,000. Gas is $4 a gallon, and car insurance costs $4,300 a year. How many hours must Jeff work in order to afford a car? » Kim is applying to college. She has been accepted at an in-state public university that costs $20,000 a year. But she also has been accepted at a private college that costs $40,000 a year. She qualifies for need-based financial aid at the private college but not at the public university. And let’s mention that the private college is 800 miles from her home, so she needs to factor the cost of traveling home on breaks into her college decision. Which school should she choose?

» Maria and her best friend plan to get jobs and move into an apartment together after graduation. If the average wage in their town is $18 per hour and the average rent in their town is $1,000 a month, can they afford to do this if they both work 40 hours a week? If you think these problems are less like algebra and more like financial literacy lessons, you are right. Each day, Americans are faced with problems such as how much to save for retirement when they have mortgages to pay and kids who are outgrowing their shoes. Problems such as how to pay off six figures of student loans while paying rent on an entry-level salary. Problems such as deciding which is the most affordable car to buy or which is the best type of insurance to choose. The lucky among us received a financial education at home or at school. But most of us had to learn these lessons the hard way. April is Financial Literacy Month, and it’s a good time to assess the state of financial literacy in the U.S. The National Foundation for Credit Counseling conducts a financial literacy survey each year, and the results of their most recent survey in 2020 show some interesting results. » More than half of adults (57%) continue to give themselves a grade of A or B on their knowledge of personal finance, and nearly nine in 10 (87%) say they were very or somewhat confident that they made the right choice during their last big financial decision (such as picking a credit card, buying a car or refinancing their mortgage).

not at all confident, and that percentage has been rising slightly each year since 2017 (12% in 2019, 10% in 2018 and 8% in 2017). » Adults ages 65+ are more likely than younger adults to feel confident in their last big financial decision (95%, ages 65+ vs. 89%, ages 55-64; 87%, ages 45-54; 83%, ages 35-44; and 84%, ages 18-34). Over three in four (78%) agree — including nearly three in 10 (29%) who strongly agree — that they could still benefit from advice and answers to everyday financial questions from a professional. When asked who they would turn to for general financial/money/management guidance, the top response remains a financial professional such as a CPA or financial planner (36%), followed closely by friends and family (31%). Our April feature is focused on financial literacy, and we learned how many professionals in the industry are passionate about sharing their expertise to help others improve their own financial situations. We share the stories of some of them this month. One of the people we interviewed said he wished math class would focus less on solving problems such as those racing trains and focus more on helping students solve problems that will impact their lives as consumers and citizens. We couldn’t agree more. Susan Rupe Managing Editor

» At the same time, however, more than one in 10 (13%) admit they are not very or April 2022 » InsuranceNewsNet Magazine

INFRONT

Lawsuits, Rules And Money As the Department of Labor continues its work on rules extending fiduciary-like duties, some groups are not waiting. Two lawsuits filed in February may or may not have an impact on the outcome.

By John Hilton

t has long been assumed that when the Department of Labor tried again to expand a fiduciary standard to common life insurance and annuity sales, a lawsuit would follow. After all, the courts have been very friendly to industry through the years. Sure enough, the DOL investment advice rule took effect Feb. 1, and a pair of lawsuits in federal courts quickly followed. “We’ve already got processes in place to eliminate the rogue advisors,” said Eric Couch, who runs ProVision Brokerage in Flower Mound, Texas. “We don’t have an insane amount of complaints. Advisors do what’s in the client’s best interest. At my 4

InsuranceNewsNet Magazine » April 2022

agency, that’s the first and last thing and everything in between.” Couch joined the Federation of Americans for Consumer Choice in a Feb. 2 lawsuit against the DOL in Dallas federal court. That court is within the Fifth Circuit, where the appellate court three years ago struck down the DOL’s prior fiduciary rule. About a week later, the American Securities Association filed a lawsuit in a Florida federal court. The lawsuits make a similar claim in slightly different ways: The DOL exceeded its authority with the investment advice rule. Written by the Trump administration, the investment advice rule has two main parts: a new prohibited transaction exemption allowing advisors to provide conflicted advice for commissions, and a reinstatement of the “five-part test” from 1975 to determine what constitutes investment advice. The Biden administration allowed the investment advice rule to take effect Feb. 16, 2021.

‘Same Old Wine’

The FACC lawsuit claims the DOL’s latest rule “carries forward the core problem the Fifth Circuit identified in vacating the Fiduciary Rule the first time,” adding that “pouring the same old wine into a new bottle does not change the result.” In 2018, the Fifth Circuit Court of Appeals tossed out the fiduciary rule, ruling that the DOL exceeded its authority by creating a new regulatory scheme for the retirement plan space. Writing the majority opinion, Judge Edith H. Jones said the DOL rule “fails the reasonableness test” in extending its ERISA authority to one-time IRA rollovers and similar transactions. Some analysts say the plaintiffs are getting ahead of themselves. For starters, there aren’t any cases yet to show the impact of the rule. “They haven’t enforced it against anybody yet,” noted Fred Reish, partner with Faegre Drinker. “Is there a true case or controversy, which is needed to have a lawsuit, if there hasn’t been any action taken by the government to actually enforce

LAWSUITS, RULES AND MONEY INFRONT

rules? That’s a big question.” Donald Colleluori of Figari and Davenport, a Dallas law firm representing FACC, is unconcerned by the lack of any enforcement actions. Precedent does not require it, he said. “We think that the legal precedent in the Fifth Circuit and elsewhere is very strong in our favor, and that will carry the day,” Colleluori said. “The court is not going to refuse to consider this simply because the Department of Labor hasn’t yet sought to enforce it against any particular agent.”

More Detail

The ASA lawsuit offers more detail on rule overreach claims. It claims the DOL overstepped its bounds with guidance issued in April 2021. The guidance indicates that first-time advice to transfer retirement assets out of a federally regulated plan can constitute fiduciary advice, which the rule subjects to a strict standard of care. Issued as a series of Frequently Asked Questions, the guidance essentially created new rules, the ASA claimed in the lawsuit. The trade group claimed the guidance essentially “rewrote” the regulation and in the process, imposed burdensome documentation and investigation requirements

on their members. “The [Administrative Procedures Act] prohibits agencies from regulating in this manner,” the lawsuit reads. “If the department wanted to change its rules, it needed to do so through the required notice-and-comment process — not through guidance documents.”

More Rules Coming

Lawsuits aside, there is yet another wild card on the way. The DOL’s spring 2021 Regulatory Agenda confirms that it will be rewriting the definition of fiduciary. The Employee Benefits Security Administration had planned to issue the notice of rulemaking by the end of 2021, but it missed that deadline. The new fiduciary definition could be out at any point and is expected to replace the investment advice rule. Industry lawsuits are only giving the DOL advance notice of legal strategies, Reish explained. “These lawsuits will have essentially a basic life expectancy from Feb. 1, 2022, to whatever date the new final regulation becomes effective,” he said. “Then there would have to be a lawsuit against that regulation. “In a way, these lawsuits are alerting the DOL to what the lawsuits against the regulation will be. And I assume the

Department of Labor is drafting around that as we speak.” Again, FACC attorney Donald Colleluori demurred. “Unless they’re going to turn around and just completely reverse course, then any new rule seems likely … to confirm the position that they’ve got in this new interpretation, which basically leaves every annuity agent operating in the space subject to being called a fiduciary,” he said. For the time being, the only thing for advisors and firms to do is be in compliance, Reish said. And every client he talked to is doing just that. “To a person, they came back to me and said, ‘We don’t know if these lawsuits will fail or not, and we can’t afford from February 2022 to whenever they get resolved to be wrong. Because that will be potentially millions and millions and millions of dollars of damages if these lawsuits don’t prevail,’” Reish recounted. 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.

April 2022 » InsuranceNewsNet Magazine

INTERVIEW

Joe RoosEvans discusses how he discovered the way to set himself apart from all the other advisors out there, describes the way he mastered the art of marketing and reveals why losing his first job was the best thing that ever happened to him.

InsuranceNewsNet Magazine » April 2022

An interview with Paul Feldman, Publisher

A S ILING ON THAT BIG BLUE OCEAN — IW TH O J E ROOSEVANS

hat are the secrets of success? For Joe RoosEvans, those secrets boil down to having a system, having mentors, having referrals and having a way to set yourself apart from all the other advisors out there. RoosEvans started in the financial services industry in 1982 and eventually founded Financial Resources of America, which is ranked among the top 5% of financial services agencies in the world. His practice focuses on protecting his clients’ wealth and maximizing their assets. He has published nine books, including a series called Here’s To The Good Life, in which he reveals what he calls “things they don’t want you to know.” His most recent book is Take a Step: The New Normal in a Post Pandemic World. He is a follower of the Blue Ocean Strategy, finding a market space where no competition exists and then capturing that space and creating a new demand. RoosEvans found success by observing what successful people do and then adapting it to his own style. In this interview with Publisher Paul Feldman, RoosEvans describes what makes his business unique and how losing his job as a railroad diesel mechanic put him on a path to future success. PAUL FELDMAN: Let’s start out by talking about how you started in the industry. JOE ROOSEVANS: My folks were immigrants. They always told me that if I got a job on the railroad, I would be set for life. Right out of high school, I got a job on a railroad that had never had a layoff in its history. I was a diesel mechanic; I was going to make good money. Twenty-three months in, and I was rich. I was 19, 20 years old, getting union pay, I had no bills and I got paid every Friday. One Friday, I got my check and behind it was a pink slip. It said I was furloughed. I didn’t know what that meant, so I asked a couple of the old-timers there and they said it meant I was out of there. On Monday, I went over to talk to the head executive about it, and he told me the railroad’s gone, things are changing and I need to find something else to do.

INTERVIEW I went to work selling cars and met this guy who sold insurance to the auto shop, and he told me he raced motorcycles. He gave me his phone number and asked if I wanted to spend the next day riding motorcycles with him. We spent the whole day riding motorcycles, and then I went to his house. I had just turned 21 years old at that time, and this guy was 26. He had a house, a truck, a Pontiac Trans Am, a Harley and dirt bikes. I asked him, “What exactly do you do?” He said, “I sell insurance.” Then he asked me, “Are you going to be selling cars all your life?” And I said, “Oh, no — I’m going to be doing what you’re doing.” That was how I got into the business. I interviewed with State Farm, and they wanted me to relocate to Florida. I said no, I wanted to stay in O’Fallon, Ill., a suburb of St. Louis, where I was from. Instead, I went to work for Farmers Insurance, and they told me I needed to work in my hometown. I said no, I’m going to work 10 miles away and create my own clients. I’m not going to try to sell to my friends. The day I started in this business, I was broke. I hired two people to work in my office and I ran up $26,000 on my credit card to pay them until the money started coming in. I had a telemarketer set my appointments; she set 15 appointments a week, I would see them and that started my marketing system. I ended up being the top agent in my district because nobody was seeing as many clients as I did. FELDMAN: Tell me about mentorship and how it impacted your career. ROOSEVANS: Every step of my career involved mentorship and running into the right people. Where I’m at today came about because of someone I met who was a marketing genius. I got into wealth management by way of annuities. This man had a marketing system for annuities, and I went to work for him and learned his system. What I soon realized is that relationships and partnerships are very important. One of the things I realized is how much the people I’ve met helped me along in my career. It’s said that some of us think we have to do April 2022 » InsuranceNewsNet Magazine

INTERVIEW SAILING ON THAT BIG BLUE OCEAN — WITH JOE ROOSEVANS

it all ourselves. I read something in a book that said, “If you are doing the paperwork, you are your assistant.” FELDMAN: Can you tell us more about how you got to where you are now? ROOSEVANS: I met someone who was selling annuities and single-premium life insurance. I ended up working for him and was successful at it. Then he decided to retire. I wanted to find a practice, and I moved into my home in Illinois, outside of St. Louis. He agreed to stay around for six months to help us. That ended up lasting 10 years. He introduced me to someone who said, “If you just listen to what I say, you won’t have to you won’t have to hit the potholes I did.” Boy, he was right. But I realized what was missing in our industry — relationships. So today, we’re a trust representative office. We are actually a trust office with national powers. Another thing that was instrumental to my thinking was a book called Blue Ocean Strategy. In essence, what it said is that there’s a red ocean where everyone is competing for the same thing, but there’s a blue ocean that’s wide open. That’s where you want to be. That red ocean is the 30 financial advisors all within 20 miles and all competing for the same thing. So you want to distance yourself from the red ocean and set yourself apart. I looked for ways to set myself apart, and I looked at estate planning. Forty percent of the U.S. population has done no estate planning — zero. You have people who are 60 years old, and they have done zero. 8

