InsuranceNewsNet Magazine - June 2022

IN THIS ISSUE ANNUITY AWARENESS MONTH IS HERE! Life • Annuities • Health/Benefits Financial Services • Multiline JUNE 2022

POWERING THROUGH DISRUPTION

Annuities keep overcoming disruptions while pushing pandemic sales to greater heights. What will the rest of 2022 (and beyond) look like as interest rates, inflation and possibly wealth taxes combine to alter the market?

— PAGE 18 —

Don’t Worry; Retire Happy — An Interview With Moshe Milevsky PAGE 8

Annuities Provide Nourishment In An Income-Starved Environment PAGE 38

You Helped Your Clients Build A Budget — But What About Their Kids?

PAGE 46

Life • Annuities • Health/Benefits Financial Services • Multiline JUNE 2022

Exclusive interview with the CEO of Brookstone Capital Management Dean Zayed PAGE 5

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IN THIS ISSUE

View and share the articles from this month’s issue

» read it

JUNE 2022 » VOLUME 15, NUMBER 06

FEATURE

Powering Through Disruption

By John Hilton After a pandemic sales dip, Americans resumed loving on annuities, more so than ever.

18 INFRONT

6 Insurance Industry Facing Massive Talent Shortage

By John Hilton The “Great Resignation” is hitting the industry particularly hard.

INTERVIEW

Retirement often is viewed as a time to worry about finances, but it doesn’t have to be that way. Moshe Milevsky has made a career of studying retirement insurance and annuities over the centuries. In his interview with Publisher Paul Feldman, he describes how advisors can take the fear out of retirement by building a portfolio that considers the client’s biological age and support systems as well as the client’s financial needs.

8

22 The 2022 Annuity Thought Leadership Special Section Four elite companies offer their unique perspective on product, process and the future of an ever-changing annuity marketplace.

Paul Feldman John Forcucci Susan Rupe John Hilton Susan Chieca Melissa Clark

12 A Helping Of Kindness

By Susan Rupe An income annuity is crucial to the success of a retirement portfolio.

HEALTH/BENEFITS 42 How Brokers Can Support Overworked HR Teams

ADVISORNEWS

46 You Helped Your Clients Build A Budget — But What About Their Kids?

MULTILINE

By Susan Rupe Elliott Appel found a market serving those who need compassion and grace.

50 Wedding Events Bring Increased Risk For Agribusinesses

By David Espinoza Farm venues are becoming popular locations for weddings and other social events, but they pose a unique set of risks for landowners.

LIFE

34 Inflation May Push Insurers To PE Investments

BUSINESS

By Steven A. Morelli Insurers believe rising interest rates will be the way to tame inflation.

MANAGER/ACCOUNTANT CREATIVE DIRECTOR GRAPHIC DESIGNER SENIOR CONTENT STRATEGIST DIGITAL CAMPAIGN MANAGER MARKETING PROJECT MANAGER TRAFFIC COORDINATOR

38 A nnuities Provide Nourishment In An Income-Starved Environment

By Thomas Henske Help the next generation understand money and its impact on the family.

INSURANCE & FINANCIAL MEDIA NETWORK PUBLISHER EDITOR-IN-CHIEF MANAGING EDITOR SENIOR EDITOR VP SALES SENIOR MARKETING DIRECTOR

ANNUITY

By Kim Buckey Benefits are among an employer’s strongest tools in offsetting the challenges of recruiting and retention.

IN THE FIELD

8D on’t Worry; Retire Happy

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52 Marketing: When You’ve Tried It All And Nothing Works!

By Julie Genjac Consider these tips when trying to connect with younger consumers.

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InsuranceNewsNet Magazine » June 2022

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WELCOME LETTER FROM THE EDITOR

Kindness Happens Where You Least Expect It

T

he month of June is meaningful to me as the anniversary of when I first opened the heavy front door and dashed up the stairs to start my first job in publishing only a few weeks after I graduated from high school.

In the years since then, I have interviewed hundreds of people, attended a seemingly endless list of meetings, and probably asked a million questions in a quest for information to publish.

But during an interview for one of InsuranceNewsNet’s June features, the tables turned on me for perhaps the first time. Someone asked me a question for a change.

It happened when I interviewed Elliott Appel, founder of Kindness Financial Planning, for this month’s In The Field section. We were discussing the concept of kindness and how Appel weaves it into a practice serving a clientele that desperately needs kindness and grace — widows and caregivers. As the conversation wound down, Appel asked me this question: “What act of kindness did someone do for you that had the greatest impact on your life?”

I took a deep breath and thought about the answer.

Annuities Maintain Their Momentum

The world has been kind to annuities despite the market enduring every kind of gut punch imaginable. That’s a key takeaway from this month’s cover feature that ties in to our annual observance of June as Annuity Awareness Month. Annuity sales are at their highest levels in more than a decade.

Americans are looking at high inflation, rising interest rates and market volatility, and deciding that annuities provide one way to ease their anxiety over having sufficient and reliable income in retirement.

Washington is paying attention as well, with the House recently voting to pass the Strong Retirement Act of 2022, known 4

InsuranceNewsNet Magazine » June 2022

colloquially as SECURE 2.0, with overwhelming bipartisan support. SECURE 2.0 was in Senate hands as of press deadline, with backers confident it will follow a similar path as its predecessor legislation.

At a time when government seems more polarized than ever, retirement savings legislation seems to be one area of agreement between Democratic and Republican lawmakers.

SECURE 2.0 makes it easier for plans to offer annuities by tweaking required minimum distribution requirements for annuity options. Likewise, the bill makes qualified longevity annuity contracts, or QLACs, more attractive by increasing the amount of retirement savings a client can use to buy one.

Senior Editor John Hilton goes into more detail on what the rest of 2022 will do for the annuity market in this month’s cover story.

Retirement is touted as a time that’s carefree. At least, that’s the way retirement is depicted in all the financial services industry’s advertising aimed at the age group that is approaching their post-employment years. You see images of older folks relaxing on the beach or fishing in a mountain stream, playing with their grandchildren or taking that once-in-alifetime vacation.

But for many who are approaching retirement, the prospect of saying goodbye to working life fills them with dread.

It doesn’t have to be that way, Moshe Milevsky tells us in this month’s Interview section.

Milevsky has made a name for himself by studying the evolution of retirement insurance and annuity products over the centuries. He believes that advisors can relieve clients’ fears around retirement by building a portfolio that considers their biological age and their support systems as well as their financial needs.

And annuities are a crucial part of the plan. Read more in his interview with Publisher Paul Feldman.

And The Answer Is …

Now that you’ve read this far, you probably want to know my answer to Elliott Appel’s question on the act of kindness that had the greatest impact on my life. Here it is.

A couple of months after my college graduation, I moved 125 miles from home to take a job as a newspaper reporter. I didn’t know anyone in my new town, and I was eager to change that situation. As my first week in my new job came to a close, a coworker invited me to have Sunday dinner at her home. I was excited and grateful to accept.

When I arrived at her home on Sunday, I discovered that my coworker had invited five or six of her friends to have dinner as well. I hit it off with them right away.

When dinner was over, they invited me to go swimming at a nearby lake the following Saturday. And then one of them invited me to join the group for dinner the Friday after that. Soon they introduced me to some of their other friends and family members, and things snowballed from there. Before I knew it, I had a tribe of friends and a busy social life. All because someone thought I might be lonely and she invited me to dinner.

If there’s a moral to this story, it’s that you never know when a simple invitation or other act of kindness can make an impact on someone’s life. What act of kindness can you do today?

Susan Rupe Managing Editor

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ack in 2006, Dean Zayed identified an opportunity in the financial advisory industry, which was fragmented, principally between insurance-based professionals who worked largely on commissions and securities-based professionals who primarily charged fees. “I had a vision of converging these disciplines under a platform that provided coordinated, holistic support to transcend all types of financial advisory practices,” Zayed recalls.

Advisors are not one-trick ponies

That’s when he founded Brookstone Capital Management, an $8.4 billion Registered Investment Advisor (RIA) that would sit at the intersection of insurance and fee-based money management with the goal of creating the most enhanced asset gatherers in the industry.

Besides providing full-service support, Brookstone is on a mission to transform advisory practices so they can realize their full potential. “Advisors are not one-trick ponies,” says Zayed.

“They have to provide comprehensive, credible advice on a wide variety of financial situations for a wide variety of clients. We can help.”

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A relationship with Brookstone, which provides a turnkey asset management platform (TAMP), comes with everything necessary to build a successful practice.

Advisors have access to comprehensive training, marketing and lead-generation tools and a proprietary, cutting-edge technology platform specifically designed to empower advisors to grow their businesses in multiple ways.

“Advisors can easily use our unique, seamless portal to run their entire book

of business,” says Zayed.

With Brookstone’s turnkey solutions, advisors are able to attract more qualified prospects and increase closing ratios. They’re able to gather more client assets and grow their book of business. With more assets under management comes more revenue growth, which further enhances enterprise value.

That’s especially true as more of those assets are under active management with recurring revenue instead of being transactional and commission-based. “Everything we do transforms the advisor’s entire business,” says Zayed. “We get more assets into your practice while you remain positioned as the financial quarterback — the personal CFO — of every client you have.”

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Besides enhancing franchise value, Brookstone’s investment platform allows advisors a great deal of flexibility. Advisors can leverage Brookstone’s

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In addition, Brookstone has training resources that enhance the skill sets of advisors. These resources help advisors achieve their goals more quickly and efficiently. By enabling them to sharpen individual skills, such as how to create more compelling client meetings, Brookstone can help maximize and optimize the success of each advisory practice. That’s true no matter how experienced or new an advisor may be.

“No one is above furthering their knowledge and gleaning new ideas,” says Zayed. “Continuing to add to your repertoire will always make you that much more successful.”

Taking out the noise

With individualized attention, cutting-edge technology, an open-architecture platform, and comprehensive training to empower advisors of all types to reach their A-game, a partnership with Brookstone can do more than help advisors reach their business growth goals. It can also ease the challenges that come with day-to-day operations.

“Advisors are not one-trick ponies. They have to provide comprehensive, credible advice on a wide variety of financial situations for a wide variety of clients. We can help.” turnkey model portfolios, which are risk-managed and built for relevancy in all market cycles. For more complex situations, advisors can utilize Brookstone’s team of financial experts to analyze current portfolios and collaborate on a customized, goals-based solution for clients. With its open architecture approach, Brookstone has access to a vast universe of investment solutions for any client situation.

“That’s the beauty of the flexibility of our open architecture,” says Zayed. “It allows you to navigate in whatever way you think is in the best interest of the client.”

To learn more about how the Brookstone platform can help you grow your business, visit Brookstone2022.com.

With Brookstone, advisors are no longer distracted by the hassles and noise that are typical in the maintenance of a practice. They are free to focus on what they do best — cultivating new relationships and helping existing clients manage their wealth and plan for retirement. “You are the rainmaker of your firm,” says Zayed. “You have choices on the ideal partner that will be instrumental to your success. We have helped thousands of advisors reach the highest levels of success, and our goal is to help thousands more. Let us help you achieve and succeed.”

INFRONT

Insurance Industry Facing Massive Talent Shortage Insurance unemployment is at 1.5%, said Brad Whatley, managing director of The Jacobson Group, compared to the national 3.6% unemployment rate for all industries.

By John Hilton

T

he “Great Resignation” turned the job landscape into an employee’s market. But the talent shortage is especially acute in the insurance industry.

In fact, it’s pretty much at a crisis point.

Insurance industry unemployment is at 1.5%, said Brad Whatley, managing director of The Jacobson Group, compared to the national 3.6% unemployment rate for all industries. Whatley hosted a session during the annual 2022 Life Insurance Conference.

There are two familiar employment issues the industry is wrestling with: retention and recruitment.

Retention is hugely important. The cost to replace an employee is estimated at one-half to two times the salary that employee made, Whatley said.

“So, if you’re paying somebody $100,000 in salary, that’s $50,000 to $200,000 it’s going to cost you to replace them,” he added.

Effective recruiting is the next hurdle.

Nearly two out of three life/health insurers plan to add staff in 2022, Whatley noted. The question is, where will those additional employees come from?

Then there’s the age of insurance agents. While millennial and Generation Z workers make up the majority of the entire workforce, the insurance industry trends older, Whatley noted.

“Insurance, it is no secret, is one of the most aged workforces in the industry,” he said.

The median age of the insurance industry employees is 45, compared to 42.2 for the overall U.S. workforce. However, “where that number gets a bit skewed 6

InsuranceNewsNet Magazine » June 2022

Aging Workforce The median age of insurance industry employees is 45, compared to 42.2 for the overall U.S. workforce.

More than a quarter of the insurance workforce is 55 or older.

Millennials and Gen Zers make up the majority of the overall workforce. is the insurance industry is much more dominated by the boomer section than any other industry out there,” Whatley explained.

In fact, one-quarter of the insurance workforce is 55 or older.

Retirements And Quits

The COVID-19 pandemic did not help the insurance industry personnel problem.

Studies show that older workers are more likely to just retire early rather than press on through adversity, such as job loss or a pandemic interruption.

Data from the past two years proves that to be true, as insurance workforce retirements rose dramatically. In 2021, the financial services sector recorded the highest average monthly retirements in more than a decade.

However, the pandemic only exacerbated a problem that began long before. At least since 2011, the financial services industry has seen an increasing level of “quits.” It is an alarming trend, Whatley noted.

When the job market is weak, it is up to employers to adapt, Whatley said, and insurers are doing plenty of adapting.

For starters, the pandemic-inspired work flexibility is likely to become a permanent perk for insurance employees. Nearly nine out of 10 carriers plan to offer a “hybrid approach,” that is, the ability to work from home and/or office, in the future, Whatley reported.

Insurers are open-minded about allowing employees to work some set day hours, and perhaps deferring a couple hours to the evening, he added.

“Thirty-nine percent of carriers do plan to offer flexible hours, which is something that I think is up dramatically from years past,” he said.

Keep Engaging

Likewise, thoughtful retention plans can be extremely effective at limiting employee turnover and boosting bottom-line performance, Whatley explained. Components of an effective retention plan include communication, exposure, compensation, intellectual stimulation, professional challenges and career path projection, he said.

Engagement is a major theme across several of those categories. It is an investment that pays off handsomely for employers. Teams with “low engagement” are seeing turnover rates 18% to 43% higher than highly engaged teams, Whatley said.

Identifying “high potentials” is just as important as the focus on high performers, he explained. Both are crucial strategies for maintaining the consistency of a business.

“What we’ve found is that’s just as important as maintaining those high performers in your organization,” Whatley said of the high potentials. “You want to keep the people like that so when you have that next wave of retirements, you’re

INSURANCE INDUSTRY FACING TALENT SHORTAGE INFRONT keeping that full intellectual ability in your organization. That could be your next wave of leaders.”

Showdown Looms On DOL Rules

A showdow n is com i ng w it h t he Department of Labor over ongoing efforts to regulate the sale of insurance products into retirement accounts.

No one is quite sure when the next skirmish will take place — or whether it will be a battle at all. What is known is the DOL intends to publish a new definition of “fiduciary” at some point, likely sooner rather than later.

what constitutes investment advice.

Industry lobbyists are generally unsatisfied with the rule, and Berkowitz explained why. For starters, the exemption “is not particularly workable in the context of independent producers because it requires a fiduciary financial institution,” he said.

“For independent producers, there’s typically not a financial institution that is eligible and willing to serve in that function. Insurance companies are not generally going to be comfortable supervising producers who can recommend products offered by other companies, and these

DIGITAL MONTHLY F CUS Be sure to check out our

NEW MONTHLY FOCUS section, highlighted on our home-page.

The Monthly Focus topic for JUNE 2022 is:

ANNUITY AWARENESS

High Potentials vs. High Performers High performers do their jobs well and are more productive than most.

High potentials have the skills and abilities to become high performers and make an even greater impact.

77% of high-potential employees say that being formally recognized as high potential is important to them, contributing to their retention.

Like everyone else in the industry, Jason Berkowitz, chief legal and regulatory affairs officer for Insured Retirement Institute, awaits the new fiduciary interpretation.

“Our view is that more rulemaking is not needed,” said Berkowitz. “Our view is that we have the five-part test that’s been in place for 45 years, and we know how it works. We know how it applies. We have other transaction exemptions that we think are functioning the way they’re intended. We have Reg BI and the NAIC model. We think this is a framework that should be given some time to function in the marketplace.”

What happens next is anybody’s guess, but a fiduciary-only rule is certain to be followed by another round of lawsuits from industry lobbying groups. Two lawsuits were filed already challenging the Trump administration’s investment advice rule, which took effect in February.

The new rule has two main parts: a new prohibited transaction exemption allowing advisors to provide conflicted advice for commissions; and a reinstatement of the “five-part test” from 1975 to determine

independent producers are typically not affiliated with broker/dealers, or banks.”

Shortly after the investment advice rule package took effect, the Federation of Americans for Consumer Choice and the American Securities Association filed separate lawsuits asking courts to block the rule.

IRI is “ready and waiting to engage,” Berkowitz said, while keeping in mind the federal appeals court decision that overturned a 2016 fiduciary standard put forth

by President Obama’s DOL. “We want to make sure that as the definition of fiduciary may continue to evolve, that it does so in a manner that is consistent and compatible with the Fifth Circuit ruling in the case that overturned the 2016 rule,” Berkowitz said.

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.

June 2022 » InsuranceNewsNet Magazine

www.insurancenewsnet.com/ topics/monthly-focus 7

For more information about sponsoring the monthly focus please contact a National Account Director. 717-441-9357

INTERVIEW

R

ecord inflation. Skyrocketing long-term care costs. The widening retirement income gap. All these things can lead would-be retirees to believe that the post-employment years are a time to fear.

But it doesn’t have to be that way.

Moshe Milevsky has researched the evolution of retirement insurance and annuity products over the centuries. He believes that advisors can relieve clients’ fears around retirement by building a portfolio that considers their biological age and their support systems as well as their financial needs. And annuities are a crucial part of the plan.

Milevsky is a finance professor at the Schulich School of Business at York University in Toronto. He also is a member of the graduate faculty in the Department of Mathematics and Statistics.

He has published 15 books and is a fintech entrepreneur with a number of U.S. patents in the retirement income space.

With one foot in the ivory tower of academia and the other in the financial world, Milevsky has a unique perspective on the science of retirement planning.

In this interview with Publisher Paul Feldman, Milevsky discusses the concept of “pensionizing” a retirement nest egg and speculates about whether the tontine could ever make a comeback.

DON’T WORRY; RETIRE HAPPY Moshe Milevsky discusses why annuities are the key to “pensionizing” a nest egg and planning for a worry-free retirement.

An interview with Paul Feldman, Publisher 8

InsuranceNewsNet Magazine » June 2022

PAUL FELDMAN: Tell us how you became a finance expert.

MOSHE MILEVSKY: My day job is teaching undergraduate and graduate students at the university.

