THE 2022 GIVING ISSUE
Special Section • P. 17
The Financial Services Community Performs Philanthropy On A Grand Scale PAGE 20
NEW Multiline Section: ‘Everybody Knows Him:’ Keeping P/C, Life Sales Balance PAGE 42
Get an inside look
into Protective Life’s rebrand and mission in this interview with Rich Bielen, president and CEO.
PAGES 6-7
Life Insurance | Annuities | Asset Protection
Protecting what matters most. Together. Your clients count on you to help them protect what matters most. And for more than a century, you’ve trusted Protective to work as hard as you do for your clients and help you deliver the sense of security they deserve. Now, more than ever, Protective is here for you with a bold new energy and renewed commitment to helping you make life insurance and annuities more accessible to more people. We’re here to help your clients be more confident, to help you protect more people and to help you grow your business. Because in the end, we’re all protectors. protective.com/protectors The Protective trademarks, logos and service marks are property of Protective Life Corporation and are protected by copyright, trademark, and/ or other proprietary rights and laws. Protective and Protective Life refers to Protective Life Insurance Company (PLICO) located in Nashville, TN and its affiliates, including Protective Life & Annuity Insurance Company (PLAIC) located in Birmingham, AL. Insurance and annuities are issued by PLICO in all states except New York and in New York by PLAIC. Product availability and features may vary by state. Each company is solely responsible for the financial obligations accruing under the products it issues. Product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Insurance and Annuities are: Not a Deposit | Not Insured by any Federal Government Agency | Have no Bank or Credit Union Guarantee | Not FDIC/NCUA Insured | May Lose Value CLABD.2925266.07.21
What do you look for in a retirement company? Security Benefit has dedicated expertise in multiple retirement markets and wealth segments to accommodate a variety of life stages and help you grow your practice. We offer retirement plan services, a flexible advisor mutual fund program, access to specialty markets like teachers and fire fighters, and a full range of annuity products.
Visit us online at SecurityBenefit.com/Financial-Professionals Annuities are issued by Security Benefit Life Insurance Company (SBL) in all states except NY. Services offered through Security Distributors, a subsidiary of SBL, which is wholly owned by Security Benefit Corporation ("Security Benefit").
One Security Benefit Place | Topeka, KS 66636 | SecurityBenefit.com SB-10011-95 | 2021/07/13
IN THIS ISSUE
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JANUARY 2022 » VOLUME 15, NUMBER 01
FEATURE
Giving Back, Giving Big
By Susan Rupe Financial services professionals are inspired to go above and beyond in philanthropy and inspire others to follow them.
20 INFRONT
12 L ife Is Rich
By John Hilton The coming year is shaping up to be another big year for political and regulatory changes impacting financial services.
By Susan Rupe Katie Brewer took a leap of faith to build the kind of practice she always dreamed of.
HEALTH/BENEFITS
34 The Likelihood And Cost Of LTC May Be Higher Than You Think
By Brandon Clay Using holistic financial planning to help clients solve health care risks.
NEW MULTILINE
42 ‘Everybody Knows Him’: Balancing P/C And Life Sales
LIFE
Doing your homework about a prospect or client can strengthen your relationship with them. Sam Richter, author of Take The Cold Out Of Cold Calling, tells how you can use social media and other tools to find the right clients and help them achieve their goals.
By John Rafferty Planning for the “known unknowns” in your clients’ retirement.
38 3 Reasons Your Clients Need You To Provide Medicare Advice
We uncovered great philanthropic initiatives by true mission-driven organizations that are making the world a better place. • PAGE 17 8A Relationship Mindset
30 D onald Rumsfeld Would Have Made A Great Annuity Advisor
ADVISORNEWS
The Giving Issue
INTERVIEW
ANNUITY
By Robert Pokorski A number of variables go into the estimates of the cost of long-term care and how likely a client is to need care.
IN THE FIELD
4B usy Year Expected For Insurance Regulation
online
www.insurancenewsnetmagazine.com
26 Life Insurance: The Financial Offense vs. The Financial Defense By Joe Ross Creating resilient financial and retirement plans means having a strong financial defense that supports their financial offense to achieve clients’ goals.
By John Hilton Doug Wheeler has successfully incorporated property/casualty and life insurance into his practice while being the agent known to almost everyone in his small town.
BUSINESS
44 Thermostat Or A Thermometer – Which Is Your Team Culture? By Jason V. Barger Set the tone in your practice instead of reacting to your environment.
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January 2022 » InsuranceNewsNet Magazine
1
WELCOME LETTER FROM THE EDITOR
If You Want To Go Far, Take Others With You
I
always make sure I keep an extra stash of dollar bills in my purse when I’m out Christmas shopping. I know that at some point while dashing through the local outlet center or around the nearby retail hub, I’ll hear the familiar sound of the bell beckoning shoppers to throw some cash or change into the Salvation Army kettle. Years ago, our family pledged we would never walk past a red kettle without putting some money inside. We observed firsthand all the good work done by the Salvation Army in the communities where we lived. When my hometown was devastated by a flood in 1977, Salvation Army volunteers came in to help people clean out their ravaged homes and provided hot meals for people who went for weeks without electricity or safe drinking water. Years later, my husband worked in the emergency services field. Whenever there was a fire or a train derailment or some other local calamity that brought out first responders, the Salvation Army was there to serve them hot coffee, bottled water and sandwiches. They helped the helpers. I think that the few bucks I slip into the kettle don’t make much of a difference when there is so much need all around me. But when those dollars are added to the bills and coins donated by others, they can become a powerful force. The financial professionals we profile in this month’s Giving Issue are giving money in a big way to those in need. But they aren’t doing it alone. They are inspiring others to work alongside them to support the causes they believe in and to relieve some of the need they see around them. We all can donate money to support some worthy cause — and most of us do. But encouraging others to join us on the giving journey can amplify our efforts. This month of January is a time for making resolutions for the new year. It’s a good time to figure out what role giving will play in your business and in your personal life. And take it a step further 2
— think about who you can partner with to make your giving go further.
Multiline Moves Into The Spotlight
The beginning of a new year is a great time to introduce a new feature in InsuranceNewsNet Magazine. We are launching a regular feature focusing on property/casualty insurance. This feature, called Multiline (page 40), begins with a profile of an advisor who successfully incorporated P/C into his life insurance and annuity practice. He describes how he became the advisor known by everyone in his small town. He also gives some tips on how to make P/C a part of your own practice. The Multiline feature takes the place of the InBalance feature on wellness that we have published for the past two or three years. We believe this change will give our readers more tools that they need to serve their clients and run their practice more effectively.
InsuranceNewsNet Magazine » January 2022
In addition, we are always on the lookout for topics to cover in this area and for professionals who want to contribute articles. You are welcome to discuss your ideas with me at editor@insurancenewsnet.com. And one final word on giving. Before I became a full-time remote worker, I had a tiny card pinned above my desk that contained one of my favorite quotes. It’s from St. Teresa of Kolkata, more popularly known as Mother Teresa. She said, “Not all of us can do great things. But we all can do small things with great love.” It’s a reminder to myself that every day I will try to do something small but do it with love. I challenge you to do the same. Susan Rupe Managing Editor
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INFRONT
Busy Year Expected For Insurance Regulation A new fiduciary rule is expected to land sometime in the spring. It will join a crowd of regulators and lawmakers trying to make it safer and easier for Americans to save for retirement. By John Hilton
A
s 2022 gets underway, it is shaping up to be another big year for political and regulatory changes impacting financial services. Start at the top, where President Joe Biden enters his second year in office. The clock is ticking on the administration’s ability to get any major priorities through Congress. If precedent holds true, Congress will largely cease to function by the middle of 2022 as members focus on reelection. Republicans are favored to retake 4
control of the House of Representatives, which which would further hamper Biden’s ability to get major legislation passed. He would not be the first president to ride out his final two years in a political gridlock. By far, the most interesting big-ticket item on the docket is the Department of Labor fiduciary rule reboot. Biden was in the vice president’s office when the DOL first pushed out a fiduciary rule in 2015. It was tossed out by a federal appeals court two years later. Whether the DOL can craft a successful fiduciary standard this time around — the new rule is expected to be published in the spring — will be a major 2022 storyline. Otherwise, Republicans and Democrats might be able to again agree on retirement security legislation. It might be the lone bipartisan issue in all of Washington, D.C. But they are certain to continue haggling over tax policy for the remainder of
InsuranceNewsNet Magazine » January 2022
Biden’s time in office. All of these issues will have major implications for advisors and their clients. At the state level, new annuity sales rules continue to take hold, substituting a best-interest standard for suitability. As of press time, 18 states had passed an annuity sales model update pushed out by the National Association of Insurance Commissioners. The financial services industry is preparing to fight any fiduciary standard at the state and federal levels. “Unlike a fiduciary-only approach [a best-interest standard], make sure savers, particularly financially vulnerable middle-income Americans, can access information about different choices for long-term security throughout retirement,” said the American Council of Life Insurers and the National Association of Insurance and Financial Advisors in a joint statement.
BUSY YEAR EXPECTED FOR INSURANCE REGULATION INFRONT
PTE 2020-02 Explained: Fiduciary Status Logic Flow
According to a study by the Hispanic Leadership Fund, a fiduciary-only approach would limit choices for consumers, reduce savings of 2.7 million people by $140 billion, and widen the racial wealth gap by 20%.
Fiduciary Redux
Initially, the Employee Benefits Security Administration planned to issue the new fiduciary rule by December, according to the DOL’s spring regulatory agenda. When it became clear that the deadline would come and go, interest and anxiety picked up. There isn’t any reason to read anything into the delay, said Bradford P. Campbell, partner at Faegre Drinker Biddle & Reath, during a recent webinar. “I think probably it’s more like the spring,” Campbell said. “That's because the issues are hard. To their credit, they're spending a lot of time meeting with people and discussing the issues. I think DOL is just taking time to do the rule as best they can.” In February, the DOL allowed the investment advice rule, written by the Trump administration, to take effect. That rule replaced the Obama-era fiduciary rule tossed out by the Fifth Circuit Court of Appeals. The DOL is certain to build on the new prohibited transaction exemption 202002 included in the investment advice rule, Fred Reish has said. Reish is also a partner at Faegre Drinker Biddle & Reath. PTE 2020-02 applies to recommendations for rollovers and other movement of retirement money. Broker-dealer representatives and investment advisors can
Source: www.capitalrock.com
use the exemption to collect compensation for transactions involving 401(k)s or individual retirement accounts. Insurance producers can still use PTE 84-24 for annuity and life insurance sales involving retirement funds. “I think 84-24 will definitely be modified,” Reish said. “There will be provisions of 2020-02 that'll be moved over to it. Probably the fiduciary acknowledgement, the best-interest standard and maybe specific disclosures of reasonable compensation limitation. It’ll look a lot more like a fiduciary-type rule than it does right now.”
Legislation Potential
Further retirement security measures seemingly got lost in the fall wrangling over Biden’s Build Back Better bill. But administration officials maintain those priorities remain high on their list. Auto-enrollment of employees into retirement plans was the biggest measure cut from the Build Back Better bill. According to a study conducted by Fidelity, 91% of employees whose companies auto-enroll them into their workplace 401(k) do not opt out. Industry supporters were hopeful that another major retirement security package, dubbed SECURE Act 2.0, would be passed in December. It includes dozens of provisions to help workers increase retirement savings. Kathleen Kennedy Townsend, who serves as special assistant to the secretary of labor for retirement, spoke at the Employee Benefit Research Institute’s Winter Policy Forum in December. The Biden administration wants to
support retirement security through a strengthened Social Security system and via workers’ savings, Townsend explained. In 2016, only 41% of African American families and 35% of Hispanic families had any retirement savings, she said. Even employees who have 401(k) retirement accounts have difficulties translating those dollars to security in retirement, Townsend added. “We aren’t starting from scratch,” she said. “We still have defined benefit plans and companies that offer annuities. The SECURE Act provided for the creation of PEPs and provided a fiduciary safe harbor for selecting an annuity provider.” In addition, EBSA is busy writing a rule that will provide savers with a lifetime income illustration.
State Regulation
The NAIC entered 2021 with a goal to get as many states as possible to adopt its annuity sales model update. The financial services industry shared that goal and joined in lobbying state insurance departments. That hard work paid off. As this issue went to press, Mississippi had just become the 18th state to adopt the new rules. The growing list of states that have adopted the NAIC model includes Arizona, Arkansas, Kentucky, Iowa and Ohio. In February 2020, the NAIC adopted an update to the Suitability in Annuity Transactions rule that articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. With the outbreak of COVID-19, states were slow to adopt the update in the months that followed. The NAIC began lobbying state officials last summer and began work on a series of FAQs to help facilitate adoption. How quickly a majority of states adopts the new rules might determine whether a fiduciary standard gains further momentum. InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.
