How the industry is responding to economic conditions as it eyes the coming year.
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POLICY NOT AVAILABLE
Policy Form No. I L1702 and if made available, associated Form Nos. R I1506, R I1703, R I1705, R I1706, R I0762, R I0825-T and R I0827-T underwritten by Assurity Life Insurance Company, Lincoln, Nebraska.
Assurity reserves the right to order, at the company’s expense, evidence of insurability which the company feels is necessary for the prudent evaluation of the risk on any application. Assurity is a marketing name for the mutual holding company Assurity Group, Inc. and its subsidiaries. Those subsidiaries include but are not limited to: Assurity Life Insurance Company and Assurity Life Insurance Company of New York. Insurance products and services are offered by Assurity Life Insurance Company in all states except New York. In New York, insurance products and services are offered by Assurity Life Insurance Company of New York, Albany, NY.
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6 Training for Greatness — with Harry Hoopis
Harry Hoopis shares what it takes to successfully recruit new agents and inspire veteran agents through training and education.
By Susan Rupe How the industry is responding to economic conditions as it eyes the coming year.
LIFE 23 Study finds integrating insurance products boosts value to investors
By Doug Bailey
How insurance products can meet investors’ savings and protection needs. 24 Changing financial tides could hit IUL cap rates
By Kyle G. Mills
When will interest rates, index caps and policy crediting reverse course?
ANNUITY 27 Big ideas that could generate lifetime retirement income
By Susan Rupe
18 Flying high — with Bill Keen
By Susan Rupe
Bill Keen, author and financial expert, is inspired to help people engineer their retirement.
Simple ways that retirement plans could generate income for life. 28 It is the ‘perfect time’ for preretirees to consider FIAs
By Susan Rupe
The case for adding fixed indexed annuities in the accumulation phase of a client’s retirement portfolio.
Patricia Cain
Federal law requires group health plans to cover mental health and substance abuse benefits the same as medical and surgical benefits, but many aren’t in compliance.
By
Carl Myers
Black Americans are particularly concerned about repaying debt and saving for retirement. How advisors can help them with these competing financial priorities.
38
Brain Thorp
Here are some tips for advisors who want to find success with online testimonials.
John Hilton
Nearly a decade after Integrity Marketing Group acquired its first company, the IMO is now one of the giants of distribution. What is next for CEO Bryan Adams and Integrity?
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As we’ve exited 2022, we can say with certainty that it has been a challenging year. For similar reasons, 2023 is likely to be challenging as well. While these challenges — economic and otherwise — are the reality, they also provide opportunity.
About 10,000 baby boomers are retiring every day, and the runway for near-retirees is just as crowded. A triple whammy of high inflation, a rocky economy and fear of outliving savings as lifespans increase is facing this generation of new retirees and increasing their fear and trepidation about retirement. Should I retire? When is it OK for me to retire? Do I have enough in savings to retire? These are among the common questions, even among those who have saved close to seven figures in retirement funds.
Many retirees are seeking out part-time employment to make ends meet, while other near-retirees are postponing their retirement date.
With retirement a stark and imminent reality, the reassurance of having advisors providing guidance through this process is essential. In addition, spending in retirement has become another hidden worry for the current retirement generation. Due to factors such as high inflation, many are reporting overspending from their retirement savings. This is another area where guidance and reassurance have never been more important.
Addressing these concerns and questions should be a key part of how advisors work with clients in this demographic. Although clients may have planned well for decades leading up their retirement, executing the final steps and having confidence in their retirement plan is a challenge that advisors are uniquely able to solve.
At the same time as retirement angst grows for older generations, a raft of studies over the past year have shown that younger generations, such as Generation Z and millennials, are more tuned in to their financial well-being and eventual retirement than earlier generations are.
These young adults are thinking about
savings and retirement from earlier ages and are starting investment funds sooner than most of the older generations did. They understand that time is on their side, and they are taking advantage of that, even if they have only a small amount to invest at the present time.
These generations also represent a great opportunity for advisors, especially as most studies have shown the majority of these younger investors are seeking human counsel, even as they rely on apps and social media for much of their financial information.
The recognition that younger generations are solidly ensconced in social media — and are often more comfortable using apps and texting than they are talking on the phone — provides key guidance for advisors who seek to build their client base. Connecting on social media is essential to a successful practice today. As with all social media, providing insights and expertise along with revealing something of yourself is essential so that a true human connection can be made between advisor and prospective clients.
Investing in daily posting, sharing expertise on appropriate platforms such as LinkedIn — or even TikTok — and making short videos on key financial topics are some of the pathways to building these connections.
The Consumer Price Index saw its largest increase in 40 years in June when it increased a staggering 9.1%. That, along with supply chain issues and the return of commuter traffic to near-normal levels following the declines during the height of COVID-19, has had an impact on car insurance. Forbes reported in Nov. 2022 that the American Property Casualty Insurance Association found that insurance claim costs had been rising faster than the CPI and outpacing increases by car insurance companies.
Drivers are expected to see significant rate increases when their policies come up for renewal or they shop for car insurance. As part of this equation, repair costs
are expected to continue to rise as well, as original equipment manufacturer parts are harder to find and causing delays in repairs.
As with many other sectors in the economy, when these factors will abate is anybody’s guess, and their growing impact is sure to be felt until some cooling down takes place.
Some of those same factors, along with the ever-increasing severity of natural catastrophes including hurricanes, tornadoes and even severe hailstorms, are also throwing a wrench into the reinsurance market. Along with increased storms and damage, higher home valuations are playing a role. Florida and Louisiana are particularly hard-hit, but watch for this trend to grow and impact more of the country’s susceptible geography.
John Forcucci Editor-in-chief
said last month. “If the North Carolina Department of Insurance receives the proposal, it will be reviewed to determine if it meets the requirements of North Carolina law and is in the best interests of policyholders.”
Lindberg was freed after his conviction for trying to bribe state Insurance Commissioner Mike Causey was tossed out by a judge in July.
According to court documents, Lindberg controlled four insurers — Colorado Bankers Life Insurance Co., Bankers Life Insurance Co., Southland National Insurance Corp. and Southland National Reinsurance Corp. — with about 262,000 policyholders combined.
Lindberg claimed the deal he worked out will get money back to policyholders.
Upon completion of the sale, including assets held in reinsurance trusts, the North Carolina insurers formerly owned by Lindberg will have $337 million of capital and surplus and will have $3.22 billion in total assets, a press release said.
by John HiltonDisgraced insurance magnate Greg Lindberg announced recently that he sold his four financially troubled insurance companies in a deal that would make policyholders whole again.
The problem is they might not be his companies to sell.
In early December, Lindberg announced the sale of stock by GBIG Capital to Universal Financial Holdings that would allow all four of Lindberg’s North Carolina insurance companies to exit rehabilitation and would allow policyholders to access all policy benefits.
However, a North Carolina Superior Court judge had placed two of those insurance companies into liquidation two weeks earlier. Triangle Business Journal in Raleigh, N.C., reported that the judge
heard testimony on a proposal to allow Universal Financial Holdings to take over Lindberg’s insurers but ordered the liquidation anyway.
The insurers were placed in rehabilitation June 27, 2019, by order of the Superior Court of Wake County, North Carolina. Since then, regulators have accused the Lindberg camp of stonewalling efforts to make policyholders whole.
State regulators will continue to control the process, said a spokesman for the North Carolina Department of Insurance.
“Before any such sale can occur, Mr. Lindberg is required to submit the proposal to the North Carolina Department of Insurance for approval, which he has not yet done,” Jason Tyson, communications director for the department,
Total cash and liquid assets, including assets held in reinsurance trusts, will be $2.1 billion, which is equivalent to approximately 95% of the current annuity account value — an extraordinarily high liquidity number in relation to annuity account value.
“With $337 million in capital and surplus and $2.1 billion in liquidity, the insurance companies will be in a position of excellent financial strength to meet all policyholder obligations,” Lindberg said in the release.
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.
Read up on the Greg Lindberg saga, delayed health commissions and the tough P&C market in 2023.
[Editor’s Note: These are some of the major stories to which we are devoting ongoing coverage on InsuranceNewsNet.com.]North Carolina Insurance Commissioner Mike Causey, left, and Greg Lindberg, right, are at odds over the future of Lindberg’s financially troubled insurance companies.
Problematic issues with health insurance carriers not paying agent commissions for plans sold in the ACA marketplace went public with a Texas carrier this fall.
Agents said they hadn’t been paid commissions from Friday Health Plans since that carrier was ordered to exit the Texas health insurance marketplace earlier in November. The Texas Department of Insurance ordered Friday Health Plans to stop offering health policies for 2023 on that state’s Affordable Care Act marketplace, although the carrier continues to offer off-exchange plans.
Agents owed back commissions on Friday Health Plans were finally paid on the day before Thanksgiving.
“We plan to release November and December [commissions] roughly a few weeks after each month’s close,” said Tracy Faigin, Friday Health Plans chief marketing and experience officer. “Commissions were delayed due to some changes we made on the accounting side of the business. We appreciate
everyone’s patience while we went through that process.”
Agent associations such as Health Agents for America have been vocal in their fight for their members’ ability to get paid for serving their clients. HAFA members have told Congress and federal regulators about their ongoing concern with many carriers not paying commissions to agents for new enrollments or enrollments during special enrollment
America. “And unfortunately, if we look back to the last time this occurred, back in the early 2000s, we can expect this to be an 18- to 36-month-long period. Hopefully not that long.”
periods under the ACA.
The Centers for Medicare & Medicaid Services issued a statement in 2016 regarding broker compensation and discriminatory marketing practices. Under a CMS rule, “an insurer … cannot employ marketing practices or benefits designs that will have the effect of discouraging the enrollment of individuals with significant health needs in health insurance coverage …”
CMS determined paying commissions is a marketing practice, HAFA said, and many insurers responded by not paying commissions for new or special enrollments.
Read the full story online: bit.ly/getpaid23
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.
underwriters are willing to cover — will plummet 50% from previous years may be overstated. Still, he said, capacity is definitely tightening.
by Doug BaileyInsurers, reinsurers and property owners are calling 2023 one of the toughest markets in recent memory as they begin the renewal period.
With natural catastrophe losses at record levels, spiraling costs from inflation, and an unyielding investment environment with which to backstop losses, carriers are scaling back capacity, exiting markets in some areas and raising prices to such a degree that some property owners are dangerously deciding to go uncovered.
“Yes, we’re in crisis, we’re definitely at a time of crisis,” said Jeremy Burr, vice president of sales for Insurance Office of
Hurricane Ian and other destructive storms have doubtlessly wreaked havoc on the market.
“Even before Hurricane Ian struck at the end of September, reinsurance pricing and availability were a key concern for the sector,” said Meghan Merris, group property broker with CRC Insurance Services Inc. However, the hurricane’s devastating impact has served to amplify those concerns and solidified the reinsurance market’s resolve in a rapidly hardening property market. Inevitably, these concerns will impact insurers’ capabilities and capacities available to insureds in 2023.
Burr said predictions that capacity — generally the amount of insured risk
“A couple of years ago the market started hardening, and we’re still experiencing part of that,” he said. “Right now, we’re experiencing an absolute gut punch of an already hardening market post-hurricane with a lot of uncertainty as to how the January 1st renewal will go.”
Burr pointed at some reports that predicted a $100 billion reduction in capacity, owing to major players in the market anticipating a significant pullback.
“Just this morning I was speaking with a major, major, major player in that space who was predicting more of a 25% to 40% reduction in PML (probable maximum loss) estimates for next year.”
Read the full story online: bit.ly/pcloss23
Harry Hoopis created one of the largest and most successful financial services firms in Chicago. After decades breaking records for sales and agency growth, his company’s mandatory retirement age forced him to step down. He turned to his passion for training, which had been such an important driver in his success, and founded Hoopis Performance Network to help insurance and financial professionals reach their true potential.
Hoopis is CEO of HPN, which boasts over 100,000 learners in its system. He always has recognized the importance of continuous learning, having provided self-improvement opportunities to staff during his highly successful career at Northwestern Mutual and later growing that experience into HPN. He partnered with LIMRA to produce the sales effectiveness program “Trustworthy Selling,” which has enriched the skill sets of more than 30,000 advisors.
He is the author of the best-selling book The Road to the Bountiful Life. Hoopis prizes the art of listening and lives by his Ten Rules of Life. He believes in working hard, and he recognizes the advantages that recent changes, such as virtual client visits, bring to the industry. He recently was presented with the life insurance industry’s highest honor, the John Newton Russell Memorial Award, in recognition of his contributions to the profession.
Most important, he believes in building trust with a client. “When trust is at the highest point, that’s when the sale is made,” he said. “You don’t have to ask for it. They’ll ask you, ‘Who do I make this check out to?’”
In this interview with Publisher Paul Feldman, Hoopis discusses his lengthy career and his thoughts on developing advisors to the fullest.
Paul Feldman: You have had such an illustrious journey through the insurance industry. How did you get into the business?
Harry Hoopis: I’m celebrating 51 years in the business. It’s kind of a funny story. I was studying accounting at the University of Rhode Island, and because I had dropped the class, I had to take it in summer school. I gave up my construction job, which was paying $4.25 an hour. I needed something
An interview with Paul Feldman, publisher
HARRY HOOPIS shares what it takes to successfully recruit new agents and inspire veteran agents through training and education.
to fill in around summer school class. So, I went down to the placement office, and when I walked in, there was a big sign on the wall. I can still see it. It said: “Sell life insurance part-time, $75 a week guaranteed. Northwestern Mutual Life.”