I teach finance and investments and insurance. I studied physics and mathematics at Yeshiva University in New York; then I went to graduate school. I was fascinated by gravitational physics — how gravity affects objects as they move, such as how a golf ball moves across the course in an arc. My thesis supervisor said I would never get a job anywhere with that sort of specialty.

She said, “If you want a job, you want to do something more practical than modeling equations.” She said I should go to business school and apply my math skills

DON’T WORRY; RETIRE HAPPY — WITH MOSHE MILEVSKY INTERVIEW to problems in business. That’s how I got into finance.

Twenty-five years ago, I went to business school and I learned accounting, economics and finance. I never left the business school since having earned my Ph.D. from there. I started teaching there and I became a tenured professor and a department chair. I combine finance, economics, actuarial science and accounting with the math and science I acquired during my graduate education. And I apply all these to retirement problems.

FELDMAN: What is your feeling on the economy today, and where do you see us going over the next couple of years?

MILEVSKY: I have absolutely no idea where the economy is going. But I’ve been reading a lot about where we are today. There’s talk about an impending recession, and that affects our industry and the annuity space and the retirement planning space.

I do not have a crystal ball that can predict where the economy’s going. And I personally don’t think anybody has a crystal ball to predict that unless they control the economy.

I certainly can’t predict the recession, but I will tell you that recessions are never good for any industry. If you’re trying to get people to buy financial products, a recession is even more difficult because one of the first things that people will sacrifice are these excess investments and excess payments and excess premiums. Because they’re going to say, “You know what? I just lost my job. We have to cut back. That’s not essential.” So, the short answer to your question is, it would not be good.

FELDMAN: What do you think is the most dangerous thing for retirees right now? Is it the tax increase we will need to cover our government’s expenses, or will it be inflation or will it be the stock market?

MILEVSKY: One of the things I find is this misperception that retirement is all about being scared. “Oh, I’m retired now!

What should I be scared about?” Or you read about retirement guidance and it’s all about the things to worry about.

There are some great things about being retired. You have more time on your hands to do things that you enjoy. You get to spend time with family and loved ones.

You no longer have the work stress.

These all are great things, but you have to rely on your nest egg and your accumulated savings to finance those years. When you are relying on a nest egg of accumulated savings, a 401(k), an individual retirement account, a 403(b) to supplement or even replace the salary that you no longer have, there are a number of things you should concern yourself with. It’s not so much the nest egg you have to take into account as it is navigating 20 or 30 years in retirement.

But we don’t want to give people a message like, “You’re retired now, so it’s time to worry.”

Obviously, we live in a time of inflation.

Inflation is higher now than it has been in 40 years. It’s unclear whether the Federal Reserve will be able to get ahead of it before it gets into double digits. It’s a concern because things are getting more expensive and your standard of living has to keep up.

I would say on the top of the list of things retirees must account for when they’re managing their nest egg is getting real — not nominal — returns.

Let’s say you buy an annuity. The annuity carrier is paying you an income for the rest of your life. You’re getting a thousand dollars a month and that’s going to stay constant, but inflation erodes the purchasing power and it buys less and less. So, I would say inflation is one of the things that you want to have conversations around.

Another important factor is longevity.

How long will you live?

Imagine you are going on vacation.

And you’re trying to figure out how many clothes to take, how much money to keep in your wallet. The first thing you ask is how long will the vacation be? Am I going for a weekend? Then I need only one suit.

Am I going for a month? I need to pack more clothing. I tell you that this retirement vacation can be anywhere from five years to 40 years. That’s complicated. How will you pack for that vacation?

Another aspect is the gap between life span and health span. Life span is how long you live. Health span is how long you live in good health. Mathematically, life span is always longer than health span. And there’s a gap between those two. Those are the years when we need help with the activities of daily living. And that span between health span and life span can be anywhere from a couple of years to 10 years. That’s where I think things such as long-term care

insurance are very important. You hear a lot of discussion about annuities and of life insurance. But those don’t really address this gap between health span and life span.

Advisors must get a better handle on that gap and counsel their clients on how to manage it.

But there’s another thing advisors must talk to their clients about, and it isn’t about money. When clients think about retirement, they need to think about what support system they will have in place. Who will take care of your financial affairs when you can’t count anymore?

You don’t want to scare anyone, but I think a good financial advisor should have conversations about these topics with their clients who are planning for retirement.

FELDMAN: One thing we frequently hear is that consumers hate annuities.

Do you believe the industry is responsible for that sentiment?

MILEVSKY: I think there has been an evolution in the public perception of annuities. Ken Fisher aside, if you were to take a look at the annuity critics in the media — you know, the established media, not people who are trying to sell an alternative and hate annuities because they’re selling something else — the established media, 20 or 30 years ago, all were opposed to annuities and they would write about why they didn’t think annuities were a good idea. They were opposed to any form of annuity. But I think that in the last few years — especially with the passage of the SECURE Act — there’s a growing awareness that if you have a 401(k) or a 403(b), it’s not a pension. You may have a big sum of money in your retirement account, but that’s not a pension.

The question becomes how do I pensionize some of my nest egg? Even the greatest annuity critics accept the fact that an annuity has a place there. I think it’s not so much that there’s a hatred of annuities as it is confusion about what an annuity does.

How have annuities changed? Why is my grandfather’s annuity different from today’s annuity? And why do I like today’s annuity more than I like my grandfather’s?

I believe the industry is to blame for a lot of cases where it was unsuitable or inappropriate for a particular investor to have a particular annuity. You can’t blame the media or competitors for that. I also blame June 2022 » InsuranceNewsNet Magazine

9

INTERVIEW DON’T WORRY; RETIRE HAPPY — WITH MOSHE MILEVSKY the atrocious surrender charges that we saw 20 years ago. A 25-year or a 30-year surrender charge to a retiree who’s 80 years old? How do you get away with that?

These are high-commission products, very opaque. Whatever negativity is out there toward annuities, the industry brought it on themselves, and they can’t rehabilitate themselves overnight.

FELDMAN: What can the industry do better to communicate the value of an annuity?

MILEVSKY: I think that the industry should decomplexify. I know that’s not a word yet. The industry must do a little bit more to simplify these things — all these riders and bells and whistles and features.

I understand they have to be competitive.

They don’t want to be spreadsheeted. They don’t want to be compared against the other. But I think it’s important to make it simpler.

Another thing is the industry must do a better job of differentiating the various types of annuities. The word “annuity” means nothing anymore. The word annuity is like saying “funds.” Do you like funds?

What are your thoughts on funds? Do you mean a hedge fund? A private equity fund?

An exchange-traded fund?

Now talk about annuities. You can talk about an immediate annuity, an income annuity, a registered index-linked annuity with a buffer and a cap, or a variable annuity with a guaranteed minimum benefit.

Or you can talk about a deferred income annuity or longevity insurance contract or tontines. The list goes on and on.

So, the industry must do a better job of explaining the different types of funds. I’ll give you an example. If you were to talk to someone with a minimum amount of financial knowledge, they should know the difference between a stock fund and a bond fund. A stock fund invests in stocks — stocks are ownership shares in the company. A bond fund — bond is debt.

We need to raise the public awareness of the distinctions between annuities, so that at the very least, it’s the same as their understanding of the distinction between different types of mutual funds. I’ll sum it up with two words: more education.

FELDMAN: What do you think about annuities with long-term care riders?

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InsuranceNewsNet Magazine » June 2022

MILEVSKY: I see a lot of discussion around the fact that stand-alone long-term care is either unaffordable or has disappointed people or the premiums have gone up. I’m a big fan of combo products — whether it’s an annuity with a long-term care rider or a combo insurance product where you have life insurance but you get a multiple, an average factor, so that if you need long-term care, you can take out much more than the death benefit amount if you can’t perform the activities of daily living.

To be honest, if you asked me five years ago what I thought about long-term care insurance, I would have said, I don’t know, it’s too complicated, but there’s the tax benefit. If you pull money out for qualified long-term care expenses, it’s going to be tax free.

But I do think that combo products are the way to go.

MILEVSKY: That’s complicated. Many states in the U.S. have laws against tontine insurance. But their problem is with tontine insurance where the dividends are reinvested for the benefit of survivors. I think if you structured it differently and built it into a whole life or a universal life policy, it should be fine.

I believe the innovation on this will take place outside of the U.S. I’m involved in at least three initiatives — all outside the U.S. — where they are trying to do this. I think that once they take off, people in the U.S. will take a look at it.

FELDMAN: You wrote the book, Pensionize Your Nest Egg. What are your thoughts on pensionizing your nest egg?

MILEVSKY: I co-authored the book with Alexandra Moshe Milevsky is a student of the tontine, MacQueen. About 10 an early financial scheme in which subscribers years ago, we realized noreceived an annuity for life. Tontines also body likes the word “annuwere used in England and France as a way of itize.” It sounds too much funding bridges and other structures. like “suicide,” according to financial advisors. We believed there was another word that had I think it’s on the way, but it will never to capture the process of converting a sum be called tontine. My family is originalof money into an income stream you can’t ly from South America, and in South outlive.

America, they’re trying to introduce tonSo we coined the term “pensionize,” and tine for various reasons. But the name now it’s a rallying cry for people to say a is a no-no because in Spanish, “tonto” sum of money at retirement isn’t a pension. means “idiot.”

How do I turn this into a pension? How do So, we came up with another version I pensionize a fraction of my estate? One where we pool a bunch of people togethway is to buy an annuity. er, we guarantee absolutely nothing, and I think annuities help you pensionize survivors end up being subsidized by those your nest egg. There are other pooling who don’t survive. mechanisms that can be used, but, genTheir rate of return is higher because of erally speaking, an annuity will help you mortality credits, and it is a principle that pensionize your nest egg. can work on any fund structure. And I would be willing to bet that five years from FELDMAN: Do you think tontines will now, if we have this conversation again, ever come back? you’ll be saying, “Hey Moshe, you were on to something.”

DON’T WORRY; RETIRE HAPPY — WITH MOSHE MILEVSKY INTERVIEW FELDMAN: Another one of your books is titled Longevity Insurance For Biological Age. Why should a retirement plan not be based on somebody’s chronological age?

MILEVSKY: The problem is that chronological age doesn’t really tell us much about what we really want to know, which is how long you’re going to live. The reason chronological age is important in a financial plan isn’t because we’re looking backward.

We don’t care that you went around the sun 50 times. Why is that relevant to us?

The reason we want your chronological age is we want to get a sense of how long you have left to go. You only have 10 years left? You shouldn’t be investing so much in stocks. You have 40 years left? You can invest in stocks.

Chronological age isn’t the best metric out there to figure out your future. If we really want to get a sense of your future, we need to know your biological age. There are people who are 55 years old chronologically but their biological age is 75. They’re not in good health. Either they’ve done a test that tells them their telomeres are shrinking quickly, there are other biomarkers of aging that they may have looked at, or they simply might be in bad health.

There are other people whose biological ages are 10 to 15 years less than their chronological age. They’re in great shape.

You look at them and say, “She does not look 65.” It’s not just that she doesn’t look 65. Her biological age is 45.

We need financial plans that are geared toward the number that really matters — biological age. So that’s another one of those examples where now it sounds like science. Talk to me five years from now. I think you’ll have more and more financial advisors saying, “Whoa, your biological age is so low. Good for you. Get an annuity quickly. You’re going to outlive everybody else. Go get an annuity. Because an annuity is about living a long time.”

There will be people who walk into their advisor’s office and say, “My biological age is 30 years over my chronological age.” And their advisor will tell them, “Get some life insurance and get it quickly before you don’t qualify.”

This will become part of the conversation: biological versus chronological age.

FELDMAN: What are some of the exciting products in the industry now?

MILEVSKY: I sit in the ivory tower. I live around books. But what I am seeing is a greater awareness of the decumulation phase of retirement. It’s an awareness that now we have gathered our money, and we need to spend it down.

I think that’s where the action is, and there are developments in that field.

Counseling 40-year-olds on stocks versus bonds, domestic funds versus international equity funds versus small-cap funds is getting boring.

FELDMAN: What else do advisors and investors need to know?

MILEVSKY: I think advisors must do a better job of managing the suitability process and get a better handle on their client’s entire balance sheet before they make recommendations. The annuity industry must do a better job of understanding who the client is and what they really need.

I also would like to see more of an emphasis on understanding the client’s family dynamics and family network. You never hear an advisor ask, “Do you have any kids who are going to take care of you when you get old, or will you basically be on your own? Do your kids like you, or are they all going to disappear and only show up for Christmas? You have a daughter who lives near you? Are you on good terms with her? How well do you get along with your child-in-law?”

If I were an advisor, this is how I would know the more people we have to take care of you, the less stress there will be on your portfolio.

We also need to look at the gender differential, racial differential. You are more than just your age. There’s a community that you’re part of, there’s an ethnicity you’re part of, there’s a religion that you’re part of — all of them have an impact on retirement.

Advisors must know all of that in order to build a suitable portfolio for a client. I believe the future is about customized portfolio construction. It’s like personalized medicine — it’s a detailed list of everything on your personal balance sheet.

June 2022 » InsuranceNewsNet Magazine

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the Fıeld

A Visit With Agents of Change

Elliott Appel delivers financial advice to those who are going through rough times, serving up compassion with his expertise. • by Susan Rupe

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InsuranceNewsNet Magazine » June 2022

A HELPING OF KINDNESS — WITH ELLIOTT APPEL IN THE FIELD

E

lliott Appel knows firsthand what it means to be a caregiver.

His father is suffering from cancer and dementia, and Appel and his mother are by his side during his journey.

Empathy for those who are experiencing difficulties inspired Appel to create his financial advisory practice, Kindness Financial Planning, in Madison, Wis. His practice serves caregivers, widows, widowers and those with durable powers of attorney.

Appel’s experience with his father drew him to those who are, in his father’s words, “waiting for the other shoe to drop.” His father was diagnosed with stage 4 lung cancer in 2016. Appel is the secondary caregiver for his father while his mother serves as primary caregiver. Complicating the situation even further is that Appel’s parents live half a continent away from him, in Olympia, Wash.

Olympia is Appel’s childhood home and where his interest in financial services began.

“I always liked finance,” he said. “My uncle got me started in investing when I was young. I always was attracted to the technical side as well as the emotional side of money. I liked how, in this industry, you can blend those two sides together. And it’s not just the technical side, it’s not just the emotional side, but sort of weighing what each of those brings to our relationship with money.”

Appel was an intern with Charles Schwab while he attended Seattle University. During his 10-week internship at Schwab, he met one of the partners at Empirical Wealth Management in Seattle and was offered an internship there. He began working there full time after graduation, starting as a portfolio manager and ending up as vice president-director of associate advisors nearly 10 years later.

“I was an associate advisor supporting a partner in the practice who I connected with,” he recalled. “The firm specialized in serving people who were approaching retirement or who were in their early stages of retirement when they have a lot of planning decisions to make such as how to claim Social Security. How do we take withdrawals from retirement accounts?

Do I have enough money to retire?”

During Appel’s time with Empirical Wealth Management, his clientele expanded.

“Once I became a lead advisor, I had a mix of clients,” Appel said. “I still had

clients who were approaching retirement or who already were retired. But being in Seattle, there was a huge tech community that had a lot of younger people in their 30s and 40s. They had newfound wealth and weren’t sure what to do with it.”

Youth As A Benefit

As a 20-something advisor helping clients sort out their retirement issues, Appel was serving people who were old enough to be his parents.

“It was a tough thing to overcome in the beginning,” he said. “But after a certain point, there was sort of a crossover where I felt confident in my knowledge and in working with people. It wasn’t as challenging anymore, and most people didn’t seem to have an issue with my being so young.

Because if you go into a meeting and you listen to people and you meet them where they are and demonstrate that you have the knowledge to help them, most people aren’t going to care how old you are.”

Appel often framed his age as a benefit to his older clients. “I mean, do you want to have an advisor who is in their 50s or 60s who is likely to be retired when you are in retirement? Or do you want an advisor who is younger, who might be more familiar with new rules that are coming out and who will be with you for the next few years?”

When Appel’s fiancée was accepted for medical residency training at the University of Wisconsin in 2021, he followed her to Madison and began his own practice. The idea for Kindness Financial Planning came about after Appel studied for his Registered Life Planner designation.

“Through that program, you get paired up with someone else doing the training, and you actually lifeplan someone else,” he said. “That gave me permission to go out on my own and start talking about what I wanted. I went back and forth about the clients and the demographic or niche I want to serve. I decided I wanted to serve widows, caregivers and people affected by major health events.”

Kindness As A Vision

Incorporating the word “kindness” into the name of his practice came about when he thought about the way he wanted to provide advice.

“I thought Kindness Financial Planning was a good description of what I wanted

to do, with an emphasis on financial planning, as well as a good description of how I approach relationships,” he said.

Appel’s experience with his father’s illness, along with his experiences with clients he served in his former job, shaped his vision for the practice he created.

“In my prior firm, I worked with about 115 clients,” he said. “They ran the spectrum in terms of age, experience and occupation.

So I asked myself, which of these clients do I get most excited about? I began to realize that in a lot of the conversations I had with clients, I was talking with those who were about to lose someone or who were taking care of someone or who had lost a loved one recently. I decided that would be a great demographic to work with.”

Appel was able to get clients to open up to him as he related their experiences with his own family’s challenges with illness and caregiving. “It was that commonality of experiencing loss and grieving as well as going through the caregiving experience.”

He said his journey as a caregiver inspires him “to meet clients where they are on that particular day, whatever they are experiencing.”

“People can be on a roller coaster,” he said. “Sometimes they have bad days. For me, it’s about being as patient as possible and explaining things and re-explaining things that they need to know because they have a lot on their plate. People who are going through a loss or extreme stress often experience brain fog and can’t remember a lot. So if you can guide them through whatever they need and be a partner to them through that and educate them, you are performing an important service.”

Appel’s clients who are caregivers frequently look to him for recommendations on how to help their loved one. “Things like ‘I need to take over my parents’ finances,’ or ‘my parents aren’t quite ready for me to take over.’ They want to know whether their parents have enough money to last through whatever long-term care event they are going through. They want information on whether they need to find care for their loved one now or whether they should think about power of attorney documents.”

Appel frequently provides referrals to elder care consultants, accountants or attorneys.

Many caregiver clients have multiple family members who are involved in making decisions for a loved one’s care, he noted.

June 2022 » InsuranceNewsNet Magazine

13

the Fıeld

A Visit With Agents of Change

“Sometimes it’s nice to have that Appel was able independent third-party opinto get clients ion from someone who’s not in to open up the day-to-day stuff,” he said. to him as he Widowed clients frequently related their fall into one of two scenarios, experiences Appel said. with his “One is when your spouse is own family’s recently diagnosed with somechallenges with thing and you know you’re goillness and ing to become a widow soon,” caregiving. he said. “In that situation, you help prepare them to take over the finances. So many times, the man has been the one in charge of managing the finances and the wife has not been that involved. How do you bridge and establish that relationship so that she feels comfortable enough to hanWhen Appel is asked to describe the act dle what she wants to handle?” of kindness that transformed his life, he The other scenario is when someone looks no further than his mother. dies but their spouse was unprepared for “She has always been the primary caretheir death. “Now the surviving spouse is giver for my dad,” he said. “Her willingness experiencing brain fog and grief. They’re to step up gave me permission to move trying to pick up the pieces and put them out to Wisconsin with my fiancée while I back together slowly. That’s a much harder continue to help my parents as much as I situation. People frequently are not quite can from here. It was harder for my mom sure what to do with their finances. So, we when I moved across the country, but her need to come together to help them figure willingness to accept that has meant the all this out.” world to me.”

