InsuranceNewsNet Magazine | November 2022

CAN

SOLVE YOUR TOUGHEST PROBLEMS?

INSIDE:

10

Securing the Future of Retirees

Ibexis is Delivering Next-Generation Annuities

Get

Everything to gain.

As you think about financial security, you may be looking for ways to grow your long-term wealth safely and with certainty. Ibexis’ fixed annuity products are complemented by fixed returns, easy-to-understand crediting strategies and flexible payout options tailored to your financial goals. Learn more at ibexis.com

THIS ISSUE

FEATURE

Can tech solve your toughest problems?

By John Hilton, Susan Rupe and John Forcucci

From prickly compliance demands to finding leads, tech is meeting some challenges and is taking on others.

INTERVIEW

4 From insurance advisor to ‘life coach’ — with Joe Jordan

Joe Jordan has spent his life inspiring financial professionals to live a life of significance. In this interview with Publisher Paul Feldman, Jordan explains why advisors must pivot to become coaches for their clients.

LIFE

IN THE FIELD

20 ‘Financial planning is for everyone’ — with Osmar Garcia

By Susan Rupe

Osmar Garcia believes you don’t have to be wealthy to begin funding your American dream.

16

View and share the articles from this month’s

»

www.insurancenewsnet.com/topics/magazine

HEALTH/BENEFITS

34 Helping small businesses weather the great resignation

By Stephanie Shields

How brokers can help their small-business clients offer the benefits most popular with their employees.

ADVISORNEWS

38 Why the 4% rule may no longer be the golden rule

By Anthony Martin

Inflation and life expectancy may put this rule out to pasture.

BUSINESS

40 6 ideas to attract talent and retain your best employees

By Pam Stampen

26 7 reasons to buy life insurance in a turbulent economy

By Doug Bailey

Is life insurance a good invest ment in today’s economic scene?

Advisors weigh in.

ANNUITY

30 Annuities: Gaps can lead to opportunities

By Susan Rupe Research shows consumers are interested in protected retirement income, but not necessarily in “annuities.”

How to recruit the right people and turn your business into the place everyone wants to work.

IN THE KNOW

42 Today’s selling and buying environment requires new standards

By Richard M. Weber

As products become more complex, there is a greater concern for advanced consumer protection.

Center Drive

Suite 200

Camp

17011 717.441.9357 www.InsuranceNewsNet.com

Copyright 2022 Insurance & Financial Media Network. All rights reserved. Reproduction or use without

graphic content in any manner is strictly

to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011, fax 866.381.8630

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

Leaning into technology and change

Mywife, Lisa, and I re cently went shopping at our local Whole Foods Market, only to find a shopping cart on tech nological steroids there to greet us, along with a store employee ready to prep us for our “first flight” with this new smart cart.

We set up our reusable bags in the cart and set off down the aisles. As we select ed items from the shelves, we ran them by one of the three scanners on the cart and watched each item pop up on the cart’s full-color display. If we inadvertent ly scanned the wrong item or one of the cart scanners picked up a bar code as we passed too close to a produce display, we could easily reject the item. The cart rec onciled what we had on the screen readout by weighing the items in our cart to ensure that we didn’t have extra items onboard that had not registered in the cart display list — or on our running total.

The cart was easy — I’d even say fun — to use. As we went about our shopping, we realized that we would not need to lift and put all the groceries on the checkout con veyor belt and then put the bagged items back in the cart. Also, checkout was “vir tual” and took place as we walked down a special aisle with no clerk. As we headed toward the exit, a final receipt popped up on our display, asking us to confirm all our items before it completed the purchase.

We loved this experience. It made shop ping a bit more enjoyable and reduced the time we needed to spend in the store; at no point in the process did we have to wait in any line. My wife — a tech ed teacher — enjoyed it so much she is now looking for reasons to pick up something at the store just as an excuse to use the cart.

So what? Well, this is the future. The insurance industry, like so many others, is facing a couple of major challenges: 1. a workforce that has been reduced both by the “great resignation” and the “great retirement”; 2. a consumer base that increasingly is seeking a quick, conve nient and — when possible — self-ser vice experience.

As with our smart cart experience, tech nology will enable more of these changes

in financial services — and already has begun to do so in many areas. Artificial in telligence, big data and telematics are just some of the ways this is happening. More areas of compliance are being automated to make that process easier and faster. This is especially important as compliance grows more complex. And to grow busi ness, more is being done in a range of areas from lead generation to building relation ships on social media.

While consumers are seeking speed and convenience, we also have learned in recent studies that more of them are seek ing the counsel of financial advisors, es pecially in light of the turbulent economy and markets. These needs for guidance and convenience are not mutually exclu sive. The time spent with clients will be meaningful — advising on strategy, pri orities and investment options — rather than working through forms and red tape. This will save agents and advisors valuable time and save their clients time as well.

The time saved can be spent on build ing new client relationships and strength ening existing relationships, which is where some guiding lights in the industry,

Technology in financial services will enable a better experience for clients but also is an opportunity to make inroads into tech-savvy generations and underserved minority communities. Deloitte Consulting conducted a study in 2021 that identified a $12 trillion — yes, trillion — coverage gap, primarily in Generation X and Generation Z. And these are generations that prefer self-service, texting rather than phone calls or in-person visits, and using apps.

This represents a great opportunity for the industry to modernize, streamline and — most important — significantly ex pand its client base. Providing faster, more convenient service; more time for client relationship prospecting and building; and expanding outreach to new commu nities all are benefits of what technology can achieve.

John Forcucci Editor-in-chief

such as Living a Life of Significance author Joe Jordan, say the future of the business is headed.

Signature Guaranteed Universal Life offers three opportunities to fully surrender the policy to receive a partial or full return of premiums paid.1

A Guaranteed Death Benefit between ages 95 and 121 ensures your client does not outlive their policy.

Accelerated Benefit Riders (ABRs) provide the potential to receive a partial or full accelerated life insurance benefit if the insured experiences a qualifying medical condition.2

Living benefits provide additional protection with no added premium.

because it will be

by

and

of

amount of the

discount is primarily dependent on American National’s

of the

at the time of

request for an accelerated benefit may only be advisable if the qualifying event results in a significant reduction in the insured’s life expectancy. A shorter life expectancy will result in a larger benefit offer. Outstanding policy loans will reduce the amount of the benefit payment. Policy Form Series: SGUL18; ABR14-CT, ABR14-CH, ABR14-TM (ND & SD Form Series ABR22-CT, ABR22-CH, and ABR22-TM) (Forms may vary by state). The contract and riders may not be available in all states. See Policy for details and limitations. American National Insurance Company, Galveston, Texas.

FROM INSURANCE ADVISOR TO life coach

FROM

With more than 40 years of experience in financial services, Joe Jordan has had a unique career. His ability to inspire has made him a regular speaker in the most important venues for the insurance and financial services industries as he takes financial profes sionals on a journey to discover their true purpose and significance.

He has brought his gift for storytelling around the world, most recently as far as the Middle East, and in some cases, he has financial professionals from 10 or more countries in the room at one time. His ex periences that inform his message range from selling life insur ance to running a major division in a Wall Street stock brokerage firm to becoming a senior vice president at MetLife in charge of retail sales and product development. His bestselling book, Living a Life of Significance, has been published in five languages and has creat ed fans around the world.

Joe believes that being cli ent-centric and creating value are not only the right things to do but they’re also good for business. For Joe, serving clients is not “all about the num bers” but about building relationships.

He is an outspoken supporter of busi ness ethics and the concept of “doing well by doing good,” and he believes advisors should be driven by inspiration. In this interview with Publisher Paul Feldman, Jordan explains why the industry must focus more on inspiration and less on numbers.

Paul Feldman: You have said you believe we need more inspiration in our business and that too much time is spent on numbers. What do you mean when you say we need more inspiration?

Joe Jordan: The business is built on two foundations: prospecting — and then everything else. And that’s not a joke.

There’s a tremendous amount of rejection when it comes to prospecting. You must have a tough skin. So, you must be in spired. How else can you do it?

I wrote Living a Life of Significance for

advisors because I didn’t think that there was enough discussion about the inspi ration in what we do. And I don’t think there’s enough discussion about inspira tion in the culture. I think our business is very left-brain oriented and deals with numbers. I don’t think that’s where the business is going, and I don’t think that’s what people ultimately want.

Feldman: What are some of the new ideas you’re working on? What’s next?

Jordan: One of the things I’ve realized is that while Living a Life of Significance was for advisors, I’ve found out that signifi cance is also what their clients want.

I guess I’m a little slow. I’ve always talked about the aging population of the world being the pre dominant issue that the planet faces. But beyond that was the idea that people need purpose and meaning in retirement. Most people have an un realistic view of what re tirement will look like. Dr. Riley Moynes talks about “The Four Stages of Retirement.” Stage 1 is the vacation stage. That’s when everyone says, “Oh, this is great. I can sleep all day and do all of this other stuff.” It usually lasts about two to three years.

Stage 2 is the loss period. There are five losses. You lose your routine. You lose your identity. You lose relationships. You lose purpose, and you lose your power. It takes trial and error to get out of that. That trial and error is stage 3.

And then, the last stage is happiness. That’s when you rewire yourself. I think that’s something new that we, in our busi ness, need to gravitate toward. There was a great quote from one of the astronauts. He said, “If you think going to the moon is hard, try staying home.” So that’s a whole new challenge that people face. And I think that’s where the business is going.

There was a report from McKinsey. It said that in 10 years, advisors will gradu ally shed their role as investment manag ers and become more like integrated life and wealth coaches. Who else does that? Who else could possibly do that?

I think our approach is kind of wrong.

Instead, it should be about creating rela tionships. And that’s all been exacerbated by the pandemic, right? People have felt more lonely than they ever have before. Isolation kills. When people have a sense of isolation, it’s equivalent to smoking 15 cigarettes a day in terms of their health.

I’m really turning on to the fact that I think this is the age of the fraternal or ganizations, because they also focus on relationships. I’m doing something with the Knights of Columbus — a couple thousand of their members. They have a lot of programs designed to keep peo ple active — mentorship programs with younger people, a travel club — so they’re spending time together.

And that’s a huge competitive advan tage. I’ve spoken at a number of these fraternal organizations, and I want to talk more about it, because the insurance industry doesn’t have that same kind of relationship with its clients. I think that would be a competitive edge.

They have a value proposition more like where I think our business is going. Insurance products are commoditized. So right now, how do you differentiate yourself? It’s the idea of becoming a kind of life coach. This is an evolution that must happen. There was a study that said people retain 6% of what you’ve said and 100% of how you’ve made them feel. I think the industry needs to move more toward a service culture.

Feldman: Tell me more about being an integrated life and financial coach. What does that look like for an advisor?

Jordan: Actuarily speaking, when peo ple retire, their life expectancy goes down significantly. So what do you say to that? First of all, as an advisor, how do you coach your clients into not dying and into staying on this planet awhile and finding significance?

People who retire to something are happier than people who retire from something. And so when people retire, if they haven’t made any plans, they get iso lated. They lose their routine, their iden tity, their relationships — they lose their purpose. And they lose power.

People who have meaning and purpose are the ones who will live longer.

Our business has been designed to go in, make the sale and then get out. I think

the way to create a great relationship with people is by adding value. That’s what Mitch Anthony describes in his book The New Retirementality. There’s the rep’s perspective and then there’s the client’s perspective — and you can bring the two together.

the advantage — they’re already thinking like that.

Feldman: We’re an older industry, with a higher-average-age workforce — and many are getting closer to retirement. I think this is such a good opportunity,

need of it, that’s bad. Your monthly pay out will increase the longer you wait. On top of that, you can prepare new retirees for some of the things that might change due to various changes and regulations so they could start thinking in that manner.

I think pre-retirees and retirees are a big, big market. Of course, we can’t forget about the younger people who are raising families. I would recommend looking at both of those areas.

Feldman: How do you see the business market evolving as a source of potential clients?

Jordan: The business market is huge. It’s the main engine of the American finan cial system. Those clients create a lot of wealth, and they also have their own par ticular needs. A lot of their wealth is built within their business. How are they going to dispose of that business? What hap pens if they die and they have partners?

I recently heard one CEO say to his team, “I was proud of you guys during the pandemic because you acted more like life coaches than you acted like financial guys.” If you stay where you are in a com moditized marketplace where everybody does the exact same thing, the products don’t differentiate you anymore.

Feldman: In your book, Living a Life of Significance, you mention that at some point, life is like a marathon. What do you mean by that?

Jordan: I mean that from a standpoint of a cultural change. It’s a marathon for peo ple who retire. Clients don’t understand that they have to do something meaning ful and worthwhile when they retire. A lot of them don’t know what that would be. I was at MDRT, and a lady got up and said, “Purpose is not the thing you do. It’s what happens inside of others when you do what you do.” You can’t attain purpose and a meaningful life unless you’re im pacting others.

So when people retire, they have to be somewhat active in terms of being involved with others. And that has to be pre-thought-out. And I think helping clients realize that and create a plan is the next step of our evolution. And that’s why I think fraternal organizations have

as an industry, to mentor new people into the business as older people transition out of their practices. How do you bring in and mentor a new person?

Jordan: There are two types of challeng es. People moving from another indus try are one type of new person. Usually, people who have moved over from an other profession have some business ex perience. They’ve been around the block. They understand that it would be nice to be able to run your own business.

The other type of people new to the business is those who are younger and haven’t experienced much of life. One of the things that they have to do when they get into this business is try to understand clients’ opinions, feelings and what have you. You’re at the client’s service, and so that’s where someone without much ex perience will need the most help.

Feldman: Do you feel advisors should be focusing on retirees or pre-retirees right now?

Jordan: Both. I think focusing on pre-re tirees is important because you can help make certain that they don’t fall into the traps, the mistakes, that some retirees do. For example, some of them sign up to take Social Security early, and if you’re not in

There’s a guy who’s in our business now. He worked for his dad, who had a big car dealership. The father died. He and his brother took it over. The two sisters want ed income but didn’t want to work. The mother sold the business out from under them. Destroyed the family. We can help businesses avoid that type of crisis.

Feldman: What’s one of the newest things you feel that advisors should be thinking about today?

Jordan: I’ve recently become an advocate for reverse mortgages. I used to hold up a garlic and the crucifix whenever I heard about reverse mortgages. But for people over age 62, there’s $10.2 trillion tied up in their houses. And reverse mortgages are not just for the wealthy people. You’ve got some poor guy who bought a house for $25,000 some 30 years ago. It could be worth $250,000 now. For the first time in his life, he has access to funds.

And so there could be the possibility of using a buffer asset. If you’re in a situation like recently, when the Dow went down 1,000 points in a day, that’s volatile. Well, guess what? You shouldn’t be taking mon ey out of your account. Perhaps you could shift to another pocket. And it could come from your reverse mortgage. And the money comes out on a tax-free ba sis. And so it allows the portfolio to heal,

INTERVIEW FROM INSURANCE ADVISOR TO LIFE COACH — WITH JOE JORDAN

the classic buffer-asset type of approach. That’s one thing to do.

Another benefit a reverse mortgage could provide for someone who reach es age 62 is to provide a Social Security bridge. This would allow you to obtain the funds you might need and then wait until age 67 or 70, when the monthly payout would be significantly more. If you wait till 70, it’s 77% more.

