InsuranceNewsNet Magazine | April 2023

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How one IUL is staying ahead of the proposed regulation curve. p.11

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IN THIS ISSUE

FEATURE

A rising tide

By Susan Rupe

Industry professionals

help lift others in their communities by helping them improve their financial literacy skills.

IN THE FIELD

18 Protecting the castle

By Susan Rupe Brian Carden

wants to help his clients build a castle of wealth and then create a moat to protect it.

LIFE

24 Ask the right questions, find the right coverage

By Howard Sharfman

How to get all the information you need to provide clients with the best solution.

INTERVIEW

6 Volunteering for success

Jeff Chernoff, NAIFA’s Young Advisor Team Leader of the Year for 2022, found success through his passion for giving back. In this interview with Publisher Paul Feldman, Chernoff describes how his community involvement helped grow his business.

ANNUITY

28 Does pessimism really suppress annuity sales?

By Steven A. Morelli

A negative outlook regarding life expectancy may be correlated with other factors that impact the decision to buy annuities.

INSURANCE & FINANCIAL MEDIA NE TWORK

PUBLISHER Paul Feldman

EDITOR-IN-CHIEF John Forcucci

MANAGING EDITOR Susan Rupe

SENIOR EDITOR John Hilton

VP, SALES & MARKETING Susan Chieca

HEALTH/BENEFITS

31 Keeping five generations of workers happy with their benefits

By John Thornton

Today’s multigenerational workforce demands a fresh look at benefits.

ADVISORNEWS

36

Helping clients navigate difficult estate-planning conversations

By Ben Beshear

When an advisor holds a client accountable, it helps ensure their legacy will be carried out smoothly.

BUSINESS

38 The how and when of texting clients

By Tom Sheahan

Stay compliant while communicating with clients.

IN THE KNOW

40 States maintain iron grip on insurance regulation

By John Hilton

The issues surrounding state insurance commissioners and the differences between elected and appointed systems.

INSURANCE & FINANCIAL MEDIA NETWORK

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EMAIL & DIGITAL MARKETING SPECIALIST Megan Kofmehl TRAFFIC COORDINATOR Sorayah Talarek

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NATIONAL SALES DIRECTOR Sarah Allewelt

NATIONAL ACCOUNT DIRECTOR Brian Henderson

NATIONAL ACCOUNT DIRECTOR Tobi Schneier

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Helping the public get an A+ in financial literacy

According to the most recent available Federal Reserve SCF data, the average retirement savings for Americans who are between the ages of 65 and 69 is $206,819. The highest average was among those 55-59 years old at $223,493. According to the Government Accountability Office, however, only about half of households age 55 or older have any retirement savings. About a third have no defined benefit plan or retirement savings, and about 20% have a defined benefit plan but no retirement savings. The remaining 52% have some retirement savings.

Those numbers are alarming.

There are some signs of hope, however. A recent BlackRock study found that Generation Z workers, ages 18-25, are saving an average of 14% of their income. So one might assume that financial literacy is improving among the younger generations. Among the older generations — millennials, Generation X and baby boomers — the average is 12%.

However, with nearly half the population having little or no retirement savings, there is definitely a shortfall when it comes to financial literacy.

A savvy advisor I recently had a conversation with suggested that financial literacy education should start in middle school. My wife, Lisa, is a middle school engineering teacher. If we’re teaching engineering in middle school, why not financial literacy? The advisor went on to say that in terms of retirement planning, even people who work in other aspects of the financial industry are not educated in what is needed to plan for their financial future and retirement. It’s a different set of skills.

About one-fourth of non-retirees have no retirement savings at all, according to the Federal Reserve. And only about one-third of non-retirees believe their saving plan is on track. And the breakdown by race/ethnicity shows an even greater disparity.

While 42% of white people believe their retirement savings is on track, that

percentage drops to 23% for Blacks and 22% for Hispanics. And while 80% of whites have at least some retirement savings, that percentage drops to 63% for Blacks and 58% for Hispanics. (See chart.) So there is

of advice that the public needs in order to become financially literate.

also a disparity in financial literacy across racial and ethnic groups, and, in fact, a more intense need for financial literacy.

While it’s alarming that only 40% of those ages 45-59 believe their retirement savings are on track, according to the Federal Reserve, it’s also alarming that only 34% of those ages 30-44 believe they are on track. As we know, the earlier people start saving for retirement, the greater chance they have at meeting their retirement savings goals.

Obviously, improved financial literacy is better for all: those who are managing their budgets and planning effectively for retirement, and for the financial advisor community, since improved literacy would provide a greater pool of the public seeking financial assistance.

It’s also clear that there is a large percentage of the public in the middle-aged demographic who need financial advice and help steering their retirement planning onto a better course. For them, the need is more urgent.

I noticed recently that Schwab MoneyWise has a feature on its site called “Ask Carrie.” Certified financial planner Carrie Schwab-Pomerantz offers the kind

She does so in a format that we’ve all come to recognize and be comfortable with — the advice column — and which doesn’t reek of making an overt sales pitch, but only offers sound advice. This type of approach is one of many possible methods of addressing the need for financial literacy. There is no right or wrong way, but more outreach is needed. There are many ways to connect — through advice columns or blogs on your website, a regular podcast, newsletters — maybe even offering a seminar at your local high school. Letting the public know that you are there to offer help and advice is a crucial step in helping to turn the tide and improve financial literacy.

Welcome to FPA

As we strive to broaden the voices in the magazine, we are working to expand the number of professional associations providing useful information and discussion for our readers.

With this issue, we welcome the Financial Planning Association to our pages with their first article, “Pro bono financial planning benefits society and advisors,” which takes a look at how offering your time and guidance can make you a better financial planner. FPA is the leading membership organization for Certified Financial Planner professionals and those engaged in the financial planning process, and we know the association will add to the valuable discussions and provide actionable information for our readers.

Welcome to FPA!

John Forcucci Editor-in-chief

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What’s in the news on InsuranceNewsNet.com

Read up about fiduciary rule setbacks and why older Americans are extending their careers and have unexpected wealth.

[Editor’s note: These are some of the major stories to which we are devoting ongoing coverage on InsuranceNewsNet.com.]

Judge deals DOL big setback in bid to extend fiduciary duty

Institute, 401(k) plans hold $6.3 trillion in assets as of Sept. 30, 2022, on behalf of about 60 million active participants and millions of former employees and retirees. When recipients retire and the money is “rolled” out of those plans, many advisors earn a commission.

Regulators consider that a conflict of interest and want to expand the definition of fiduciary. The fiduciary standard is based on the “five-part test” established in 1975, in which one of the prongs is whether the advisor and client are in an “ongoing relationship.” In order to satisfy that prong, the DOL claims a one-time rollover contains the expectation of future advice rendered.

The judge was not buying it.

“While an offer to provide future advice may, as the Department suggests, be the beginning of a relationship, that relationship is inherently divorced from the ERISA-governed plan,” she wrote. “Because any provision of future advice occurs at a time when the assets are no longer plan assets, it is not captured by the ‘regular basis’ analysis.”

by John Hilton

The Department of Labor is determined to extend fiduciary duty to sales of financial products paid with retirement plan dollars. A new rule is expected sometime this year.

But the DOL suffered a significant setback when a federal district court judge in Florida struck down a portion of guidance issued in 2021 that expanded the definition of a retirement plan fiduciary.

As of press deadline, the DOL had not officially appealed the decision.

The American Securities Association filed the lawsuit shortly after the DOL’s investment advice rule took effect in February 2022.

Judge Virginia M. Hernandez Covington ruled that a portion of the department’s FAQ guidance illegally widened its regulatory lane and failed to comply with the agency’s own regulations.

The ruling is the latest setback for the DOL in its bid to extend fiduciary duty to advisors who handle “rollover” planning. According to the Investment Company

Created by the Trump administration, the Investment Advice Rule has two main parts: a new prohibited transaction exemption allowing advisors to provide conflicted advice for commissions and a reinstatement of the fivepart test to determine what constitutes investment advice.

The Biden administration allowed the investment advice rule to take effect Feb. 16, 2021, while the DOL began work on a new definition of fiduciary.

Older workers a growing segment of the workforce

Whatever the reasoning, it is clear that more older people are remaining at work or returning, with the greatest growth coming from those 55 and older. In 2000, only 19% of those between 65 and 74 were working, a percentage expected to grow to 32% by 2030.

by Steven A. Morelli

More older Americans are claiming they relish the opportunity to continue working. But do they really?

A third of people between 65 and 74 and 12% of people over 74 expect to still be working by 2030, according to a study.

More workers are expecting to extend their work lives, and they might be tricking themselves into believing that they want to do it rather than having to do it, according to findings from the survey report “Employment Extenders: A (labor) force to be reckoned with” from Voya Cares and Easterseals.

Most “employment extenders” said they want to work longer, but most of them also say they have not saved enough for retirement, with a majority having less than $500,000 in savings. The survey polled 1,062 of what the researchers called employment extenders — half 50 and older who previously retired but are currently working, the other half at least 65 and planning to work past retirement age.

Only 43% said they were working to cover current or future expenses, but nearly all (92%) older workers said they needed or wanted more money for retirement. Needing the money was No. 8 of the reasons most cited for working past retirement age. Simply being able to work was No. 1.

Census: More wealth than thought held by older Americans

by Steven A. Morelli

Are older Americans holding more wealth than generally thought? If the Census Bureau data is correct, it’s true.

The Census Bureau found that the population overall had higher income and slightly less poverty than previously thought, thanks to a new analysis project, the National Experimental Wellbeing Statistics, or NEWS. The bureau is correcting survey data for a more accurate measure by linking the survey, the decennial census and commercial data to remove errors and bias in income and poverty estimates.

The project found that in 2018, median household income was 6.3% higher than in survey estimates, and poverty was 1.1 percentage points lower.

But older Americans were faring far better. For those 65 and older, household

income was 27.5% higher and poverty was 3.3% lower.

The previous estimates were spot on for those under 65, with median household income showing a slight difference of -0.1% in the corrected data. But for the 65-and-older group, household income was $55,610 versus $43,700, a 27.3% difference.

The next age group down fared better as well. For those 55-64, the correction showed $72,430 versus $68,950, a 5% difference. The change below that was statistically insignificant.

Older people were less impoverished as well. For all ages overall, the poverty rate

“Of no surprise, this lack of confidence correlates to the amount Employment Extenders have in retirement savings,” according to the report. “As many as 60% say they have less than $500,000 in savings, including all investments, savings accounts, pension plan/defined benefit plans, employer-sponsored retirement plans (e.g., 401(k), 403(b), 457) and IRAs or Roth IRAs. And three-in-10 admit to less than $100,000 in savings.”

Perhaps the most concerning theme in the survey results was how few are preparing for the likely financial or physical challenges ahead of them.

Read the full story online: bit.ly/oldwork23

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

was 1.1% lower. That might not sound like much, but it represents a 9.4% decrease in the number of people in poverty. For people over 64, poverty was much lower, with a 3.3% decrease in the poverty rate, representing a 34.1% drop in the number of people in poverty.

There was no decline for Black people, people with disabilities, children, those with some college education, and Midwest and rural residents.

The rich were even richer than estimated in the share of income, but only at the very top, which by now seems familiar for the modern American economy. The top 5% fared better, but the groups directly below did not see a similar lift.

Read the full story online: bit.ly/olderwealth23

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

Third-generation financial advisor and member of National Association of Insurance and Financial Advisors Jeff Chernoff says he owes his success to his family roots in the business, what he has learned through being an association member, and his passion for giving back through his volunteerism and mentorship.

In recognition of his work, Chernoff was named NAIFA’s Young Advisor Team Leader of the Year for 2022. Vice president of his family’s Tampa-based Insurance and Trust, Chernoff is also president-elect of NAIFA-Florida and is past president of NAIFA-Tampa Bay. He has mentored dozens of young professionals in recent years.

Chernoff’s leadership activities, however, extend beyond NAIFA. He serves on the board of the Tampa Bay Chamber of Commerce and is vice president of Partners in Network, which links professionals in order to facilitate referral-based business growth. He also serves on cultural boards, such as the board of the Stageworks Theatre in Tampa. This volunteerism not only provides a way to give back, but it also provides an opportunity to build his professional network.