Appel’s mix of advisory knowledge and The podcast series has been as much of a caring nature make him a perfect fit for the learning experience for Appel as it has been clients he serves, said an advisor who has an educational tool for other caregivers. known him for several years.

“My goal is to bring in a host of experts “Elliott has a lot of technical expertise, as well as people who have been through but what makes him stand out is the way he this,” he said. “So that someone who listens handles people who are going through dif- to the podcast can say, ‘Someone else has ficult situations,” said Diana Gisel Yanez, made it through this.’” a certified financial planner and founder Danika Waddell of Xena Financial of All The Colors. “He has a tremendous Planning praised Appel for what she deamount of emotional intelligence.” scribed as “a gentle, calming presence.”

“To have someone like him in your corThe Magic Question ner when you are going through a difficult Appel hosts a podcast series, “Making The time — I can’t imagine how powerful it Most Of Time,” in which he speaks to peo- would be. That’s a rarity in our industry,” ple about the caregiver’s journey. In the she said. podcast, he often asks his guests this question: What act of kindness was transforma- Susan Rupe is managing editor for tional in your life?

InsuranceNewsNet. “It’s a question that gets people thinking, She formerly served and you find out something really interest- as communications ing about them at the same time,” he said. director for an insur“Or I often ask people, ‘What is something ance agents’ association and was an award-winning newspaper good that happened to you today or this reporter and editor. Contact her at Susan. week?’ Again, it’s a way of establishing a Rupe@innfeedback.com. Follow her on relationship, of moving the conversation Twitter @INNsusan. forward.”

14

InsuranceNewsNet Magazine » June 2022

1. Average premium ranking for Eclipse Protector II vs. top IUL competitors was based on combined averages in the following scenarios: lifetime no-lapse guarantee and NLG to A100, ages 3565 (this product’s target market), male/female, Pref. Best, Pref. Standard Plus and Standard underwriting classes, full, ten and single pay, death benefit amounts of $500,000 and $1M. Companies/products included: Securian Financial: Eclipse Protector II American General: Value+ Protector II IUL (only available for benchmarking in NLG-A100 scenarios) Nationwide: IUL Protector II North American: Protection Builder IUL Symetra: Symetra Protector IUL 3.0 This comparison does not take all material factors into account and must not be used with the public.

These factors include but are not limited to: indexed account options, rider availability, surrender periods, or fees and expenses. For information regarding these and other factors please consult each company’s respective policy guide..

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

Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods. Policyholders could lose money in this product.

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

Products, features and availability may vary by state.

Uncapped indexed account participation rates are subject to change and may be less than 100%. This could have the impact of the indexed account credit being less than the change in the reference index.

Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements.

This information should not be considered as tax or legal advice. Clients should consult their tax or legal advisor regarding their own tax or legal situation.

These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person's individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its subsidiaries, have a financial interest in the sale of their products.

Insurance products are issued by Minnesota Life Insurance Company in all states except New York.

In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer.

Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its subsidiaries.

Minnesota Life Insurance Company and Securian Life Insurance Company are subsidiaries of Securian Financial Group, Inc. For financial professional use only. Not for use with the general public. This material may not be reproduced in any form where it is accessible to the general public.

NOT YOUR FATHER’S FINANCIAL ADVISOR — WITH JESSICA WEAVER IN THE FIELD INSURANCE INVESTMENTS

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June 2022 » InsuranceNewsNet Magazine

15

NEWSWIRES

QUOTABLE

US Economy Shows Surprise Contraction

The U.S. economy unexpectedly contracted in the first quarter for the first time since 2020 as the trade deficit ballooned. Gross domestic product fell at an annualized rate of 1.4% as rising imports and slower inventory growth more than offset solid consumer and business demand, the Commerce Department’s preliminary estimate showed.

At first glance, the overall GDP was decidedly weak. But the underlying details show still-solid household demand and business investment, corroborating comments on the economy from company executives during the current series of earnings calls.

Commerce Department data showed personal consumption, the largest part of the economy, rose an annualized 2.7% in the first quarter, compared with 2.5% at the end of 2021.

Spending on services added 1.86 percentage points to GDP, while spending on goods stagnated, reflecting changing consumer behavior. Earlier this year, spending increased as COVID-19 cases declined. As the quarter progressed, high inflation began to diminish purchasing power.

Heart Disease Still The no. 1 Killer In 2021 Heart Disease: 696,962 * Cancer: 602,350 * * COVID-19: 350,831 * Accidents: 200,955 * Stroke: 160,264 SOURCE: CDC

2021 WAS DEADLIEST YEAR IN US HISTORY

COVID-19 and drug overdoses pushed the U.S. to its highest death toll ever in 2021, the Centers for Disease Control and Prevention said. The CDC reported there were 3.465 million deaths last year, or about 80,000 more than 2020’s record-setting total.

Early last year, some experts were optimistic that 2021 would not be as bad as the first year of the pandemic — partly because effective COVID-19 vaccines had finally become available. But COVID-19 deaths rose to more than 415,000 in 2021 from 351,000 the previous year as more variants of the virus appeared and large numbers of Americans resisted getting vaccinated or wearing masks.

DID YOU

KNOW

?

16

COVID-19 wasn’t the only factor leading to the spike in death rates. The CDC reported the U.S. is on track to see at least 105,000 overdose deaths in 2021 — an increase from 93,000 in 2020. In addition, the cancer death rate rose slightly in 2021, and deaths from diabetes, chronic liver disease and stroke saw an uptick.

SMALL BUSINESSES FACE TRIPLE WHAMMY OF CHALLENGES

Small-business owners are stressed about the economy, and there are three main factors driving that stress, according to a Truist survey. Those three challenges are economic uncertainty, employee shortages and rising inflation.

Supply chain issues and labor shortages have hit small businesses hard, the survey said. Two-thirds said their workforce has changed over the past year and 23% lost key workers. Two-thirds also said they experienced supply chain issues, with 45% saying those issues led to lower profitability and 36% saying they

The economy is not falling into recession.

— Ian Shepherdson, chief economist at Pantheon Macroeconomics

lost customers because of them.

Despite their challenges, small-business owners said they are optimistic about the future. Many said they are more positive than they have been in the past three years. Sixty-seven percent are optimistic about their financial well-being, which is a 7% increase compared to 2021, and an 18% increase compared to 2020.

EXECS WARILY EYE A SHAKY WORLD

The good news is t hat cor porate executives are not as worried about t h e C OV I D -19 pandemic as they have been the past few years, but the bad news is they are more worried about the world splitting at the seams, according to a McKinsey survey.

A clear majority (76%) of the 785 executives surveyed said “geopolitical instability and/or conflict” was the top risk to economic growth globally, and 57% said the same was true in their own country, according to the quarterly economic conditions outlook survey that McKinsey conducted four days after the Russian invasion of Ukraine started.

The pandemic dropped from 57% as the top risk in the previous survey to 12% in the current one. After two years in the top risk slot, the pandemic was pushed down by geopolitics, energy prices and inflation.

More than one-third of small-business owners considered shutting down in the past 12 months.

InsuranceNewsNet Magazine » June 2022

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Good

Strong

This rating is the 2nd highest of 16.*

This rating is the 5th highest of 21.*

This rating is the 5th highest of 21.*

A.M. BEST

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*as of 4/1/22

Mutual of Omaha’s Medicare solutions, with competitive pricing and outstanding customer service, are a perfect fit for your senior-age clients.

Contact your marketer or visit mutualofomaha.com/ sales-professionals.

COVER STORY

Annuities keep overcoming disruptions while pushing pandemic sales to greater heights.

What will the rest of 2022 (and beyond) look like as interest rates, inflation and possibly wealth taxes combine to alter the market?

— BY JOHN HILTON —

A

s 2022 rolls into sum- recorded in history, according to results mer, the annuity market from the Secure Retirement Institute U.S. is enduring every kind Individual Annuity Sales Survey. of gut punch disruption “After 2020, there was significant pentimaginable — from the up demand for investment options that ofpandemic to technology, fered a balance of protection and growth,” from regulation to inflation. said Todd Giesing, assistant vice president, And now you can add massive interest SRI Annuity Research. “As a result, regrate uncertainty to the mix. istered index-linked annuity sales had a But after a pandemic sales dip, Americans record year and fixed indexed annuities resumed loving on annuities, more so than experienced the strongest growth in three ever. Every research and intelyears. Together, sales of these ligence tracking group reports products represented 40% of the highest annuity sales levtotal sales in 2021.” els in more than a decade.

Whether sales keep climb“From our standpoint, esing will depend on how anpecially in the retail space, nuity product designs work it’s as though the pandemic with the expected economic Mike Downing never happened,” said Mike turbulence ahead. Industry Downing, vice president, execs insist they are projectchief operating officer and chief actuary of ing solid sales increases and smooth sailing Athene Holding, a leading annuity seller. for quarters to come.

Annuity sellers thrived in 2021, recording the highest industry sales figures Chameleon Product since 2008. Analysis by LIMRA, Beacon Annuity designers are a smart group. The Research, Morningstar and Wink all use of caps, participation rates, riders and agreed on the stunning market turnaround proprietary indices and other mechanisms from the COVID-19 business shutdown. enables designers to tweak products to fit Total annuity sales were $254.6 billion, any range of economic circumstances — up 16% from 2020, and the third-highest from boom to bust times.

18

InsuranceNewsNet Magazine » June 2022

Registered indexed-linked annuities are just the most-recent example of that ingenuity. Also known as buffered or structured annuities, RILAs are leading the growth spurt in recent quarters.

RILAs provide a menu of index-linked accounts of varying durations, with crediting methods like those seen on indexed annuities. The index buckets are coupled with downside protection options in which the insurer will absorb initial index losses up to a predetermined percentage.

Because the client takes on any additional downside, or percentage “floors” where clients take the first losses, less risk is assumed by the carrier.

Insurers are seizing the product opportunity, continuing to replace traditional variable annuities that offer living benefits with RILAs. Sheryl Moore RILA sales checked in at $38.1 billion in 2021, reported Wink, which classifies the products as “structured” annuities.

“The 2021 sales topped the prior year’s record by nearly 59%,” said Sheryl Moore, CEO of Wink. “And soon, more companies will enter this growing market.”

POWERING THROUGH DISRUPTION COVER STORY However, RILAs have done well in the sweet spot for clients seeking tax-deferral who want more growth than they can get with fixed instruments in a low-rate environment but unwilling to endure significant equity risk. Those factors are changing.

The stock market is certainly more turbulent — a situation that favors RILAs — but interest rates are on the rise, too. At their May meeting, the Fed boosted interest rates by 0.5 percentage points to a target range of 0.75 to 1 percent. Expectations are for further rate hikes this summer.

Psychological Impact

A typical baby boomer planning to retire soon was in their 20s when inflation reached a peak 14% in 1980. Their parents probably carried forward generational scars of Depression-era struggles for work and food and money to pay bills.

Those experiences will impact the investing decisions for many as they adjust their retirement planning. It’s part psychology, but also a very real problem for retirees and near-retirees. High inflation can drastically shrink a retirement nest egg.

The Department of Labor reported that Even Sweeter Spot? its consumer price index jumped St. Louis Fed President 8.5% in March from 12 months James Bullard wants to earlier — the biggest year-overgo further and hike rates year increase since December to 3.5% by year’s end. The 1981. Prices have been driven up Fed is trying to bring inflaby bottlenecked supply chains, tion down by raising rates. robust consumer demand and disJames Bullard Rising interest rates ruptions to global food and energy should be good news markets worsened by Russia’s war for annuity sellers and buyers. As the old against Ukraine.

Chinese phrase states, a rising tide lifts all A recent survey by Voya Financial found boats. A higher interest rate means insur- Americans of all generations worried ers can get better returns on investments. about the impact of inflation on their reLikewise, the products become more at- tirement plans. tractive as well.

Voya found that three-quarters (73%) of Fixed annuities, which pay out a specific, millennials and Generation X (74%) agreed guaranteed rate, are most directly affected or strongly agreed that they are worried by interest rates. Simply put, the higher the about the impact of inflation on their abiliinterest rate, the better the payout investors ty to save enough for retirement. And more will receive for the same premium. than half (57%) of millennials, who now Regardless of where interest rates land, make up roughly one-third of the U.S. labor Downing said RILAs are likely to remain force, agree or strongly agree that, because strong sellers. In fact, higher rates should of inflation, they will need to delay their help a wide range of annuities, he added. planned retirement date.

“In general, rising rates are good for in“Because of inflation, nearly half (43%) surance because it means we can offer more of individuals have had to tap into ficompetitive products,” he explained, “and cre- nances that they previously had set aside ate a more compelling alternative to for retirement — and not other choices that customers might surprisingly, this is even have with respect to traditional eqhigher among millenniuities or variable annuities.” als (57%),” said Heather It remains to be seen how othLavallee, CEO of wealth er interest-bearing investments, solutions for Voya. such as bonds and money market What does the inflaHeather Lavallee accounts, adjust to higher rates. tion fear mean for annuity “Rising rates are great, because sales? Plenty, said Martin in terms of the promise that’s available Powell, head of annuity distribution for to customers, protecting the downside CUNA Mutual Group. and the traditional fixed indexed annuity, CUNA is enjoying strong sales success flooring the downside at zero, but there’s with fixed annuity products, Powell said. just that much more upside potential,” Sales increased 36% in 2021 to $1.8 billion, Downing said. “That creates more interest- and that momentum carried forward into ing decision points for customers and more the first quarter of 2022, he added. options and opportunities for customers.”

The company projects continued strong

sales of its flagship RILA, ZoneChoice.

Introduced last year, the ZoneChoice products include a new Barclays Risk Balanced Index, which allocates between low-volatility stocks and fixed income, and was developed in partnership with CUNA. It also offers the S&P 500 Index and a declared rate account that lets buyers lock in a pre-determined rate for one year.

The RILA offerings are a good place to park money during times of economic volatility, Powell noted.

“People are realizing, ‘Hey, I need to put a collar around my risk,’ especially with increased interest rates, increased inflation, a lot of market volatility, and a lot of uncertainty with the market,” he said.

Tax Hikes Planned

President Joe Biden never shied away from his campaign trail commitment to levy “wealth taxes” on the high earners. The idea returned this spring with the “Billionaire Minimum Income Tax” tucked into the president’s $6 trillion budget.

It would assess a 20% minimum tax rate on total income, including unrealized capital gains, on U.S. households worth more than $100 million. Over half the revenue could come from those worth more than $1 billion.

“This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters,” the document said.

As part of the tax package, the administration wants to tax appreciated assets, even if they are not sold, upon the death of their owner. If adopted, the tax plan could prevent billionaires, and their heirs, from escaping taxes via the gifting of assets at death.

Should the tax package be passed into law by Congress, it is natural to wonder whether the wealthy will look to park more money in tax-advantaged retirement vehicles. In general, the push for more taxes is a boost for tax-averse annuity planning, Downing noted.

“We are interested in exploring to see what more can be done in terms of tax strategies,” he explained. “We see opportunities to look at more investment-oriented products where the advantage of tax deferral can be a strong selling point to help deliver and meet customer needs where taxes are a bigger part of those needs.”

That type of holistic tax and retirement June 2022 » InsuranceNewsNet Magazine

19

COVER STORY POWERING THROUGH DISRUPTION

Preliminary U.S. Annuity First Quarter 2022 Sales Estimates Q1 2021

Q2 2021

Q3 2021

Q4 2021

Full Year 2021

Q1 2022

Q1 2022/ Q4 2021

Q1 2022/ Q1 2021

Traditional Variable

20.9

22.7

21.3

21.7

86.6

19.1

-12%

-8%

Registered Index-Linked

9.2

10.0

9.3

10.3

38.7

9.3

-10%

2%

Total Variable

30.0

32.7

30.6

32.0

125.3

28.4

-11%

-5%

Fixed-Rate Deferred

14.6

16.0

11.5

11.0

53.1

16.0

45%

10%

Indexed

13.5

16.5

17.1

16.6

63.7

16.3

-2%

21%

Deferred Income

0.42

0.51

0.51

0.43

1.87

0.35

-20%

-18%

Fixed Immediate

1.5

1.6

1.6

1.7

6.4

1.5

-12%

0%

Structured Settlements

1.0

1.0

1.1

1.1

4.2

1.1

0%

10%

Total Fixed

31.0

35.6

31.8

30.8

129.3

35.2

14%

14%

Total U.S. Annuities

61.0

68.3

62.4

62.8

254.6

63.6

1%

4%

planning is done in the traditional advisor space.

While fee-based annuity sales remain a small piece of the overall market, those numbers are growing, noted Alison Reed, chief operating officer, Jackson National Life Distributors. Like many annuity manufacturers, Jackson is looking to capitalize on the potential in the advisor market.

During the third quarter of 2021, the company introduced Jackson Retirement Investment Annuity, a new fee-based variable annuity targeted at independent registered investment advisors.

“As we look to continue to expand our reach, we believe there is significant opportunity to provide independent RIAs with annuity product options that fit into their client portfolios,” Reed said.

Securing Retirement

Tax deferral is not a new benefit of annuity ownership. Congress is listening to financial services and delivering many more benefits via legislation. Of course, the federal government moves slowly, especially with regulation changes, but the Setting Every Community Up for Retirement Enhancement bill signed by President Donald Trump in the waning days of 2019 was a big victory.

That momentum continued when the House recently voted to pass the Strong Retirement Act of 2022, known colloquially as SECURE 2.0, with overwhelming bipartisan support, 414-5. SECURE 2.0 was in Senate hands as of press deadline, with backers confident it will follow a similar path as its predecessor legislation.

20

InsuranceNewsNet Magazine » June 2022

During a recent webinar hosted by InsuranceNewsNet, Diane Boyle, senior vice president for government relations at the National Association of Insurance and Financial Advisors, said retirement savings legislation is a big winner for elected officials on both sides.

“I think we’re going to see the same level of support in the Senate,” Boyle said. “We’ve heard conversations around the need for enhanced retirement savings. How can we get more people to focus on retirement savings and planning and putting together a plan for when you reach retirement? How do you get there? How do you start? And this legislation would enable that and so I think when we move to the Senate, we’re going to see that same level of excitement.”

The twin SECURE bills contain a wide range of tweaks and changes to aid retirement saving. A few big ones directly boost annuities. The first SECURE Act created a

safe harbor that employers can use when choosing a group annuity to include as an investment within a defined-contribution plan, with new provider-selection rules.

Another provision of the SECURE Act requires plan sponsors to provide a statement, at least once during a 12-month period, that sets forth the “lifetime income stream equivalent” of the participant’s account balance.