January 2022 » InsuranceNewsNet Magazine
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Protective Life Corporation is on a Mission to Protect More People The company’s sweeping rebrand focuses on providing the protection and security customers deserve. In September 2021, Protective Life Corporation (Protective) began showcasing its new visual identity and updated voice, forging a stronger connection to its purpose and audiences. This new brand recognizes “the protector in all of us” and exemplifies the company’s 114-year commitment to putting people first, delivering on promises and striving to do more for its customers, employees, business partners and communities. Rich Bielen, Protective president and chief executive officer, shares his insights on the new chapter of Protective’s impactful story, which includes a clear purpose, refined values, defined commitments, and a bold visual identity that is uniquely Protective. Is there a story behind Protective’s rebranding? The new brand leverages Protective’s name and amplifies its purpose — “because we’re all protectors.” It allows its many audiences to see themselves as part of the Protective story. According to our research, the people who know us know us well and understand what we stand for. But we realized there was a great opportunity to build more awareness. We always pride ourselves on our strong financial foundation and being a reliable partner for our customers — and our rebranding journey is helping us elevate our story and tell it more broadly. Using our new brand as a launching pad, we’re excited to capitalize on our strengths, enable continued growth and serve more people. And as Protective continues to grow, we look forward to our partners and communities growing with us. Did the rebranding change Protective’s values? We kept our core values and added “aspire for better.” Whether it’s customer experience, organizational effectiveness, product innovation or how we treat people, we always want to be able to do better for
Rich Bielen, Protective president and chief executive officer our people. Since our founding, making a meaningful impact with our customers, colleagues and communities has been a priority, but it has not been explicitly stated. “Aspire for better” reflects our aspiration, with a focus on the future. It encourages us to be curious, stay open to different perspectives, search for better solutions, learn continuously and keep growing. Our values are core to who we are, and “aspire for better” describes how we act and strongly complements our other values: “do the right thing, serve people, and build trust.” How is Protective pursuing these aspirations right now? In light of the pandemic, there has been a heightened awareness of our industry’s products and the need for planning and financial protection. At Protective, we’ve seen tremendous momentum in our retail divisions and have made it a priority to better meet the needs of customers in this new climate. To address the increased interest in our products and to continue raising awareness of their importance, we’ve teamed up with several industry partners and initiatives. In addition to collaborating with industry peers to continue raising awareness about the value of life insurance and retirement
solutions, we also want to help more people achieve a sense of protection and security and make the process as easy as possible. We’re making sure they can do business with us whenever and however they want, which is often through digital experiences. More and more, consumers are turning to digital tools to learn, shop and engage, so we’re using tailored platforms to meet their expectations while simplifying and accelerating the process. Lastly, we’re focused on our virtuous cycle, which is driven by both organic growth in our retail lines and acquisitions to periodically enhance earnings growth and create scale. This continues to serve as a strong business model for us, and we’re looking forward to leveraging upcoming opportunities in the market. What can your partners expect of Protective? We’re focused on serving them and making their lives easier. Together, we’ll help more people achieve the protection and security they deserve. We’ll do that by putting people first and delivering on our promises. To serve with care and help our partners reach their goals, we’ll keep aspiring for better. We’ll work together for better protection and simpler solutions for our partners and their customers. This includes the effective adoption of virtual technologies. It’s about making everything as seamless as we can with all the parties we deal with. Our goal is to strengthen the way we build and establish lifelong customer relationships. Is listening an important part of interacting with your partners? Building trust is a long-standing core value for Protective. What that means is to listen and understand what people need. You have to listen to your customers; you have to listen to your partners and the people you’re doing business with because that feedback will help you better serve them. Then, in turn, you can strengthen the
overall relationship because it is based on trust and a willingness to improve. For example, I’ve shared how we are striving to optimize digital tools, but we also know that some customers want to call us and talk to a live representative. For those who prefer to deal with us online, through text and other methods, we’re collecting feedback and providing the communication channels and options they are requesting. Often when we listen to our partners, we’re hearing what’s needed so they can better serve customers. At the end of the day, that’s why we’re here — to serve customers. Our life insurance, retirement solutions and asset protection offerings meet people where they are. By listening, we’re able to find better ways to meet needs — today and tomorrow. How does the idea of being a protector influence Protective’s culture? Since I joined Protective in 1991, I observed an overriding spirit of ownership and service within the organization. As CEO, I am here to serve our 3,600 employees and our 12.4 million customers, and I take ownership in that. At the same time, I recognize that our people embrace that same sense of ownership and servant’s heart for our customers. They always have. That’s why our purpose of being
protectors is so reflective of who we are and who we have always been. In addition to our protective spirit, our culture of determination is something that has built our reputation as a valuable partner, specifically in acquisitions. This has led large companies to entrust their customers to us, to supply them with insurance, pay their claims and administer the business. They’re selecting us because they trust in our protecting nature. We assume these customers as our own and protect them, because their original companies are responsible for making sure they put their customers into a caring company that stays true to their word. It’s an important part of our business that we plan to uphold. How do you stay true to Protective’s 114-year history while looking to the future? When I think about Protective’s legacy, I reflect on the fact that I am only the seventh CEO in this company’s history. Since 1907, we’ve withstood many challenges and maintained our solid foundation with a focused continuity. We’ve laid the groundwork for the strength and stability that allows us to grow and look to the future at the same time. A prime example was our ability to navigate the circumstances of
COVID-19. Right away, we determined we must first manage. Then we quickly shifted gears to continue building for our future and imagining the possibilities on the other side of the pandemic. We are continuing to manage through the pandemic, and we’re using what we’ve learned to prepare for our future. Our business is one that evolves. It’s a long-term business. We’re not selling a pair of shoes that will be discarded in three or six months. We’re selling a policy that might be with the customer for decades. So that’s what we keep in mind. We must keep thinking about how we emerge and imagine what’s possible for us as we look to the future. Do Protective’s solid financials play a role in how the organization has weathered the pandemic? Our solid financials allow us to keep our focus on serving our customers. We maintain high ratings, we’ve had a very strong financial base and we remain financially sound, even with the effects of COVID-19. Our policyholders shouldn’t be worried about whether we’ll be here to pay the claim at one of the most challenging points of their lives. We continue to be very strong financially and will be there for customers decades into the future.
A mission to become America’s most protective insurance company Protective’s rebranding renews its commitment to putting people first and continuing to make financial protection and security more accessible — helping more people achieve a level of protection that makes a real impact on their lives. Its employees strive to live this mission every day through their actions, supporting a values-driven and financially strong and disciplined company. Protective’s growth and success can be largely attributed to an ongoing commitment to serving people and doing the right thing — for its employees, distributors and customers. To learn more, visit protective.com/protectors. The Protective trademarks, logos and service marks are property of Protective Life Corporation and are protected by copyright, trademark, and/or other proprietary rights and laws. Protective and Protective Life refers to Protective Life Insurance Company (PLICO), founded in 1907 and located in Nashville, TN, and its affiliates, including Protective Life & Annuity Insurance Company (PLAIC), located in Birmingham, AL. Insurance and annuities are issued by PLICO in all states except New York, and in New York by PLAIC. Product availability and features may vary by state. Each company is solely responsible for the financial obligations accruing under the products it issues. Product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Insurance and Annuities are: Not a Deposit | Not Insured by Any Federal Government Agency | Have No Bank or Credit Union Guarantee | Not FDIC/NCUA Insured | May Lose Value
CLABD.3197227.10.21
INTERVIEW
Sam Richter gives you tips on how you can glean information on clients and use it to help them reach their financial goals. An interview with Publisher Paul Feldman
8
InsuranceNewsNet Magazine » January 2022
A RELATIONSHIP MINDSET — WITH SAM RICHTER INTERVIEW
D
o your homework! Homework doesn’t stop when you graduate from school. Taking the time to do your homework prior to meeting with a prospect or a client can yield dividends, and it can strengthen your relationship with them. Sam Richter is a master of using social media to help do the “homework” of finding out what makes someone tick. He emphasizes that this is not “stalking” someone — it is, in his words, ethically finding information and then using that information for the benefit of others. Richter is the creator and founder of the Know More sales and business improvement program. He specializes in using Google combined with LinkedIn, Twitter, Facebook and other web-based resources as intelligence-gathering tools. He is the author of Take the Cold Out of Cold Calling, a book about finding information online and using it for business and sales success. He is a pioneer in sales intelligence — using technology to collect, analyze and present information to help salespeople find, monitor and understand the data that provides insights into prospects’ and clients’ daily business. In this interview with Publisher Paul Feldman, Richter discusses some strategies for finding information online, as well as why it’s crucial to attract new blood into the industry. PAUL FELDMAN: What is the best piece of advice you can give to a financial advisor? SAM RICHTER: Do a little bit of homework prior to meeting with somebody. One way — and one that’s less commonly implemented — is to look at somebody’s LinkedIn profile in order to try to find something of interest for you to ask a good question. People like to talk about themselves. Yet all too often, especially when we’re doing virtual meetings, we launch into talking about ourselves. Your prospects don’t care about you; your prospects are really passionate about themselves. So say a simple thing like “I was on your LinkedIn profile and see that you play in a garage band on the weekends. Can you tell me a little bit about that?” Or “I see that
you have a degree in neuroscience from the University of Georgia. And yet you now own a manufacturing company. That must be an incredible story. Can you tell me a little bit about it?” Doing a little bit of homework allows you to gain permission to ask more challenging questions. Because there will always be that brick wall between the prospect and the advisor. The prospect is wondering what you are going to sell them. So you can easily blow up that brick wall by asking a question or talking about something you know the other person is passionate about. Let them talk, and then listen. And then ask another question. And another question. Things will move quickly from a prospect/vendor relationship to the kind of relationship we’d like to have — one of value. FELDMAN: In this business, we often talk about finding money in motion. What is money in motion, and what’s the best way to find it? RICHTER: First, identify who you want to target — who your best client profiles might be. For example, I know a financial advisor in Minneapolis, and his business was built on working with key executives at General Mills. He had quite a few clients in the executive suite at General Mills, and he probably knows General Mills and its benefits package and stock option program better than the human resources people at General Mills. He wanted to expand his practice within General Mills, as they have about 30,000 employees. Who do you go to first? He started targeting money in motion. He looks for an executive at General Mills who has been promoted within the past one to three months. Why? Because that person theoretically will have money and can take advantage of the different stock options and benefits available to them. How do you find someone who has money in motion? In this example, you could go on LinkedIn and search for employees at a major employer in your area such as General Mills. Search for one month and
see whether you can find people who have been promoted recently. And then target those people. Here are other examples. Companies that have recently received funding. Companies that are going through a transition where executives or any employee in that company potentially could be coming into money that wasn’t available before. Look at companies that are relocating. Those folks might not be coming into money, but a bunch of people might be moving to your city and they might want a local advisor. You can do Google queries on those kinds of activities. For example, if you want to target health care companies in Dallas, how do you build a query to find health care companies in Dallas that are receiving funding? You might put the words “heath care” or “Dallas” in quotation marks. That limits your search to health care companies and Dallas. And you might want to put in another search term like “funding” or “venture capital.” Then you can find those articles, social media posts, whatever it might be, and you will be able to target the executives at that organization. You also might want to use search words like “CEO” or “announces” or “welcomes” if you want to target companies that have recently hired a new chief executive. When you are searching, you want to make sure you get the most recent results. It obviously doesn’t do you any good to call on a company that filed for an IPO seven years ago. So you want to click on the Tools button underneath the main Google search form. A drop-down menu will appear, and that allows you to sort your results by date. FELDMAN: What are some different strategies for getting introductions?
January 2022 » InsuranceNewsNet Magazine
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INTERVIEW A RELATIONSHIP MINDSET — WITH SAM RICHTER RICHTER: Let’s say you’re my client and you have a meeting with me this afternoon. I can go into whitepages.com and type in your address, and it will pull up a list of your neighbors. Now, instead of
them. Let’s say your client’s name is Julie Smith; you’ll be able to see which CEOs are connected with Julie Smith, and then you can ask her for an introduction. Also, you can use LinkedIn to find out
introduction by name and being specific about why you’d like the introduction. A client tends to be more emotionally involved in making that kind of introduction as opposed to someone saying, “Yeah, I’ll give you a name. I’ll give you my cousin’s name.”
Your clients do not need to have a relationship with you as an advisor. They don’t need to treat you like they treat their friends.
FELDMAN: What do you think about checking out your clients’ social media?
RICHTER: You can ask your client if you might follow them on social media. But even if they don’t accept your request, I think you certainly should go to Facebook and search that person prior to every meeting. Just because you have information from their social media doesn’t mean you have to tell them you have that information. You’re using that information so you can ask better questions. If someone’s Facebook feed has a post that says, “Don’t bother contacting me over Thanksgiving; we’re taking our dream vacation to Greece,” or you see something about them volunteering with their kid’s soccer league, you can use that information the next time you meet with them. You can ask, “Are you going to be in town over Thanksgiving?” It’s a conversation starter. When you see your clients posting things they are doing, put it in your customer relationship management system. Things like their kid’s birthday, where he goes to school or when he graduates.
But you need to have a relationship mindset with them. You need to think about them as friends, but you don’t have to call them friends. my asking you “Do you know anyone who could use my services?” I can say, “I see you’re neighbors with the Hogans.” Then you say, “Yeah, they’re great friends of mine.” And I say, “I like to have really close relationships based on core values and shared commonalities with my clients. Knowing that, do you think the Hogans might be good prospects for me?” You can go into LinkedIn, go into the profile of a client or prospect and see the names of all their connections. So you can ask for an introduction to that shared connection. Another way you can prospect on LinkedIn is to search for CEOs or chief executives. You will get a whole bunch of names, and then you can see which of your clients or prospects are connected to 10
what prospects are serving on what advisory boards or other volunteer organizations. And that can be another way to get introductions to the people you want to meet. Instead of saying to your client, “Do you know anyone who serves on the Minneapolis Art Museum board of directors?,” you can say, “I know that you’re on the board of directors at the Minneapolis Art Museum. I looked at some of the other board members, and there are two I think would be really good fits for my practice — Julie Anderson and Joe Buffett. How well do you know Julie and Joe? Do you think they would be a good fit for my practice? Can you do me the favor of an introduction? I’ll send you an email with a virtual introduction.” The key there is asking for the
InsuranceNewsNet Magazine » January 2022
FELDMAN: Tell us about what it means to have a relationship mindset with your clients. RICHTER: You’ll hear sales gurus saying you must have a relationship with your client. I think where people get confused is, if I’m an HVAC repair guy, do my customers really need to know about me? Because you think of a relationship as something that goes both ways.
A RELATIONSHIP MINDSET — WITH SAM RICHTER INTERVIEW But here’s an example. I’ve had a financial advisor for a number of years. I know a little bit about them. But frankly, I don’t need to know when his birthday is, when his anniversary is, I don’t need to know about his kids. I don’t need to know any of that stuff. But I expect him to have a relationship mindset with me. So it’s more of a one-way relationship. Your clients do not need to have a relationship with you as an advisor. They
corrugated box sales. Twenty years ago, at his funeral, all of these customers of his came up to my wife and said, “Ken was amazing. He knew my kids and what school they went to. He knew when my anniversary was. He knew what my favorite candy was, and he always brought it to me on the holidays.” Let’s think about that. This was a guy who was gathering all that information before the internet, meaning that he actually
find information. And then — here’s the key part — use that information for the benefit of others. FELDMAN: How do you attract new advisors to your practice? RICHTER: We always talk about having a pipeline of leads for our practice. But I think we really need to start building that pipeline of people we think might be good
When you see your clients posting things they are doing, put it in your customer relationship management system. Things like their kid’s birthday, where he goes to school or when he graduates. don’t need to treat you like they treat their friends. But you need to have a relationship mindset with them. You need to think about them as friends, but you don’t have to call them friends. What I mean is that with your friends, you know what’s going on in their lives, what’s important to them, what they care about. You know how you can help them achieve goals as friends — easier, more efficiently, more effectively and more profitably than they might be able to on their own. For example, I have a dear friend who had COVID-19. My wife and I brought him dinner. That’s what we do in a relationship. We need to have that mindset with our clients. How can I help my clients achieve their goals more efficiently, more effectively, more profitably? I’m going to do that by understanding what they care about. I don’t need them to know what I care about. But I need to know what they care about. The key is to make sure you’re tracking all of this stuff and knowing what has meaning to the client. It’s knowing things like their son plays football. So that’s always a topic of conversation. You can ask, “How’s your son doing in football?” There’s nothing new about any of this. What’s new is how we find the information. I used to talk about my late fatherin-law, Ken Livingston, who worked in
had to ask questions. What’s our excuse? If Ken could do it back then, what’s our excuse for not doing it today? I don’t mean to be morose, but there were hundreds of customers at his funeral. As a financial advisor, how many of your clients are coming to your funeral? Do you have three who will? FELDMAN: You’ve done a lot of work with Harvey McKay, author of Swim With The Sharks Without Being Eaten Alive. Tell us what you learned from him. RICHTER: Harv is a dear friend and mentor. We’ve spoken together many times. Back in the 1970s, he developed the McKay 66. These are the 66 items you need to know about other people. It has nothing to do with what product that person buys, but it focuses on the person who does the buying. What are they like? What are their accomplishments? What makes them tick? And he taught you how to do that by asking questions. Harvey and I do presentations together now and then. I’ll come up to him and say, “Let me show you how you can get between 50 and 66 items before you even walk in the room.” It’s not being a stalker. But part of the relationship mindset is, I’m going to use these techniques and tools to ethically
advisors and reach out to them. At the conferences where I speak, there’s always a workshop on succession planning. Because how many people in our business are over the age of 50? So I think we need to start treating recruitment almost as a sales activity. You can take the same techniques to find prospective clients that I discussed earlier and use them to find prospective advisors. Try to find teachers who retired early or try to find companies that are announcing a layoff. You can go into LinkedIn, type in “retired teacher Atlanta,” for example, and you’ll get a list of retired teachers in Atlanta. You might look at when they graduated from college and find that they may be a retired teacher but they’re only 48 years old. Or reach out to a company when you see they’re announcing a layoff. There’s a lot of talent out there looking for new careers. We need to think of that talent search almost as a sales call. If you’re not doing succession planning, you’re doing a huge disservice to your clients. Succession planning is a fiduciary responsibility to your clients.