InsuranceNewsNet Magazine » April 2022

Take that a step further. Forty percent of the 60% who have done estate planning have inadequate estate planning. They wrote a will when their kids were two years old, and they never updated it. Or they have a trust, but it’s not funded properly. So I chose to market to that population that needs estate planning and needs us. FELDMAN: How do you reach out to that market? ROOSEVANS: We have people coming to our events because our story is different. Our team is holistic. I emphasize smart relationships. It’s not about making a sale; it’s not about telling people that XYZ annuity is the hottest annuity in the world, or what the hottest product or strategy is. It’s asking people, “What would you like to accomplish? Would you like to look at some options?” FELDMAN: How did you get into the trust business? ROOSEVANS: There are some insurance companies I worked with, and we had an orphan program. We installed conservation orphan programs, and they turned out to be phenomenal for us and our clients. But it really all came together after I read the blue ocean book. I started talking to a guy in Texas, and he set me up with a relationship with a bank in South Dakota. As far as I know, we’re the only firm of its kind that has an active marketing trust office representative in the U.S. You have insurance agents, financial advisors, attorneys, CPAs — the truth is,

they’re all associated with a trust company. When you go to a trust company, they take care of all those things for you. This opened my eyes. That conversation with the guy in Texas led us to be licensed to do all this. It has been unbelievable. If our clients don’t have a relative or a friend or someone to take care of their estate, they can use the bank as their successor trustee. So they have a professional fiduciary behind them when something happens, so their kids can be taken care of and everything can be done the right way. When I first saw how this could be done, I thought, “This is the blue ocean.” I designed a seminar around estate planning, we went out and did seminars, and our rooms would be full of people. Insurance agents and wealth advisors would love to have attorneys give them referrals. But attorneys don’t want to give them referrals because they don’t want the advisors to mess up their client. Insurance agents and wealth advisors will try to give leads to those attorneys, but they never get anything in return. So with a trust company, we have attorneys on staff at all our locations. We have attorneys doing our estate planning seminars. Our marketing is profitable. When we have seminars, seven days after the event, prospects go into the attorney’s office and 55% will make a buying decision. So that covers the cost of our marketing — pays for the offices, the direct mail, the dinners, and the processing center that does estate planning. The attorney delivers the trust and then we come in seven days later and do funding in the wealth management. A lot of people think that wealthy people don’t go to seminars. They do. But you have to make it an emotional event they can’t miss. Seminars are high-engagement events, because people respond, they make a reservation and then they go to the event. A lot of guys are focused on the sale, and they’re trying to sell the people at the event. No, the event is not the sale but the experience of those who attend. We play music, we have bright lights. We shake everyone’s hand; we go around to all the tables and talk to people, and we’re thankful they’re there. I make time to answer questions. We hold seminars in a restaurant that is modeled after a French castle and in an Italian restaurant that has been in the same family for generations. Well-known

SAILING ON THAT BIG BLUE OCEAN — WITH JOE ROOSEVANS INTERVIEW places. People love to go there. You have to create an experience and control as much of that experience as possible. Sometimes it’s the little things that are a big deal to your clients. We have period candies — candies that were popular in the 1950s, ’60s, ’70s — sitting in a big bowl in the lobby. That candy is magical; it’s a magnet. People won’t stop talking about it. FELDMAN: Tell me more about what you do differently from others. ROOSEVANS: We focus on estate planning, and we partner with attorneys. Our marketing as of now is all about seminars

my career, I find it rejuvenating to show younger people the huge blue ocean opportunity that exists in this industry. And if we don’t start recruiting good people, this industry won’t survive. There’s a ton of manpower out there, and we need to bring in the next generation. I brought young people in as interns, and I’ve found that to be more successful than trying to work with someone experienced. Right now, I have a glowing star named Curtis — he has an MBA now. He was an intern in his second year and now he is a mini me.

Our average client age is between 62 and 64 years old. They have between $1 million and $3 million. But they don’t think they are wealthy enough to go to a trust company, and they don’t want to go to someone like Merrill Lynch. They are our niche. That’s where our blue ocean is. I create my own referrals marketing through attorneys. There are 50 attorneys in our system, and we take away their headaches. We take care of the paperwork and bring in other people who like to do what they do best. I think this is the greatest business in the world. I make a ton of money, more than I ever dreamed of. I’m not bragging about

FELDMAN: Tell us some of the other

Another thing that was instrumental to my thinking was a book called Blue Ocean Strategy. In essence, what it said is that there’s a red ocean where everyone is competing for the same thing, but there’s a blue ocean that’s wide open. That’s where you want to be.

and webinars. Despite COVID-19 putting the brakes on a lot of in-person events, we still had our best year in 2021. We had to move from in-person seminars to directto-the-office Zoom calls. That leads me to the message that I want to get across: We need to hire the next generation. We need to open the door and bring the young advisors in. They know about using technology to reach clients. This industry has given many of us one of the most amazing opportunities, and we need to share that with others by bringing them into the business. At this point in

things that have made you successful. ROOSEVANS: Do what you do best and delegate the rest. But if someone needs help, you need to be able to offer them help. Before I was in the practice I’m in now, I would ask clients if they had a will or a trust. But the truth is they wouldn’t get it done and then life gets in the way. Now, I have a one-stop shop. Someone needs a will or a trust, I can put them in touch with an attorney. They need investment advice, we can give it to them. People want convenience, and they want to know they’re getting value.

that; I’m thankful for it. Thinking back to when I worked on the railroad, if I had stayed there, I would have been broken down by now. Knees, hand — it’s physically hard. But I like education. I like reading. I like being in front of clients in a sales environment and doing what I do best.

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April 2022 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

Robelynn Abadie displays the 2021 John Newton Russell Memorial Award.

ROBELYNN ABADIE began with no training and no experience and ended her 43-year career as the 2021 John Newton Russell Memorial Award winner. BY JOHN HILTON Robelynn Abadie walked away from an abusive first husband with nothing. No home, no car, no money and no job. She did have two toddlers — daughter Melissa and son Jason. To say the future looked bleak would be underselling bleakness. “I was a train wreck,” Abadie recalled. Opportunity didn’t exactly knock at Abadie’s door — more like it waved at her from a distance. But that was enough of a lifeline to pull her into the insurance business. From there, grit and determination took hold. A single mother working to sell insurance and benefits in Louisiana had to work hard during the 1970s. Abadie had to both work hard and work efficiently. “I was told repeatedly that I would not make it if I didn’t work at night,” she said. “It was the best time for traditional sales to families. But I couldn’t. I had two children under the age of 5, and it was difficult enough to pay for daytime child care, much less leave them at night with sitters.” Abadie found mentors, joined trade associations and thrived at serving clients for four decades. Last year, she was named recipient of the 80th annual John Newton Russell Memorial Award, presented by the National Association of Insurance and Financial Advisors. She is only the second woman to win the award and the first since 1978. “Robelynn stood out from the many qualified candidates the committee considered for her astounding professional achievement and leadership,” said Keith Gillies, chairman of the 2021 award committee. “A highly respected speaker, thought leader and innovator, she is an inspiration and shining example for every professional in the insurance and financial services industry.”

A Work Friend

Abadie traces her pathway to financial services to a brief job she held in the real estate 10

InsuranceNewsNet Magazine » April 2022

FROM SINGLE MOM TO ‘LEGENDARY’ ADVISOR — WITH ROBELYNN ABADIE IN THE FIELD

division of a Louisiana bank. “I learned how to do multiple products After marriage to her high school from one company and actually design an sweetheart dissolved, Abadie knew that entire benefit plan for them,” she explained. she needed a career plan to provide for her “My company started getting larger as my rechildren. Years spent studying to become a ferral base got stronger. And then it led me all concert pianist represented her only edu- the way to companies in my market that were cation and her only skill. But Abadie remembered a Robelynn Abadie woman she befriended at the poses in 1978 with bank. The woman had moved on her children, Melissa and Jason. She calls to work for a marketing company it a favorite picture that sold nothing but cancer inand “a real reflecsurance policies, Abadie recalled. tion of how things were when I started “She said, ‘Look, come ride this journey.” with me and see what I do; I have more business than I can handle,’” Abadie said. “It was at a time when meetings were mandatory. And these were state agencies and school boards.” The owner was a former client of the bank and hired Abadie “basically on the spot.” She obtained an insurance license and sold cancer policies for nine months. “It wasn’t any great plan or big dream or anything like that,” Abadie said of her career choices. “It was just a series of referrals and actions that led me there.” With a warm personality, punctuated by a lot of Southern charm, really huge, with 1,000 to 1,500 members.” and a willingness to do the work, Abadie One thing stood out very early in thrived right away. After nine months, Abadie’s career: There were not a lot of feshe was recruited to Southwestern Life of male role models to learn from and grow Dallas, Texas. with. That there are many such groups toAbadie’s stay at Southwestern was not day is part of Abadie’s legacy. long either, as the company was bought She joined the National Association of out in 1980. But she learned more about Life Underwriters — the forerunner of the business at each job. NAIFA — and she was a founding mem“During those nine months at that lit- ber of the Women Life Underwriters tle cancer company, they taught me all Conference in 1979. about mass marketing,” she said. “And In 1986, she chaired the first national Southwestern was one of the first com- women’s study group for insurance propanies that actually came out with a fessionals, which continues today as an mass-marketed universal life product. I annual event. Abadie also chaired the understood the concept of doing that. So, development of a national mentoring proit was just learning products and getting gram for female agents, “Friend to Friend,” out to see clients.” copyrighted by WLUC and financially underwritten by several of the largest life On Her Own insurance companies in the nation. After Tenneco bought Southwestern Life, WLUC, now known as Women in Abadie decided to become her own boss. Insurance and Financial Services, “proShe very quickly learned about all the prod- vided me the opportunity to meet other ucts she didn’t yet sell — like disability and women who helped me through some dental insurance. In fact, benefits sold so very tough times,” Abadie said during her well, Abadie remade herself as a benefits John Newton Russell Award acceptance advisor while still selling life insurance. speech. “They gave me great hope and

supported me when I thought my possibilities were limited.” “Robelynn Abadie is a legendary figure in the insurance and financial services industry,” said NAIFA past president Tom Michel. “Robelynn has served and continues to serve as a champion for women in our industry. She is someone all of us can look up to.”

‘Steller Things’

Abadie later obtained her securities license and went on to become a life member of Million Dollar Round Table, qualifying for Top of the Table. She is a member of MDRT Excalibur Society, and in 2004 MDRT Foundation honored her as a Quality of Life Award recipient. While the trade associations are down in members from those days, Abadie still views association participation as crucial to success. For example, she recalled what signing up for an MDRT phone-a-thon did for her career. “I got to know the people there and I was invited back for a few years, and then I was invited onto committees,” she said. “Then from the committees, eventually I was selected to serve in leadership and I was on the board. Then I went up the chairs and became the president of the MDRT Foundation, which is just one of the most stellar things that I could have done in my career.” But while volunteer service can be a good career move, it just comes naturally for Abadie. Following the Hurricane Katrina devastation in 2005, Abadie led an effort to build a $115,000 playground in the city of Baker, La., just outside Baton Rouge. Abadie had met Sandy Cobden, executive director of Rosie O’Donnell’s ‘For All Kids Foundation” at a Federal Emergency Management Agency event and secured a $25,000 donation from the entertainer. But her powers of persuasion did not end there. “O’Donnell came down and was at the groundbreaking ceremony and spent the day with us,” Abadie recalled. “So, it got a lot of press and a lot of recognition. But it was just a wonderful project.” Along the way, Abadie Financial Services grew to include four employees in a 3,400-square-foot, lakefront office building Abadie bought in Baton Rouge. April 2022 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

Stepping Aside

Effective Jan. 1, 2021, after 43 years in the business, Abadie transitioned most of her clients to another firm. She retains a few clients, or, as she describes them, “just people that wouldn’t let me leave them. We may exchange an email or two every month, but that’s about it.”

the beginning blending five children into a family unit. They pressed on and celebrated their 30th anniversary on Valentine’s Day. “We have six wonderful grandchildren, and all five of our kids are doing well,” Abadie said. “None of them came into the [financial services] business. Not a one. I

On stage for a 2011 MDRT meeting, Abadie stands between Soles4Souls CEO Wayne Elsey and musician Michael Franti. MDRT gave about $75,000 to the Soles4Souls charity that year.

Retirement means further involvement in the Baton Rouge community where she lives. Her efforts to promote women via the Women’s Council of Greater Baton Rouge began in 1999. Abadie founded the group and remains heavily invested in the its annual “Women: A Week-Long Celebration.” “We have probably served maybe 40,000 women in the Baton Rouge area with this program,” Abadie said. “What we would do for the week is feature different women with businesses — they could be fitness or belly dancing instructors, there was just so much diversity. And we would have up to 60 or 70 workshops within a week.” After about 15 years as a single mother, Abadie married Wayne Brackin. The pair had known one another growing up in Denham Springs, a small town on the outskirts of Baton Rouge. “After 15 years of being single and working hard and doing the things that I needed to do and supporting my kids and all their activities, Wayne and I got married six months after we bumped into each other,” Abadie recalled. “We figured out this was meant to be, and it was surprising even to me.” The couple had some tough times in 12

InsuranceNewsNet Magazine » April 2022

really had hoped that they might do that. But they had other interests and pursued their own paths.” Abadie was “shocked” when Gillies called her with the John Newton Russell Award news. John Henry Russell created the John Newton Russell Memorial Award in 1942 as a tribute to his father, an influential leader in the life insurance industry and an early advocate of agent education. John Newton Russell served as NAIFA (then NALU) president from 1916 to 1917 and was a contributing founder of LIMRA International, The American College, and the Chartered Life Underwriter (CLU) designation. “It was never on my mind, but I’m thrilled,” Abadie said, “because that award is so significant and so extraordinary. And it just envelops my entire career and everything that I’ve done.” 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.

Variable annuities are sold by prospectus. Your clients should consider the investment objectives, risks, charges and expenses of a portfolio and the variable insurance product carefully before investing. The portfolio and variable insurance product prospectuses contain this and other information. A prospectus can be obtained at securian.com or 1-866-335-7355. An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Please consult a tax advisor for specific information. There are charges and expenses associated with annuities, such as deferred sales charges for early withdrawals. Variable annuities have additional expenses such as mortality and expense risk, administrative charges, investment management fees and rider fees. The variable subaccounts of variable annuities are subject to market fluctuation, investment risk and loss of principal. MultiOption annuities and optional benefits may not be approved in all states and product features may vary by state. Not all products, features and optional benefits are available from all firms. We reserve the right to limit or discontinue acceptance of future purchase payments after the contract is issued. This may limit the ability to increase the contract value through additional purchase payments. If an optional benefit is elected in the contract, this may also limit the ability to increase the value used to calculate the optional benefit. 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 of action. Securian Financial Group, and its subsidiaries, have a financial interest in the sale of their products. The Indexed Account options described here can be accessed through the purchase of the MultiOption Momentum variable annuity. This material must be preceded or accompanied by a current MultiOption Momentum variable annuity prospectus. You should consider the investment objectives, risks, charges and expenses of the portfolio, Indexed Accounts and the variable insurance product carefully before investing. The portfolio and variable insurance product prospectuses contain this and other information. Please read the prospectuses carefully before investing. 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. Securities offered through Securian Financial Services, Inc., member FINRA/SIPC, 400 Robert Street North, St. Paul, MN 55101-2098, 1-800-820-4205. Securian Financial is the marketing name for Securian Financial Group, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are subsidiaries of Securian Financial Group, Inc. The information presented above is solely intended for use by financial professionals. Such information is not intended for public consumption or dissemination.