While it is still too soon to know the full impact of all the provisions in the original SECURE, Boyle said industry providers are generally happy with the opportunities to date.

A Nod To QLACs

SECURE 2.0 makes it easier for plans to offer annuities by tweaking required minimum distribution requirements for annuity options. Likewise, the bill makes qualified longevity annuity contracts, or

You can view the full recording of the webinar with Diane Boyle at insurancenewsnet.com/topics/ insurance-webinars

POWERING THROUGH DISRUPTION COVER STORY QLACs, more attractive by increasing the amount of retirement savings a client can use to buy one.

The U.S. Treasury Department authorized QLACs for the 401(k) and the individual retirement account markets in 2014 to help workers save for retirement.

Modest sales followed, driven primarily by the wealthy.

SECURE 2.0 includes a number of other provisions:

» Raises the age to start required RMDs. Plan participants are required to begin taking distributions from their retirement plans at 72. The bill would raise it to 73 this year and increase it to 74 on Jan. 1, 2029, and 75 in 2032.

» Expands automatic enrollment in

employer-sponsored retirement plans, while reducing the service requirements for part-time employees to participate in an employer plan. It requires 401(k) and 403(b) plans to automatically enroll participants, with an employee opt-out. The initial automatic enrollment amount is at least 3% and no more than 10%, but the amount would be increased by a percentage point each year until the total reaches 10%.

» Increases the catch-up contribution

level to retirement accounts for people nearing retirement. Under current law, the limit on IRA contributions is increased by $1,000 for individuals who have reached age 50, but the bill would index such limits starting in 2023. It would also increase the limits on catch-up contributions for employees.

» Reduces administrative burdens for

plan sponsors by modifying retirement plan design rules, and changes regulations on pooled employer plans and multiple employer 403(b) plans. Small businesses with 10 or fewer employees, new businesses (those that have been operating for less than three years), church plans and governmental plans are excluded from automatic opt-in requirements.

» Expands “Rothification” by requir-

ing a section 401(a) qualified plan, section 403(b) plan, or governmental section 457(b) plan that permits an eligible participant to make catch-up contributions to treat those contributions as after-tax

Roth contributions, according to a Deloitte report. The bill would also allow plan participants to designate employer matching contributions as Roth contributions, and permit SEPs and SIMPLE IRAs to be designated as Roth IRAs.

Fiduciary Specter

Regulation change is the one disruptive factor facing annuity sellers that is nearly impossible to turn into a positive. Under Biden, rumblings of a fiduciary standard are again percolating from the Department of Labor.

for transactions involving 401(k)s or IRAs. Insurance producers can still use PTE 8424 for annuity and life insurance sales involving retirement funds.

Meanwhile, state insurance regulators are making terrific progress getting states to pass annuity sales rule updates based on a best-interest model. In April, Wisconsin became the 23rd state to adopt the model put forth by the National Association of Insurance Commissioners. Seven more states have efforts in the works, Boyle said.

The federal regulations take precedence when selling insurance products

“There’s not a need for a fiduciaryonly rule. Why are we doing this again? … If you’re going back to putting in play something that’s a fiduciary only, you’re going to lose access to that personalized advice.”

As this issue went to press, the DOL had yet to publish its revised definition of “fiduciary.” But industry critics are concerned that it could put the clamps on annuity sales just when business is great.

“There’s not a need for a fiduciary-only rule,” Boyle said. “Why are we doing this again? … If you’re going back to putting in play something that’s a fiduciary only, you’re going to lose access to that personalized advice.”

In February 2021, 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.

The DOL is certain to build on the new prohibited transaction exemption 2020-02, included in the investment advice rule, legal analysts say.

PTE 2020-02 applies to recommendations for rollovers and other movement of retirement money. Broker-dealer representatives and investment advisors can use the exemption to collect compensation

using retirement dollars, Boyle noted, adding that industry leaders are lobbying for a uniform standard as the best way to provide financial advice and products to those in need.

Regardless of where annuity sales rules end up, Athene is planning strong sales for some time to come, Downing said.

“It’s not a big disrupter. I think it would be, at best, a potential nuisance,” he said of the regulation talk. “The demand for products is there and will continue to be there.

And so, when the demand is strong, even though there may be regulations that could make the delivery of those products a little bit more challenging. Generally, the industry is very good at coming to grips with how to address it.”

Insurance N ewsN et 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.

June 2022 » InsuranceNewsNet Magazine

21

COVER STORY POWERING THROUGH DISRUPTION

Special Sponsored Section

In this year’s Annuity Awareness Month Thought Leadership Series, great minds from four elite companies offer their perspective on product, process, and the future of an ever-changing annuity marketplace.

INSIDE

22 22

Gradient Is An IMO For Today’s Advisors with Brian Lucius of Gradient Financial Group, LLC PAGE 23

What In The Word Is Working Capital?

by Signal Advisors PAGE 26

Build Retirement Confidence With Annuity Awareness

by American Equity PAGE 24

It’s Time To Make An Impact

by National Western Life Insurance Company PAGE 27

InsuranceNewsNet Magazine » June 2022

The Annuity Issue • Special Sponsored Section

Gradient Is An IMO For Today’s Advisor

A

dvisors today face more demands than ever. You must keep up with an ever-expanding array of products while serving a greater variety of clients. You must maintain an efficient back office, adhere to compliance regulations and stay on top of today’s marketing and prospecting trends. Likewise, the demands of the consumer are evolving — revealing a savvier, younger and more knowledgeable clientele that have a wealth of information at their fingertips.

These consumers view technology as a benefit rather than a roadblock and require a top-of-theline tech suite. At the same time, your competitors continue to find Brian Lucius ways to expand the breadth and Chief Distribution Officer depth of their offerings.

The demands of the daily grind prohibit you from keeping up with today’s tasks or tomorrow’s vision. It’s information overload, with no end in sight and no plan to get you there.

To the rescue comes Gradient Financial Group, a Minnesota-based full-service IMO that’s built a business around helping advisors build a business they never imagined possible, freeing up time to work on the business, not in the business.

“Today, it’s about running a successful small business and delivering on consumers’ expanding expectations. They want a financial professional to be a fiduciary with all the available tools and technology to meet their needs,” says Brian Lucius, Gradient’s chief distribution officer.

TECHNOLOGY BENEFITS

Custom fashioned after nearly two decades of serving advisors, Gradient offers a proprietary software suite comprising a dozen different planning tools. “We built it to be the best for advisors,” says Lucius. “It’s easy to just string a bunch of tools and technology together. That’s not us. Data seamlessly passes among our solutions, which provides real value to your office and, in turn, your clients.”

If you’re not seeing the added value from your current IMO, now is the time to turn to a company like Gradient.

NEVER A HARD SELL

Gradient has helped many advisors build multimillion-dollar practices. This isn’t through quick fixes, trendy marketing or a hard sell. Rather, it works holistically. “We don’t push any one solution, one program or one product. It’s not a onesize-fits-all business anymore,” says Lucius. “At the end of the day, Gradient has some of the most diverse and exclusive products on the market.” Working with Gradient ensures that you are one of the first to get those products from the insurance carrier to your clients.

Offering myriad integrated solutions for practices of all

types and sizes means Gradient can help with commission-based insurance products and fee-based retirement planning, as well as financial handholding and a lot more.

“Having one or more product lines that offer a recurring revenue stream has benefited many advisors, as it gives them the opportunity to invest back into their business, hire employees and explore new marketing outlets so they can bring in more clients, capture repeat business, receive more referrals and generate ever-greater profits. We help advisors build that model,” explains Lucius.

BUILD SCALE AND STABILITY

Gradient is uniquely equipped with the breadth and depth of expertise required to build scale and stability into an advisor’s business. “We ask our advisors to begin with the end in mind,” says Lucius. “And then we help them get there by implementing their plan right away rather than when it’s too late.”

Gradient provides worldclass back-office operational support that takes the burden of costly overhead off the advisor.

The Gradient platform offers traditional services, such as case design, new business and transfer processing, as well as a dedicated team that can hire and onboard employees, navigate compliance issues, create brand enhancements, and support succession planning.

Everything is coordinated and available under one roof and via a single toll-free number.

“Our business has shifted dramatically over the past 10 years. A decade ago, advisors may have used an IMO for a single product category such as annuities,” says Lucius. “Today, advisors are more sophisticated — their businesses are more complex. The upside to this change is that the potential gains for advisors can be unprecedented.”

“It’s easy to string a bunch of tools and technology together.

That’s not us.”

To learn more about how Gradient can help you build your business, visit the website IMOForTodaysAdvisor.com.

June 2022 » InsuranceNewsNet Magazine

23

The Annuity Issue • Special Sponsored Section

Build Retirement Confidence with Annuity Awareness Time and money are two of your clients' top assets. Don’t let lack of fixed index annuity awareness cost them valuable time and money in retirement.

The cost of waiting Two individual pre-retirees, have the same goal: add $10,000 in annual income when they retire at 65. Both individuals are interested in the IncomeShield 10 fixed index annuity,* with a Lifetime Income Benefit Rider that provides a 7.25% simple interest growth rate to the income account value. The only difference is one purchases at 58; the other at 64.

Deciding Dave

Income Product: IncomeShield 10 fixed index annuity with Lifetime Income Benefit Rider providing 7.25% Simple Interest.

Age: 58 Retirement age: 65 Goal: Additional $10,000/year in retirement

Waiting Wally Age: 64 Retirement age: 65 Goal: Additional $10,000/year in retirement

Purchase Payment to Reach Goal: $125,754

40

%

Purchase Payment to Reach Goal: $176,754

More premium required for Wally after waiting 6 years

Example shown for illustrative purposes only. Assumes no withdrawals are taken from the contract prior to income payments beginning. Excess withdrawals taken in addition to lifetime income payments will reduce future income payment amounts. * There is a 10-year surrender charge schedule for early withdrawals exceeding 10% annually. The Lifetime Income Benefit is an option and may carry an annual fee. The Lifetime Income Benefit Rider is used to calculate lifetime income only and is not part of the contract value or available as a lump sum.

Cost of Six Years: 40% more premium required to generate $10,000 additional income The IncomeShield fixed index annuity provides the principal protection that the clients need during the critical years leading up to and into retirement. By purchasing early, Dave is able to build on that protection and secure a supplemental lifetime income stream that meets his income goals.

Lifetime Income available through optional Lifetime Income Benefit Rider. Available for issue ages 50+ Annuities and Rider issued under form series ICC17 BASE-IDX, ICC17 BASE-IDX-B, ICC17 IDX-11-10, ICC19 E-MPTP, ICC19 E-PTPC, ICC19 E-PTPR, ICC16 R-MVA, ICC20 R-LIBR-FCP, ICC20 R-LIBR-FSP, ICC20 R-LIBR-WFCP, ICC20 R-LIBR-W-FSP, and state variations thereof. Availability may vary by state.

Provisions of the Lifetime Income Benefit Rider, such as Income Account Value Accumulation Rates, may change prior to issue. IAV only used to calculate lifetime income payments. Not part of contract value or available in a lump sum. Interest grows until the earlier of payments beginning or the end of the IAV period. Certain eligibility requirements and restrictions may apply.

1 Bonus available only on IncomeShield 10. Bonus available on 1st year premiums. Each year after the 1st contract year, you become vested in a percentage of the bonus, until 100% vested at the end of the 10th contract year. Vested amounts of the bonus are the amounts not forfeited as a result of an early withdrawal or surrender. Bonus, surrender charges, and vesting schedules may vary by state. See brochure and disclosure for details.

Surrender charges may apply to excess withdrawals that exceed the annual free withdrawal available under the contract. You may be subject to a 10% federal penalty if you make withdrawals before age 59 1/2 Guarantees are based on the financial strength and claims paying ability of American Equity and are not guaranteed by any bank or insured by the FDIC. For a comprehensive overview of all the relevant features, benefits, and limitations of the IncomeShield 10 fixed index annuity. Please read the sales brochure and disclosure for complete details.

This material is for informational purposes only, and is not a recommendation to buy, sell, hold or rollover any asset. It does not consider the specific financial circumstances, investment objectives, risk tolerance, or need of any specific person. In providing this information American Equity Investment Life Insurance Company is not acting as your fiduciary as defined by the Department of Labor. American Equity does not offer legal, investment or tax advice or make recommendations regarding insurance or investment products. Please consult a qualified professional.

24

InsuranceNewsNet Magazine » June 2022

The Annuity Issue • Special Sponsored Section

The growth required Let’s take a closer look at our hypothetical demonstration to see the growth needed for that approach to generate $10,000 in retirement income with an IncomeShield 10 fixed index annuity.

A 58-year-old individual, looking to retire at 64, would need an annual growth rate of 5.8% on their $125,754 principal to raise enough capital for a $176,754 purchase payment of an IncomeShield 10 with Lifetime Income Benefit Rider that would generate $10,000 in retirement income. Each year the guaranteed income purchase is postponed, the greater the growth rate and more significant the equity risk required to catch up.

This hypothetical example is for illustrative purposes only and is not representative of the past or future performance of any particular product.

Don't delay.

Inform your clients on the benefits of American Equity's IncomeShield 10 The IncomeShield fixed index annuity line is designed to “shield” a portion of your client's portfolio from retirement unknowns like market declines. It offers the crucial benefit of asset protection with no loss of principal due to market volatility, along with a powerful combination of guaranteed income and lifetime income options.

7% Premium Bonus1 Competitive Guaranteed Monthly Income Multiple Lifetime Income Benefit Rider Options TM

AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY®

6000 Westown Pkwy, West Des Moines, IA 50266 www.american-equity.com ● Call us at 888-221-1234 01AD-INN-0622 06.01.22 ©2022 American Equity. All Rights Reserved.

June 2022 » InsuranceNewsNet Magazine

25

Dell was different. Dell would take orders directly from The Annuity customers, collect payment, and then quickly assembleIssue and • Special Sponsored Section ship the computer. In addition, Dell would negotiate payment The Annui ty Issue Section Annuity Issue • Special Spo terms with their component manufacturers, and often would • Special Sponsored The haveWhat cash in hand from customers before they everworld had to pay in the What is WORKING CAPITAL? in Annuity access to the secret weapon behind agents high-growth companies fin forAnnuity the parts! agents finally have DellWhat useddocapital from their vendors and customers toWhat do the fastest-growing and the fastest-gro When agents can finance their working capital needs, they most successful companies like most successful can turn their marketing dollarscompanies faster, run more events every fundTesla, working capital, becoming one of theT fastest growing Apple, and Amazon have esla, Apple , drive and Amazon h year, more revenue, grow faster, and even expand Robert Smith, President, RCS Wealth Management* in common? They all find affordin common?

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However, for almost all agents, affordcompanies in history, IPO’ing just four yearsable after launching. ways to ablefund able ways to fund their working their worki financing for working capital has been completely capital in order to grow rapidly. capital in order to out of reach…until now.grow rapid SoWorking - what cancapital independent financial professionals learnWorking capital is a bu is a busiSignal.Advisors unlocks working ness’ liquidity. When a comliquidity When a co frompanytheisstory of Dell Technologies? ness’ investing in growth, it’s pany is investing “By advancing commissions within 24in hours,professionals we’vegrowth unlocked 30 to capital for financial common for the cash going out to common for the cash going “As a venture capitalist for more than a decade, I have While financial professionals don’t have working capital tied up in be faster than the cash coming in. This be faster40 days than the cash com of working capital, at no cost to the agent,” says Patrick Kelly, seen first-hand how important working capital is for all kinds of gap is called working capital, and the fastest-growing gapcompanies is incalled the working capital, fast-growing businesses,” says Jake Cohen, president and co-founder inventory, they do have working capital tied up in marketing.

Typically, world - big and small - benefit from accessing world cheap capital to fund big and small bene CEO and co-founder of Signal Advisors.

Advisors. “Financial professionals are no different.

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AnnuityAnnuity agents finally have agents access to thefinally secret weaponhave behind high-growth access companies to the secret

capital can transform a business is the story capital of Dell Technologies. Tradican transform a of busin which pays agents their commissions within 24 hours receiving tionally, the personal computer businesstionally required tying up a lot of cash , the personal comput an annuity application in good order (Signal Advisors estimates in inventory – buying parts, building computers, in and inventory then selling them –average buying parts, b that the industry for commission payments is currently through wholesale and retail channels. through wholesale and retail more than 30 days.).

Dell was different. Dell would take orders directly from Dell was different. Dell w customers, collect payment, and then quickly customers, assemble and collect payment, a ship the computer. In addition, Dell would ship negotiate paymentthe computer. In addition terms with their component manufacturers, terms and often would with their component m have cash in hand from customers beforehave they ever had to pay cash in hand from custom for the parts! for the parts!

Dell used capital from their vendors and customersDell to used capital from th fund working capital, becoming one offund the fastest growing working capital, becom -in Robert Smith, President, RCS Wealth Management* companies in history, IPO’ing just four years companies after launching. history , IPO’ing So - what can independent financial professionals learn So - what can independen from the story of Dell Technologies? from the story of within Dell T echno “By advancing commissions 24 hours, we’ve unlocked 30 to While financial professionals don’t have working capital While tied up in profession 40 daysfinancial of working capital, at no cost to the agent,” says Patrick Kelly, inventory, they do have working capitalinventory tied up in marketing. Typically, , and they do CEO co-founder of Signal Advisors.have work cash is tied up in marketing for an average cash of 120 days – from is the timetied up in marketing f Signal has also negotiated exclusive payment terms with leading the cash is spent on direct mail or digital the ads, to the time cash the cash is is spent on direct m direct mail and digital marketing vendors. Rather than paying up front, collected from commissions. While that collected cash is unavailable, there is less from . W agents will benefit fromcommissions extended payment terms of 45-90 days. flexibility to continue investing in growth. flexibility to continue investin “We stand behind our agents, we vouch for them, and in turn our

marketing are willing payment termstheyto What do the What fastest-growindo g and the fastest-growing andpartners When agents can fintoanceextendtheirexclusive working capi tal needs, them,” says Kelly. most successful mostcompanisuccessful es like companies like“By my canmarketing turnourtheirTruePay marketinfeature g dollarsandfasteraren’t , runextended moretied eventspayment every leveraging our Now that dollars up terms, there Iiscan a scenario agents events cangrow receive before Tesla, ApplTesla, e, and Amazon Apple, have and Amazonforhave months, year , drirun ve where moremore revenue, fastercommissions ,and and evenwrite expand ever have to come for marketing expenses,”explains morethey business.

It’s out-of-pocket that simple. in common?inTheycommon? all find afford- They all find affordi n to new markets.

However , for almost all agents, affordKelly. “Agents who leverage Signal Advisors for their working capital able waysABOUT toable fund theiways rWORKING workingto fundCAPITAL their working needs can scaleablat ea rate financithatngwasn’t for worki ng capitpossible.” al has been completely previously capital in order capital to grow rapiindlyorder . to grow rapidly. out of reach…until now.