I’d never heard of Northwestern Mutual, never thought about selling insurance, but I thought $75 a week was just what I needed to help me scrape up $2,500 for the next year’s tuition. I took the interview and got started in the business in 1968. That’s how it all began. That program was experimental, and eventually it became Northwestern Mutual’s internship program, which today is a very highly successful program.
Feldman: How did your career develop when you started with Northwestern Mutual?
You started part time. Tell me what happened next.
Hoopis: I sold life insurance my entire senior year in school and decided that I would not go into accounting, but instead would pursue a career in life insurance. I graduated in June and went full time. I qualified for the Million Dollar Round Table that year and was really enjoying things. I got into management rather quickly as what we now call a college unit director. I recruited people to do what I was doing in my senior year.
I did that for a few years and then became a district manager in the southern part of Rhode Island. Eventually, in 1974, I was invited to go to the home office and get into a management development program. That eventually led me to being appointed as general agent in Chicago in 1977. I operated the agency there for 35 years. I was the youngest general agent appointment in the company’s history. And when I was done, I was the longest serving in company history for that reason. It was a good run. I retired at the mandatory age of 65 in June 2012.
Feldman: When you were building up the agency, how did you build up a successful team? How did you
Hoopis: That’s an interesting process. As I look back over those 35 years, I realized that I had perhaps five or six different teams. We had a good management system. I liked to get young people involved in management as early as I could. Over that period of 35 years, I believe we appointed nine general agents from my office to take over in other cities for Northwestern Mutual.
What you learn in that process is that each time you lose a person, the team is reshaped. The process of bringing people
dedicated to recruiting. The recruiter was always the manager. You kept your eyes open, found somebody and talked them into the business. But I had an idea that we could grow more quickly if I had somebody who was dedicated to sourcing names and running the process. There was a very talented woman on our team, and I suggested that she might take on this newly created role of recruiter, which she did.
Our recruiting went from 17 people in 1983 — which was a good number in our company at that time — to 35 in 1984. And then we recruited 34 in 1985. And then we recruited another 30 or 35 in 1986. All of a sudden, I found myself with approximately 100 new people in less than three years in the business. And they were everywhere. They were working in closets — we didn’t have any room for them. From that group, I was able to cull perhaps 20 really good people who wanted to be in management. So then we had the multiplier that we needed. And that momentum carried us forever. It literally carried us until the day I retired.
Hoopis: It’s always evolving. I often hear that you can’t find good people anymore. I object to that notion. There are many very talented people in the marketplace. You just have to work harder to find them. There are many who really do want to make an important impact in the work they do.
into the management system was organized. We did it with small groups of young people who came to classes once a month to talk about recruiting, coaching and training in general. We always had a steady flow.
In the early days, the thing that changed our agency more than anything else was that I created the position of recruiter. Up to that point, they never had a person
Having the ability to get them engaged in the business is critically important. How has it changed? It’s still a very difficult task. I talk a lot about the importance of having a better selection of people in our business. As a new manager way back in 1977, I was dedicated to only bringing people into my organization who showed a propensity to succeed in sales. I tried to find the 20% of the population who have the ability to sell. I think the mistake that our industry has made over and over
bring in new people and keep the ones that you had motivated?
again is trying to get people to sell who have no talent to do so.
It takes a lot more work to find those people who can sell. We used psychometric profiling to help us find the right people.
Feldman: Tell me more about psychometric profiling and its importance in recruiting new agents.
Hoopis: Profiling is available even for people who are independent. What I loved about psychometric profiling — whether it would be LIMRA’s Career Profile or the Self Management Group’s POP (Predictor of Potential) test — was that people tell you about themselves. And we should listen to that.
You know, if you take one of these profiles and it says this person probably can be successful in a sales career, you need to believe that.
In one test, for example, they ask, “What do you think people think of you? Do they see you as outgoing? Do they see you as a hard worker?” Well, as you answer that question, you really express your own preference. When they boil that down and they put it through the algorithms and it comes out and it says, “Yeah, we recommend this person for the business,” or worse, “We don’t,” you had better listen to that recommendation.
You need to believe it because with both the LIMRA and Self Management Group profiles as examples, they prove this out. You can see what the retention and productivity is for someone who has the right profile versus someone who doesn’t fit the profile. The way things have changed today, it is even more important to have strict selection standards when you consider the amount of time and money that we put into a new advisor coming in the business. We’re going to spend $20,000 or $30,000 in the first year or so to get them launched, and yet we don’t want to spend a relatively small amount on a profile to be sure we’re launching the right person.
That’s how you end up with better retention. Average industry retention? Let’s be generous and call it 15%, four-year retention. My organization ran at 30% or 35%, four-year retention. We had very high productivity and a good retention rate, which equals a successful operation. That would work for anyone.
Today, we’re seeing agents and advisors recruited who never even get face to face. They’re in Zoom meetings. It’s incredible. At the height of the pandemic, of course, nobody was going face to face. The big change today — which I think is a big bonus — is that it has never been easier to keep the number of appointments that people need to succeed.
There were three benchmarks for me, which I call the “SEA Change” (Selection, Education and Activity). One is better selection. The second is higher and better education, which I think is what drove me to create the Hoopis Performance Network. And the third was higher activity. Let’s call it the three-legged stool. If you did all three of those things, you couldn’t help but succeed.
In terms of activity, I’ve never seen an agent reach the Million Dollar Round Table by doing 40 appointments a month. But I do subscribe to the idea that you can do this if you see 60 people a month. I used
Hoopis: We used to say 60 appointments kept is the job, not the goal. Whether you’re going to recruit young people or older people, we must teach them what constitutes work in our business. So, what is work? Getting 60 to 80 referrals. Work is keeping 60 appointments in a month. You work 15 days or 20 days in a month. If you have to, you work 25 days. But you’re going to keep 60 appointments. That’s how you build success.
Feldman: You know, we used to do all of this face to face. We had to do it that way. Now technology and the internet make it so easy to learn and work remotely.
Hoopis: Yes, it’s remarkable. If you look for the silver lining in the COVID-19 cloud, if you will, it accelerated e-learning at least by five, if not 10, years. I was a big supporter of being face to face in the training room. I couldn’t imagine that you would do it any
to say, if you see 60 people face to face. Now with Zoom and this new world that we live in, I see agents keeping 70 and 80 appointments a month. And they never touch the steering wheel of their car. They’re saving all that time. And if they’re good, they turn that saved time into productive time.
Clients — particularly existing clients — have become comfortable with this idea.
Feldman: For a new agent coming into the business, getting in front of 60 to 80 people in a month, as you recommend, is a tall task. What are some strategies to accomplish that?
other way. But today, everyone’s delivering it via a Zoom-type meeting.
Feldman: What are the most important things in your training that every agent and advisor should look at today?
Hoopis: There are several things that never change. First, we must work with referred lead prospecting. We always say cold calling is God’s punishment for not prospecting. We’re in a less trusting world today. The sales effectiveness training HPN and LIMRA did in a joint venture is
called “Trustworthy Selling.”
The very first thing is learning how to establish trust. The four facets of trust in financial services are benevolence, integrity, dependability and competency. Competency is considered table stakes. In other words, you are knowledgeable until you prove otherwise. But what we teach in
see the tension drop and trust goes up. When that person’s tension is at its lowest point, and their trust is at the highest point, that’s when the sale is made. You don’t have to ask for it. They’ll ask you: “Who do I make this check out to?” We teach these things because saying the right things the right way makes all the difference.
and which side the bread dish is on. We literally would set up tables in our conference room, and we’d serve a plated lunch. We’d have someone standing there explaining everything that was going on. This was the kind of training.
We taught memory training. We taught product training. We taught speed reading. I would do anything that I could do to help the person develop personally, professionally and financially. Our mission was to help agents grow — to create an environment where agents continue to grow personally, professionally and financially.
That led to the creation of the Hoopis University within the agency. Around 2007, I came across a learning management system that was designed to be used by a lay person. In other words, I could take video of a person speaking in my agency, and I could put the video up on this learning management system so that other people could watch it repeatedly.
Trustworthy Selling is how you build rapport with people. How do you create that sense of benevolence and integrity, and that follow-through in dependable behavior? That’s a very important piece.
Once you have that foundation, that leads to your business development, which for us is prospecting. The best thing you can do is to spend your time working with people who have been referred to you by those you have done business with. In the Hoopis University, we have 70 or 80 videos just about prospecting.
It might seem trite, but the next most important piece is listening skills. They are extremely important skills for a person in sales. I’m in so many sales situations where I watch somebody just talking and talking — and not listening. It’s amazing. I always taught my people that the first thing you should ask someone is: “Why did you agree to see me today?” They have something on their mind when they agree to see you. Having listening skills leads to better fact-finding. If you work with people you are referred to, and you do a good job fact-finding, the close is automatic.
Tension is high when we first meet someone. Our trust is at the lowest point. When you apply the proper skills, you gradually
So now it’s 12 years later, and 30,000 advisors have gone through Trustworthy Selling. And guess what we found? The average improvement in productivity in the 12 months following the program is 25% to 30%. We’re teaching people how to express what’s in their heart. They can get so caught up in sales language that they forget to be real.
Feldman: You started HPN when you retired from Northwestern Mutual. Tell me more about that.
Hoopis: At Northwestern Mutual, we put a very high emphasis on education. Going back to 1985, when we recruited new agents, I put a program in place we called the “class program.” It was curriculum linking agents to systems for success.
I charged them a modest tuition. When they took the Chartered Life Underwriter exam and passed the test, Northwestern Mutual reimbursed them.
I would use that money to bring in people to teach prospecting. I would bring in someone to teach etiquette to new agents.
I believed that it was important that if I’m sitting down and having lunch with a good prospect, I should know which fork to use
We did invest in that LMS, and before you know it, we had 50, 75, 100 programs in there. Then some of my colleagues at Northwestern Mutual said, “Hey, can we use that?” I said, “Well, sure.” I said, “But you know, it’s going to cost me, so I have to charge you.” So we started charging a small fee.
I would go to my industry groups, and they would say, “Hey, can we get access?” Before you know it, we had a business going. My associate Joey Davenport [now president of the Hoopis Performance Network] was running Hoopis University. When I retired, we took it and made our move to full time. Today, we’re in about 70 companies. We’re in almost 30 countries, four continents, and we have more than 100,000 learners in our system. We have about 3,000 active videos in the Hoopis Performance Network University. That’s how we got into the business. It was an evolution. If you had asked me in 2000 if I would I be doing this today, I wouldn’t have had any idea that this would happen.
It really points out the tremendous need for training — for giving advisors what they need. Our experts are Million Dollar Round Table producers. Our consultants are the Tom Hegnas, Bill Cates and Joe Jordans of the world. Those are the people who understand and speak our language, and that’s what makes us unique.
We’ve seen e-learning grow very rapidly in the industry. E-learning is here to stay.
The environmental, social and governance movement’s noble intentions are running into stiff resistance with growing backlash while a Department of Labor rule moves ahead that would allow limited ESG goals in investing.
During the Trump administration, the DOL proposed ESG rules that would require retirement fund advisors to put pecuniary interests ahead of ESG goals in investing, replete with a note from then-DOL Secretary Eugene Scalia deriding social goals in ERISA-protected plans. The Biden administration took back the rule to realign it with ESG objectives, but ultimately kept the primary focus on monetary considerations.
The Securities and Exchange Commission is casting a skeptical eye on companies’ ESG claims to guard against “greenwashing.” The SEC has proposed rules requiring publicly traded companies to disclose their ESG plans. When the SEC created the Climate and ESG Task Force within the Division of Enforcement, with the express purpose of identifying ESG-related misconduct, many public companies and investment advisors started preparing for expected enforcement actions.
The task force is working with such SEC divisions as corporation finance, investment management and examinations as it seeks gaps and misstatements in issuers’ disclosures of climate risks and ESG strategies.
A divided balance of power in Washington will bring something of a stalemate to government over the next two years, a consultant said.
Geoff Manville, partner and government relations leader with Mercer’s law and policy group, said that with Senate control in Democratic hands while the House of Representatives moves to Republican control, “the Democrats’ policy agenda — what’s left of it — will be on ice for the next two years.”
Health care “is not as much of a priority for Republicans as it is for Democrats,” Manville said. “But tax and budget issues are more of a priority for Republicans.”
Manville made a few predictions for the post-midterm environment. He believes the new Republican House will be checked by the President Biden veto and the Democratic Senate. In addition, he said, bipartisan deals are possible despite razor-thin majorities in both chambers of Congress.
The markets went through a rocky patch during the first three quarters of 2022, but better days may be coming now that the midterm elections are mostly over. That was the word from a Carson Group expert who said that the midterms are giving the markets a much-needed boost now that the uncertainty surrounding who will control Congress over the next two years largely has been settled.
“We know that midterm years tend to be rough on equities during the first three quarters, then you get a rally,” said Ryan Detrick, Carson Group chief market strategist. “The calendar seems to be playing out here again where you have a rough stretch and then a boost. Some of the best quarters for stocks are here,” he said, noting that years two and three of a presidential cycle tend to be strong-performing years for the S&P 500.
The midterms “could give us tailwinds,” Detrick said, as midterm years tend to see a big bounce off the lows for the S&P 500. He
noted that the S&P 500 average intra-year pullback in a midterm year is -17.1%, with the average return of 32.3% a year after the lows. Stock performance historically has been weak in the second year of a new presidency, Detrick said. But stocks bounce back stronger in year three.
Americans are anxious about their investments but not pulling out, although some would like to. They’re spending cash on necessities rather than buying assets in a down market. They have one eye on their lives and the other on their sinking investments as they doomscroll on the brink. Those are some of the findings from a couple of recent surveys, although one of them found some glimmers of optimism about next year.