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April 2022 » InsuranceNewsNet Magazine

NEWSWIRES

Local Governments Rebound From Big Pandemic Losses

State and local governments lost at least $117 billion of expected revenue early in the pandemic, according to an Associated Press analysis, but many are now awash in record amounts of money, boosted partly by federal aid. In response to the dramatic turnaround, governors, lawmakers and local officials have proposed a surge in spending as well as a new wave of tax cuts. The pandemic relief law championed by Democrats and signed by President Joe Biden last March included $350 billion in aid to states and local governments. The Treasury Department required states, counties and larger cities to file reports last year detailing their initial plans for the money. Those governments also were asked to estimate their losses for 2020 by comparing actual revenue with expected revenue under a Treasury formula. Though revenue figures were left blank by nearly one-quarter of the roughly 3,700 governments that filed reports, the data nonetheless provides the most comprehensive picture yet of the financial strain on governments during the pandemic’s first year. More than two-thirds of state and local governments reported at least some losses, ranging from a few thousand dollars in some rural counties to more than $12 billion for the state of Texas, according to the AP’s analysis. The total was $117.5 billion.

A RECORD NUMBER OF WORKERS ARE BECOMING MILLIONAIRES

Meet the newly minted millionaires next door. They didn’t put all their money into a Microsoft-type stock that made them rich, or start a business that they then sold to some billionaire. No, many current millionaires are government workers, civil servants, educators, military service members (or retired military), managers or co-workers clocking in just like you, leaving at the end of a shift to pick up their kids from school. They’ve been investing for nearly three decades, taking every dollar offered by their employers in matching retirement plan contributions. They also don’t cash out their retirement savings when they change jobs. In its quarterly retirement analysis, Fidelity Investments reported that its number of individual retirement account and 401(k) millionaires hit an all-time high. DID YOU

KNOW

Likewise, the number of millionaires investing in the Thrift Savings Plan, the federal government’s version of a 401(k), also spiked significantly. Fidelity, one of the largest managers of workplace plans, reported that its number of 401(k) millionaires in the fourth quarter of 2021 jumped 32% to 442,000, up from 334,000 a year earlier. The number of IRA millionaires increased 30%, from 288,300 to 376,100, for the same time period.

US BANK ACCOUNTS FLUSH WITH CASH, DATA SHOWS

Most Americans are significantly better off financially now than they were before the pandemic began, new bank-account data shows, but there are signs that low-income families are beginning to fall behind. Following surprisingly strong retail sales, consumer expectations and hiring numbers, new savings data through December 2021 from the

QUOTABLE

We will use our policy tools as appropriate to prevent higher inflation from becoming entrenched. — Jerome Powell, chairman of the Federal Reserve

JPMorgan Chase Institute points to a rapidly thawing economy, one that could shift into even higher gear as the omicron-fueled COVID-19 wave subsides and states continue to ease some restrictions. Americans are sitting on $2.6 trillion in extra savings, a separate Washington Post analysis shows, and signs abound that they are opening up their wallets on long-delayed spending on travel, dining and other experiences that have been on hold since lockdowns swept the country almost two years ago.

INFLATION TO REMAIN HIGH, GOLDMAN SACHS REPORTS

Rising inflation might continue to hit Americans for months to come, Goldman Sachs cautioned in a new report. The investment bank expects that core PCE inflation, the Federal Reserve’s preferred price metric, will decelerate to 3.7% at the end of this year. That is up from 3.1% and nearly double the Fed’s goal of 2%. “The inflation picture has worsened this winter as we expected, and how much it will improve later this year is now in question,” Goldman Sachs economists wrote in a client report. Goldman also now expects consumer prices to drop to 4.6% by the end of this year and 2.9% by the end of next year.

The party holding the White House lost seats in every midterm election since 1978.

InsuranceNewsNet Magazine » April 2022

Source: Cook Political Report

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COVER STORY REACHING OUT, LIFTING UP

Advisors give their time and expertise to h

InsuranceNewsNet Magazine » April 2022

REACHING OUT, LIFTING UP COVER STORY

elp others increase their financial literacy. By Susan Rupe

April 2022 » InsuranceNewsNet Magazine

COVER STORY REACHING OUT, LIFTING UP

t’s one of the most exciting days in anyone’s life — the day they close on the purchase of a home of their own. Josh O’Gara knows what that excitement is like, and he and his fellow advisors want to help more people experience it. But they know the path to homeownership sometimes is filled with rocks and detours. Having a plan for becoming a homeowner can smooth the path, but people need help in mapping out that plan. It can be even more difficult to do that when you’re homeless. That’s where O’Gara and his friends come in. O’Gara is the owner and founder of O’Gara Financial Group in Woburn, Mass. He and some of his fellow members of the National Association of Insurance and Financial Advisors-Massachusetts volunteer their time and expertise to work with F.A.M.I.L.Y. Movement, a nonprofit organization based in Boston. The

organization’s mission is to help families transition out of homeless shelters and into stable and permanent living arrangements by teaching and mentoring homeless youths and families on how to become financially independent to end generational poverty and homelessness. O’Gara and the other NAIFA-Massachusetts volunteers work with families in the organization’s Homeless to Homeownership program. Families who go through the program have already transitioned out of a homeless shelter into more stable housing. They are mentored on topics such as debt management, saving and budgeting. The future homeowners also are educated on the financial implications of homeownership, such as making sure to budget funds for property taxes, homeowners insurance and repairs. “We work with the families to establish good credit, make sure they’re saving money each month to pay down debt,”

F.A.M.I.L.Y. Movement was awarded a grant from “Invest in Others.” NAIFA-Massachusetts members Peter Sechoka (left) and Robbie Basiri (right) are among the members who mentor those served by the organization’s Homeless to Homeownership program.

InsuranceNewsNet Magazine » April 2022

O’Gara said. “There are certain metrics they need to meet, such as having a credit score over 610, saving at least 5% to 10% of their income each month and having a certain debt-to-income ratio. If they hit those goals, they qualify for down payment assistance of up to $5,000.” Guiding homeless families to become tomorrow’s homeowning families is one example of how insurance and financial professionals spend their time and share their knowledge to educate the public on financial literacy issues. And there’s a hunger for that knowledge. A OnePoll survey of parents revealed that four out of five said they wish they had learned more about money when they were growing up. Thirteen percent said their parents never spoke to them about money at all. The result is that nearly 60% of those surveyed said they still feel uncomfortable talking about money today. O’Gara sees the need for financial education and how much the families he

REACHING OUT, LIFTING UP COVER STORY

NAIFA-Massachusetts members help mentor future homeowners in F.A.M.I.L.Y. Movement’s Homeless to Homeownership program.

works with in Homeless to Homeownership need the confidence that financial literacy gives them. “When we first sit down and talk to them, the goal of homeownership just seems so far-fetched to them,” he said. “They feel as though they’re so far away from owning their own home. But now we’ve had our first family go through the program and purchase their house, and that’s bolstering the confidence of the other families in the program.”

Helping Teens Become Moneywise

Andrew Crowell is vice chairman, wealth management, with D.A. Davidson in Los Angeles. He regularly works with wealthy clients, but through his volunteer work with youth groups in the LA metro area, he saw that an entire generation could be future clients for his industry if they only had the right financial education. “We’re sending 18-year-olds into the world without basic life skills like financial literacy,” Crowell said. “I realized that I have the ability to close the gap. I can bring the subject matter that we discuss every day for the paying clients of our holistic wealth management firm to an audience of inner-city kids or foster kids who aren’t getting that education at home or as part of their school curriculum.” Crowell started by asking the heads of the finance departments at three universities to ask whether any of their students would be interested in shadowing someone at his company. But he realized that offer didn’t go far enough to reach young people who needed financial literacy education. “I was reaching out to kids who are in college, but what about the kids who don’t go to college? They still need this basic life skill. So that’s where I started focusing my time,” he said. “I thought I can be ‘professor for a day,’ maybe several times a year. And that’s great. But it’s probably more of a benefit to D.A. Davidson because we’re telling kids about our summer internship program and career opportunities with us.” Crowell wanted to dig deeper into providing financial literacy

education for young people who needed it. So he created the Moneywise program in 2018. D.A. Davidson partnered with the YMCA of Metropolitan Los Angeles to share knowledge of personal finance to 6,000 teens who already were coming to the Y for various healthy lifestyle activities. COVID-19 restrictions forced the Moneywise program to go virtual in 2020, and Crowell said the pandemic reinforced his belief that the program provides crucial information and needed to expand even further.

Andrew Crowell created the Moneywise program for teens.

April 2022 » InsuranceNewsNet Magazine

COVER STORY REACHING OUT, LIFTING UP

The Moneywise program reaches teens through the YMCA and other youth programs in the Los Angeles area.

“The pandemic was highlighting the income gaps that are out there even more profoundly,” he said. “We saw how the pandemic created economic stress. I believed we needed to take what we do in Moneywise and bring it to other groups who aren’t getting that kind of education. We did an open call to associates throughout our firm to see whether we could generate interest. We had 46 people volunteer to look for opportunities in their communities to take the Moneywise curriculum we developed and tailor it to other groups who needed the information.” D.A. Davidson associates brought Moneywise to clients of a women’s shelter in Montana, a school in Denver, and Boys & Girls Clubs in California. “It has been fun to see the program expanding,” Crowell said. “It’s doing the right thing for a constituency who needs it and who isn’t getting it in school or at home.” The Moneywise curriculum includes modules on money basics, getting your first job and understanding your first paycheck, understanding investments and compound interest, and learning how to pay for college. Part of Moneywise, Crowell said, is getting the teenage participants to talk about their views on money. “We start off by asking, ‘What’s important about money to you?’ One person might say they’re saving for a car, and another might say they want to be able to go to concerts, and somebody else is saying they need to help their family out. We try to identify where they are at the current time in regard to money and why they are prioritizing money.” Moneywise “is a small investment of time that could change the trajectory of a lot of students’ lives,” Crowell said. “It’s a tragedy to me that financial literacy isn’t a requirement for all high school graduates,” he said. “My hope is that, by doing this, we elevate an awareness of how important it is so we will have some policy changes down the road where schools prioritize it.” Crowell recalled the old math class problem where two trains are traveling toward each other at different speeds and students are asked to calculate which train will arrive at a destination 20

InsuranceNewsNet Magazine » April 2022

first. He said those old math problems should be changed to reflect today’s realities. “Wouldn’t it be more important to teach students about what happens when you pay only the minimum on your credit card each month? How many months will it take you to pay your credit card off at 14% interest is way more relevant. Meanwhile, advisors have a golden opportunity to change lives by teaching financial literacy lessons.” The Moneywise curriculum includes four modules focused on money basics.

REACHING OUT, LIFTING UP COVER STORY

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COVER STORY REACHING OUT, LIFTING UP

Paul McAneny and Indira Cozine volunteer to help members of the military community with financial issues.

Helping Our Heroes

Many Americans find rewarding careers in the military. But when they leave the service — then what? Paul McAneny and Indira Cozine of 1847 Financial in Tampa, Fla., not only have a large client base of military personnel who are transitioning to civilian life, but they also volunteer their time to educating veterans on financial issues. The two advisors have a special affinity for the military community. McAneny spent 27 years in the Air Force before entering the financial services business; Cozine is a former mathematics teacher whose husband retired from the Marine Corps. They volunteer with the Military Officers of America, speaking at their monthly meetings about financial issues that are relevant to their members’ situations. “We’ve talked to them about the benefits of getting their estate plan in order and making sure that they have a will, a living will or health care directive, and a durable power of attorney in place, and the importance of getting those things in place. And we educate them about reviewing these documents regularly because things change,” Cozine said. “We also talk to them about ensuring that once they’re in retirement, making sure their money lasts throughout their lifetime.” MOA holds a quarterly event for members of the military who are retiring to civilian life, and McAneny and Cozine volunteer to speak on financial topics that are important as they move to the next phase of their lives. 22

InsuranceNewsNet Magazine » April 2022

“We talk about changes in their tax situation once they retire, as well as laying a firm foundation for themselves in retirement,” Cozine said. “Setting themselves up for their second retirement is really crucial for this particular group because most of them have served in the military for 20-25 years. Now they’re in their 40s, and they still have another 15-20 years to work in their next career. We want to give them strategies they can use to make sure they’re setting up their next retirement appropriately.” McAneny and Cozine also volunteer with Hiring Our Heroes, which

was organized by the U.S. Chamber of Commerce. “We put together a program called Thriving After Military Service,” McAneny said. “It’s all about figuring out what you need to know after you’ve served in the military for 20-some years and you retire. Now when you’re out of the military, you get a military retirement, maybe you get VA disability benefits, and you’ll get your salary from whatever your next job will be. “Now figuring out your financial situation isn’t as simple as you think. A lot of the military pay is not taxed. We show them how to figure out what’s the minimum amount they’ll need to make in their next job in order to maintain the standard of living they had when they were in the military.” The time McAneny spent in the Air Force inspired him to be “mission-focused” in educating people on financial literacy. “We have a mission to help people in the military,” he said. “Sometimes that mission doesn’t always align with making money. But that’s OK; we’re here to do things differently and to serve.”