With IRMAA [income-related monthly adjustment amount], how much money you make in retirement dictates the premiums you pay for Medicare. Well, if you use some of your income from your reverse mortgage, it’s tax-free, and so using it could help lower Medicare premiums. So there’s a lot of flexibility there.

People have to begin to use the wealth they have in their home. For the most part, it’s three-quarters of a person’s net assets in terms of the average person. And they’re able to use that wealth instead of just saying, “The house is paid off.” This

We all know that inflation is a ma jor issue. If I’m living longer, $100,000 of purchasing power has got to become $240,000 at 30 years out to help keep me solvent. So that’s why equities are import ant — because equities went up in value 10 times over 30 years.

A lot of people would be happy if they could sustain their current lifestyle. And so that’s where I think the RILAs come in and the indexed annuities come in. It doesn’t go all the way to solve long-term income challenges, but it allows you to have some upside participation with no downside risk.

I would say right now I think the annu ity business is on the verge of exploding.

Feldman: What are your thoughts on life insurance in this market?

Jordan: Life insurance is crucial at this stage of the game. Life insurance has been elevated as the premier vehicle for dis tributing a legacy. There’s no restriction

Jordan: There are three main reasons to buy life insurance — in or out of a pan demic.

The three reasons are: You love some body. You owe somebody money. You have a cause. If you don’t have any of those three reasons, why buy it? But if you do, then there’s nothing better that will pro vide for those three needs.

Feldman: What’s one of your favorite sales ideas that most advisors may not know?

Jordan: I have an old one, which I think is really great. It’s a version of “The Ben Franklin Close.”

I draw a “T” and list the pros on one side and the cons on the other. What are the obligations of the agent versus the ob ligations of a client?

On one side, you have the client obliga tion, which is to pay for our services. So you list that one item, maybe how much they’re paying either monthly or annually.

People who retire to something are happier than people who retire from something.

could be helpful, especially because peo ple are living a lot longer.

Feldman: In the volatile market situation that we’re currently experiencing, interest rates are going up. Is this the best time to get an annuity?

Jordan: You’ve got a couple of things go ing on. RILAs, for example, seem to really have been taking off. They have that buff ered approach. There are a lot of people today who wish they had a 10% buffer on their money. Also, I’m a big fan of variable annuities because they provide, again, the idea of a guaranteed lifetime income.

There has been a lot of criticism of an nuities. A DALBAR study found in 2021, however, that the average equity subac count investor outperformed the average equity investor by 3.5%. Why? Because they didn’t get out of their investment. They didn’t panic, because they know they have a guarantee that they’re going to get some income.

on how much money you put in. There’s nothing saying that you have to take money out at a certain time. The income comes out on a tax-free basis. You don’t need a trust.

My nephew’s 18 years old. If he gets all the money in one lump sum, he’s going to blow it on a Corvette. So what I want to do is control it over his lifetime. Well, if it’s a 10-year payout, he can’t go blow it all at once. So there’s more control. And it’s all tax-free.

Life insurance sales went up 20% in 2021, the highest increase in 20 years. I think that’s what the pandemic did, get ting people to think more along those lines. I think the future for life insurance is bright.

Feldman: Let’s talk about the impact of the pandemic. It definitely spurred more life insurance sales. Statistics show it. But statistics are also showing that sales are going down a little bit now. Are we losing an opportunity?

On the other side of the T, you list “Our obligations” — meaning all the services you are providing — and all the benefits. For example: We’ll create a half-million dollars in case you die. We’ll pay those premiums if, for some reason, you be come disabled. If you become sick, you’ll have some access to the money. Etc.

So, you end up having only the one item listed on the client obligation side, while on the advisor side, there are many items listed. Then you cross out the client’s obli gation: their fee. And then in the advisor’s column, you add a “Y” before “Our obliga tions” and it becomes “Your obligations” … meaning those advisor obligations have suddenly become the client’s obligations.

So, without your help, the client now has to: Create a half-million dollars in case they die. Pay those premiums if, for some reason, they become disabled. Provide some income if they become sick. Those are now the client’s obligations.

It makes an impact.

QUOTABLE

A global recession isn’t in the forecast, but a “brief and shallow” recession is expected to occur in the U.S. and Europe, an economist said. Dana M. Peterson, chief econ omist with The Conference Board, said that Russia and Ukraine are already in a recession, the U.S. and Germany are predicted to experience recession, and “we are expecting very slow growth in China.”

Peterson predicted “a brief and shallow recession” in Europe, beginning in fourth-quarter 2022 and lasting through first-quarter 2023. Fueling that recession is the escalation of the war in Ukraine leading to an energy crisis in Europe. The collapse of the housing market in China and continued COVID-19 lockdowns are leading to an economic slowdown in that country. In the U.S., a recession is expected as a result of the Federal Reserve attacking inflation by increasing interest rates. She also noted that consumer spending in the U.S. is shifting from goods toward services.

Erik Lundh, The Conference Board principal economist, said he is concerned about several factors impacting the U.S. economy, including increased interest rates, con tinued inflation, the housing market and government spending on the Infrastructure Investment and Jobs Act that was passed in 2021.

INFLATION, MARKET TURMOIL TOP CONSUMER CONCERNS

Inflation and market volatility are among the top financial consumer worries, with inflation leading the way with 67% of respondents expressing concern, accord ing to a Lincoln Financial Group report.

“Of course, as everyday living expenses rise, there are downstream financial-plan ning impacts in how we budget, save and spend,” said Mike Burns, se nior vice president, individ ual life, Lincoln Financial Group. “So it’s not surprising that the second-ranked financial challenge is having enough income in retirement, which 55% of study respondents are thinking about.”

Compounding the retirement-income challenge is market volatility, which can impact retirement accounts, added Burns. While market volatility was just outside the top five concerns identified, it is still on the minds of 43% of those surveyed.

SENATE PANEL ISSUES FINAL RETIREMENT PROTECTION BILL

The Senate’s retirement protection bill

— the Enhancing American Retirement Now (EARN) Act — is ready for negotiations with the House for final legislation improv ing retirement savings provisions, accord ing to the Senate Finance Committee.

The EARN Act will become part of the Senate’s broader re tirement protection package, the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE) Act, later to be reconciled with the House’s bill, SECURE 2.0.

Among the EARN Act’s provisions, the act changes required minimum distribu tions. Required distributions would start at 75 rather than 72, starting in 2032. This contrasts with SECURE 2.0, which increases the RMD age to 75 from 72 gradually over a 10-year period. The EARN Act would also reduce the excise tax on a missed RMD to 25% from 50%. The

excise tax could be further reduced to 10% if the RMD is taken within the correction period, generally two years.

ACLI FILES BRIEF IN SUPPORT OF LAWSUIT CHALLENGING DOL ADVICE RULE

The American Council of Life Insurers filed an amicus brief supporting one of the two lawsuits that seek to overturn the investment advice rule that took effect in February.

If allowed to stand, the package of rules, known as the investment advice rule, will essentially return the sale of financial products to a fiduciary standard, ACLI states in its brief. The Fifth Circuit Court of Appeals tossed out the Obama-era fiduciary rule in a 2018 decision.

ACLI was one of the lead plaintiffs in that case. The February lawsuit was filed by the Federation of Americans for Consumer Choice just days after the investment advice rule took effect.

FACC, a trade group representing inde pendent life insurance agents and agencies selling annuities and other insur ance products, contends that the latest DOL rule will harm average consum ers even though it is promoted as increasing consumer pro tection.

Source: State Street Global Advisors Inflation Impact Survey

In a year on track to be one of the worst on record to retire, the market downturn and sharp increase in food, gas, housing, and medications have hit retirees particularly hard.

— 2022 Global Retirement Index

CAN TECH SOLVE YOUR TOUGHEST PROBLEMS?

From prickly compliance demands to finding leads, tech is meeting some challenges and is taking on others.

Filling the sales pipeline

By Susan Rupe

Advisors are finding technology makes it easier to connect with prospects and find the prospects that are just right for their practice. Here are some examples of how tech is helping fill the sales pipeline.

Although most of Craig Lytle’s practice is focused on helping clients with life insurance and financial plan ning needs, some times a client needs help with something else. That’s where technology comes in.

Lytle is CEO of Income & Estate Planning Partners in Newark, Del., and is a Goosehead franchisee. Goosehead’s Digital Agent is an online tool that lever ages relationships with hundreds of insur ance companies to build a home and auto bundle that suits a client’s needs.

Client leads go into Lytle’s Salesforce. He then can help create the kind of cov erage needed by the client. In the case of a client who lives out of Lytle’s area, he can work with a local agent where the client lives and then can split the commission.

In one example of how he was able to use Goosehead to help a client, Lytle said he was contacted by a mortgage loan offi cer in New Jersey to help a client who was relocating to Texas and needed homeown ers insurance. “I’m not licensed in Texas, but I was able to have the lead referred to a Goosehead agent in the ZIP code where the client was moving,” he said. “We col laborated to get the client the coverage, and we split the commission.”

In another example, a client who relo cated to Oregon needed help with insur ing their car and RV. “We were able to use this technology to help them get their coverage,” Lytle said.

“Without this technology, people moving

to Texas or Oregon in the past would have just gone away to work with another agent someplace else,” he said. “But for the client who wants to work with me because they are familiar with me and trust me, it’s a good way for me to help them. It’s also a good way for me to work with a local agent in the place where they are moving because of the particular nuances in each state as well as the licensing issues in each state. It’s a win-win all around.”

Lytle

No more ‘plain vanilla’

The use of technology for lead generation means that advisors have to devote less time to filling the sales funnel and have more time available to close sales.

Taylor Schulte uses his podcast, “The Stay Wealthy Retirement Show,” as a way to build awareness of his practice and lead his search engine optimization on Google. Schulte is found er and CEO of Define Financial in San Diego. He describes his podcast as the top of his sales funnel, as he wants prospects to find it when they go online to search for “best retirement podcast” on Google.

“After we show up in SEO, then we want to move prospects to the middle of the funnel, which is to subscribe to our news letter or to our podcast,” he said.

But converting those who move to the middle of the funnel into actual clients takes time, and that’s by design, he said.

“We have a very detailed sales process. It takes about four to six weeks for some body to go through it from start to finish,” Schulte said. “We always say, if you want to hire us tomorrow, we’re probably not the right fit. What we do is we offer a free retirement and tax analysis. You can think of this as kind of a life financial plan.”

Schulte specializes in working with people who are over age 50 with $1 mil lion or more in investments and have tax problems in retirement. He directs prospects to his website, where they are routed to a landing page that gives them information on how they can obtain that free analysis.

“If they feel like we’re potentially a good fit, they can schedule their call direct ly on our webpage. We use a scheduling software called Acuity Scheduling. That allows them to get the introductory phone call scheduled so we can discuss whether we’re a good fit to work with them going forward.”

Schulte also uses Acuity to send pros pects automated educational emails while they are going through the sales process. “So, it’s not radio silence from us,” he said. “We’ve used technology to create a good client experience. We’ve taken a very plain vanilla sales process that many ad visors use, and we’ve created an amazing

experience out of it and leveraged a lot of technology to do that.”

Using platforms to grow community

Trent Grzegorczyk created his private com munity, Retirement Planning Club, which is hosted on the Skool platform. Grzegorczyk is founder of Resilient Financial Planning in Traverse City, Mich.

He uses his YouTube channel, The Retirement Planning Coach, to direct prospects to the club. After they join, they can take three of his classes for free. From there, they can sign up to pur chase some of his advisory programs and services. “The end goal is for them to eventually become our wealth management clients,” he said.

In the five months since launching his community, he has seen it grow to more than 180 members. “I think those results are good, considering it has only been around for a short time,” he said.

Grzegorczyk said his niche client is an individual over the age of 50 who has been doing DIY investing for a number of years and has accumulated some money but needs a second opinion or has decided they need a professional advisor. He said this type of self-directed client already is comfortable with receiving an education online, and he wants them to get that edu cation from him.

He also wants to begin using an online tool, New Retirement, which will enable him to work alongside clients who want to direct their own retirement planning with the help of an advisor.

“Building an online community is noth ing new,” he said. “But for independent ad visors who are looking to grow online, this is a good model.”

Automation with personalization

Adam Cmelja likes to quote the saying “Never delegate something that can be automated, and never automate something that can be eliminated.”

As for lead generation, Cmelja believes

that’s something that should be automat ed instead of delegated. He is president of Integrated Wealth Management, a prac tice based in Carmel, Ind., that serves in dependent optometrists.

Cmelja said that he uses automation to schedule appointments as well as to cap ture the right prospects for his practice.

Using technology enables him “to capture important information that you would like to know about the potential relationship.

“For instance, you can create online forms that will ask a prospective client to fill in some qualitative and/or quantitative pieces of information about themselves. We have an integration built into it that says if you check this box and you want to receive our newsletter, it’ll automati cally add you to our email newsletter list. They are giving us permission to market to them in the future. And it also allows the advisor to put constraints around when they want to have calls with prospective clients. So, it’s this idea of blocking your time so you can control how prospects reach out to you, and it also puts guard rails around your time and frees you up to work on your business.”

Although Cmelja is enthusiastic about using technology for scheduling, he also sees it as an opportunity to do some per sonalized marketing to the prospect.

“You can set up a generic appointment confirmation email, but that’s a missed op portunity to communicate with a client and personalize that interaction,” he said. “With us, the first email they get after booking an appointment with us is something like ‘You may not believe this right now, but we’re doing a little bit of a happy dance over here at the office because we’re so excited to en gage in another conversation with someone who is looking to work with us.’”

He described technology as one way to “communicate to a potential relationship your values, your purpose, your perspec tive, your culture, your mission and your firm’s personality.”

Susan Rupe is man aging editor for InsuranceNewsNet. She formerly served as com munications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeed back.com. Follow her on Twitter @INNsusan.

Schulte

Grzegorczyk

Cmelja

Can ‘regtech’ help producers stay compliant with new rules?

By John Hilton

Every minute that an advisor spends mak ing sure they are in strict compliance with ever-changing and tougher regulations is one less minute devoted to clients.

Unfortunately, it is also the reality in 2022.

Technology is filling that void with systems and software that are helping producers and their financial institutional sponsors achieve disciplined and consis tent recordkeeping.

“The benefits are significant,” said Sandeep Deva, vice president of policy develop ment for Exdion, an insurance digital platform compa ny based in India.

“These products enable the insur ance industry to meet compliance regula tions efficiently and effectively to reduce noncompliance events.”

What is at stake is nothing short of

survival in a rapidly changing regulatory climate. States are rapidly adopting new and tougher “best interest” sales stan dards, while regulators struggle to give the industry consistent rules.

The U.S. Department of Labor is again attempting to redefine “fiduciary” in a way that has many industry watchers recalling the dreaded 2016 fiduciary rule. Although that Obama administration effort was defeated in court, the DOL likely learned enough lessons to craft a better rule.

Then there’s the Securities and Exchange Commission’s Regulation Best Interest, which took effect June 30, 2020.

The best compliance response for all these rules is usually documentation, doc umentation and more documentation. But that is just the start of the benefits that technology can bring to the independent agent, Deva added.