A Wells Fargo survey found that two-thirds (66%) of investors are anxious about their money and three-quar ters (77%) are spooked by market volatility. Two out of five (42%) would like to cash out of their investments, with 29% saying they wish they could cash out their retirement funds without tax penalty.
Inflation is a key driver pushing Americans to shift their priorities. Even with a down market offering bargains for assets, 25% are investing less as they spend more on basics such as groceries, gas and housing.
Persistently high inflation undermines the ability of our economy to perform at its full potential.
— New York Federal Reserve President John WilliamsBy Nathan Driskill, Vice President of Individual Sales, Assurity
Term life is more popular than it’s been in years. Millennial buyers are driving demand, coupled with a wave of life event triggers like home purchases, having children, or even a brush with COVID. With a commoditized product and razor-thin margins, making money from term life sales can be a challenge – how do you translate consumer interest into more revenue for your business? The answer is life insurance that does more for both you and your clients: Assurity’s new 3-in-1 life insurance bundle, StartSmart.
Applying is a breeze using our convenient e-application platform. It includes and instant decision for face amounts up to $1 million to those who qualify, approved faster. We designed it to be easy from beginning to end, all while doing more for you and your clients.
Term life is more popular than it’s been in years. Millennial buyers are driving demand, coupled with a wave of life event triggers like home purchases, having children, or even a brush with COVID. With a commoditized product and razor-thin margins, making money from term life sales can be a challenge – how do you translate consumer interest into more revenue for your business? The answer is life insurance that does more for both you and your clients: Assurity’s new 3-in-1 life insurance bundle, StartSmart.
Term life can feel like more trouble than it’s worth. It doesn’t bring you much extra revenue, and customers purchase low-cost policies that exhaust their term before providing any benefit. The middle market desperately needs products that provide more value than base coverage, and that can be converted to permanent protection later in life.
Term life can feel like more trouble than it’s worth. It doesn’t bring you much extra revenue, and customers purchase low-cost policies that exhaust their term before providing any benefit. The middle market desperately needs products that provide more value than base coverage, and that can be converted to permanent protection later in life.
It starts with expanded 3-in-1 coverage that goes beyond what most term life policies offer, bundling life insurance with our Critical Illness Benefit Rider and Monthly Disability Income Rider. These living benefits help guard against the financial impact of critical illness or total disability, all built into the term policy. The riders don’t deduct from the death benefit, meaning the life insurance remains untouched if clients need to use their living benefits.
It starts with expanded 3-in-1 coverage that goes beyond what most term life policies offer, bundling life insurance with our Critical Illness Benefit Rider and Monthly Disability Income Rider. These living benefits help guard against the financial impact of critical illness or total disability, all built into the term policy. The riders don’t deduct from the death benefit, meaning the life insurance remains untouched if clients need to use their living benefits.
StartSmart is fully convertible to permanent coverage, including the riders – so your clients get an opportunity to keep their coverage and you can make another sale.
StartSmart is fully convertible to permanent coverage, including the riders – so your clients get an opportunity to keep their coverage and you can make another sale.
By Nathan Driskill, Vice President of Individual Sales, Assurity assurity.com/startsmartApplying is a breeze using our convenient e-application platform. It includes and instant decision for face amounts up to $1 million to those who qualify, so you can get more clients approved faster. We designed it to be easy from beginning to end, all while doing more for you and your clients.
The advantages of StartSmart are immediate: You get more revenue than you’d see selling straight term, and your clients get better coverage that lasts for as long as they need it. It’s a win for both of you, and a gamechanger for term life sales. You can use it with younger clients who want more bang for their buck, clients who want to increase their coverage without applying for multiple products, or anyone who wants a sturdy financial foundation on which to build their lives.
The advantages of StartSmart are immediate: You get more revenue than you’d see selling straight term, and your clients get better coverage that lasts for as long as they need it. It’s a win for both of you, and a gamechanger for term life sales. You can use it with younger clients who want more bang for their buck, clients who want to increase their coverage without applying for multiple products, or anyone who wants a sturdy financial foundation on which to build their lives.
At Assurity, we truly believe that StartSmart can transform your term life business. And we’re here to help every step of the way, with a 130-year legacy of partnership with independent distribution like you. StartSmart is the latest way we’re helping you to succeed, and it has the potential to make a real difference for your clients and your bottom line.
At Assurity, we truly believe that StartSmart can transform your term life business. And we’re here to help every step of the way, with a 130-year legacy of partnership with independent distribution like you. StartSmart is the latest way we’re helping you to succeed, and it has the potential to make a real difference for your clients and your bottom line.
Let’s talk more about how StartSmart can help you increase your revenue while providing better coverage – my team and I would love to talk more.
Let’s talk more about how StartSmart can help you increase your revenue while providing better coverage – my team and I would love to talk more.
The middle market desperately needs products that provide more value than base coverage, and that can be converted to permanent protection later in life.
The middle market desperately needs products that provide more value than base coverage, and that can be converted to permanent protection later in life.
Term life sales are up. Your revenue isn’t. Here’s the one-of-a-kind solution.
Life insurance and annuities are heavily influenced by economic conditions, “and we’ve got a lot going on there now,” said John Carroll , head of insurance member relations and sales at LIMRA and LOMA.
“Our expectation is that the markets will calm down in 2023 and improve compared with 2022,” he continued. “As a result of that, we see interest rates peaking and tapering down a bit but still staying steady at least through 2024. We do see economic conditions still moderating over the coming year but not going back to where we were.”
A calming of the economic landscape is one change impacting the industry. Another is the continuing advances made in using technology to streamline underwriting and make it easier for those who need coverage to obtain it.
“COVID-19 made 10 years of change happen in the industry in 10 months,” Carroll said. “Now we’re seeing the benefit of streamlined underwriting. Automatic underwriting really has taken off, and it’s become predominant in the
industry up to a certain level of policy size. And we’re seeing less reliance on paramedical exams.
“These are not only streamlining the carriers’ internal processes and helping reduce costs but also enabling companies to reach more people.”
But despite the industry making it easier for people to obtain coverage, “the life insurance need is still significant in this country,” Carroll added.
“In our data, we see that at least 4 in 10 households would face significant hardship within six months with the loss of a primary breadwinner. We’re thinking there’s over 100 million Americans who say they need or need more life insurance. So the need is tremendous.”
Carroll said the industry’s challenge is how to reach those uninsured and underinsured, especially when inflation and high interest rates mean families have less money to buy coverage.
He said he expects life insurance sales could slowly tick upward if inflation slows down.
COVID-19 prompted a sense of urgency in people to protect their families, so life insurance sales saw a significant increase in 2021. But as economic challenges have replaced COVID-19 as being top of mind for consumers, “we’re seeing a settling down in life insurance sales,” Carroll said.
He predicted life insurance sales will stay around 2022 levels in the new year but will remain above pre-pandemic levels for the foreseeable future.
Whole life sales, which were strong in 2021, saw a drop in the mid-single digits in 2022. Carroll said one concern around whole life sales is that inflation is eating into the purchasing power of middle-market consumers who traditionally buy the product.
But if a recession occurs in 2023, it’s possible that whole life sales will improve, he added, as he looked back at the 200809 Great Recession.
“Going back to that time, we saw sales of whole life increase because not only were people looking for protection but also the guarantees that whole life offers were very appealing,” he said.
“We don’t know where whole life will go in 2023, but we certainly are seeing a softening. We expect to stay flat in 2023 and then in 2024 start to pick up again to a normal low-single-digit growth rate.”
Term life sales also are expected to slide in 2023 and then pick back up to pre-inflation levels, Carroll said, as consumers are more willing to spend money for coverage.
Variable universal life sales were up 73% in 2021 and continued to have a strong showing in 2022. Carroll predicted a leveling off in 2023 and then an increase the following year, “assuming the equity markets will stabilize next year and then continue to rise in 2024.”
Indexed universal life sales also are predicted to see a flattening in the coming year and an increase in 2024, although “at a more subdued, sustainable rate as opposed to what we’ve seen in the past two years,” Carroll said.
“Whole life and term are struggling relative to very strong 2021 numbers,” he said. “We see that sort of settling down and then see them coming back to a slow, steady growth rate going forward. And the UL space, again, growing dramatically,
Market volatility. Interest rate hikes. Inflation at a 40-year high. Those were the factors that dominated the economic news in 2022. How will those economic conditions impact life insurance and annuity sales in the new year? And is the health insurance market finding stability a decade after the Affordable Care Act went into force?
Some industry observers are predicting a calmer 2023, which could lead to life insurance sales staying flat, annuities appealing to more consumers and health insurers offering consumers more choices.
staying strong and picking up after potentially leveling off and absorbing some of that high growth of the past two years as we go forward.”
For years, a prolonged low-interest-rate environment “had a dramatic effect on life insurance carriers,” Carroll said. “It really put up “a tremendous number of barriers and forced some product innovation.” As interest rates rise, “those higher rates give a lot more breathing room to the carriers. There’s a lot more they can do.”
Carroll predicted interest rates will level off in 2023, which he said will lead to more product innovation in the future. “Interest rates that rise slowly and steadily are good, but spiking interest rates are not,” he said.
“When there’s a huge spike, carriers can’t address pricing issues and product development that quickly. What we do see is that interest rates will level off at a rate quite a bit higher than where they had been for the previous 10 years.
“That gives the carriers much more flexibility in their product design, in their product pricing. It’s attractive to have a stable and somewhat more predictable interest rate environment — that can be very positive for insurance carriers.”
Although life insurance sales are expected to be flat in 2023, annuities are expected to keep booming after a record-setting 2022, Carroll said.
Higher interest rates are a main driver of higher annuity sales, he added. An aging demographic is another factor making annuities attractive.
“When you look at the annuity environment, you have this higher-interest rate environment that automatically makes certain products more attractive. But you also see the population aging, the 65-and-older group increasing.
“Annuities are generally attractive to
pre-retirees and retirees because of the protection they offer and the upside they offer. And we see consumers moving toward protection as they see the kind of market volatility we have been experiencing. So consumers are looking for products that offer protection while offering upside.”
Variable annuities continue to struggle, Carroll said. LIMRA is projecting 2023 VA sales to be between $60 billion and $65 billion. “That sounds like a big number, but in 2007, we had more than $180 billion in VA sales.”
Other annuity products are competing with VAs for attention and investor dollars. One such product is registered index linked annuities, which continue to grow in popularity. “In this product, you get some of the benefits of the VA, but there is a guaranteed aspect of it that is a crediting rate,” Carroll said.
He predicted RILAs to hit around $40 billion in sales in 2022, and that number will increase in the coming year.
Fixed annuities “will continue to be the big story in 2023,” Carroll said. Coming off of 2022, when sales hit nearly $100 billion, fixed annuity sales will continue to be strong in the current year, although maybe not quite at this year’s level.
“It’s simply because interest rates have gone up and you see carriers much more responsible and flexible on raising rates quickly on their products. When you see the environment where certificates of deposit and money market funds have been yielding less than half of a percent, and then they you look at rates of 4% or 5% on some annuities, that’s going to attract a lot of attention.”
If interest rates go down, then annuity rates will go down as well, Carroll said. “So I think it will be a question of when people continue to pour money into annuities before rates peak and maybe start to head down.”
Fixed indexed annuities also hit record sales in 2022, and Carroll said he expects growth to be driven by an opportunity to lock in higher interest rates before rates begin to fall.
Income annuity sales are rebounding from pre-pandemic levels, and Carroll predicted steady growth of that product sector over the next three to five years, again with aging demographics and higher interest rates driving that growth.
“COVID-19 made 10 years of change happen in the industry in 10 months. Now we’re seeing the benefit of streamlined underwriting. Automatic underwriting really has taken off, and it’s become predominant in the industry... .”
— John Carroll
“It’s a very good environment for people who are looking to use an income annuity as part of their retirement income plan,” he said. “It really comes down to whether the equity markets can settle down and rates settle in above where they’ve been for the past decade — you’ll see a strong environment for annuity sales going forward.”
years in term. So when they review those contracts, that’s when they agree to higher payment rates. So for right now, the health insurers aren’t facing the inflationary pressures that the hospitals are. But that will slowly change over the next few years. And we all pay that in our health insurance premiums as well.”
But health insurers have an advantage in dealing with inflation, he added. “Because they have sort of a heads-up to this inflation, they can factor that into premium rates before they actually have to start paying out claims. So it gives them a little bit of a head start. This is supporting more stability in health insurers.”
Diversification is one factor that is contributing to health insurers’ stability, he said, pointing to the number of carriers offering Medicare plans as an example.
Health insurers are entering 2023 with the worst of COVID-19 behind them. But they are keeping an eye out for a possible recession after being hit with high inflation, especially pertaining to increased costs of care and higher salaries for health care workers. In addition, health insurers faced increased consumer health care usage after people deferred receiving care at the height of the pandemic.
That was the word from Brad Ellis, senior director at Fitch Ratings, who said “the health insurance market has been relatively stable even in the face of what we thought would be a strong test of its resilience.”
But the health insurance industry is facing headwinds from a possible mild recession hitting in the second and third quarters of 2023, Ellis said. Recession typically leads to lower enrollment for group health insurers as the unemployment rate goes up.
In addition, inflation is a factor that could impact health insurers’ bottom lines in 2023, as most aspects of care cost more and the health care industry is hit with a continued worker shortage and demands for higher wages.
Ellis said he does not expect inflation to hurt health insurers in the coming year.
“Health insurers typically have contracts with hospital systems that are three
“If you look over the past decade, the proportion of the total enrollment of the large health insurers that is made up of Medicare business has grown. So that helps because the Medicare business is extremely resilient. It’s government funded and not impacted except in an extreme case. So that is helping carriers in terms of offsetting some of the loss from the group medical side,” he said.