Taking It To The Schools

A request from a college intern’s professor sparked the idea for a financial literacy program that EP Wealth Advisors of Torrance, Calif., created four years ago and took to schools throughout California. “We had an intern who said her professor wanted someone from EP to talk to the class,” said Erin Voisin, managing director. “We brought that request to our women’s initiative group here at EP and asked if anyone was interested doing it, and about seven of us raised our hands. So, we did what women do, which was rolled up our sleeves, created a presentation, made some handouts, and went out and gave this presentation.” The students were so engaged in the presentation that the advisors were inspired to take it a step further, Voisin said. Erin Voisin of EP Wealth Advisors said presenting financial literacy classes also shows young women “The kids were so into it, and that a financial services career could be an option we all left saying, ‘This is awefor them in the future. some. We could really make this

REACHING OUT, LIFTING UP COVER STORY

EP Wealth Advisors’ financial literacy program includes an opportunity to learn skills such as networking and business etiquette.

a thing. Let’s do it,’” she recalled. The advisors did what so many advisors already do in their course of their jobs — they made cold calls. But this time, they cold-called schools, offering to come in and present a financial literacy class. “We said to the schools, ‘This is something we would love to come in and do. And we started getting tons of responses saying they would love to have that happen,” Voisin said. The presentations cover everything from goal setting to budgeting and investing. But Voisin said the advisors also discuss careers in the industry. “It’s a way for us to be out there and show young women that it’s a profession,” she said. The financial literacy program grew to the point where it became an initiative of the entire company, not just the women’s initiative group. “We expanded and opened this up to the whole firm, and we started doing presentations in different geographic areas,”

Voisin said. “We’re taking advantage of any opportunity we have to get in front of students.” Finding that first job and applying to college are top of mind among most of the students who participate in the financial literacy program, she added. “Lately, we’ve been getting a lot of questions about cryptocurrency and NFTs,” she said. “I think it’s because of what young people see on social media. But we try to steer them toward news versus noise. Like you really need to focus on your goals; what are you actually working for? What will you use your money for? And from there, think about priorities such as your emergency fund.” EP Wealth Advisors also started an externship, where students can spend two days with the firm. The two days include an ice cream social, where the students are required to network and introduce themselves to everyone at the firm. “They learn business communication

and etiquette. They prepare a resume. They do a mock interview,” Voisin said. “They meet with every director at the firm. They have a lunch with our founders. They play a stock market game. We help them set up a LinkedIn profile. We teach them about financial terms. It’s immersing them in financial services as well as the business world.” The students aren’t the only ones who benefit from the information the financial literacy program conveys, Voisin said. The teachers do as well. “I was doing a presentation in a school and the students weren’t asking questions, but the teachers were,” she recalled. “Later, one of the teachers told me, ‘We all know that this is needed in the schools, but we don’t feel like we’re the ones to teach it if we’re not comfortable with it ourselves. If my finances aren’t in order, why am I going to tell a high school student how to do it?’ “I always share that story because I remind everyone that our profession is meaningful, and the knowledge you have could be so impactful to someone else.” Susan Rupe is managing editor for Insurance N ewsN et. 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.

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Finding that first job and applying for college are top of mind for participants in the EP Wealth Advisors program.

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April 2022 » InsuranceNewsNet Magazine

LIFEWIRES

38% Said They Can’t Afford Life Insurance Some good news and bad news when it comes

Top 4 Reasons People Had No Life Insurance 38%Can’t afford it 29%Cost isn’t worth it 28%Don’t have a family to support

to end-of-life planning. Consumer Affairs found 25% Believe they’re too young that 65% of those surveyed have both life insurto think about it yet ance and a will, and 77% have life insurance. But the bad news? More than one in three (38%) said they don’t have life insurance because they can’t afford it. Meanwhile, 26% said they encouraged their loved ones to buy life insurance, and 24% even bought coverage for them. The majority of those surveyed (84%) said their family would be able to afford funeral expenses in the event of their death. Twenty-two percent of breadwinners said they believe their dependents would not be able to support themselves if that breadwinner died. Ten-year term life was the most common type of coverage that respondents said they owned, with 30% reporting this type of insurance. For respondents in the survey, $60,000 was the average amount of coverage taken out for a life insurance policy.

INDEXED LIFE SALES SMASH MORE RECORDS IN 4Q 2021

Indexed life had a stellar fourth quarter, with 4Q sales hitting $718 million, up more than 19.1% when compared with the previous quarter, and up more than 15.5% as compared to the same period last year, according to Wink Inc. This was a record-setting year for indexed life sales, with the total 2021 indexed life sales hitting $2.4 billion. Indexed life sales include both indexed universal life and indexed whole life. Pacific Life had the No. 1 overall sales ranking for nonvariable universal life sales, with a market share of 10.8%. Transamerica Life’s Transamerica Foundation IUL was the No. 1 selling product for nonvariable universal life sales with all channels combined. National Life had the No. 1 ranking in indexed life sales, with a 12.7% market share. Pacific Life, Nationwide, Transamerica and John Hancock rounded out the top five, respectively. Whole life had a moment in the sun in 4Q, with sales at $1.5 billion, up 36.7% when compared with the previous quarter, and up 45.5% as compared to the same DID YOU

KNOW

period last year. Total 2021 whole life sales were $4.8 billion.

LACK OF KNOWLEDGE KEEPS WOMEN FROM BUYING COVERAGE

Over the past five years, the life insurance ownership rate for U.S. women has dropped 10 points to 47%. Throughout the pandemic, women expressed a higher concern about the financial, physical and mental impact of COVID-19 on themselves and their families. Yet these concerns didn’t necessarily prompt women to consider buying life insurance. Just 31% of women said they would likely purchase coverage in 2021, compared with 42% of men. Why are women reluctant to buy? LIMRA took a look at what holds them back and found the overwhelming reason women say they don’t buy life insurance is lack of knowledge — they don’t know how much or what to buy. According to the 2021 Insurance Barometer Study conducted by LIMRA and Life Happens, only 22% of women feel very knowledgeable about life insurance, compared with 39% of men. This lack of knowledge leads to misperceptions about life insurance. For example, a common

QUOTABLE It is great to see indexed life setting sales records again. — Sheryl J. Moore, CEO of both Moore Market Intelligence and Wink Inc.

reason women give for not purchasing life insurance is that they think it is too expensive. Yet, 8 in 10 women overestimate the cost of life insurance. Despite the perceived obstacles to buying, LIMRA found a significant portion of women recognize their need for life insurance. In the 2021 Insurance Barometer Study, 43% of women — 56 million — say they need (or need more) coverage.

BLACK AMERICANS STILL HAVE SIGNIFICANT COVERAGE GAP

According to the 2021 Insurance Barometer study, conducted by LIMRA and Life Happens, 56% of Black Americans own life insurance, which is higher than the national average (52%). Yet 46% of Black Americans — 20 million adults — say they need (or need more) life insurance coverage, which indicates a substantial coverage gap in the Black American community. However, 58% of Black Americans said they intend to purchase life insurance within the year, significantly higher than the general population’s purchase intent (36%). The top reason Black Americans give for not purchasing coverage is that it is too expensive. Yet 75% of Black Americans overestimate the cost of life insurance threefold. In addition, more than half (54%) say they don’t know what to buy or how much they need, and more than a third (35%) don’t think they would qualify for coverage.

Life insurers saw their highest single period of growth over the past five years in 2021.

InsuranceNewsNet Magazine » April 2022

Source: Fitch Ratings

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LIFE

A Term Alternative In Business Succession Planning Permanent policies can provide many unique benefits to comprehensive business planning. These benefits ultimately could cause permanent life insurance to be less costly than term insurance in the long term.

By Ryan Mattern & David Bauer

uccessful businesses recognize the important role that insurance plays in risk management. Businesses commonly insure their buildings and equipment against a variety of hazards, as well as insure against other potential liabilities. However, a business’s most valuable assets are often its people. Business-owned life insurance can cover a variety of needs, such as: » Offsetting the financial loss caused by a key employee’s premature death. » Providing funding for a variety of plans aimed at attracting, retaining and rewarding key executives. » Funding a buy-sell agreement.

InsuranceNewsNet Magazine » April 2022

Before we explore these applications for life insurance in a business context, some background is in order.

Term vs. Permanent Insurance

In its most basic sense, life insurance can be grouped into two categories: term and permanent. As the name suggests, term insurance policies are typically issued with level premiums and face amounts for a specified duration. Common durations are 10, 20 or 30 years. Premiums are relatively low during the initial term. However, after the initial term they increase annually and often quite substantially. Individuals who still have a life insurance need when the initial term expires may apply for new term policies; however, they will have to medically requalify, so options may be limited for those whose health has deteriorated. Many carriers offer a conversion privilege that allows the insured to exchange the term policy for a permanent policy without requiring new evidence of insurability. However, the product set available for conversion may be more limited than what is available for initial purchase. If a policy is not renewed or converted, term insurance will provide only a temporary solution. Permanent insurance, on the other hand, will generally not only provide

a death benefit for the life of the insured (assuming funding requirements are met) but can also include access to cash value. One tenet in the world of business accounting is that if you are unable to get a tax deduction for a business-related expense, then at least make sure you are able to achieve cost recovery. Section 264(a) of the Internal Revenue Code expressly prohibits taking a tax deduction for premiums paid on a policy in which the business has a beneficial interest. An “interest” in a policy could include, but is not limited to, ownership, all rights to cash values and the right to receive a death benefit. These would all apply to the arrangements discussed here. So, given that a deduction is disallowed in these cases, cost recovery becomes increasingly important.

Key Person Insurance

In this arrangement, the business will own, and be the beneficiary of, a life insurance policy on a key employee, which will help the company survive should the employee die. The insurance proceeds could be used to train a new employee, replace lost revenue and even mitigate potential loss of credit. The main purpose of key person insurance is to provide a death benefit, but

A TERM ALTERNATIVE IN BUSINESS SUCCESSION PLANNING LIFE it can also be used as a way to provide the key employee with supplemental benefits in the more likely event that the individual retires versus passes away, which can be an effective means of retaining key employees. Term insurance may be used for key person arrangements. However, a term policy will only provide cost recovery to the business if the key employee passes away while it is in force, which would be unexpected for most working-age adults.

Endorsement Split Dollar

transfer. The employee can receive the distributions from the policy income tax free if the policy is properly structured. Upon the transfer, the employer will include in its taxable income the difference between the policy’s FMV and the employer’s basis in the policy. However, the employer should also receive a deduction equal to the policy’s FMV if the transfer is considered reasonable compensation to the employee.

retiring owner. The FMV of the policy could then be used as a component of the buyout agreement and perhaps be used to jump-start an installment sale. If the business does not transfer the policy for any reason, it could, at the very least, surrender it for its cash value. Another issue to consider is the valuation of the business itself. If life insurance is the funding mechanism being used for the buy-sell, what happens if the value of the business changes over time? The death benefit on a term policy remains level throughout its duration so, in some cases, this may be insufficient to cover the buy-sell need as the business grows and prospers. One solution is to use a permanent life insurance policy that allows for an increasing death benefit, which includes the initial death benefit of the policy combined with the cash value component in any given year. Although this may not keep up with an increase in business value dollar for dollar, it will help the business owners get closer to where they need to be. Term insurance can be an effective tool in business-related planning if the benefit is received at a desired time. However, this rarely ends up happening. Although term coverage requires less cash flow to fund than permanent life insurance does, permanent policies can provide many unique benefits to comprehensive planning for businesses. These benefits ultimately may cause permanent life insurance to be less costly in the long term.

Term insurance may be used for key person arrangements. However, a term policy will only provide cost recovery to the business if the key employee passes away while it is in force …

When an employer recognizes the need to insure a key employee’s life, the employer often will also recognize the value of keeping the key employee employed. An endorsement split dollar plan provides a way to accomplish both objectives. Since the policy is owned by the employer, the employer’s key person objectives can be met. By applying for more death benefit than just the amount for key person coverage, the key employee can be allowed to “endorse” the excess death benefit for their own family’s protection. The key employee’s cost is measured by either the IRS 2001 one-year term rates, or the rates published by the life insurance carrier if available. The employee’s actual out-of-pocket cost is normally only the income taxes on the one-year term rates and not the term cost itself. The employer also has the option of increasing the employee’s compensation by an amount that offsets the additional tax cost. By using a flexible-premium permanent life insurance policy, the employer has the option of selecting the amount of premium funding that comfortably fits the employer’s objectives for cash value accumulation. The employer may decide to ultimately transfer ownership of the policy to the insured key employee via a bonus at some future date (quite often coinciding with the employee’s planned retirement age). The bonus can be structured so that it meets the short-term deferral exception to the more complex requirements of IRC Section 409A. If the business transfers the policy to a non-owner employee, the policy’s fair market value is included in the employee’s taxable income. The employee might use a portion of the policy’s cash value to offset the income tax cost of the ownership

Funding Buy-Sell Agreements

A buy-sell agreement is a legal agreement that dictates what happens to a business when one of the owners dies, becomes disabled or retires from the business. These arrangements typically come in two main forms: entity purchase (sometimes referred to as stock redemption) and cross purchase. This article will focus on entity purchase. In this type of arrangement, the business is the owner and beneficiary of the policy and pays the premium. This is very similar in structure to a typical key person arrangement; the difference is that the death benefit in a buy-sell is used to purchase the shares from a deceased owner’s spouse or estate rather than using it to replace the loss of a key employee. Term insurance may be used in a typical buy-sell arrangement. However, what happens in the more likely event that the business owner retires? The term premiums now have become a nondeductible, nonrecoverable expense. This contrasts with permanent coverage, where the cash value component can serve many needs in a buy-sell scenario in addition to only the death benefit. Consider a situation in which one of the owners retires from the business. Obviously, there is no death benefit to fund the buy-sell at that point, but the policy itself could be transferred to the

Ryan Mattern is director, advanced sales, Crump Life Insurance Services. He may be contacted at ryan.mattern@innfeedback.com. David Bauer, CLU, ChFC, is director, advanced sales, Crump Life Insurance Services. He may be contacted at david.bauer@ innfeedback.com.