“Insurance compliance solutions typically contain policy and procedure management, incident management,

complaint management, task manage ment, audit trails, workflow management, reporting and regulatory intelligence fea tures,” he said. “These provide a compre hensive set of tools for insurance agencies to use to govern all their compliance-re lated tasks.”

Many different rules

Ryan Brown is corporate counsel at M&O Marketing, an independent marketing organization focused on assisting inde pendent finan cial professionals headquartered in Southfield, Mich.

M&O does nearly $1 billion in fixed and fixed indexed annuity sales, along with some life insurance sales. The company also owns a broker-dealer and registered investment advisory firm called Corecap.

Deva Brown

CAN TECH SOLVE YOUR TOUGHEST PROBLEMS?

History of regtech

The 2008 financial crisis ushered in an increase in financial sector regulation. There was also a rise in the disruptive use of technology in the financial sector. Technology breakthroughs led to an increase in the number of fintech companies that created technology-driven products to enhance the customer experience and engagement with financial institutions.

The reliance on consumer data to produce digital products has led to concerns among regulatory bodies calling for more laws on data privacy usage and distribution. The coupling of more regulatory measures and laws with a sector more reliant on technology brought about the need for regulatory technology.

As of mid-2018, deregulation in the United States — as seen in the unwinding of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) rules — has led to a slowdown in regtech company financing deals, though the compliance burden should still fuel the drive toward greater automation.

Source: investopedia.com

recordkeeping became an even higher priority. And a lot tougher, Brown noted.

“If you want to stay afloat, you have to adapt or at least get familiar with that, regardless of whether the producer is 80 years old and still selling insurance or is a newbie who is super tech savvy,” Brown said.

In a 2022 survey of financial services firms by Thomson Reuters, about a quar ter of respondents said that the successful adoption of “regtech,” or regulation tech nology, will produce enough efficiencies over time to permit a greater focus on val ue-add activities.

Respondents had a substantial wish list of what they would like regtech solutions to be able to do for them. At the top was improved line of sight to risk management processes (21%) and increased accuracy of regulatory reporting (19%).

“I think customer relationship manage ment systems are really critical,” Brown said. “And I think people that stuck with them are going to be grateful in the long run that they adopted them. They’re go ing to have better client notes versus just scribbles on a yellow legal pad.”

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

As insurtech investment slows, future remains cloudy

By John Forcucci

Insurtech startups arrived in a big way in recent years, propagated by millions of dol lars in startup investment. The promise of insurtech has been to provide insurance faster and easier — and cheaper — relying on big data, more accurate risk assessment, technology such as telematics, and conve nient apps. Investment in insurtech has slowed recently, though, and the industry may not be delivering on its initial promise.

Insurtech experienced an investment high in 2021 of $14.4 billion across 644 deals, according to Boston Consulting Group. Insurtech in Q2 of 2022 has been on course to be about 50% of the invest ment seen in the previous year. According to GlobalData, the value of global invest ments in insurtech fell by a staggering 79.6% in 2021.

“These trends are likely due to a combi nation of factors,” said Ben Carey-Evans, senior analyst at GlobalData, adding, “The investment into the sector has dried up somewhat.”

Insurtech has made inroads into the insurance in dustry, however, despite the declin ing valuations and reduced investments.

According to the recently released J.D. Power 2022 U.S. Home Insurance Study, “Overall, nearly one-fourth (23%) of home insurance customers are aware of insurtech offerings from companies like Lemonade, Hippo, Kin, Openly, Jetty and Trove. Among homeowners not cur rently insured by Lemonade but aware of the brand, 34% say they ‘definitely will’ or ‘probably will’ purchase from Lemonade if it is available in their state.”

“I think the future of insurtech invest ing will be with those that are designed for insurance distributors — agents, brokers, etc. — rather than those that are too fo cused on the direct-to-consumer market,” said Mike Brown, director of communi cations at Breeze, an insurtech that spe cializes in disability and critical illness

insurance. Breeze received $10 million in series A funding in 2021.

“It’s become clear that the in surance market is a tough one to crack for new compa nies,” said Brown, adding, “There are just too many legacy companies and insurance professionals with too many strong relationships. It’s difficult to reach buyers … you need the agents and the brokers; they are the veins of the industry. The insurtechs that will win going forward are those that have de signed streamlined online platforms that make it easier for agents and brokers to sell a product.”

‘Opportunity for new entrants’

“There is definitely opportunity for new entrants in the market, especially ones who excel at improving the customer journey and streamlining the entire digi tal experience,” said Eileen Potter, solution marketing leader for the insurance indus try, ABBYY. “Chief among them is mak ing onboarding easier so custom ers complete the entire process via their smartphone,” said Potter, add ing, “This includes automatic docu ment processing with mobile capture, identity proofing, and affirming of IDs and supporting documents — and using process intelligence to ensure the digital experience is smooth.”

“I also think there will be continued innovation in insurtechs that are created in incubators run by established insur ers,” said Potter. “This enables them to market-test new products and innovate with new distribution channels. This will also give them the opportunity to use new technologies on a smaller scale before trying them out in other parts of their organizations. It’s definitely a faster

and less risky way to road-test ways to use artifical intelligence, low-code/no-code and other emerging technologies in their operations.”

Potter cited Lemonade and Hippo as examples of insurtechs that are likely to succeed.

“They’ve both made similar moves with respect to making executive hires from within more established corners of the in dustry,” Potter said, adding, “Ultimately, I feel like the combination of innovative ideas from industry newcomers who feel unen cumbered by ‘the way we’ve always done things’ combined with the business acumen of insurance veterans will be what separates insurtechs who are a flash in the pan from those who will succeed over time.”

Bill Brower, vice president indus try relations and vehicle claims at Solera, has a long history with tra ditional carriers, having worked at Liberty Mutual and Nationwide. He be lieves that consumers, especially after the pandemic, want to see more ease of use and convenience. “This idea of automating claims is growing in popularity with cus tomers,” he said.

In their Innovation Index 2022 report, Solera found that 49% of tech-savvy con sumers surveyed would prefer self-service when it comes to vehicle claims. “Also, 79% said they would trust automotive claims powered entirely by AI,” he said.

Consumers seek digital convenience

Since COVID-19, Brower said, consumers have become accustomed to using digi tal services. “They’re saying “If I’m using Amazon, if I’m using Uber, if I’m using some of these restaurant apps, they’re very easy, they’re very intuitive, and I love this. Why can’t I do more with insurance?”

He added that with carriers facing fi nancial pressures due to inflation, work force turnover (“the great resignation”)

Carey-Evans

Brown

Potter

Brower

Insurers

Tech-savvy

Technology: Only as good as the problems it solves for agents and advisors

Remember when all you needed as a financial advisor was a yellow legal pad and a landline? For a financial professional in the 21st century, there are countless technology solutions — and they can be overwhelming. That’s where an IMO can help. In this interview, we speak with Brian Lucius, chief distri bution officer at Gradient Financial Group, about the integral role technology plays in an advisor’s ability to attract more clients and referrals.

INN: What should technology do for advisors?

BL: Technology’s sole purpose should be to solve a problem — enhance client experience, bring value, reduce overhead, save time and help advisors scale their business. That’s why building our own technology has always been a top priority.

I often hear from advisors that they use an average of six platforms — that’s six expenses and six screens and systems where you have to reenter information. That’s not necessary anymore, and it’s a waste of your time.

Our focus is on uniting solutions into one seamless plat form to make life easier for today’s advisors.

INN: Why is technology essential to an advisor’s practice?

BL: Financial professionals are typically good at reading people, listening and explaining solutions but may not have a well-defined process that earns and keeps client business.

Most advisors know they need a process, and many have one — in their head. But you can’t scale your business until you adopt an effective process.

We’ve always believed technology can provide that process. It’s foundational to setting our advisors up for success. Once we have technology table stakes established, we layer on ad ditional benefits and processes that save you time and money.

INN: How important is having the right tools to create a good client experience?

BL: If your office runs efficiently, clients will have a more positive experience. You’ll attract more clients and a larg er portion of their assets. For example, with Generational Vault®, clients have access to their account values, planning reports, trust, wills and other legal documents. They can communicate with their advisor through a secure, data-en crypted environment. This alone makes clients more loyal and reminds them of the value you deliver.

“Today people can learn about and find financial products anywhere. It’s what you do as an advisor that is over and above placing product that earns and keeps clients’ business.”

INN: As the DOL fiduciary rule is being considered again, what do advisors need from their IMO?

BL: We’ve built our technology around helping advisors accomplish three main objectives: 1) Do what’s right for the consumer. 2) Provide transparency and be upfront. 3) Document everything and retain that documentation.

You can’t provide transparency if clients can’t easily view their accounts and any transactions or changes.

Moreover, regulatory issues don’t usually surface while everything is fresh in an advisor’s mind. So, how do you provide documentation to support your recommendations years down the road? You need a system to re-create what took place leading up to the sale.

INN: Any parting thoughts that are crucial for advisors to know?

BL: Adoption of effective technology is the biggest change that needs to happen in our industry. The technological ability of today’s retirees is much greater than we give them credit for. The world is not just ready for the technology. It demands it.

We provide a proprietary CRM, Virtual Advisor®, Generational Vault®, planning software tools and an email system that are complimentary for our advisors. But our key differentiator is how data flows throughout each, creat ing greater efficiency.

Because our tools helped set the original baseline of finan cial services technology, we don’t have to waste time refining what we offer. We can instead address the ever-changing in dustry, regulatory environment and client experience.

Even if advisors ease into it, the right technology will help their business, provide a better experience, and at tract more clients and referrals. Additionally, it helps advi sors document their process, be transparent and align with regulatory requirements.

“We are a financial services company building technology. We are not a technology company building for financial advisors.”

To learn more about how Gradient’s technology solutions could help you attract more clients and referrals, visit IMOForTodaysAdvisor.com.

The staying power of Ibexis and its annuity products for securing retirement.

Introducing innovative features and seamless experiences.

Ibexis Life & Annuity Insurance Company is a Missouri do miciled insurer offering fixed annuity products in 44 States and the District of Columbia. It was formerly a subsidiary of Kansas City Life Insurance Company. In September, it launched a multi-year guaranteed annuity (“MYGA”) called MYGA Plus. Ibexis is currently writing business through nine independent marketing organizations. The Company has hired a management team made up of industry veterans that have demonstrated success growing and running fixed annuity companies. We recently spoke to Nate Gemmiti, Chief Executive Officer & President, and Ryan Lex, its Chief Distribution Officer.

What is the story behind the inception of Ibexis?

NG: The company was formed in 1937 in Washington State as Sunset Life. It had a long history of issuing various types of life and health products throughout much of the United States. In 2021, with equity from Investcorp, it was purchased and renamed Ibexis Life & Annuity Insurance Company. Ibexis now has a new management team focused on launching fixed

annuity products. We have an A- (Excellent) rating from AM Best with a stable financial rating outlook.

RL: We also recently launched our MYGA Plus product with a number of independent marketing organizations and will release our FIA in the coming months. With our strong rat ings and unique product features, we’re confident that Ibexis will help increase consumer value and interest into the fixed annuity market.

Tell me about the relationship with Investcorp? Who are they?

NG: Investcorp is a nearly $43 billion global alternative asset manager with a 40+ year track record. Over the years, they have owned a number of brands names, such as Tiffany & Company, Gucci, Saks Fifth Avenue, and my person favorite, Carvel Ice Cream. Investcorp has an insurance focused asset management business led by Todd Fonner, the former Chief Investment Officer for Blackstone’s insurance solutions platform. The entity serves as the asset manager of Ibexis. Having access to Investcorp’s financial support, institutionalized platform and asset management expertise across asset classes allows Ibexis

Ryan Lex Chief Distribution Officer

Nate Gemmiti

Chief Executive Officer & President

Technology

to maintain financial stability and offer strong crediting rates.

I noticed a number of familiar names on your management team and Board of Directors. Can you tell me more about the team?

NG: At the end of the day, as an insurance company helping individuals retire with financial security, we are in the trust and relationship business. It was important for me that our team members have both skill and integrity and we’ve accomplished just that with individuals from well-known entities such as Athene, Nationwide and Transamerica, but also Big-4 audit firms, leading actuarial firms and a regulator. I feel fortunate to work with each of them, and am proud of how well-rounded we are collectively.

It is a competitive market? How is Ibexis looking to be different in the annuity space?

RL: Other recent market entrants have shown that there is room in the growing annuity market for a well-rated insurer that offers good products, competitive rates and a smooth agent and client experience. Ibexis built a technology-heavy agent experience with no paper applications, e-delivery of applications and a variety of automated process – we’re meeting the needs of consumers at every phase. Our MYGA Plus product also has some easy-to-understand, yet innovative features that aim to create greater value for our policyholders.

I have read some press on the MYGA Plus. It looks interesting. Tell me more about it and how it is being positioned by agents?

RL: At its core, the MYGA Plus works just like a traditional MYGA. It offers a strong fixed rate for a set duration. It has 10% free liquidity after the first year, annuitization options and a death benefit included. The Plus bucket is where it gets interesting. A client may, at their option, put up to 50% of their initial premium in an event linked bucket that pays the client a substantially higher fixed rate if the S&P 500 goes up in any annual period. If the S&P 500 goes up at all, the client gets 100% of the full fixed rate. The Plus bucket fixed rate is guaranteed for the entire initial term of the contract. So far, the reception has been fantastic! Even if a client doesn’t choose the feature, advisors like presenting our product because it’s different and gives them the option to enhance from the traditional base product offering.

There are several new competitors in the annuity space. Are you concerned about the impact on the opportunity for Ibexis?

NG: Competition is good for the industry. It pushes product innovation and keeps rates competitive. It also gets the message out more broadly to the public that a fixed annuity can be an excellent investment option for someone that wants safety of principal and good returns as compared to other similar investment choices.

RL: The market is experiencing incredible growth across all fixed product types as an aging client base demands safety in a

volatile investment market. There is broad need for financially strong insurers with good product and rates. We are proud to be part of an industry that serves financial advisors and those saving for retirement.

What is your commitment to your distribution partners?

RL: We recently launched with limited distribution and nine of the most highly reputable IMO partners. We felt that this limited approach was the best way to ensure that we give “high touch” service to each IMO partner along with their agents and advisors. This approach helps to ensure that in a time of growth, we are still able to act like a true partner and not just use it as a term. Having a limited group at launch helps ensure that we offer great service, receive feedback and implement positive change on behalf of the partner.

What are your future plans for Ibexis?

NG: Over the years, we have all seen some insurers come and go. Maybe it’s because they aren’t offering annuities any longer, commitment to certain distribution channels waivers or their product offering falls out of favor. We are here to stay. Ibexis is financially strong and has a large institutional equity partner to support its growth. We intend to continue to enhance our exist ing distribution relationships and thoughtfully build additional relationships. We will continue to offer innovative features, as well as traditional products. Given our asset manager’s expertise, lack of legacy business and tech-focused platform, we also expect to continue to offer very competitive rates to clients. Finally, we will be a dependable counterparty for each and every advisor or client that chooses to trust us with their business.

Learn more about our fixed annuity products and how we help advisors and their clients find the right option. Call 866-376-1669 or visit ibexis.com

Ibexis provides a secure path for growing wealth.