More states are privatizing Medicaid, and that will mean more opportunities for health insurers to increase their business through managed care, he added.
Consumers who purchase individual health coverage through the Affordable Care Act exchanges will find more choices available to them as more carriers find ways to be profitable in that market, said Tara Straw, senior health advisor at Manatt Health.
After several years in which consumers in many areas of the country could find only one carrier offering ACA coverage in their county, more carriers have filled the void for 2023.
“People absolutely have more choices. It has been a very stable marketplace,” she said. “With the exception of COVID-19 disruption, it was a lucrative marketplace for some insurers in the couple of years prior to COVID-19 and
“If you look over the past decade, the proportion of the total enrollment of the large health insurers that is made up of Medicare business has grown. So that helps because the Medicare business is extremely resilient.”
— Brad Ellis
in the first year of COVID-19. That stable place for insurers to be has drawn in more insurers.”
Straw said enhanced premium tax credits that enabled more people to obtain coverage through the ACA marketplace also benefited insurers that offer coverage there. “Because not only are more people choosing to get coverage through the marketplaces, but also it’s easier for them to stay in that coverage,” she said. “One of the complaints that insurers have had about the marketplace is that people get into coverage and then drop it until they need it again.”
“Now, if you have more people who have zero-premium plans, they won’t go into arrears on premiums,” she continued. “So the more people you have in these zero premium plans, it becomes a more stable market for carriers. I believe the carriers have recognized that, and that’s why they are coming into the marketplace for every area of the country.”
are at risk of losing Medicaid or ACA coverage.
According to an analysis by the Kaiser Family Foundation, an estimated 5.3 million to 14.2 million could lose their Medicaid coverage when the COVID-19 public health emergency ends.
Straw said The Great Unwinding will impact both ACA health insurance and employer-based insurance.
“How will people transition into employer-sponsored coverage if they’re eligible for that? Will employers be ready for that influx of people? Do employers — especially employers of low-wage or moderate-wage workers — understand that there will be an influx of people, or will they be aware of the number of people who could request special enrollment periods?”
In October, the Biden administration issued a rule that addressed what is known as the family glitch under the ACA.
Under the glitch, families were unable to qualify for ACA-subsidized health insurance when one member received coverage from his or her employer that was considered affordable — even if the cost of covering the entire family was unaffordable. The employee-only definition did not take into consideration the fact that the cost of family-based coverage is usually much more than the cost of employee-only coverage.
The end of the COVID-19 public health emergency is expected sometime in 2023, and that will trigger what some call The Great Unwinding.
The Great Unwinding is how the Centers for Medicare & Medicaid Services refers to the undoing of many health coverage requirements and incentives put into place as a result of the COVID-19 public health emergency declaration and related legislation. When the public health emergency declaration ends, millions of Americans
Straw said fixing the family glitch will drive more people to the ACA marketplace.
“For employers, they will potentially lose some people out of their risk pool who do not have an offer of affordable family coverage and will decide to go into the marketplace,” she said.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan. Rupe@innfeedback.com. Follow her on Twitter @INNsusan.
“With the exception of COVID-19 disruption, it was a lucrative marketplace for some insurers in the couple of years prior to COVID-19 and in the first year of COVID-19. That stable place for insurers to be has drawn in more insurers.”
— Tara StrawBy Susan Rupe
Bill Keen is inspired to help people engineer their retirement.
Flying HIGH
Bill Keen was a 10-year-old boy, sitting on the sofa while his father waited for an unemployment compensation check to arrive in the mail, when he became inspired to do his life’s work.
“He was having a difficult time in the job market, and I could see the anxiety and the fear and the discontent around financial resources,” Keen recalled.
“Even as a young boy, I didn’t really understand what it meant, but I started to comprehend that if someday I could learn to take care of my financial affairs — understand the economy, understand how the markets work — that at some point I could care for him in that way. It drove me to pursue a degree in finance. I was one of the lucky young ones who knew what I wanted to do from an early point, and pursued it into the field, and went right out of college and got right into the industry.”
That was more than 30 years ago. Today, Keen, age 53, is founder and CEO of Keen Wealth Advisors in Overland Park, Kan., where he heads a staff of 16.
Keen said the financial stress he experienced as a boy “was difficult at the time, but I wouldn’t trade it because it gave me a real passion to understand all this and to not only support my family — which I ended up doing for my parents right out of college — but also to help other families.”
After graduating from the University of Central Missouri with a degree in finance, Keen went to work for Twentieth Century Mutual Funds, now known as American Century Investments. After a year, he moved to Dean Witter and was sent for training on the 83rd floor of the World Trade Center in New York, one month after a truck drove into the building’s parking lot and detonated a bomb that killed six people and injured more than 1,000 others.
“Here I was, a young guy with no assets, no resources, no personal contacts, no family money, and frankly didn’t know anybody who had any of those things either,” he recalled. “But I did know that I needed to be successful in the business. So I set on my path of prospecting and trying to get clients.
“Eventually, I was able to think more like an entrepreneur and realize I couldn’t do it all by myself,” he said. He gradually built a team to expand his business and reach more prospects.
“I determined that it would be a good idea to focus on retirement planning, to understand the rules and regulations around taxation of lump sum distribution, how individual retirement accounts worked — those types of things.”
When Keen started his retirement planning practice, the Roth IRA hadn’t yet been created. But he said he saw a need for consumers to understand how all the pieces of the retirement puzzle fit together.
“There was a need to help those navigating toward retirement who never had a lot of experience investing because most of their assets were tied up in either pension plans or in 401(k)-type investments,” he said. “I was fortunate enough to see that, more than 25 years ago.”
During his early years at Dean Witter, Keen encountered people who had built up their
retirement savings but didn’t know what to do with them.
“A good portion of them didn’t even have advisors,” he said. “They had retirement assets that had been built up, but I could see that they didn’t know how to go from the working-and-saving phase of life to the phase of life where they are retired and the paychecks are no longer coming in. They didn’t know how to go to the distribution phase of investing, or of life. And that is a very different set of issues for people to deal with.”
Keen’s views on retirement planning are spelled out in his best-selling book Keen on Retirement: Engineering the Second Half of Your Life . The book was originally published in 2019 and its second edition came out in October. Keen also has a podcast, Keen on Retirement, and has produced more than 175 episodes over the past seven years.
“In both the book and the podcast, we get into the emotional aspects of retirement, where folks have saved their whole lives and lived within their means to get to the point where they are able to retire. But then they feel guilty about spending their money and not having any idea of what they can spend and how to make that money last the rest of their lives,” he said.
Keen said that would-be retirees have one common goal.
“We want to know that someday, work will become optional,” he said. “Then we want to know that we will make the right decisions and be good stewards of our resources so we don’t end up running out of money at some point because of a technical mistake or an emotional mistake. And we want to know how that all fits together.”
Keen said advisors and their clients must take a holistic approach to retirement planning.
“It’s all about putting that plan in place and making sure that it’s updated regularly and making sure that clients’ goals, dreams and aspirations are updated accordingly,” he said. “And it’s crucial that the
plan moves and is nimble with someone’s life.”
Keen noted that many people retire sooner than they expected for a number of reasons. Sometimes the reason is because of a health issue, a need to provide care for a spouse or family member, or because of downsizing at work.
“But sometimes people retire early for good reasons,” he noted. “For example, maybe their stock performed better than they expected and now they can retire earlier.”
Because retirement can happen sooner than a client expects, Keen said he believes it’s important to get clients to begin thinking about retirement issues five to 10 years before they plan to exit the workforce.
He also is passionate about helping younger workers prepare for their retirement.
“People who are entering the workforce
understand the power of compound interest and how important it is to start saving early,” he said. “But what is this money for? Why are we saving? Why are we investing? Why are we putting ourselves through the ups and down of the market and some of the volatility that we must endure at times?”
Keen said the answer to those questions is to focus on the journey.
“Some people never will retire in a traditional sense,” he said. “They love what they do or they will shift what they do. But I do believe everybody shares the goal that they would like work to become optional so they could retire if they wanted to. They built the resources to be what I call independently wealthy.”
Keen described his clients as salt-ofthe-earth folks who are much like him.
“They started with nothing and they’ve lived within their means and they’ve built their wealth through their own journey.”
Keen said some of the chapters in his book discuss compound interest as well as fundamentals of wealth building and investing — issues that apply to retirement investors regardless of their age.
“We also have a process where we invite our clients to bring their children and grandchildren — if they’re of age — here and discuss issues related to saving and investing,” he said. “I’ve even sat down with 10-year-olds when the grandparents brought them in and asked, ‘Can you at least just start to plant the seed about saving money?’”
Keen fulfilled a longtime dream by becoming an instrument-rated private aircraft pilot. He likens retirement planning to preparing to take flight, and he uses many flight-related analogies in his book.
“Throughout the book, I relate the seriousness of flight planning and the
execution of a safe flight operation to financial planning and navigating the path across a lifetime,” he said. “I write about navigating turbulence and trusting your instruments in tough conditions, and those types of things. And I simply say the investments are the engine to the plan. The plan is our goals, dreams, aspirations and accomplishments, and what we want to pass on to our kids and to our communities.”
Keen said he loves to share the experience of flight with people. That love of flight inspired him to volunteer with Angel Flight. He not only volunteers as a pilot, but he is on the board of directors for Angel Flight Central, which serves people in 10 Midwestern states.
Angel Flight provides free air transportation for any legitimate, charitable, medically related need. This service is available to individuals and health care organizations. Angel Flight will also arrange transportation of those people
who are financially distressed or who are in a time-critical, nonemergency situation due to their medical condition.
“I love sharing my aircraft with others,” he said. “This is a whole other level of sharing it with others. When you show up to an airport and patients are there, and they look at you like, why are you doing this for us? Why would you possibly be doing this for us? It’s very fulfilling.” He has made numerous flights to transport patients to and from the Mayo Clinic in Rochester, Minn.
Keen’s wife, Carissa, does a great deal of fundraising for Angel Flight Central. Keen also has a charitable foundation that provides funding to organizations that assist veterans and inner-city schools, and Carissa researches the charitable initiatives that the foundation supports.
Keen said his goal for himself and his clients is to live with intention and hopefully with the least amount of anxiety
and stress around financial affairs.
“We say money makes you more of what you are. And we know that money in and of itself is not a bad thing. It’s a neutral thing, but it certainly doesn’t solve problems in and of itself. We want to be able to pursue those things that are inspiring in our lives and to use money as a tool to do those things.”
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.
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“Some people never will retire in a traditional sense. ... But I do believe everybody shares the goal that they would like work to become optional, so they could retire if they wanted to.”
For the second year in a row, life insurance benefit payments increased by double-digit percentages, as U.S. life insurers paid out a record $100 billion in benefits in 2021, the American Council of Life Insurers reported.
The record increase in payouts may be partly due to COVID-19, which was associated with 460,513 U.S. deaths in 2021, making it the country’s third leading cause of death that year, according to the Centers for Disease Control.
Individual life insurance protection in the U.S. totaled $13.6 trillion at the end of 2021 and has grown at an average annual rate of 2.1% since 2011, when $11 trillion was in force, ACLI reported. The average size of new individual life policies purchased has increased from $162,230 in 2011 to $189,830 in 2021. The number of individual policies purchased totaled 10.4 million in 2021.
Cost is not a primary concern when shopping for life insurance, the study found. Along with concerns for the future, the perceived value of the policy and the view that insurers are making recommendations in the customer’s best interest are key factors in choosing one brand over another.
not purchasing coverage is that it’s too expensive, the study found that Black Americans are more likely than the general population to overestimate the cost of life insurance (75% versus 50%, respectively). They are also more likely to believe the coverage they get through their employer is adequate.
The old aphorism that life insurance is sold and not bought has been turned on its head partly as a result of pandemic-influenced buying habits and partly because of the technological ease with which policies can now be purchased. This is according to a new J.D. Power study of the life insurance business that found customers are initiating the purchase of life insurance much more frequently than before.
The study found industrywide quote rates, which rose last year for the first time in 30 years, increased another 9% in 2022 while buy rates increased 13% as increasing numbers of consumers are seeking life insurance policies.
The biggest single factor prompting consumers to start researching life insurance is concern for the future, a factor heightened by the pandemic and other global issues. More than 57% of respondents cited future concerns as the primary catalyst for seeking a policy.
Although more than half (56%) of Black Americans own life insurance, this number still represents a 19-point gap from the 75% of Black Americans who believe they need life insurance, according to the Insurance Barometer Study conducted by LIMRA and Life Happens.
The Barometer Study, conducted last year, noted that Black Americans were significantly more likely to be concerned about being able to save for an emergency fund, paying their monthly bills and their mortgage, and leaving their families in a difficult situation due to a premature death.
Like most Americans, Black Americans’ mis conceptions about life insurance prevent them from getting the coverage they need, the study said. While the top reason Black Americans give for
While the life settlement market broke its five-year winning streak in 2022 — down 9% compared to the previous year, attributable to COVID-19 disruption — researchers predict a decade of higher sales, according to Conning’s annual review of the market.
Although 2020-21 was a banner 12 months with $4.4 billion in sales while COVID-19 was top of mind, Conning’s researchers said that in 2021-22 more consumers chose to hold on to their policies partly because of COVID-19 concerns, reducing sales to $4 billion. (The researchers used a fiscal year from July to June.)
The researchers predicted the market will bounce back to reach an average of $5.2 billion over the next 10 years. Although the firm attributed the drop in 2021-22 to COVID-19 disruption, researchers said the current flavor of disruption might benefit life settlements.