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April 2022 » InsuranceNewsNet Magazine

ANNUITYWIRES

Conning: Hottest Life-Annuity Market In 20 Years

Annuity sales are out there for the taking. Producers just need to connect with a hot market, new data indicates. Variable and indexed annuities will boom in what was called the best insurance environment in 20 years during Conning’s 2022 Outlook webinar, held recently. “The overriding theme is that the insurance industry is going through a strong growth mode, and probably the strongest we’ve seen in 20 years now,” said Steven Weberson, head of insurance research. “We see evidence of that in just about every line of business throughout both the property/casualty and the life sectors.” Strong consumer demand for new products is propelling the growth. In the life sector, the SECURE Act opened the Consumer Search for Return Shifting door for enormous opportunity Annuity Preference in retirement accounts. INDIVIDUAL ANNUITY SALES BY PRODUCT Carriers already in the re100% $110,965 $47,792 $57,703 $64,836 $52,403 $62,884 $69,172 $76,090 tirement space will be able to 80% develop products for retirement $110,965 $45,971 $50,262 $59,960 $60,679 $48,544 $50,971 $53,519 accounts, but even carriers not in 60% $110,965 $112,158 $123,374 $135,712 $88,086 $99,841 that space will benefit from asset 40% $92,680 $93,465 20% managers who need to link with 0% insurers, said Scott Hawkins, di2016 2017 2018 2019 2020 2021 2022 2023 rector of life/annuity insurance Fixed Annuities Indexed Annuities Variable Annuities SOURCE: Conning research.

DOL RULE LAWSUITS HAVING LITTLE IMPACT, ANALYSTS SAY

It is unclear whether a pair of lawsuits filed in February will do anything to slow down the Department of Labor’s push to extend the fiduciary standard. A pair of leading retirement plan lawyers doubt it. Written during the Trump administration and allowed to stand by the Biden DOL, the Investment Advice Rule would hamper sales of retirement products, advisors say. The Federation of Americans for Consumer Choice and the American Securities Association filed separate lawsuits asking courts to block the rule. Some analysts are questioning what the lawsuits will accomplish. For starters, there hasn’t been any enforcement of the new rules yet, and the rules only took full compliance effect on Feb. 1. “We expect the DOL as a matter of procedure to take the position that these can’t

really be litigated yet,” explained Joshua Waldbeser, partner at Faegre Drinker, “that there’s actually going to have to be some enforcement of this new interpretation that has an effect on insurance agents before it can actually be litigated.”

FEDS SUE TAX ‘ELIMINATION’ SCHEME USING CHARITABLE ANNUITY TRUSTS

The Justice Department is attempting to shut down the promotion or sale of an allegedly unlawful tax scheme involving the use of charitable remainder annuity trusts. In a complaint filed in Missouri federal court, the government allegations detail defendants’ involvement with at least 70 CRATs, in a scheme that has resulted in

63% of Americans age 25+ are anxious about KNOW whether they will have enough money to live comfortably during retirement. DID YOU

InsuranceNewsNet Magazine » April 2022

Source: American Association of Retired Persons

QUOTABLE You know [age] 65, as a stopping point, really doesn’t make sense anymore. — Bradley Schurman, author of The Super Age: Decoding Our Demographic Destiny

an estimated $40 million of taxable income going unreported and at least $8 million in tax revenue losses. The government alleges that advisors convinced customers to contribute property to a CRAT while unlawfully inflating (stepping up) the cost basis in the property. The property was sold to purchase an annuity, with advisors accused of falsely reporting the annuity payments as tax-free distributions of income made by the CRAT.

NAIC REGULATORS LOOK TO TIGHTEN UP RILA PRODUCT DESIGNS

State insurance regulators encountered resistance during initial meetings to better regulate popular but unique indexed-linked variable annuity products. In mid-2021, a National Association of Insurance Commissioners task force created a subgroup to focus solely on index-linked annuity products. The subgroup developed an actuarial guideline for technical changes to ILVA values that would bring the products in line with traditional VAs. The proposed AG would allow an indexed-linked annuity to be considered a VA only if the annuity’s interim value is based on the market value of (A) actual separate account assets or (B) a hypothetical portfolio of assets, each of which supports the guarantees of the contract. Regulators explained their reasoning: If an ILVA owner is being subject to the risk of loss, then the contract holder should also benefit from gains in the actual separate account assets or hypothetical portfolio assets. Still, the American Council of Life Insurers said its members consider the AG as it is written too restrictive.

ANNUITY

Could FIAs Be A Cure For Dropping Bond Prices? Inflation and rising rates, on top of ongoing market volatility, have come into sharp focus for investors.

Bloomberg U.S. Aggregate Bond Index 10-Year Performance

By Doug Wolff

rice hikes were widespread across sectors of the economy in 2021, according to the Federal Reserve’s Beige Book (December 2021). Rising interest rates sent bond prices lower, posting their first losses since 2013, and the prospect of continued rising interest rates could have a negative impact on bond markets in 2022. The Fed’s bond buying support is expected to end in March 2022, furthering the likelihood of rising rates thereafter in 2022 and 2023. All this comes amid ongoing demographic retirement trends that show retirees are living longer and, in many cases, bearing more of the weight of their income needs; therefore, they need to save more. Additionally, many retirees have considered retiring earlier as a result of broader consumer trends such as the “Great Resignation” as the pandemic continues to spark many to shift their career focus or exit the workforce earlier. With these factors and many more impacting common retirement savings methods, there is a growing concern among investors and their financial advisors. How can they combat the impact of rate increases on fixed income market values and still earn competitive interest to accumulate assets for retirement? While bonds have traditionally provided a source of stability for portfolios, acting with little or no correlation with volatile stocks, they may be less effective going forward. Fixed-rate bond prices generally drop as rates rise, which can expose clients to loss of principal and poor total returns.

Navigating Rising Rates

Floating-rate securities offer some advantages, as they adjust periodically to the 30

InsuranceNewsNet Magazine » April 2022

going market rates. This helps an investor take advantage of rising rates. However, there is not a guarantee that they will move as quickly as the market to match current rates, so investors still face interest rate risk and could underperform the market. An innovative alternative to floating-rate bonds comes in the form of a new category of fixed annuities that feature an adjustable-rate mechanism. Floating-rate annuities function similar to floating-rate bonds but are tax-deferred products that guarantee clients’ principal while allowing them to benefit as rates rise. Financial professionals should consider the use of floating-rate annuities for the shorter-term portion of client portfolios and funds they are looking to keep “safe” from market and interest rate volatility. Floating-rate annuities could be a complement to CDs, money market funds and interest-bearing bank accounts, along with other more conservative products. Rising rates can wreak havoc in the stock market too but are not necessarily bad for equities longer term. An uptick in rates could signal strong and growing economic conditions, which could translate to rising earnings and, subsequently, rising stock prices. However, there can often be a lot of volatility along the way, and there’s no guarantee that stock prices will rise in the near term.

When Rates Go Up, Bonds Go Down: An Alternative Approach

From an industry perspective, advisors equipped with the right technology and resources have been able to adapt to the challenges of COVID-19 by shifting to digital meetings and client service. The annuity industry has kept pace and become more efficient as well, with digital ticketing and servicing now the rule instead of the exception. And like floating-rate annuities, other innovations have come to market that serve as viable alternatives in client portfolios. Advisors and their clients can consider the use of a newer breed of fixed indexed annuities, for example, which provide accumulation potential and tax deferral while still guaranteeing principal. Financial professionals have not sold FIAs as extensively in the past but have been giving them a fresh look as potential bond fund replacements. When interest rates rise, bond prices drop. As recently as 2018, the last time the Federal Reserve raised rates, the Bloomberg U.S. Aggregate Bond Index turned negative. Given the current economic environment, with inflation at a level not seen in 40 years, we are likely in for a set of Federal Reserve rate increases. And if history repeats itself, bond funds could potentially see the same negative returns. Could financial

COULD FIAS BE A CURE FOR DROPPING BOND PRICES? ANNUITY professionals look to FIAs as a different solution during this next rate cycle?

Rethinking The 60/40 Rule

A traditional 60/40 portfolio, with 60% in stocks and 40% in bonds, has been a common asset allocation for decades. There are several ways in which advisors can use FIAs in rethinking the 60/40 rule. For example, an advisor working with a relatively aggressive investor could substitute an FIA for bonds or bond funds as a portion of the conservative part of their portfolio (part of the 40%). This would give them greater accumulation potential, as interest is pegged to a stock index and not interest rates. Meanwhile, an advisor working with clients who already are retired or who have a lower risk tolerance can use an FIA to replace or reduce exposure to more aggressive investments out on the risk spectrum that have most likely accumulated substantially over the past few years. This can help bring their portfolio back to an overall equity to fixed income ratio in line with their risk

tolerance (back to 60/40 or 50/50, or even 40/60 for those already in retirement who have a shorter time horizon). The advantage is that a client can have a portfolio with a higher weight on fixed income/conservative investments but still keep some upside potential with FIA returns that are pegged to a market index. This could be a beneficial approach for those who don’t want to take the risk of a pure stock fund but still want some accumulation potential that is related to how equities perform. FIAs can be a solution that fits a wide range of end-user needs. Of course, in no case would 100% of a portfolio be right for a fixed index annuity, but a decision to move some percentage of client assets into an FIA could prove beneficial to clients now and down the road.

for more advisors in the marketplace. In addition, most bond funds suffer market value losses in a rising rate environment, while most annuities do not (if held for certain time periods). In summary, fixed and fixed index annuities can be a smart option for advisors to make available in their practice, especially when considering:

The Potential For Annuity Products Amid Rate Changes

Doug Wolff is president, Security Benefit Life. He may be contacted at doug.wolff@ innfeedback.com.

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» The interest rate environment and

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HEALTH/BENEFITSWIRES

Most Medicare Agents Earn Less Than $50K Their First Year The vast majority of Medicare agents earn less than $50,000 in their first full year in

the business, but their annual incomes increase as they stick with the business. That was the word from the American Association for Medicare Supplement Insurance. The association found that more than 83% of agents surveyed said they made less than $50,000 the first year. But more agents move into the six-figure commission range in future years. In the next two to three years that they were in the Medicare business, the percentage of agents who made less than $50,000 decreased to 58.9%. Meanwhile, nearly 13% earned commissions of more than $100,000, an increase over the 5.5% who were in that range after their first year. After agents hit the five-year mark, earnings really begin to heat up, the survey showed, with more than 45% of agents reporting commissions of more than $100,000 and 18.4% earning commissions of more than $200,000. For more than half of agents who sold Medicare insurance for five years or more, the majority of their commission comes from Medicare sales, with 16.7% reporting Medicare accounted for all of their commission income. fully understand any of the employee benefits they selected during their most recent open enrollment period.

VOLUNTARY BENEFITS: DISCONNECT OVER ENROLLING

We’ve all read the news about the Great Resignation and the war for talent. Workers are leaving their jobs and seeking new employment opportunities. But the upending of the job market is making workers take another look at their employers’ voluntary benefits offerings, a Voya survey indicated. The survey found that 70% of workers are more likely to work for an employer that offers voluntary benefits. But the survey showed that less than half of workers (49%) actually took advantage of those benefit offerings during the most recent open enrollment period. The disconnect was particularly notable among millennial workers, with 78% of them saying they are more likely to work for an employer offering voluntary benefits, but only 49% of them are enrolling in coverage. Voya’s survey also revealed that nearly one-third of American workers who are eligible for benefits (31%) admitted they do not DID YOU

KNOW

EVEN INSURED AMERICANS LACK FUNDS FOR CARE

Nearly half of Americans are what Aflac calls “insured but exposed.” The most recent Aflac Care Index revealed 46% of Americans who have health insurance do not have enough savings to pay for an unexpected medical expense. Further exacerbating the situation is that 33% of insured Americans cannot go more than one week without a paycheck, while 71% cannot endure a month without pay, leading many (25%) to have to borrow money in the event of a medical emergency, almost a quarter (22%) saying they would need to find an additional job and 6% saying they would have to file bankruptcy. At the same time, more than three-quarters (78%) of insured respondents underestimate their financial exposure to

70% of Americans have no plan for extended care.

InsuranceNewsNet Magazine » April 2022

Source: Thrivent

QUOTABLE Health care almost always outpaces inflation, and so healthcare costs grow faster than the economy. — Cynthia Cox, vice president of the Kaiser Family Foundation

common medical challenges, such as heart disease and breast cancer. The survey also found that 63% of those surveyed do not have enough savings to cover their out-of-pocket maximums, while residents of Arkansas, South Carolina and Texas report they are more likely than residents of other states to be more concerned about paying medical bills today than they were five years ago.

WORKERS FEELING BURNED OUT, DELAYING HEALTH CARE

The COVID-19 pandemic continues to damage workers’ physical and mental health, a survey by The Hartford showed. The survey showed that 43% of those polled said they have delayed routine health care appointments since the start of the pandemic. And the pandemic has affected worker health in other ways. Workers reported declines in their mental health (42%), social well-being (41%) and physical health (29%). Those declines have an impact on the workplace. The Hartford found that the worker burnout rate in January was at 61%. This burnout rate and declining health are manifesting in the way many workers feel about their jobs. Most respondents (63%) said their overall health/wellness impacts their productivity at work. Thirty percent noted they’re less engaged with their work, and 25% said they have trouble concentrating or focusing.