“Given our asset manager’s expertise, lack of legacy business and tech-focused platform, we also expect to continue to offer very competitive rates to clients.”

planning is for everyone’

Osmar Garcia is on a mission to help those in his community improve their financial literacy and fund their own American dream. BY SUSAN RUPE

hen COVID-19 shut down orders forced many small business es to close, Osmar Garcia checked on his small-business clients. That checkup couldn’t have come quickly enough for one client, Melbourne Gonzalez, a painter who told Garcia he had lost $110,000 of busi ness in two weeks and feared he wouldn’t be able to make his weekly payroll. Adding to the anxiety was that the client owned several rental properties and feared his tenants would be unable to pay their rent.

At that point, the painter had been Garcia’s client for about five years. During that time, Garcia had helped the client buy cash-value life insurance and had advised him on how to build up some cash reserves that would tide him over any rough spots.

Garcia reminded his client that he could tap into the cash value in his life insur ance policy to access needed funds, and he helped him reach out to his bank to dis cuss whether he could defer his mortgage payments if his tenants were unable to pay him. Garcia even helped his client apply for a Paycheck Protection Program loan. After a few slow weeks, business came rolling back, and the painter was able to weather the financial storm.

The story of Garcia and his client eventually became a TV commercial for Northwestern Mutual. Garcia is the cofounder and CEO of Garcia Wealth Management in Conway, Ark.

COVID-19 impacted many of Garcia’s small-business clients, and he said that helping them through an uncertain time became his mission.

“There was a lot of uncertainty then,” he said. “My clients didn’t know what was coming. Early on, we had a lot of conver sations with our clients around what re sources were available. We met with some of our lawmakers to understand the legisla tion that was being passed — PPP funding — so that we could relay that information to our clients in a simple manner. We also collaborated with our clients on how to strategize things such as speaking to the bank they work with, how to retain their employees.”

Garcia said the majority of his clients emerged from the pandemic “and actually did really well.” And that led his work with them in a different direction.

“Then the conversation turned to ‘We

actually had a lot more business than we anticipated, so please tell us what we can do to mitigate some of our tax risk,’” he said. “So we had very different conversa tions at polar ends of the pandemic. But we’re thankful we were able to give our cli ents some good guidance at the beginning and then follow up with some additional work toward the end of it.”

In search of opportunity

Garcia has an affinity for small-business owners, mainly because his father owned a small business.

Garcia, his parents and his brother were born in Jalisco, Mexico. His father moved to Ontario, Calif., in search of work, and the rest of the family came to the U.S. a year later. A few months after settling in California, the family moved to Morrilton, Ark., and put down roots there.

“My parents decided to bring us here for a better opportunity,” he said. “That was a big decision on their part. And I’m thankful that they did. They made a lot of sacrifices that paid off for all of us.”

believe that what has helped me and helped our firm to grow is having good communi cation skills.”

A lack of financial literacy hurts

After graduating from college, Garcia began working in a bank, working his way up to becoming a real estate appraisal officer and consumer lender. He soon discovered that few of the bank customers who sought loans were eligi ble to obtain them.

“I had to turn down about 70% of those who came in for a loan,” he said. “The rea son for that was mainly a result of a lack of financial literacy. A lot of loan applicants were required to have a certain percent age to put down toward the loan, and they didn’t have the savings to do it. Or they didn’t have a credit history. Some didn’t know how to leverage what they had in a way that could help them.”

Garcia decided to switch gears and be come more of a financial coach.

“I found myself spending time with peo ple, coaching them on how to get out of the

Garcia’s father started out by working as a painter and eventually started his own business. Garcia’s mother started out by working in a sawmill but soon be came a housekeeper for a member of the Rockefeller family.

The language barrier proved to be diffi cult. Garcia remembered starting school in the U.S. as a third grader and having to rely on a classmate to translate for him. After Garcia became proficient in English, he helped his father translate and negotiate business contracts.

Overcoming the language hurdle taught Garcia “communication is key.”

“I focused on how I can be an effective communicator,” he said. “Today, I really

financial rut they were in,” he said.

During his time at the bank, Garcia bought life insurance and was asked by his advisor whether he would consider going into the business himself.

“At the time, I had no interest in be coming an advisor,” he said. “But God had other plans. An opportunity came up, and I looked into it. I found I was able to transfer the knowledge and experience I had into helping small-business owners in terms of financial planning. So that was a really cool transition. It also allowed me to think about the business differently. I could tell that no one else was running a practice like a bank, and that’s what we’re doing today.”

I found I was able to transfer the knowledge and experience I had into helping smallbusiness owners in terms of financial planning. So that was a really cool transition.

the Fıeld A Visit With Agents of Change

that will help them carry this out,” he said. His clients also need help improving their financial literacy. “A lot of our Hispanic clients come from Mexico and South American countries, and there’s a distrust toward the financial sector,” he said. “So we have a lot of conversa tions on how financial institutions work in America. What is a Roth IRA? What does it mean to protect my family with life insur ance? We start with the basics and build on that.”

Garcia said that he believes community involvement is the best way to connect with Hispanic pros pects. He is active in his local United Way and serves on the

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, and may contain restrictions, such as surrender periods.

Additional agreements may be available.

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.

SecureCare III may not be available in all states. Product features, including limitations and exclusions, may vary by state.

SecureCare III includes an Acceleration for Long-Term Care Agreement and an Extension of Long-Term Care Benefits Agreement. These two agreements are tax qualified long-term care agreements that cover care such as nursing care, home and community-based care, and informal care as defined in the agreements. These agreements provide for the payment of a monthly benefit for qualified long-term care services. These agreements are intended to provide federally tax qualified longterm care insurance benefits under Section 7702B of the Internal Revenue Code, as amended. However, due to uncertainty in the tax law, benefits paid under these agreements may be taxable. Please ensure that your clients consult a tax advisor regarding longterm care benefit payments, or when taking a loan or withdrawal from a life insurance contract.

The death proceeds will be reduced by a longterm care or terminal illness benefit payment under this policy.

The return of premium options affect the amount available upon full surrender of the policy. This amount varies based on the return of premium option selected in the application, and premiums paid at the time of surrender. Please ensure that your clients consult with a financial professional regarding return of premium options.

He founded his firm in 2015 with his brother, Gilberto.

“It’s an interesting dynamic,” he said. “My brother is what I would call the executor. He is very good at following through, he sets a goal, and he helps us get there. I’m more of a strategist. I think about what do the next five, 10, 20 years look like and what decisions can we make today that will get us there. I think we complement each other well. Whenever I share a vision and he has a passion for it, we execute really well together.”

Helping Hispanic clients succeed

Conway’s population is about 6% Hispanic, and Garcia said those he serves are small-business owners.

“They represent anything from con struction to manufacturing to real estate,” he said. “We do everything from 401(k)s to group and individual planning for business owners and top-level executives, and we also serve many of their employees.”

One issue that Garcia said his clients are focused on is passing their businesses to the next generation. “We collaborate with attorneys and CPAs so that there’s a team

board of his local symphony orchestra. He also participates in activities in his church.

He ultimately believes that the biggest misconception about insurance or finan cial advice “is that people think it’s only for the wealthy.”

“Financial planning is for everyone. You don’t have to be wealthy to plan. You can start at an early age or if you’re just starting out in your business. There are things you can start doing today — saving, reducing debt. Then you can start jumping into investing and protecting your family or income. From there, you can start think ing about estate planning. So I encourage those who have not started their financial planning journey to meet with a profes sional and take the first steps.”

Susan Rupe is man aging editor for InsuranceNewsNet. She formerly served as com munications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeed back.com. Follow her on Twitter @INNsusan.

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

The purpose of this material is the solicitation of insurance. An insurance agent or company may contact you.

Policy form numbers: ICC20-20212, 20-20212 and any state variations; ICC21-20220, 21-20220 and any state variations; ICC21-20221, 21-20221 and any state variations.

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

securian.com

400 Robert Street North, St. Paul, MN 55101-2098 ©2021 Securian Financial Group, Inc. All rights reserved. F95989-5BW Rev 3-2022 DOFU 10-2021 ICC21-1694726

We have a lot of conversations on how financial institutions work in America. What is a Roth IRA? What does it mean to protect my family with life insurance? We start with the basics and build on that.

Give your LTC clients a benefit boost

term care (LTC)

with

Learn more

WITH NATHAN

Insurance products issued by:

Life insurers in a good position despite looming recession

S&P’s credit outlook for the U.S. life insurance sector is stable: Capital levels remain robust. Sales remain strong. COVID-19 mortality declining and is manageable.

The life insurance industry is facing significant headwinds, an S&P Global Ratings analyst said, but it is strong enough financially to push through 2023.

Carmi Margalit, life insurance sector lead, said life insurers are on very sound financial footing, which makes recession talk less worrisome. In fact, insurers are probably better equipped to handle an economic disruption than they were when COVID-19 hit in March 2020, he added.

“The industry is actually very well positioned to handle that,” he explained, “both in terms of just the capital that they have to withstand it and some of the actions that the industry has been taking to prepare in terms of the pivoting to higher levels of credit, higher levels of liquidity in anticipation of a potential recession.”

addition to protecting the future well-be ing of an employee’s family, life insurance can be used by businesses to fund buy-sell agreements, attract and retain top talent with executive bonus plans, and protect from the financial impact of the loss of an essential employee.

HOW LIFE INSURANCE ADDRESSES

TOP CONSUMER CONCERNS

With consumers expressing fears of mar ket volatility and inflation, life insurance products can help ease some of their con cerns, a Lincoln Financial Group official said in a report. Mike Burns, Lincoln Financial senior vice president, individual life, pointed to permanent life insurance, including vari able universal life and indexed universal life, as helping address the potential impact of inflation and volatility.

These types of policies offer the po tential to accumulate cash value that can be accessed as a financial resource for needs such as funding a child’s college tuition, supplementing retirement income or dealing with unexpected events. “They also offer investment op tions that may include indexed accounts to pursue market upside with downside pro tection,” he added.

Life insurance can also be an import ant tool for strengthening a business. In

Education can help increase the relevance of life insurance for near-term and longterm financial planning needs and also help facilitate conversations that can break down misconceptions, such as those around cost. For example, LIMRA finds that more than half of Americans overestimate the cost of life insurance by as much as threefold, Burns said.

INDUSTRY PUSHES ‘QUICK FIX’ FOR IUL ILLUSTRATION ISSUES

If state regulators were look ing for a wide range of opinions on how to fix troublesome indexed universal life illustrations from a com ment period that closed in September, mission accomplished.

The comment period on how to best fix AG 49-A was ordered by the Life Actuarial Task Force, part of the National Association of Insurance Commissioners.

LATF regulators added a twist to its com ment period: “plus consideration of limited,

Americans

insurance.

QUOTABLE

targeted revisions to the Life Insurance Illustrations Model Regulation (#582).”

The most popular “quick fix” offered via the comments would put a “limit on indexed illustrated rates of 145% of each indexed account’s hedge budget,” as explained in a letter signed by Allianz, John Hancock, Lincoln National, National Life Group, Pacific Life and Sammons Financial.

This would extend the 145% limit on “as sumed earned interest rate” set forth in AG 49A.

JOHN HANCOCK OFFERS EARLY CANCER DETECTION

Over 600,000 people in the U.S. die of can cer each year, the American Cancer Society reports. John Hancock wants to help its cus tomers avoid becoming a cancer statistic.

The carrier began offering access to GRAIL’s Galleri multi-cancer early de tection test to a pilot group of existing customers through the John Hancock

Vitality Program, in collaboration with reinsurer Munich Re Life US.

The Galleri test is a multi-cancer early detection blood test. In a clinical study, the Galleri test demonstrated the ability to detect a signal from more than 50 types of cancers, more than 45 of which lack recommended screening tests.

The test can also help determine where in the body cancer may be locat ed, which can then guide diag nostic follow-up.

At the end of the day, [life insurance] provides a foundation of protection for yourself and your family. That peace of mind is powerful.

— Mike Burns, Lincoln Financial Group senior vice president, individual life

Source: LIMRA and Life Happens

7 reasons to buy life insurance during a turbulent economy

Advisors provide their top reasons why consumers need coverage.

By Doug Bailey

Askan agent about the best time to buy life insurance and the answer will likely be “now” or “anytime.” But consumers watching the value of their 401(k)s decline in this in flationary era as interest rates spiral may want to know if perhaps life insurance is a particularly good option to supplement investments and retirement accounts during a down economy. And if it is, why? We put the question to financial planners and insurance experts. Not surprisingly, they agreed it was a good time to buy life insurance. But their reasons differed.

Why buy life insurance during turbu lent economic times?

1Portfolio diversification

One of the advantages of purchasing life insurance during a time of a bear market and rising interest rates is for port folio diversification. Life insurance compa nies offer some unique policies that allow you not only to protect your family or busi ness, but also to gain some portfolio diver sification that offers guarantees. One of the unique product offerings from some life insurance companies is called indexed universal life. In its simplest terms, indexed universal life offers life insurance protec tion, along with potential growth tied to an outside index such as the S&P 500 or others. These policies allow you to use a portion of your premium payment to grow tax-deferred and potentially earn market like returns. One of the best features of this product can be that once these linked returns are credited to your account, they cannot be lost in a future down market. This allows you the potential for equity growth with no loss.

— Mike Raines, Owner/agent at Raines Insurance Group, Cumming, Ga.

2Asset leveraging

There are so many types, flavors and variations of life insurance used for so many different situations.

People buy life insurance because it allows them to leverage their other assets without the fear of ultimately losing them. It is the ultimate force multiplier. Own a business? You can get a loan to pay your life insurance premiums that will allow you to access the money you have locked up in bricks and mortar and machinery — and you can utilize those assets without ever having to repay the principal on the loans. Owning an business and having too many passive assets can lead to your pay ing too much in taxes. Life insurance can help solve that too.

Life insurance is useful if you make a lot of money, it is useful if you have a tax prob lem, and it is useful if you die too young.

It is useful if you live too long or if you are seriously ill. If you invest badly, it’s your backup plan. If you invest well, it can help pay future taxes. It allows you to maximize the lifetime value of other assets you have by allowing you to use them and still create intergenerational wealth. It can even pro tect you from bankruptcy. Life insurance provides dignity.

— Naoshad Pochkhanawala, estate and financial planner, Chartered Life Underwriter at Amiko Benefits, Toronto, Ont.

3Accumulate cash

Is there the “right” economic time to buy life insurance? Depending on the type of policy one is purchasing, ris ing interest rates can be beneficial for life insurance. Permanent policies, unlike term policies, accumulate cash value. The cash value inside the policy grows tax-deferred, and depending on the type of policy, the interest rate credited to the policy could be directly affected by the current inter est rates. An insurance company uses the premium a policy owner is paying for the policy and invests it. Many of those invest ments are interest-rate sensitive, and as the interest rates rise, so does the amount the insurance company is earning on its investment portfolio (which includes pol icyholder premiums), and therefore more interest is credited to the policy owner’s cash value.

The other reason to purchase more insurance in inflationary times is any ex isting death benefit will be worth less than it was worth prior to inflation increases.

If you own a policy with a death benefit of $50,000, for example, that $50,000 will have less buying power following an infla tionary period. Goods and services cost more than they did just a few years ago. If you determined your beneficiaries needed $50,000 a few years ago, they may need more than that today due to the higher costs of living.