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January 2022 » InsuranceNewsNet Magazine
11
the Fıeld
A Visit With Agents of Change
Life Rich Katie Brewer focuses on helping young clients build the foundation they need to live their richest lives. by Susan Rupe 12
InsuranceNewsNet Magazine » January 2022
LIFE IS RICH — WITH KATIE BREWER IN THE FIELD
IF
Is
it hadn’t been for that pesky biochemistry course that Katie Brewer had to take as a Texas A&M University undergrad, she might have been a physician today. Brewer discovered her desire to go into the medical field ebbing away as she struggled with biochemistry. But a financial literacy course lit a spark in her. She tried to figure out a way to combine her longtime interest in biology with her new interest in finance. The financial profession won out. Today, Brewer is president of Your Richest Life, a financial planning firm she founded in 2014. She also is a founding member of the XY Planning Network. Her Rockwall, Texas, firm provides fee-only planning with an emphasis on coaching clients through the financial ups and downs of life. After graduating from Texas A&M with a biology degree, Brewer got a foot in the door of a large regional broker-dealer in Dallas. That led to her literally “knocking on a lot of doors” trying to drum up business. “My parents had very safe jobs working for the state of Texas. And I remember my mom saying at one point, ‘I don’t know why we got a college degree for you when you’re just wandering around in neighborhoods,’” Brewer recalled. But she knew her mother didn’t understand the big picture of what she was trying to accomplish. Although her early years in the business were challenging, Brewer developed an entrepreneurial mindset that led her to where she is today. After her first two years in the business, Brewer moved to a wealth management firm, where she was an associate planner. It was a welcome change to work in an environment where she did not have to pound the pavement to bring in clients. But although she was growing in her knowledge of the planning profession, something was missing. “As an associate planner, I didn’t have a say in who I served,” she said. “I served the team I was assigned to. That team mostly worked with the traditional clients, mainly male breadwinners who were between the ages of 55 and 75. Which I thought was interesting and challenging as well, because I was young enough to be their daughter.” Over time, Brewer realized something about the planning industry. “A lot of financial professionals work with people who are nearing retirement or who are in retirement, and there are a lot of companies who want to work with people who are either millionaires or who are five years away from retirement. There is almost nobody out there who works with people who don’t have a million dollars and are a long way from retirement.” She switched firms again, working for a startup
firm based in New York with planners all over the country. “What excited me was that they were focused on working with younger clients,” she said. “That was a cool experience. And working for a startup gave me a taste of what it would be like to work for myself. Because when you’re working for a startup firm, you don’t just do financial planning or sales — it’s like you’re doing beta testing. You’re involved in figuring out what people want, and you’re involved in financial planning and actually talking to people. So I thought that was really cool, just being able to wear all of those different hats.” The startup firm was on the verge of being sold when Brewer got the urge to start her own firm. But she had some misgivings about it at first. “It seemed like a whole lot of work,” she said. “And I didn’t have a formal plan, so that worried me.”
Taking The Leap
Brewer soon put her fears aside and took the leap to start her own registered independent advisory firm. “I talked through it with my husband, and we discussed things like how much capital would we be willing to put toward this as kind of a loan to the business? And what we were willing to do as far as rearranging our household expenses, cutting cable, doing all the stuff that financial planners tell everybody else to do but never do themselves.” After 10 years in the business, Brewer opened the door to her own firm and started to serve the clients she wanted to serve in the way she wanted to serve them. She developed a fee-for-service model but wasn’t sure at first whether it would work. “I didn’t really know what the market was, so I told myself I’m going to put it out there and test it,” she said. In the beginning, Brewer found support and clients from those she knew in the industry who weren’t serving the clients she wanted to serve. “A lot of the folks I’ve networked with over the years told me they were relieved to know what I was doing because they feel bad when they have someone reaching out to them for help but they feel it’s someone they aren’t able to serve — someone such as a client’s child or family member, or someone who doesn’t have the firm’s minimum amount to invest. So it was funny because I started off by taking outcasts from other financial advisors.” Brewer knew she wanted to target those who weren’t being served by larger advisory firms, so when an advisor asked her whether she wanted to talk with a prospect they weren’t able to serve, “I would always say, whether you think they’re qualified for me or not, just send them on over. And I’ll figure it out.” January 2022 » InsuranceNewsNet Magazine
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the Fıeld
A Visit With Agents of Change
That attitude remains true today, she said. “Sometimes people are right where they should be in order to move forward with their planning,” she said. “Sometimes they’re kind of in need of what I call free financial planning. If they have struggled with credit card debt or they have been in some patterns that are disruptive to their financial health, then I might connect them with an accredited financial counselor who specializes in that kind of thing.”
think younger clients want instead of simply hiring somebody who’s plus or minus 10 years of the target age that they want to attract,” Brewer said.
Fun And Nonfun
Most of Brewer’s clients range in age from their mid-20s into their 40s, with a number of clients up into their mid-60s. “A lot of them have a household income of more than $200,000 annually, and a lot of them have things they’re really worried about now,” she said. “I tell them my job is to make sure the fun things in their lives are addressed as well as the nonfun things.” Many of Brewer’s clients are either new parents or about to be parents, and they are concerned about planning for new financial responsibilities. “They need some advice on how to get to the next level of financial responsibility,” she said. “They might need advice on how to manage taking time off without having an income, or they may be ready to buy their first home or buy a bigger home.” Brewer’s young clients also are looking at planning for the short term, she said, events that they anticipate occurring one to three years in the future. “They have financial goals that they want to accomplish, but they are worried about making a mistake or ruining their financial future, so that’s where I come in to guide them,” she said. Brewer initially thought it would be difficult to market to young prospects “because there’s a lot of noise out there.” “It’s funny because I thought I would be competing with a bunch of other advisors. But I find instead that I’m competing with people who think they can do it themselves or take the advice of an online guru or take the advice of their dad or some other family member,” she said. “The biggest obstacle that I found in working with younger professionals is whether they think it’s worth the money to pay someone to advise them on their finances.” Advisors who want to serve younger clients “should quit guessing what they 14
“The biggest obstacle that I found in working with younger professionals is whether they think it’s worth the money to pay someone to advise them on their finances.”
Generation X and Generation Y clients “want to know what you’re recommending, but they also want to know why you’re recommending it. If you don’t tell them why, they will sit on their heels and not take action on it.” Younger clients “usually will challenge you with something they heard or read,” Brewer added. “They’ll say something like, ‘But my brother Joe said I should do this instead,’ or ‘I read this thing that said I should do this.’” Some advisors may get aggravated over this, but Brewer said, “I like it when clients ask me questions, because it means that we have an open enough relationship, that they’re not just nodding and smiling and then leaving the meeting and not doing what we just talked about.” Pam Horack of Clover, S.C., is founder of Pathfinder Planning and, along with Brewer, is also a founding member of the XY Planning Network. Although Horack and Brewer each has her own financial planning firm, Horack said she has known Brewer for so long she considers her a co-worker. “She has good insights on things her clients are going through,” Horack said of Brewer. “She really knows her stuff, and she has a lot of expertise in what her clients need.”
InsuranceNewsNet Magazine » January 2022
Growing Into The Future
Brewer added another planner to her practice recently. He lives about eight hours away from her, and he sees clients virtually, as she does. “Bringing him on board essentially doubled our capacity,” she said. “And it was a good thing because being the person who has to do the marketing and the sales and client service and financial planning, I was getting to where I didn’t think I could possibly do one more thing.” Brewer also works closely with several independent insurance advisors and refers clients who need life insurance or homeowners coverage. “I believe insurance is really important,” she said. “Because I know that death, destruction and the inability to work are not fun things to talk about. And even if we talk to clients about insurance and get them to agree to do something, often they are hesitant about the amount of coverage, or they end up freezing in their tracks on the way to implementing what we talked about. So I use several professionals as complements to our firm. If our clients want to get insurance online, they can. But I find that most of our clients are not super gung-ho about shopping online for insurance. They’d rather have a personal, professional touch.” Brewer and her 11-year-old daughter are pet lovers, and they both volunteer with an animal rescue organization in their community. They enjoy family singalong sessions at home, led by her husband, who plays guitar. Looking at her practice, Brewer said she originally wanted to have a 10-person firm. But now she isn’t so sure she wants her practice to grow that large. “I don’t want to be solo. But I’m not sure if I love managing a lot of people. It’s kind of funny, because I’m a planner who plans everything. But now I’m thinking more like, OK, we’re on a sailboat, and we’re going to see where the wind takes us over the next five years.” 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.
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NEWSWIRES
Where’s The Punch Bowl?
Back in 1955, William McChesney Martin Jr., chairman of the Federal Reserve, famously said that the job of the nation’s central bank is “to take away the punch bowl just as the party gets going” — that is, raise interest rates just when the economy reaches peak activity after a recession. Will the punch bowl get dragged back into the kitchen after the current Fed chair, Jerome Powell, said the Fed may halt its immense support for financial markets sooner than Wall Street expected? Some economists and investors were already calling for just such a move — given the economy’s strong recovery from last year’s brief recession and stubborn high inflation that’s impacting the global economy. Powell said the Fed’s monthly bond purchases, which recently began shrinking from $120 billion, may end months sooner than the June target it had been on pace for. Wall Street has reason to fear the party may be ending early. An early halt to the Fed’s bond-buying program, which has helped keep long-term interest rates low and thereby supports the economy, would open the door for the central bank to make the more impactful decision to start raising short-term interest rates.
IGNORE ‘HYSTERICAL’ PEOPLE, ECONOMIST SAYS
The Consumer Price Index showed that inflation came in at an annual rate of 6.2% in October, its steepest climb in more than 30 years. The persistent high inflation and continued pressures such as supply chain bottlenecks have led many economists to question the Federal Reserve’s long-held view that the spike will be “transitory.” Despite all the news about inflation, one economist’s advice is this: Ignore “hysterical” people — inflation is not here to stay. That was the word from Carl Weinberg, chief economist at High Frequency Economics. “Let’s listen to what the people who actually are making policy are telling us,” Weinberg told CNBC. Weinberg said that with industrial output and gross domestic product back to pre-pandemic levels, the U.S. economy has essentially recovered. He argued that the labor market lagging is “typical for economic recessions,” with unemployment following the 2008 global financial crisis taking around a decade to fully recover. DID YOU
KNOW
?
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QUOTABLE
When I think about the challenges that we all might face going into next year, the labor shortages that we’re seeing are suddenly one that’s top of mind. — Northrop Grumman CEO Kathy Warden
then cost investors, including OPERS, more than $100 billion in market losses resulting from negative publicity after the allegations were made public, according to Yost.
2/3 OF AMERICANS WORRIED ABOUT THEIR JOBS
OHIO RETIREMENT FUND SUES FACEBOOK OVER LOSSES
Facebook is a great place to see photos of your friend’s new puppy or to spout off your opinion on the latest political issue. But it’s not a good place for a public pension fund to invest its money, a federal lawsuit contends. The Ohio Public Employees Retirement System claimed in its lawsuit that Facebook broke federal securities law by purposely misleading the public about its product’s negative effect on children, allegations detailed earlier by a former Facebook employee turned whistleblower. Facebook also knew that its platform facilitated dissension, illegal activity and violent extremism, but refused to correct it, said the lawsuit, filed in federal court in California by the office of Ohio Attorney General Dave Yost. Concealing these actions led to artificially high stock prices for the company and
A record number of Americans are quitting their jobs, but those who have jobs are concerned about whether they will continue to be employed. A Bankrate survey found that 63% of Americans are concerned about their jobs or income sources over the next six months. Americans were most concerned about the economy, with 39% saying they view the ongoing pandemic as the biggest threat to the economy over the next six months. That outpaces concerns about the political environment in Washington (with 21% most worried) and inflation (14%). The survey found that 23% of Americans indicated they’re very concerned about their job or income source over the next six months while 40% indicated that they are somewhat concerned. That said, 56% of those surveyed expect the economy to be in better shape six months from now.
39% of Black Americans reported living paycheck to paycheck, compared to 27% of white Americans. Source: LIMRA
Source: National Association for Business Economics
InsuranceNewsNet Magazine » January 2022
Source: Guardian Life
THE 2022
GIVING ISSUE In this special section, we searched for the industry’s most socially responsible organizations who are doing great things for the causes they care about and the communities they support. We uncovered great philanthropic initiatives by true mission-driven organizations who are making the world a better place.
In the spirit of giving, 10% of proceeds will be paid forward to Big Brothers Big Sisters, the nation’s largest donor- and volunteer-supported mentoring network.
INSIDE Volunteering: It’s Good — and Healthy — For Agents, Their Clients, and Their Businesses by Foresters Financial PAGE 18
Giving Back To Their Community by Ohio National Financial Services PAGE 19
2022 Giving Issue • Special Sponsored Section
THE 2022 GIVING ISSUE
Volunteering: It’s Good — and Healthy — For Agents, Their Clients, and Their Businesses New Foresters Go Wellness App Rewards Members for Helping Others
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ince its founding, the Foresters fraternal mission has been steadfast and is as relevant today as it was nearly 150 years ago. That mission is: Helping those who help others. “Unlike other organizations that have embraced purpose because it’s popular, Foresters has always been a purpose-driven life insurer,” said Matt Berman, President of Foresters Financial U.S. “We are innovating across our products and member benefits to generate unique ways to encourage and reward those who help others. We’ll be right behind agents who want to volunteer in their communities. Our programs can help them have a greater impact; and our products and benefits can help them connect with like-minded volunteers who are making a difference.” In the blog post, 5 Ways Volunteering Can Help Grow Your Business1, American Express reports on the positive forces that come with volunteering. They include: • Enhance your skills • Win publicity • Make New Contacts • Bolster Employee Moral • Give Back to Your Community
Most recently, Foresters introduced the new Foresters Go mobile app which takes volunteering to a whole new level. Foresters Go is a wellness engagement platform that not only rewards members for adopting a healthy lifestyle — it also provides rewards for volunteer activities and communityminded behavior. Members receive points for their volunteer activity to use in the Foresters Go Reward Store for merchandise (e.g., tablets, smart
“We have many successful agents who are Foresters members and use the community grants to give back to their local neighborhoods and meet new people and prospects. Now they can receive additional rewards for their efforts through the Foresters Go app.”
“Our commitment to supporting local – Mark Rush, Chief Distribution Officer, Foresters Financial U.S. volunteers is a powerful differentiator for agents who work with Foresters,” said Mark Rush, Chief Distribution Officer for Foresters. “Want to engage watches), gift cards, and charitable donations. The app is available in an activity that’s good and healthy for you, your clients, to all current and new Foresters members in North America. your employees, your community, and your business? Consider “If you are an agent who is building a business, I suggest volunteering,” he said. you become a Foresters member, and get out into your community and make a difference,” said Mr. Rush. “We have The Many Ways to Give and Get: Community given you all the tools you need.”
Grants, Foresters Care, and Foresters Go™
There are many different ways Foresters fosters volunteering and community giving. The most impactful benefit for members2 is the $2,000 Community Volunteer grant. Foresters members can receive grants of $2,000 up to three times a year to use for local causes and disadvantaged parts of their communities. There are also smaller Foresters Care grants that are more quickly approved that provide $200 for small but impactful gestures to local causes.
Please call the Foresters Sales Desk at 866-466-7166 option 1 to learn more about Foresters products and member benefits.