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April 2022 » InsuranceNewsNet Magazine

HEALTH/BENEFITS

Broker Comp Disclosure ‘Will Change The Game’ Compensation transparency will have a bigger impact on health insurance brokers over the next few years than did the Affordable Care Act, an insurance industry veteran said.

By Susan Rupe

ompensation transparency will have a bigger impact on health insurance brokers over the next few years than did the Affordable Care Act, an insurance industry veteran told members of the National Association of Health Underwriters. Dan Meylan built four insurance firms from scratch and has five decades of business experience. He spoke to NAHU members during their 2022 Capitol Conference. “It’s not medicine that’s broken in America, it’s the business of medicine that’s broken,” Meylan said. He predicted 34

InsuranceNewsNet Magazine » April 2022

transparency “will change the game dramatically over the next 10 years.” The Consolidated Appropriations Act of 2021 requires brokers and consultants who work in the health benefits field to disclose compensation from sources such as insurance carriers, including commissions, fees and noncash compensation. The new regulations require disclosure of direct and indirect payments to brokers that equal $1,000 or more, and disclosure of noncash compensation that equals $250 or more. “Is this a problem or is it an opportunity? It’s an opportunity!” Meylan said. He noted that the ACA disrupted the health insurance world, “and when disruption happens, opportunity is just around the corner.” When change is on the horizon, Meylan said, three types of people emerge: disrupters, doubters and protectors. The disrupter knows something is broken and wants to fix

it. The doubter knows something is broken but doesn’t know how to fix it. The protector knows something is broken but wants to keep everything the same. Compensation disclosure will require several big shifts, Meylan said.

» A shift from broker to consultant. » A shift to justifying your compensation. » A shift to selling your professional value and not selling a plan or policy.

» A shift in the employer client’s perceptions and expectations.

» A shift in the value of your time. » A shift in competitive strategies. “You will have to justify your compensation to your client,” he said. The client

BROKER COMP DISCLOSURE ‘WILL CHANGE THE GAME’ HEALTH/BENEFITS knows how much you make, so you have to justify your value.” Compensation disclosure also will require some shifts in the broker’s behavior, Meylan said, such as:

» Adopting a fee-for-service mindset, even if you still take commissions.

» Knowing your complete scope of services.

» Using a consulting contract. » Knowing the value for your time on a

per-hour and a per-employee per-month basis.

» Adapting your business operating model.

» Exploring performance-based compensation.

COMPENSATION – DEFINED

(dd)(AA) The term ‘compensation’ means anything of monetary value, but does not include non-monetar y compensation valued at $250 ... or less, in the aggregate, during the term of the contract or arrangement. (BB) The term ‘direct compensation’ means compensation received directly from a covered plan. (CC) The term ‘indirect compensation’ means compensation received from any source other than the covered plan, the plan sponsor, the covered service provider, or an affiliate. Compensation received from a subcontractor is indirect compensation, unless it is received in connection with services performed under a contract or arrangement with a subcontractor.

» Making compensation disclosure an advantage over your competition.

» Transitioning from salesmanship to leadership.

Brokers must determine how they will justify their value and how they will make these shifts, he noted. By adopting a fee-forservice mindset and approach, brokers will transition to becoming health care advisors.

What You Need To Know About Disclosure

Stacy Barrow, partner in the law firm Barrow Weatherhead Lent, gave a rundown on what agents and brokers need to know about the disclosure requirements. The requirements apply to contracts executed after Dec. 27, 2021, and apply to contracts or arrangements between plan sponsors (employers) and brokers or consultants involving group health plans. For example, he said, the requirements would apply to brokers who receive a commission on fully insured groups or consultants who receive fees from a third-party administrator for self-insured groups. Brokers and consultants who receive at least $1,000 in fees or commissions — either directly or indirectly — for performing certain services for group health plans must disclose their compensation to their clients. Barrow said this does

not apply to exclusively fee-based work subject to a fee agreement where the payment is made directly from the employer client’s general assets. Disclosures are required to include: 1. A description of the services to be provided to the covered plan pursuant to the contract or arrangement. 2. Where applicable, a statement that the covered service provider will provide or reasonably expects to provide service directly to the covered plan as a fiduciary. 3. A description of all direct compensation the covered service provider reasonably expects to receive in connection with services provided under the contract. 4. A description of all compensation, including compensation from a vendor to a brokerage firm based on a structure of incentives not solely related to the contract with the covered plan. 5. In addition, for any indirect compensation, the disclosure also must include a description of the arrangement between the payer and the covered service provider, identification of the services for which the

indirect compensation will be received, and identification of the indirect compensation payer. Services that are covered under the broker disclosure requirements include: Brokerage services: Help with selecting insurance products, recordkeeping services, benefits administration, wellness services, compliance services and third-party administrator services. Consulting services: Development or implementation of plan design, insurance product selection, medical management services, TPA services and pharmacy benefit management services. These two categories may overlap in certain circumstances. Disclosure requirements are not limited to service providers who are licensed as, or who market themselves as a “broker” or a “consultant.” Susan Rupe is managing editor for I n s u r a n c e N ew s N e t . 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.

April 2022 » InsuranceNewsNet Magazine

Financial facts and figures powered by AdvisorNews.com

Wisconsin Retirement Saving Lawmakers Down During Pandemic Saving for retirement declined during the pandemic, more so for women, ac- Debate cording to a new survey from the personal finance website The Penny Hoarder.

Fifty-nine percent of men said they are putting more away for retirement compared with only 41% of women saying they were. Perhaps that’s

not surprising given that women were more likely to work in sectors hardest hit by pandemic closings, such as retail and hospitality. Overall a majority of those surveyed, 67%, said they’ve made no change in how much they’re saving, but the rest of the survey was split almost equally between those who said they were saving less (17%) and those who said they were saving more (16%). The biggest disparities in the data occurred geographically, with 44% of residents in the Northeast saying they were saving more for retirement, while only 18% in the West and Midwest saved more. About 14% of respondents in the South said they were saving more, while 31% said they were saving less. The Penny Hoarder attributed the small showing from residents in the South to disruptions in the tourism industry and lower median wages compared with Northeastern states.

Gen Xers To Inherit Massive Wealth Transfer

Generation Xers may have grown up cynical and sneering as their baby boomer siblings consumed the environment, but the slackers will enjoy the last smirk as they reap trillions upon trillions of dollars in generational transfer. They will be the big winners with nearly $30 trillion between now and 2045, while boomers make do

with their measly $4 trillion, according to Cerulli’s report “U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2021: Evolving Wealth Demographics.” Over the next two decades, $84.4 trillion in wealth is expected to pass, mostly from boomer hands, with $11.9 trillion of it going to charity. The rich will still be getting richer, with $35.8 trillion, or 42% of the transfers, to come from high-net-worth and ultra-high-net-worth households, which together make up only 1.5% of all households.

Crypto Too Big For Advisors To Ignore, McKinsey Says

Wealth managers can no longer ignore digital assets as they go mainstream, although the assets still have three hurdles for broader acceptance, according to a McKinsey report. The issues identified in “U.S. Wealth Management: A growth agenda for the coming decade” are as follows: • Regulatory: Ambiguity about asset classification and tax reporting, among other issues — has lingered, often 36

InsuranceNewsNet Magazine » April 2022

DID YOU KNOW?

42% of retirees did not consider how tax rates would affect their retirement income when planning for retirement. SOURCE: Nationwide’s 2021 Tax-Efficient Retirement Income survey

Retirement Accounts For Kids

Lawmakers are warming up to an effort to create a retirement-style savings account for every child from birth in Wisconsin. In January, Wisconsin Treasurer Sarah Godlewski announced a bill that would create the 401(K)IDS savings program to help every child save money

for retirement. In an interview with the Beloit Daily News, Godlewski said that a number of people who testified last year during public hearings before the committee signaled they wanted to save for retirement, but were unable to do so based on various factors. The bill would create an IRA-like

investment account for every child born or adopted in Wisconsin. Once

they became adults, individual account holders would access the savings to roll the funds into an additional retirement plan or pay off medical expenses or school tuition costs. Families with existing children would be able to buy into the program to create accounts for children. creating uncomfortable levels of risk exposure for wealth managers. • Infrastructure: The infrastructure required for offering digital assets, including custody services, differs from traditional investment products. • Education: Digital asset classes are not well understood by many advisors, so advising on the products is challenging for them.

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May 2020 » InsuranceNewsNet Magazine

ADVISORNEWS

Help Clients Spring-Clean Their Financial House When you help clients improve their financial literacy, you move them along the road to achieving their financial goals in every season of their lives. • Eddie Gill

or many, spring is a time to refresh home and garden, but the turn of the season is also a great opportunity to assess your clients’ financial literacy. Every client has different needs and expectations when it comes to financial planning, whether it’s managing a monthly budget or planning for retirement. Providing clients with the guidance they need to improve their financial literacy will aid in their financial health and overall well-being.

Planning vs. Budgeting

Differentiating between budgeting and financial planning is an important distinction when it comes to financial literacy. While budgeting plays a part in financial planning, budgeting on its own is not a

InsuranceNewsNet Magazine » April 2022

financial plan. Budgeting is an opportunity to list income and expenses and allocate the former to the latter, ensuring expenses don’t exceed income. When clients see where they are putting their money, they evaluate what is and what isn’t a necessary expense, which helps them make financially healthy decisions. Financial planning involves setting goals for different stages of life. For example, someone in their 20s might be saving for a wedding, while someone in their 40s might be paying for their children’s college expenses. Along with planning for life’s milestones, other important financial

considerations include insurance, investments, savings and retirement.

Cleaning Up Debt

Many clients think paying off debt must be their first priority when looking at their financial picture, but it doesn’t have to be an all-or-nothing proposition. Starting a savings or emergency fund and saving for retirement can be done in tandem with paying debt. A client’s emergency fund should include a month’s worth of take-home pay. This can provide a safety net in case of unexpected expenses. Incorporating

Incorporating a savings element into monthly budgeting as part of a long-term financial strategy will ensure that clients are on track to meet their long-term goals while they are tackling debt in the here and now.

HELP CLIENTS SPRING-CLEAN THEIR FINANCIAL HOUSE ADVISORNEWS

a savings element into monthly budgeting as part of a long-term financial strategy will ensure that clients are on track to meet their long-term goals while they are tackling debt in the here and now. Credit cards and student loans are two areas in which clients often incur large amounts of debt that can seem insurmountable and derail their financial goals. Student loans and credit card debt typically have higher interest rates, so paying them down first can be a good strategy for eliminating debt altogether or improving credit ratings. If clients have a number of high-interest credit cards, they can prioritize repayment by organizing cards by interest rate and paying them off from highest to lowest to ensure they are paying as little interest as possible. Progress toward reducing credit card debt can help boost credit scores for future big-ticket purchases, such as a house. Student loans aren’t just for those in their 20s. People of all ages deal with student loan repayments, especially those who are putting children through college or going back to school themselves. Private loans often have higher interest rates, so those should be paid off first. Once clients have a plan to reduce debt, budgeting can be a useful tool to avoid taking on more debt. Identifying the causes of debt and suggesting ways to change patterns of behavior are important discussions to have. By reducing debt, clients have more options in putting together a financial strategy that will protect them in the event of financial hardship and proactively meet financial goals for retirement.

six to eight times their salary saved in their 401(k). These guidelines can help a client get the most out of their 401(k) and prepare them to live comfortably in retirement. Another way to plan for retirement is through investments. There are opportunities to grow a client’s savings by selling their investments as the When asked to identify their top market rises. There are financial planning priorities in 2022, also risks that come along respondents identified: with investing, such as market crashes and dealing with inflation and deflation. When the market falls, clients can rely on other assets in their retirement portfolio, such as cash reserves or cash value within their life insurance policies, to tide them over until the market evens out again. By being proactive with retirement planning, SOURCE: Northwestern Mutual Planning & Progress Study inflation and deflation will have less of an impact on a client’s savings. Financial planning is an important part of financial distance doesn’t make it less of a priority. success, and planning grows in importance Retirement planning offers an opportu- as a client reaches retirement. Taking time nity for clients to live comfortably after to budget, repay debts and contribute to they retire. Clients who are in their 20s retirement is just as important to a client are probably just starting their careers at a in their 20s as it is to a client in their 50s. company that offers a 401(k). Increasing financial literacy allows clients Taking full advantage of a company’s to take control of their finances early and, 401(k) offering is a great way to begin in turn, successfulpreparing for retirement and potentially ly prepare for their earning free money if the company match- financial goals and es contributions. If a client’s company ultimately enjoy redoesn’t offer a 401(k), they have the oppor- tirement. tunity to start contributing to an individual retirement account. Contributing to Eddie Gill is a lead advisor with Wise these accounts over the long term will al- Financial, a member of Northwestern low financial security when it comes time Mutual Private Client Group. He may be contacted at eddie.gill@innfeedback.com. for retirement. As the client ages, it is important to continue helping them prioritize retirement planning. Clients in their 40s need Like this article or any other? Making Room For Retirement to think about what kind of lifestyle they Take advantage of our award-winning Many clients overlook the importance want to live in retirement and make adjournalism, licensure and reprint options. of retirement planning in their 20s. justments to their retirement plan. Once Find out more at innreprints.com. Just because retirement is off in the a client reaches 60, they will want to have

Paying Bills Tops The List Of Priorities

• Paying bills/expenses (48%) • Saving for retirement (39%) • Paying off debtl/ oans (38%) • Taking care of family (37%) • Investing (32%)

April 2022 » InsuranceNewsNet Magazine

MULTILINEWIRES

QUOTABLE

Pandemics Are Uninsurable Events, NAMIC Says

Pandemics are inherently uninsurable events, the National Association of Mutual Insurance Companies told members of Congress recently. NAMIC’s public policy counsel explained to a House subcommittee how the potential for widespread and concurrent losses from a pandemic for an indefinite period of time defies the fundamental nature of insurance. “Insurance was not designed to insure policyholders who are all expected to suffer losses at the same time,” Andrew Pauley said. “It has been estimated that costs of a pandemic for business loss of use could run in excess of the entire insurance reserve retention to pay all claims across all lines of insurance in a short period of time. This starkly demonstrates that pandemics are not an insurable risk.” Pauley urged lawmakers to recognize that the economic toll of government-ordered closures and other public safety efforts should be the government’s responsibility. He encouraged them to resist the temptation “to create new federal pandemic programs that could needlessly and severely disrupt and destabilize the nation’s insurance marketplace without resolving these concerns.”