— Mark Williams, CEO of Brokers International

4Peace of mind

If the economy is turbulent, as it is now — with rising inflation and higher interest rates — clients tend to start feeling poorer or less wealthy, and again life insurance comes into play to shore up their investments and assets and help

them feel more secure. Either having a long level-term life insurance policy in place for an extended period of time or designing a permanent life insurance policy for some one’s lifetime is very relevant — irrespec tive of the economy.

— David E. Appel, MDRT member, man aging partner at Appel Insurance Advisors, Newton, Mass.

5Protection

It’s taboo to consider what may hap pen due to an unfortunate passing, but it’s vital to put protection in place for loved ones. According to Life Happens and LIMRA, 44% of folks say in less than six months they would feel the financial strain after the death of a primary wage earner.

Each individual should decide for them self whether a life insurance policy is a sound investment based on their needs, what they are trying to protect and for how long they are seeking protection. If a consumer is looking for a life insurance product that builds cash value and offers a guaranteed rate of return, a whole life in surance policy could be an ideal product. If the consumer is looking for protection for a specific period of time, wants to pro tect their income, or wants protection to pay off their mortgage or other debts upon their unfortunate passing, a term life in surance policy may be a better solution. For older consumers who are looking to pay for funeral expenses or pay off credit card debt, a final expense insurance policy is likely the best option.

Inflation may be putting a strain on dis cretionary income, making it hard for peo ple to consider this investment, but with new digital tools, it’s never been easier to apply for a policy online within minutes and be given options custom to unique budgets.

— Jim Reboin, chief revenue officer of Afficiency, a New York City-based digital distributor of life insurance.

6Safety and security

During the pandemic, many people fundamentally shifted their attitudes toward core life priorities such as health and wealth, and they are turning to life insurance to support their new aspirations to live longer, healthier and better lives.

They are also looking for more safe and secure places to put their dollars, and if structured properly, permanent life

insurance cash value accounts offer stated and guaranteed yields while protecting these dollars from IRS intervention, offer ing immediate liquidity through tax-free loans and withdrawals and potentially taxfree growth of those dollars.

Life insurance offers more than just ben efits to your loved ones after you’re gone. Today’s life insurance industry has made major strides to create “living benefits” such as the ability to access the policy face amount tax-free to provide for the named insured to use for long-term care or chron ic illness needs. This is a valuable benefit given the constantly increasing premiums for stand-alone LTC policies.

Permanent life insurance is more than just a death benefit paid to your chosen beneficiaries. When structured correctly, it can be a great source for building and protecting wealth.

— Brian Carden, author of Castles & Moats, Insurance, Investment , and Life Planning Simply Explained

7For family

I never realized how influential the economy can be on how people make financial decisions, and it’s interesting that when money is good, people forget it will inevitably pass. When the market takes a turn, people tend to think about their financial position more seriously.

Unfortunately, sometimes life insurance has a negative connotation, so people tend to avoid it and only start to think about their financial situation when they are forced to do so.

It is always best to put your family first and secure financial stability while you still can.

— Shawn Meaike, founder and president of the Connecticut-based life insurance company Family First Life.

Doug Bailey is a jour nalist and freelance writer who lives out side Boston. He can be reached at doug.bai ley@innfeedback.com.

Like this article or any other?

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

Find out more at innreprints.com.

ANNUITY WIRES

Survey: Americans warming up to lifetime income

Maybe it’s the COVID-19 pandemic, or perhaps it’s inflation. Maybe it’s just the gen eral economic malaise.

But Americans are loving lifetime income more than ever, a new survey finds. According to the third Protected Retirement Income and Planning Study from the Alliance for Lifetime Income and CANNEX, fewer than half of respondents (48%) believe their retirement savings and sources of income will last them throughout their lifetime — a 13% drop from a year ago.

The survey reveals a notable lack of financial preparation for the future. Despite mounting economic concerns, nearly one-quarter of consumers don’t have any kind of financial plan, and another quarter (28%) have an overall direction in mind but no financial plan to get there.

Nearly half of nonretired consumers ages 45-75 are saving less than 10% of their annual income for retirement. Among those not yet retired who are advised by a finan cial professional, only three out of 10 have both talked with their financial professional and have a plan in place in the event they retire early.

LIFE/ANNUITY INCOME UP 62%, REPORT FINDS

It is a good time to be selling life insurance and annuities, a new AM Best report finds.

Net income for the U.S. life/annuity in surance industry increased by 62% in the first half of 2021, rising to $20.9 billion from $12.9 billion in the same prior-year period, according to the report.

The data is derived from companies’ sixmonth 2022 interim statutory statements received as of Sept. 8, 2022, representing an estimated 99% of total industry pre miums and annuity considerations, AM Best said.

Total income in the L/A industry rose 3.2% to $478.8 billion from the prior-year period, driven by a 5.3% increase in net in vestment income and a 161.9% rise in other income. Total expenses for the industry grew 4.6%, largely due to a $12.2 billion reduction in net transfers to separate accounts, AM Best reported.

REGULATORS LOOK TO TIGHTEN INDEXED-LINKED ANNUITY REGS

Inclusion of a “market value adjustment” remains a sticking point as state insurance regulators close in on a new actuarial guide line to fit trendy indexed-linked annuities into variable annuity nonforfeiture rules.

The Index-Linked Variable Annuity Subgroup was created last year by a National Association of Insurance Commissioners task force to focus solely on the index-linked annuity products — known variously as structured, buffered or registered indexed-linked annuities.

While classified as variable annuities, the indexed-linked products do not fit into Model 250, which includes the nonforfeiture rules that determine how much money a contract holder can get back if they give up the annuity.

With the indexed-linked products, daily values are not based on the value of units of a separate account. Rather, the daily

QUOTABLE

values are based on formulas set forth in the contract. The subgroup developed an actuarial guideline for technical changes to values that would bring the indexed-linked products in line with traditional VAs.

POTENTIAL BENEFITS OF RILA ACT TOUTED

A group of industry trade associations pressed the House Finance Committee to bring to the House floor for a vote stalled legislation to reduce market barriers for the sale of registered index-linked annuities.

The group sent a letter to committee chair Maxine Waters, D-Calif., and rank ing member Patrick McHenry, R-N.C., asking for a vote on the RILA Act. The bill would lower barriers to retirement income products by requiring the Securities and Exchange Commission to revise rules regarding developing and offering certain annuity products, including RILAs.

Signatories of the letter include the American Council of Life Insurers, Committee of Annuity Insurers, Finseca, the Insured Retirement Institute and the National Association of Insurance and Financial Advisors. The bill remained stalled as of press deadline.

You would think that retirement-based products like annuities would be growing a lot more than just holding steady.

— Carmi Margalit, life insurance sector lead, S&P Global Ratings

Source: Hearts & Wallets

Annuities: Gaps can lead to opportunities

Research finds a gap between what clients feel about annuities and what financial professionals believe they feel about them.

By Susan Rupe

The year 2024 is expected to be the year of Peak 65, when more people in the U.S. turn age 65 than ever before, un leashing the greatest surge of new retirees in history.

“The baby boomers are redefining ev erything, and they are redefining retirement,” said Jon Rosborough, vice president of Statler Nagle, at a recent we binar presented by the National Association for Fixed Annuities and the Alliance for Lifetime Income.

With disappearing pensions, the tradition al three-legged stool of retirement security has collapsed, Rosborough said. This makes an nuities a key part of the new retirement securi ty framework needed to support baby boom ers through a poten tially long retirement.

getting it. They want you to reach out,” Rosborough said.

The research showed that protected in come and the benefits of annuities are of great interest to investors, but many inves tors don’t connect the benefits of annuities to the name “annuities.”

What financial professionals must do for annuity prospects, said Mike Harris, education advisor with the alliance, “is link those things up — show them this is what an annuity does.”

Harris said research found investors are interested in annuities.

» Seven in 10 investors who have a 401(k) plan are interested in investing in annu ities through their plan.

Harris said he believed a significant finding is that 66% of investors are consid ering an annuity and that half of investors believe financial professionals have a re sponsibility to discuss annuities and how they fit into a portfolio if they meet the client’s needs.

Three-quarters of financial professionals (73%) believe protection is important in the context of retirement income versus 86% of investors.

Financial Professionals Importance of Protection When Working with Clients on Retirement Planning

at all important

Investors Importance of Protection When Thinking About Your Retirement Planning

All these findings align with previous research done by the alliance. Less than 15% of consumers who are familiar with annuities have a neg ative impression of them. But 55% who are very familiar with annuities have a very favorable impression.

somewhat important Moderately important Very important

The alliance and CANNEX recently released the findings of the Protected Retirement Income and Planning Study of investors and financial professionals. Those findings found gaps in how inves tors perceive annuities and in their un derstanding of them.

“In our analysis, we found there are 4.3 million households in America that are approaching or are in retirement who need that annuity discussion but are not

» Nearly two-thirds of investors expressed an interest in buying an annuity as part of their retirement plan. That interest was even greater among younger investors.

» Nearly half of investors believe financial professionals have a responsibility to pres ent guaranteed lifetime income products to their clients.

One key gap that the research uncovered is that investors who work with a financial pro fessional tend to worry about their finances, but few financial pro fessionals believe their clients worry that much. Nearly half (48%) of in vestors said they worry about their finances several times a month or more often. Only 8% of financial professionals said they believe their clients worry about fi nances that often.

“There’s a gap between what clients are feeling and what their financial profession als believe they are feeling,” Harris said. The implications of the research, he add ed, are that financial professionals must focus on reassuring clients and identifying risk-mitigation strategies.

It’s one thing to plan for retirement, but an unforeseen retirement is another matter, Harris said. The research showed

ANNUITIES: GAPS CAN LEAD TO OPPORTUNITIES ANNUITY

that nearly all financial professionals (92%) said they discussed the possibility of an unforeseen retirement with their clients, yet 37% of clients said their advisors never discussed that possibility with them.

The opportunity here, Harris said, is for financial professionals to discuss the pos sibility of an unforeseen retirement with clients and use that discussion to initiate a conversation about retirement income.

The research found that although 86% of investors believe protection is import ant when planning for retirement income, only 73% of financial professionals found the same to be true, Harris said.

“Investors have only one shot at retire ment planning,” he said. “If you don’t do it right, you can’t go back and start it over.”

“You might be confident in doing a plan, but clients are more concerned about making sure their basic expenses in retirement are covered by protected, guar anteed income.”

What clients value and the role their emotions play in decision-making are powerful, Harris said. Market volatili ty and high inflation rates are driving

anxiety, and that anxiety “can be a prison for some clients,” he said.

“Make sure those emotions, worries and uncertainties in terms of funding their fu ture goals are key ingredients to successful income planning conversations with cli ents,” he added.

The study found that one-third of finan cial professionals are more likely to rec ommend an annuity due to rising interest rates, inflation and growing anxiety.

Another gap found in the research is that almost all financial professionals said they have had a good conversation about the changing economic environment with their clients, yet one-quarter of investors disagreed.

“There is a communication disconnect between what you’re saying and what cli ents are hearing and feeling,” Harris said. “This is not matching up with their feel ings and emotions — and emotions moti vate them to take action.”

Harris advised financial professionals to try to find the disconnect around the client’s desire for protection. “That’s where you want to embed their emotions so they

can feel there is safety and security for them,” he said.

Consumers and financial professionals alike are concerned about inflation reduc ing retirees’ spending power, the research found, with more than 80% of consumers and more than 90% of financial profession als worried about it.

This concern, Harris said, provides an opportunity for financial professionals to reach out to clients and have a conversa tion about the changing economic envi ronment and how to increase protection of their retirement income.

“You must address these emotions headon,” Harris said. “You have to meet your clients’ financial needs, but you also must meet their emotional needs.”

Susan Rupe is man aging editor for InsuranceNewsNet. She formerly served as com munications director for an insurance agents’ as sociation and was an award-winning news paper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

and your time is valuable. Because SERVICE has …VALUE

Choose American Equity for world-class service and support!

6000 Westown Pkwy, West Des Moines, IA 50266 www.american-equity.com

November 2022 »

Call us at 888-221-1234

Men press snooze on health care

Many men are not paying enough atten tion to their personal health care, and they’re particularly tight-lipped about their mental health. Those are among the findings from Aflac’s most recent Men’s Health Survey.

The survey found more than half of men go to the doctor only when they feel sick or have an accident. Fewer than half had a routine wellness visit in the past 12 months. And at the same time, one in four men admitted they’ve never talked to anybody about their mental health and well-being, despite nearly three-quarters having experienced some type of mental or behavior health concern in the past year alone.

Generation Z and millennial men especially report mental and behavioral health concerns as well as their effect on productivity. As the survey reported, 79% of respondents in these categories report having experienced a mental health concern within the past year, compared to 57% of Generation X and 68% of baby boomers.

SURVEY FINDS HIGHER SPENDING ON MENTAL HEALTH DISORDERS

Overall spending on mental health services increased, while the percentage of enrollees using outpatient services rose from 12% to 16% among people with employment-based health coverage — reflecting a 32% increase between 2013 to 2020.

That’s the word from the Employee Benefit Research Institute, which found that one in five adults and one in six youth expe rience mental illness each year.

Among enrollees with a mental health diagnosis, average annual spending on mental health care services increased from $1,987 to $2,380 between 2013 and 2020. It increased 20%, or an average of 3% per year.

In addition, spending on outpatient mental health services increased 37%, while spending on prescription drugs for mental health disorders fell 15%.

AMERICANS GIVE HEALTH CARE SYSTEM FAILING MARK

Public satisfaction with the U.S. health care

system is remarkably low, an Associated Press-NORC Center for Public Affairs poll revealed. Fewer than half of Americans said health care in the U.S. is generally handled well. Only 12% say it is handled extremely or very well.

The poll results were even worse when it comes how prescription drug costs, the quality of care at nursing homes and mental health care are being handled, with only 6% or less saying those health services are done very well in the country.

The poll shows an overwhelming majority of Americans, nearly eight in 10, say they are at least moderately concerned about getting ac cess to quality health care when they need it. Black and Hispanic adults in particular are resoundingly wor ried about health care access, with nearly six in 10 saying they are very or extremely concerned about getting good care. Fewer than half of white adults, 44%, expressed the same level of worry.

QUOTABLE Navigating the American health care system is exceedingly frustrating.

MAJORITY OF PREMIUM GOES TO PRESCRIPTIONS, SERVICES

Where does your health insurance pre mium dollar go? America’s Health Insurance Plans conducted its Health Care Dollar study and found that 82.4 cents of every premium dollar goes to prescription drugs and medical services. That’s an increase from the 81.6 cents in AHIP’s last analysis in 2022.

Of each premium dollar, 22.2 cents were spent on prescriptions, the study found. Nearly 20 cents were spent on outpatient hospital costs, while 19 cents went to inpatient hospital costs. Doctor visits ate up 11.8 cents of each premium dollar, with 3.3 cents spent on emergency room care and 6.2 cents on other outpatient care.

The remaining premium spend saw 3.8 cents go to tax es and fees, 3 cents to other fees and business expenses, 2.1 cents on cost containment, 0.8 cents on quali ty improvement and 4.2 cents on other administrative expenses. The remain ing 3.6 cents? That went to profit.