When you factor in that the majority of Black households do not have significant financial assets that most firms look for in prospects, it’s no surprise the majority of African American prospects I encounter have never worked with an advisor.
— Brenton Harrison, Henderson Financial Group, Nashville
At the end of 2021, a total of 737 life insurance companies were in business in the U.S.
How insurance products can be used to meet investors’ savings and protection needs.
By Doug BaileyAcomprehensive Ernst & Young analysis of retirement savings scenarios concluded that integrating insurance products into a financial plan significantly boosts value to investors when compared with investment-only strategies.
The paper by the Big Four accounting firm was undertaken in the wake of estimates predicting a $240 trillion retirement gap and a $160 trillion protection gap by 2030.
“Insurers are uniquely positioned to address these gaps with products that offer legacy protection, tax-deferred savings growth, and guaranteed income for life,” the report said.
The paper, titled “Benefits of integrating insurance products into a retirement plan,” explores how two products can be utilized to meet investors’ savings and protection needs: permanent life insurance (PLI), and a deferred income annuity with increasing income potential (DIA with IIP), which represents deferred income annuities with persistency bonuses and nonguaranteed dividends.
The analysis considered five strategies:
» Investment only.
» Term life plus investments.
» PLI plus investments.
» DIA with IIP plus investments.
» PLA plus DIA with IIP plus investments.
To compare the five strategies, E&Y used a Monte Carlo analysis to generate 1,000 different scenarios, each of which contained a time series of interest rates, inflation rates, equity returns and bond returns across the planning horizon. It then analyzed two outcome metrics generated through these simulations. One was the after-tax retirement income that can be sustained at 90% probability of success,
and the second involved the legacy value or sum of the face amount of the life insurance and investments after taxes, at the end of the time horizon.
In one scenario, for a 25-year-old couple making $80,000 a year, the analysis found that permanent life insurance plus investments outperformed investment-only and term life plus investments strategies.
For example, a couple starting with a little more than $61,000 in retirement income would realize a 20% gain compared with the investment-only strategy when employing a 50% PLI plus investments plan. Using a 50% term life plus investments strategy would actually result in a negative 2% change versus an investment-only strategy.
“There are a couple of reasons for this,” the analysis concluded. “For one, PLI tends
balance between the two
“Allocating up to 30% of annual savings to PLI and up to 30% of wealth at age 55 to DIA with IIP may be appropriate when optimizing retirement income and legacy value outcomes,” it said.
Integrated strategies are still better even for investors with a higher risk appetite, E&Y said.
“While the degree of improvement in income and legacy is less when anchoring the analysis on 75% probability of success,” the report said, “we note that our findings still apply. Overall, integrated portfolios still provide better income and legacy benefits relative to investment-only and term life + investments strategies.”
Looking ahead, E&Y said its analysis could be broadened for many other retirement investment strategies.
to provide superior returns over fixed income in long-run scenarios due to the combined effect of the guaranteed growth of cash value and dividends. Term life premiums do not boost long-term savings, instead acting as a drag on portfolio performance. The second reason is that using PLI as a volatility buffer improves returns because the investor does not have to sell and realize losses on their investments.”
The analysis found similar results when examining scenarios with 35-, 45- and 55-year-old couples, with some exceptions and rebalancing of investments due to the age differences.
“Integrated strategies are more efficient than investment-only strategies,” the report concludes, with integrated strategies providing investors with the flexibility to focus on the financial outcomes most important to them: retirement income, legacy or a
“For example, we expect that other annuities will provide value relative to an investment-only strategy, but it would still be worthwhile to incorporate them into our framework for confirmation,” the report said.
“This analysis could be conducted for households that do not use investment advisors and invest mostly in low-cost exchange-traded funds. While ... do-it-yourself investors tend to lag the market, which may somewhat offset the impact of lower advisory and investment management fees, it would still be interesting to investigate. What would the lift be to retirement income and legacy from an integrated strategy compared with an investment-only strategy? Would the same findings still apply?”
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.
“Overall, integrated portfolios still provide better income and legacy benefits relative to investment-only and term life + investments strategies.”
Indexed universal life (IUL) cap rates have reached low tide, which makes long-term projections much less attractive for current and future policyholders.
It is not hyperbole to say “every IUL policy sold in the last 10 years illustrates lower today than it did when it was sold,” assuming maximum illustrative rates. Some will argue this, but that does not provide answers about the future of permanent products, including whole life, IUL and universal life (UL).
Interest rates have been trending down for decades. When will interest rates, index caps and policy crediting reverse course?
Here are two of the most common distractions regarding crediting.
Short-term interest rates refer to the federal funds rate set by the Federal Open Market Committee. Rising interest rates do not translate to higher cap rates in the short term because higher interest (and volatility) increases the cost of options that insurers buy to create the cap and floor that define a typical S&P 500 index account. The easiest way to validate the disconnect between interest rates and index caps is to look at data from the last rising interest rate cycle from 2016 to 2019.
The chart above shows that eight interest rate increases had almost no impact on cap rates. At the end of the cycle in 2019, interest rates were still increasing and caps were still going down. To borrow an analogy from a colleague, “short-term interest rates are just waves
splashing against the Titanic.”
A corporate bond index is a better barometer for potential changes in cap rates. If increases are sustained month over month, the yields will show up as profits in general accounts (GAs). At the 2018 peak, you can see an inflection point where AAA yields slightly alter the downward trajectory of caps, but not enough to reverse course.
This is one of the great headfakes in product marketing. Life Insurance 101 taught us that all UL products, including IUL, are general account products. Therefore, by definition, IUL premium dollars are invested in the carrier’s GA portfolio, not an index fund.
Index accounts are shadow accounts. They are a sandbox of equities where marketers can model hypothetical results using various caps,
floors, spreads, indexes, derivatives, loan strategies, volatility controls, etc. that are not directly associated with the investment of client money.
Why does the industry devote so many resources to the index game? Perhaps the steady introduction of new indexes
has become a marketing platform of its own. It is a convenient distraction where increasingly complex market schemes are molded for point of sale and then unceremoniously eroded by the reality of general account investments.
When the index honeymoon is over, the long-term performance of insurance products is tethered to the insurer’s GA, specifically net investment yield, by a leash that has been getting shorter and shorter.
The chart to the right makes it clear that net investment yield is the ugly truth behind product performance, which also makes a good starting point for better analysis.
In general, net investment yield is the source of funds that carriers use to determine product budgets (plus whatever the carrier is willing to commit to new business acquisition). It is no surprise that caps and crediting have followed this same trajectory.
So what drives net investment yield? Investment grade bonds make up 65% of yield potential. The good news is bond yields are on the rise.
A 50/50 mix of Aaa and Baa corporate bond yields have risen from 3.12% to 5.48% in 2022, according to FRED, the Federal Reserve Bank of St. Louis. The steep climb in yields may offset the increased cost of options.
So far, the industry has not seen a wave of fresh cap decreases that many analysts projected. Instead, fixed crediting accounts have begun to increase rates,
which could lead to increases in IUL cap rates in the next six months or more.
Insurers with a diversified mix of assets have fared better than those who rely too heavily on bonds. The table below underscores how small alternative investments can have a disproportionate impact on GA yield:
Alternative investments are private equity funds, hedge funds, joint ventures and other high-risk/high-return investments. Insurers’ investments in alternative assets
increased 23% from 2017 to 2021 as a supplement to low bond yields, according to ALIRT Insurance Research.
The beginning of this article questioned the future direction of long-term interest rates and policy crediting. We can only speculate, but some economists think fundamental macroeconomic conditions are changing. There are signs that the past three decades of deflation and decreasing interest rates bottomed out in 2021.
Significant changes in demography and globalization may support a fullscale reversal that is already underway. Specifically, an aging and shrinking work force and political opposition to global trade may drive inflation and interest rates for the foreseeable future.
If the forces that pushed portfolio yields down for so long are reversing, it is logical to think yields themselves will go in the other direction as well.
I am optimistic that the new economic environment will bring higher caps and crediting to index-based insurance products by the first half of 2023.
Kyle G. Mills is a senior life analyst at Schechter. He may be contacted at kyle.mills@innfeedback.com.
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Significant changes in
and globalization may support a full-scale reversal that is already underway.
Experts are expecting monster sales numbers for the fourth quarter and 2022 overall for multiyear guaranteed and indexed annuities, while variable annuities and their hybrid offspring, structured annuities, are in for a bumpy ride.
MYGAs blasted over the past few quarters, with $27.4 billion in sales in the third quarter, 4.7% over the previous, stellar quarter and 138% over the third quarter of last year.
Sheryl Moore, CEO of Wink Inc. and Moore Market Intelligence, credited MYGAs’ success to outcompeting CDs. MYGAs lock in rates for multiple years, just like CDs but at a much higher rate. According to Wink data, the average MYGA rate is 4.34%, while the average CD for a year is 1.16% and the five-year is 1.05%.
Variable annuities, however, have slumped with the stock market. VA sales, not including structured annuities, amounted to $13.3 billion in the quarter, down more than 15.9% compared to the previous quarter, and 37.8% over the same period last year. VAs have had a mighty fall since 15 years ago, when the products used to outperform all fixed annuities.
of people who retired early during the pandemic,” he said. “As a result, they may have taken their annuity payments before they had planned.”
goal was the formation of Corteva, which combined the agribusiness operations of Dow and DuPont.
The Department of Labor better not wait too long to publish its redefinition of “fiduciary,” one industry analyst said recently.
Did more people access their annuity funds because of the pandemic? Some experts think so.
Annuity payments increased 7.4% in 2021, the American Council of Life Insurers found in its 2022 ACLI Life Insurers Fact Book, released recently. Life insurance companies paid $100 billion to beneficiaries of life insurance policies and $97.7 billion to annuity holders in 2021, both record highs for a single year, ACLI said. Annuity payouts were well above the annual average for the past decade, the trade association found.
It is possible the pandemic influenced changes to retirement plans for many, said Andrew Melnyk, ACLI vice president, research and chief economist. “One reason may be the increase in the number
Many DuPont retirees are seeing a conversion of their retirement pension plan to an annuity, which will be administered by insurance giant Prudential.
Parent company Corteva issued the following notice: “As disclosed in Corteva’s 3Q22 10Q, the company transferred obligations and assets from the U.S. pension plan to purchase a group annuity in August 2022 for a portion of the pensioner population.”
This change in the pension plan has no impact on the pension benefit amount. Payments begin at the year-end.
The change had been widely expected after Corteva ended up with DuPont’s retirement obligations upon the merger and spinoff of Dow and DuPont. The main
The DOL’s spring 2021 Regulatory Agenda confirmed that it will rewrite the definition of fiduciary, which is likely to dramatically impact annuity sales processes.
Ever since, the Employee Benefits Security Administration has likely been work ing on the rule update. It’s hard to say for sure, said Brad Campbell, partner at Faegre Drinker law firm, since the DOL does not provide much infor mation on its work.
As of early December, there were no plans to release the rule, a DOL spokesperson said.
As the halfway point of President Joe Biden’s term nears, the pressure increases to speed along the rulemaking, Campbell noted. Otherwise, we could see a Republican administration come in after the 2024 election and reverse all rulemaking to that point.
The average
rates continued to be more than triple the rates offered in bank CDs in the third quarter.
Giesing, assistant vice president, LIMRA Annuity Research
A panel of financial industry leaders looked at simple ways that retirement plans could generate lifetime paychecks for workers.
By Susan Rupe
The financial services industry, boosted by federal and state programs, has made strides in getting workers to save for retirement. But after workers retire — then what? How can retirees create a sustainable stream of lifetime income to support them during a retirement that could last three decades?
A panel of financial company leaders presented some ideas during a session at a recent Employee Benefit Research Institute’s Retirement Summit. Although those ideas differed a bit, the thing they had in common is that retirement plans should have a simple way for retirees to generate a lifetime paycheck.
“My vision would be that everyone would get a paycheck for life from their 401(k) plan, optimized to their personal situation,” said Anne Ackerley, managing director and head of BlackRock’s Retirement Group.
Ackerley said that using the 401(k) as the source for lifetime income would benefit workers because of lower fees. In addition, she said, “People trust their employer and look to their employers for this type of benefit.”
A paycheck for life from the 401(k) “should be the default,” Ackerley said. “And when I say guaranteed income, I mean it should be affordable, simple, easy to use and an option.”
Ackerley also said she believes those who are approaching retirement should be able to use a technology-enabled tool to help them make better decisions on the best age to retire and the best age to begin claiming Social Security, etc.
Artificial intelligence can help workers do a better job of making their
retirement-related
“We have the power to do a better job through predictive analytics to help people make better decisions,” he said. “We have employers who are demanding and insisting that we provide more comprehensive views. AI will help us do that.
“Employees need the help, and we need to have the latitude to be able to help them make those decisions.”
Ken Mungan, chairman of the board at Milliman, proposed a new default for workers’ 401(k) plans that would generate income.
Mungan suggested that when a worker turns age 55, 3% of the worker’s 401(k) balance would be moved into an annuity that pays lifetime income beginning at age 80. That 3% transfer then would happen each year on the worker’s birthday until the worker retires.
“When you retire, you would have about 25% of your 401(k) balance in an annuity that would pay you lifetime income from age 80,” he said. “Now you divided the retirement income problem into two distinct pieces. You withdraw the 75% from your mutual fund until you reach age 79 and then at age 80, the annuity would take over from there. When the person retires, targeted monthly income would be moved into
their checking account each month.”