Chernoff credits NAIFA for helping him make the transition into the insurance business from his earlier career in higher education, and he credits association-sponsored trainings for helping set him on the path to success.

Speaking with InsuranceNewsNet publisher Paul Feldman, Chernoff describes how volunteerism inspires him and why “we’ve always done it this way” no longer holds true.

Paul Feldman: Congratulations on being the Young Advisor Team Leader of the Year. Tell me about that. What does that mean to you?

Jeff Chernoff: I was overwhelmed when I found out. I joined NAIFA in March 2011, the same month that I got licensed. Like many leaders in our association, I started off by getting involved in what was then called a local association, now a chapter. Through the chapter, there were opportunities for state involvement. I kept showing up and kept asking, “How

can I help?” For me, it felt like a true recognition of all the efforts that I’ve been doing for the past 12 years.

Feldman: You’ve been actively involved. What are some of the lessons you’ve learned from your fellow advisors and the people you’ve been mentoring?

Chernoff: Don’t be afraid to put yourself out there. But if you are asking to assist, make sure that you do whatever it is that you say you’re going to do.

There are a lot of people who volunteer but never do anything, never make any sort of a positive impact. The people who do make that positive impact stand out. Which led me to leadership opportunities.

Feldman: What are some hard questions you faced or that you’ve asked as you’ve worked with the organization?

Chernoff: One of the questions that I ask a lot is: “Why are we doing this?” I don’t want to hear, “Well, we’ve always done it that way.” Just because we’ve done something the same way doesn’t mean that’s how we need to do it now. We need to come up with new ideas; we need to improve our association.

One of the things NAIFA says is, “Youth is the future. Young advisors are the future.” I’m always quick to point out, “No, we are not the future. We are the now.” I think the average NAIFA member is in their 50s — that’s not a great look for us when we are trying to attract a wider audience. We, as an association, should work to bring in younger pe ople.

Feldman: What do you think NAIFA could do or should do as an organization to inspire younger people to enter the field or become NAIFA members?

Chernoff: You would never go to a doctor who wasn’t part of the American Medical Association. You would never go to a lawyer who wasn’t part of the American Bar Association. Why would you consult someone about financial services who wasn’t part of that professional association?

NAIFA is reaching out, going to colleges and universities, and reaching out to people in risk management and finance

and encouraging them to get involved. The association will hold its diversity symposium in May for the seventh or eighth year. NAIFA recognizes they need to get younger, they need to appeal to a broader audience. But it’s like turning a battleship around. You have to go five miles in the wrong direction before you can actually turn around.

Feldman: I think a lot of people join organizations and just expect magic to happen. I truly believe associations are about getting involved. What did you learn early in your career when you got involved?

Chernoff: What I learned is that I’m not the typical young professional. I’m involved with mentoring a lot of young professionals, and the conversation that I hear over and over is, “Oh, I went to one or two meetings. I didn’t get anything out of it.” In addition to being a member

your decision to enter the business?

Chernoff: My grandfather worked for MetLife from 1959 to 1981 and then retired. In our family — including both sides — there’s something like 15 family members who have worked in insurance or financial services.

My father’s oldest brother, my uncle, he worked in it for a short time. My aunt worked in it on the administration side. She met her now husband, my uncle, at MetLife. We had a cousin who became a financial advisor. Ironically enough, my uncle worked in claims for Travelers for 40 years. I’ve always been around the business, but it was never something that I considered.

I remember my father started our company when I was 3 years old. He was working six days a week. He would come home for dinner and then, a lot of times, after we went to bed, he would go out for evening appointments, networking or

of the national organization, I currently serve as president of NAIFA-Florida. I’ve been speaking about the need to create micro volunteerism. We have to create opportunities for young professionals, people who are just getting into the business, and make them feel as though they have a voice. And make sure that their voice is heard.

It took me 12 years to become president of my state. That is an incredibly long time. We, as an association, must do better and must provide those impactful opportunities immediately.

Feldman: You are third generation in the business, like I am. How did that influence

whatnot. I remember on school holidays and weekends, we would come in and do things around the office, like filing. I was very much around the business. At that point, though, I never even considered going into the industry.

Then, my wife got a job at the University of South Florida in May 2010. Florida was still being impacted by the recession. If you’re looking to work in higher education and there’s not a lot of public funding available, you’re going to have difficulty getting a job.

My father said, “Look, you’re here. Come in, see what you think. No pressure.” Within three months, I got my customer service representative license and

Jeff poses with NAIFA president Bryon Holz (left) and Carina Hatfield, 2020 NAIFA National Trustee and Young Advisor Team Leader of the Year Award recipient.

was on the path to becoming a licensed agent. I haven’t looked back.

Feldman: You were about 30 when you got your license, so you had a little bit of a career before you got into the business.

Chernoff: Yes. My previous career was working in higher education, managing residence halls. After I came into the business, my father said, “One of the reasons I wanted to start a company is that if either one of my kids wanted to come into this business, it was available for them.” He was always willing to allow us to pursue our dreams or pursue what we felt was going to be best for us. He was just excited that I had shown any interest in it at all.

Feldman: Did your family members inspire you to join and be active in NAIFA?

Chernoff: My father definitely did. I’m assuming my grandfather was in the association; at that point in time, though, it was the National Association of Life Underwriters. When you contracted with MetLife, one of your onboarding forms was signing your NALU application. My father was the one who gave me my NAIFA application. He said, “Fill this out. You need to be a member of your professional association.” He was the one who encouraged me to make my first political action committee contribution and said, “Give $50. It won’t hurt you much, but it’ll

make all the difference in the world.” He also gave me the gift of knowing the value of advocacy.

Feldman: Tell us a little about your practice.

Chernoff: We’re a multiline agency. We specialize in working with business owners on their personal lines insurance. We also work with them on their business needs for life insurance and disability income insurance, and then we also work with them on their investments.

Our market is business owners and particularly small-business owners and their key executives. We do a lot in the group retirement space. We do financial planning.

We’re a small business. We’re made up of four agents, two of whom sell life insurance and financial investments — which is what I do — and then two of them who are strictly property and casualty. We do a lot in the third-party money

manager space and working with clients on the wealth management side.

Feldman: How do you do your marketing and sales? I know you said you do a lot of networking. I think that’s a missed opportunity for anybody who sells locally.

Chernoff: I’m involved with the Tampa Bay Chamber of Commerce. I’ve served on their board for several years. I mentor their young professionals. I’m a past chair of that program.

Actively participating is important. I tell people, “When you get involved in something, truly get involved. Don’t just show up. Don’t just pay membership dues simply to say, ‘I’m a member’ or ‘I’m doing this for a resume line.’ But rather, show up, volunteer, donate your time, donate an hour a month. If you can donate more, great.”

What often ends up happening is that the people you work with come to you and say, “Hey, I have this insurance issue or I have this financial services issue. Is this something that you might be able to help me with?” I get between 30% and 40% of my business from the Tampa Bay Chamber of Commerce.

I serve on probably four or five different committees. That’s in addition to the things I do with NAIFA. I’m currently chair of our leadership Tampa Alumni Association, which is made up of 550 members. I do quite a bit because I’m passionate. What’s interesting about my prior career is that it taught me the importance of service. It taught me the importance of giving back. When I changed careers and went into insurance, that’s what I missed. So, by volunteering my time, I found a way to be involved and to mentor and make a positive impact on my community.

Pictured are the past 10 NAIFA’s Young Advisor Team Leaders of the Year. Jeff, the most recent recipient, was named YATL in 2022. Jeff with his wife, Cara.

Feldman: What advice would you have for a person who is new to the business? What are some of the easy first steps they can take to network and create business for themselves?

Chernoff: That’s one of the ways I benefited from joining NAIFA. I’ll tell you how I became involved with the chamber of commerce. My father told me early in my career that I was a terrible manager who didn’t know how to train people. But, he said, there are NAIFA classes you should consider taking called the LUTCF, the Life Underwriter Training Charter Fellow program.

The very first course I took was on prospecting. There was a line in the textbook that said, “You should consider joining your local chamber of commerce.” I took the book’s advice. I showed up and I said, “Hi, I want to get involved. What can I do?” It was as simple as that.

NAIFA has the professional development resources that will be needed. They’ll help you figure out the type of professional you want to be.

Feldman: One of the courses you teach is NAIFA’s Leadership in Life Institute. Tell me a little bit about that, what you got out of it and how it helped your business.

Chernoff: I went through the course in 2014. My father said, “You should get more involved with NAIFA. This is something that will serve as a door opener for you to get involved.” What LILI is meant to do is to help people grow professionally, grow personally, be a better family person and be more successful in sales. Those are the four premises. The course is designed to help challenge your way of thinking and make you a better leader. That’s what it did for me. When the opportunity came for me to moderate the course, I said, “I would love to do that. It’s something that I’m very passionate about.” As a moderator, I serve as someone to provide perspective, challenge opinions appropriately and help people taking the course grow as people and as professionals.

Feldman: How do you work with agents who are not really sure this industry is right for them? What

are some ways of keeping people engaged?

Chernoff: The reality is that, yes, the start of your career can be really tough. The first two to five years are the hardest. If you can get over that hump, eventually you build enough credibility that people start to work with you and you build a positive reputation.

If I were sitting across from someone right now who was thinking about exiting the business, the first question that I would ask them is why they got involved in the first place. Why did they choose to join this profession? Have they had the opportunity to see a death claim paid and what sort of impact that had on that family or on those loved ones? Until they’ve experienced it, they really don’t know the value of what it is that we do.

I was 10 years into my career when I paid my first death claim, and I saw the value. It’s something that has been very, very impactful.

Being part of a professional group can help even if you’ve been in the business for a while. For example, the past 10 Young Advisor Team Leaders of the Year meet on a monthly basis, almost like a study group. Even though I’ve been in the business for a long period of time, I can have a down day. We’re told “no” more often than we’re told “yes.” That can be debilitating psychologically. Last month, I was having a down day. I was really kind of disappointed about something, and those two hours in the monthly team leader meeting inspired me. It really lifted me up.

Feldman: Napoleon Hill talked about the power of a “mastermind” group, and that is a big benefit with NAIFA. Some people feel like masterminding with people in your local market is feeding their competition, but you haven’t found that to be true?

Chernoff: Absolutely without question. They must have an “abundance mentality.” For example, the Tampa Bay media market is made up of 3 million households. How many policies am I going to sell in my lifetime? It’s certainly not going to be 3 million. I don’t need to sell 3 million. I need to sell one or two a week. I think the first part of it is helping people switch from a mentality of scarcity to a

mindset of abundance.

I’m very fortunate in that most of the people I’ve interacted with, including those with NAIFA, very much have an abundance mentality. They want to help you. The evidence proves members of NAIFA make more money than those who are not in NAIFA. I think part of that has to do not only with the abundance mentality but also with the resources that NAIFA provides to those in our profession.

Feldman: What benefits can someone who has been in the business a long time get from joining NAIFA?

Chernoff: Most of our members join NAIFA for one of three reasons. No. 1, advocacy. No. 2, the ability to share ideas and to learn from other people. Our industry, for better or for worse, hasn’t changed that much in 40 or 50 years. A good sales idea from 50 years ago, a lot of times, still works today.

No. 3: People join because they want to belong to a group of like-minded professionals who want to be ethical, who want to do the right thing. I think NAIFA appeals to all of our industry in those different ways.

NAIFA is being much more intentional in terms of making sure that there are benefits of value for members.

For example, three years ago, there was an advanced planning session, a half-day workshop. At that session, I learned a defined benefit plan can contain life insurance.

As part of the defined benefit plan, the premium becomes tax deductible because the policy is held in a trust and the death benefit is tax deductible. Well, 95% of my clientele are business owners or they’re key executives.

A light bulb went on and it revolutionized my business. I spent the time necessary growing that part of our business. That’s when we started our group retirement division. All that came from what I learned from NAIFA.

And I learned the importance of how to prospect by joining your local chamber of commerce. About 30% to 40% of my business comes from that. I don’t think the average industry member knows all the things that NAIFA offers. I wouldn’t be here if it weren’t for NAIFA.

A ‘Short and Shallow’ Recession?