Employers and workers spent nearly $77 billion on mental health disorders in 2020.

Source: EBRI

— Mark Fendrick, director of the University of Michigan Center for Value-Based Insurance Design

Helping small businesses weather ‘the great resignation’

Six ways brokers can help small-business clients offer the kind of benefits their workers want.

By Stephanie Shields

Overthe past decade, the idea of providing bene fits as a solution to small businesses’ retention woes has fallen slowly by the wayside. But now a confluence of factors in the wake of the pandemic — supply chain disruption, personal and familial challenges, and rampant inflation — are making recruiting even more difficult. As a result, your small-business owner cli ents will have to reconsider a recruitment tactic they have long taken for granted.

The numbers don’t lie; 6 in 10 small businesses say they are struggling to at tract talent amid the “great resignation,” according to Alignable’s poll of more than 6,000 small businesses. Many companies have raised their wages in response — Forbes reported large companies expect to pay a 3.9% increase in wages this year. However, high turnover remains a chal lenge for employers two years into the pandemic, with a record high of 4.53 million resignations in March.

With these numbers in mind, it’s clear that small-business owners can — and should — look beyond salary to attract talent and improve retention. To stay competitive without breaking the bank, small-business owners must address the intangible aspects of work — such as job satisfaction and employee wellness — and offer employees a comprehensive set of benefits that helps them take care of themselves and their families.

How employee benefits can stem the worker shortage tide

Offering health care and other bene fits can give small businesses a competi tive edge over their peers. Although large

corporations have been offering benefits for years, fewer than half of small businesses have offered retirement savings plans for employees, according to JPMorgan Chase. In 2020, only 31% of private-sector estab lishments with fewer than 50 employees offered health insurance, according to KFF.

Benefits are also overwhelmingly popular with employees. Seventy per cent of employees see dental and vision coverage as a must-have, according to a 2022 MetLife survey. Benefits packages are equally important for retaining em ployees. A 2022 report by Willis Towers Watson found that 6 in 10 employees cite their employer’s retirement benefits as an important reason they remain with their current employer.

Small businesses that already offer benefits shouldn’t assume they’re in the clear. A Ceridian poll found that 37% of employees who receive benefits would like to see their employers prioritize en hanced mental and physical benefits in 2022. Therefore, it’s critical for compa nies to reevaluate their own benefits with a fresh set of eyes and an understanding of their employees’ needs.

Here are some common misconcep tions small-business owners may have regarding benefits.

• Employers must cover the cost of benefits.

A common complaint among small-business owners is that providing a benefits program is too costly. But by using a voluntary benefit program that provides services that are either fully or partially covered by the employee, employers can offer a wide range of benefits — such as disability, life insur ance, dental, vision, hospital indemni ty, critical illness coverage and more. Employees simply select what services they prefer and pay for them through de ductions from their paycheck. Benefits providers handle administration and can provide educational materials for

small businesses to distribute to their employees, leaving businesses with money to spare.

• Offering supplemental insurance isn’t that important.

Nobody wants to offer their employees a high-deductible health insurance plan, but some small-business owners have no other cost-effective option. In fact, 31% of employees were enrolled in an HDHP as recently as 2020, and that number has been on an upward trajectory, according to KFF.

However, HDHPs do mean that outside of preventive care, employees are left cov ering their medical bills until they have spent thousands of dollars out of pocket. So it’s wise for small-business owners to provide employees with a safety net.

That’s where supplemental insurance — such as for accident, critical illness and hospital indemnity — comes in. These insurance plans can help cover the gaps in major medical insurance, providing additional security for those who decide to invest in extra coverage.

• Benefits are too expensive to offer 1099 contract workers.

Many small businesses employ 1099 contract workers because they are quick to onboard and require minimal over sight. However, most small-business owners have been reluctant to offer benefits to these contractors because small-business owners don’t want to run the risk of misclassifying their contract workers, which can be costly.

As the public discourse about whether workers in the gig economy should qual ify as independent contractors or should be employees with full benefits continues, small-business owners may find themselves competing with deep-pocketed corpora tions for scarce labor. One consideration for small businesses is to provide their em ployees with access to information about professional or trade associations, which often offer benefits to their members.

HELPING SMALL BUSINESSES WEATHER ‘THE GREAT RESIGNATION’ HEALTH/BENEFITS

4] Develop a communication and engagement strategy.

WHAT DO WORKERS WANT?

Ceridian polled workers about attitudes toward their workplaces for 2022 and found:

• 64% of employees said they felt very or somewhat optimistic about their work life in 2022.

• 22% of employees said a promotion was among their work/life goals for 2022.

• 37% of employees said they wanted their employers to prioritize enhanced mental/physical benefits in 2022.

• 31% of employees said they wanted to see their employers pri oritize enhanced financial wellness offerings, such as access to earned wages at any time and retirement planning, in 2022.

Another option a small-business owner might consider is joining a professional employer organization, which enables small to mid-sized businesses to provide their employees with access to better and more affordable benefits. PEOs also help streamline a lot of administrative human resources functions, like payroll, benefits, compliance and workers’ compensation.

Although there are benefits to joining a PEO, there can be drawbacks, which is why it’s important that small-business owners understand all the pros and cons.

Offering or providing access to benefits to nontraditional workers is a long-term play for small-business owners aimed at improving company loyalty. Employers that decrease presenteeism — lost pro ductivity due to illness — and reduce turnover among their workforce can re coup their initial investments. They won’t have to spend money finding and retrain ing employees, and they’ll experience productivity gains and improved morale as a result.

Designing a smart small-business benefits strategy

There are more ways to provide benefits than ever before. The excess of options means business leaders may end up feel ing overwhelmed or encounter financial roadblocks.

Here’s how brokers can help small busi nesses with limited budgets and expertise overcome those challenges to deliver a smart benefits strategy that addresses the labor shortage without breaking the bank.

1] Assess the workforce demograph ics to ensure strategic benefits offerings.

For the first time in history, there are five generations in the workplace. Although everyone may need health and dental insurance, it’s crucial that small-business owners offer a com bination of traditional employer-paid benefits alongside a large number of em ployee-paid options that can cater to both newcomers and those in the twilight of their careers.

2] Assess which benefits are tax deductible and eligible to use tax credits.

Small-business owners should work with a certified public accountant to identify which benefits will provide them the biggest tax breaks and credits. Often these include retirement plans, tuition reimbursement plans, health reimburse ment arrangements and paid leave. For instance, employers with fewer than 100 employees may be eligible for an annual tax credit of up to $500 if they create a 401(k) or SIMPLE IRA plan with auto matic enrollment.

3] Leverage voluntary benefits.

Small-business owners must be selec tive about which voluntary benefits they choose to offer. That’s why benefits bro kers are an excellent resource.

Brokers can assist small-business own ers with paperwork, compliance and an nual renewals, putting together a custom package that makes sense for their unique needs.

A business owner’s work doesn’t stop once an employee benefits program is in place. Employers must promote the program and help employees understand the benefits they are offering. Insurance brokers and carriers can offer employers tools and resources to help educate their employees, integrating those resources with a small busines’s existing commu nication strategy.

Additionally, brokers and employers should ask employees for feedback on the program so they can constantly improve their benefits plan.

5] Adopt benefits administration technology.

In order to meet employees where they are, employers should adopt a digital platform that provides decision-making support, such as videos and education tools. Choosing a carrier that integrates well with these digital platforms will allow small-business owners to give employees an easy, intuitive and flexible user experience.

6] Supplement voluntary benefits with workplace perks.

Workplace perks are a great way to shore up recruitment efforts — but they must be the right kind of perks. Gone are the days of throwing up a Ping-Pong table and a beanbag chair as a concession for working long hours. A recent Glassdoor survey found 60% of workers now place more emphasis on perks related to physi cal and mental well-being.

For small businesses, that might mean providing access to mental health services, wellness and dependent care specialists, summer half-day Fridays, and more.

The great resignation may be here for the foreseeable future — the quit rate, for example, shows little sign of waning. But by following these six steps, brokers can help small-business owners rest easy knowing they are offering what employees want — the safety and se curity that come with a comprehensive benefits package.

Stephanie Shields is head of employee benefits at Equitable. She may be contacted at stephanie.shields@ innfeedback.com.

Most retirees are financially fragile

Most retirees and pre-retirees are financially fragile, with the average retiree able to with draw about $5,000 each year from their sav ings, according to a recent longevity study.

A majority rely on their own instincts for retirement planning, but they also say they regret not doing more planning, according to “Disconnected: Reality vs. Perception in Retirement Planning,” a study by the Stanford Center on Longevity, sponsored by the firm Finance of America Reverse.

As boomers surge into retirement, this study found the median savings of respondents between 50 and 74 was $128,000 and 55% said their financial situation was fragile or they’re just able to get by financially. Going by the 4% rule, respondents could withdraw an average of $5,120 annually, with 72% going by their instincts for planning and 60% saying they should have done more planning. Only 10% of respondents were very comfortable with their finances.

20% of DIY investors still rely on professionals

Many investors may say they want to manage their money on their own, but their stated preference doesn’t always match their behavior. That’s one takeaway from a Hearts & Wallets survey that found that although an increasing number of Americans rely on multiple sources of information and advice to make investment decisions, 20% of households cite some kind of financial professional as their primary source.

Forty-three percent of households use seven or more sources to at least some degree today, triple the 14% of households that used that many sources in 2010. Millennials with $100,000 to less than $1 million or with $1 million-plus are the generation-wealth groups most likely to rely on a high number (seven-plus) of sources, at least to some degree. Baby boomers are much less likely to rely on a high number of sources to some degree, and this lower use of sources may relate to their higher reliance on an advisor, when they do have one.

Most retirement plans unchanged by COVID-19

Although a significant percentage (40%) of study respondents said their work was impacted by the COVID-19 pandemic, retirement expectations for the majority remain unchanged, according to a pan el of industry experts during a webinar hosted by the Employee Benefit Research Institute.

The 2020 Health and Retirement Survey found

Men were more likely than women to say their jobs were impacted by the COVID-19 pandemic.

More BIPOC Americans open to receiving advice

Americans who identify as BIPOC (Black, Indigenous and People of Color, includ ing Hispanic and Asian/Asian American) report receiving less professional assis tance than they did a year ago. That was a main finding of the 2022 Retirement Risk Readiness Study from Allianz Life.

But although fewer BIPOC respondents are currently getting professional help with their finances, the number who are open to working with a professional in the future is on the rise. The percentage of BIPOC respondents who have never used a financial professional but said they would consider using one grew for each group: 37% for Black/African American respondents, up from 32% in 2021; 34% for Hispanic respondents, up from 30% in 2021; and 39% for Asian/Asian American respondents, up from 34% in 2021.

Specific financial planning needs for each BIPOC community have likely evolved during the pandemic , the study found. Black respondents were more like ly than other groups to want to work with a professional on short-term financial planning issues. For Hispanic respon dents, advice on how to leave a legacy to family was top of mind. Asian respon dents were most interested in holistic fi nancial planning.

that 40% of respondents said their work was affected by the pandemic , compared to 60% who said that their work was not.

Fourteen percent lost their jobs, 50% stopped working, 47.8% were furloughed or laid off temporarily, and 6.5% said they quit their jobs.

The financial situation of 75.7% of respon dents stayed the same, and surprisingly, the income of about 5% of respondents actually went up, while about 20% saw a decrease in income.

It’s a guything.

SOURCE: 2020 Health and Retirement Study

I get by with a little help

of retirees want an advisor’s help in determining an investment strategy

want help decid ing when to take Social Security benefits.

SOURCE: Stanford Center on Longevity

DIGITAL MONTHLY F CUS

Proudly brought to you by

Be sure to check out our MONTHLY FOCUS section, found right on our homepage.

Our Monthly Focus topic for NOVEMBER 2022 is: LTC AWARENESS

Read our full coverage of Senior Health Month over the entire month of October at www.insurancenewsnet.com/topics/monthly-focus

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

Why the 4% rule may no longer be the retirement golden rule

Even the father of the 4% retire ment rule, William Bengen, admits that it’s time to rethink that rule.

Anthony Martin

Doesthe 4% safe withdrawal rate for retirees still pre serve a retiree’s portfolio, or can that rule be put on the shelf for another time?

The 4% rule for retirement withdraw al and spending was articulated for the first time in 1994. Since then, financial planning experts have relied on this cornerstone of client retirement income management.

It turns out that the “4% beacon” may appear slightly blurred, if not even shak en. The current economic climate and the changing financial landscape undermine the rule’s reliability.

Even the father of the 4% retirement rule, William Bengen, admits that.

William Bengen confesses he’s violating the rule Bengen has reconsidered his 4% invention and doesn’t treat it as a golden rule for retir ees anymore.

The 60/40 stock and bond portfolio has been referred to as a guidepost by moderate-risk investors. An eye-opening truth is that Bengen’s personal portfolio accounts for 10% bonds, 20% stocks and 70% cash.

As Bengen claimed in a Wall Street Journal interview, belief in the 4% rule

and the strategy of allocating 60% to eq uities and 40% to bonds do not actually fit the modern settings.

Let’s see why it happens and why you might need to offer your retiree clients a more flexible strategic plan to secure their post-retirement finances.

Why the 4% rule may not be a rule of thumb anymore

Skyrocketing inflation

Inflationary periods may slowly kill your clients’ retirement savings accounts and investment strategies. Inflation hit a record high of 9.1%, and as retirees have to with draw more from their accounts just to keep to the same standard of living and their costs spiral out of control.

Besides, the chance of a more-aggressive inflation-driven recession is increasing.

Unpredictable market returns

They’re not at a bubble range, but equity market valuations are considerably higher than the historical average and they impact the 4% withdrawal rule tremendously.

As for bonds, yields have fallen to re cord lows. Bonds used to provide a guar anteed and steady income. Not anymore.

Variability of personal investment risk

Adapting to inflation, the 60/40 portfo lio is facing the worst year ever, accord ing to Bank of America Securities in a recent Barron’s article. The 60/40 portfolio should be adjusted in accordance with the

As Bengen claimed in a Wall Street Journal interview, the belief in the 4% rule and the strategy of allocating 60% to equi ties and 40% to bonds do not actually fit the modern settings.

client’s

financial aims and investment time hori zon. However, the stock-bond combina tion should remain the core, even if retirees don’t strictly follow the 4% rule. Based on Bengen’s calculations, a 50/50 mix of equi ties and bonds can make a nest egg last for approximately 33 years.

Are your retiree clients going to live so long? Turns out they need to prepare for a longer retirement.

Life expectancy a factor

COVID-19 drove a drop in U.S. life expec tancy rates. Still, living longer and exhaust ing financial resources remain significant retirement risks.

Taking into account all these reasons, your clients may need to reconsider their retirement spending strategies.

Rethinking a retirement withdrawal strategy

Here are some alternatives to the 4% with drawal rule, along with ways to help your clients weather market turbulence.

1) Personalize a retirement spending plan and get out of the 4% rule box.

In a 2021 interview with Barron’s, Bengen said he believes that retirees may now switch to 4.5%, while the bottom rate may be 3.3%.

But do your retiree clients need to go to extremes?