1. https://www.americanexpress.com/en-us/business/trends-and-insights/articles/5-ways-volunteering-can-help-grow-your-business/ 2. Foresters members are insureds under a life or health insurance certificate issued by The Independent Order of Foresters. Foresters member benefits are non-contractual, subject to benefit specific eligibility requirements, definitions and limitations and may be changed or cancelled without notice or are no longer available. Foresters Go is provided by The Independent Order of Foresters and is operated by dacadoo AG. Foresters Financial, Foresters, Helping Is Who We Are, Foresters Care, Foresters Go and the Foresters Go logo are trade names and/or trademarks of The Independent Order of Foresters (a fraternal benefit society, 789 Don Mills Road, Toronto, ON, Canada M3C 1T9) and its subsidiaries. 420310 US (01/22)
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InsuranceNewsNet Magazine » January 2022
2022 Giving Issue • Special Sponsored Section
THE 2022 GIVING ISSUE
Giving Back To Their Community For Ohio National Financial Services, giving back is part of their history, culture and future.
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he associates of Ohio National are dedicated to giving their best to their clients and community. In addition, the Ohio National Foundation donated a total of $1.6 million to worthy causes in 2021. Since the Foundation started in 1987, it has given over $29 million to various charities, including Habitat for Humanity, the American Heart Association and more.
A cause close to home, and close to their hearts
An example of the strong history of Ohio National’s commitment to community is its long partnership with United Way, going back generations. Giving back and being involved in the Greater Cincinnati area have always been a major focus. This culture of giving goes beyond monetary support and includes leading through volunteerism. In fact, President and CEO Barbara Turner serves as board chair of United Way of Greater Cincinnati (UWGC). With her leadership, Ohio National associates raised more than $840,000 for UWGC programs. UWGC strategically matches needs to resources to ensure that donations make a sustainable difference in people’s lives. This activity aligns with Ohio National’s stated mission to make a difference in your life by helping you achieve financial security and independence today — and for generations to come. UWGC brings together the fundraising efforts of businesses in the Greater Cincinnati area to make a positive impact throughout the community. For Ohio National Financial Services, giving goes beyond the Cincinnati area. Associates and retirees who live outside the Cincinnati region can direct their pledged funds to their local communities through United Way.
Giving back continues to be a priority at Ohio National
Associates put in more than just pledges — their creativity and engagement shine through with their numerous events. To start, they hosted a UWGC carnival fundraiser on the Ohio National campus. It was a great, creative way to bring everyone together and raise funds. The team also had fun giving back with a rubber duck regatta, a car show, a dunk tank, yard games, live music and even a food truck rally. A virtual pet-a-palooza contest offered prizes for best owner look-alike and best trick. In addition to these activities, the fundraising committee raised money with the dine-to-donate program, where sales from meals at local eateries went to UWGC. They even had traditional raffles for great prizes to get them that much closer to reaching their fundraising goals for this year. Time is another way the team at Ohio National gives back. Associates receive paid time off to volunteer at local nonprofits each year. In 2021, associates volunteered 1,537 hours during the work day, bringing the current total to over 16,000 since the community service hours program began in 2016. Contributing to the communities where associates live remains a top priority for the company. The people of Ohio National are proud to participate in their company’s legacy of giving.
Learn more about Ohio National’s tradition of philanthropy and become a part of this legacy at OhioNational.com.
January 2022 » InsuranceNewsNet Magazine
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COVER STORY
Members of the financial services community perform philanthropy on a grand scale By Susan Rupe
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InsuranceNewsNet Magazine » January 2022
GIVING BACK, GIVING BIG COVER STORY
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hen Tyrone V. Ross Jr. than provide socks to homeless shelters, goes out of town, he never Ross said. It raised awareness of needs that travels light. often go unnoticed. The CEO and co-founder “One of the things I noticed is that peoof Onramp Invest in San ple really didn’t understand how much Diego, Calif., doesn’t leave homeless shelters need socks,” he said. home without extra socks “And they also didn’t understand that a — hundreds of pairs of lot of homeless folks use socks as gloves to socks, to be exact. cover their hands if they are outside.” When most people travel, they want to Having access to socks also helps the make sure to hit all the tourist spots. But homeless maintain personal cleanliness, when Ross travels, he makes sure he visits the homeless shelters in his destination city. Ross has spent the past several years combining his business travel with his desire to give to those in need. The more miles he logs, the more people he helps. Each year, he promotes the month of October as “Socktober,” taking to Twitter to encourage and challenge his social media followers to donate socks to the homeless. He has conducted the Socktober campaign for several years now and said he lost count of how many pairs of socks he has given away. Socktober is one example of how members of the financial services community are giving back to their communities in big ways — and Tyrone V. Ross Jr.’s mother inspired him in his giving bringing others along for the philjourney by telling him his one responsibility is to anthropic ride. help people in need. Ross’ mother inspired him in his giving journey when he was growing up in Trenton, N.J. Ross said. “Being able to change their socks “My mother always told me, ‘You have is important to them, just as it’s important one responsibility. And that is, when you to everyone else.” see people in need, you must help them,’” Visiting homeless shelters and learning he said. “That’s really what I focus on — about their residents’ needs inspired Ross just making sure that I help people and get to tell others about the need for socks and them the help that they need if they are in other essentials. my view. It’s a passion of mine to use my “When you look at the demographics of voice and the platform that I have to be the those who are on Twitter, especially those voice for the voiceless and for people who who are in finance, they do well, they make can’t advocate for themselves.” good money,” he said. “So I thought, what Ross said he always was interested in better way to bring awareness to this issue donating to shelters, as he recognized than by bringing it to Twitter?” widespread homelessness in his home city Ross’ Twitter feed is filled with posts of as well as in every city he visits. him delivering socks to homeless shelters “Every time I would go to a shel- and veterans’ homes. He encourages his ter, I would ask, ‘What is the No. 1 followers to tweet about their own sock thing you need?’ And they would say, donations, and he has partnered with ad‘Undergarments and socks, especially visors to donate socks to shelters in cities socks,’” he recounted. “So a couple of years where he travels for business. ago, I started Socktober on Twitter.” “It’s an awesome thing to see,” he said, The social media campaign did more “and now it’s a tradition we do every year.”
Ross buys the socks at Target and Walmart, and he packs socks with him on all his business travels. He has “probably thousands of pairs of socks in my house that I haven’t yet given out.” Ross estimated that he has delivered socks to at least 25 shelters, and he always keeps some socks with him when he goes out in public “because you never know when you might come across someone who needs help. “I don’t go to any city without touching the people,” he said. “It’s important to me to reach out to and serve the people who are underserved and disenfranchised, and who don’t get the opportunity to be on stage or eat an expensive lunch or any of that.” Ross doesn’t only give out socks. He promotes what he calls “Nolayawayvember” in the month of November, when he anonymously pays off store layaway accounts for people he doesn’t even know. For those who want to help others in need in their communities, Ross advises “find something close to you that you are passionate about. “It doesn’t have to be socks. It doesn’t have to be homelessness,” he said. “It could be helping veterans, those who are disabled, victims of domestic abuse, a school where folks are in need. Just look locally and offer your help and your time. What I’ve noticed is they never say no when you offer to help. And it’s important to realize that you don’t need to do much, you just need to start right where your feet are. There are so many people right in your backyard who need help.”
More Than Writing A Check
Sometimes the road to philanthropy begins with a simple phone call. For Angie Rehkop, founder of Financial Care Providers in Atlanta, the giving journey began when a friend asked her to go horseback riding. The request was for adult volunteers to accompany children who were patients at St. Jude Children’s Research Hospital in Atlanta. The children were having a “horse day” at a local stable. Rehkop joined in the fun and became hooked on helping kids who are dealing with life-threatening illness. What she learned on horse day was that,
January 2022 » InsuranceNewsNet Magazine
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COVER STORY GIVING BACK, GIVING BIG
A day of horseback riding with hospital patients set Angie Rehkop on a path to raising funds to help sick children.
at the time, St. Jude did not have money allocated for recreational activities such as horseback riding, nor did they have funds to provide recreational activities to their patients’ siblings. “Some of the volunteers started writing big checks to pay for these things, and then an attorney who was involved set up a foundation and we started raising money,” she said. A beginner golfer, Rehkop was asked to organize a golf tournament to raise funds for the foundation. “But I said, ‘I can barely play golf. I don’t know anything about tournaments. I’ll look for other things I can do to raise money,’” she said. “But you know there
are times when you say no and you feel bad about it for a little bit and then the bad feeling goes away. This was not one of those times; the bad feeling didn’t go away. I wanted to do something.” She soon became more active in golf and met some like-minded people who promised to help her if she would organize a charity tournament. In 2007, Rehkop held her first golf tournament. Six foursomes participated and the event raised $8,000. More people stepped forward and volunteered to help the following year. The event took a big step forward when Rehkop made a presentation on the golf tournament at her business networking group. One of the group members told her she was crazy for putting on the tournament alone and volunteered to be her co-chairman. The two of them recruited an advisory board and set up a single-person limited liability corporation called Golf for the Kids. Golf for the Kids raises money for the Aflac Cancer and Blood Disorders Center, which is located within Children’s Healthcare of Atlanta. Rehkop estimates that the golf event has raised about $500,000 over the years. Some of the funds are given to the cancer center to be used wherever there is a need, while other funds are earmarked for the therapy dog program at the hospital. “Who can say no to a therapy dog? When the dogs show up, everything in the room changes,” she said. “Service animals make a huge difference in general. Specifically, when you’re working with kids, service
Golf for the Kids has raised $500,000 for Aflac Cancer and Blood Disorders Center, which is located within Children’s Healthcare of Atlanta.
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InsuranceNewsNet Magazine » January 2022
animals are a complete game changer.” Rehkop called her work with Golf for the Kids “an investment in the community.” “When you’re dealing with insurance, this is not an easy industry for anyone, and we see a lot of the hardships of life,” she said. “When you take on something like this, you get to see a lot of good people, and it helps bring out the very best in everyone involved.”
The Four P’s Of Giving
Giving doesn’t happen in a vacuum, and it’s not an afterthought for those who make philanthropy part of their business. The Kelly family in the Baltimore area is an example. Reedbird Park is a community recreational hub in South Baltimore. One of the newer features in the park is BGE Field, presented by Kelly Benefits. The park is the 100th Youth Development Park built by the Cal Ripken Sr. Foundation, which builds youth sports facilities in underserved areas. Reedbird opened to the public in November 2021. The fact that Kelly Benefits partnered with the foundation on this project is no surprise to those in the Baltimore area. Kelly Benefits and the family that operates Maryland’s largest employee benefits administrator have been pillars of the local philanthropic community for decades. Francis X. Kelly III, company CEO, said he and three brothers who operate the company with him are inspired by their faith and by the generosity of their parents, Frank X. Kelly Jr. and Janet Kelly, who started the company in the basement of their home in 1976. “We come from a faith tradition that believes in tithing — giving 10% of your income to those in need,” he said. “We have a four-pillar giving program. We recognize that giving involves more than treasure. Giving involves time, talent, treasure and what we call a testimony or story. So we look to give time, talent, treasure and testimony in different ways — locally, regionally, nationally and internationally. It’s the principle of sowing and reaping. We try to leverage the business we feel we’ve been blessed with to help others in need as well.” Helping those who are homeless or have addiction problems and helping lift those in poverty are among the focus areas of the Kelly family’s philanthropy.
GIVING BACK, GIVING BIG COVER STORY
Francis X. Kelly III said his family’s philanthropy is inspired by his parents, who started Kelly Benefits in the basement of their home in 1976.
Kelly and his wife, Gayle, have been longtime supporters of Helping Up Mission’s men’s recovery center in Baltimore. While volunteering to serve food there, Gayle discovered a woman who dressed like a man in order to receive a meal. It was then that Gayle learned the mission was unable to serve women — and an idea took root. Frank and Gayle spent the past three years co-chairing a $61 million Inspiring Hope campaign to build the new
145,000-square-foot Center for Women & Children to help women in Baltimore dealing with addiction and homelessness. The project helps the women’s children as well. “Many women don’t get treatment because they’re not going to leave their young children,” he said. “They’ll do what they have to do to maintain their addiction and keep their children with them. This facility will house up to 200 women and up to 50 of their children. We raised more than $62 million, so we beat our original fundraising goal.” The facility will open its doors to women in early 2022. In addition to spearheading the fundraising campaign, the Kellys and various family members donated money to the project and served in various volunteer roles. Members of the Fellowship of Christian Athletes, the Kellys are involved in the organization’s Park Heights Saints football and cheerleading program, which serves young people in an impoverished area of Baltimore. A friend started the program 20 years ago, and it has grown to include nine football teams and a cheerleading squad. About 250 kids participate in the program each year. As part of their involvement in the FCA, the Kellys helped raise $250,000 in cash and in-kind contributions to
renovate an abandoned home into the Park Heights Saints Community Center. The 2,000-square-foot center is a gathering place for teams in between games and throughout the year. The kids in the program have a safe environment to watch a game on TV, do schoolwork in the computer lab or share a meal together. Over the past 30 years, Kelly Benefits has opened its doors to employees who have Down syndrome. The Kellys have been involved in Pen-Mar Human Services, which provides services to adults with intellectual disabilities. The family was presented with Pen-Mar’s Distinguished Humanitarian Award in 2020. The Kelly family philanthropy extends overseas as well. They have sponsored 250 children around the world through World Vision. Kelly advised anyone who wants to start their own giving program to “start with areas that are connected to you or the people close to you.” “Let’s say you know a kid who is battling cancer, and the next thing you know, you might go out and raise money for childhood cancer,” he said. “Or maybe someone you know is dealing with addiction, so you might help raise funds for an organization that helps people with addictions.” Giving, he said, should include what he calls “the four P’s.” “Make it a priority, have a plan and give a percentage. And then make it progressive over time.”
A Son’s Memory Spreads Hope
Members of the Kelly family celebrate the opening of a youth sports facility in Baltimore, BGE Field, presented by Kelly Benefits.