Is the U.S. in a recession? “It’s probably the top question of the day,” said Dana Peterson, chief economist at The Conference Board, at a recent webinar.

If the U.S. is in a recession, “it’s probably starting right now,” she said. She presented some data pointing to a recession starting either in the first quarter or early in the second quarter of 2023. Leading indicators have fallen well into negative territory, she said. A current reading of those indicators suggests a recession may already be here.

Recession warning signals “have been flashing red since March 2022,” Peterson said. She noted that the six-month rate of leading economic indicators fell below 4% at that time. The diffusion index has been below 50 since January 2022. These two factors suggest what Peterson described as “a shallow recession.”

If the U.S. is in recession, Peterson said, she doesn’t anticipate deterioration in the labor market. She predicted a modest increase in the unemployment rate, which would level off toward the end of 2023.

OLDER AMERICANS DOING BETTER THAN PREVIOUSLY THOUGHT

Forget the image of an older person living on cat food in retirement. Older Americans may be doing better financially than the U.S. Census thought they were, according to a new analysis the agency recently released. The Census Bureau found that the population overall had higher income and slightly less poverty than previously thought.

An analysis found that in 2018, median household income was 6.3% higher than in survey estimates, and poverty was 1.1 percentage points lower. But older Americans were faring far better. For those 65 and older, household income was 27.5% higher and poverty was 3.3% lower.

Even if seniors were doing better than expected in 2018, they had a tough time during the pandemic. Teresa Ghilarducci, an economics professor at the New School who studies retirement policy, said the skyrocketing rate of early retirement will set older Americans, especially poorer people with fewer resources, back economically.

QUOTABLE

IRS REFUNDS COULD BE SMALLER THAN EXPECTED

Income tax season is winding down, and people are worried that higher inflation and interest rates will take a chomp out of their refund check. They also fear their tax refund will be smaller than usual and delayed.

This year, more people are paying down debt and are a tad anxious that the refunds are not going to have the impact that they are hoping for, according to a Bankrate survey. In fact, worry is the key term this year, with only 31% of respondents saying they were not worried about their refund.

Bankrate respondents’ worry that refunds will be down is justified. Refund amounts were down 11.3% compared with last year, according to the IRA.

In perhaps a sign of where Americans are financially, a substantial proportion of respondents to the Bankrate survey said the refund is important, with 75% saying it is at least somewhat important to their financial situation.

WELLS FARGO AGREES TO $300M SETTLEMENT

Wells Fargo agreed to pay $300 million in cash as part of a settlement with shareholders, addressing a federal class-action lawsuit filed in 2018. The Construction Laborers Pension Trust for Southern California led the class-action lawsuit brought on behalf of an estimated “hundreds of thousands” of investors. The settlement also involves former Wells Fargo chief executive Timothy Sloan.

The plaintiffs claimed they were damaged by the bank when they purchased or acquired Wells Fargo’s common stock during the class-action period of Nov. 3, 2016, to Aug. 3, 2017.

According to the settlement, the plaintiffs “alleged that during that period, [Wells Fargo] made materially false or misleading statements” in violation of federal securities law. Those statements “caused the price of Wells Fargo stock to trade at artificially inflated prices.”

We are adopting too high a level of risk by using all our financial capacity to fund programs we would like to have but cut taxes at the same time.

— Joseph Kasputys, CEO at Economic Ventures

U.S. payroll growth has topped estimates for 10 straight months in the longest streak in decades.

AG49’s Attempt to Level the IUL Playing Field

Transamerica Financial Choice IULSM launches amid new regulatory guidance for IUL products to align illustrated growth with actual yields.

Index universal life (IUL) is a popular tool for consumers to gain financial protection, growth potential through index accounts linked to major market indexes, downside protection1, and supplemental income through policy withdrawals and loans2

The first IUL product was launched by Transamerica on January 6, 1996, and the product line has continued to expand and evolve to become one of the most popular forms of permanent life insurance today. In 2021, over 30 carriers sold a combined $3.5 billion of index universal life, according to LIMRA. As more consumers have taken interest in IULs, there has been a growing need for illustrations that more clearly communicate the features, benefits, and value of the product while showing realistic projections of potential policy performance.

Regulators began to address the need for greater consumer education and uniformity in IUL illustrations across the life industry with the introduction of Actuarial Guideline 49 (AG49) in August 2015. AG49 provided guidance to carriers in determining maximum illustrated credited rates while also placing limits on policy loan leverage in illustrations.

As the industry continues to innovate in this space with new index account offerings such as volatilitycontrol funds (VCFs), many carriers illustrate these new features under very different parameters. This makes it difficult for consumers to compare one carrier’s policy to another on an “apples-to-apples” basis.

As an example, the same carrier may offer a VCF with a lower participation rate and an annual persistency credit while also offering the same VCF with no bonus and a higher participation rate as an account option. Under current AG49 regulations, the illustrated bonus on the VCF isn’t subject to maximum illustrated rate limitations and may be much larger than other index accounts such as the S&P 500® index. These differences can lead to more confusion and greater complexity among consumers trying to select the best product for them.

To bring greater transparency and consistency to the IUL market, Transamerica has taken a different approach with the launch of Transamerica Financial Choice IUL (FCIUL). FCIUL features five index accounts that are designed to give consumers greater choice and flexibility in how they choose to allocate their cash values over time. The index accounts offer exposure to small-mid cap, large cap, and global equity indexes while also giving customers the option to choose from higher cap rate options in exchange for a 1% annualized fee. Transamerica also offers an index account option featuring an uncapped participation rate strategy with an annual volatility target of 5%. The current 200% participation rate means any positive index return will receive interest at a rate that is double that amount.

FCIUL is also one of the few products in the market to offer a persistency credit3 that has no restrictions on how the policy’s cash values are allocated. This allows for consistent illustrations across all index account options, making it easier for consumers to evaluate the product on its features rather than solely on how it illustrates with a particular index account. The persistency credit, currently at 0.6%, begins the later of the policy’s 10th anniversary or attained age 60. The credit provides an additional boost to cash values that customers may access for supplemental income in the future.

The NAIC has proposed another update to AG49 that will eliminate the discrepancies in illustrated performance between benchmark indexes like the S&P 500 and non-benchmark indexes like VCFs to bring further clarity and uniformity to IUL illustrations. Transamerica’s FCIUL was built in anticipation of these upcoming regulatory changes, which will help consumers make more informed comparisons when deciding which product best suits their needs.

TPIU10IC-0322, or #TPIU1000-0322. Form numbers may vary by jurisdiction. Not available in New York.

1 Guarantees are based on the claims-paying ability of the issuing insurance company.

2 Loans, withdrawals, and death benefit accelerations will reduce the policy value and death benefit. Provided the policy is not and does not become a modified endowment contract (MEC), 1) withdrawals are tax-free to the extent that they do not exceed the policy basis (generally, premiums paid less withdrawals) and 2) policy loans are tax-free as long as the policy remains in force. If the policy is surrendered or lapses, the amount of the policy loan will be considered a distribution from the policy and will be taxable to the extent that such loan plus other distributions at that time exceed the policy basis.

3 The Persistency Credit is a non-guaranteed, discretionary credit that may or may not be paid.

2716036

Learn more at transamerica.com/FCIULToolkit

For Financial Professional Use. Not for Use With the Public. Life insurance products are issued by Transamerica Life Insurance Company, Cedar Rapids, IA. All products may not be available in all jurisdictions. Policy Form #ICC22

How advisors are boosting their communities by helping their members raise their financial literacy skills.

By Susan Rupe

Ana Stringfellow wants to keep young people and their families from making some of the same mistakes she made when she was fresh out of high school and new to the workforce.

Stringfellow is a financial advisor with Edward Jones in St. Louis. But she was a recent high school graduate, beginning her first “real” job at Ford Motor Co., when her mother gave her some advice that puzzled her.

“She said to me, ‘Go to Labor Relations and start putting money in your 401(k).’ I said, ‘OK, well, what is a 401(k)?’ And she said, ‘Don’t worry about it; just do what I told you to do.’ She couldn’t articulate what a 401(k) is, but she knew I needed to do it.”

Stringfellow is one example of how financial professionals give of their time and knowledge to help provide people in their communities with the financial literacy knowledge they need to lift themselves to financial independence.

She speaks of her own experience as a young adult in the working world as her inspiration for helping others learn more about money.

The Ford plant where she worked for 12 years closed down, and she received what she called “a substantial buyout” in addition to the money she had in her 401(k).

“Because I had seen Warren Buffett on TV a few times, I thought I was an investment guru,” she laughed. “I invested the money, but I made every mistake imaginable. I took some of the money and put it into something I didn’t know, which turned out to be a real estate investment trust, which I now know was really stupid. And I lost a lot of money. I said, ‘If God ever puts me in a position to have that much money at one time again, I’d never make the same mistake twice.’”

She eventually became a financial advisor and set out to share her knowledge.

ANA STRINGFELLOW

Stringfellow volunteers to teach financial literacy classes at St. Louis Community College and in four high schools in the city. She also is one of several financial advisors who work with the 314 Project, partnering with the Urban League to teach money management skills to students and parents.

“One financial advisor works with the students, and another financial advisor works with the adults,” she explained. “We teach them about financial literacy, and then we bring students and adults together at the end so that they can help hold one another accountable. It’s not only about giving the information to the students or giving the information to the parents — it’s giving the information to the family so they can change the trajectory of their life.”

In her sessions, she covers budgeting, paying for expenses and “the differences between wants and needs.”

“We not only discuss how you make a budget, but we also go through the budget and ask, ‘These things that you’re purchasing — is that a want or a need? Is this something you can’t live without?’” she said. “I want to make them understand that something that may be a want, maybe they can scale it back. We help them figure out how much is going out? How much are you bringing in? How can we adjust those figures so that they come closer to one another?”

She uses name-brand sneakers as a way of differentiating between wants and needs.

“I know that students feel they need them. And I know they need to cover their feet with something. But it doesn’t necessarily have to be with a $150 pair of shoes.”

Stringfellow said she covers different methods of money management, such as the avalanche method of paying off debt or the 50/20/30 rule that states 50% of your income should go toward bills, 20% should go toward discretionary spending and 30% should go into savings.

She estimates she has worked with about 25 families and 60 individuals in her financial literacy education sessions.

“I know that there are people who will have a better life trajectory for themselves or their children or even their grandchildren because of their interactions with me,” she said.

A ‘million-dollar’ discussion

Joseph Chalom goes into his local schools — not to lecture about financial literacy but to begin a discussion aimed at empowering students to take financial control over their lives.

Chalom is president of Retirement Council Inc. in Coral Springs, Fla., and he volunteers with Invest, which describes itself as an insurance education program for future leaders.

“I’m really trying to spark engagement,” he said. “I also want the students to engage in a conversation with their parents about what they are or aren’t doing.”

Chalom said he recognizes that the high schoolers he works with “are at the age where a lot of them think that adults — especially their parents — don’t know anything.

“But when this information comes from a third party, they think, ‘Maybe my mother or father does know something.’ And maybe the student could bring something back to the home that might help empower their parents to take a second look at their own financial planning or their own legacy plan. If we don’t focus our energies toward students who are willing to soak in this information and create brighter financial futures for themselves and generations to come, we’ve got a real problem.”

Chalom said sometimes the students surprise him with their questions. He recalled a recent session in which a discussion about beneficiaries led to a lively discussion on life insurance.

“We spent several minutes talking about what a beneficiary is — a primary beneficiary, a contingent beneficiary — and I asked, ‘What if this happened?’ and we did a little bit of role-play. I said I have a million-dollar life insurance policy, and I’m making particular students the primary beneficiary, and as soon as I said ‘million-dollar,’ everyone started asking questions. Could there be more than one beneficiary? Could there be an ultimate beneficiary? Could you leave the money to charity? I was excited about the conversation because that indicated to me there was genuine interest in learning more about life insurance.”

He also discusses using credit responsibly and prioritizing needs over wants.

One issue that Chalom said he wants to impress upon the students is “that the

“If we don’t focus our energies toward students who are willing to soak in this information and create brighter financial futures for themselves and generations to come, we’ve got a real problem.”