Ackerley suggested that many workers would not want to give up 25% of their retirement savings and not see a return on them until age 80. Instead, she proposed that workers start getting those annuity payments at age 65, suggesting that the payments could allow some workers to delay claiming Social Security.
A broad holistic approach to retirement saving is what workers need from their advisors, said Rich Nuzum, president of investments and retirement with Mercer.
“Think about the things people need to navigate in retirement: their health, their work, their savings and their social connections or lack of social connections,” he said. “For example, do you have a partner or a family member who will take care of you? How are you navigating housing? A good advisor will know what’s going on in all of those areas.”
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.
Impact of FIA allocation on median of $1M portfolio
Median is defined as 50th percentile of outcomes after seven years
By Susan RupeThe current market environment “could not be a more perfect time” for those who are in the “retirement red zone” to add a fixed indexed annuity to their portfolio. That was the word from Igor Zamkovsky, head of indexed annuities and insurance with Blackrock’s Retirement Insurance Group. Zamkovsky made the case for adding FIAs in the accumulation phase of a client’s retirement portfolio at a webinar presented by the National Association for Fixed Annuities.
The retirement red zone refers to the time period of roughly five years before retirement or five years after retiring.
“If you happen to be retiring in 2022 and your portfolio is down 20% and you’re not overfunded, something has to give,” Zamkovsky said.
With so many investment classes down, “having protected retirement solutions is more important than ever,” he said. “We’re in an incredibly dynamic market environment. But the overall concepts surrounding the value of FIAs are still true.”
The classic portfolio of 60% stocks and 40% bonds is under pressure in today’s environment, Zamkovsky said. The quarter ending Sept. 30 marked the third consecutive quarter of both stock and bond losses. This is the first time this occurred since 1931. Although stock volatility and valuations are elevated, bonds are less equipped to provide protection. Bond indexes have only lost money in four consecutive quarters once — in 1954 — and in three consecutive quarters three times — in 1931, 1980 and 2022. Stock indexes have lost money in six consecutive quarters twice — in 196970 and 2008-09 — in five consecutive quarters only in 1931 and in four consecutive quarters twice — in 1937-38 and 1974-75.
Meanwhile, bonds are on pace for the lowest returns since the 1960s, Zamkovsky said. As for equity funds, they have become riskier in the past 10 years, which may increase the risk of losses.
Clients want to “play it safe” with their portfolios, he said, but that strategy carries its own risks. Much like it reduces the value of money in the future, inflation also affects the true return on our investments after we take it into account. If an investment’s return is less than the inflation rate, then a return that appears positive on paper could actually be negative in real-value terms. In particular, Zamkovsky noted bond returns are at a negative 0.1% return over the past 10 years when adjusted for inflation, while bank certificates of deposit are at a negative 1.75% return and cash is at a negative 2.3% return.
“We believe liquidity is incredibly important, but too many people have too much cash on the sidelines,” he said. “Inflation is eating away at purchasing power.”
Blackrock’s research suggests that FIAs can allow for consistent equity exposure in the retirement red zone to help capture upside potential while also mitigating downside sequence-of-return risk.
Zamkovsky provided a case study showing how an FIA can be added to the portfolio of someone entering the retirement red zone.
Zamkovsky said Blackrock analyzed the benefits and tradeoffs of adding partial portfolio allocations to an FIA. In its case study, Blackrock looked at a hypothetical preretiree with a 60/40 retirement portfolio. The preretiree is 58 years old, planning to retire at age 65 and has an initial portfolio of $1 million. Blackrock ran Monte Carlo
The case for adding fixed indexed annuities in the accumulation phase of a client’s retirement portfolio.
simulations with 5,000 return paths.
Blackrock’s simulation looked at adding an FIA funded from equities and fixed income or adding an FIA funded from fixed income. The simulation found that allocating funds to an FIA offers greater upside in the “median” scenario when suitably funded. It also found that adding an FIA reduced extreme bad outcomes in balanced portfolios. FIAs improved worst and median outcomes for conservative and cash-heavy portfolios, assuming liquidity needs had been met. Finally, the simulation found incorporating an FIA with an underlying volatility-controlled index can help provide more certainty around future portfolio values.
What impact does an FIA have on a retirement portfolio in bull markets and in bear markets? If markets keep going up, allocating some of the portfolio to an FIA “can actually decrease median value a little bit,” Zamkovsky said. But what if markets are down?
Blackrock’s analysis looked at the portfolio value at the end of seven years for three different FIA allocations: 0%, 10% and
30%. It found that in consistently positive markets (up 5% annually for seven years), a 30% allocation to an FIA led to an overall portfolio value after seven years of $1.36 million versus $1.4 million in a portfolio with no FIA allocation — a 3% decrease. Meanwhile, in consistently negative markets (down 5% annually for seven years), a 30% allocation to an FIA led to an overall portfolio value of $790,000 after seven years versus $700,000 in a portfolio with no FIA allocation — a 13% improvement.
The Blackstone simulation also looked at how to fund the FIA for the hypothetical preretiree’s portfolio.
Sourcing from fixed income: In the situation of the client’s concern that their current portfolio will not provide the upside potential needed for an adequate retirement portfolio, the challenge is that allocating 60% of the portfolio to fixed income is unable to generate the return potential the client needs to grow the portfolio. The solution is to have the client consider allocating a portion of their fixed income to an FIA to potentially provide more upside.
Sourcing from equities and fixed income: For the client who is focused on avoiding extreme downside market scenarios and is less focused on growth, the challenge is that equity funds today are riskier than they historically have been. The solution is for the client to consider allocating funds from both fixed income and equities to an FIA to provide more protection in an extreme downside scenario.
Sourcing from cash: For a client who is conservative and holds a large amount of cash and fixed income inside their portfolio, the challenge is that inflation and low bank rates could eat into the value of their assets. The solution is for the client to consider including an FIA sourced from cash and fixed income to improve the worst and the median expected outcomes.
Zamkovsky said choosing between FIA crediting strategies and benchmarks requires an active discussion between the advisor and the client. These conversations can consider product design, index design, current cap and participation rates, median outcome expectations, and desired confidence around target outcomes.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.
70% percent of hybrid workers believe that their organizations care about them at least a moderate amount, compared to 56% of remote workers and 48% of on-site workers.
The burgeoning and critical need for mental health resources in the U.S. extends well beyond families and schools to the workplace, with more than half of employers saying that mental health issues have affected their businesses in the past year, according to the latest WorkForces Report from Aflac.
The study found that more than half (59%) of American workers are experiencing at least moderate levels of burnout, a notable increase over the 2021 figure of 52%. Moreover, nearly 80% of employees agreed that mental health coverage is critical, yet only 61% have access to it as part of their benefits package.
The survey also revealed some alarming findings of how much many American workers are struggling financially and are vulnerable to unexpected medical costs. More than half of respondents (58%) said they could not pay $1,000 in out-of-pocket costs. The most affected groups were Generation Z (78%), African Americans (72%) and Hispanics (65%).
Add health care to the list of things Americans are cutting back on as they attempt to beat inflation’s erosion of their bank accounts.
A Nationwide Retirement Institute survey revealed 14% of respondents have canceled or postponed plans to see a specialist in the past 12 months, while 10% are failing to take a prescribed medication and 11% didn’t get an annual physical due to inflation. And almost one-fifth of Generation Z (17%) and millennials (19%) have canceled or postponed plans to see a mental health professional in the past year.
As Americans brace for even bigger expenses in the future, the survey finds that 1 in 10 (10%) have decreased their retirement plan contributions in the
Less than a fifth of Americans (17%) have adjusted their family’s budget to pay for health care expenses in the past 12 months.
past year to pay for health care expenses, because of high inflation.
Emboldened by a landslide election victory in Massachusetts that reformed dental insurance, the American Dental Association plans to take the issue national. Massachusetts became the first state in the nation to deliver consumer dental protections. By a margin of 71.4% to 28.6%, voters approved the measure, which will require insurance companies to spend the bulk of their customers’ premiums — 83 cents of every dollar — on patient care. The remaining 17 cents would be available to insurers to spend on costs like employee salaries, fraud protection, customer hotlines and other services.
The term for the share of premium dollars that goes toward patient care is known as the “medical loss ratio.” The law will also require greater financial disclosure. The Affordable Care Act set
up a similar system for health insurers. Across the country, medical insurers must spend at least 80% of premiums on patient care or issue rebates to customers. In Massachusetts, health insurers must spend 85%-88% of premiums on patient care.
Consumers may believe they are off the hook for big bills if they have health insurance, but an American with an employer-sponsored health insurance plan can expect to spend more than $320,000 (including insurance premiums and out-of-pocket costs) during their adult lifetime, according to research from Synchrony. That figure goes even higher for those who purchase individual coverage without employer or government subsidies or for those who are managing a chronic illness such as diabetes or heart disease — reaching up to $700,000 over a lifetime.
The research also showed that consumers significantly underestimate their annual health care expenditures and do not save for future health care costs, leading many to delay recommended medical procedures.
Average worker pay in the U.S. rose 6.7% in 2022, while the average increase in premiums for family coverage ticked up 1%.
Today’s consumers set aside money for college or a mortgage, but not for health care.
— Alberto Casellas, chief executive officer, Health and Wellness, SynchronySOURCE: Aflac SOURCE: Nationwide Retirement Institute
Federal law requires group health plans to cover mental health and substance abuse benefits the same as medical and surgical benefits, but many aren’t in compliance. Here are four action steps for plan sponsors should take.
By Patricia CainThe COVID-19 pandemic has exacerbated what was already a severe mental health crisis in America, leading to a serious shortage of therapists and rising substance abuse rates. To get the care they urgently need, many patients and families are forced to take on unprecedented amounts of debt — often without knowing that their insurers or their group health plans are supposed to foot the bill.
Under the Mental Health Parity Act of 1996 and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), insurers and group health plans are required to provide coverage for mental health and substance abuse treatment on par with medical and surgical benefits.
However, as a recent report to Congress showed, many group health plans are not in compliance, denying coverage for things such as applied behavioral therapy and addiction services, leaving patients to bear the brunt of the costs.
But this may be changing. The Department of Labor has stepped up its enforcement activity, and a flurry of pending court cases are challenging coverage denials and reviewing policies for parity.
So, what has changed — and what does this mean for plan sponsors?
The Consolidated Appropriations Act of 2021 added an extra layer of enforcement to long-standing parity requirements for mental health and substance abuse treatment. While the Tri-Agency regulations issued in 2013 required group health plans to extend MHPAEA parity to non-quantitative treatment limitations (NQTLs), or factors limiting the scope or duration of benefits for treatment, the new legislation required group health plans to demonstrate their compliance.
In light of this new enforcement mechanism, the DOL has made enforcing MHPAEA compliance for group health plans a top priority. There is now “a level of attention, a level of resources being put to these issues that is kind of unprecedented,” said Ali Khawar, acting assistant secretary at the DOL Employee Benefits Security Administration.
Recent responses to an EBSA inquiry show how serious the problem has become. Out of 156 letters to group health plans and insurers requesting comparative parity analysis, not a single reply contained sufficient information, leading to further investigations and enforcement actions.
The DOL and patients also have been successfully taking health plans to court as a way of enforcing parity. These court challenges relate to treatment coverage, level of care guidelines, reimbursement rates and non-restorative therapy. For example, several courts have held that exclusion of Applied Behavior Analysis therapy, a treatment for autism spectrum disorders, violates MHPAEA.
Thanks to these new enforcement
activities, many group health plans are no longer requiring blanket pre-certifications for mental health or substance use disorders, nor are they excluding coverage for treatments such as ABA therapy, medication-assisted treatment for opioid use disorder, nutritional counseling related to psychological conditions, or drug testing for substance use disorders.
With heightened regulatory scrutiny and litigation likely to continue, it’s important for plan sponsors to take steps to ensure their policies meet MHPAEA requirements to avoid costly fines and costs associated with enforcement and settlements.
With a small number of exceptions, nearly every group health plan must offer parity. However, most sponsors will not be able to evaluate whether their plans are in compliance based simply on third-party
care, both in-network and out-of-network; outpatient care, both in-network and out-of-network; prescription drugs; and emergency care. The DOL provides a self-compliance tool to walk users through their review approach, which can be broken down into four steps. Each of these steps is required for each NQTL. Following is a high-level example of how this review would be conducted with respect to a pre-authorization NQTL.
The first step of the analysis is to identify all services requiring pre-authorization, including mental health and substance abuse treatments, as well as the components to which the NQTL applies (inpatient in-network, outpatient, etc.). How the pre-authorization requirement is implemented must also be documented, such as who makes pre-authorization decisions and that person’s qualifications.
The second step identifies the factors considered in the design of the NQTL
plans it services or its fully insured products. Getting information about past or current audits can help sponsors understand where administrators are in the compliance process, as well as potential risks. Although TPAs may be reluctant to disclose this information, it’s a good idea to ask the question.
Because plan sponsors aren’t able to ensure MHPAEA compliance themselves, plan sponsors of self-insured plans should ask their TPAs to represent that the plan will be operated in compliance with MHPAEA and for indemnity for breach of this representation. While the group health plan would be responsible for paying out improperly denied claims, litigation and audits can also prove costly for sponsors thanks to attorney fees (both their own and plaintiffs’), penalties and settlements that may result.
Although it may be difficult to obtain these protections in the service agreement, it is worth raising these options with the TPA when discussing group health plan operations or reviewing for compliance.
administrator contracts or certificates of coverage because they don’t contain the granular analysis needed to demonstrate compliance.
Instead, plan sponsors that want to proactively ensure their group health plans comply with MHPAEA can take these steps.