Pratik Shah used to drive past the Methodist Children’s Home in Redford, Mich., on his way to and from his office in nearby Farmington. “It’s a very beautiful facility. From the front, it looks like a castle,” he said. But Shah didn’t understand exactly who the home served or what its residents needed until a family tragedy inspired and led him and his wife to philanthropy. The Methodist Children’s Home and the young people it shelters have benefited from the Shahs’ financial contributions as well as their contributions of time and attention. Shah has been a Prudential advisor for 30 years. He received the 2021 Prudential Advisors Award of Merit for his work done through the Abhi Shah Foundation, which is named after his son. Abhi Shah was a 20-year-old University January 2022 » InsuranceNewsNet Magazine
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COVER STORY GIVING BACK, GIVING BIG
Pratik Shah with his wife and a picture of their son, Abhi.
of Michigan student when he died unexpectedly on the day before Thanksgiving 2016. He had been his parents’ only child. “It was tragic when he left us, [but] he paved the path for us to make sure that we walk on a journey to give love, hope and happiness to many kids,” Shah said. He and his wife established the Abhi Shah Foundation as a way of continuing their son’s legacy. “Abhi was a loving and caring individual,” Shah said. “My wife and I decided the best way to keep Abhi alive is to make sure we spread that love to other kids. So we started the foundation.” Shah turned his attention to the Methodist Children’s Home Society,
which provides foster care to children whose parents or other family members are unable to take care of them. He learned that the increasing numbers of children in the community who needed care meant that the home needed more space. “So we provided funds to make improvements and make more room for the kids,” he said. As he became more involved with the home, he realized that although the home provided the children with life’s necessities, the children needed more. “The children there, they get a place to stay and food to eat, but they don’t get love. They don’t get the hope they need to live,” Shah said. “So we decided to have
Funds raised through walk-a-thons benefit the Abhi Shah Foundation, which supports the Methodist Children’s Home Society in the Detroit area.
activities for the kids and show them someone cares.” Shah holds an annual Thanksgiving lunch for the children, has taken them on field trips to places like the Ford Motor Co. plant and holds a picnic for them each summer. He also treats the children to new sneakers each year and provides them with other gifts. The next project for the Abhi Shah Foundation is funding an additional facility for the Methodist Children’s Home Society. “What often happens is that a court gives an order at night that a child needs to be rescued and the regular foster home may not be able to take the child,” he said. “The Methodist Children’s Home Society was able to buy some abandoned buildings at a very low cost, but they needed funds to make them livable. So we are paying for a new heating system, new air conditioning system, new hot water heater, new beds — everything.” The new facility will be called My Friend’s Place. The name came about because of an anecdote Shah was told. “This particular child had no family. When the holidays were coming up and the other kids in his school asked him where he was going for Christmas, he said, ‘I’ll go to my friend’s place’ because he didn’t want the other kids to know he was going to stay in his foster home. The CEO of the society told me he wants to call this new facility My Friend’s Place so that kids don’t have to say they’re staying in a foster home; they can say, ‘I’m staying at my friend’s place.’” Despite the Shahs’ efforts to find meaning in philanthropy, Abhi’s death still left a big hole in their home. But they eventually went on to have two more children through surrogacy. “So we have our children,” he said. “We have our foundation. We are incredibly blessed.” 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.
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InsuranceNewsNet Magazine » January 2022
LIFEWIRES
QUOTABLE
Life Insurance Premium Up 18% In 3Q Total life insurance new annualized
premium saw its third consecutive quarter of double-digit growth, with an increase of 18% in the third quarter 2021, according to LIMRA. This increase represented the largest growth recorded for a ninemonth period in 25 years. LIMRA said all product lines recorded gains in premium in the third quarter and year to date. While overall policy sales were level with the third quarter of 2020, the number of policies sold year to date was 5% higher than in the first three quarters of 2020. Variable universal life new annualized premium recorded the greatest growth in terms of absolute dollars, up 104% from the previous quarter. VUL market share was nearly double pre-pandemic levels. Indexed universal life new premium jumped 21% in the third quarter, with two-thirds of IUL carriers increasing their sales and all but one carrier reporting double-digit growth.
VUL sales have been remarkable in 2021. — John Carroll, senior vice president and head of LIMRA’s Insurance Division
life insurance policy to cover future living expenses. Almost 90% of those surveyed say their beneficiaries are aware of policies in place and 76% knew where the actual policies are kept. About twothirds of policyholders have reviewed their policies with their beneficiaries within the past year.
MOST CONSUMERS UNSURE ABOUT ADEQUATE COVERAGE
AIG TO SELL LIFE/RETIREMENT BUSINESS IN 1Q
AIG expects to sell its life and retirement business during the first quarter of 2022, CEO Peter Zaffino said. Completion of a sale could potentially linger into the second quarter, he added. AIG announced its plan to sell 19.9% of Life & Retirement — either through a private sale or a public offering — near the end of 2020. In early November, AIG closed a deal to sell a 9.9% equity stake in Life & Retirement to Blackstone for $2.2 billion in an all-cash transaction. DID YOU
KNOW
?
Many consumers are unsure whether their life insurance coverage will be enough for their loved ones, according to a National Association of Insurance Commissioners survey. The survey reveals that 54% of respondents are uncertain or only somewhat confident that their life insurance benefit would meet the needs of their beneficiaries. However, most agree that if they died within the next decade, their beneficiaries would need their payout from the
MOODY’S SAYS LIFE INSURANCE OUTLOOK IS STABLE FOR 2022
The 2022 outlook for the U.S. life insurance sector is stable, reflecting the ongoing, although slower pace of recovery for the economy, Moody’s Investors Service said in a new report. However, while persistent inflation, supply chain issues and new COVID-19 variants are risks, the still-solid level of growth supports a continuing stable outlook. In its report, Moody’s cited the following factors: » Modest inflation is credit positive for life insurers. » The private equity-assisted mergers and acquisitions boom accelerates life insurers' transformation. » Life insurers face a host of new rules in 2022.
Craig DeSanto has been named CEO-elect of New York Life. Source: New York Life
January 2022 » InsuranceNewsNet Magazine
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LIFE
Life Insurance: The Financial Offense vs. The Financial Defense Being the coach of your clients’ financial security means finding the best defense to support their goals.
L
By Joe Ross
IMRA research shows that six in 10 Americans have a heightened sense of awareness around the importance of life insurance, especially in the wake of the COVID-19 pandemic. Seven in 10 Americans go so far as to say that the pandemic has been a wake-up call to reevaluate their long-term financial goals. COVID-19 reinforced the need to prepare for both the expected and the unexpected. In sports, coaches will often tell you that the best offense is a good defense. When it comes to the role of life insurance in overall financial planning, the same thing applies. For today’s advisors, creating resilient financial and retirement plans means having a strong financial defense that supports their financial offense to achieve clients’ goals.
Financial Offense
Financial security is the foundation for a good life — knowing one’s family is protected and that a comfortable future lies 26
ahead can give people confidence. And while no one wants to collect from their insurance, when they need to collect from it, they’re glad the insurance is there. To start building this foundation, it’s important to figure out your client’s risk tolerance and balance their portfolio. Then, explain to them what their financial trajectory looks like by elaborating on what they’re projected to have at retirement, how much they can spend each year and what will be left for their legacy. This is where you’re helping them plan their “financial offense.” Permanent life insurance can also play an important role in their financial offense. Some types of life insurance — such as whole life, universal and variable life insurance policies — can help clients with financial needs during retirement. These types of policies build up cash value as policyowners make premium payments over time. As an advisor, explain the economic benefits of life insurance. For example, it can provide a way to accumulate tax-deferred cash value and also provide an option for clients to take tax-advantaged distributions depending on the policy type.
Financial Defense
Life doesn’t always go as planned, which is why “financial defense” is equally as
InsuranceNewsNet Magazine » January 2022
important as offense. For example, a family with young children may face significant financial hardship if the household breadwinner dies unexpectedly. And for those approaching retirement, a new set of concerns may emerge. What impact might stock market corrections, increasing tax rates, low interest rates or home repairs potentially have on a retirement portfolio? Or if someone needs nursing home care, will there be any money left for their spouse to remain financially independent and secure? In all of these examples, life insurance can be used to play “defense” to protect families from potential unexpected events. Cash value life insurance in particular provides death benefit protection throughout the insured’s life. If a husband or wife passes away, the life insurance death benefit can be added into the surviving spouse’s retirement portfolio, restoring it to a level that enables the survivor to live a financially secure and independent life. There’s also the cash value component of a policy, which, depending on the type, can grow tax-deferred over the life of the policy. Some of the benefits of cash value life insurance may include taking out a loan on a policy, withdrawing cash
LIFE INSURANCE: THE FINANCIAL OFFENSE VS. THE FINANCIAL DEFENSE LIFE as long as the policy is active and not considered a modified endowment contract.
Financial Offense: Setting client goals
Winning The Game
When it comes to offense and defense, this is the bottom line: Listen to your clients to help them identify which life goals are most important and build their strategy with them from that base. That way, their financial plan can be optimized for offensive strategies that will maximize growth, and defensive strategies that will protect what they’ve worked so hard to build. Most people choose to work with a financial advisor based on trust, so be open, transparent and genuine. In the end, remember your clients are putting their trust in you to guide them toward the best protection for themselves and their families.
• What funds will they have at retirement? • How much money will they be able to spend each year? • What will be left for their legacy?
Financial Defense: Protecting clients from unexpected financial harm • What if the household breadwinner dies? • How will a retirement portfolio be impacted by tax rates, market corrections, interest rates or emergency expenses? • How will a long-term care event affect a client? from the policy, surrendering the life insurance policy for its cash value, or using cash value to pay premiums (once it’s reached a certain point). For example, if a client needs to pay
for college tuition or to supplement their retirement income, they can borrow from the cash value life insurance policy to fund these needs. If they take out a loan, they won’t have to pay taxes on the loan,
IncomeShield
Joe Ross, ChFC, CLU, CRC, is vice president, sales productivity and business development, with AIG Life & Retirement. Joe may be contacted at joe.ross@ innfeedback.com.
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All Deferred Annuity Sales
ANNUITYWIRES
36.0% 29.0%
3Q Annuity Sales Power Past 2020 Numbers
15.2% 19.2% 0.6% Indexed Annuities
Structured Annuities
Fixed Annuities
Americans love them some annuities, which two Multiyear Variable Annuities Annuities third-quarter sales reports confirm. Third-quarter sales for all deferred annuities totaled $59.8 billion, a decrease of 7.1% compared to the second quarter and an increase of 10.4% when compared to the same period last year, according to Wink’s Sales & Market Report. Total deferred annuities include the variable annuity, structured annuity, indexed annuity, traditional fixed annuity and MYGA product lines. Total variable annuity sales were $93.3 billion in the first three quarters of 2021, 31% higher than prior year, LIMRA found in its data. Registered index-linked annuity sales were $28.4 billion, 81% higher than prior year. Total fixed annuity sales grew 10% to $98.1 billion for the first three quarters of 2021. Third-quarter fixed indexed annuity (FIA) sales were the highest levels in two years, increasing 30% to $17.1 billion. FIA sales were $47.1 billion in the first nine months, up 14% from prior year, LIMRA found. “Interestingly, nearly half of all retail annuity sales (49%) used nonqualified assets,” said Todd Giesing, assistant vice president, director of SRI Annuity Research. “Generally, nonqualified annuity sales have held about 42% of the retail market in the past 10 years.”
SEC COMMISH TO VA SELLERS: DON’T FORGET ABOUT US
Agents selling variable annuities would do well to remember the Securities and Exchange Commission. Speaking last month at the American Law Institute Continuing Legal Education 2021 Conference, SEC Commissioner Allison Herron Lee told life insurance company lawyers that VA issuers will have to comply with the SEC’s Regulation Best Interest, not just state rules such as the National Association of Insurance Commissioners annuity sales’ model regulation. “As states continue to adopt and implement the NAIC model,” Lee said, “I encourage those of SEC Commissioner you in the securities Allison Herron Lee and insurance industries to evaluate your policies and procedures to ensure they are consistent with both standards.” Eighteen states so far have adopted the NAIC best-interest model regulation. Under both the SEC regulations and NAIC rules, brokers and dealers must DID YOU
KNOW
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make certain they are recommending products that are in the client’s best interest and not selecting a particular product because of their own compensation. They must be able to document and disclose how they reached their recommendation.
VENERABLE 4% RULE FALLING OUT OF FAVOR
A recent study questions the longstanding “4% rule” for safely withdrawing funds from retirement accounts at a rate that can support a 30-year retirement. The Morningstar research also found that including protected income offered by annuities can help ensure retirees meet their income needs. “Outliving retirement savings is a major concern for America’s workers and retirees,” said Frank O’Connor, vice president, Research and Outreach for the Insured Retirement Institute. “This latest study by Morningstar summarizes several key points and concerns about current market conditions that may affect how long
QUOTABLE Indexed annuity sales not only increased, but they are up more than 25% from this time last year. If not for this, annuity sales would have been down across the board [in the 3Q]. — Sheryl Moore, CEO of Wink
retirees can generate sufficient income.” The 4% rule was proposed by William Bengen in a 1994 paper, “Determining Withdrawal Rates Using Historical Data.” It is a guideline to determine a withdrawal rate that would theoretically provide sustainable income without depleting assets entirely over a 30-year retirement.
NEW FIDUCIARY RULE ON THE WAY
The Department of Labor is likely to deliver a new fiduciary rule in the spring, a pair of industry analysts said recently. Officially, the Employee Benefits Security Administration had planned to deliver a new rule by December, according to DOL’s regulatory agenda. But that timeline was likely too ambitious. “I think probably it’s more like the spring,” said Bradford P. Campbell, partner at Faegre Drinker Biddle & Reath. “That’s because the issues are hard. To their credit, they’re spending a lot of time meeting with people and discussing the issues. I think DOL is just taking time to do the rule as best they can.” In February, the DOL allowed the investment advice rule, written by the Trump administration, to take effect. That rule replaced the 2015 fiduciary rule produced by the Obama administration. A federal appeals court later vacated the fiduciary rule.
85% of investors are interested in owning, or already own, an annuity that guarantees lifetime income.
InsuranceNewsNet Magazine » January 2022
Source: Alliance for Lifetime Income and CANNEX Protected Retirement Income and Planning Study
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ANNUITY
As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.
Donald Rumsfeld Would Have Made A Great Annuity Advisor How advisors can prepare clients for the “known unknowns” in retirement income planning. By John Rafferty
F
ormer Secretary of Defense Donald Rumsfeld was nothing if not provocative in his press conferences. Twenty years ago, during the buildup to the Iraq war and the premise of Saddam Hussein’s regime harboring weapons of mass destruction, he addressed the news media in a 2002 press conference. “As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.” When it comes to retirement income planning, it is good to be aware of each of these conditions and to plan accordingly.
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Known Knowns
» We should know how much Social Security income our clients likely will receive, and whether they have any other sources of lifetime income such as pensions. This information should be the foundation of a plan, with few to no surprises in store for clients.
Known Unknowns
» Two of the biggest unknowns that we know of are mortality and market performance — specifically the timing of mortality and the timing and scale of market performance.
Unknown Unknowns
» This one is a bit different. BusinessDictionary.com defines “unknown unknowns” as follows: “Future circumstances, events or outcomes that are impossible to predict, plan for or even know where or when to look for.” From a current events standpoint, its fair to say that the COVID-19 pandemic
InsuranceNewsNet Magazine » January 2022
that began in 2020 falls into this category. Nobody was anticipating anything like the virus ripping around the globe and shutting down economic activity for extended periods. Nor was anybody anticipating that the market would recover and reach new highs while the pandemic still raged. It’s the middle category — the known unknowns — that would seem to be the area where planners can provide the most value to their clients. This is particularly true for planners with clients who are within about five years of retirement and have healthy retirement savings but no pensions waiting for them. These clients are both lucky and unlucky at the same time — lucky to have had great careers, earned a good living and saved substantial sums, into the seven figures in many cases. But they are also unlucky in that without a pension, the bulk of their retirement cash flow must be generated from their own assets, with no guarantees.
DONALD RUMSFELD WOULD HAVE MADE A GREAT ADVISOR ANNUITY
For clients looking for more certainty and less probability in their income planning, an FIA with a guaranteed lifetime withdrawal benefit can be a powerful tool. And with no guarantees, two key unknowns loom large. The first unknown is the timing and scale of market performance on which their portfolios will rely for growth. Will markets climb before and during the early years of retirement and spare them the agony of a bad sequence of returns — or not? The second known unknown is mortality. Will they live until age 75, 85, 95, 105? How about their spouse? Think of it this way — for a healthy 65-year-old couple, if you assume each of them dies within 30 years if they plan to age 95, there are 900 combinations of mortality timing (30 x 30) that are and will remain unknown. This means that planning with precision for income needs and wants over a 30year period without guaranteed solutions is difficult at best and likely to be highly inefficient.