JOSEPH CHALOM

concept of planning and goal setting is scalable. It’s transferable to everything in your life, everything from testing, preparing for a test to education planning to planning for retirement. It’s the same concept. You can’t wait to the last minute to do it. You have to plan ahead, and you have to set goals, and you have to prioritize those goals.”

Chalom said that when he was younger, “no one shared the information that I’m sharing with others.

“If they had, it would have saved me some grief. I learned this the hard way. And if people can’t take what they know and help empower others, then I think that’s pretty sad.”

Answering the question

‘Am I good?’

Stoy Hall spends much of his volunteer time partnering with various nonprofit organizations in the Des Moines, Iowa, community to promote a greater understanding of financial issues. He said his goal is “to have an open dialogue, an open conversation from tip to tail, whatever they want to learn.

“I want to direct people and have deep conversations with people. And I find that in the majority of those conversations, no matter what I speak about, I bring up a money mindset.”

Hall is founder and CEO of Black Mammoth in West Des Moines, Iowa. He also has a weekly newsletter and a regular podcast in which he discusses having a money mindset.

“In my conversations, I ask everyone, ‘What is your relationship with money? Is it negative? Is it positive?’”

Money is tied with emotions, Hall said.

“The reason we don’t learn about money or the reason we don’t have money, all of that will stem down to some type of an emotional decision at some point, whether that’s trauma from your childhood, trauma from work, trauma from being an adult, etc.,” he said. “I have found those people who are successful have been able to turn that negative relationship with money into a positive, and that has allowed them to reach the goals that they want to achieve. It has nothing to do with a dollar figure. It has everything to do with what’s in their mind. That’s the overall theme of everything I talk

about. And then I’ll get into the nittygritties within.”

Hall said when he talks to people about financial literacy, there is one question they want him to answer.

“All people want to know is, ‘Am I good? Am I on the right path?’

“They want to understand what they’re doing with their dollar every day, and every time they get a paycheck. Is there a path and a structure to it? Or are they out here, just willy-nilly throwing money around? And then after you answer that for them, you can start to talk to them about things like 401(k)s, a Roth IRA, how to sign up for health insurance.”

Hall said the most difficult thing about discussing financial literacy is getting people to open up to an uncomfortable conversation about money. “At that point, people will break down, they’ll cry, they’ll bring out emotions and trauma that are deeply rooted. And that all has to happen before they can get into the nitty-gritty of products and details and concepts.”

He said he believes financial literacy education is crucial to helping bridge the economic divide in the U.S.

“The wealthy have the means to get that education, but they also have had something passed down to them — whether that’s knowledge or money or whatever. The first-generation wealth builders, myself included, never had that. We didn’t learn from our parents, and we got nothing from school. Then by the time we get out on our own, we think it’s too expensive to hire a planner because we don’t have any assets or we have $100,000 in student loans.”

Hall said those who need financial literacy education often find they must fight for it.

“I believe that fight isn’t about the knowledge of products or concepts. The fight is deeply rooted in their mental health. And no one really talks about that as much. But if we can help fix that issue, or at least improve it, everything else kind of opens up for itself.”

Helping people take charge

Financial literacy education isn’t limited to young people. It’s for people at every stage of their lives.

That’s the message Elvin Turner wants to convey. Turner is president of Turner Consulting in Hartford, Conn., and he is

“People will break down, they’ll cry, they’ll bring out emotions and trauma that are deeply rooted. And that all has to happen before they can get into the nitty-gritty of products and details and concepts.”

STOY HALL

the founder, president and CEO of Take Charge Total Wellness Foundation.

After four years as a pilot program of the Society of Financial Service Professionals, the Take Charge Total Wellness Foundation was launched in 2020. Its mission is to increase the financial and health literacy and well-being of multiple generations of people in minority and other underserved communities.

The foundation brings together professionals from multiple disciplines to work alongside people in their communities to improve the financial and health literacy of those who are underserved. These professionals conduct community forums as well as online discussions.

“We work in communities where people don’t typically see insurance agents, investment advisors, lawyers, accountants — they’re not really part of that network. And I go into these communities, primarily in churches, and hold financial literacy sessions on a range of topics that are important to the people who live there,” Turner said.

Turner travels about 20 times a year to places such as Philadelphia; Waterbury, Conn., and Oakland, Calif., to speak to community members as part of his work with the foundation.

The foundation has a multigenerational focus, he said. “We believe that if each family member across generations adopts sound financial and health disciplines, the fortunes of entire families can be transformed. This enhances individual and collective quality of life and profoundly impacts the family legacy.”

Turner said the foundation reaches families and individuals who are in one of four distinctive life stages.

1. Teens seeking to attend college. Turner said the program teaches teens that attending a “name” school is less important than whether the school is a good fit for the student.

2. Young adults starting jobs and buying homes. The program teaches that the pursuit of material goods, travel and work/life balance is important: but young adults also must build an inventory of skills and wisdom that’s transferable to the jobs emerging in a turbulent economy.

3. Middle-ages people and their families and individuals in the highest earning years of their lives. The program teaches them to create a financial and insurance safety net that will keep them whole through the inevitable challenges of life.

4. Senior citizens. The program teaches them about security with dignity, using accumulated resources and relationships to continue their lifestyles into their retirement years.

No matter the life stage of someone who seeks financial knowledge, people of all ages have a few challenges in common, Turner said. The first challenge is lack of trust.

“Part of what I do with these seminars is build trust between the people in these communities and people in the financial services industry,” he said. “That’s a huge barrier for many people and it’s the reason why they never will seek help. So, I focus on creating a level of trust, and I believe it’s important to treat people respectfully.”

The fear of not having enough money to be able to plan is another challenge, Turner said.

“People ask, ‘Do I have enough to start the plan?’ The answer is, ‘Yes, you do.’ You may not be one of the superrich, but you have many of the same issues that they do. So getting people to engage with you because they know they have enough to start to plan is a challenge.”

The third challenge, Turner said, is helping people answer the question, how much is enough?

“Many people don’t plan because they can never get to that number,” he said. “So they focus on accumulating, and they think, when I get enough, I’ll start planning. But it doesn’t happen.

“Our goal is to help people overcome these challenges and not be afraid to plan.”

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.

“Part of what I do with these seminars is build trust between the people in these communities and people in the financial services industry. That’s a huge barrier for many people, and it’s the reason why they never will seek help.”

ELVIN TURNER

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Protector OF THE Castle

BRIAN CARDEN helps his clients guard what is most important to them.

By Susan Rupe

Photo credit: Taylor Ballantyne / MediaRow

Brian Carden was fresh out of college, working in a department store, when a flyer on his apartment door set him on a completely different path.

The flyer was from a recruiter who was looking for people interested in launching an insurance career with John Alden Life. Carden contacted the recruiter and embarked on an insurance and financial services journey that has lasted 40 years.

Carden is based in Brentwood, Tenn., and is an advisor affiliated with Madison Avenue Securities. He said he views his career as a calling to serve and views himself as a “professional explainer.” He also is an avid blogger, writing about “things that make you go hmmm,” and he published a book, “Castles & Moats,” in 2022.

But his early days in the insurance business were mainly spent on the telephone. “I was making a minimum of 40 connected calls a day to insurance agents to market my one-to-15-employee small group health plan,” he recalled.

He eventually moved on to Safeco Insurance, where he learned about annuities and 401(k) plans. He moved into the retail side of the business, where he traveled throughout an eight-state territory.

“Safeco also had a huge network of property and casualty agencies,” he recalled. “I called on them and asked them who else I should talk to.”

At that time, the Internal Revenue Code Section 72(t) began allowing penalty-

“I spent nights in North Carolina in the furniture factories. I did workshops with companies like R.J. Reynolds. At that time, North Carolina was flush with big manufacturing plants that needed to get people off their staff. And they offered that early retirement program. So I was the guy from out of town who came in and led the workshop for the advisors.”

Carden eventually became tired of the road, and someone he met through his local professional association asked him whether he would consider opening his own agency. He opened a Nationwide agency in the Nashville area, and his business took off.

“I jumped at it. I was good at it. I enjoyed it. And I learned how to ask good questions,” he said.

Carden said a friend gave him some advice that stuck with him. “He said, ‘Don’t waste your time calling on people; call on people who will refer you people.’” He focused on serving people who were buying homes in his community, and he called on real estate agents, lenders and attorneys for referrals.

Learning to sell

But after a while, Carden believed he already had done as much as he could do with his agency, so he sought another change.

A bank hired him to be a small-business 401(k) specialist, but a general agent for what was then known as Connecticut Mutual approached him about coming to work for him. It was a turning point in

mentality didn’t work at all. And I started to fail miserably.”

Carden said a friend in the agency introduced him to the Sandler Selling System, which is a seven-step consultative selling approach. The goal is to establish an open dialogue to build trust and understand the prospect’s pain points, budget and decision-making process. Then, the seller can either disqualify the buyer or guide them to the right solution.

“I dug in until I mastered it, and I still use it today,” he said. “It taught me how to conduct an interview, how to get answers, how to find out if the person I’m talking to is the decision maker, how to set expectations and how to lead people to where they say, ‘I want to work with you.’”

A vacation leads to an opportunity

Opportunities can crop up in the most unlikely places, as Carden discovered when he was part of a group touring Greece on vacation. He met a woman in the group who had spent about 20 years working for some of the major securities firms in the U.S. She told Carden she dreamed of opening a boutique firm, and Carden told her he was thinking about opening his own practice.

A few months after returning to the U.S., the two reconnected and decided to move forward with their professional dreams. “She is the securities brains of the operation, and I am more on the insurance side,” he said.

The practice continues to grow, with Carden affiliating with a Medicare practice in an effort to serve another set of client needs.

Carden said the most difficult part of being independent is “motivating yourself to stay disciplined to go and see people.”

But being independent has many advantages as well.

free early withdrawals from 401(k) plans and individual retirement accounts under certain circumstances. This enabled people to retire prior to reaching age 59½ while avoiding a 10% penalty on their retirement plan withdrawals. Carden said Safeco was one of the early adopters of the 72(t) plan, and he spent much of his time explaining it to workers in large manufacturing facilities in his territory.

Carden’s career.

“When I was a wholesaler, I was the master of ‘show up and throw up,’” he recalled. “You know, ‘Here’s my product, here’s why it beats the competition. Here are the features and benefits. Here’s the commission. I’d love to work with you.’ And that was pretty much it.

“Now I am sitting down with my peers, my friends here at home, and that

“I love the fact that I am very agnostic when it comes to product. I work with a lot of BGAs and FMOs in different areas. And if I get, for example, someone who is a business owner, and he needs a large amount of life insurance for a business loan. And let’s say he has some health issues. I can pick up the phone, call my BGA and say, ‘This is who I have. What will be the best fit?’ And I let them do the due diligence, and I present their recommendation to the prospect.”

“I think it’s important that other people understand my life experiences. Because I don’t want them to go through that.”

the Fıeld A Visit With Agents of Change

planning for the future.

Some of his personal experiences tie into the insurance world.

When he was about a week away from his 50th birthday, he was in a head-on collision that destroyed his car but left him unhurt. “I could have been a quadriplegic,” he said. Carden said he sometimes shows photos of his wrecked car to prospects and gets them thinking about whether they have planned sufficiently in case the unexpected happens to them.

He also tells stories of the time his family was sued because of a freak backyard fireworks accident, or the time his aunt and uncle and their children were killed in a plane crash. That makes people think about possibility of liability or the importance of contingent beneficiaries.

“I think it’s important that other people understand my life experiences. Because I don’t want them to go through that,” he said.

Carden tied together his thoughts from his blog posts and other writing, along with his industry knowledge, to publish the book “Castles & Moats.” The idea for the title came from his days in property/ casualty insurance. Your home is your “castle,” and insurance is the “moat” that protects your castle.

In the same fashion, he said, someone’s wealth also can be their castle. He wants to help people “build their glimmering castle of wealth and surround it with a moat of protection.”

Writing from the heart

Carden wrote his first blog post about 20 years ago, and the subject was his father.

“Mom let him read it, and he called me and said, ‘Son, I appreciate you writing about me. But is that going to get you any business?’ That’s just the way he thought about it.”