THE Worki ng capiMYTH: talWorking is a busiA- financially capitalhealthy is a busi- Learn how to finally unlock your working not needa com-capital at SignalWorkingCapital.com Signal Advisors unlocks working ness’ lfinancial iquiness’ dity. Whenservices liquidity. a com- firm doesWhen pany ifinancing s inpany vesting in forgrowth, isworking investing it’s capital.in growth, it’s capital for financial professionalsB THE BIG MYTH THE reflectsO the uniqueU experienceT of Robert Smith,WO who commonTHE forcommon theTRUTH: cash goiWORKING ng outforAny to thefast-growing cash going out*This tostatementB ABOUT CAPITAL A was not compensated for thiscapi statement.

“As a venture talist forMYTH moreyourthanworking a decade, I have THE MYTH: Ain.financially healthy THE Learn how to finally unlock be fastercompany than be the faster cash comi n than g Thi s the cash coming in.

This benefit financial can services firmfrom does working not need financial capital attheSignalWorkingCapital.com Results use ofimportant the concepts notalguaranteed seen fifrom rst-hand how workindiscussed g capital areis forservi l kinds of w financing for working capital. financing for gap is calcapital legap d workifinancing, nisg capicalled tal, andnotheworking fastest-growi n g compani capital, e s i n the and the fastest-growing companies in the

by Signal Advisors. SA42211000 matter the size! fast-growi ng businesses,” says Jake Cohen, president and co-founder THE TRUTH: Any fast-growing THE world - bicompany gworld and small -can -benefi bigbenefit t fromand accessi small ng cheap capi- talbenefit to fund company from accessing cheapTRUT capital to fund from working can capital financing, no matter the size! capital gnal Advipractice sors. “Financial professi s arefinanc no different. Theymany need that gap. Withat despreadgap. adoptionWidespread of this practice has transformed adoption many ofof Sithis has onaltransformed to financetraditionally their working capital if they are plannihad ng to grow.

Signal is to industries, industries, but annuity agents havebuttraditannuity ionally never hadagents access to have never access

THE BIG MYTH

marketing partners are willing to extend exclusive payment terms to them,” says Kelly.

“By leveraging our TruePay feature and our extended payment terms, there is a scenario where agents can receive commissions before they ever have to come out-of-pocket for marketing expenses,”explains Kelly. “Agents who leverage Signal Advisors for their working capital needs can scale at a rate that wasn’t previously possible.”

*This statement reflects the unique experience of Robert Smith, who was not compensated for this statement.

Results from the use of the concepts discussed are not guaranteed

by Signal Advisors. SA42211000

26

InsuranceNewsNet Magazine » June 2022

WBR Payment Base of $294,000 after 5% compounded growth in the first year.*** HERE TODAY. HERE TOMORROW.

Start of Year 2 $16,170 Guaranteed Annual Payout (hypothetical assumes no other withdrawals are taken)

It’s Time to Make an IMPACT

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Take it a step further and pair it It’s about time you put the NWL Ben is 65 and decides to place $250,000 in an with the NWL® Income Outlook ImpactImpact 10® to work th its NWL 10® wi annuity.

Plus 5 NH for an additional 5% hard-working 7% first-year Roll-Up Rate bonus on premiums premium bonus* designed to received in the first year.** grow income.

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Day 1 First Year Premium

First Year Premium Bonus

NWL Income Outlook NH Plus 5 Bonus**

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$250,000

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Your clients wil continue to earn 5% interest on the Withdrawal Payment Base until lifetime Want more information Withdrawal Payments begin.*** about the NWL Impact 10®?

Connect with the NWL Sales Desk at 1-800-760-3434 or email at SalesDesk@nationalwesternlife.com

End of Year 1 WBR Payment Base of $294,000 after 5% compounded growth in the first year.***

FOR AGENT USE ONLY. This document has not been approved under the advertising laws of your state for dissemination to individual purchasers. NWL IMPACT 10® (01-1162-10 and state variations) is a flexible premium defer ed fixed indexed annuity is ued by National Western Life Insurance Company®, Austin, Texas. *Subject to a 10-year vesting schedule. **5% bonus is available on the Income Outlook Plus 5 Withdrawal Benefit Rider and is subject to a vesting schedule for annuitization or sur ender and is ful y vested for Guaranteed Lifetime Withdrawals or death benefit. ***Guaranteed for the first 10 years, unles restart is elected. Minimum Rollup rate is 1.00%. Rates are current as of March 27, 2020. The Income Outlook Plus 5 – Withdrawal Benefit Rider (01-3128-09 and state variations) is not available in all states. See rider for qualifications and requirements. Annuity Date is 22 years after the Policy Date and cannot be changed. Certain limitations and exclusions apply. Product not approved in all states. See policy for complete information and details.

Start of Year 2 $16,170 Guaranteed Annual Payout (hypothetical assumes no other withdrawals are taken)

It’s about time you put the NWL Impact 10® to work with its hard-working 7% first-year premium bonus* designed to grow income.

Take it a step further and pair it with the NWL® Income Outlook Plus 5 NH for an additional 5% Roll-Up Rate bonus on premiums received in the first year.**

Your clients will continue to earn 5% interest on the Withdrawal Payment Base until lifetime Withdrawal Payments begin.***

FOR AGENT USE ONLY. This document has not been approved under the advertising laws of your state for dissemination to individual purchasers. NWL IMPACT 10® (01-1162-10 and state variations) is a flexible premium deferred fixed indexed annuity issued by National Western Life Insurance Company®, Austin, Texas. *Subject to a 10-year vesting schedule. **5% bonus is available on the Income Outlook Plus 5 Withdrawal Benefit Rider and is subject to a vesting schedule for annuitization or surrender and is fully vested for Guaranteed Lifetime Withdrawals or death benefit. ***Guaranteed for the first 10 years, unless restart is elected. Minimum Rollup rate is 1.00%. Rates are current as of March 27, 2020. The Income Outlook Plus 5 – Withdrawal Benefit Rider (01-3128-09 and state variations) is not available in all states. See rider for qualifications and requirements. Annuity Date is 22 years after the Policy Date and cannot be changed. Certain limitations and exclusions apply. Product not approved in all states. See policy for complete information and details.

SAT-1719 SAT-1719

Ameritas leaders are industry leaders

Kim G. Allen, LUTCF United Wealth Advisors Group Watertown, NY

Stephen D. Andersen, RHU

inSOURCE Financial Advisors Lincoln, NE

Zachary H. Blume

Peter C. Browne, LUTCF

Stephen L. Bruneau, CLU, CFP

Price/Raffel LA Los Angeles, CA

DFG - PRB New York, NY

Boston 128 Companies Weston, MA

Keith M. Gillies, CLU, CFP, ChFC David R. Guttery, RFC, CAM, RFS

Kathyrn A. Frank

Mark E. Friese, CMFC

Innovative Premier Financial Services Houston, TX

Friese Financial Advocates Canvas Financial Libertyville, IL

United Wealth Advisors Group La Place, LA

Brett A. Moldenhauer

Franklin R. Mooney,

Merle D. Miller, RFC

Frank G. Heitker, CLU

Keystone Financial Group Trussville, AL

Premier Planning Group Cincinnati, OH

William C. Moore, CFP

Kevin P. Nicholson

Midwest Financial Solutions Iowa City, IA

Moldenhauer & Associates Orchard Park, NY

Arnold J. Price

Stuart J. Raffel, CLU, CPC, RFC

Amber D. Stitt

Brian P. Walsh, CLU, ChFC, RFC

Brian P. Walsh, Jr

Price/Raffel LA Los Angeles, CA

Price/Raffel LA Los Angeles, CA

Southeast Financial Services Cave Creek, AZ

Walsh & Nicholson Financial Group Wayne, PA

Walsh & Nicholson Financial Group Wayne, PA

LUTCF, MRFC, LACP

Insurance Services Inc. Peoria, IL

W.C. Moore Financial Services Walsh & Nicholson Financial Group Wayne, PA Centreville, VA

Any agency referenced is not an affiliate of Ameritas or of any of its affiliates. © 2022 Ameritas Mutual Holding Company DST 1364 5-22

2022 MDRT Top of the Table Ameritas salutes our valued field associates who have attained the highest levels of MDRT membership.

Mark A. Cecil, CFP

Samson Chan

James R. Christensen Jr.

United Wealth Advisors Group Bethesda, MD

National Wealth Group San Ramon, CA

inSOURCE Financial Advisors LaVista, NE

Frank S. Hennessey, ChFC, LUTCF

Kyle J. Christensen, CFP

Angelo E. Cilia, CLU, ChFC

Unique Advantage San Antonio, TX

CF Advisors Group Pittsburgh, PA

Premier Planning Group Phoenixville, PA

Josh A. Jalinski

John C. Kenan

Frank C. Kinter, CLU, CHFC

Curtis May

Jalinski Advisory Group Toms River, NJ

Southeast Financial Services Greensboro, NC

WPA Pittsburgh Financial Center Indiana, PA

Practical Wealth Advisor Lansdowne, PA

Mitchell W. Ostrove, CLU, ChFC

Joseph S. Pantozzi, CLU, ChFC

Christopher M. Pirtle, LUTCF

Michael C. Polin

Ronald G. Pray, CLU, ChFC

The Ostrove Group White Plains, NY

Alpha Omega Wealth Las Vegas, NV

Peake Financial Silver Spring, MD

Premier Planning Group Phoenixville, PA

Ronald G. Pray Company Gilroy, CA

David B. Wentz, J.D., LUTCF

Michael R. Wilcox

Tax Favored Benefits Overland Park, KS

Wilcox Financial/ Wilcox Sports Management Toledo, OH

Ameritas® and the bison design are registered service marks of Ameritas Life Insurance Corp. Fulfilling life® is a registered service mark of affiliate Ameritas Holding Company.

2022 MDRT Court of the Table

Justin R. Craft, RFC

David J. Fazzini, LUTCF

Lindsay N. Haas

Dominick F. Impastato, Jr., LUTCF

Nowlin and Associates Homewood, AL

Premier Planning Group Phoenixville, PA

Hoffmann Financial New Braunfels, TX

Acacia Financial Group Metairie, LA

Dominick Luongo

David A. McBride

David E. McClure

Timothy J. Moran, LUTCF

Luongo & Associates Hauppauge, NY

Sovereign Financial Group Midvale, UT

Koehler Financial Group Las Vegas, NV

UCL Financial/United Wealth Advisors Group Memphis, TN

Daniel J. Scholz, CLU, ChFC

Vance S. Wentz

John E. Worrel, LUTCF

Ameritas Financial Center - CFS Omaha, NE

Tax Favored Benefits Overland Park, KS

Acacia Financial Group Matairie, LA

This information is provided by Ameritas®, which is a marketing name for subsidiaries of Ameritas Mutual Holding Company, including, but not limited to, Ameritas Life Insurance Corp. in Lincoln, Nebraska and Ameritas Life Insurance Corp. of New York (licensed in New York) in New York, New York. Each company is solely responsible for its own financial condition and contractual obligations. For more information about Ameritas®, visit ameritas.com.

Any agency referenced is not an affiliate of Ameritas or of any of its affiliates. DST 1423 5-22

2022 MDRT Qualifiers Ann Baker Ronn, LUTCF, The AFP Group C. Robert Brown, CLU, LUTCF, UCL Financial Group Richard T. Brunsman, CLU, ChFC, RT Brunsman Insurance & Investements Anthony G. Butz, LUTCF, Premier Planning Group – Cincinnati John Elias Calles, J.D., CLU, ChFC, National Wealth Group Jenning Chen, Capstone Financial Calvin Currinder, CLU, Carillon Group Scott C. Hanna, Westpoint Wealth Management Edward H. Harrell, CLU, Harrell-Virginia Beach Carroll U. Hoffmann, Hoffmann Financial Tobin C. Hoffmann, LUTCF, Hoffmann Financial Bryan L. Holen, inSOURCE Financial Advisors Jennifer L. Larabee, Ameritas Financial Center – CFS Valerie Laroque, Alpha Omega Wealth Scott A. Leavitt, Gem State Financial Group Ryan S. Lim, EMP Financial Network Charles E. Nowlin, CLU, ChFC, Nowlin and Associates Tyler J. Petersen, Sovereign Financial Group Stanley B. Plocharczyk, CLU, ChFC, Plocharczyk & Associates Douglas A. Thompson, CLU, Executive Benefits John B. Tickle, Houston Agency Anthony Tringale, CLU, DC Metro Agency Randall H. Trost, LUTCF, inSOURCE Financial Advisors R. David Wentz, J.D., CLU, ChFC, Tax Favored Benefits David W. White, CLU, ChFC, National Wealth Group

Ameritas® and the bison design are registered service marks of Ameritas Life Insurance Corp. Fulfilling life® is a registered service mark of affiliate Ameritas Holding Company. © 2022 Ameritas Mutual Holding Company

LIFEWIRES

The Secret To Security?

Life Insurance!

The 2022 Insurance Barometer Survey is out and showed the

relationship between financial security and owning life insurance.

Two-thirds (68%) of life insurance owners report feeling financially secure, compared with 47% of non-owners. Those who feel most secure are people who have life insurance both through the workplace and through individual coverage (78%).

Despite the feelings of security that life insurance ownership brings, the need gap for life insurance — what people have versus what they say they need — is at an all-time high (18 points), more than double what it was 12 years ago. For the sixth consecutive year, the percentage of uninsured women has increased. Just 46% of women report owning life insurance, compared with 53% of men. However, a greater proportion of women than men recognize they need (or need more) coverage (44% versus 38%).

More than one-third of uninsured women (36%) acknowledge their need for coverage and say they plan to buy life insurance in the next year.

HISTORIC INVESTMENT PLANNED TO AID COMMUNITIES OF COLOR

Sustainable, affordable housing will be the focus of a historic investment partnership by the life insurance industry. The American Council of Life Insurers will form a nonprofit investment partnership to exponentially expand the industry’s capability to help close the racial wealth gap and drive upward mobility in communities of color.

The nonprofit investment partnership will support community development with a focus on sustainable, affordable housing. The partnership stemmed from ACLI’s Economic Empowerment and Racial Equity initiative, launched in 2020.

The 36 founding partners of the initiative represent a cross section of the life insurance industry.

DID YOU

KNOW

?

32

NEARLY HALF WANT TO TALK TO A LIVE PERSON

When it comes to contacting an insurance provider, nearly half of consumers (49%) prefer speaking with a live person. That’s according to First Orion’s 2022 Insurance Survey Report.

Contact via email/messaging apps ranked second with 29%, and SMS/text came in third at 22%. When asked about their insurance provider contacting them, phone calls from providers outpaced all other methods of communication at 42%.

There can be consequences for not communicating in person, the survey showed. More than three in four respondents (76%) reported missing a call from their insurance provider because they didn’t recognize the number calling or it was not properly identified as a call from their insurance provider. The survey results indicate that missing these calls had a “moderate to big impact” on nearly 60% of respondents.

QUOTABLE While new policy growth jumped last year to the highest levels since 1983, there is still a lot that our industry can do to ensure that families are properly protected.

— David Levenson, president and CEO of LIMRA and LOMA

PRUDENTIAL’S BIG TECH BET TURNS SOUR

In late 2019, Prudential paid $2.3 billion for Assurance IQ, a data science startup that promised to modernize life insurance selling. Earlier this year, Prudential wrote down its investment in Assurance by nearly half, The Wall Street Journal reported. The deal for Assurance has badly missed its financial targets and left Prudential facing questions from regulators, the Journal said.

The goal for the Prudential-Assurance deal was for Prudential to use Assurance’s tech talent, algorithms and machine learning to sell large volumes of various types of insurance to middle-class households.

Assurance was supposed to hit about $1 billion in annual revenue last year but only earned $558 million.

“It clearly has underperformed our financial expectations in the near term, but Andy Sullivan this is a strategic purExecutive Vice President and Head chase that I would say of U.S. Businesses at we need to evaluate Prudential over the next five to 10 years,” said Andy Sullivan, who heads Prudential’s U.S. businesses. “We wish we would have paid less.”

Mutual of America entered into an agreement to acquire Landmark Life.

InsuranceNewsNet Magazine » June 2022

Source: Mutual of America

The Spectrum Financial Group ascended to the top of Kansas City Life Insurance Company by winning the Agency Building Award (ABA) for 2021. The agency also achieved an ABA Honorable Mention in 2010. Pictured: General Agent Dennis Parrish (right) and President, CEO and Chairman of the Board Phil Bixby.

2021 Agency Building Award winner The Agency Building Award is Kansas City Life Insurance Company’s most prestigious agency honor, bestowed only to agencies that embody the spirit of entrepreneurship, growth, and building for the future.

Life is better here.

SM

“I’ve been in the business for over 30 years, and I have never seen a Company like Kansas City Life that truly wants a partnership with their general agents. Kansas City Life really cares about our success and will do virtually anything to help.”

– General Agent Dennis Parrish, CLU The Spectrum Financial Group CONTACT DENNIS PARRISH, CLU

317 846 2100

The Spectrum Financial Group

9000 Keystone Crossing, Ste. 620 Indianapolis, IN 46240

LIFE

Inflation May Push Insurers To PE Investments, Survey Shows Insurers believe inflation will be around for two to five years, eventually tamed by rising interest rates.

I

By Steven A. Morelli

nsurers are expecting the reappearance over the next few years of two infamous villains, inflation and recession, according to Goldman Sachs’ annual global insurance survey.

Inflation was a clear leader in the top concerns race with 28% of insurance

companies globally citing it as the greatest macroeconomic risk to their portfolio for the first time in the 11 years that Goldman has conducted the survey. In fact, 91% of companies in the Americas (79% globally) expect inflation to be a risk this year.

After inflation, it was a tight race for the next three, with 20% citing U.S. monetary tightening, which goes hand in hand with an inflation response. The majority of respondents (87%) said they think the Federal Reserve will raise rates at least three times this year, with 36% in the Americas expecting more than four increases.

Credit and equity volatility are next on the roster of risks at 18%, with the fourth horseman, U.S. recession, closing in at 16%. Sixty-three percent of respondents said they believe an economic recession will hit the United States in the next two to three years, with Asian companies leading the pack with that prediction. On the plus side, the respondents did not expect recession to begin this year, said Michael Siegel, Global Head of Insurance Asset Management for Goldman Sachs Asset Management.

“You could see this year looks like clear sailing,” Siegel said during a media preview

Allocation To Private Assets Over the next 12 months, are you planning to increase, maintain or decrease your allocation to private assets?

Source: Goldman Sachs Insurance Asset Management’s Insurance Survey 2022

34

InsuranceNewsNet Magazine » June 2022

INFLATION MAY PUSH INSURERS TO PE INVESTMENTS, SURVEY SHOWS LIFE

Concerning Cryptocurrencies What is your company’s position in regard to cryptocurrencies?

“In the area of credit, the covenants tend to be better in the area of private equity,” Siegel said, noting that 70% of companies plan to increase their allocation to private assets. “It’s been shown over the last several decades that private equity returns exceed public equity returns. You give up liquidity, but the industry is awash in liquidity.”

ESG And Crypto

Source: Goldman Sachs Insurance Asset Management’s Insurance Survey 2022

of the report, “but planning for a recession down the road.”