Easing The Known Unknowns
A fixed indexed annuity with a guaranteed lifetime withdrawal benefit removes the ill effects of those two known unknowns, improving the efficiency of the planning process. The FIA can be structured to provide guaranteed cash flow to both spouses for life. With some time to bake the guarantees for a few years prior to starting withdrawals, cash flow can be in the range of 6% to 7% of the purchase amount for life. In this super-low-yield environment, that’s a nice core cash flow to supplement Social Security. More to the point, with rates likely to continue rising over time and hurting fixed-income values and with equity valuations today trading near all-time highs, assumptions about future returns from the capital markets should be looked at with a jaundiced eye. For example, the last time the Shiller Cyclically Adjusted Price Earnings ratio (named for its creator, Yale University professor Robert Shiller) was at the levels it closed at on Oct. 29, 2021 (about 39), was in the tech bubble years of 1999, 2000
and 2001. (Source: Shiller PE Ratio by Year (multpl.com)) A $100,000 investment in the S&P 500 Total Return index on Jan. 1 of each of those years produced tepid results five years later. That $100,000 was worth $97,000, $89,000 and $102,000 by yearend 2003, 2004 and 2005, respectively. In contrast, the past five years have seen spectacular results, but the Shiller CAPE was much lower on Jan. 1, 2016, at 24. That same $100,000 invested on Jan. 1, 2016, more than doubled to $203,000 by the end of 2020. Recency bias, anyone? (Source: moneychimp.com, CAGR of the stock market) As good a harbinger of future equity returns as the CAPE has been, nobody knows what markets will look like next week, let alone in five years’ time. But for clients looking for more certainty and less probability in their income planning, an FIA with a guaranteed lifetime withdrawal benefit can be a powerful tool. Today’s more competitive products can guarantee a lifetime cash flow of 6% or 7% or more of the original purchase payment, covering both spouses. Think how comforting that kind of cash flow reserve would be in five years should markets lose steam, and how valuable that core cash flow can be in allowing any depleted portfolio values to be restored over time without being burdened by withdrawals while markets are down. Donald Rumsfeld, we hardly knew ye, but your work on known unknowns remains a valuable tenet of retirement income planning for today’s pensionless masses. The annuity industry has a solution for addressing the two biggest known unknowns: mortality and markets. John Rafferty is principal at Rafferty Annuity Framing, Spring, Texas. John may be contacted at john.rafferty@innfeedback.com.
January 2022 » InsuranceNewsNet Magazine
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HEALTH/BENEFITSWIRES South Dakota ACA plans took the biggest jump in 2022 – 23% over 2021 ACA plans took the Health Insurance Costs To Georgia biggest drop in 2022 – a decrease of 41% over 2021 Stay Nearly Flat In 2022 Inflation is hitting nearly every segment of the economy, but health insurance doesn’t
SOURCE: ValuePenguin
appear to be one of them. A ValuePenguin.com analysis found that health insurance costs for those who get an Affordable Care Act plan have remained mostly steady — with a 0.67% increase in average premiums from 2021. That amounts to an average premium increase of $48 per year. The analysis found that in 2022, Americans will spend an average of $541 per month, or $6,492 per year, on an ACA plan. However, the analysts found significant variations in premiums across states and types of insurance plans. West Virginia, South Dakota, Wyoming, Vermont and Louisiana residents will pay the highest health insurance premiums in 2022. Georgia, New Hampshire, Maryland, Minnesota and Colorado residents will pay the lowest. Meanwhile, South Dakota, West Virginia, New Mexico, Arizona and Texas will experience the biggest jump in health insurance costs in 2022. Georgia, South Carolina and Nebraska will see health insurance costs decrease the most in 2022.
NONMEDICAL BENEFITS TO GROW 20% BY 2026
Workers want health insurance and related medical benefits, but they also want something more. With the onset of the COVID-19 pandemic, workers became increasingly concerned about their financial security and emotional and physical well-being. This led to a growing employee appreciation for nonmedical benefits such as paid family medical leave, life insurance, disability insurance and wellness programs. A LIMRA/EY study predicts this increased demand, combined with the fierce competition for top talent, will drive nonmedical workplace benefits to grow 20% by 2026. Some of the factors leading the charge include a more diverse workforce spanning five generations, and a war for talent that makes benefits a crucial part of recruiting and retaining workers. Two-thirds of midsize and large DID YOU
KNOW
?
32
QUOTABLE Nearly half of those we surveyed (47%) say they are more afraid of falling than getting cancer. — Holly Snyder, president of Nationwide’s life insurance business
Another barrier for men going to the doctor is financial concerns. In the past year, nearly half of men said they postponed or avoided medical treatment due to medical costs, the Aflac survey revealed.
employers expect their number of benefits offerings to expand to address the needs of multigenerational workers. Meanwhile, the study showed that 76% of employers said they believe their workers will expect a wider variety of benefits options in the future.
MEN SHY AWAY FROM SEEING THE DOC, AFLAC SAYS
Life can seem like an endless number of to-dos, with top priorities getting the most attention. For many men, however, taking care of their health may not make the list. According to Aflac’s 2021 Men’s Health Issues Survey, in the past year, 45% of men did not go to the doctor for an annual checkup, 60% missed going to their eye doctor and 54% did not see their dentist. Aflac’s survey revealed twothirds of men said they do not feel wellinformed of the ailments that commonly affect men.
HALF OF LTCI CLAIMS BEGIN AFTER AGE 80
If you live a long life, the likelihood you will need some kind of long-term care increases exponentially. So how old are most people when they get to the point where they need care? Half of long-term care insurance claims begin when policyholders are in their 80s, according to the American Association for Long-Term Care Insurance. About 27% of claims begin between age 80 and 84, with 23% between ages 85 and 89. Twelve percent of claims begin when the policyholder is age 90 and older. But the average age for those buying new LTCi policies is nearly 30 years younger than the average age of those making claims. The association reports the average age for those buying new traditional long-term care insurance policies remains between 56 and 57.
64% of households that experienced a COVID-19 diagnosis had out-ofpocket health care expenses in the past 12 months, compared with 45% of other American households. Source: Aflac
InsuranceNewsNet Magazine » January 2022
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HEALTH/BENEFITS
The Likelihood And Cost Of LTC May Be Higher Than You Think A look at a client’s likelihood of needing care and the cost of obtaining that care show the various factors that impact those estimates. By Robert Pokorski
W
e often hear conflicting statistics about the likelihood of clients needing longterm care, what kind of care they are likely to need and — most importantly — how much that care will cost. But there are a number of variables that go into the estimates of the cost of LTC and how likely a client will need care. Here are some factors that go into those estimates. The likelihood and cost of LTC depend on the definition of LTC. There are two ways to estimate the likelihood and cost of LTC, and several factors that determine those estimates.
» Stage 1 (IADL care). Help is needed
and expenses may be incurred because of difficulty performing the instrumental activities of daily living, including cooking, housework, laundry, managing finances and medical care, phone and computer use, shopping, and transportation.
» Stage 2 (standby care). Medical
conditions worsen or cognitive ability declines. Paid caregivers may be needed. Stage 2 is when many people indicate their first need for LTC, regardless of the HIPAA criteria. (See Stage 4.)
Method 2: When care is first needed and costs are incurred.
This approach estimates the likelihood and cost of LTC from the perspective of care recipients and family caregivers. The stages identified here were created solely for the purpose of this discussion.
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What Is The Likelihood That LTC Will Be Needed?
Table 1 displays recent estimates of the likelihood of LTC for individuals and couples. In 75% to 91% of couples, one or both people (joint probability) will need LTC. These projections underestimate the likelihood that care will be needed because the projections don’t include people
Likelihood of needing long-term care for 65-year-old individuals and male-female couples June 2021
January 2021
April 2019
Man
44%
50.9%
64%
Woman
56%
61.1%
75%
Likelihood for individuals
Method 1: Strict HIPAA definition.
Estimates of the likelihood and cost of LTC are usually based on criteria established by the Health Insurance Portability and Accountability Act of 1996. A person requires LTC if a licensed health care practitioner certifies they need assistance with at least two of the activities of daily living for 90 days or more or need supervision because of severe cognitive impairment. Medicaid and some financial services companies use this definition to determine eligibility for LTC benefits. This approach underestimates the true likelihood and cost of LTC because people who need care at pre-HIPAA levels of disability are not counted.
are not included in most LTC statistics because their disability does not meet HIPAA criteria.
Likelihood for male-female couples Man only
19%
20%
16%
Woman only
31%
30%
27%
Both
25%
31%
48%
One or both
75%
81%
91%
Neither
25%
19%
9%
SOURCE: HealthView Services, Urban Institute research
» Stage 3 (hands-on care). More care
is needed and more expenses are incurred. Paid caregivers are often needed. Stage 3 still doesn’t meet HIPAA criteria. (See Stage 4.)
» Stage 4 (HIPAA-level care). A health
care provider certifies that LTC is needed according to the HIPAA definition. Research published by the Urban Institute shows one in four people (26%) who pay for care and almost three in four (71%) who receive only unpaid care
InsuranceNewsNet Magazine » January 2022
who live beyond their life expectancy or who never reach HIPAA-level disability.
» June 2021. Likelihood that healthy
65-year-olds will need some level of LTC by the time they reach actuarial life expectancy for males (age 86) and females (age 87).
» January 2021. Likelihood of needing
LTC from age 65 to death. These are future (prospective) probabilities based on the HIPAA definition of LTC.
LTC MAY BE HIGHER THAN YOU THINK
» April 2019. Likelihood of needing LTC
from age 65 to death. These are historical (retrospective) data based on self-reported need for HIPAA-level LTC.
Cost Of LTC Based On HIPAA-level Disability (Stage 4)
Table 2 displays the January 2021 government-sponsored estimate of the cost of LTC. These projections underestimate outof-pocket costs because expenses incurred before reaching HIPAA-level disability (Stage 4) are not included.
HEALTH/BENEFITS
never need care (costs are truly zero); some incur significant expenses for care in stages 1-3, but these costs are not counted (only HIPAA-level expenses are included in the study); and some become Medicaid eligible before spending any of their own money. 9% incur costs of $100,000-$249,999, and 5% spend $250,000 or more. 22% have some LTC expenses paid by Medicaid.
» Upper income ($86,489 to $142,501) 58% are projected to have zero out-ofpocket costs. Some people with zero costs
Lifetime out-of-pocket LTC cost (2020 dollars) for 65-year-olds with HIPAA-level disability (Stage 4), by household income at age 65, and share who will have some additional costs paid by Medicaid. Costs for LTC in stages 1-3 are not counted. Income
Zero
Up to $25K
$25K$100K
$100K$250K
$250K+
Some Medicaid
Middle ($53,504 to $86,488)
60%
12%
13%
9%
5%
22%
Upper ($86,489 to $142,501)
58%
13%
13%
10%
6%
14%
Highest ($142,502+)
53%
12%
14%
11%
10%
8%
» Middle income ($53,504 to $86,488)
60% are projected to have zero out-ofpocket costs. Some people with zero costs
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SOURCE: Urban Institute research, U.S. Census Bureau
Some people in each income group (based on income at age 65) become eligible for Medicaid by the time they need LTC. Reasons include decades of general inflation, plus wage and cost inflation for LTC services; reduced value of Social Security benefits because Medicare premiums (which are deducted from Social Security checks) often increase faster than cost-of-living increases; more taxes paid on Social Security benefits (the share of Social Security benefits included in taxable income is increasing because threshold levels for including benefits in taxable income are not currently indexed for inflation); and increased longevity (some people with a relatively high income at age 65 qualify for Medicaid when they reach their mid-90s because they spend down their assets). Let’s break down the various income groups and their costs of care. Why do some groups have higher out-of-pocket costs than others?
Offer Your Clients The Best By Partnering With The Best!
never need care, some need care but never reach HIPAA-level severity, and some become Medicaid eligible before spending any of their own money. 10% incur costs of $100,000-$249,999, and 6% spend $250,000 or more. 14% have some LTC expenses paid by Medicaid.
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» Highest income ($142,502+)
53% are projected to have zero out-ofpocket costs. Some people with zero costs never need care, some need care but never reach HIPAA-level severity, and some become Medicaid eligible before spending any of their own money. 11% incur costs of $100,000-$249,999, and 10% spend $250,000 or more. 8% have some of their LTC expenses paid by Medicaid. Robert Pokorski, MD, MBA, is a consultant and public speaker with expertise in longevity, long-term care, and the decline of cognitive and financial ability at older ages. He specializes in educational meetings for financial professionals and consumers. He may be contacted at robert. pokorski@innfeedback.com.
January 2022 » InsuranceNewsNet Magazine
35
Andy Dastur President
Gene Woznicki Chairman of the Board
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Financial facts and figures powered by AdvisorNews.com
Nearly Half Expect 2 In 5 Admit To Retire In Debt To Financial Despite their lofty retirement dreams, 46% of Americans expect to carry debt into retirement. That’s among the findings of MagnifyMoney research, which Infidelity found that not only do a large portion of Americans expect to retire in debt but they also doubt whether Social Security will be there for them. The research found some conflicting results. Even though many Americans expect to have debt in retirement, only 20% expect to work in their current field or a new field during retirement. Only 21% of consumers said they work with a financial professional, yet more than half of those surveyed (54%) said they have no plans to seek expert help in planning for their retirement.
In addition, the survey found many people want to leave the workforce sooner rather than later. Researchers said 27% of Generation Z and 28% of millennials want to retire before they turn 50. Women are more likely than men to dream of an early retirement, with 21% of women saying their ideal is to retire before age 50, versus 15% of men.
Caregivers Hit Financially By COVID-19
CAREGIVERS ARE TAKING THESE STEPS TO PLAN FOR THEIR OWN LTC NEEDS
46% are increasing
Caregiving is challenging even in the best of cirtheir savings cumstances. Add a global pandemic to the mix, 39% are incorpoand caregivers are feeling especially stressed, rating LTC into their particularly when it comes to their finances. financial plan That was the word from Northwestern 37% talked to their Mutual’s 2021 Planning & Progress Study, financial advisor which found that one in five Americans said SOURCE: Northwestern Mutual they currently provide care for someone. On average, nearly a third (31%) of current caregivers’ monthly budget goes toward providing care. Those costs include professional support, as well as expenses for services caregivers provide themselves. The study also stated the pandemic has led caregivers to think about their own future long-term care needs. The study pointed out that a third (34%) of adults have planned for their own long-term care needs while 53% said their views on their need for care have changed as a result of COVID-19.
Infidelity doesn’t always mean having an affair. Two in five Americans (43%) admit to committing some act of financial deception against someone with whom they have combined finances in a relationship, according to the National Endowment for Financial Education. Among those who said they were financially unfaithful, 85% said the deception affected their relationship in some way. Financial infidelity is an act of deception by one partner in a relationship where finances are combined.
Examples of infidelity include hiding purchases, money or accounts or lying about the amount of income earned, debt owed and more. The poll asked respondents about the incidence of financial deceptions in current/past relationships, as well as explanations for — and impacts of — those deceptions. Among those who admitted to a financial deception, more than one-third (39%) admitted to hiding a purchase, bank account, statement, bill or cash from their partner, and about one in five (21%) admitted to lying to a partner about amount of debt owed or amount of mon-
ey earned.
Workers Lag Behind In Retirement Savings
More than half of American workers say they’re behind on their retirement savings, according to a Bankrate.com survey. What is worse, the accounts of many have been moving in the wrong direction as workers take early withdrawals from their retirement plans because of the COVID-19 pandemic. 36
InsuranceNewsNet Magazine » January 2022
DID YOU KNOW?