FLORIDA HOMEOWNERS STRUGGLE AGAINST SOARING RATES

Florida had the highest average annual homeowners insurance premium nationwide in 2021, at $3,600 — 157.5% more expensive than the $1,398 U.S. average. And things are about to get even more expensive. Homeowners insurance premiums are up nearly 25% this year and aren’t expected to level off soon, said Mark Friedlander of the Insurance Information Institute. What’s driving the higher rates? Industry experts blame unrenewed policies, fraudulent roofing schemes, increasing replacement costs and limited legislative oversight. Dozens of insurance companies are either not renewing existing policies in Florida or are no longer writing new ones in the state. Insurers say they can’t turn a profit in Florida and they are abandoning high-risk properties. In 2020, Florida’s insurance companies reported $1.6 billion in underwriting losses,

mainly caused by roofing fraud and increasing replacement costs.

NEW WILDFIRE STANDARDS FOR CALIFORNIA

California already has wildfire building standards for homes built after 2008. But as wildfires become more frequent and more intense, the state implemented a new approach to address the issue. A three-pronged approach dubbed “Safer from Wildfires” aims to reduce the wildfire risk of older homes, including measures to harden homes, their immediate surroundings and the communities they are in. As catastrophic megafires drive up the cost of insuring homes and thousands of homeowners in rural areas are dropped by insurers, the new standards would prompt insurance companies to offer

There were several factors that cooled off the property market, including the resurgence of COVID19 as well as rising interest rates and rent prices. — Mark McElroy, executive vice president and head of TransUnion’s insurance business

discounts, providing incentives for retrofitting older homes.

2020 WILDFIRES TOOK TOLL ON PHYSICAL, MENTAL HEALTH

Wildfires that struck Oregon in 2020 not only destroyed property, they damaged the physical and mental health of those affected, according to an AARP survey. Survey results showed 46% of respondents said the fires took a toll on their mental health. Among those whose homes were directly impacted, 58% reported negative mental health affects. The fires harmed the physical health of about onethird of respondents. Almost two-thirds of those people said they are fully recovered, while the rest said they are dealing with ongoing health issues, the survey found. Fewer than half of property owners — 42% — who were impacted by wildfires said they had wildfire insurance coverage, and only 51% of renters said they had renters insurance. Financial assistance remains the top need for survivors, with 22% who were displaced saying they still need financial help.

DID YOU

KNOW Private U.S. property/casualty insurers saw a $5.6 billion net

underwriting loss in the first nine months of 2021.

InsuranceNewsNet Magazine » April 2022

Source: Verisk and the American Property Casualty Insurance Association

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MULTILINE

Sea Level Rise Could Significantly Affect Property Insurance A greater threat of flooding will lead to higher rates of property damage. By Susan Rupe

new report predicts an alarming rise in sea level between now and 2050, bringing with it a greater threat of flooding and related property damage. The interagency report, led by the National Oceanic and Atmospheric Administration, forecast that U.S. sea levels will rise at the same rate in the next 30 years as they did in the previous 100 years, sparking fears of more frequent high-tide flooding, extreme storm surges and saltwater infiltrating coastal infrastructure. The NOAA report said scientists are confident U.S. coasts will see between 10 and 12 inches of sea level rise by 2050. But not all coasts will experience the same level of rise. Over the next three decades, sea level rise is predicted to be an average of 10-14 inches for the East Coast, 14-18 42

InsuranceNewsNet Magazine » April 2022

inches for the Gulf Coast, 4-8 inches for the West Coast, 8-10 inches for Puerto Rico and the Virgin Islands, 6-8 inches for the Hawaiian Islands, and 8-10 inches for northern Alaska. Sea level rise will create a profound shift in coastal flooding over the next 30 years by causing tide and storm surge heights to increase and reach farther inland, the report said. By 2050, “moderate” (typically damaging) flooding is expected to occur, on average, more than 10 times as often as it does today, and it can be intensified by local factors. The report described moderate flooding as currently happening about once every three years but expected to increase to about four times a year, with minor flooding (mostly disruptive or nuisance flooding) increasing from three times a year to 10 events per year. Occurrences of major flooding are predicted to happen five times more frequently in 2050 than they do in 2022. However, the report said, coastal flooding can be exacerbated by many factors that aren’t directly related to sea level rise,

such as rainfall, river discharge and coastal erosion. Rising ocean temperatures are behind this predicted rise in sea level, the report said. And with 40% of the U.S. population living within 60 miles of its coastlines, rising sea levels will impact a significant number of people. Sea level rise combined with warming ocean temperatures already made tropical cyclones and hurricanes more deadly and more destructive, a United Nations report revealed. Storm surge can now spread farther inland because of higher baseline sea level, and extreme rain events are predicted to intensify by about 7%. Flooding will be a hazard even on sunny days, the report said. The frequency of high-tide flood events in coastal cities such as New York, Washington and Miami has already doubled since 2000. Researchers said this increase in high-tide flooding has moved from what was a “rare event” into a “disruptive problem.”

How Does This Impact Insurance?

Two “macro-dynamics” are affecting

SEA LEVEL RISE COULD SIGNIFICANTLY AFFECT PROPERTY INSURANCE MULTILINE c om m e rc i a l prop er t y insu rers, sa id Hemant Shah, CEO of Archipelago, a property risk data platform. Sha h a lso founded Hemant Shah RMS, a global catastrophe modeling and risk management firm. “The first dynamic is that, as sea levels rise, climate change and climate volatility on dimensions are increasing,” Shah told InsuranceNewsNet. “Risk is rising. Whether it’s for inland flooding, coastal flooding, tidal flooding, the risk is increasing. But we’re not talking only about flooding; we’re also talking about severe convective storms — cyclones and hurricanes in coastal areas. So we have a growing critical amount of science that suggests scientists are more confident that this is increasing, and the frequency of flooding and other climate events will increase over the next several decades.” Shah said the severity and frequency of weather events over the past few years are evidence that weather risk is increasing. The second dynamic at work is that the private insurance market is wary about flood risk, Shah said. “Insurers already are reluctant to offer it; they often don’t write it for properties in flood zones, so property owners often have to resort to the federal flood insurance program, which provides limited coverage. And that gap between private insurance and federal flood insurance is growing.” In addition to the increased risk of flooding and storms, Shah pointed out that there are large populations that are in harm’s way with so many people living in coastal areas. “That’s something the insurance industry is really beginning to grapple with,” he said. “How does the industry innovate in ways that enable it to write more cost-effective coverage, to cover more people, and to fill their commercial purpose and their social purpose?” Shah predicted that property insurance will become even more expensive and difficult to obtain for people who are in coastal areas or flood zones. “But if insurers don’t provide coverage, they’re not doing business,” he said. “So it’s both sides of the equation. It’s a challenge.” For agents who are advising clients on having adequate coverage against weather disasters, Shah suggested first helping the client understand where their property

Two Takeaways From The 2022 Sea Level Rise Technical Report

Source: NOAA

falls relative to the current definition of flood zones. “But there are some new online resources that are available that project how sea level rise will impact flood zones in the coming decades,” he said. “So it helps to be aware of not only where you are and where you stand today but also where you’re likely to stand in 10 or 20 years.” Shah said the NOAA report also shows projections of where flood zones are likely to change in the coming decades. “Those are projections and not predictions,” he said. “But science is getting more granular, and scientists are more confident in these projections.” The NOAA report has implications not only for flooding but also for other weather disasters, Shah said. “Science is suggesting that the hurricane strike zone dimensions are widening,” he said. “In addition, we are seeing damaging hurricanes and flooding happening earlier

and later than the traditional hurricane season. Perhaps most important, I think the likelihood of severe events is increasing as a result of a warmer environment. So we have the right conditions to sustain these severe hurricanes as sea levels and sea temperatures rise.” He also suggested that warmer ocean temperatures and rising sea levels will contribute to other severe weather events such as more extreme blizzards. “Going into the future, we’re likely to see more weather volatility and more extreme weather events,” he said. 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.

April 2022 » InsuranceNewsNet Magazine

BUSINESS

What It Takes To Have A Million-Dollar Day 1,O0o,0oO.oo Get the right factors into alignment to execute the perfect day for your practice. By Rebecca Korn

magine you ran a practice in its most brilliant design. You would have a “Million-Dollar Day” that you would command from the start of your journey into the office. It would start with the way you woke up, and then move on to the way you drove into the office, and then to the care you would take in preparing for clients, the way you’d lead your team and so on. Imagine how you would move through the day with key insights and tools you 44

InsuranceNewsNet Magazine » April 2022

used to free yourself from the natural psychological tendencies that, in the past, derailed and held you back. Now you move from one thing to the next, aligning with everything purposefully. In order for us to do this, let us take a moment — a very intentional moment — to sit back and let this soak in. Despite this vision of a Million-Dollar Day, the reality of our current circumstances is grim at best. Much is changing inside the financial world, along with COVID-19 and a variety of other external, yet-to-be named “plot twists.” The real problem is, these things are flooding into your day. Impacting your clients. Creating more instability than necessary. A Million-Dollar Premium Day or a

Million-Dollar Rollover Day, whatever relates to your practice, doesn’t appear by magic. It is deliberately created. It is crafted with intention — with detail, understanding, consistency, and a sprinkle of clarity and intention. First, before we go too far out onto the magic limb, let’s identify key biological factors that may get in the way of our execution of a Million-Dollar Day. Let’s begin with an example of a common psychological obstacle that we’re all likely to encounter. Neuroscientists discovered that the pain that results from a financial loss affects the same parts of the brain that process mortal threats. That fear of a loss within your business, or even fear about a prospect who won’t complete a

WHAT IT TAKES TO HAVE A MILLION-DOLLAR DAY sale, places your brain into high alert. Your brain makes you feel as though a saber-toothed tiger is right around the corner, about to pounce at any moment. The brain’s survival mechanisms have a purpose, but they don’t help you when it comes to growing » a powerfully aligned practice. No wonder we can’t focus! We constantly throw rocks at things that we perceive as threats. In order to shift this psychology, the clarity of what » a Million-Dollar Premium Day looks like to you will help. Olympic athletes learn that visualizing and imagining their own actions enable them to succeed at the highest levels. Tennis star Billie Jean King and Olympic medal-winning discus thrower Al Oerter were among the first athletes to use this technique back in the 1960s. Some may scoff at this, saying it’s a “woo-woo” practice, but you will be hard pressed to meet a professional athlete who doesn’t use visualization at some level.

An Exercise In Visualization

Begin by visualizing that you have an uncle who would pay you to run his practice. He walks in the door as you are reading this article and says he would like to pay you the commission of a Million-Dollar Premium Day every single day while he’s away on vacation. What would the commission on a million-dollar premium be for you? If your practice is focused on assets under management, what would a million-dollar rollover generate for you? Now begin to let those thoughts flood your nervous system. Don’t worry, these thoughts won’t hurt you! How would you feel if you had the Million-Dollar Day and what would you do with the funds it would generate?

IF YOU CAN SEE IT, YOU CAN DO IT

Your uncle then explains that all you would need to do is map out exactly what you would fill your day with to show him that you would be productive and moving his business forward. After all, we can’t just play with his business. Your mind begins to reel. How would you design your day? Would your phoning be more aligned and more in your personal power than ever before? Perhaps you would set appointments with those A++ clients because you have certainty of being in power. Or perhaps you would go to a country club to schmooze it up with that high-powered exec you’ve been avoiding for months now. How would you spend your morning with your family? Would knowing that you would receive the proceeds of this Million-Dollar Day change the way you relate to your family? Would it allow for cleaner, intentional mornings?

Olympic athletes learn that visualizing and imagining their own actions enable them to succeed at the highest levels.

BUSINESS

Maybe you would sit down and take the time to make sure your language and the way you educate clients are clear and confident. Would you end your day at a certain time or would you spend some time hitting the gym, knowing you need to be in peak physical health? Take out a piece of paper and commit to 10 minutes of mapping this out in a detailed way to empower your day, your month and your year. Imagine if you committed 48 weeks of to this. That’s right, you would take an extra month of vacation too. Where would you travel to? Welcome to the chapter of your practice where your brain isn’t operating in survival mode, but in a systematic ability to execute every day! The first quarter of 2022 went by faster than we expected. That doesn’t mean that the year is over. Sometimes it takes a quarter to master our awareness and to kick up the right keys to clarity. This is your chance to shift and pivot if you choose to. As we step into April, we can shift everything into full throttle. We feel energized; we feel prepared and full of excitement for 2022. We give ourselves the permission to begin again, and it ushers the perfect time to double down, with intention, focus and understanding. As you begin to imagine what a MillionDollar Day would be like to you, redefine the next quarter as a beginning of that new energy for you, your practice and your clients. Rebecca Korn is CEO and founder of RiseReignRule. She specializes in coaching and developing female entrepreneurs. She may be contacted at rebecca.korn@innfeedback.com.