Carden said that as he traveled to conferences or attended workshops or wholesalers meetings, he would be hit by what he called “an aha moment.”

“I thought, ‘I can spin that,’” he said. “And so that’s how the blog got started.”

He originally penned his thoughts for a local newspaper. It was in the days before Facebook and other social media became

prime means of communication.

“I would find things that appealed to me, things that I think are taught incorrectly, like the whole ‘buy term, invest the difference’ mentality. Or when you see these auto insurance ads on TV that are basically pushing price and telling you you should only buy what you need. And I’m saying, ‘No, I walked away from a head-on collision. Let me tell you what you need.’”

Carden’s favorite blog topics relate to his family and personal experiences. He writes about the people in his life, about his favorite sports teams and his favorite activities — golf being a big one. And he ties those topics to some aspect of

Carden said he not only is the book’s author, but also its “explainer.” He aims to help consumers understand, prioritize, organize, strategize and stress-test each financial product or strategy to help create a more favorable outcome.

His writing is another way for him to connect with clients, he said. “People recognize that I’m here, but I have a heart. And family is important to who I am.”

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.

Carden says he wants to help people

“build their glimmering castle of wealth and surround it with a moat of protection.”

Photo credit: Taylor Ballantyne / MediaRow

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This is not an offering of any securities for sale in New York. This communication refers to Brighthouse Shield ® Level Select 6-Year Annuity, Brighthouse Shield ® Level Select 3-Year Annuity, and Brighthouse Shield ® Level Select Advisory Annuity, collectively referred to as “Shield ® Level annuities” or “Shield ® annuities.” These products are index-linked annuities issued by, with product guarantees solely the responsibility of, Brighthouse Life Insurance Company, Charlotte, NC 28277, on Policy Form L-22494 (09/12)-AV (“Brighthouse Financial”). Shield Level annuities are distributed by Brighthouse Securities, LLC (member FINRA). All are Brighthouse Financial affi liated companies. Shield Level annuities have charges, termination provisions, and terms for keeping them in force. Please contact your fi nancial professional for complete details. Product availability and features may vary by state or fi rm. Brighthouse Financial ® and its design are registered trademarks of Brighthouse Financial, Inc. and/or its affi liates.

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

Indexed life led the pack in a strong 2022

IUL

Consumers love indexed life, a love affair that remained strong in the fourth quarter of 2022, according to Wink’s Sales & Market Report. Total 2022 indexed life sales hit $2.7 billion, an increase of 10.9%. This was both a record-setting quarter and a record-setting year for indexed life sales, Wink reported.

Non-variable universal life sales also showed an upswing in sales in 2022, ending the year at $3.1 billion, an increase of 5.9% over the prior year.

Fixed universal life sales were another story, though, with total 2022 fixed UL sales at $425.3 million, a decline of 17.9%. Universal life had a challenging year in 2022, with Sheryl J. Moore, CEO of both Moore Market Intelligence and Wink Inc., reporting “Universal life sales are likely the lowest they have been since the product was developed nearly 45 years ago. There definitely needs to be some new innovation in the market if carriers want to revive the product line.”

Whole life sales didn’t fare well in 2022 either, with total sales for the year at $4.5 billion, a decline of 5.7%.

LIFE INSURERS HIKED RATES, NOW OFFER REFUNDS

After the 2008-09 finan cial crisis, interest rates fell to near zero and dozens of life insurers boosted costs for longtime policyholders, seeking to improve results as their investment income fell. Now these insurers are giving partial refunds to tens of thousands of these customers to settle a wave of lawsuits spurred by the increases, The Wall Street Journal reports.

The higher charges spurred lawsuits that alleged breach of contract and other wrongdoing. Insurers say their actions were in line with policy provisions allowing increases up to specified maximums.

Approximately 43,000 refund checks totaling $69 million were issued in recent weeks to Voya Financial policyholders. Lincoln National and Genworth also reached recent settlements in lawsuits over higher insurance bills.

NOW THAT WE’VE HIRED THEM, HOW DO WE KEEP THEM?

It’s difficult enough to bring advisors into the business; keeping them in the business is even harder.

DID

QUOTABLE

High turnover rates among those new to sales positions in the industry are an ongoing challenge. LIMRA research shows that in 2020, only 15% of financial professionals in agency systems that recruit mainly inexperienced individuals remained with their hiring companies after four years. In fact, the majority of those left within their first two years in the business.

When asked how to address this issue, field and home office leaders identified five factors that have the greatest influence:

1. Early sales activity (a fast start).

2. A strong selection process prior to hiring financial professionals.

3. Joint fieldwork.

4. Quality of sales training.

5. Mentoring.

African American insurance agents are also leaving the industry at a rapid clip, prompting calls by industry leaders to take steps to address this issue and enhance diversity, equity and inclusion among professionals serving the industry.

“The Next Steps on the Journey,” a survey report recently released by Marsh and the National African American Insurance Association, found that most participants said that lack of promotions or

advancement is the most significant barrier to retention (75%). This was followed by lack of growth opportunities (70%) and lack of mentorship (68%).

LIFE INSURANCE LEADS TO FINANCIAL SECURITY FOR BLACK AMERICANS

Owning life insurance is one way Black Americans can improve their sense of financial security. According to the 2022 Insurance Barometer Study, 68% of Black Americans who own life insurance feel financially secure, compared with just 47% of uninsured Black Americans.

Historically, Black Americans’ life insurance ownership rate has been above the rate for the general population. In 2022, 55% of Black Americans reported owning life insurance, which is higher than the national average (50%). Yet 48% of Black Americans — representing 21 million adults — say they need (or need more) life insurance coverage, which indicates a substantial coverage gap in the Black American community.

Despite the fact that Black Americans reported higher levels of financial concerns, LIMRA research also showed a higher intent to purchase life insurance. Sixty percent of uninsured Black Americans intended to purchase life insurance, compared with just 37% of the general population.

More than 100 million Americans said, ‘We want to buy your product; sell me life insurance.

— Joe Templin, advisor and author of Becoming an Introduction Machine

Brooks Tingle was named CEO of John Hancock.

SOURCE: John Hancock

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Ask the right questions, find the right coverage

You may be surprised at what motivates people to buy life insurance coverage.

By Howard Sharfman

Regardless of how well you know your clients or believe that you understand what they want, some of their comments and motivations still may surprise you. That’s why asking the right questions is critical to ensuring that you have all the information required to provide them with the best solutions.

Ultimately, information in equals information out. Many upper-level executives in many industries erroneously believe they can diagnose any problem simply sitting at their desk. The reality for insurance and financial professionals is that we all must obtain accurate information directly from the client because every person, and every set of facts, is unique.

My firm recently conducted a client survey that included the question “Why did you buy life insurance?” One of the respondents, a retired doctor with no

reasonable liabilities, stated that his key motivation was asset protection. I could have given you 20 reasons why I thought he should own a policy, and asset protection wouldn’t have been on the list. Yet that was his hot-button issue. The survey reinforced to me how crucial it is to ask clients what is most important to them — since those answers can be quite unexpected.

Another client who ran a large private equity fund once said to me, “If my father had cared enough to get life insurance, life wouldn’t have been so hard for my mother, sisters and me after he passed away. But he didn’t, and I would never leave my family in that situation.”

Although this client is wealthy enough that his family will be well provided for even without an insurance policy, he feels that having a policy serves as an important symbol of how much he cares. Priorities and wishes such as these are often only discovered by asking the right questions.

Key questions

One key question that I ask clients is “What should we know about your health or anything that might affect your mortality?” The responses could reveal health issues you’d never know about otherwise, particularly if the client appears perfectly healthy. You also might learn whether a client had a health scare earlier in life or

I tell clients that although these conversations may not always be fun, they are necessary for adults who have responsibilities and resources.

was once involved in an accident that has strongly influenced their perspective. Factors such as these can potentially drive client decision-making and are important to understand.

I also make sure to ask clients about who is counting on them in life. Beyond the nuclear family, there might be friends or in-laws who rely on them for financial support. I recently met with one client who had about 20 people listed as beneficiaries of their trust. Wanting to help that many people is great, but it was important for us to know about those people so that we could address the gift-tax ramifications. Without asking the client specifically about this topic, I might not have been able to ensure everything was handled in the most tax-efficient way.

Additionally, toward the end of client conversations, I’ll often say, “What didn’t I ask that I should have?” This type of catchall question can help reveal details that might otherwise slip through the cracks.

Finally, I always ask the client, “How long would you like this process to take?” This will allow me to manage the client to their desired outcome and keep the project on track.

Why information is important

I tell clients that although these conversations may not always be fun, they are necessary for adults who have responsibilities and resources. If we don’t have such discussions, then the government is free to substitute its judgment — and most likely not in the manner a client would prefer. The government implemented its own plan for every citizen and their money the day they were born. If a new plan isn’t created, the government’s plan prevails.

In addition, insurance and financial professionals too often make bad decisions for clients simply because these advisors haven’t obtained enough information from clients. For example, it might seem logical to assume that because a client is 85 years old, they’ll have a short life expectancy. However, compared with a 65-year-old client with significant health issues, the 85-year-old person could be more likely to live another 10 years.

These are all important details to know to represent clients properly. Therefore, if someone would rather not answer health-related questions, you must decide whether to continue working with them.

It’s OK to say, “If you don’t feel comfortable about providing me with this information, then I advise you to find someone you are comfortable with. I simply cannot do the best job for you without being fully informed, and you deserve me at my best.”

Letting clients lead

I find that letting clients take the lead during conversations is often an effective way to acquire needed insight. People usually enjoy talking about themselves. When I come to a meeting with a list of questions and then allow the client to respond to them at length, they’ll probably feel as though we’re having a great conversation, and I’ll be able to gather relevant information.

say to the golfers he instructs, but he has 10 different ways of saying each of them because people learn differently.

Similarly, I think insurance and financial professionals should be able to say the same thing in multiple ways to ensure that we successfully communicate with our clients. Some people might grasp concepts better in graph form, while others prefer numbers, pictures or stories.

Whichever is the case, professionals who aren’t asking the right questions during these conversations will likely miss out on significant details — not only about money itself but what that money means to each client. Furthermore, we should pride ourselves on providing the best solutions.

Why people buy

63%

I think too many professionals feel a need to justify why they’re sitting at the table, so they end up talking too much. It’s important to recognize that the client has already decided the merit of their being there. At that point, the focus should really be on the client and their needs.

When I’m meeting with clients, my job is to listen and put their wishes into action, even if I don’t necessarily agree with everything they want to do. In those cases, maybe I’ll say, “I might do it a different way if I were in your position, but that doesn’t mean I’m right.”

Clear communication

I have a friend who is a well-known golf instructor, and he once shared with me an intriguing aspect of his approach — there are only about 10 different things that he’ll

Source: LIMRA

For anyone who isn’t asking the right questions because they feel they’re too busy or don’t have the time to prepare, I don’t believe those reasons are good enough. We must dedicate the time. If you don’t feel you personally can spare that time for a client, then at least ensure an associate at your company does so for you, because the time it takes to ask those questions and gain important insight could turn out to be far more valuable to a client than how many decades of experience you can offer.

Howard Sharfman is senior managing director of NFP Insurance Solutions. He may be contacted at howard.sharfman@ innfeedback.com.

ANNUITY WIRES

Annuity sales shift in full swing

EXPECTED MARKET SHARE OF ANNUITY SALES IN 2027

Fixed index: 26% Registered index-linked: 23%

fixed: 20%

Current market conditions are driving an annuity sales shift to safer products — the so-called Flight to Safety.

Cerulli Associates expects that trend to continue for several years to come. If current market conditions hold, fixed annuities, fixed-indexed annuities, and registered index-linked annuities are predicted to compete more fiercely with one another during the next five years, according to Cerulli Edge-U.S. Asset and Wealth Management Edition.

If fixed annuity rates remain high enough, advisors and their clients will likely continue to elect a predictable rate of return with full principal protection versus annuities that offer upside potential with principal at risk.

However, as interest rates decrease over time, Cerulli predicts that by 2027 market share of fixed index annuities (FIAs) as a percentage of total annuity sales will increase and reach 26%, followed closely by RILAs (23%), and traditional fixed annuities (20%).