43% of Americans fear their retirement dreams could be derailed due to Social Security running out. SOURCE: MagnifyMoney
The survey reports that 52% of American workers say their retirement savings are not where they need to be. A further 16% are not sure wheth-
er they’re on track, and 21% say they’re where they need to be. Only 11% said they're ahead of their plan. Americans have raided their retirement accounts to stay afloat, too. Of those with accounts such as a 401(k) plan or an IRA, 51% have taken an early withdrawal, including 20% who have taken one since the pandemic began in early 2020.
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May 2020 » InsuranceNewsNet Magazine
37
3 Reasons Your Clients Need You To Provide Medicare Advice Providing advice on Medicare can help the financial advisor deliver an exceptional client experience. • Brandon Clay
I
n my 26 years in the Medicare industry, I have met with thousands of financial advisors to discuss the Medicare opportunity and what I believe is Medicare’s important place in a holistic financial plan. Some advisors are intrigued with the potential — not only the financial potential but the potential that lies in their ability to differentiate themselves in the market. But, to my dismay, many advisors see only the impact (or lack of it) on them rather than looking at the benefits for the clients. Here is what these advisors tell me:
• Medicare is a distraction to my core financial planning business.
• The earning potential is too low. • The workload is too much to balance.
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I empathize with those concerns. I have experienced each one of them at different times in my career. I know those concerns often provided easy ways for me to rationalize that the juice wasn’t worth the squeeze. But I want to challenge your thinking about whether Medicare should be in your bag. I believe there are many reasons your clients should have someone who already knows their life goals help them through one of the most complicated decisions they will ever make. Let’s look at three top reasons your clients need your help with Medicare. 1. Clients don’t want to trust someone new. How many people does an individual really trust? Some of their family members. A friend or two. And a small number of professionals who help them navigate life’s big decisions. Medicare is a big decision. Many studies have shown how much money individuals left on the table when they did not turn to a Medicare expert for advice. In most
InsuranceNewsNet Magazine » January 2022
cases, your clients are on their own to find that expert they can trust. Don’t you think many of your clients would love to have their trusted financial advisor at their side for this decision? 2. Clients just don’t understand health care. And they don’t want to understand it either. They want to be in a system that looks out for their interests. If you have paid any attention to what happens in the roughly 90-day free for all they call Medicare annual enrollment period and open enrollment period, then you probably know a little bit about how Gen. George Armstrong Custer felt at the Little Big Horn. There aren’t many times in a person’s life when they face as big a decision as choosing their Medicare coverage. 3. Clients are petrified they will outlive their money. This is always one of the top two or three concerns of older clients. The thought that this could happen to them influences a broad range of life decisions, health care being an obvious high-impact
3 REASONS YOUR CLIENTS NEED YOU TO PROVIDE MEDICARE ADVICE
A Growing Market
Over the next 15 years, Medicare’s enrollment is projected to increase almost 50% — rising from 54 million beneficiaries today to more than 80 million beneficiaries in 2030. SOURCE: MedPAC
decision. Clients need someone they can lean on, which takes us back to Reason No. 1. The Medicare decision process is worth mentioning. Never before have we seen the opportunity for people to be fooled and confused. Digital marketing experts say we see between 4,000 and 10,000 ads each day. That doesn’t include all the social media posts that steal our time. I imagine the average Medicare beneficiary during open enrollment season feels a bit like a javelin catcher at a track meet. People make decisions based on their values (see Maslow’s hierarchy of needs). Values seldom change over a lifetime. That should be comforting to those of us who work in financial services. But behaviors — now that’s a different animal. Almost 10,000 ad impressions a day impact decisions. People will make decisions they know are wrong. That’s their values speaking to them, but they do it anyway. When it comes to Medicare, your clients should not be left on their own to decipher the thousands of Medicare-related messages they see, hear and read. The solution: It’s not about Medicare; it is about delivering a truly holistic planning experience. It’s not just about adding Medicare to your practice. It’s about how you can use your holistic financial planning process to help your clients best solve their health care risk. The required logistics will vary based on the solution you choose to provide your clients. There are three common ways financial advisors implement Medicare solutions into their practice.
1. Go all-in and embrace Medicare to the fullest. This is the most time-intensive option, requiring health licensing, certifying and annual testing. It’s also the most lucrative from the standpoint of fully owning your book of business as the agent of record. 2. Hire a Medicare specialist in your office. This is the most common solution I’ve seen as it allows an advisor to offer the Medicare capability without trying to be all things to all people. 3. Refer to a third party. Using a third party is similar to hiring a Medicare specialist in your office, but it traditionally lacks the personal engagement that comes along with a dedicated in-office resource. Making the right decision among these three should be based on expanding longterm relationship-building with clients. Any of these three will work well. You must decide what’s best for your clients.
Communicating Medicare To Your Clients And Using It To Grow Your Practice
People love to do business with those they know and trust. Nailing the client's experience every time without fault will help you accomplish two critical things: 1. Open doors to getting to know more of your target prospects through referrals. 2. Build unquestioned trust with all your clients and prospects.
Do these two things and you will be well on your way to delivering an exceptional customer experience. President Woodrow Wilson is credited with this saying: “Be brief, be brilliant and be gone.” Keeping things simple in the context of the broader financial planning process makes this much easier to ingest and adopt as a new habit. 1. Be brief. Address the health care risk for what it is: a major concern and financial risk to your clients in retirement. 2. Be brilliant. Educate clients on the basic decisions they will face each year and the best practices they should adopt regarding Medicare Supplement and Medicare Advantage plans. Be brilliant at the basics. 3. Be gone. Provide a resource or enrollment solution, then get back to what you’re good at while closely managing your team of support resources. Brandon Clay is CEO of Senior Market Advisors. He may be contacted at brandon.clay@ innfeedback.com.
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January 2022 » InsuranceNewsNet Magazine
39
MULTILINEWIRES $37.5 bill ion
P/C Insurers See Solid Performance In 2021
Private property/casualty insurers posted strong net income growth in the first half of 2021 as the country continued to recover from the economic disruption caused by the COVID-19 pandemic. That was the word from Verisk and the American Property Casualty Insurance Association. Insurers’ net income rose to $37.5 billion in the first half of the year, up from $24.3 billion in the first half of 2020. Reflecting an uptick in overall economic activity, insurers wrote $24.4 billion more in premiums during the first half of this year ($348.4 billion) than in the comparable period in 2020 ($324 billion). Despite these gains in income, more economic activity may also have resulted in more insurance claims as commuters returned to roads, businesses resumed operations, and material and labor costs rose. In addition, insurers issued $1.6 billion in dividends to policyholders through the first half of 2021, an amount close to pre-pandemic levels.
HARD COMMERCIAL MARKET BEGINS TO MODERATE
After several annual cycles with steep, often relentless increases, the North American commercial insurance marketplace has taken significant steps toward “correcting” itself, said Willis Towers Watson in a new report. North American commercial insurance prices are expected to soften gradually, bringing a welcome deceleration in premium rate increases and further stability in 2022, the report said. The report concludes that the cost of insurance is still going up — for the near term. Most buyers will be paying more, but marketplace results should be less painful.
DID YOU
KNOW
?
40
QUOTABLE Florida has more billboards encouraging people to sue you than any country on the planet. — Mark Wilson, Florida Chamber’s president and CEO
Locke Burt, president and CEO of Security First Insurance, says consumers who sign Direction to Pay contracts are in effect “signing a blank check” to contractors, he said.
MICHIGAN MOTORISTS TO RECEIVE REFUNDS
‘DIRECTION TO PAY’ LEAVES HOMEOWNERS ON THE HOOK
It’s bad enough when a homeowner faces an expensive emergency repair on their property. Now imagine how much worse it is when that homeowner receives an unexpected invoice saying payment is more than 30 days past due and that they’re responsible for it if their homeowner’s insurance doesn’t cover it. That’s the situation some Florida homeowners face under a billing strategy requiring homeowners to sign what’s called a “Direction to Pay.” It gives contractors the right to bill insurance companies directly for their repair services. What customers might not know is that by signing the document, they agree to pay whatever portion of the contractor’s invoice is not paid by the insurer — even if the contractor assured them that the work would be covered by their policy.
A nonprofit corporation controlled by the insurance industry voted to issue refunds of $400 for each vehicle in Michigan. State law requires the Michigan Catastrophic Claims Association in September 2022 to refund to Michigan motorists any surplus it holds in excess of 120% of its estimated liabilities. The 2019 law, intended to lower Michigan’s highest-in-the-nation auto insurance premiums, scrapped mandatory unlimited catastrophic medical coverage and gave motorists five choices for their insurance, ranging from keeping the current system of unlimited lifetime benefits to opting out entirely from the personal injury protection portion of insurance coverage.
Enrollment in California’s last-chance FAIR Plan jumped from Chico (Calif.) 140,000 to more than 200,000 in the past two years. Source: Enterprise-Record
InsuranceNewsNet Magazine » January 2022
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MULTILINE
‘Everybody Knows Him:’ Keeping P/C, Life Sales Balance Balancing the workload between P/C and life sales might not be as impossible as you think. By John Hilton
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any agency owners end up choosing between the more volatile and potentially lucrative life and annuity business or the stable and renewal-heavy property/ casualty side. But Doug Wheeler is not your typical insurance man. And First Community Insurance and Annuity Center is not a typical insurance agency. Wheeler wants it all, building a multifaceted, multiline agency that matches his outsized personality and relentless energy. That drive and work ethic built First Community into a thriving agency with dual lines of insurance that complement one another nicely. “During these times of COVID-19 and times when my wife had an illness or I needed to be with my family, the great
Wheeler credits his success to a willingness to be involved in the community as much as possible. Here, he gets ready to take to the airwaves on WYUR in Illinois.
42
Wheeler is joined onstage by Tina Turner impersonator Dorothy Roberson, who entertained at the 2018 Bourbonnais Friendship Festival.
part of having the property and casualty company is the renewal business,” Wheeler explained. “The great part of the life and annuity business was that I could earn higher commissions to fund the advertising to grow my P/C business. “I don’t know if I could have one without the other.” From the day the doors opened in 1990, Wheeler pushed to grow First Community as a true community insurance agency in Bourbonnais, Ill. The agency is well known for its local event sponsorships, outreach and charitable activities. Wheeler is a social media showman, sharing photos of everything from singer-celebrities to his horses. It’s a winning strategy that has helped both sides of the business thrive. “People see me as kind of the neighborhood blue jeans guy who’s just the same as them,” Wheeler said. “I’m not living some gray pinstripe lifestyle to impress people. I’m just hanging out with the folks.”
InsuranceNewsNet Magazine » January 2022
Humble Beginnings
Wheeler grew up living a small-town life and went to work alongside family members in a Western Auto store as soon as he was old enough. “I got in the insurance and financial services business when I was 19,” Wheeler recalled. “I worked for a company called Pioneer Life of Illinois, selling Medicare supplements door to door. And that got old really fast.” But Wheeler was learning the business and meeting people, and he was ambitious. After a three-year stint at MetLife, he was recruited by Mutual of Omaha and quickly became district sales manager there. “At age 27, I walked out of corporate life with a bonus I received from them and formed what is now First Community Insurance and Annuity Center,” Wheeler said. “I started literally with a folding table and a folding chair.” As a young entrepreneur, Wheeler was eager to try new things and learn from his
‘EVERYBODY KNOWS HIM:’ KEEPING P/C, LIFE SALES BALANCE MULTILINE mistakes. He was confronted with a big miscalculation right away. “I thought all of my clients were going to follow me from Mutual of Omaha,” he recalled. “One did, and that was my wife. But even my mom is still a Mutual of Omaha orphan account, and my brother has Mutual of Omaha policies that we didn’t move over. So, it was a hard struggle.” That’s when property/casualty became part of the business. The timing was fortunate because Illinois, after 17 years of
business insurance,’ and so forth. And kind of subconsciously, people would mark off those things.” That kind of event marketing grew along with the agency. Today, First Community is well known as the main stage sponsor of the Bourbonnais Friendship Festival. “I’m in front of probably 200,000 people over that weekend,” said Wheeler, who emcees the performances. “So instead of standing in a tent in the mud or in the humid sunshine, I’m having a lot of fun
I’m not living some gray pinstripe lifestyle to impress people. I’m just hanging out with the folks.” opposition in the state General Assembly, finally passed a law requiring auto insurance on all vehicles. The auto insurance business was booming, and Wheeler jumped all-in. That decision helped First Community to survive, but it was “a hard business,” he said. Due to fierce competition, his agency was left to write a lot of nonstandard auto policies, or high-risk coverage for those drivers other insurers passed on. All the while, Wheeler kept working the phones in search of better business. “I would call The Hartford literally every Thursday afternoon for about four or five months, until a marketing rep finally said, ‘Do you want to be part of an experiment?’” he recalled. “They were giving about 10 contracts out to scratch agencies. And I was one of those. At the end of the experiment, I was the only one still standing.”
Success At Last
Breaking through with The Hartford put First Community on the success track. Other major carriers soon signed on to work with the agency in the ensuing years. At the same time, Wheeler matured into a focused agency owner with a knack for marketing. “We did a lot of what I call folding table events,” he explained. “We set up a folding table and we put a drawing box out to give away a $50 gas card. We’d clock people in with a card to sign up for the drawing. The card would say, ‘I would like more information about auto insurance, home insurance, life insurance,
goofing around with rock-and-roll bands and country bands.” First Community is very candid on its website that the agency “isn’t for everyone.” Bare-bones coverage that doesn’t really cover anything isn’t what Wheeler does. “We choose to apologize now for the cost of coverage difference instead of apologizing later when your claim is denied because of lack of coverage,” the website states. “Our clients appreciate this candor and truthfulness when it comes to problem-solving. We won’t sugarcoat things just to obtain your business.” The combination of the agency’s blue-collar sensibility and Midwestern candor is resonating with clients. “In 2019, before COVID-19, a gentleman came up to me dressed in what I would call biker apparel,” Wheeler recollected. “He says, ‘Mr. Wheeler, I’m getting ready to retire. I have talked to three of those suits and I don’t like ’em. You are one of us. I’m coming to see you next week so you can take care of my retirement.’ Did I do anything special? I don’t know. Maybe I hired the right rock-and-roll band.” Todd Reimers is senior vice president and chief marketing officer at Assurity Life. He has worked with Wheeler’s agency for more than a decade. During that time, Wheeler has been a consistent top producer for Assurity. “I’ve been to his hometown, and everybody knows him,” Reimers said. “You go out for breakfast, lunch or dinner and people know him. He’s just more of a well-rounded P/C agent than most. His quality of business
with us has been excellent.”