Those concerns, particularly on inflation, are expected to accelerate the shift to private asset classes for returns, Siegel said, citing two broad trends in the race for returns.

“One is a continued movement from public assets to private assets. That would be public equity to private equity, that would be public fixed income to private fixed income in order to pick up the illiquidity premium,” Siegel said during a media preview. “And then within asset classes themselves a continued movement toward private equity, green or impact bonds, middle market corporate loans, which are floating rate assets, infrastructure, debt and equity, real estate equity, and US investment grade private placements.”

From Public To Private

One of the major factors pushing an investment shift is the expectation of an aggressive increase in the U.S. 10-year Treasury with 72% of respondents predicting that the bond will be at least 2% this year, putting older bonds at a disadvantage while improving terms for new note purchases.

“If we get a sharp, steep rise in rates, that will end up causing disruptions in markets,” Siegel said. “And volatility tends to be bad.”

Although the 10-year Treasury is the bedrock of insurance investing, it is not the winningest bet. In fact, government

and agency debt was listed as the poorest performer by 29% of respondents, with 65% saying it was one of the three worst performers.

By far, companies are looking to private equity to make some bank, with 32% of respondents expecting the asset class to deliver the highest returns this year, with 58% listing it in the top three.

“You see a little bit of a theme here,” Siegel said of the asset leaders, “equity, equity, equity, equity and commodities.”

Although it is second on the list, commodities lagged at 14%, with 34% listing it in their top three. But it is the first time commodities have been in the top three.

Its appearance at the top of the returns list might be an aberration because of supply chain issues and concerns about geopolitics and inflation, according to the report.

Even though companies respect the return for commodities at the moment, that does not necessarily mean they will be placing their bets there. Respondents indicate they have little appetite for the asset class this year, likely because of high historical volatility and capital inefficiency, according to the report.

The survey indicated money will accelerate the migration to private assets.

Money in investment-grade corporate bonds and government securities is moving to private credit and public equity investments moving to private equity, Siegel said.

Environmental, social and governmental considerations have been increasing for several years. In the Americas six years ago, 85% of the respondents said ESG was not an important investment consideration, with 15% saying it was one of several considerations. This year, 77% of companies said it’s one of several and 15% said it was not a consideration.

“I suspect next year that this graph will just continue to look the same way, increasing in importance,” Siegel said.

ESG is already more important in other regions, with 37% of European companies saying it’s a primary consideration, and only 2% saying it’s not a consideration at all. In Asia, 16% said it is primary, 84% said it is one of several, and no one said it was not a consideration.

This is the first time the survey asked about cryptocurrency.

“We did this because every time we meet with companies, they ask us about cryptocurrencies,” Siegel said.

Although the survey found that 94% of companies were not invested or planning to invest in crypto, Siegel was surprised because 2% of the companies were invested in crypto and 4% were considering it.

“In our dialogues with the companies that are invested or considering, their primary motivation is to understand the instrument, to understand the market, and in particular to be prepared if it becomes a more dominant market,” Siegel said. “And maybe at some point premiums are denominated in crypto.”

Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at stevenamorelli@gmail.com.

June 2022 » InsuranceNewsNet Magazine

35

ANNUITYWIRES

QUOTABLE

Fixed Annuity Sales Take Off In First Quarter

Fixed annuities captured buyers’ attention early in 2022, with rising interest rates fueling a product sales shift.

Total fixed annuity sales were $35.2 billion, up 14% over first quarter 2021. Doubledigit growth for fixed indexed annuities and fixed-rate deferred annuities drove the overall fixed annuity sales to pre-pandemic levels.

Fixed indexed annuity sales were $16.3 billion, 21% higher than prior year. Fixed-rate deferred annuity sales increased 10% in the first quarter, year over year to $16 billion.

Total U.S. annuity sales increased 4% to $63.6 billion, according to preliminary results from the Secure Retirement Institute U.S. Individual Annuity Sales Survey.

Traditional variable annuity sales were $19.1 billion in the first quarter, down 8% year over year. Registered index-linked annuity sales were $9.3 billion. While this is 2% higher than first quarter 2021, it reflects a 10% drop from prior quarter.

WISCONSIN THE LATEST STATE TO ADOPT NEW ANNUITY SALES REGS

FORMER CALIFORNIA AGENT ALLEGEDLY STEALS $48,000

Former insurance agent Alan Douglas Armstrong, 56, of Lake Forest, Calif., was arraigned recently on five felony counts of theft from an elder. This comes after Armstrong allegedly acted as a financial advisor and licensed insurance agent to steal over $47,950 from elderly clients.

The California Department of Insurance began an investigation after being contacted by a family member of one of Armstrong’s clients when they learned their elderly parents had withdrawn cash on 12 separate occasions from several annuities to personally loan Armstrong more than $47,950.

The investigation also found Armstrong convinced his clients to withdraw funds from one annuity and then months later purchase a new annuity, hiding that the source of funds was from a terminated annuity, resulting in his clients incurring more than $24,000 in surrender charges.

Wisconsin became the 23rd state to adopt best-interest annuity sales rules favored by the industry.

In February 2020, the National Association of Insurance Commissioners adopted a model law 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 model in the months that followed. Activity began to pick up in late 2021 and has continued in 2022.

Supporters hope to finish the year with a strong majority of states having the rules in place.

“Unlike a fiduciary-only approach that limits choices for consumers, the bill signed into law today offers strong protections while making sure savers, particularly financially vulnerable middle-income Americans, can access information about options for

By 2060, total life expectancy in the U.S. KNOW is projected to reach an all-time high of 85.6 years.

DID YOU

?

36

InsuranceNewsNet Magazine » June 2022

Source: U.S. Census Bureau

Rising interest rates and increased market volatility shifted the product mix this quarter with fixed annuity products driving the overall growth.

— Todd Giesing, assistant vice president, Secure Retirement Income Annuity Research

long-term security throughout retirement,” said National Association of Insurance and Financial Advisors Wisconsin Grassroots Chair Laura P. DeGolier.

PRIVATE EQUITY INTEREST IN LIFE/ ANNUITY INSURERS EXPECTED TO CONTINUE

Private equity firms will continue to hunt out life/annuity company acquisitions despite growing regulator concerns, according to experts.

The reasons are obvious, said Rosemarie Mirabella, director, rating analytics, for AM Best Research: There’s plenty of Rosemarie money to be made.

Mirabella Private equity Director for AM Best firms are seeing a nice return on insurance investments, Mirabella noted, and are nicely positioned to take advantage of the gradual uptick in interest rates expected this year and next.

Private equity firms have helped large legacy companies by buying their closed blocks of business, such as Principal Financial selling its fixed annuity and universal life business to the investor Sixth Street in a recent $25 billion deal.

The main benefit for PE firms is the capital that it can invest more freely without the oversight and complications that public companies endure. Even without pushing the investment envelope, the blocks of business come with a decent spread between revenue and cost, said McKinsey in a recent article, “Why Private Equity Sees Life and Annuities as an Enticing Form of Permanent Capital.”

Help Clients Build Toward the Retirement They’ve Imagined

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1

Withdrawals may be subject to withdrawal charges.

This communication refers to Brighthouse Shield® Level Select 6-Year Annuity, Brighthouse Shield® Level Select 6-Year Annuity v.3, Brighthouse Shield® Level Select 3-Year Annuity, Brighthouse Shield® Level Select Advisory Annuity, and Brighthouse Shield® Level 10 Annuity, collectively referred to as “Shield® Level annuities” or “Shield® annuities.” These products are index-linked annuities issued by, and product guarantees are solely the responsibility of, Brighthouse Life Insurance Company, Charlotte, NC 28277, on Policy Form L-22494 (09/12)-AV and, for products issued in New York, by Brighthouse Life Insurance Company of NY, New York, NY 10017, on Policy Form ML-22494 (09/12) (“Brighthouse Financial”). Shield Level annuities are distributed by Brighthouse Securities, LLC (member FINRA). All are Brighthouse Financial affiliated companies. Shield Level annuities have charges, termination provisions, and terms for keeping them in force. Please contact your financial professional for complete details. Product availability and features may vary by state or firm.

Shield Level annuities are registered with the SEC. Before you invest, you should read the prospectus in the registration statement and other documents the issuing company has filed for more complete information about the company and the product. You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov. You may also request a prospectus from your financial professional or directly from Brighthouse Financial at (888) 243-1932 or brighthousefinancial.com.

• Not a Deposit • Not FDIC Insured • Not Insured by Any Federal Government Agency • Not Guaranteed by Any Bank or Credit Union • May Lose Value 2108 BDVA1095005 3758414.1[09/16/2023]

ANNUITY

Annuities Provide Nourishment In An Income-Starved Environment Adding an annuity to a client’s retirement portfolio can increase retirement sustainability as well as provide a legacy.

By Susan Rupe

J

ust as food sustains the body throughout its lifetime, an annuity sustains a client’s savings throughout their retirement.

Just how important an income annuity is to the success of a retirement portfolio was the subject of a recent webinar by Tamiko Toland, director of retirement markets for CANNEX, and sponsored by the National Association for Fixed Annuities.

CANNEX looked at the use of annuity income incorporated into the fixed income allocation, and how that would affect the retirement portfolio sustainability. Among the findings: 38

InsuranceNewsNet Magazine » June 2022

» The annuity improves the sustainability of savings throughout retirement.

» Characterizing the annuity as part of

the fixed income portfolio can further benefit retirement outcomes, particularly when the portfolio allocation leans more toward the fixed income side.

» The annuity can increase retirement sustainability as well as legacy.

» Equity exposure contributes to both retirement sustainability and legacy.

These findings apply to any form of guaranteed lifetime income, Toland said, whether it comes from an income annuity or guaranteed lifetime withdrawal benefit.

The research looked at whether the retiree would run out of money over the course of retirement. In addition, the research

looked at legacy, or how much money would be left over when the retiree dies.

Three different asset allocations were explored in the study.

» Conservative: 30% equity/70% fixed » Balanced: 60% equity/40% fixed » Aggressive: 70% equity/30% fixed The researchers added annuity income in 5% increments starting at 0% and ending at 30%. Researchers looked at a scenario in which the annuity was separate from the remainder of the portfolio and a scenario in which the annuity was included as part of the fixed income allocation.

The percentage of annuity “based on the amount of money put into the annuity on the first day of retirement,” Toland said.

“And for the purpose of the study, we used

ANNUITIES PROVIDE NOURISHMENT IN AN INCOME-STARVED ENVIRONMENT ANNUITY that by shifting the annuity into the fixed income allocation, you’re able to fully allocate the rest of that portfolio into equities, as opposed to if it’s outside,” Toland said.

“Then it’s almost like doubling up on the fixed income component.”

Balanced

The balanced portfolio has twice the equity allocation of the conservative portfolio. As with the conservative portfolio, adding the SPIA as part of the fixed income allocation gives a noticeable improvement to the portfolio.

Aggressive

single premium immediate annuities with a 2% inflation adjustment.”

The scenario considers a 65-year-old with $1 million in retirement savings who seeks a starting retirement income of $50,000. The income increases by 2% annually to account for inflation. The SPIA income amount is based on an average of the top three rates available at the time from a SPIA with a 2% cost-of-living adjustment a company rated at least A++ from AM Best. The rate using a $100,000 premium payment was $410 a month or $4,920 a year.

Conservative

In this scenario, the conservative portfolio has the highest allocation to fixed income, but it also benefits the most from adding the SPIA. Meanwhile, the SPIA reduces the financial legacy because it dedicates some starting assets to the lifetime income stream with no death benefit.

“One of the things that I think is really important is the basic principle

Although treating the annuity as part of the fixed income allocation has a noticeable improvement on both the conservative and the balanced portfolios, it has little effect on the aggressive portfolio.

Overall, the findings support the idea that it makes sense to include guaranteed annuity income as part of the fixed income allocation of a retirement portfolio, Toland said.

One interesting note, she added, is that much of the effect of this approach shows up in the legacy component and not in the income sustainability component.

She said the findings consider the effect of the annuity purchase on both the strategy’s ability to provide the target income over a lifetime (retirement sustainability quotient, or RSQ) and the size of the legacy.

This is true when simply adding the annuity or counting the annuity as part of the fixed income allocation.

“What I really wanted to focus on is the idea that characterizing the annuity as part of the fixed income portfolio can further benefit outcomes, particularly when the portfolio allocation means towards more towards the fixed income side,” Toland said.

“A lot of good customers for annuities are people who are very conservative-leaning in their investments, and they don’t want to take a lot of chances. But this strategy of including the annuity as part of the fixed income allocation enables the client to be able to have a higher equity allocation. So I think that there’s a general understanding within the industry among people who really understand these products and understand the fundamental dynamics — that not having enough of an equity allocation in a retirement portfolio has its own risks and simply protecting assets alone is not the only thing to consider.

“But protecting assets does allow you to take that risk.

And this study is very helpful, I think, in demonstrating how much of an effect that can have in terms of improving outcomes, particularly when clients are conservative in their investments.”

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.

June 2022 » InsuranceNewsNet Magazine

39

HEALTH/BENEFITSWIRES

Health Ministry Leaves 10K Families On The Hook For Bills About 10,000 families have ended up with more than $50 million in unpaid medical

bills after their health sharing ministry shut down.

Sharity Ministries, formerly known as Trinity HealthShare, filed for bankruptcy in late 2021 and began the liquidation process. With so many outstanding claims against the ministry, it is unlikely that its members will receive the reimbursements they are owed.

Sharity Ministries operated as a nonprofit that offered an alternative to traditional health insurance. As a health care sharing ministry, members pay premiums and voluntarily agree to share their medical expenses in accordance with their Christian beliefs, according to the company’s previous website. Fifteen states and the District of Columbia have taken actions against Sharity.

HSAS CONTINUE TO TREND UPWARD

Proponents of health savings accounts say the vehicle could bridge the gap in health coverage, and an increasing number of Americans seem to agree. The Employee Benefit Research Institute has a database of 11 million HSAs, with assets totaling more than $32.9 billion as of the end of 2020.

EBRI noted an upward trend continuing over the past few years, with average HSA balances increasing once again — to $3,622. The average individual contribution decreased slightly from the alltime high observed in 2019, and employer contributions declined slightly as well.

EBRI found that account holders who live in disproportionately white or Asian ZIP codes, for instance, had higher average balances and higher average contributions than their counterparts in disproportionately Black or Hispanic ZIP codes. Also, male account holders made higher contributions and had higher balances, on average, than their female counterparts.

FUTURE OF SHORT-TERM HEALTH PLANS IN QUESTION

Democratic lawmakers and advocacy groups are trying to convince the Biden

administration to get rid of a Trump-era rule that expanded the duration of shortterm health plans.

A collection of more than 40 House Democrats wrote to Health and Human Services Secretary Xavier Becerra calling for the agency to pull the rule. The action comes after more than 20 advocacy groups wrote to Becerra back in January asking for the rule to be eliminated or modified.

The Trump administration finalized the regulation in 2018 for short-term limited-duration plans that can bypass requirements under the Affordable Care Act to cover preexisting conditions and essential health benefits.

The rule said that the 12-month plans can be renewed for up to 36 months.

At the time, HHS said the plans were necessary to give consumers options, as premiums on the ACA’s exchanges were too high. However, the insurance industry and consumer advocates charged that the plans offer skimpy coverage and can deceive consumers into believing they are getting more robust benefits.

QUOTABLE Agents and brokers want to help consumers, but they also have to keep their doors open. If they’re not earning commissions, they may not be able to help those consumers.

— Marcy Buckner, senior vice president for government affairs at the National Association of Health Underwriters

MORE STATES EYE LONG-TERM CARE TAX

Twelve states are currently considering a so-called long-term care tax in an attempt to address the skyrocketing need for care in the future.

California lawmakers passed CA AB 567, which established a task force in the California Department of Insurance to explore the feasibility of developing and implementing a statewide insurance program for longterm care services and support.

Alaska, Colorado, Hawaii, Oregon, Illinois, Michigan, Minnesota, New York, North Carolina and Utah are currently considering state-sponsored long-term care programs.

Although consumers may dislike the idea of additional taxes, this trend will help drive a much-needed conversation about the costs and responsibility for long-term care, financial experts say. The opportunity this provides is for working people and their financial or insurance advisors to plan and be proactive before legislation is passed.

DID YOU

KNOW More than 50 million people are enrolled either in a Medicare Advantage plan with prescription drug coverage or stand-alone Medicare Part D.

?

40

InsuranceNewsNet Magazine » June 2022

Source: Centers for Medicare and Medicaid Services

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10,000 persons per day age-in to Medicare. Most of them simply elect Part A and B and live their lives.

In recent years, 24 million seniors have chosen a Medicare Advantage option to deal with the payment gaps. Finally, a much smaller number have selected Medicare Supplement policies to afford them the most flexibility for their healthcare choices.

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HEALTH/BENEFITS

How Brokers Can Support Overtaxed HR Teams The wave of job switching presents brokers with an opportunity to educate their employer clients on benefit programs.

By Kim Buckey

A

mericans continue to switch jobs at near-record rates, subjecting employers to a level of turnover that few have ever experienced.

As a result, human resource teams that were already spread thin are juggling increased recruiting, onboarding and offboarding efforts and return-to-work planning. All of these leave little time for them to focus on more routine demands such as their benefits program.

Yet benefits are among an employer’s strongest tools in offsetting the challenges of recruiting and retention: the Society for Human Resource Management reports 36% of employees admit they are 42

InsuranceNewsNet Magazine » June 2022

looking to switch jobs for better benefits options. It’s critical for employers to make sure employees and prospects are aware of the plans and programs available to them and what role each can play in protecting the individual’s health and financial well-being.

If this sounds like a tall order for HR teams, the good news is that they don’t have to juggle these demands by

themselves. Brokers can help either directly or by connecting employers with the right resources to identify meaningful benefits options, communicate those options to the workforce, support employees as they use their benefits, and keep their employer client compliant with current regulations.

To pinpoint how employers can leverage brokers in their benefits programs,

IN THE PAST YEAR, MARKET FORCES HAVE LED BROKERS TO ADD PRODUCT AND SERVICE OFFERINGS BECAUSE OF ...

73 54

% Rising Health Care Costs % Competition From Other Brokers

56 51

% The Pandemic

% Increased Demand For Price Transparency

Source: DirectPath

HOW BROKERS CAN SUPPORT OVERTAXED HR TEAMS HEALTH/BENEFITS DirectPath surveyed health insurance brokers on what services they currently offer and which services they believe deliver the most business value. The findings illustrate how integral brokers are and will continue to be in helping employers develop financially effective benefits programs that support employees’ evolving needs.

Finding Benefits Reflective Of Employees’ Evolving Lifestyles

Employees’ new normal requires new coverage options. The pandemic has given employees a chance to reassess their needs, and they are looking for the same flexibility in their benefits that they want in choosing where they work. This means it’s time for employers to evaluate their benefits package to ensure they offer employees the benefits they need and want. Brokers can help employers determine which voluntary benefits to add to support employees’ evolving lifestyles.