Cerulli sees potential avenues for growth of the annuity market in the coming years, all of them connected to the needs and preferences of the 44% of retired households that cite ensuring a comfortable standard of living in retirement as their most important financial goal.

US HOUSEHOLD NET WORTH INCREASED IN 4Q

A gain in the value of equity holdings more than offset weakness in real estate, and the result was an increase in U.S. household net worth in the fourth quarter of 2022.  Household net worth climbed nearly $3 trillion, or 2%, in the OctoberDecember period to $147.7 trillion after declining the previous two quarters, a Federal Reserve report showed.The value of equity holdings advanced $2.7 trillion in the fourth quarter, while the value of real estate held by households fell almost $100 billion. The Fed’s report also showed household checkable deposits, or the money Americans have in checking, savings and money market accounts, climbed to almost $4.8 trillion at the end of 2022 from $4.1 trillion a year earlier. Those excess savings have been a key driver of the resilience in consumer spending, despite high inflation.

QUOTABLE

With financial markets and economic news remaining unsettling for many investors, annuities that provide predictable outcomes will remain a hot commodity.

the required minimum distributions begin to age 75 by 2033, and an increase in catch-up contribution limits for people ages 62-64.

BUYOUT SALES HIT RECORD HIGHS IN 2022, LIMRA REPORTS

SECURE 2.0 COULD HELP GET ANNUITIES TO OVERLOOKED AGE GROUP

The SECURE 2.0 bill signed by President Joe Biden at the end of 2022 holds the potential for expanded inclusion of annuities inside retirement plans.

If it happens, Americans will be better off, said Tyler Brown, director of government affairs for North American Co., during a March webinar. SECURE 2.0 “provides a sizeable boost to retirement savings,” Brown said. “It also provides some modest improvements to using annuities in retirement plans.”

The bill contains about 90 provisions aimed at improving Americans’ ability to save for retirement. “When you look at all these provisions together, they will help Americans really grow that pie of retirement savings,” he said.

Provisions include automatic enrollment for 401(k) and 403(b) plans, a phased-in increase in the age when

Single-premium buyout sales were $48.3 billion in 2022, up 42% from 2021 results, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey.

It marks the highest annual sales for single premium buyout sales recorded in the U.S. The number of single-premium buyout contracts also hit a record. In total, there were 562 buyout contracts, 34% higher than the number of contracts sold in 2021. This breaks the previous record set in 2019 of 500 contracts sold. There were 200 contracts sold in the fourth quarter, up 16% from fourth quarter 2021, LIMRA said, and an increase of 32% from third quarter 2022.

At the end of 2022, total group annuity assets totaled $274 billion, increasing 14% from 2021. The $234 billion in single premium buyout assets represents 86% of the total PRT market assets.

Only 43% of households nationally say they have a retirement plan in place and are contributing regularly.

Source: Hearts & Wallets

— Donnie Ethier, senior director, Cerulli Associates

Does pessimism really suppress annuity sales?

A recent study from the Boston College Center for Retirement Research suggests that pessimism has less of an effect on annuity sales than might be expected.

By Steven A. Morelli

Aprospect’s pessimism about their life span is usually seen as a high hurdle in an annuity sale, but lowering the dour outlook has less impact than raising the objective facts about longevity, according to a recent study.

Researchers were taking a crack at the “annuity puzzle” that has vexed the insurance industry since annuities were invented: Why, if people prefer having a regular pension payout, do they not buy an annuity, essentially a private pension, with their retirement funds?

According to the Boston College Center for Retirement Research study What Matters for Annuity Demand: Objective Life Expectancy or Subjective Survival Pessimism?, “Since 1965, academics have argued that, under a broad set of assumptions, individuals should annuitize a large part of their assets. For nearly as long, it has also been documented that annuitization rates fall short of what seem to be optimal levels, a fact known as the ‘annuity puzzle.’”

Explanations for the reluctance usually revolve around what could be called the “sucker principle,” basically that if someone buys an annuity and dies early, they just gave all the remaining money to the insurance company rather than their family. (Of course, people can opt for a death benefit or some other return of principal angle, but those do come with a cost.)

But really, what is the sucker principle? It’s pessimism that the person is not going to live long into old age. That is the subjective survival pessimism weighing heavily against an annuity purchase, according to the study’s authors Karolos

Arapakis and Gal Wettstein.

“Of the many possible explanations for the annuity puzzle, irrational pessimism on the part of potential consumers regarding future life expectancy is appealing,” according to the report. “Naturally, no one can learn about their own life expectancy from personal experience. Further, the decision to buy an annuity is itself usually made once and for all, a situation in which individuals never get the chance to learn from their own mistakes — and so mistakes can persist.”

70 and 85. Even though women tend to outlive men, they were nevertheless more pessimistic about their longevity.

Subjective guesses are in fact shorter than the best objective life expectancies, but not by much.

“On average, subjective life expectancy is lower than objective life expectancy by 1.6 years for the 55-59 age group, and 1.2 years for the 60-65 age group,” according to the report. “For the 55-59 age group, males are less pessimistic than females, understating their life expectancies by

But is pessimism really the reason? And would objective mortality data be an antidote to it? These were a few of the questions the researchers wanted to answer.

How pessimistic are we?

The authors used data from the University of Michigan Health and Retirement Study, which has been a nationally representative, biennial longitudinal survey of adults in the United States since 1992.

It turns out that we earn our optimism rather than sink into pessimism as we age. People are darker about their longevity between ages 55 and 70 and brighter between

0.9 years versus 2.5 years. For the 60-65 age group, the difference between men and women holds steady at 0.5 years versus 2 years.”

Not a simple evaluation

It’s not as simple as that for evaluating the impact of objective life expectancy versus pessimism. To drill into the data, the researchers used a regression model that controls for objective life expectancy, pessimism and the information that insurers use to price annuities.

They found that objective life expectancy and pessimism affect the choice

A negative outlook regarding life expectancy may be correlated with other factors that impact the decision to buy annuities.

to buy an annuity. But a one-year rise in objective life expectancy increased the probability of holding an annuity by 0.20 percentage points, while a one-year decline in pessimism increases the probability of holding an annuity by only 0.023 percentage points.

“Taken at face value, the results are consistent with objective life expectancy having a much stronger effect on the decision of whether to buy an annuity than pessimism,” according to the paper.

When the model included health factors, pessimism weighed heavier but not in blocking a purchase, rather in the amount that is annuitized.

“These results are more in line with past research,” according to the study, “as pessimism seems to remain important in the extensive margin decision of how much to annuitize, even as controls for objective factors such as health and demographics render objective life expectancy moot.”

Does pessimism get a bad rap?

The analysis suggested that the assumption that pessimism is the key hurdle to purchase of annuities and the amount to annuitize might be overestimated and that an objective life expectancy might be more important.

Also, pessimism is not necessarily bad in the process. In fact, pessimism about other factors in life, such as the stock market, can be an inherent but unseen factor.

“Pessimism about life expectancy may be correlated with pessimism about other variables that affect annuity purchases,” according to the report.

“These variables include pessimism about medical expenditures and pessimism about market risk. Hence, our results on the importance of subjective life expectancies may capture an overall measure of pessimism rather than a causal effect.”

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

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It turns out that we earn our optimism rather than sink into pessimism as we age.

Humana exiting employer-based coverage

Humana is leaving the employer-sponsored space and focusing on bigger parts of its business. The insurer announced it will leave the employer market over the next 18-24 months.

The employer market is only a small part of Humana’s business. The majority of the company’s enrollment comes from Medicare Advantage. Humana also will continue to provide coverage to nearly 6 million military service members and their families.

Humana said in a statement that it made its decision after realizing that employer-sponsored business “was no longer positioned to sustainably meet the needs of commercial members over the long term or support the company’s long-term strategic plans.”

ANNUAL HEALTH INSURANCE PREMIUMS COULD BE BACK ON THE RISE, SURVEY SAYS

Annual family premiums for employer-sponsored health insurance averaged $22,463 last year, according to the 2022 benchmark KFF Employer Health Benefits Survey. The average premium for family coverage has increased 20% over the past five years and 43% over the past 10 years, according to the survey.

“Employers are already concerned about what they pay for health premiums, but this could be the calm before the storm, as recent inflation suggests that larger increases are imminent,” KFF president and CEO Drew Altman said.

On average, workers are contributing $6,106 toward the cost of a family premium, with employers paying the rest. Among workers who face an annual deductible for single coverage, the average last year stood at $1,763, similar to 2021 ($1,669), but up 61% since 2012 ($1,097). Workers at small firms (with less than 200 workers) on average pay $7,556 out of their paychecks annually for family coverage — nearly $2,000 more than workers at larger firms ($5,580).

DID YOU KNOW ?

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Almost 159 million Americans rely on employer-sponsored coverage.

EMPLOYERS TURN TO VOLUNTARY BENEFITS

What can employers and workers do to combat increasing health care costs? More employers are adding voluntary benefits to the workplace health care mix.

An Optavise report said 64% of brokers saw an increase in clients adding voluntary benefits, up from 58% in 2021. The top three most added benefits remained the same from 2022: accident insurance (71%), critical illness (68%) and hospital indemnity (39%).

Employees and employers seem to be increasingly focused on income protection; respondents reported that interest in disability almost doubled (from 18% to 34%) and life insurance tripled (30% combined for group and whole life, up from 10%), while pet insurance (19%, down from 28%), ID theft (13%, down from 20%) and legal protection (11%, down from 20%) all saw declines from 2022.

ORAL HEALTH WORSENS AFTER PEOPLE GO ON MEDICARE

The senior years don’t have to be characterized by missing teeth and other dental woes. But traditional Medicare doesn’t cover dental care, and a Brigham and Women’s Hospital study found a dramatic drop in the percentage of people receiving restorative dental care and an almost 5 percentage point increase in the number of people who lost all their teeth after they turned 65 and became eligible for Medicare.

The study found that both traditional Medicare and Medicare Advantage beneficiaries experienced immediate and long-term reductions in dental services use after Medicare enrollment. While the total number of annual dental visits did not change, the number of visits for restorative procedures, such as fillings or crowns, decreased by 8.7%. Adults also experienced an increase in complete edentulism — loss of all teeth — which puts people at higher risk of poor nutrition, lower quality of life and progression of cognitive impairment.

“Without dental coverage for adults who are eligible for Medicare, we are seeing a rise in loss of teeth after age 65 among nearly one in 20 adults, which represents millions of Americans,” said Dr. Lisa Simon, a resident in Brigham’s Department of Medicine.

SOURCE: ELI LILLY

Eli Lilly cut insulin prices by 70% and capped out-of-pocket costs at $35 per month.

If the employer tax exclusion is capped or repealed, many employers would not be able to stay in this market.

— Marcy Buckner, senior vice president of government affairs, National Association of Benefit and Insurance Professionals.

Keeping five generations of workers happy with their benefits

How to meet the benefits needs of today’s multigenerational workforce.

By John Thornton

Today’s workforce is multigenerational, with five different generations represented. They include the Silent Generation (those born before 1946), baby boomers (those born from 1946 to 1964), Generation X (those born from 1965 to 1980), millennials (those born from 1981 to 1996) and Generation Z (those born in 1997 and later). Each of these groups has their own specific needs when it comes to employee benefits and related financial services. But many employees do not believe their employers are meeting their needs.

A MetLife survey found that nearly two in every five employees believe that their benefits don’t adequately address their needs, 49% of employees said they would bear more of the cost to have access to more benefits that met their needs, and 70% of employees said they are

more likely to remain with their employer if they are satisfied with their benefits. In light of the record number of employees leaving their jobs, this last statistic is particularly worth noting.

With the “great attrition” underway, it is especially important for employers and plan sponsors to gain essential information and insights on the challenges each generation faces and what benefits should be offered to better meet their life stage needs.

Navigating today’s multigenerational workforce landscape

Driven largely by the COVID-19 pandemic and the proliferation of new remote working, the great attrition, also referred to as the “great resignation,” has forced employers to consider how employees view their work-life balance, and what benefits and financial services they need to best achieve their goals.