Why not coin a personalized retire ment withdrawal plan, just like Bengen did himself?

“Financial professionals should think out of the box now and apply personal ization strategies to reach flexibility with dynamic withdrawals,” said Mark Pierce, CEO at Cloud Peak Law Group.

“Starting with a lower withdrawal rate may be risk-free. Not many retirees would like that variant. However, there are some obvious things they cannot deny. Here’s one of them: There will definitely be more expenses for health care and medicine af ter age 75. Consequently, retirees will have more withdrawals starting from that age,” he continued.

2) Working out a safer asset allocation. Bengen’s recommendation on the asset allocation blend is as follows: 35%-40% in bonds, 50%-55% in stocks and 10% in cash. He sees it as an op timal solution.

It also may be benefi cial for current retirees to rebalance their portfolios to 20%-30% stocks. Thus, they enable higher predict ability and steadier growth.

3) Sticking with the required minimum distribution. The required minimum distribution applies to individual retire ment accounts; profit shar ing plans; 401(k), 403(b) and 457(b) plans; and other defined contribution plans.

While the 4% spending rule is a fixed plan, the RMD approach is a variable one. Based on life expec tancy, it’s a more contextu al approach.

raise the withdrawal rate when the market is stronger.

5) Reallocating a portion of a retirement saver’s portfolio to fixed indexed annuities.

Or any other type of annuity, as annu ities provide nourishment in an income

sources — such as annuities, certificates of deposit or rental income — financial experts should also draw their clients’ attention to Social Security as a possible income booster in retirement,” recom mended Catherine Schwartz, finance edi tor at Crediful. “If retirees postpone filing for Social Security benefits and claim them as late as possible (as they turn 70), they’ll get up to an 8% increase per year,” she said.

History of the 4% rule

The concept of the 4% rule is attributed to Bill Bengen, a financial advisor in Southern California who created it in the mid-1990s.

The rule was created using historical data on stock and bond re turns over the 50-year period from 1926 to 1976, focusing heavily on the severe market downturns of the 1930s and early 1970s.

Bengen concluded that even during untenable markets, no historical case existed in which a 4% annual with drawal exhausted a retirement port folio in fewer than 33 years.

SOURCE: Investopedia

This method can be personalized. Financial advisors should create indi vidual life expectancy RMD tables for their clients and adjust them on the go. Taking an average 20-year life span after retirement, the lowest starting point may even be 5%.

4) Using guardrails to optimize the withdrawal rate.

In addition to inflation adjustments, the Guyton-Klinger guardrails method lifts starting withdrawals even more meaning fully.

Using probability-of-success-driven guardrails, a retiree can cut back on with drawals during a market downturn but

starved environment.

Your clients would want to play it safe, wouldn’t they?

They may do that with guaranteed minimum benefit. Capped and uncapped FIAs, for example, may become potential solutions. Applying the 4% rule to annu ities, you can educate your clients on why incorporating an FIA in a retirement strat egy is worthwhile.

6) Considering supplementary variants to boost income in retirement.

“Focusing on guaranteed income

More than 25 years have passed since William Bengen coined the 4% rule for retirement withdrawals. We’ve demonstrated some specific reasons why it might be slightly behind the times now. When even its inven tor dared to break his own rule, why should retirees stick to it, with all its pit falls popping up now?

Helping clients re vise their retirement withdrawal strategy should start with an explanation of why the 4% withdrawal rate may not be quite applicable to particular situations and circumstances — especially with the ever-changing fi nancial “weather” of today.

When retirement securi ty matters most, a flexible, personalized and holistic financial strategy should result in a strong and suc cessful retirement spend ing plan.

Isn’t it the best time to apply some changes to the 4% oldie and reevaluate other alternatives to ensure your clients’ fi nancial stability and happy retirement?

Anthony Martin is founder and CEO at Choice Mutual. He may be contacted at anthony.martin@ innfeedback.com.

Like this article or any other? Take advantage of our award-winning journalism, licensure and reprint options. Find out more at innreprints.com.

6 ideas to attract talent and retain your best employees

How to boost your applicant pools and entice your current employees to stick with you.

By Pam Stampen

Twoand a half years ago, insur ance companies and agencies were working hard to retain their employees after the COVID-19 pandemic pushed the world into a sudden recession.

Then, in 2021, we faced a new challenge; rhe “great resignation” spurred millions of employees to seek greener pastures as they left their jobs. Many leaders figured hiring levels would soon settle back to their reg ular pace, but so far, they haven’t. Simply put, it’s hard to find good talent. This is particularly true in the insurance industry, one that requires a skill set that includes problem-solving, organization, analytical skills and customer service.

Many organizations in our industry are trying to figure out how to recruit the right people to fill their positions. Although employees certainly are driven by salary, they also want to work for an organization that has a sense of purpose. With that in mind, here are six ideas for boosting your applicant pools and enticing your current employees to stick with you.

to mitigate their risk and rebuild after a disaster. When employees feel they are making a difference at your company, they are more likely to stay put — even if another organization gives them an at tractive offer.

1

Make sure your company’s values and purpose are clear. Insurance companies and agencies are focused on their customers, helping people and orga nizations through hard times. That may seem obvious to you, but is it obvious in everything you do? Do you highlight your corporate values during hiring interviews?

Provide opportunities for your employ ees to help the communities in which they live and work — not just by addressing claims but also by rolling up their sleeves and working side by side with customers

Give your employees the chance to par ticipate in committees that reinforce the good work you do. They will feel owner ship and a personal investment in the or ganization, which can translate into better employee retention.

2Offer career paths within your company. Recent college graduates and almost-graduates want to know there is room to grow if they join your organi zation. Show them you will provide them with opportunities to further their ed ucation, such as offering job coaches or subsidizing continuing education courses. Depending on the size of your company and the quality of the talent, you could

RETAIN YOUR BEST

Employees: Why they leave, why they stay

» 89% of Americans who left their job in 2021 or plan to leave in the near future said they felt burned out and unsupported.

» 57% of workers said they left their jobs because they felt disrespected at work.

» 43% of those who left said it was because of insufficient benefits.

» 39% left because of long working hours.

» 80% of workers said they were more likely to stay at a job that offered them mental health benefits.

» Workers are more likely to leave their jobs over a toxic work environment than they are over low pay.

even map out possible career paths avail able to them for growth.

3Showcase your company’s unique benefits and culture. And if you don’t already have unique benefits, offer some! Yes, health insurance and a retire ment plan are musts, but these days, many companies are offering their employees much more than just the basics.

For example, some permit employees to donate their paid time off to another employee facing a personal challenge and needing extra time off. Employee assis tance programs are also an important added benefit — particularly these days, when mental health issues are at an alltime high.

When potential employees are inter viewing at your company, they also want to know about your company culture. They will spend a large percentage of their waking time working for you, and they crave a community. You can create that sense of belonging for them so they feel like they are surrounded by trusted friends and neighbors instead of co-work ers. This is especially important for young people, who may be starting out in a new location and want to feel connected.

4Offer flexibility. Now that the world has seen working from home is possible in many situations, work will never be the same. The insurance indus try, in particular, is a great place to offer flexibility. A hybrid work environment is one way to give employees the best of both worlds — time to complete auton omous work at home, while still creating an in-person environment to collaborate, mentor and socialize as a team.

5 Redefine productivity for your employees. Twenty years ago, many companies considered their employees productive if they accomplished a certain number of tasks by the end of the day. As work schedules have become more flexible, many insurers’ definition of pro ductivity has changed as well. They view an employee’s worth based on their out comes rather than the number of hours they worked or the number of “things” they created.

Imagine you have a choice between two sales associates; one works 50 hours a week and is able to close the deal on an average of five interactions a week. The other works only about 30 hours a week but usually closes the deal on at least 10

interactions per week. Which employee would you prefer?

6

Recognize good work. Even the most productive, happiest employ ees need a boost now and then. Managers often will call out particularly good work — but what if you have a manager who doesn’t do this regularly? You risk that person’s team getting burned out because they don’t receive any positive feedback.

Instead, you could have a companywide system of doling out accolades to em ployees who have worked especially hard. Make positive feedback a part of your cul ture so it doesn’t depend on the manager.

Even the best-paid employees won’t stick around if they don’t see value in the company for which they are working. You believe in your company, so make sure your employees do too. Turn your business into the place everyone wants to work, and soon you will find that you have your pick of quality talent.

Pam Stampen is chief peo ple officer at Church Mutual Insurance. She may be con tacted at pam.stampen@ innfeedback.com.

SOURCES: Pew Research, Forrester, MIT Sloan Research Lab

discussions with industry experts

Today’s selling and buying environment requires new standards

Our country and its life insurance industry have experienced phenom enal growth since the turn of the last century.

During the 20th centu ry, we saw such interruptions as a 10-plusyear economic depression, two world wars and numerous foreign conflicts. From the 1905 Armstrong investigations to the era of “Father Knows Best” to the time just prior to the COVID-19 pandemic, life ex pectancies in the U.S. have risen from an average of 49 years in 1905 to 79 years in 2020 — a 68% increase.

In 1905, $5 billion in life insurance death benefits were in force. By 2020, that number grew to $20.4 trillion (a 4,080fold increase). By almost any measure, that’s progress.

Not so progressive are sales practice issues that seemingly move the industry three paces forward and then two paces (or four) back, reflecting the awkward and ten uous move away from “caveat emptor” and toward fiduciary standards of care. This is the ebb and flow of the issues reviewed in last month’s InsuranceNewsNet article

“The Game of Life.”

By Richard M. Weber

There has been a growing concern for providing enhanced consumer protection in the purchase of increasingly complex annuities and life insurance products. This concern was prompted by the 2010 DoddFrank Wall Street Reform and Consumer Protection Act’s attempt to harmonize agent and broker sales behavior with that of fiduciaries. Concerns further increase with the existence of extremely high and upfront sales compensation. After all, doesn’t compensation drive sales behavior? But compensation won’t change anytime soon, notwithstanding attempts in the specialty area of “no-load” products.

Major regulations and rules impacting certain groups of advisors

1. Following the passage of the 1974 Employee Retirement Income Security Act, the Department of Labor attempted to broaden the extent to which advisors selling products or services to retirement plans would be deemed to fall under strict fiduciary standards. Implemented in 2015, the DOL’s updated fiduciary regulation was vacated by the U.S. Court of Appeals for the 5th Circuit in March 2018.

“DOL 2” was instituted in 2021. Both ef forts were an attempt to impose fiduciary duties on those receiving fees and/or com missions when rendering financial advice and/or making product sales to retirement plans, expanded to include individual re tirement accounts and Roth plans.

2. In 1979, the Society of Financial Service Professionals began requiring applicants to agree to abide by its Code of Professional Responsibility as a condition of membership.

3. In 2019, the CFP Board of Standards upgraded its fiduciary standards to require that all client discussions and planning per formed by a CFP certificant be performed at a fiduciary level. Unstated, though implied, is that if something should have been discussed in the planning process but wasn’t, the CFP may be in jeopardy of a complaint or lawsuit in the event that a client claimed the CFP’s failure to provide advice created financial loss for the client.

This is probably most important in the area of personal risk planning, some thing many non-insurance advisors do not provide.

There has been a growing concern for providing enhanced consumer protection in the purchase of increasingly complex annuities and life insurance products.

4. New York’s Regulation 187 went into effect for life insurance sales in New York state in early 2020, imposing “client best interest” and suitability requirements on agents and brokers in the sale of cashvalue and term life products as well as annuities. The regulation was suspended by the Appellate Division of the New York State Supreme Court in April 2021 and is now under appeal to New York’s Supreme Court. Most life insurance companies sell ing in New York continue to require agents and brokers to follow the broad require ments of the suspended regulation.

5. Also in 2020, the Securities and Exchange Commission and the Financial Industry Regulatory Authority introduced Reg BI to address client best-interest issues. While some commentators suggested Reg BI didn’t go as far as the requirements of the DOL or the CFP Board of Standards, it was at least an important first step. FINRA has already audited and assessed some fines for failure to meet the new standard.

All of these reflect current regulatory imperatives, addressing producer behav ior by those who fall under various reg ulatory purviews. However, the broader question must be asked: What is the advi sor’s responsibility to the client when it is merely a matter of ethical and professional imperatives?

Clerks are largely regulated by rules, generally with clear do’s and don’ts. Professionals are regulated by princi ples-based processes and procedures. These make it inherently more difficult to judge deficiencies in individual situations that may change the objective viewpoint.

Organizations weigh in Finseca occasionally coauthors posi tion papers with trade groups such as the American Council on Life Insurance. Finseca has a broad mission to protect the interests of agents and advisors, and as a result, it generally provides pushback as the counter to the pull for more regulatory sales practice solutions.

The Life Insurance Consumers Advocacy Center is a California state-focused notfor-profit entity with the mission to create greater transparency in life and annuity sales practices, especially in the area of “in vestment-focused” product sales. The need for LICAC and similar financial watchdogs

Low/no load policies

So-called low/no load life insurance policies suppress or elimi nate agent compensation yet represent an extremely small niche within the overall sales of life insurance products. Only a hand ful of insurers make such products available. The leading no/low load life insurer in 2020 placed only 189 policies, less than 1% of its total business, in this category. For context, all life insurers combined placed 5.6 million policies in 2020.

The appeal of low/no load comes from the erroneous belief that commissions are paid out of the customer’s account and, if eliminated, would enhance the value of the product. This is partly true but mostly wrong.

Commissions are not a charge against product account values but are paid out of the carrier’s general account. To avoid imme diate terminations after paying commissions as high as the initial premium itself, the carrier will impose a “surrender” charge on immediate terminations, gradually reducing it to no charge after as few as five or as many as 20 years.

Because so few low/no load policies are sold as a percent age of the total, distribution costs are disproportionately high. Compared to commercial, commission-paying policies from quality carriers, the numbers do not justify the expectation.

is one of the more recent reflections of the broader issues first raised by Dodd-Frank and ending with New York’s Regulation 187.

Today’s issues — front and center

1. Premium financing (using borrowed money to pay life insurance premiums) has existed for a number of years, but the volume and breadth have increased mark edly in the past five to 10 years. The con cept works under the premise that policy values will increase at a greater rate than loan interest, along with the expectation that such loans will ultimately be extin guished by policy values.

At the same time, it is assumed the cli ent has the means to pay premiums but has more profitable opportunities, especially in times of low borrowing rates.

In reality, however, there isn’t a good probability the policy sales illustration will deliver the expected benefits after an objective analysis using appropriate statistical measurements of the stock market’s financial ups and downs. Along with the maxim first stated by Aristotle,

loosely stating, “We are drawn to the at tractive impossibility rather than the less attractive probability,” we are currently in a market downturn in which indices and current segments are generally at 0% guar antees, while loan interest rates are rapidly rising. Adding to the concerns about these plans are the instances of loan commit ments that are greater than the borrower’s net worth.

2. Life insurance enjoys federal and state income tax advantages not accorded most asset classes. These tax benefits were created with widows and orphans assumed to be the primary beneficiaries of life insurance. But these tax benefits are now being sold to wealthier clients for whom tax benefits are the primary — not secondary — feature.