Separate Businesses
The key to running a successful multiline agency is separation of the businesses, Wheeler said. At First Community, the P/C business is run by “fantastic” people, he added. “Full disclosure here, I couldn’t figure your auto rate to save my life,” Wheeler said. “Because I’ve been away from that probably 14 or 15 years. So, by keeping that separated, I can focus on what I do really, really well. And that’s retirement income planning.” Likewise, the idea that a full-service agency that does everything will lead to massive cross-selling possibilities is mostly a fallacy, Wheeler said. “It’s really tough getting people from the property and casualty mindset of your services to the financial planning side of your services, and vice versa,” he explained. “Because your financial planning clients, they get their car insurance from the guy down the road. So, it’s hard. It’s a very difficult thing to do the cross-sell.” Of total revenues, about 40% comes from the P/C business, and the rest from life and annuity sales, Wheeler said. While First Community has grown plenty in 30 years, it remains a small-town agency with six employees, including Wheeler and his wife, Chris. Wheeler is aware that the future involves more technology and more “commoditizing” of insurance. He is frustrated with the slick ads that offer Medicare supplement insurance by calling a 1-800 number. The insurance world is changing, but there is only so much change in the destiny of First Community. “I think it’s totally about the relationship with the person,” Wheeler said. “And in the agencies that don’t have high-touch relationships, they’re going to die. So, we’re going to continue to be in high-touch relationships so that we can continue until the day I decide to retire or sell.” InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback.com. Follow him on Twitter @INNJohnH.
January 2022 » InsuranceNewsNet Magazine
43
BUSINESS
Thermostat Or A Thermometer – Which Is Your Team Culture? How to go from running hot and cold to knowing what temperature to set. By Jason V. Barger
I
nvestors who are purely reactionary do not perform as well as those who are proactive. The same is true for teams and organizations. Too many teams and leaders operate in Thermometer Mode. Without clarity on the type of culture they are trying to create and the leader they need to be, they end up with a culture that is purely reactionary. The temperature goes up and down depending on who is in the room or what is happening in the external environment. One day it’s hot and the next day it’s cold. Like a thermometer, the culture reacts only to its environment. But the best leaders and teams on the planet operate in Thermostat Mode. With clarity and precision, they know the temperature they want to set as a 44
leader and a collective team. No matter what is happening in the external environment, they proactively set the temperature they desire. The focus isn’t only on what they will do, but on how they will do it as leaders and unified teams. Like
coverage before it’s needed, and taking advantage of timing are all proactive elements of success. Thermostat thinking is key to developing your clients’ portfolios as well as the culture of your firm’s brand.
Thermostat thinking is key to developing your clients’ portfolios as well as the culture of your firm’s brand. a thermostat, the culture is proactively shaped by the consistent temperature they set. Being proactive is a cornerstone of every strong investor and every advisor. Having a clear investment strategy from the beginning, starting investments early, establishing life and health insurance
InsuranceNewsNet Magazine » January 2022
The best leaders and organizations understand that calibrating the thermostat doesn’t magically happen. It’s not reactionary — it’s proactive. The best teams are committed day in and day out, month in and month out, year in and year out to calibrating their thermostat, and gaining alignment and clarity on the temperature
THERMOSTAT OR A THERMOMETER — WHICH IS YOUR TEAM CULTURE? BUSINESS they desire to set in the future. Here are four ways to calibrate your team.
1
Mission. The mission is why you are on your particular journey. It is the heartbeat and soul to all your efforts. Return your team to purpose by involving them in discussions on why they are on your team’s journey. What is your collective mission and what is each teammate’s individual mission? Help clarify the mission so that everyone understands why your organization is making its efforts.
2
Vision. The vision is where your team or organization is heading. It’s the dream of what is possible and what can be created together. Paint the picture of what you hope to
Culture-shaping is not a one-time act, a flavor of the month or an annual exercise. It requires ongoing discussion, focus, accountability and action. that you are on track with how you’re committed to traveling. Values aren’t dictated to us, but they are discovered, discerned and identified by participatory discussion. What are the unified values that will guide you as a team and what do they look like in action and behavior? Help clarify the values so that your team has a compass for how they’ll travel together.
How Culture And Engagement Affect Return On Investment • Organizations with a high level of engagement report 22% higher productivity. (Gallup Poll results published in Harvard Business Review)
• Engaged companies grow profits as much as three times faster than their competitors do. (Corporate Leadership Council)
• A disengaged employee costs an organization about $3,400 for every $10,000 in salary. (McLean & Co.) create that doesn’t exist and what that future vision looks like. What’s your collective vision as a team and what’s the individual vision for each contributor’s role? Help clarify the vision so everyone is clear on the end game and the desired results of all efforts.
3
Values. Your values are how you are committed to traveling along the journey. Values are the compass that helps you know
4
Strategy. The strategy is what you will do to bring the mission, vision and values to life. It’s the game plan that clarifies the priorities, people and next steps to bring the dream into reality. With clear direction for the road ahead, what are the next actions needed to stimulate progress individually and collectively as a team? Help clarify who is on the journey and who is doing what. Have a bias toward action that stimulates progress toward the vision.
Every time you return to these discussions and seek clarity as a team, the thermostat begins to calibrate. Every time you deliver on the actions and behaviors you envisioned, the temperature becomes even more consistent. Culture-shaping is not a one-time act, a flavor of the month or an annual exercise. It requires ongoing discussion, focus, accountability and action. The temperature is intentional and consistent. Your clients will see that in the growth of their portfolio and, more importantly, they will feel it in how you approach your relationship with their plan. The best cultures proactively set the temperature throughout their organization. They are grown, developed, cultivated and led with intentionality. The process for developing high-performing and engaged cultures never stops. The best leaders, teams and organizations are committed to setting the temperature in how they hire, onboard, do performance evaluations, develop emerging leaders and recognize excellence. The best leaders invest in their cultures and the climate they want to be a part of. If you’re experiencing negativity, blame, blurry vision, division, disconnection or uncertainty, it may be time to calibrate the thermostat! Your clients will feel the different temperature and so will your entire team. Jason V. Barger is the author of Thermostat Cultures, ReMember and Step Back from the Baggage Claim. He is the founder of Step Back Leadership Consulting. Jason may be contacted at Jason.barger@innfeedback.com.
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January 2022 » InsuranceNewsNet Magazine
45
INSIGHTS
The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.
How Real Estate Can Fit Into A Client’s Financial Plan Real estate investments can lead clients to previously unconsidered sources of income and financial confidence.
How It Works
By Charlene Quaresma
Real estate isn’t the right tool for everyone, and it’s usually best to wait until clients bring up the idea. Millennial or Generation X clients may want passive income, or they may want to provide for parents who didn’t save for retirement themselves. Sometimes, clients will also want additional dwelling units as a base of operations for retirement travels or as a home for an in-home caregiver. They can acquire that ADU early and use it as a rental property until they retire. Most importantly, clients need a definitive reason for wanting real An investor’s first rental estate. “I feel like I should have it” property is typically a singleisn’t a good enough reason. Clients also must be able to family dwelling, as that’s afford ongoing real estate costs, the easiest property type to even in times of financial crisis. Mortgage payments, maintenance acquire for investors without costs and taxes are standard, but a lot of extra capital. clients should budget for private mortgage insurance and the ocand fourplexes offer more rental income casional tenant who can’t make rent, too. but often require 25% down payments. Finally, clients should plan to hold real esBut why residential at all, instead of tate investments for at least five to seven commercial? As the pandemic showed years. Real estate can generate impressive us, everyone needs a place to live. Not rates of return, but those returns take time everyone needs a place to host a business to accumulate. — lots of businesses have learned how to Real estate may be the most popular “aloperate remotely, and many other busi- ternative investment” in the U.S. right now, nesses went under. Even Section 8 hous- and it will continue to be a worthwhile ining is safer for real estate investors than vestment option for the foreseeable future. commercial properties, as government When making plans for clients’ financial subsides often make Section 8 residents futures, make sure to very reliable tenants. consider the potential It’s important to note that overpaying a that real estate can mortgage is typically a poor use of rental offer. income. Overpayments reduce a client’s ability to use the mortgage interest tax Charlene Quaresma deduction, and returns on market invest- is a wealth management advisor with Northwestern Mutual ments typically outpace mortgage interest in Portland, Ore. She is a global speaker rates anyway. Remember, real estate equity and four-year MDRT member. She may means nothing for a client’s financial secu- be contacted at charlene.quaresma@innrity unless they sell or refinance. The only feedback.com.
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any financial advisors see real estate as their competition, often because of the simple fact that advisors cannot draw fees from property a client manages. This approach can be shortsighted, and advisors who adopt it can leave clients unaware of how investing in real estate can help them achieve their financial goals. Advisors who embrace real estate, on the other hand, can lead clients to previously unconsidered sources of income and financial confidence.
Why It Works
The home in which you live, even if you own it outright, is not a real estate investment. Primary residences are assets, and their value can have enormous importance in retirement or estate plans. But real estate investments are defined by their ability to produce passive income for their owners through rental leases. The biggest benefit of real estate investment is safety. Rental income insures clients against market swings and generates regular income with which clients can invest. That insurance can be critical in recessions, and it’s important to remember that the housing and stock markets have not historically moved in tandem. The 2008 financial crisis was the exception, not the rule. As with every other investment, real estate works best when it’s part of a diversified portfolio that also contains brokerage investments and insurance policies. In fact, rental properties come with regular costs in maintenance and taxes, and property owners may find advisor fees on brokerage accounts very low by comparison! 46
The typical investor breaks into real estate like this: An investor purchases their first home, their primary residence that counts as an asset but does not generate income. Then, when the numbers add up, the investor takes out a home equity line of credit or a cash-out refinancing to buy a second home as a rental property. Rental income is the leftover profit after an investor covers the mortgage, maintenance and taxes on a rental property. An investor’s first rental property is typically a single-family dwelling, as that’s the easiest property type to acquire for investors without a lot of extra capital. Duplexes
InsuranceNewsNet Magazine » January 2022
time overpayments might be worthwhile is when a client owns a home they intend to live in for the rest of their life.
Who It Works For
INSIGHTS
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.
Let’s Not Make The Industry Smaller
I want to ensure that we are doing everything we can as an association to not make the industry smaller.
We need more people coming into financial services who care about Main Street Americans, and we need more advisors to recognize with pride the work that they do protecting individuals and small businesses.
I
By Lawrence Holzberg
am always looking for ways to expand — expand my book of business, expand my network AND expand my influence. I have a twofold mindset each time I meet someone new: 1) What is driving you, or what is your “why”? and 2) How can I help get you where you want to go? Whether I get a good night’s sleep is based on how much good I did for others that day. What makes it a great day is when I receive feedback from a client telling me
that they feel financially secure. This truly translates into a client telling you that they have inner confidence that they can face whatever the future may bring. I know that this isn’t new to most advisors. Advisors who put their clients’ interests first and make financial planning and products accessible to anyone who walks through their front door share this common desire to get individuals on a path to financial wellness. COVID-19 has made financial security — or the lack of it — a topof-mind issue to American consumers. It’s unfortunate that too few American consumers are aware of their ability to access ethical advisors who will provide guidance without upfront fees and asset minimums. And here lies one of the true problems in our industry: Many advisors mistakenly think that underserved markets equate to underfunded markets, and this just isn’t the case. We have too many entities
hyper-focused on the same high net worth clientele with organizations advocating for niche issues. Focusing on only the Wall Street crowd equates to consolidation. There is a concern that if companies and advisors take a narrow focus on listening to and serving only the wealthy that the mass middle and below will be left out of the equation. These groups will be without access to risk protection products or the availability to seek solid financial advice from an advisor who is a nonfiduciary, but instead, holds to an ethical standard of care. As I step into the role of NAIFA national president, I want to ensure that we are doing everything we can as an association to not make the industry smaller. On the contrary, my presidency will be focused on expansion. How can we expand NAIFA to bring in more like-minded advisors who truly care about access to products and services, and financial security for all Americans? How can we expand NAIFA so that we bring awareness to more advisors as to their critical voice in shaping policy at the state and federal levels? How can we expand NAIFA to work collaboratively with as many organizations in our industry as possible without trying to change them, but to honor their existence in serving niche populations? The statistics of insurance coverage of the American consumer clearly relay the message that there is much work to do. As we enter into another year of the pandemic, it’s time for advisors to step in and do their part to ensure that the wealth gap and coverage gap do not continue to grow. We need more people coming into financial services who care about Main Street Americans, and we need more advisors to recognize with pride the work that they do protecting individuals and small businesses. Let’s expand in 2022 — expand our thinking, expand our prospecting, expand our clientele to create more financial security for all Americans. Lawrence Holzberg, LUTCF, LACP, is managing director, director of insurance and advanced sales, at Fortis Lux Financial. He is NAIFA’s 2022 national president. He may be contacted at lawrence.holzberg@ innfeedback.com.
January 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.
INSIGHTS
What’s On The Minds Of Global Life Insurance Executives? A Lot! The full effects of the COVID-19 pandemic on the life insurance industry have not been fully realized. By Kristen Gillis
T
echnology was clearly the standout challenge among insurers in 2021 as COVID-19 pushed digital distribution adoption as the way to achieve sales success. Low interest rates, excess mortality and regulation are also high on
In response to this, the majority of executives started adjusting their strategy for managing investments and matching assets and liabilities. It is also common for expense and product guarantee reduction to take place in response to the current low-rate market, as well as shifting product focus toward protection. Recent LIMRA research suggests that excess mortality may be the next big worry for life insurers around the globe. Excess mortality increased by 14% in the second quarter of 2020 and 7% in the third quarter. The COVID-19 virus not only resulted
to changing regulatory demands is more than just crucial — it is imperative. Some of the most challenging regulatory changes are those involving tax and savings, distribution and sustainability, and cybersecurity and privacy, as well as capital standards. Companies are coping with the related expense to comply with regulations by reducing operating costs, effectively managing portfolios and identifying new paths to growth. In 2021, executives were up against what may become the most challenging time of their careers. In order for their companies
What actions has your company taken, or will you be taking, in response to current low interest rates and the risk of a long-term low rate environment?
Adjusting investment and assets and liability management strategy
20%
Expense reduction to maintain margins
17%
Reducing guarantees on products
17%
Shifting product focus toward protection Low interest rates are not driving immediate strategic changes
9% 5%
15%
Closed block transactions and reinsurance agreements
4%
14%
3% 5% 6%
6%
5% 4%
16%
17%
20%
Considering merger and acquisition opportunities Shifting product focus toward fee-based
21%
10%
42%
8%
42%
49%
17%
6%
17%
7%
17%
7%
15%
57%
16%
First
Second
Third
Source: What’s on the Minds of Life Insurance Executives Globally: Responding to the Moment, Looking to the Future, (2021) LIMRA and Boston Consulting Group
the list of what executives are focusing toward in this time of risk and uncertainty. Going forward, the pandemic may stand out as one of the most challenging times for life insurers across markets all around the globe. In a recent LIMRA and Boston Consulting Group study, more than a quarter of executives report that interest rate market conditions are a top challenge facing their company today. Of those worried about the market, 14% say that it is not only a top challenge, but the top challenge for their company. While low interest rates have been an attention-grabbing headline since the 2008 financial crisis, actions to address the market needed to be adaptable to the frequently changing environment. 48
in many fatalities but also created an environment in which people were less likely to visit their doctor for preventive care and screenings. Beyond the virus, there is extreme climate change to contend with. This has led to an uptick in severe weather patterns and events worldwide, claiming many additional lives. Flooding, heat and wildfires are occurring with much more regularity as a result of the planet’s change in climate. Finally, regulatory challenges come up quite often in conversations regardless of time, place and market conditions. In 2021, 22% of executives placed regulation near the top of their list of concerns, making it the fourth greatest challenge overall. The ability for a life insurer to adapt quickly
InsuranceNewsNet Magazine » January 2022
to succeed, they must continue to be agile and implement new ways in which to effectively adapt and manage the risks posed by the pandemic and other issues over the past two years. The full effects of the pandemic on the life industry have not been fully realized. Kristen Gillis is a research analyst with LIMRA. She may be contacted at kristen.gillis@ innfeedback.com.
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