Notably, brokers have witnessed an almost 60% increase in clients adding voluntary benefits in the past year. In the shadow of COVID-19, it makes sense that accident (78%), critical illness (73%) and hospital indemnity (60%) insurance were the most requested additions.

Workers also are looking for benefits beyond medical insurance. In 2021, brokers reported higher demand for pet insurance (28%) than for ID theft and legal protection (20% each), likely due to more employees adopting pets after their roles went remote. Making recommendations for carriers to supply this coverage is also a large part of brokers’ roles, with 55% sharing that they spend more than half their time recommending supplemental carriers to clients.

Of course, these benefits provide little value if employees don’t know how to use them or even that they exist.

Considering more than three-quarters of consumers either learn about health insurance terms and concepts from friends and family or are self-taught, employers should plan to educate — or reeducate —workers on how to best choose and use their benefits. To this end, employers also must provide timely communication materials as they add and update coverage options. Brokers are filling this gap for employers: 95% of brokers report moderate to high demand for help with

Top 3 Reasons US Executives THINK Workers Are Searching For New Jobs 1 Better benefits: 28% 2 Better career advancement opportunities: 28% 3 Discomfort in the workplace due to COVID-19: 26% Top 3 Reasons US Workers ARE Searching For Jobs 1 Better compensation: 53% 2 Better work-life balance: 42% 3 Better benefits: 36% benefits communications. In addition, most brokers (72%) offer a full range of communications services, including virtual presentations, in-person support and vendor recommendations.

Offering Clarity Amid Confusion And Expense

The current health care landscape can be confusing even for those in the industry, not to mention the average consumer.

Employees can quickly rack up unexpected medical expenses if they don’t select the right coverage or use their plans correctly. When employees overspend on care, employers overpay on coverage.

And, with pay increases not keeping pace with the rise in health care costs, it’s crucial that employers provide appropriate programs, tools and support for employees’ financial well-being. Considering that the Federal Reserve reports nearly 40% of American adults would not be able to cover a $400 emergency expense, these resources are more important than ever.

Employers rely heavily on their brokers for cost containment (89% of brokers report clients depend on them for this already). While brokers can help employers better understand where their money is going and suggest areas for cost savings, brokers can also help workers be financially smarter with their care selections.

DirectPath’s survey found that 86% of

Source: Society for Human Resource Management

brokers currently provide some sort of health care transparency and clinical advocacy services to help clients keep their health care costs down. With access to advocates who can help employees shop for care, resolve claims and billing questions, and find providers, employees can feel more confident they are getting the care they need at a reasonable price.

The pandemic is pushing HR teams to their limits, leaving them with reduced bandwidth to create, maintain and promote the benefits programs employees expect from their employers. Fortunately for brokers, this situation gives them a significant opportunity to support employers in creating plans that attract and retain top talent and in identifying partners to support that talent year-round.

Brokers are and will continue to be an invaluable resource to employees — and employers — in navigating the current health care landscape.

Kim Buckey is vice president of client services at DirectPath. She may be contacted at kim.buckey@innfeedback.com.

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Take advantage of our award-winning journalism, licensure and reprint options.

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June 2022 » InsuranceNewsNet Magazine

43

Financial facts and figures powered by AdvisorNews.com

Get Ready For A 66% Fear Inflation New Generation Of Will Hurt Retirement Ahh, retirement. Time to relax on the beach, fish or play golf every day, or re- Female Investors visit a long-neglected hobby. But more Americans fear inflation will punch a hole in that retirement dream.

A Voya survey revealed that 66% of Americans

INFLATION TAKES ITS TOLL ON RETIREMENT

Because of inflation, nearly half (43%) of individuals have had to tap into funds that they previously had set aside for retirement.

agree or strongly agree that they are worried about the impact of inflation on their ability to save enough for retirement .

What’s more, an even greater amount of individuals agree or strongly agree they are worried about the impact of inflation on their personal finances and their ability to maintain their current lifestyle (71%).

The survey found that three-quarters of both SOURCE: Voya millennials (73%) and Generation X (74%) agreed or strongly agreed that they are worried about the impact of inflation on their ability to save enough for retirement.

And more than half of millenials (57%), who now make up roughly onethird of the U.S. labor force, agree or strongly agree that, because of inflation, they will need to delay their planned retirement date. Meanwhile, just 0 0 110 10 10 110 1 55% of baby boomers and 62% of those in Generation Z agreed or strongly 0 110 10 110 1 :( agreed that they are worried about the impact of inflation on their ability to save for retirement.

Americans Say No To Robo

Many financial advisors are growing concerned about becoming obsolete amid the increasing role of robo-advisors, but American consumers do not appear ready to make the move. In fact, a new study from the Million Dollar Round Table reveals that 56% of Americans want their finances to be handled by a mix of people, robo-advisors and other technological tools.

This majority includes 54% of human-advisor clients, 50% of roboadvisor users and majorities of all age groups. Far from supplanting human advisors, robo-advisors may simply be the next supplementary tool, according to the survey.

Americans see several advantages of working with human advisors.

These include the opportunity to build trusting relationships (chosen by 66% of survey respondents), ease of communication (65%) and high levels of human interaction (49%).

Crypto Surging In Popularity With Black Investors

New and higher-risk investment options are becoming more popular with Black investors as unregulated assets on the crypto markets surge in popularity during the pandemic.

That’s according to a Charles Schwab survey.

The survey showed 25% of Black Americans currently own cryptocurrency, and among Black investors under 40, that figure jumps to 38%.

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InsuranceNewsNet Magazine » June 2022

The world has changed dramatically since the pandemic began, and according to new U.S. Bank research, so has the way women manage their money.

U.S. Bank first released its Women and Wealth Insights Study in March 2020, just as the pandemic began. While that survey showed that women were less confident and less engaged with managing money than men were, generally started

investing later than men did, and tended to associate negative emotions with financial planning, the most recent survey conducted in March 2022 demonstrates that many of these gaps are shrinking.

Women are more positive about managing their finances now: In 2020, women associated positive words like pride (35%), excitement (29%) and happiness (28%) and negative words like anxiety (33%), inadequacy (13%), fear (12%) and dread (9%) with financial planning. In the new survey, the number of women who associate positive words with their finances has jumped: pride (37%), excitement (34%) and happiness (31%).

WHAT INVESTORS FEAR ABOUT ROBO-ADVISORS

• 51% are concerned about personal or financial security breaches.

• 42% worry about minimal human interaction.

SOURCE: Million Dollar Round Table

This is compared with only 15% of white investors who own cryptocurrency, and 29% of white investors under 40.

Black investors are more than twice as likely to say cryptocurrency was their first investment (11% of Black investors compared with 4% of white investors), according to the study. Younger Black Americans are even more likely to first experience investing through this asset class. Nearly a quarter (23%) of Black investors under 40 first invested in the stock market through cryptocurrency.

May 2020 » InsuranceNewsNet Magazine

45

ADVISORNEWS

You Helped Your Clients Build A Budget — But What About Their Kids?

Empowering clients to have conversations about money with their children will generate greater client trust.

• Thomas Henske

P

art of our job as advisors is educating clients on good financial strategies, including helping them determine and maintain a budget. But who’s educating their kids?

Just as sure as budgeting is a key to financial success, it’s a topic that’s often avoided, even at the adult level. If you can find a way to help your clients sew the concept of budgeting into their kids’ brains, their children will grow up with a healthy attitude on the subject and will have a much better chance at achieving a secure financial future. Plus, by empowering your clients who are parents to have this beneficial conversation with their children, you’ll cultivate greater client trust, securing longer-term clients.

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InsuranceNewsNet Magazine » June 2022

Beginning The Conversation

Tweens (ages 8-12) are at the age where the concept of budgeting starts to make sense. Introducing them to your actual household budget is a crucial first step in helping them understand what money is and what money does. It’s a natural next step to then move to establishing their own micro budgets.

Before introducing the budget conversations, your client will want to first

explain the differences between income and expenses. In a child’s world, income can be described as any form of inflow from allowance or part-time jobs such as caddying, mowing the lawn or babysitting.

On the other hand, expenses are outflows for goods and services such as toys, books, clothes and food.

With that foundation, your client is now ready to define budgeting and why it’s important. Parents can start with the

Introducing kids to your actual household budget is a crucial first step in helping them understand what money is and what money does.

YOU HELPED YOUR CLIENTS BUILD A BUDGET — BUT WHAT ABOUT THEIR KIDS? ADVISORNEWS

simple explanation of: “Budgeting is the way our family decides what our financial priorities are, and it helps us spend in order of greatest importance based on our financial situation. Done right, this allocation of money gives us the ability to spend without guilt, assuming we’ve included adequate saving as part of our plan.”

From there, they’ll be able to break down how budgeting helps their family determine financial priorities (such as food or school tuition) while still allowing them to spend money on nonnecessities (such as toys or a family vacation). Sharing which items are financial priorities — such as food, clothes and shelter — compared with nonnecessities is helpful too.

Establishing The Budget

After your client has defined what a budget is, they can then take the child through the steps of building their own budget. Having the child make a personalized budget allows them to think through all the expenses that are attributable to only them and go through their own process. Here is an easy process for parents to kick the conversation off with their children: 1. Brainstorm the categories of outflows. First, advise your client to ask the child to brainstorm a list of all their personal expenses. This may include clothes, food, tutoring and sports. Let the child struggle through the list over a few days and try to add to the initial brainstormed list over the course of a week. Ask the child to assign costs to each expense. They might struggle with knowing how much things cost, so you can guide them along the way.

2. Finalize the category list. Next, your client can help the child think through the categories that might have been left out.

Help them get familiar with everything that is spent on them or that they spend.

3. Tweak and formalize the revised budget. This is typically when your client should introduce the idea of needs versus wants, otherwise known as the distinction between fixed versus discretionary expenses. A fun way to introduce this idea naturally is via the needs-versus-wants game during car trips. Play the game by identifying stores, billboards, or commercial trucks that you pass that represent

Kids Have Pull Over The Family Purse Strings 1. Teens ages 13–15 drive more than $61B in annual household spending.

2. 52% of U.S. parents of children between the ages of 8 and 23 said their children influence the brands they consider when shopping.

3. 84% of U.S. children helped parents choose online groceries during the COVID-19 lockdown.

4. 97% of U.S. parents follow their children’s holiday wish list, with 1 in 5 parents saying they will buy every single item on the list.

5. 72% of U.S. parents said they typically involve their children in every step of the purchasing journey.

Source: SuperAwesome.com, National Retail Federation

different companies that distribute all sorts of things: restaurant foods, plumbing supplies, accounting services, etc. For example, the parent identifies a supermarket and asks, “Is food a need or a want?”

Eventually you’ll start a debate when you see a McDonald’s, which serves food, which is a need — but do you “need” to eat out at a restaurant?

The Bottom Line

When children are participating in spending and budgeting, it gives them an understanding of how much items cost, promotes ownership, and enhances gratitude for purchases made by them and members of their family. By helping your client introduce the idea of a budget to their children and having them establish their own personal budget, they can begin shaping a brighter financial future for their kids.

In addition, clients will appreciate

the value you place on one of the most important parts of their life — their kids. Empowering your clients with child-friendly strategies serves to deepen their trust in you as an advisor and affirm the interest you give their lives beyond their finances.

Tom Henske, CFP, ChFC, CLU, CLTC, CFS, CTS, CES, is a 17-year Million Dollar Round Table member with two Court of the Table qualifications. He is an advisor at Fifth Avenue Financial and The Affluent Insurance Advisor and develops programs to help parents foster responsible financial habits in children. Tom may be contacted at tom.henske@innfeedback.com.

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June 2022 » InsuranceNewsNet Magazine

47

MULTILINEWIRES

Pedestrian Deaths Up By 17% In 2021

Rising Trend In Pedestrian Deaths

There were 6,516 pedestrian deaths

Reckless drivers, a crumbling infrastrucin 2020, up from 4,457 in 2011. ture and fewer police on patrol added up to a deadly year for pedestrians in the first half of 2021. The Governors Highway Safety Association reported a SOURCE: Governors Highway Safety Association 17% increase in the number of pedestrians killed in motor vehicle accidents in the first six months of 2021.

In the first six months of 2021, drivers struck and killed 3,441 people, up from 2,934 in the same period in 2020. This is part of a rising trend in pedestrian fatalities. There were 6,516 pedestrian deaths in 2020, up from 4,457 in 2011, the safety association reported.

What’s behind the rise in pedestrian fatalities? Fewer police on patrol, the association reported. When there are fewer law enforcement officials on the streets, the rate of people driving dangerously increases, said Jonathan Adkins, the association’s executive director. Better infrastructure, including newer roads and highways, would also prevent more pedestrian deaths, he said.

WHEN A BITE IS WORSE THAN A BARK

There are nearly 85 million dogs living in U.S. households.

About 4.5 million people, most of them children, are bitten by SOURCE: American Pet Products Association dogs each year.

American Veterinary Medical Association

DOGS TAKE A $900M BITE OUT OF INSURANCE

A dog may be a man’s best friend, but a dog bite can be an insurer’s worst enemy. Dog bites and other dog-related injuries cost homeowners insurers $881 million in 2021 and accounted for more than one-third of all homeowners liability claim dollars paid out last year. That’s according to an analysis by the Insurance Information Institute and State Farm.

The number of dog bite claims nationwide increased to 17,989 from 17,567 in 2020 — a 2.2% increase. The average cost per claim decreased 1.1% from 2020-2021 — to $49,025 in 2021 from $50,245 in 2020.

However, the report said the cost per claim increased by 39% over the past 10 years.

California led the nation in the number of dog-related claims, followed by Florida and Texas.

4TH LOUISIANA INSURER GOES BELLY-UP IN HURRICANE’S WAKE

Louisiana’s Department of Insurance took over Lighthouse Property Insurance in a court-ordered receivership, making it the fourth financially troubled insurer in that state to require rescue in recent months.

The carrier, also known as Lighthouse Excalibur Insurance, has approximately 30,000 policies and 16,000 Hurricane Ida-related claims. It covered 3.27% of the Louisiana’s homeowners insurance market.

The Louisiana Insurance Guaranty Fund, a state-sponsored safety net also known as LIGA, promises up to $500,000 in payments for unpaid claims and $10,000 for premium refunds for policyholders whose insurers go insolvent.

QUOTABLE Most policyholders probably won’t feel the burn of FEMA’s price hikes in Year One, but by Year Five or 10, the elevated cost of flood insurance could impact where Americans decide to buy and build homes.

— Sheharyar Bokhari, senior economist, Redfin

FLOOD INSURANCE PREMIUMS GOING UP FOR 3M

Nearly 3 million owners of single-family homes in the U. S. a re seeing their flood insurance prem iums rise as a result of the Federa l Emergency Management Agenc y overhauling the way it measures risk.

FEMA policyholders in Texas, Florida and Mississippi are especially hard-hit, with 90% of policyholders in those states experiencing a rate hike.

Nationwide, 81% of single-family home policyholders saw their flood insurance premiums rise, starting April 1.

The remaining 19% are seeing decreases.

Of the policyholders experiencing increases, most (88%) are seeing annual premiums rise by up to $120, while 9% are facing increases of $120 to $240, and 4% are seeing jumps of $240 or more.

The Louisiana House of Representatives introduced a bill KNOW to require insurers to cover a policyholder’s short-term living expenses in the event of a voluntary evacuation.

DID YOU

?

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InsuranceNewsNet Magazine » June 2022

Source: The Advocate (Baton Rouge, La.)

High Limit Disability Individuals annually earning in excess of $500,000 need disability benefits that can keep pace with their affluent lifestyle - they need High Limit Disability. The benefits of a recently-insured surgeon, making $1,100,000 consisted of: ⌂ $10,000/month Group LTD ⌂ $15,000/month Individual DI ⌂ $32,000/month High Limit DI Call (800) 345-8816 or visit www.piu.org for more information.

Occupation: Surgeon Age: 51 Income: $1,100,000 Total Benefit: $57,000/month

MULTILINE

Wedding Events Bring Increased Risk For Agribusinesses Barns and farms are becoming popular wedding and event destinations, but owners must cover their risks before opening their doors.

Farm Weddings Take The Cake 18% of 2021 weddings were held at farm/barn venues, ranking behind banquet halls (20%) as the most popular venue type, and followed by historical buildings/homes (12%).

By David Espinoza

O

n-the-farm weddings have grown in popularity in recent years as couples seek rustic, unique places to tie the knot. Recognizing an opportunity to add a dependable secondary revenue stream in what can be a volatile industry, many farm, ranch and winery owners are hoping to cash in on the trend.

According to wedding website The Knot, barns and farms were the second most popular wedding venue in 2021, behind banquet halls. For owners of such venues, that can mean between $6,000 and $12,000 on average per wedding in rental fees alone.

Yet there are unique considerations owners must take into account before opening the barn doors to a wedding.

In addition to costly upgrades to property — guests typically expect modern restrooms, for example — getting the proper permits and ensuring everything 50

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is up to code takes time and money.

Hosting special events also requires insurance coverage that isn’t included in most agribusiness policies. The current hard market for property/casualty insurance makes it even more critical to think through these considerations before launching into a new business venture.

Wedding Receptions And Live Events Pose Additional Risks

When deciding whether to host special events, property owners must first assess the potential impact on their primary business — whether it is farming, ranching or winemaking. Is the space where the event will take place located far enough from crops to prevent damage? Can guests be kept away from animals and farming equipment, or is access to livestock and tractors part of the attraction? Will hosting special events inhibit primary revenue streams, such as wine tastings or harvesting?

SOURCE: The Knot

Venue owners also must evaluate the potential impact on the community. How will hosting events affect neighbors’ access to their own property? Traffic, parking and noise are important issues that must be addressed up front.

Finally, owners must decide whether they can handle the new line of business.

How will they staff events? Who will run the day-to-day operations?

Answering these questions will help determine the viability of expanding into the special-event space, and will help address some of the unique liability issues that farmers and other landowners face when hosting special events.

The rise in the number of agribusinesses hosting weddings and other special events has brought about a commensurate increase in the number of lawsuits against property owners hosting such events. At the very least, agribusiness owners must expand their P/C policies to include special-events coverage, including general

WEDDING EVENTS BRING INCREASED RISK FOR AGRIBUSINESSES MULTILINE liability, commercial umbrella, property, equipment and workers’ compensation.

This will protect owners in case a guest or employee is injured in a fall, suffers food poisoning or causes damage to property.

If alcohol is served, liquor liability coverage is a must to protect the business in the event of a lawsuit arising from bodily injury or property damage caused by an intoxicated guest.

In addition to obtaining insurance coverage, owners must make every effort to ensure safe conditions to keep guests in specified areas and eliminate potential risks. Insurance is only part of the solution to protect business owners from claims.

Risk mitigation is a vital component of any business strategy; policyholders with multiple exposures, poor risk management and significant losses will face higher costs and deductibles along with coverage restrictions.

Risk Management Measures And Methods Include: » Installing adequate lighting and signage. » Securing animals and equipment. » Using liability waivers. » Keeping a clean environment.

As noted in the University of Vermont white paper “How to Host Weddings on Your Farm,” venue owners should require clients and vendors to have $1 million in liability insurance coverage, which can cost as little as $150 for a one-day event.

