16 minute read
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
Investors 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 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
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 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.
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
they desire to set in the future.
Here are four ways to calibrate your team.
1Mission. 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.
2Vision. 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
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.
3Values. Your values are how you are committed to traveling along the journey. Values are the compass that helps you know 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.
4Strategy. 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.
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.)
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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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.
By Charlene Quaresma
Many 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!
How It Works
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
and fourplexes offer more rental income but often require 25% down payments.
But why residential at all, instead of commercial? As the pandemic showed us, everyone needs a place to live. Not everyone needs a place to host a business — lots of businesses have learned how to operate remotely, and many other businesses went under. Even Section 8 housing is safer for real estate investors than commercial properties, as government subsides often make Section 8 residents very reliable tenants.
It’s important to note that overpaying a mortgage is typically a poor use of rental income. Overpayments reduce a client’s ability to use the mortgage interest tax deduction, and returns on market investments typically outpace mortgage interest rates anyway. Remember, real estate equity means nothing for a client’s financial security unless they sell or refinance. The only 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
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 An investor’s first rental definitive reason for wanting real property is typically a singleestate. “I feel like I should have it” isn’t a good enough reason. family dwelling, as that’s Clients also must be able to the easiest property type to afford ongoing real estate costs, even in times of financial crisis. acquire for investors without Mortgage payments, maintenance a lot of extra capital. costs and taxes are standard, but clients should budget for private mortgage insurance and the occasional tenant who can’t make rent, too. Finally, clients should plan to hold real estate investments for at least five to seven years. Real estate can generate impressive rates of return, but those returns take time to accumulate. Real estate may be the most popular “alternative investment” in the U.S. right now, and it will continue to be a worthwhile investment option for the foreseeable future. When making plans for clients’ financial futures, make sure to consider the potential that real estate can offer. Charlene Quaresma is a wealth management advisor with Northwestern Mutual in Portland, Ore. She is a global speaker and four-year MDRT member. She may be contacted at charlene.quaresma@innfeedback.com.
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.
By Lawrence Holzberg
Iam 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.
The full effects of the COVID-19 pandemic on the life insurance industry have not been fully realized.
By Kristen Gillis
Technology 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
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.
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
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 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
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.
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 Expense reduction to maintain margins Reducing guarantees on products Shifting product focus toward protection Low interest rates are not driving immediate strategic changes Considering merger and acquisition opportunities Closed block transactions and reinsurance agreements Shifting product focus toward fee-based
20%
17% 17% 21%
17%
20%
9% 3% 5%
5% 6% 6%
4% 6% 7%
5% 4% 7% 15%
14%
17%
17%
17%
16% 15% 16%
49%
10%
8% 42%
42% 57%
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
Kristen Gillis is a research analyst with LIMRA. She may be contacted at kristen.gillis@ innfeedback.com.
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