One of the simplest steps plan sponsors may take to demonstrate compliance with parity requirements is to request a compliance demonstration from their TPA. While plan sponsors are legally responsible for ensuring compliance, the demonstration can help a plan sponsor determine whether its group health plan meets the compliance requirement. The demonstration must show that the group health plan, in writing and in operation, is in compliance with the parity requirements for NQTLs with respect to each of the components of care: inpatient
and how they are weighted. Example factors include excessive utilization, recent cost escalation, a lack of efficiency or high levels of variation in treatment. Step three goes further, identifying the sources used to define those factors, such as internal claims analysis or medical expert reviews.
The final step evaluates whether the processes, strategies and evidentiary standards used in applying the NQTL, both as written and in operation, to mental health and substance abuse benefits are comparable to and no more stringently applied than those used for medical or surgical benefits. The DOL uses information such as approval rates, reasons for denial, duration of approval, appeal rates and turnaround review times, among others, to make this determination.
Plan sponsors can also ask the TPA whether it has been subject to an NQTL audit, either with respect to the self-insured
If the TPA will not agree to perform and document its NQTL comparative analyses, then plan sponsors are legally required to do their own in-depth compliance review. This type of review is costly and difficult and will require cooperation from the TPA. Even if the TPA provides NQTL comparative analyses, the responsibility for compliance remains with the plan sponsor.
In any case, proactive steps by plan sponsors to understand parity requirements and review their health plans before any audits or litigation can help promote full regulatory compliance with MHPAEA, deliver better care to their employees and limit the potential for costly litigation and enforcement actions.
Patricia Cain is chair of Neal, Gerber & Eisenberg’s employee benefits and executive compensation legal practice group. She may be contacted at patricia.cain@ innfeedback.com.
The Department of Labor has stepped up its enforcement activity, and a flurry of pending court cases are challenging coverage denials and reviewing policies for parity.
Young workers are relying on more than their 401(k) plans to save for retirement, as other types of investments are playing a greater role in their long-term wealth plans, according to a Schwab Retirement Plan Services study.
Americans are setting themselves up for less-than-golden years if the economy slides into recession, according to findings from a few surveys. As people adjust to higher inflation and prepare for difficult times, more of them are putting off retirement and reducing retirement savings, thinking they will work into the customary retirement years.
Source:
Generation Z and millennials are more likely to want a broader range of assets in their 401(k), not just bonds and traditional equities but also annuities, ESG options , fractional shares and crypto. Even at their young age, Gen Z and millennials see that saving for health care expenses in retirement is crucial too. And about half of Gen Z and millennial workers are using health savings accounts to save and invest for healthcare costs in retirement.
More than 4 in 10 Gen Z and millennial workers wish they could invest in annuities and cryptocurrency in their 401(k). More than a third of them wish they could select ESG investments, and nearly as many say they’re interested in fractional shares. Also, more than 7 in 10 younger workers say it’s important that their 401(k) investments reflect their personal values.
While about 8 in 10 respondents to a recent study said they are taking steps to pass on wealth to their heirs, they are not discussing their plans with heirs — in some cases, in order to avoid any conflict such plans may evoke.
Nearly 8 in 10 respondents to The Money and Family Study by Ameriprise Financial Inc. have taken at least one step to build generational wealth, said Marcy Keckler, senior vice president, financial advice strategy, at Ameriprise Financial. “About two-thirds of people (67%) say passing it on to their heirs is important to them. But they’re not openly discussing their intentions to do so,” she added.
Advisors spend much of their efforts helping clients plan for long-term care costs. But what about the financial impact on family members who provide that care? Nearly 1 in 5 Americans are unpaid caregivers , according to AARP, and close to a third of them have voluntarily left their jobs due
A Nationwide Retirement Institute study found that 40% of workers plan to postpone retirement because of increasing costs of living, double the number of people saying so a year ago. Fewer people have confidence in their retirement plan, with 58% feeling confident versus 72% last year.
Postponing retirement would seem to be a natural consequence of the anxiety around savings and income. But people are probably overestimating their ability to remain at work . Even before the COVID-19 shutdown, people in their 50s were being forced out of their long-term jobs, with 56% leaving involuntarily, according to a ProPublica/Urban Institute study.
to their caregiving responsibilities. AARP reports that family caregivers spend about a quarter of their income on caregiving activities, with an average cost of $7,242 a year. Caregivers’ work lives also take a hit. Even if caregivers don’t quit their jobs, they may miss out on career opportunities and promotions , or see an impact on their work performance and increased absenteeism.
Hold on!
One-third of survey respondents said they are holding more than 90% of their investable assets in cash.
Gen Z workers first became involved in investing through:
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Black Americans are particularly concerned about repaying debt and saving for retirement. How advisors can help them with these competing financial priorities. • Carl Myers
Black Americans comprise the population segment in the U.S. most impacted by the financial challenges created by the COVID-19 pandemic: facing problems with job loss, competing financial priorities and debt.
According to Lincoln Financial Group’s 2021 Retirement Power Study, 93% of Black Americans reported having two or more competing financial priorities, one of which is repaying debt. And that is a particular challenge for those families facing job loss, which was prevalent during the pandemic. In fact, in a Pew Research survey 33% of Black Americans said they or someone in their family had been laid off or lost their job as a result
of the pandemic. When there is a layoff, a financial priority such as repaying debt tends to take a back seat. This is an issue, especially for Black Americans, as research shows they are more likely than the general public (85% versus 73%) to view debt as a problem.
Despite their competing financial priorities, Black Americans are the most focused of any demographic on setting financial goals, which is a key first step toward financial security and building generational wealth. As Black Americans look toward these goals, they are setting a budget for expenses and putting an emphasis on goal setting in their top two areas of concern: debt repayment and retirement savings.
Financial professionals work with thousands of Americans every year who are interested in making their finances a priority and building generational wealth. And of all those individuals, no two clients are the same. They are in all
demographics, they come from different backgrounds and frequently they have different financial goals.
Before any meeting with a new client, financial professionals should consider some key questions. What does their financial education look like? What are their goals? Is this an opportunity to educate the client? Is their current income sufficient to achieve their goals over time? And depending on their employment, what do their financial workplace benefits look like?
This is the first step in any financial planning conversation and, quite frankly, one of the most important. If a client has low financial literacy, this typically makes decision-making more difficult. If they have a low income, this typically makes wealth accumulation harder.
As individuals take steps to focus on improving their finances, it’s important for advisors to consider a holistic approach, which involves creating a
Among employed U.S. adults, percentage who have set a specific goal for each of the following
financial plan designed to create finan cial security for clients and their fami lies. The plan could include prioritizing contributions to retirement accounts or buying a life insurance policy to protect loved ones. Life insurance, long-term care and supplemental income in retire ment years are often priorities for Black Americans looking to build wealth.
Clients looking to better secure their financial futures should start with three things.
1. Create a budget. They should review their current income and expenses, while seeking ways to reduce discretionary spending on items like dining, traveling, clothing and entertainment. Suggest they create a simple budget so they can prioritize increased savings and retirement contributions to strengthen their financial future. They can take advantage of any online budgeting tools and worksheets to help.
2. Lower interest rates. Part of a holistic financial plan is to identify ways to reduce interest rates on vehicle loans, home mortgages and credit cards. This can have a direct impact on clients’ ability to contribute more toward their long-term financial security.
3. Make a plan. Financial planning revolves around your client and their family’s financial philosophy and vision. As
financial planning profession, and that limited representation creates “advice deserts.”
This is a challenge because advice correlates with positive financial outcomes, retirement confidence and formal financial plans for retirement. According to Employee Benefits Research Institute & Greenwald Research’s 2021 Retirement Confidence Survey, only 17% of retired Black Americans use financial advisors — a lower percentage than that of retired white and Hispanic Americans.
Additionally, only 47% of Black Americans trust financial advisors, compared to 57% of all U.S. adults who say they trust them. Improving financial wellness program content to ensure that it is culturally relevant and speaks to the motivations and unique needs of Black Americans is an important first step to rebuilding and establishing that trust.
atic savings account for emergencies and unexpected events, setting aside at least six months’ of expenses to have a financial cushion in the event of a situation like job loss.
If there is one silver lining of the pandemic, it is that Black Americans are more focused on their overall finances. This shift will help create more positive long-term financial opportunities for the Black community to build generational wealth.
Carl Myers is a board member of the African American Financial Professional Network as well as a registered representative of Lincoln Financial Securities and a financial professional with WealthPlan Financial Group. Carl may be contacted at carl.myers@innfeedback.com.
By Brian Thorp
It’s no secret that most Americans have always-on access to the internet at their fingertips, whether at their desk or in the palm of their hand. So it shouldn’t be a surprise to hear online reviews have replaced personal recommendations and word-ofmouth referrals as the primary source of influence when consumers are preparing to hire professionals such as doctors, lawyers and accountants.
In fact, 83% of people in an NRC Health Market Insights Study said they trust online ratings and reviews more than personal recommendations, even when choosing a doctor.
Today, thanks to the new Securities and Exchange Commission marketing rule, consumers can make more informed and educated decisions when choosing a financial advisor by reading online reviews written by advisors’ clients and other people who know them well.
Beyond evaluating the facts about financial advisors, such as their education and credentials, online reviews build trust and satisfy consumers’ emotional needs. This increases consumer confidence in contacting and ultimately hiring an advisor. Even a single online review can significantly impact a consumer’s hiring decision.
But how can financial advisors get started and turn their online reviews into an evergreen source of digital referrals?
With the SEC marketing rule compliance deadline now in the rearview mirror, financial advisors have the regulatory green light to join other trust-based professions using online reviews and testimonial marketing to grow their business.
Of course, advisors should first speak with their compliance counterparts to understand any prerequisites they need to complete before getting started. Compliance officers can also answer important questions about the financial advisor online review websites their advisors are permitted to use and any training that may be required on the firm’s
updated policies and procedures for collecting and promoting testimonials.
Once any compliance hurdles are cleared, financial advisors can incorporate testimonial marketing in their day-to-day business plan. Since every advisor’s circumstances are unique, the best approach for one advisor to get started may be different from another’s.
Here are tips for six types of advisors with different levels of experience and backgrounds to attract their ideal clients with testimonial marketing.
Financial advisors who depart a national firm to start their own registered investment advisory may have to leave certain clients behind. Advisors can ask these former clients to write a review about their experience working together.
From a regulatory perspective, these reviews are considered “endorsements” (by former clients or nonclients)) and not “testimonials” (from current clients). But other than regulatory semantics, these reviews are just as impactful for advisor marketing and useful to consumers evaluating advisors.
Here are some tips for advisors who want to find success with online testimonials.
In lieu of client testimonials, advisors who are just getting started in the industry can quickly amass online endorsements from nonclients — influential community members, mentors, their clergy or nonprofit leaders, among others. Online reviews written by these individuals can offer insights into an advisor’s character, civic contributions, personality and trustworthiness.
Beyond gathering reviews from current clients, many advisors specializing in a niche have developed domain expertise and cultivated relationships with influential individuals whose endorsements can prove impactful.
For example, an advisor specializing in education funding may know local high school guidance counselors who regularly sing their praises. Now this praise can be published on an advisor’s profile on a financial advisor review website, where prospective clients can gain added insights to inform their hiring decision.
And as a bonus in this example, the same guidance counselor can easily refer families to the advisor’s profile on the online review website too.
Advisors who have earned particular credentials may have already gathered testimonials and endorsements that can be “unlocked” thanks to the new SEC marketing rule.
For example, advisors who earned their Certified Kingdom Advisor designation had to first submit three references as part of the application process, including:
1) a pastoral reference and 2) “two client references from non-family members who have known you for at least two years.”
A quick call or email to these references will likely result in permission to publish their remarks as online reviews. Or their previously submitted remarks can be easily repurposed by these references in the form of a new online review.
Not all clients want to see their names publicly displayed next to an online review, but many would be happy to write a review under a condition of anonymity (or semi-anonymity — e.g., Jane S.).
The SEC permits anonymous testimonials and endorsements when accompanied by appropriate disclosures, allowing advisors to collect and promote these reviews compliantly. Although reviews on sites like Google can’t be published anonymously, advisors may opt for an online review website like Wealthtender, where anonymous reviews are permitted.
While FINRA-registered representatives have technically been able to collect and promote testimonials before the SEC marketing rule pursuant to Rule 2210(d) (6), many were prohibited by their home offices from doing so, partly out of concern about the prior SEC prohibition, or otherwise constrained by dual SEC and Financial Industry Regulatory Authority oversight.
Fortunately, with the new SEC marketing rule in effect, dually registered advisors will find they can operate under the disclosure requirements of both rules. Essentially, beyond complying with the
SEC-required disclosures, registered representatives simply need to include a couple of additional disclosures, indicating:
» The fact that the testimonial may not be representative of the experience of other customers.
» The fact that the testimonial is no guarantee of future performance or success.
» If the review discusses a technical aspect of investing, the reviewer must have the knowledge and experience to form a valid opinion.
Online reviews establish a human connection with prospects, demonstrating trustworthiness and increasing consumer confidence in contacting and hiring professionals in trust-based industries. Thanks to the SEC marketing rule, financial advisors have joined the ranks of accountants, doctors and lawyers, successfully growing their businesses with testimonial marketing.
Financial advisors embracing online reviews as part of their marketing game plan in 2023 will be positioned to lead the industry in attracting new clients throughout the historic transfer of wealth from baby boomers to millennials over the next decade. While getting started may require jumping through a few compliance hoops, the payoff could be considerable for those advisors who skate where this digital marketing puck is going.
Brian Thorp is the founder and CEO of Wealthtender. He may be contacted at brian. thorp@innfeedback.com.
Listen to Bryan W. Adams talk for very long and you will hear a story about the Adams Funeral Home in small-town West Texas.