Agribusiness P/C Outlook

Another white paper, Alera Group’s “Property and Casualty 2022 Market Outlook,” highlights the challenges agribusiness faces in the P/C market after being hit hard by the COVID-19 pandemic and a significant number of natural disasters in recent years. Property insurance pricing and availability depend in part on geography, with moderate rate increases for clients with minimal catastrophe exposures.

More buyers are being forced into the nonstandard market, particularly in catastrophe-prone areas such as California and Florida. Agribusiness owners with minimal catastrophe exposure, as well as those in states where multiple insurers want to write

What Farm Owners Need To Ask Themselves Before Taking The Plunge • Do you enjoy sharing your property with guests?

• What will be the cost of the physical modifications (roads, buildings, landscaping) associated with creating a safe, attractive atmosphere?

• Can you manage the additional business responsibilities associated with the wedding business (including marketing, employee management and client relations)?

• Are you willing to create the ideal experience for your clients?

SOURCE: University of Vermont

business, should see moderate improvement in pricing in the coming year.

Top concerns for the P/C market highlighted in the report include cybersecurity, labor shortages and employee lawsuits.

Cyberthreats are a growing risk and something all businesses must consider.

Advances in agriculture-related technology have increased the industry’s vulnerabilities, bringing a rise in cyberthreats.

While labor shortages are affecting virtually every industry, agribusinesses continue to be especially hard hit, with many younger American workers reluctant to perform manual labor and access to migrant workers limited by immigration restrictions. This has significant implications for insurance coverage, since labor shortages tend to decrease worker safety and increase employer liability.

In many instances, agribusiness owners are being forced to increase wages, enhance benefits and rely on inexperienced workers to maintain operations. Not all owners have the resources to increase wages and benefits, however, and that raises concerns over the potential for lawsuits from employment practices claims such as: » Wage and hour violations. » Wrongful terminations or furloughs. » Discrimination. » Harassment.

The Agribusiness-Insurance Partnership

It’s important for agribusinesses to keep their insurance agent or broker apprised of any changes to property or business operations and work together to keep underwriters up to date about conditions that could lead to more favorable coverage. Having a solid risk management plan in place and thorough documentation, including claims history, will help inform and influence underwriters during the review process. Almost no detail is too small.

For farms, ranches and wineries that expand into special events, it’s important to inform their agent or broker about venue details such as where on the property events will take place, how many people will attend, whether alcohol will be served, whether outside vendors will be used and, if so, what services they will provide.

Hosting special events can be a lucrative source of supplementary income. It’s guaranteed to add a significant amount of work — on the host business’s insurance coverage, as well as on the events themselves.

David Espinoza is vice president and risk advisor, Barkley Risk Management & Insurance. David may be contacted at david. espinoza@innfeedback.com.

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June 2022 » InsuranceNewsNet Magazine

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BUSINESS

When you think about ways to connect with younger generations, it may be helpful to consider these tips.

Marketing: When You’ve Tried It All And Nothing Works!

Commit to a strategy and be consistent in order to be successful in marketing to new clients.

By Julie Genjac

F

inancial professionals often feel as though nothing works when it pertains to a seamless marketing strategy that attracts new clients to their practice. I have heard “I’ve tried it all and nothing really works!” more times than I can count.

My team at Hartford Funds and I recently conducted a study that examines how investors of different genders and generations want to receive financial advice and marketing materials. We understand that the next generation of clients has more options than ever when it comes to financial advice, so it is important for financial professionals to have a buttoned-up approach.

To create an organized marketing plan that will attract younger generations of clients, consider the following tips.

Commit To A Strategy

This is a phrase that I repeat multiple times per day. I am a true believer that financial professionals can work to enhance their email marketing and social 52

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media plans by truly focusing on and committing to one strategy.

I recently had a conversation with a team whose members felt as though nothing was working with the plans they put into place, so I asked them to describe their strategy to me. It was a little bit of this, a touch of that, a pause, then a restart. This was then

repeated implementation is crucial to ultimate success.

For example, when you think about ways to connect with younger generations, it may be helpful to consider some of our findings. We found that 42% of younger consumers are attracted to lifestyleoriented materials that highlight how

Consistency is key. Apply this same thinking to your business plans.

Consistent, repeated implementation is crucial to ultimate success. followed by some talk of using LinkedIn, some website and some email. What their strategy didn’t have was consistency.

Here’s the analogy I used with this team: If you set out to lose 10 pounds and you work out for one day, don’t work out the next day, do half a workout on the third, binge on cake on the fourth, and then go back to a light workout on the fifth (and repeat), you will be frustrated at the end of the month when you either haven’t lost a pound or have actually gained one or two.

Consistency is key. Apply this same thinking to your business plans. Consistent,

sound investment advice and decisions can support their lifestyle goals. This compares to 25% of older consumers.

Could a member of your team focus on engagement activities related to life, balance or leisure to attract young adults?

In addition, our study found that design is also important. Content that is colorful and engaging resonates with 28% of younger consumers, compared to only 10% of those from older generations.

Although these details are just that — details — they ultimately can impact your marketing strategy’s reception.

MARKETING: WHEN YOU’VE TRIED IT ALL AND NOTHING WORKS!

BUSINESS

Younger and older generations have both similarities and differences in the types of content that drive them to engage with a financial professional.

Younger Older Generations

Generations

Easy to understand

53%

52%

Lifestyle-oriented

42%

25%

Focused on how a plan caters to individual needs

40%

36%

Product- and performance-oriented

29%

28%

Information-heavy

29%

23%

Design-oriented (colorful and engaging)

28%

10%

Relationship-oriented

20%

15%

Source: Hartford Funds survey

Your Strategy Must Have Only One Owner

Now that you have your plan in place, who will take the lead? Do you have a teammate in mind to follow up on the next task? Do you have a main point of contact? These are important questions to discuss with your team before taking any next steps.

Assign one person on the team who is responsible and held accountable, even if it’s you. I always say the most dangerous word on a team is “we” because it is nearly impossible to hold “we” accountable: “We should do this.” “We should do that.”

When those actions aren’t executed, it is easy to hide behind “we didn’t get it done.”

In order to take something from a great idea on paper to a great idea in execution, designate one person on your team to own it, and make the rest of the team aware of who is overseeing it. This way, the point person is the central repository for ideas, setting the strategy and executing, and each member of the team can articulate the plan.

I hear numerous success stories about how making this small change to the process has yielded results. It’s amazing how quickly something like marketing can be set aside when markets change, tax season arrives, client emails and phone calls increase, or any of the other peak times in a practice occur. Accountability and ownership are key elements of a successful strategy.

Be Patient With Your Strategy

Creating a seamless marketing plan takes time. We all are inundated with email messages, mail, phone calls, social media ads, etc. A name or a theme must be in front of people multiple times before it catches someone’s attention. And a haphazard, tryeverything-for-a-short-time approach will not capture the attention you want.

Commit to a certain period of time to execute your strategy. Will it be one quarter, six months, a year? Be sure to build a written plan, track the execution of activities and keep track of results. Be willing to adjust and be nimble, but don’t become frustrated if you don’t see overwhelming results immediately.

Use this time as a learning experience as well. For example, our study also showed that when it comes to receiving marketing or prospecting materials, consumers on both ends of the age spectrum rank email as their top choice (27% for younger generations vs. 32% for older generations).

But beyond that, the desired channels for receiving materials ranked differently for younger vs. older consumers.

Do you have a team member who is interested in learning more about using social media for business or website design?

If you’re looking to attract younger consumers, this may be the next step to take to achieve that goal. Giving yourself time to monitor results can help you better plan

and shift your focus (if needed) to better engage with younger clients.

Persistence, repetition and consistency are essential to your approach. Those teams that see results will tell you that they went through their process time and time again before seeing those results.

Had they given up early on in the process, they would have missed out on positive results in the longer term.

Committing, assigning ownership, and executing consistently for a period of time are the keys to marketing successes.

Tapping into specific ideas through survey results and your team’s unique values is a key ingredient.

Sit down with your team and discuss all the things you’ve tried over the years. Did an element of a plan work, or did it work so well that you stopped doing it? We all have those elements in our life — those habits or processes that fall off the radar over time, just because. Be honest with yourself, and determine what approach excites you and your team. Having true passion and energy behind your strategy will make a significant difference in your team’s ability to stick with the plan.

Julie Genjac is a registered representative of Hartford Funds Distributors. She may be contacted at julie. genjac@innfeedback.com.

June 2022 » InsuranceNewsNet Magazine

53

INSIGHTS

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

DI Coverage: Insuring The ‘Golden Goose’ Clients may not be aware that disability insurance is income protection insurance.

By Ann Baker Ronn

D

iscussing income protection insurance with clients isn’t always a main topic of conversation.

Many advisors don’t address disability income insurance with their clients. One common reason may be because clients often decline coverage; they never imagine something will happen to them, often not making income protection insurance a priority. However, according to the Social Security Administration, one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach normal retirement age.

When broaching the subject to clients, I explain the importance of income protection insurance by asking this question: “How long can you financially sustain yourself without a paycheck?” Clients often state they could survive one or two weeks without a paycheck. This exercise helps them begin to grasp the importance of this protection.

Whether you are explaining the best form of personal income coverage to a new client or advising on current coverage with a long-term client, I encourage you to be properly educated on the topic to better serve your clients and equip them for future financial success.

How To Address Income Protection Insurance With Clients

When addressing income protection insurance with clients, explain it as income replacement if they’re too sick or too hurt to work. Coverage takes about 90 days to kick in. A general reference for the amount of coverage needed to replace income is 60%-70% of their take-home pay.

If clients pay the premium after tax, benefits are received income tax free.

It’s helpful to mention to clients that this 54

InsuranceNewsNet Magazine » June 2022

form of income kicks in if they are unable to complete the day-to-day duties of their occupation due to serious illness or injury. Not to be confused with critical illness insurance, income protection insurance is disbursed in monthly payments, whereas critical illness insurance is received as a lump sum upon diagnosis of a specific illness. Critical illness insurance is not defined by job duties but instead triggered by a specific qualifying illness.

Leverage Visuals To Boost Understanding

Beyond explaining what income protection insurance is and why clients might need it, it’s also helpful to use visual aids. To help put this topic in perspective, I often share an idea I learned at an MDRT annual meeting, leveraging a goose and her golden egg.

I have a toy goose with a golden egg that I pull out to display to clients. Then I tell them, “You are a goose, I am a goose.

Think of yourself as a goose who lays golden eggs. The goose represents you and how hard you work every day to create golden eggs or, in your case, money that may be taken for granted. You purchase insurance for the valuable items in your life, such as your cars, jewelry and homes. If you total your car, you simply purchase another car with the golden eggs you keep laying. Yet if something were to happen to the goose, there is no other goose. That means there are no more golden eggs either.”

Visuals not only help clients understand complex subjects more easily but are also easier to remember than a verbal or written explanation. Explaining income protection insurance to clients with visuals such as this helps break down a more serious topic in a fun, lighthearted way. It also gets them thinking about what their family’s life might be like if something were to happen to the “goose.”

Convincing Clients It’s A Worthy Investment

One of the most common questions I run

into with clients is whether income protection insurance is a worthy investment. If a client is considering investing in income insurance protection, I use a chart to share with them how much money they will make while working by the time they reach 67.

For example, if a client is currently 30 years old and earns an annual salary of $60,000, they will have earned at least $2,220,000 when they reach age 67.

However, if they didn’t invest in income protection insurance and were injured at age 30, their income wouldn’t be protected or replaced. Once a client sees a visual chart of their personal finances and understands how much money they will make while working — and how much they’ll miss out on if they can’t work — they realize income protection insurance not only insures them in their time of need but also ensures their financial trajectory isn’t derailed.

When assisting a client with their financial future, address the importance of having a stable income if they are unable to work. But also help your client focus on having the necessary resources to safely recover. For a client who is injured or ill, the recovery process can be arduous; they will need to focus on getting better physically, mentally and emotionally. Income protection insurance helps ensure clients have financial stability in the future while also providing peace of mind during uncertain times.

Ann Baker Ronn, CLU, ChFC, LUTCF, is the insurance director of AFP Group, an investment advisor representative with Ameritas Investment, and previously served as a member of the Ameritas Field Advisory Cabinet. Ann is the owner of Income Protection Solutions in Houston and a third-generation member of the insurance and financial profession. She has qualified for annual membership in MDRT and is a past Court of the Table member.

She may be contacted at ann.baker.ronn@ innfeedback.com.

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.

How Will Caregiving Impact A Career Or A Business?

Clients who are caregivers must be educated about options that work for them.

By Carroll S. Golden

M

ost statistics calling out the number of people involved in caregiving are rapidly becoming outdated. The necessity of being a caregiver can have significant financial implications for professionals, workers and, particularly, business owners. Financial professionals can help clients who are caregivers navigate these challenges. And as professionals and business owners themselves, these are challenges that advisors also may face.

The pandemic blurred the boundaries between the personal and the professional and fundamentally changed the social contract that governs today’s workplace.

After seeing too many truly disturbing media images and hearing heart-wrenching stories, many people decidedly would prefer to age in place.

Arranging for care at home requires skills beyond those we may have acquired in our current employment. It is estimated that 95% of community-dwelling seniors today rely on help from unpaid family or friends. Being an employed caregiver, employing caregivers or living with a caregiver is quickly becoming the norm instead of the exception. Many businesses now employ a workforce that spans three, and in some cases, four generations — from career extenders to baby boomers to Generation X to millennials — many of whom are already involved in caregiving.

Planning Is Crucial

Juggling work and providing or supervising someone’s care is more complicated than just hiring someone to help (good luck finding a qualified, trained person).

There also are the issues of wills, end of life directives and other documents (which no one really wants to discuss). Extended care

and long-term care are expensive and can impact retirement savings. The time, energy and resources required to provide care can negatively impact a worker’s performance and can affect their own ability to retire comfortably.

Some 62% of caregivers who participated in an AgingCare.com survey say that the cost of caring for a parent has impacted their ability to plan for their own financial future. Family dynamics can add to stress and potential underperformance at work.

Addressing the need and finding adequate and affordable options are challenging.

Solutions Are Available

In my recent book How Not To Tear Your Family Apart, I follow a fictitious family as they work to create a plan that will result in the main character, Jodi, finding options that will relieve her from the stressful juggling act of personal and professional responsibilities. As a member of the sandwich generation, Jodi has passed up a promotion and backs off from working on group projects since her time is not always her own. She stopped contributing to her 401(k) and instead started diverting those funds to a separate account dedicated to the cost of her parents’ care. She spends her lunch hour running errands related to her parents’ care and often shows up late to work looking exhausted.

Fortunately, she is not the business owner, for if she were, the impact on the confidence of her employees and clients likely would suffer as well. This case study uses this fictional family who works with an

advisor/agent to explore various insurance, non-insurance and government programs.

The study provides an overview of options to address extended and long-term care needs that work for employers, employees and family caregivers. It also covers strategies for initiating and sustaining difficult conversations that are necessary for good preparation.

Caregivers, especially those with additional professional responsibilities, must be prepared for the potential impact of caregiving on their lives and finances. It’s important to understand what resources are available and to have a plan in place that includes the entire family. Understanding how caregiving can affect the whole family, not only those receiving care, is an important part of any financial plan.

Since the pandemic, retaining the best employees includes caring about the physical and financial health of business owners and workers. To avoid the likelihood of extended and long-term care needs negatively impacting your clients’ careers or businesses, they must become educated about options that work for them. Offering solid guidance and advice is crucial to growing your business and protecting theirs.

Carroll S. Golden, CLU, ChFC, LTCP, CASL, FLMI, CLTC, is the executive director of NAIFA’s Limited and Extended Care Planning Center. She may be contacted at carroll.golden@ innfeedback.com.

June 2022 » InsuranceNewsNet Magazine

55

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

A Path To Better Agent Retention Seeking insights into the reasons why some advisors terminate while others remain and are successful.

Factors That Contribute to Financial Professional Termination and Retention Personal characteristics Financial issues Early activity (or lack thereof)

By Kathleen Krozel

T

he life insurance industry has experienced a high turnover rate among financial professionals for many years.

According to LIMRA research, in 2020, only 15% of full-time financial professionals remained with their hiring company after four years. The greatest portion of those terminations occur in years one and two.

To better understand the reasons behind low financial professional retention rates, LIMRA and Finseca surveyed field and home office leaders to gain insights into the reasons why some professionals terminate and why others remain and are successful.

Follows systems and processes Prospecting ability Has (or does not have) a natural market Career mismatch Management/agency culture Selection process

It is no surprise that financial professionals who get off to a fast start are more likely to succeed. As a practical matter, less activity means fewer sales and lower income — a particularly high hurdle for new agents who lack a solid financial foundation coming into their careers. In fact, having a competitive financing plan, although Key Factors Affecting Retention rated below the “top five,” also is viewed as Our research finds a remarkable amount of an important factor in overall success. agreement between home office and field Field leaders frequently mentioned a set leaders. Both groups identified five factors of personal characteristics they believe are (out of a list of 12) they believe have the key to an agent’s success or failure. They greatest positive effect on two-year reten- described these characteristics as drive, tion: early activity (fast start), strong selec- motivation, grit, self-discipline, work ethic tion process prior to hire, joint field work, and willingness to be coached. quality of sales skills training, and mentoHowever, personal characteristics can ring. This sends a strong signal that focus- be hard to assess. The home office may be ing on or investing more resources in these able to help field leaders objectively assess five areas could result in better outcomes those attributes. If they are identifiable, for the industry. it follows to invest more in recruits who demonstrate that they are coachable and have the drive to succeed by tracking and rewarding activities and the achievement of developmental milestones.

Field leaders also believe 1. Early activity (fast start) that a lack of understanding 2. Strong selection process prior to hire about what the job entails can be a factor that contributes 3. Joint field work to termination. Considering most companies have a 4. Quality of sales skill training lengthy selection process (70% 5. Mentoring are longer than two months), it is particularly striking that

Top 5 Factors Affecting Agent Retention

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field leaders cited this “career mismatch” as a significant reason for failure.

Perhaps precontract programs, which allow recruits to “try on” the career, are underused. Such a program could flag those who are clearly struggling with foundational aspects of the career such as prospecting and sales skills.

Another possibility is that recruiters’ narratives do not align with what the new candidate actually will be doing. In addition, younger generations may come in with a negative bias toward some of the industry’s terminology (for example, “insurance agent” or “commissions”). Using terms such as “financial professional” instead of “agent” or substituting “paid based on your performance” instead of “commission” may help with this. Spotlighting the “greater good” aspects of the career and moving away from a “sales job” mentality also could be beneficial.

While there is no one-size-fits-all solution to low financial professional retention rates, a combination of improved selection, early activity, quality sales training, and real-world experience through joint work and mentoring is likely to provide a pathway to success for new recruits.

Kathleen Krozel, LLIF, FLMI, ARP, is research director, distribution research, with LIMRA. She may be contacted at kathleen.krozel@ innfeedback.com.

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