Like this article or any other?

Take advantage of our award-winning journalism, licensure and reprint options. Find out more at innreprints.com.

April 2022 » InsuranceNewsNet Magazine

INSIGHTS

The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.

Older Generations Becoming More Aware Of ESG Investing While millennials were the early adopters of this type of investing, it’s no longer exclusive to this generation.

a holistic approach when reviewing a client’s portfolio in order to provide them with full transparency and the best possible guidance.

By Amanda Cassar

Best Practices For Advising On ESGs

s we work to help our clients build investment portfolios that promote a promising financial return, we also are seeing an increase in the number of clients who are interested in the content of those investments. Bloomberg reported that an estimated $120 billion was spent in ESG (environmental, social and governance) investments in 2021, and the sector appears to be on an upward trajectory in the years to come. To provide our clients with the most informed advice, it’s important that we as advisors are knowledgeable on this growing trend and can guide our clients on the opportunity to invest ethically.

What Is An ESG And How Does A Stock Become One?

An ESG investment is a stock that is rooted in values relating to environmental, social or governance issues, such as climate change, human rights, and data protection and privacy. For a stock to qualify as an ESG, it must undergo a rigorous evaluation process and adhere to certain principles set out by investment houses. If the stock passes the initial evaluation, it is then scored based on the MSCI ESG index. ESGs can fall under three different categories in the U.S.: AAA-AA: Leaders, A-BBB: Average, and BB-B-CC: Laggard. This index rates organizations based on their exposure to ESG risks and how they manage those risks, and then assigns them one of the three categories above. However, as I learned from a fellow MDRT member in the United Kingdom, work still is being done in the standardization process of ESGs, and these principles and ratings may vary from one nation to another. 46

InsuranceNewsNet Magazine » April 2022

Getting Started With ESG Investing

While millennials were the early adopters of this type of investing, it’s no longer exclusive to this generation. Older generations are becoming increasingly aware of ESGs and are expressing interest in incorporating ethical investments into their portfolios. In addition to getting kudos from their children and grandchildren for their conscious investing, clients feel as though they are helping make the world a better place without having to undertake a large social initiative. For clients who are new to ESG investing, it’s important to review their portfolio with them in order to understand their passions and values that can translate into ethical investing. From there, I like to share available investment opportunities that align with those and see how we can incorporate them into their portfolio while also mitigating risk. Although ESGs do not carry any more inherent risk than do nonESG investments, maintaining your client’s financial well-being should always be top of mind. To quell any fears about the financial return of ethical investing, I tend to invest only a small percentage of their portfolio, typically 10%, into stocks of this kind. Finally, I like to look at the remainder of their portfolio and point out any possible conflicts of interest. For example, I had a client who did not want any investments in coal mines; however, one of their investments had an indirect relationship with funding coal mines. Although they ultimately decided to keep the stock due to its performance, it’s important to take

Every client’s degree of knowledge and comfortability with ESGs will vary, but ensuring you are educated on the topic and able to thoroughly discuss ESGs with your clients is essential. And while some clients are novices to the topic, I work with a sizeable number who solely invest in ESGs. These clients have a zero-tolerance policy for any investments that do not align with their values or efforts toward the betterment of the planet. I recommend that advisors take the following steps before discussing the topic of ESGs with a current or prospective client. First, do your homework. I advise that you speak with a couple of the fund managers you work with and learn what types of ESG investments are currently available in a few different focus areas. Additionally, be sure to ask them what their screening criteria is and how they determine which stocks qualify as ESGs. Second, provide educational resources. While some clients are OK with investing 10% of their portfolio right away, others may need more research to make their decision. Putting together a one-pager that outlines the basics of ESGs and why they might be of interest to your client is a great way to not only show that you’ve done your research, but it also serves as an educational keepsake for your clients to refer to. Amanda Cassar holds a master’s degree in financial planning and is a nine-year member of MDRT. She has been in financial services since 1991 and is the sole director of Wealth Planning Partners in Robina, Queensland, Australia. She is the author of Financial Secrets Revealed. Amanda may be contacted at amanda.cassar@innfeedback.com.

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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.

Encouraging The Next Generation Of Advisors Many students who are smart, motivated and planning their post-graduation lives are largely unaware of insurance and financial services as a career option. By Karen Byrd

he financial challenges and decisions faced by Main Street families and small businesses are more complex than ever. People need services and advice, and insurance and financial advisors are crucial to helping them make some of life’s most important decisions to ensure their financial security. But our industry could face a troubling shortage of qualified and motivated professionals. The average financial advisor is 55 years old, and around 20% of these professionals are age 65 or older. Cerulli Associates has projected that more than 110,000 will retire over the next decade. Meanwhile, the demand for advisory services is expected to increase by up to one-third over the same time frame. It is clear that we need to prepare the next generation of financial professionals to take over. However, that is not always easy. Many students who are smart, motivated and planning their post-graduation lives are largely unaware of insurance and financial services as a career option. Compounding the problem, many established firms are reluctant to bring on younger advisors. When you ask students what they are looking for in a career, you often hear responses that align very well with positions in our industry. Of course, students say they want a career that allows them to make a good living. They also say they want to help people and make a difference in the lives of others. They are looking for flexibility and independence. They want to be in control of creating their own success. A career in financial services checks all the boxes. And these students bring a lot to the table for their potential employers. They provide

insights and inroads to serving a younger, more diverse clientele. They are technologically savvy. Effective planning for younger families and individuals requires interacting with these prospective clients using technology they are comfortable with as well as creating lifelong relationships. When advisors create connections with clients at a relatively early age, they are involved in all their clients’ major adult decisions — getting married, buying a home, having children, sending those children to college, preparing for a happy retirement, all the way down the line to leaving a meaningful financial legacy. Financial planning no longer starts when clients approach retirement age. To attract this new generation of clients, a new generation of advisors is crucial. It benefits our entire industry to encourage and support our next generation of insurance and financial professionals. One way to do this is by working directly with colleges and universities. I have established a strong relationship with my alma mater, Austin Peay State University in Clarksville, Tenn. I work with students in the finance program there to help them understand

the benefits of a financial services career. I talk about my own career as a financial professional and assure them that help is available, from mentorships to professional association memberships. I encourage these students to participate in NAIFA’s Future Leaders program, which provides free educational and professional development sessions for those considering a career in the industry, and I urge them to take advantage of NAIFA’s student membership category. As seasoned insurance and financial services professionals, we have dedicated our careers to helping our clients achieve financial security and prosper. As we look to the future, we don’t want this good work to end. It is important that do what we can to encourage the next generation of advisors for the sake of our clients, our communities and the industry. Karen Byrd, LUTCF, is a past president of NAIFA-Tennessee and N A I FA - C l a r k s v i l l e . Karen may be contacted at karen.byrd@ innfeedback.com.

April 2022 » 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.

Selecting The Right Annuity Requires Dialogue & Partnership A study showed most investors would discuss annuities with their advisors, but they would make the final decision on which product to choose.

Delegation of Product Selection to an Advisor

By Matthew Drinkwater

ith millions of Americans entering retirement over the next decade, many will benefit from the unique features of annuities. Although the core and defining value of annuities is guaranteed lifetime income, deferred annuity products offer various combinations of downside protection and upside potential. Investors of varying levels of risk tolerance will have an abundance of options to meet their financial needs. In the current investment environment — where interest rates are low and stock market returns have generally been strong — annuity carriers and distributors need to understand which annuity product concepts have the greatest appeal and which investors favor certain products. Aligning specific annuity products with clients’ needs is a service usually performed by advisors. Because of this tendency, simply looking at sales patterns may not reveal investors’ preferences on a conceptual level. If investors are given the opportunity to select for themselves, what would they want? A recent Secure Retirement Institute study examined investor preferences for the four main types of deferred annuities now on the market: fixed-rate, fixed indexed, registered index-linked and variable. We asked investors to consider their current financial situation and to select one of four investment options with varying degrees of downside protection and upside potential in which to “invest” $100,000 for five years. Rather than use the industry terms for the product types, we provided study participants with a basic description and hypothetical outcomes. 48

InsuranceNewsNet Magazine » April 2022

Source: The Upside and the Downside: Annuity Production Selection, Secure Retirement Institute, 2022

Nearly half of investors (46%) selected the “full downside protection, limited upside potential” option, which corresponded to an FIA. The top reason was their placing more value on protecting savings than seeking maximum gains. FIAs are especially popular among older, more conservative and less financially knowledgeable investors. Another 35% of investors chose the “limited downside protection, limited upside potential” option, which corresponds to a RILA. Those who selected RILAs tend to believe the stock market will perform well over the next five years and value the ability to maximize gains. These two product classes were much more popular than were either VA or FRD products. If investors have such strong preferences for FIAs and RILAs, could they simply seek out and purchase these products on their own? The SRI research suggests otherwise: Among the 57% of investors who regularly work with paid professionals to assist with the household’s financial and investment decisions, the vast majority (92%) would involve their advisors in this kind of product selection decision. Only 9% of those surveyed would fully delegate the decision to their advisors without the investor’s involvement. Older, retired and

higher-income investors were more comfortable delegating this product selection decision to their advisors. This overall selection pattern reveals that most investors appreciate the combination of upside potential and downside protection offered by FIAs and RILAs. In the context of a multiyear bull market, the notion of protecting assets clearly has traction. However, with interest rates so low, many investors also want to avoid locking in a low rate of return. Our study clearly shows that most investors do not want the sole responsibility for such a complex financial decision. Even if clients give their advisors discretion over day-to-day buying and selling decisions in their portfolios, selection of a deferred annuity clearly requires dialogue and a partnership. When working with carriers, advisors will be successful by connecting the specific objectives of annuity products with the needs and mindsets of investors. Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS, is corporate vice president, Secure Retirement Institute. He may be contacted at matthew.drinkwater@innfeedback.com.

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With nearly 100 years of experience, The American College is passionate about helping students expand their knowledge and opportunities as financial professionals.

A Proven Retention Tool For Women In Financial Services Mentorship is key to retaining a diverse workforce. By Kaylee Ranck

he financial services industry increased the representation of women among its employees during the past two decades, only to have a substantial exit of female employees with the onset of the COVID-19 pandemic. Increased caregiving and household responsibilities led to nearly one-third of women leaving financial services temporarily or permanently, rendering the progress of previous decades moot. Claudia Goldin, professor of economics at Harvard University, describes the discouraging phenomenon accurately by stating, “[Gender] inequalities that existed before the pandemic are now on steroids.” According to a recent MetLife study, nearly 50% of women surveyed stated that the pandemic has negatively impacted their career path. For success in continuing with their current occupations or returning to the workplace, women are seeking increased flexibility and career advancement opportunities as well as skill development and supportive work cultures. A recent study conducted by The American College Center for Women in Financial Services on behalf of The American College Center for Economic Empowerment and Equality at The American College of Financial Services found 55% of financial advisors surveyed did not have a mentor. Of those surveyed, more women than men sought mentorship outside of their current employers and outside of the industry. This is particularly important to industry leaders, especially those wanting to retain a diverse workforce. Formal and informal mentoring can help achieve upskilling, supportive work environments and career advancement opportunities. Industry leaders can help address the challenges faced by working women or those considering a career

change through targeted initiatives to help retain and advance women within the industry. Mentors provide a powerful combination of attributes. The best mentor is a catalyst for professional development, a pathway to industry contacts, an emotional support system, an inspiration for career trajectory, a role model and a candid cheerleader of a mentee’s career. Mentors can have a positive and profound impact on a mentee’s confidence, advancement and success. Mentoring can be, at times, intensive, arduous and rewarding, with successes and letdowns. For women, mentorship is critical in professional advancement, promotion attainment, salary increases and career satisfaction and is particularly important in male-dominated professions. Industry leaders can seize an opportunity to establish mentoring initiatives, especially at a time when so many women are leaving the financial services industry temporarily or permanently. Mentoring is mutually beneficial to businesses and employees. Companies with formal mentoring programs have higher retention and engagement rates. Employees who partake in formal mentoring programs are more likely to benefit through higher compensation, increased promotions and greater career satisfaction. Given the empirical support for mentoring, it is surprising that fewer than half of individuals in the financial services industry have a mentor. Here are some mentorship best practices to help you keep this important commitment: • Establish a personal connection and trust with a mentee. It’s an impactful relationship; treat it as such — break from formal roles and titles to establish common ground and equality. • Ensure you are available. Before committing to the relationship, evaluate how much time and attention you have to devote to a mentee. • Allow relationships to grow

organically. Not all mentor/mentee relationships are a good fit even if they began with promise. • Contribute to the development of character and job skill competencies. Quality mentors go beyond ensuring a mentee has the requisite competencies for a job and devote time to assisting them with developing self-awareness, confidence, empathy and other key characteristics of future leaders. • Show support and praise success. Mentors should bring energy to the relationship in support of their mentee’s professional endeavors. This does not preclude mentors from addressing concerns or providing valuable feedback, but good mentors prefer support over being critical. • Be open to sharing your professional network. This can be helpful to the mentee once you feel they can benefit from other professional contacts. • Encourage a mentorship team. Each mentor on the team can serve a different role in a mentee’s professional trajectory. • Know your limitations. • Keep confidential client information private. Mentoring is a proven retention tool and an avenue for advancement for women. Quality and successful mentoring can serve as a method to help women develop a sense of inclusion, develop skills and get promoted. This is particularly timely for the financial services industry, with the increased resignation of women, the consideration of career changers, and the desire and need for flexibility. Kaylee Ranck is the research director for The American College Center for Women in Financial Services at The American College of Financial Services. She may be contacted at kaylee.ranck@innfeedback.com.

April 2022 » InsuranceNewsNet Magazine

InsuranceNewsNet Magazine - April 2022

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