Adams grew up there, immersed in the family business run by his parents, Allan and Gail. The business of death can be unsettling in many ways, particularly when loved ones pass on amid poor financial planning.
Young Bryan Adams saw these heartbreaking scenes and will tell you it led him to a career in retirement planning, and eventually, to start Integrity Marketing Group in 2006.
Adams was just 30 years old at the time.
“I remember coming home every night and my mom and dad would talk about families that didn’t prepare for the inevitable,” Adams said during an October industry conference. “For my dad it was like a ministry almost. He wanted to serve people and pretty much gave away funerals. My mom was the businessperson.”
Adams took a little from both of his parents in turning Integrity into a juggernaut disrupter of traditional insurance
By John Hiltondistribution. While less is known about private companies such as Integrity, the known numbers put Integrity at or very near the top of the insurance marketing mountain.
The company perfected the new model: use of financial might to build massive scale in order to consolidate and perfect back-office distribution. With a nearrelentless acquisition appetite, Integrity
Medicare Advantage and Medicare supplement
plans. Its agent network numbered 120,000 then, according to an Integrity news release.
Integrity is not the only marketing company reaching for scale. Although the companies deny being motivated by competition, Simplicity Group and AmeriLife Group are also growing dramatically via acquisition activity.
boasts a network of about 500,000 agents and advisors who serve more than 11 million clients annually.
Integrity’s rocket-ship growth has the industry buzzing. Five years ago, the company acquired Neishloss & Fleming, a Pittsburgh-based company that distributes
The Big Three’s relentless growth is altering the distribution landscape, said Sheryl Moore, president and CEO of Moore Market Intelligence and Wink Inc. Small to midsized IMOs and FMOs are being gobbled up so quickly, it is forcing many to reconsider their plan, she said.
Nearly a decade after Integrity Marketing Group acquired its first company, the IMO is now one of the giants of distribution. What is next for CEO Bryan Adams and Integrity?
Small to midsize IMOs and FMOs are being gobbled up so quickly, it is forcing many to reconsider their plan.
— Sheryl Moore, president and CEO of Moore Market Intelligence and Wink Inc.Integrity surprises employees with a $125 million payout and equity ownership in the company in this file photo.
“It is hard to compete against an Integrity, Simplicity or AmeriLife in terms of sales, and therefore annuity commission payouts,” she said. “For this reason, I’ve seen friends talking to these firms when they previously wouldn’t have considered selling so soon. It just seems like for those who had planned to retire in five to seven years, I am seeing more of them entertain discussions with these three firms than I would have anticipated.”
Certainly, not all agencies selling out to the super-IMOs are doing so reluctantly. In fact, many are eager to receive interest and offers from the big players. To understand why, one needs to look at what it means to be an Integrity “partner,” as Adams calls them.
In an era of increasing regulatory obligations and segmented marketing
audiences, combined with shrinking profit margins, agencies can use the help with back-office functions.
Integrity touts streamlined administrative functions through centralized areas, such as people and culture, technology and innovation, finance, legal and compliance, and “world-class” advertising and marketing. In addition, Integrity offers partners access to proprietary technology through its omnichannel insurtech platform.
“These comprehensive insurance and financial services offerings include valuable agent resources, such as product development, quoting and enrollment systems and customer relationship management software,” Integrity said on its website.
For a smaller agency like Richman Insurance Agency, a Dallas, Texas-based IMO that joined Integrity in August, that
kind of backstop can reduce or eliminate a lot of potential headaches.
“This partnership with Integrity is pure opportunity,” said Rob Richman, president of the agency, “to do things you never thought you’d be able to do on your own. And to do it with a big team of resources.”
Adams balks at the perception of Integrity as a voracious acquirer of agencies. He mentions the May 2022 acquisition of Ritter Insurance Marketing, a midsize IMO specializing in Medicare Supplement and Medicare Advantage plans and based in Harrisburg, Pa.
“I’ve never been to [Craig Ritter’s] office,” said Adams, who previously founded Legacy Safeguard, a final expense company. “I’d probably just get in the way. It’s really about how do you come alongside of them, give them more technology, more support, more resources to grow faster and serve more people. So, I think our model is very different than the others, because we’re not trying to acquire business to try to run it.”
Integrity made its first acquisition in 2013, and to hear Adams tell it, the deal came about almost by accident.
“We never thought about acquiring a business,” he said. “It was never part of our plan. But an insurance company came to us, a really large insurance company, and said, ‘Hey, we’ve got an older distributor that doesn’t have a succession plan. Would you acquire them?’”
That was quickly followed by another, similar offer, Adams recalled, and it quickly became clear that there was a vacuum in the distribution chain that needed to be filled.
“I think our model is very different than the others, because we’re not trying to acquire business to try to run it.”
— Bryan Adams, CEO, Integrity Marketing GroupThe Integrity Marketing Group staff poses for a group photo.
In 2016, Integrity took a giant step forward with a capital infusion from private equity firm HGGC, the shop co-founded by NFL Hall of Fame quarterback Steve Young. Young now serves as the managing director of Integrity.
The pace of Integrity’s acquisitions quickened in 2022 as the company snared some high-profile targets:
» Ash Brokerage. Acquired in May, Ash Brokerage is one of the largest insurance brokerages in the United States, with more than 400 employees nationwide. In 2021, Ash Brokerage helped to place over $2 billion of premium, while underwriting $25 billion of face amount for American families and businesses.
Based in Indiana, Ash is a full-service brokerage offering life insurance, longterm care, disability, annuities and retirement solutions.
» PHP Agency. PHP, which stands for “People Helping People,” serves nearly half a million Americans nationwide by offering life and annuity products through its team of more than 27,000 agents. Based in Addison, Texas, PHP joined Integrity in July.
» Annexus. Integrity sealed one of its biggest deals to date with a late-July acquisition of Annexus Group, a product design and distribution company with $45 billion in combined sales and partnerships with some of the biggest companies in the industry.
In 2022, Annexus expects to place approximately $7 billion in annuity premium and $150 million in target life insurance premium, the company said on its website. Annexus is one of the top annuity innovators in the business and touts itself as “the No. 1 independent retirement planning product design and distribution company in America.”
In 2021, Integrity received a second infusion of private equity capital, this time from Silver Lake. A leading technology investor, Silver Lake took a minority stake and a board seat with its $1.2 billion investment.
The Silver Lake investment was earmarked for Integrity technology platforms.
“Insurance and wealth services are crucial components of the health care and financial markets — industries ripe
for transformative innovation,” said Egon Durban, co-CEO of Silver Lake.
But the mounting investment from private equity has many in the industry wondering if Integrity is destined to go public at some point.
Integrity became an employee-owned business in 2019 with the formation of the employee ownership plan, and at that time paid out a retroactive cash distribution of $50 million to Integrity’s 750 employees. Adams said there are no plans to shake up the company’s structure.
“I don’t really have a desire to take this company public,” he said. “It’s a business that I founded and remain passionate about in how we serve people better together. So, our goal is to continue to grow and continue to expand. And at this point, we don’t have any desire or need to go public.”
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.
Even though sales were up in total through the first half of 2022, the strong consumer demand for life insurance experienced in 2020 and 2021 began to wane.
By Maureen ShaughnessyOver the past few years, the life insurance industry has experienced a pandemic, lockdowns, underwriting restrictions, work-fromhome disruptions, life insurance tax law changes and volatile economic conditions.
Life insurance premium sales soared 18% in 2021 as the result of increased con sumer demand for life insurance, coupled with the impact of tax law changes allow ing higher premiums per dollar of death benefit to qualify as life insurance. Total life insurance premium sales were up 11% through the first half of 2022.
LIMRA foresees this momentum shifting in the years ahead. Even though sales were up in total through the first half of 2022, the strong consumer demand for life insurance experienced in 2020 and 2021 began to wane. We believe sales that occurred as a result of the tax law changes were mainly one-time sales and we expect noticeable corrections in the near future for most product lines, with the exception of term insurance.
Variable universal life and indexed universal life will experience most of these tax-law-change corrections in the second half of 2022 and into the first half of 2023.
Required premiums for whole life insurance generally increased due to the tax law change, and some companies experienced extra sales at the end of 2021 — before the effective date of the price increases. In addition, a second one-time sales correction occurred due to a regulation in Washington state, which prompted a fire sale of long-term care insurance combination products as well as standalone LTCi products in late 2021.
second quarter, a sign that consumer demand is waning. Term premiums have decreased in the past three quarters, and whole life is up only slightly year to date. Term and whole life are key products for middle-income consumers.
During this time period, inflation persisted for much longer, and at a higher rate than many expected. Inflation has a negative impact on sales to middle-market consumers, and that impact is seen most likely in term and whole life products.
Through November 2022, the Federal Reserve raised the federal funds rate for four consecutive months, each time raising its benchmark interest rate 75 basis points. The Fed took an aggressive stance against inflation, at the risk of slowing the economy into a recession.
The aggressive short-term interest rate increases ripple through to longer-term interest rates as well, including the 10year U.S. Treasury rate. The 10-year U.S. Treasury is a benchmark for many life insurance companies both for what the company can receive in return for its own asset portfolio and as an indication of the return it can use in the pricing of its life insurance products. The 10-year Treasury has risen quite dramatically
risk (on their own) to life insurance companies, as long as there is enough time to adjust pricing and product development to match the economic conditions. However, dramatic changes in interest rates — whether up or down — do present risk, as companies do not have time to respond appropriately. If interest rate patterns change abruptly, there are risks to both sales and in-force business, especially to products linked to insurance company general accounts.
Considering all these factors, LIMRA forecasts life insurance sales to be relatively flat in 2022 and 2023, with the risk of sales declines being greater in 2023. If the economic environment improves over time, we anticipate a return to growth in 2024. If our industry can continue to educate consumers about the need for life insurance and enhance the innovative solutions for the underserved markets, it may be possible to improve sales, at least partially, prior to 2024.
Maureen
Shaughnessyis senior actuary, experience studies, LIMRA and LOMA. She may be contacted at maureen.shaughnessy@innfeedback.com.
As custodians of our clients’ financial well-being, advocacy should be a service we provide.
By Bryon HolzUnlike in Vegas, what happens in D.C. doesn’t stay in D.C. In fact, the actions of Congress can have profound impacts on insurance and financial professionals around the country as well as on the families and businesses that are our clients.
Taxes, retirement planning, longterm care, college savings, health care, property/casualty insurance, annuities, you name it — whatever products and services we provide and wherever we practice, legislation shapes the financial landscape for our clients. It determines how and whether we are able to guide them to financial security and help them achieve their life goals.
I believe being politically active and involved is as important to serving my clients’ best interests as is recommending the right coverages or financial plans. It’s clear that laws and regulations can work for or against Main Street Americans’ best financial interests. As the custodians of their financial well-being, advocacy on their behalf should be another of the services we provide.
Our elected officials, I honestly believe, want to do what is best for their constituents, but laws and regulations are complex and can have either misguided or unintended consequences. As experienced professionals in our industry with the guidance of advocacy organizations such as NAIFA, we understand better than our clients — and often better than the legislators themselves — how government policies promote or hinder financial security. It’s important for us to share our understanding and advocate on our clients’ behalf.
This month, the 118th Congress of the United States convenes in Washington. Numerous freshman lawmakers who have
very little understanding of our industry and how it benefits people’s lives will be taking the congressional oath of office for the first time. The same scenario is playing out in state legislatures across the country. Insurance and financial professionals are perfectly positioned to bring these novice lawmakers up to speed. But even lawmakers who have been in their roles for years or even decades benefit from hearing our message. They can never learn too much or care too much about Americans’ financial security.
I recently returned from Washington and NAIFA’s National Leadership Conference, where I went to Capitol Hill with many of my professional colleagues. I had a very productive meeting with Rep. Scott Franklin from my home state of Florida. This was not my first rodeo. I have been a grassroots advocate at the federal and state levels for years. I know from that experience that our elected officials want to hear from us. They value our input. They want us to share our knowledge of how their actions affect our clients and how they can help.
Once again, our government at the federal level is nearly evenly split between the two political parties. And while they have their obvious differences, there is one thing they have in common. They want to serve, and they need the support of their diverse constituencies in their home districts and
on Main Streets across the country.
These are the same people we as financial professionals serve, the Main Street families and businesses that drive our economy and strengthen our nation. We may or may not agree with our lawmakers. We may or may not have voted for them. But I have learned from my experience as a political advocate and from participating in NAIFA’s nonpartisan advocacy events that I can effectively serve as a resource for and be influential with lawmakers from both sides of the aisle.
When we’re discussing the issues that impact our industry and our clients with members of Congress, state legislators or their staffs, it doesn’t matter if we are Democrats, Republicans or Independents. Our issues are people issues. In our advocacy as well as in our practices, we serve our clients’ best interests. We are all members of the Financial Security Party.
As we contemplate how we can be better professionals and better serve our clients in the new year, I would urge every financial professional to consider the importance of political advocacy. Connect with your lawmakers when they are in your home district, or take advantage of opportunities to visit with them in Washington. NAIFA’s annual Congressional Conference is May 22-23. More than 500 agents and advisors will come together from across the country to meet in small groups with their lawmakers. It’s a great way to get involved.
You can make a difference. As professionals serving your clients and communities, it is in their best interests that you do so.
Bryon Holz, CLU, ChFC, LUTCF, CASL, LACP, is the 2023 president of the National Association of Insurance and Financial Advisors. He founded Bryon Holz & Associates in Brandon, Fla., in 1983 and has been a NAIFA member since 1987. He may be contacted at bryon.holz@ innfeedback.com.
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