Rising income tax rates, or at least the possibility of higher rates, prompted agents to promote the tax advantages of tax-deferred policy cash-value buildup and the subsequent absorption of those defer rals into tax forgiveness upon payment of the death benefit.

the Know In-depth discussions with industry experts

What’s your ‘best’ premium?

3. We recently saw a prominent finan cial newsletter pitch for the many bene fits of a Tax-Free Retirement Account — a description free of any allusion to insur ance, yet the underlying product is a life insurance policy. The idea is to suppress the death benefit component of cash-value life insurance to the greatest degree pos sible in favor of maximizing tax-deferred accumulation of cash-value and “retire ment income” policy loans.

The typical illustration can show more than 4-to-1 tax-free cash flow — ostensibly

4. The newest twist on a “tax-free retire ment account” occurs when the benefits are proposed through premium financing.

The bottom line in most cases is “It ain’t gonna happen,” potentially leaving the cli ent with previously deferred policy gains subject to ordinary income taxes in the year the policy lapses.

lapses before it becomes a death benefit, there is immediate ordinary income tax ation on any gains in the policy in excess of the policyowner’s basis.

for retirement — compared to the “premi ums” paid in the earlier years. However, because these products are so complex, it is highly unlikely illustrated expectations will be met. Carrier control over many of the switches and levers of policy credits and debits, and policy sales illustrations with constant rate assumptions make it inherently both volatility and the carrier’s control over key factors affecting the actual outcome of the proposed benefits and costs.

5. In most of these new trends, policy illustrations — primarily for indexed universal life — are becoming the main thrust of the sale, with almost total dependence on the sales proposal rather than understanding how the policies work in the face of volatile stock market returns. The most likely result is it’s unlikely the illustrated expecta tions will be realized It is not that the IUL is “bad.” But in a number of cases, the cli ent is not given the full picture of the pos sibility the scheme will not work out as “illustrated.”

6. Remember all those wonderful tax benefits accorded to life insurance pol icies? There is a contingency rarely men tioned: The insured must die with the policy still in effect and paying a death benefit. If the policy is surrendered or

According to a 2016 academic paper by Daniel Gottlieb and Kent Smetters, “nearly 88% of universal life policies ul timately do not terminate with a death benefit claim,” hence, taxes accelerate on all those previously untaxed policy gains.

7. Since the introduction of current assumption/universal life products, the typical buyer’s almost universal objective is to pay only the lowest possible premium. In many cases, this causes the client to sort through different policy illustrations to seek the lowest price.

But many of the factors resulting in a calculation of a planned (not guaran teed) premium are in the control of the agent running the illustration software. A planned premium is not the premium. The correct premium is the one that will sustain the policy until the insured per son’s death, whether that’s in five years or in 50 years.

The policy must be assessed periodically to make sure that the correct premium is being paid for all the inevitable changes that will occur in various policy debits and credits that occur as time goes on.

Chasing the initial appearance of “best price” does not and cannot assure the buy er their policy will have a high probability

The newest twist on a “tax-free retirement account” occurs when the benefits are proposed through premium financing.

Weber’s ‘10 Commandments’ for PREMIUM FINANCING THOU SHALT NOT,

Propose premium financing except for those prospective clients in need of large amounts of insurance who have the cash flow and/or assets to pay premiums directly — yet have the sophistication, savvy and resources to capitalize on the potential arbitrage inherent in premium financing proposals.

Use the phrase “free life insurance” in conjunction with premium financing.

Recommend a plan of premium financing when it is the only way to pay the premium.

Assume that the client’s death is the only way to end the arrangement.

Exclude the client’s other advisors from the discovery and decisionmaking process.

of being in force whenever death occurs. We need a new paradigm for “Goldilocks premium funding”: not too much, not too little — but just right.

8. Rather than seeking the lowest price, the better paradigm is for the buyer to consider the minimum probability of success they are willing to accept for the insurance policy and its duration. Does a 50-50 flip of a coin represent a suffi cient probability? Hardly. Most clients — including those of great wealth — typi cally want a probability of success of at least 80%, 90% — even 100%.

With that vital insight, the calculation of a universal life premium then can be made by determining the current payment that will meet that probability threshold. After two or three years, the policy should

Proceed with a recommendation unless all the advisors in No. V are in agreement that it makes sense for the client to proceed.

Proceed without an exit strategy that can be implemented immediately (say, the day after Lehman Brothers defaults and all premium financing lenders call their loans/letters of credit).

Recommend recapitalization of interest.

Provide only one scenario of the interaction of policy credits, policy expenses and loan interest rates.

Project insurance credits high and loan rates low without the opposite scenario prominently portrayed and discussed.

be reevaluated based on current account values and other changes that may have occurred. This periodic reassessment pro cess should be deployed throughout the insured person’s life.

A new paradigm and a new management strategy

As readers can see, the originally solved best premium in this example has less than a 10% chance of sustaining to age 100. This client’s average life expectancy is age 91. In this case, the best premium produces unac ceptable odds of success.

Alternatively, armed with this infor mation, few clients (and their agents) would be willing to take a chance that the best premium will sustain the pol icy to whenever death occurs. A client wishing to ensure the availability of the

policy’s death benefit regardless of the many ups and downs likely to occur in a lifetime will need to use the probability of success paradigm for effective lifetime management of their policy.

Richard M. Weber, MBA, CLU, AEP (Distinguished) is a 56-year veteran of the life insurance in dustry, having been a successful agent, a home office executive, a software designer, author of four books and more than 400 published articles, and an educator. He is the co-creator of Certified Insurance Fiduciary, an online program for advisors wanting to enhance the scope of their advisory services. He may be contacted at dick.weber@innfeedback.com.

Overcome client discomfort about discussing DI and LTC

A lifetime of relief and security is well worth a few uncomfortable conversations.

By Scott Fligel

Disabilityand long-term care can be unpleasant topics to discuss with clients. Most people do not enjoy con sidering the possibility of becoming disabled or needing assistance with daily life. Discussing the idea that their families may not be financially pre pared to support them in those scenarios can be difficult as well. These discomforts lead many clients to avoid the discussion altogether.

The worst possible outcome of being financially unprepared for disability or long-term care needs, however, is far

as cryptocurrency, real estate and the FIRE (financial independence, retire early) movement. Because they’re inundated by an incessant stream of news articles and social media posts, it’s not surprising that some clients will forget they are their most valuable asset.

more unpleasant. This is especially true if the client assumed their loved ones were equipped to handle those needs. Financial advisors must make sure they discuss these important protections with clients — because a lifetime of relief and security is well worth a few uncomfort able conversations.

Why planning is crucial

A person’s earning potential is one of their most important assets. This is likely old news to financial advisors, but it may be a different story for clients. We now live in a world that pulls our attention toward an ever-increasing number of flashy investment options and strategies, such

The prospect of losing that earning po tential is so scary that most people prefer not to think about it, or they think about it only in the context of others. But this avoidance hides the reality that it’s statistically common for someone to lose their earning potential through acquiring a dis ability or need for long-term care. One in four Americans will expe rience at least temporary disabili ty before retirement age, and 7 in 10 seniors will require some form of long-term care. This means ad visors may need to start a discussion that clients may not want to have.

Making the conversation easier Before approaching this topic, or any other that can set off emotional alarms for your clients, advisors should make sure they have a solid relationship with the client.

This relationship must be built on trust and a mutual conviction to act in the cli ent’s best interests. Most people want advi sors who ask thoughtful questions, actively listen and offer feedback or recommenda tions when truly appropriate. Taking this approach makes it far more likely that advisors will be taken seriously when they bring clients into unpleasant territory.

Once it’s time for the conversation, begin by asking questions about a client’s family and friends — have any of them needed as sistance with day-to-day life? Most people will say yes. Ask them if they understand the true financial impact of lost income, from needing assistance themselves or from taking time off from work to care for a loved one, and most people will say no.

At this point, you can outline the poten tial costs of care in their location and the stress families often face when they are without coverage. The final point of discus sion should be an explanation of how much disability or long-term care insurance can save your client. This is especially true for disability insurance, which typically has a low annual premium.

Conversations with clients about dis ability and long-term care can be incred ibly daunting. Not only will some clients initially not want to engage with the topics, but the details can be emotionally difficult for almost anyone to digest. But tackling the problem head-on, as uncomfortable as it can be, is far superior to losing a lifetime of built-up assets in just a few years be cause of an unplanned-for need for care.

Scott Fligel, CFP, is a wealth manage ment advisor with Northwestern Mutual and Fligel Financial Services. Scott is a 24-year and lifetime MDRT member and a Top of the Table qualifier. He may be contacted at scott. fligel@innfeedback.com.

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

One in four Americans will experience at least temporary disability before retirement age, and 7 in 10 seniors will require some form of long-term care.

Keeping up with the LTC market

By Carroll S. Golden

As we begin Long-Term Care Awareness Month, it’s im portant to recognize a few basic issues shaping today’s long-term care landscape.

Advisors are likely to face several chal lenges when working with clients on com prehensive plans. First off, few people have planned for potential extended or LTC needs, and many consumers and profes sionals lack in-depth education about the scope of planning options. This includes a large cohort of maturing baby boomers, many of whom will require some level of care as they age.

Complicating the outlook is that COVID-19 highlighted and exacerbated the shortage of skilled and unskilled care pro viders. The rising costs of health care and prescription drugs show no sign of abating.

Consumers consistently fail to plan for LTC, so crisis planning is becoming more common. The results are negative consequences felt by family members and friends as well as federal and state budgets.

Many consumers do not understand current programs or are misinformed about who qualifies for long-term services and support. The oldest of the baby boomer generation are in their late 70s, and many mistakenly believe government Medicare and Medicaid programs are equipped to handle their LTC needs. In reality, longev ity is impacting programs not designed to handle the growing volume or required length of care. These are some factors in fluencing state and federal governments to consider legislative options.

Government LTC proposals

NAIFA’s Limited and Extended Care Planning Center — supported by spon sors specializing in all aspects of limited, extended and long-term care — formed a legislative working group that follows, dis cusses and influences legislation relating to federal and state LTC proposals. The

LWG consists of participants from carri ers, broker general agencies, work site spe cialists, advisors, agents and NAIFA staff. The group stays up to date about both fed eral and state initiatives.

Developments in the federal space the group is engaged on include:

WISH ACT, the Well-Being Insurance for Seniors to be at Home Act:

» Would charge 0.6% payroll tax (50/50 cost share by employee and employer).

» Elimination period is one to five years — means-tested by income.

Social Security Caregivers Credit Act:

» Would provide retirement compensa tion in the form of Social Security credits to individuals forced to leave the workforce to care for loved ones.

Better Care Better Jobs Act:

» Would expand Medicaid to home and community-based services.

» Increased wages and benefits for paid caregivers.

» Funded by Medicaid in the federal budget to cover home and communi ty-based services.

Credit for Caring Act:

» Would create a nonrefundable tax credit of up to $5,000 for caregivers.

The Long-Term Care Affordability Act:

» Would allow use of qualified money to purchase LTC insurance.

» Excludes from gross income retire ment plan distributions up to $2,500 a year to pay premium.

» No income tax or pre-age 59 ½ penalty on distribution used.

At present, none of these proposals is moving forward.

States move in State budgets are becoming increasingly stressed as demands for services and sup port for LTC increase. Washington is the first state to pass legislation establishing a publicly funded LTC program.

» Funding will come from a mandatory payroll tax: 0.58% of all W-2 income, with no cap or limitation. It will be assessed via payroll deductions.

» Employees had until Nov. 1 to apply for an exemption if they had qualifying

private traditional LTC insurance, group LTC coverage, linked and hybrid life, or annuity hybrid policies in place.

» The maximum lifetime benefits are $36,500 (adjusted annually with Consumer Price Index).

» Gov. Jay Inslee and Washington Democratic legislative leaders announced an agreement to delay the new WA Cares payroll tax on employees as they address issues with the new LTC program.

Acknowledging the importance of planning for LTC needs is an import ant first step. However, the program is undergoing further clarification. Other states — including California, Michigan, Minnesota, South Dakota and Vermont — may soon follow suit with public-op tion LTC plans of their own.

California established the Long-Term Care Insurance Task Force, which will present a feasibility report to the state’s insurance commissioner, governor and legislature early next year. Significantly, the program is not expected to give state residents notice of a period to purchase qualifying insurance to opt out of the tax once the legislation is adopted. Hawaii has proposed a plan (Kapuna) focused on sup porting working caregivers.

The long-term care industry is respond ing to these initiatives by working toward developing supplemental products that will enhance public-private programs. Additionally, carriers are creating new innovative products to expand options for consumers to plan for funding care. Cooperation between states and carriers concerning efficient product approval and consumer education will be essential to the success of any program. It is important that advisors stay well informed during LongTerm Care Awareness Month and through out the year to understand how these developments might impact clients.

Carroll S. Golden, CLU, ChFC, LTCP, CASL, FLMI, CLTC, is the executive di rector of NAIFA’s Limited and Extended Care Planning Center. She is the author of How Not to Tear Your Family Apart. She may be contacted at carroll. golden@innfeedback.com.

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

The long-term care market continues to change, and several factors make it even more complex.

survey, U.S. adults could correctly answer only about half of the financial literacy questions. Eighteen percent correctly an swered more than 75% of the index ques tions, while 23% correctly answered 25% or fewer of the questions. As bad as these re sults were, the grades were even worse for Generation X and millennial respondents.

In fact, data from the FINRA Investor Education Foundation’s National Financial Capability Study shows a strong correla tion between respondents with higher fi nancial literacy (scoring above the median on a seven-question financial literacy quiz) and those who feel financially secure. That finding is exacerbated when, according to LIMRA’s 2022 Insurance Barometer Study, 2 in 5 parents say they are barely or not at all financially secure.

The strength coach analogy

As a 46-year-old coming out of the pan demic, I made my physical fitness a prior ity. Although I can’t control every aspect of my health, I do want to increase my odds of having a long and active retirement. If

track my performance. While I’m using technology to support my fitness, many of my friends use personal trainers and strength coaches. Improving your physi cal fitness doesn’t have to be a one-size-fitsall approach.

The same logic can apply to finances. By investing time and effort in reading books, listening to podcasts, or using budget tools and programs, some might be able to build financial literacy on their own. Others will need a financial professional, friend, coach, trainer or advisor to increase their financial knowledge, ultimately leading to financial success.

From inertia to action

Why don’t more individuals invest time and effort in improving their financial acu men? Research shows that time, topic dis comfort and being overwhelmed are three of the key areas of inertia. So what can you do? Here are three things to consider.

1. Have a social media presence. In LIMRA’s 2022 Insurance Barometer Study,

Bring expertise and empa thy to topics like end-of-life, adult care and holistic advice. According to LIMRA’s 2022 Insurance Barometer Study, 40% of respon dents felt discomfort during end-of-life discussions. Advisors and agents can build trust with clients by starting with basic top ics like emergency savings, budgeting and longevity.

3. Connect at a deeper level. People love stories. They want to feel emotions. Storytelling is powerful because it can create an emotional connection between you, your personal brand and the client. You can share 1,000 facts with a client with little success, but a powerful story will have a greater chance of moving a client closer to action.

Keith Golembiewski is senior director of LIMRA’s strategic re search program. He may be contacted at keith.golembiewski@ innfeedback.com.

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.