In its latest research, McKinsey & Co. found that more than 50% of employee resignations stemmed from workplace stressors, including insufficient benefits, job insecurity, a toxic workplace culture

or leadership, and financial stress. Forty percent of these same employees surveyed by McKinsey said that they were at least somewhat likely to leave their current job within the next three to six months.

Gallup’s “State of the Global Workplace: 2022 Report” supports the findings of employee discontent. Gallup reported that an estimated 25% admit to feeling miserable at work, while only 30% said they were thriving.

It’s also important for employers to understand that workers know what they want and need in terms of alleviating these pressures. For example, the findings from various organizations revealed that:

» 77% of working Americans consider retirement savings as their most important benefit. (Society for Human Resources Management)

» 51% of employees view companyenforced limits on after-hours communications as beneficial to their mental health. (The Conference Board)

» Employees who are satisfied with their

more than twice as likely to recommend their employer to job seekers. (LinkedIn)

Drilling down further, a survey of both 1,800 employers and their employees by the Transamerica Institute and its Transamerica Center for Retirement Studies uncovered significant gaps in what benefits employers offer and the importance employees attribute to those benefits. The survey found that:

» Life insurance is important to 83% of surveyed employees yet is offered by only 36% of employers.

» Employee assistance programs are important to 71% of employees but are offered by only 30% of employers.

» Workplace wellness programs are important to 69% of employees, but only 29% of employers offer them.

» 73% of employees said financial wellness programs were important to them, but only 28% of employers offered them.

The consequences of employees not having their needs effectively met are significant for employers. In addition to increased employee resignations, there is a direct correlation between corporate profits and workers’ contentment.

Organizations with unhappy workers

ployees. Productivity losses are attributed to high absenteeism among a company’s discontented workers. Work-related stress also has been shown to cost businesses billions of dollars in higher annual health care costs related to stress, associated illnesses and ensuing absenteeism.

In addition to these valuable findings, employers can gain even greater insight into what matters to their employees by looking at each generation’s distinct needs.

Meeting each generation’s needs

Before breaking down what matters most to each generation, these three principles should be understood. First, employee benefits should be personalized to individuals and not their generation.

To be sure that they are, employers should consider conducting their own survey to see what is important to their employees. Second, know that when it comes to employee benefits, the one-sizefits-all rule does not apply. And, finally, consider backing up specific benefits with essential support services such as financial literacy programs, on-site medical screenings, health and fitness seminars, and educational literature and videos explaining the various benefits.

Here is a breakdown of what is important to each generation, with percentages sourced from HUB International data.

representing 1% of the workforce.

With a focus on their retirement, members of this generation care most about staying healthy and injury-free, financing their long-term care needs, managing chronic illnesses (e.g., cardiovascular conditions, diabetes, chronic obstructive pulmonary disease, arthritis), and being able to meet their health care and prescription costs. They also want to remain relevant in the workforce as long as they continue working.

Employers should consider offering this generation injury prevention programs, seminars on chronic medical condition management, and opportunities to mentor younger staff members. These employees should be offered voluntary benefits such as critical illness, long-term care and hospital indemnity insurance; dental/vision insurance; estate planning services, including end-of-life planning; and identity theft protection.

Baby boomers, representing 27% of the workforce. This “sandwich generation,” which often cares for elder

Source: Transamerica Institute

parents as well as grandchildren, is also focused on their post-work quality of life and having adequate financial resources to cover their retirement expenses.

Baby boomers may be experiencing some health issues and therefore want certain medical benefits (e.g., critical illness, long-term care, hospital indemnity), prescription coverage and dental/ vision coverage.

They also want support in terms of preventive health measures, health and fitness education, and programs that help them pay for their family responsibilities, such as access to 24/7 nurse helplines, seminars on elder care facilities and discounts on various health and fitness resources (e.g., gyms, nutritionists, healthy foods, vitamins). Retirement planning advice also is important to them.

Generation X, representing 27% of the workforce.

For Gen X, flexibility in their work schedule and work location, along with child care, financial security, education, and health and fitness support are top priorities. Additionally, they seek job security along with career advancement and professional development opportunities.

Unlike the preceding generations, Gen X wants tools to support their goals. They value on-demand digital tools that help them perform their tasks and wellness portals that offer access to health and fitness information. They appreciate on-site gyms equipped with the latest exercise equipment.

Financial education is also a high priority for Gen X; they recognize what they do not know in terms of financial planning and insurance requirements. Employers should offer this generation access to and education about life insurance because many Gen Xers admittedly do not understand life insurance or how much coverage they need. Accident insurance, disability insurance and dental/vision coverage for their families, as well as high-deductible health plans and health savings accounts, are valued. Other benefits to offer Gen X include financial wellness programs covering financial and dependent care planning.

Millennials, representing 44% of the workforce. Having work that is meaningful is important to millennials. They also place a high value on a choice of benefits that support parental leave, scheduling and workplace flexibility, and workplace experiences that are engaging and purposeful. Like Generation X, millennials also value digital and online tools for wellness, social engagement and support; wellness programs and challenges that help them stay motivated and meet their health and fitness goals; volunteer opportunities that support their mission-driven goals; and mental health support programs.

Millennials also need and want financial education and resources to address their financial planning needs and stu-

and opportunities for them to share their technology skills with their co-workers are also important to them. Benefits that appeal to this generation include accident insurance, student loan assistance and financial planning education. Since many members of Gen Z have health insurance coverage under their parents, this is not a top priority for them, although medical insurance education should be offered.

Regardless of the generation, there are some benefits that all employees regard as important. They include paid time off, financial assistance, 401(k) and retirement planning, and work-life balance.

When planning employee benefits, employers and plan sponsors should consider what is important to their employees along with the budget they have for employer-paid benefits. Employers also should consider what voluntary benefits they should offer.

dent loan repayment. Life insurance, health and disability insurance, accident and hospital indemnity insurance (in particular, to cover maternity expenses), and dental/vision coverage are highly valued.

Generation Z, representing 1% of the workforce.

Of all the generations, Gen Z is perhaps the most focused on professional and personal growth. They regard career advancement as one of their most important criteria when looking for a job.

Employers looking to attract members of this generation should note that a collaborative work environment and a flexible work culture are important to them. Time and stress management tools, mental health support, digital wellness tools, volunteer opportunities,

Benefits brokers should help employers perform due diligence when selecting benefits and then help employers create a communications plan to convey these benefits in the simplest, easiest-to-understand terms, avoiding industry jargon. Place benefit information on employee portals where it can be accessed on a 24-hour/365-day basis from any device.

Following these guidelines and understanding of today’s multigenerational workforce, employers can better retain and attract high-quality employees who will contribute to an organization’s overall success, profitability and long-term viability.

John Thornton is executive vice president, sales and marketing, Amalgamated Life Insurance Company. He may be contacted at john.thornton@innfeedback.com.

Regardless of the generation, there are some benefits that all employees regard as important. They include paid time off, financial assistance, 401(k) and retirement planning, and work-life balance.

Middle-income families optimistic despite challenges

High inflation stings everyone, but it’s especially painful for middle-income American households. Still, most middle-income households are optimistic about their future and show a remarkable resilience in the face of economic headwinds.

Those were among the findings of a Primerica special report titled The Financial Condition of Middle-Income American Families Heading into 2023. What are some of the challenges facing middle-income households?

• Savings taking a hit. Eighty-two percent of respondents curtailed or stopped saving for the future or tapped into existing savings.

• Inflation’s disproportionate impact. In 2022, food, gas and utilities prices remained elevated, peaking in the second quarter at 18.2% higher than the previous year. The full consumer price index peaked at 8.6%.

• Spending higher than anticipated. Only 15% of survey respondents in the third-quarter survey planned to spend more money overall in the fourth quarter. However, more than double (33%) spent more than planned.

When asked in the survey about the condition of their personal finances, 53% of respondents in the fourth quarter of 2022 reported they were in good or excellent shape; however, this is down from 60% a year earlier.

What attracts, challenges women in the advisor world

In a recent survey of female financial advisors, more than half of all early-career respondents (56%) said “helping people with finances” was their motivation for becoming an advisor. Earlycareer advisors noted knowledge and training as their top hurdles. The recent study and white paper by OneAmerica provide insights into attracting women to the financial services industry and retaining them. It also outlines some of the unique challenges they face. Earlycareer advisors noted knowledge and training as their top hurdles early on.

The study showed that women are attracted to the advisor profession and motivated to stay because of the opportunity to help people. What can make or break career success are “the four C’s”: Confidence, community, connection and culture emerged in the survey as key determinants of success for female advisors.

Busting myths about wealth management jobs

Wealth management encompasses a wide range of positions, making it a good place for a diverse group of job seekers looking to start or advance their careers. But a number of myths about wealth management careers continue to hinder diverse job seekers from considering jobs in the field,. according to a recent Diversitas Symposium.

More workers pushing past age 65

Although early retirees have been grabbing headlines, it appears that the trend of older workers is where the growth is, with a recent report showing as many as one-third of Americans between the ages of 65 and 74 expect to still be working by 2030.

Why are so few ready to grab the gold watch? Lack of savings is a major reason. The report said as many as 60% of older workers say they have under $500,000 in savings, including all investments, savings accounts, or other retirement vehicles. And three-in-10 admit to less than $100,000 in savings.

What is particularly alarming is that most are not planning for the possibility that they may be physically unable to work or have a loved one who needs ongoing medical care, even though both these circumstances have high probabilities. Despite the fact that 40% of adults aged 65 years and older are living with a disability today, just a third (36%) are planning that they might not be physically able to work as long as they want, and only 13% are thinking about not being mentally able to work as long as they want.

One of the myths keeping a diverse employee pool from considering a wealth management career is a lack of understanding of the types of jobs available. Not every wealth management career involves selling. In addition, people from underserved communities have skills that are transferable to wealth management, said Marvine Laurent, senior vice president of finance and operation with Lenox Advisors.

Call it intuition

6 in 10 women believe we are in or approaching a financial crisis.

Source: Nationwide Advisor Authority survey

• Sheryl Moore, President and CEO of Moore Market Intelligence

• Diane Boyle, Senior Vice President of Government Relations at NAIFA

• Jamie Hopkins

• David Levenson, LL Global CEO

• Marc Cadin, Finseca CEO

Helping clients navigate difficult estate-planning conversations

Advisors may know the importance of estate planning, but that doesn’t necessarily make it any easier to have the difficult conversations that must occur during estate planning.

• Ben Beshear

hen it comes to estate planning, there is a common misconception that estate plans are only for older generations. In actuality, though, any age group can benefit from one, and yet few are participating in the planning process. The Caring.com 2022 Wills and Estate

Planning Study revealed that only 45% of Americans ages 55 and older have estate-planning documents in place. This statistic is even lower among 18- to 34-year-olds, with only 24% reporting having an estate plan.

WEstate planning goes far beyond finances and tangible assets. Rather, it is a very personal process that helps ensure an individual’s legacy is passed down to their loved ones and that family members are protected in the event of the individual’s illness or death.

Below are some best practices for financial advisors to consider when approaching estate planning with their clients.

Initiate the conversation during the discovery meeting

The first step a financial advisor should take is to ask the client whether they have a will or trust in place. If the answer is no, this is an opportunity to introduce estate planning as an important step toward creating a long-term financial strategy.

During an introductory meeting, it is also important to stress the benefits of an estate plan, such as peace of mind knowing a family’s financial future is secure. If the client is still reluctant, it is the advisor’s responsibility to continue initiating these conversations and emphasizing the importance of estate planning throughout the client’s financial journey.

Main reasons for neglecting estate planning by income

and willing to participate in the discussion when they feel supported by their advisor.

Team up with an estate lawyer

Lawyers are an essential component of the estate-planning process. Therefore, it’s vital for financial advisors to have working relationships with lawyers in the field. Although an advisor may have a general understanding of the legal components required in estate planning, this area of expertise is uniquely complex and requires specific training and education.

Main reasons for neglecting estate planning by education

If the client does not already have a lawyer, the advisor should come prepared with a list of trusted lawyers to recommend. With permission from the client, an advisor can offer to write an introduction email with a detailed list of this individual’s goals and assets. This email drastically speeds up the planning process by getting the lawyer acquainted with the client prior to the discovery meeting.

Don’t let emotions outweigh objectivity

Reframe the conversation

The process of writing a will can be uncomfortable, but with the right approach, it doesn’t have to be. Rather than leading the conversation with an emphasis on mortality and assets, an advisor can position estate planning as an opportunity for a client to pass down their legacy to loved ones. Once the client identifies what they want their legacy to look like, they’ll likely be more open to the conversation.

Help the client navigate conversations with family

An essential next step is discussing with the client what stage of the estate-planning process they would like to involve their family in. This differs for each person, depending on their age and stage of life, with some clients preferring to include their family as early as possible and others preferring to wait. Regardless of when these conversations occur, the client may feel anxious at the thought of having them.

Advisors can help by offering to write an email informing the client’s family

members of what to expect from the process. Alternatively, if the client wants to address their family themselves, an advisor can help soften the landscape by providing sample language or scripts. As a best practice, an advisor should encourage the client to introduce this conversation gently by sharing the values they’d like passed down and the legacy they want to leave behind.

Get comfortable having uncomfortable conversations

Financial advisors may know the importance of estate planning, but that doesn’t necessarily make it any easier to have the difficult conversations that must occur during estate planning. For instance, it is the advisor’s responsibility to talk through different options for passing down assets, even if a client has no immediate beneficiaries. In this instance, an advisor should introduce creative options such as spending more assets during his or the client’s life span or tax-efficient charitable giving strategies. Clients will be more relaxed

Objectivity should always be a top priority for an advisor, but it is especially important when discussing sensitive topics such as illness and death. In the instance of terminal illness, for example, it can be tempting to let emotions impact the decision-making process. However, it is vital to keep the client’s best interests in mind by providing direction on how to approach end-of-life planning and how to set the client’s family up for financial security.

Financial advisors are ultimately responsible for holding their clients accountable to create an estate plan before it’s too late. Once an estate plan is in place, advisors should help their client review and update their existing estate plan. Changes in the law, especially estate tax changes at the federal level, and significant life events may make it necessary to update the plan. When an advisor holds a client accountable, it helps ensure their legacy will be carried out smoothly.

Ben Beshear is a Cincinnati-based CEO and private wealth advisor with LiveWell Capital, a Northwestern Mutual Private Client Group. Ben may be contacted at ben.beshear@innfeedback.com.

Source: Caring.com

The how and when of texting clients

Consumers are already on their phones. Here is how you can communicate via text while staying compliant.

By Tom Sheahan

Quick and efficient communication can make the difference between a customer choosing to work with you or choosing to work with someone else — regardless of cost or your personal experience and accolades. Communication truly is that important, especially for insurance or financial professionals. Because of this heightened importance, insurance professionals should integrate communication strategies that meet customers where they already are: on their phones.

A 2022 study by Reviews.org found that 70% of Americans check their phone within five minutes of receiving a notification, and on average, people are checking their phone once every four minutes. That’s a lot of time spent on the phone, but the study findings also validate the fact that phones are a convenient

medium for communication. The method, however, has changed. According to a study by OpenMarket (now Infobip), 75% of millennials would rather lose the ability to talk on the phone than lose text messages. The primary founding function of the phone — talking — is now less valuable to people than texting is. This is something insurance professionals should take advantage of.

Best practices for SMS use

Now that we have a case for using text messages — also known as SMS, or short message service — for client communications, it’s time to dive into the specifics of how and when to use text messages. First of all, here are some best practices to keep in mind when communicating by text.

» Stay compliant. The Federal Communications Commission’s rules implemented in the Telephone Consumer Protection Act have created strict procedures for compliant SMS.

Texting people who have not opted in violates these rules. There are many ways to obtain an opt-in. Give people the option to sign up for texts when they sign up for emails, offer an opt-in link on your website, or include opt-in within new customer paperwork.

Offering ample opportunity to opt out of text messages is also critical. End messages with something like “Reply END to opt out of future communication” in order to stay compliant.

The TCPA has resulted in fines for violations related to texting, so be aware

75% of millennials would rather lose the ability to talk on the phone than lose text messages.

How obsessed are we with our phones?

Source: Reviews.org

that this is one of the most important components of your text messaging strategy. Keep thorough records of your text-sending actions in case of a consumer complaint. Most SMS software solutions will keep these kinds of records indefinitely, with many providing the ability to keep records going back even a decade or more.

» Avoid getting blocked. As a way to protect clients, phone carriers will block messages that appear to be spam. To avoid this, personalize your messages, including something like the person’s first name or your company name. When sharing a website, use full URLs, avoiding commonly used link-shrinking websites. Only link to truly relevant websites.

» Know what is safe to send. The security of your clients’ information is top priority (and another potential compliance issue), so let text recipients know what to expect from your messages. Inform them that you will never send personal identification information, nor will you request Social Security numbers, account numbers or passwords via text. This will allow clients to keep an eye out for and report spammers who do use or request that information.

» Understand fees and rules. As of last year, phone carriers including AT&T, Verizon, T-Mobile and U.S. Cellular implemented new texting regulations specifically for A2P (application-to-person) business messaging. The rules, known

commonly as “10DLC” after the 10-digit long codes or local numbers sanctioned by the carriers to be used for business texting, require action by businesses. Most SMS software providers should be well versed in following these rules, but note that there are sometimes extra steps needed to reach compliance, such as registration and recurring monthly fees.

How financial professionals can use SMS

With these best practices in mind, it’s time to explore the numerous ways insurance and financial professionals can use text messaging. Although most professionals won’t need to send the same message to long lists of people (this is called bulk messaging), here are some topics to send to one, a few or several clients.

» Appointment confirmations.

» Industry news.

» Rate changes.

» Notification of a new bill (do not reveal bill totals via text; rather, link to where someone can find their full bill).

» Reminder about annual reviews or renewals.

» New plan announcements.

» Office location or hours changes.

Just like consumers can get annoyed with getting too many phone calls, the same can happen with receiving too many text messages. Avoid text fatigue (and the increased opt-outs that come with it) by tailoring your texts to only the most relevant people. For example, if some clients you serve are outside your geographical location, they don’t need to be updated about an office closure. That kind of message should go only to people who had appointments booked during the day of the closure.

Industry news is another example of a texting topic. Some insurance or financial professionals may want to share notable industry news with their clients, but not all clients may be interested. During the opt-in process, you could ask clients to tell you either how often they would like to hear from you via text message or what kind of information they would like to receive. Some people may check the box for industry news, while others may want to only receive updates about their specific account.

Text messaging is a powerful tool to reach clients quickly and effectively with relevant, timely information. When used correctly — with compliance in mind — texting can be successful at increasing brand awareness, boosting customer loyalty and better educating clients.

Tom Sheahan is the CEO of Red Oxygen. He may be

contacted at tom.sheahan@innfeedback.com.

On average, Americans check their phones 344 times a day.

On average, Americans spend 2 hours, 54 minutes on their phones each day.

The average American spent nearly a month and a half (44 days) on their phone in 2022.

States maintain iron grip on insurance regulation

This is the first of a three-part series on the state-based insurance regulatory system. This month’s story summarizes the issues surrounding state insurance commissioners and the differences between elected and appointed systems.

By John Hilton

As summer 2020 wound down, then-Ohio Insurance Director

Jillian Froment steered a sensitive rewrite of Actuarial Guideline 49 to a successful vote.

The much-debated new AG 49 made changes designed to tighten up indexed universal life illustrations.

Froment chaired the Life Insurance and Annuities Committee, her assignment as a member of the National Association of Insurance Commissioners (NAIC).

That was then.

Today, Froment is executive vice president and general counsel for the American Council of Life Insurers, a position she assumed late last year. ACLI is one of several industry groups that took an active interest in AG 49 changes, submitting several comment letters.

Froment is hardly the first regulator to go from an insurance commissioner’s office to work for an industry group or insurance company. In fact, it is very common, said Birny Birnbaum, a designated

consumer representative at the NAIC.

“Commissioners and senior regulators often come from industry and then return to work for industry after their time as regulators,” he said. “We also see regulators who’ve worked their way to senior positions and then leave to work for industry.”

The revolving door of regulators in and out of industry is among the many criticisms of the state-based insurance regulatory system. But it is far from the only one. States were essentially given regulatory control over insurance via the McCarran-Ferguson Act, passed by Congress in 1945. The Supreme Court ruled one year earlier that federal oversight was warranted, but Congress acted quickly to insulate insurance from federal antitrust laws.

Seventy-eight years later, the state system of insurance regulation is largely unchanged. But to many, time has rendered the system at times ineffectual,

cumbersome and heavily political.

‘Tremendous power’

While duties vary from state to state, insurance commissioners serve as advocates for consumers, approve insurance product filings, and provide oversight of producers and insurers on issues such as licensing and reserving, among other things.

TThe backstory on states gaining control over insurance oversight dates nearly to the Civil War. In 1869, the Supreme Court held, in the case Paul v. Virginia, that “issuing a policy of insurance is not a transaction of commerce.”

As a result, states were left responsible for the taxation and regulation of insurance. That led to the formation in 1871 of the National Insurance Convention, which later became known as the National Association of Insurance Commissioners. The McCarran-Ferguson Act would later cement state control over insurance.

But as the business of insurance grew more complex, state insurance regulation grew more onerous in many ways. For starters, 50 states mean 50 insurance regulators, all with equal power.

Froment

“It gives tremendous power to small states,” Birnbaum said. “You could have a majority of states with less than a third of the country’s population making decisions that affect two-thirds of the people in the country.”

It is not unusual to see regulators from conservative states such as Idaho and Iowa diametrically opposed to regulators from liberal states such as New York or Massachusetts. The results are usually either gridlock or a much-watereddown regulation.

Although in a very powerful position, insurance commissioners often work out of the limelight. Media coverage is light and consumer interest nil.

The position gives commissioners substantial authority amid powerful insurers and powerful politicians. Sometimes that combination leads to bad outcomes.

In Louisiana, for example, three successive insurance commissioners were convicted and served time in federal prison for unrelated crimes. Before their convictions, the three commissioners managed to serve a combined 28 years. The embarrassing run ended when former Commissioner James H. “Jim” Brown was sent to prison in 2000 for lying to FBI agents.

More recently, North Carolina Insurance Commissioner Mike Causey turned to the FBI in 2017 and assisted their investigation of former insurance magnate Greg Lindberg. Imprisoned for trying to bribe Causey, Lindberg was freed on appeal in July 2022.

Mass resignations

In the rare instances when insurance does become a major topical issue, insurance commissioners are often overshadowed.

Florida is in a full-blown insurance crisis. Insurers are either failing or fleeing the state amid increasingly devastating storms, combined with an aggressive lawsuit culture. The average cost of homeowner insurance has more than doubled since 2019, from $1,988 to $4,231, which is about triple the national average.

While Florida lawmakers held two special sessions to deal specifically with the insurance crisis, the state’s insurance regulators maintained low visibility. Finally,

Insurance Commissioner David Altmaier announced his resignation, effective Dec. 28. His top two lieutenants – John Reilly, deputy commissioner of life and health, and Susanne Murphy, deputy commissioner of property & casualty – resigned in the preceding weeks. Then there’s the politics of trying to regulate an industry that is often a large, sought-after employer in the state. Insurance commissioners themselves are recruiters in the highly competitive captive insurance world. A captive insurer, according to the NAIC, is “a wholly owned subsidiary created to provide insurance to its non-insurance parent company (or companies). Captives are essentially a form of self-insurance whereby the insurer is owned wholly by the insured. They are typically established to meet the unique risk-management needs of the owners or members. Additionally, they provide potentially significant tax advantages, which can prove integral to longevity and company profitability.”

It all adds another layer of conflict for insurance commissioners, Birnbaum said.

“States compete with one another for insurance business,” he explained. “Probably the best example of that is with captives, where states are competing with one another to lure captive insurers to their state. And so there is pressure to compete for captives, sometimes by reducing regulatory requirements.”

Elected vs. appointed

Eleven states hold elections for insurance commissioner. Of the 39 states in which the insurance commissioner is appointed, the governor appoints in 37; in New Mexico and Virginia, the insurance commissioner is appointed by a commission.

Neither model is perfect, Birnbaum said, adding that an elected commissioner has a degree of independence not possible for appointed commissioners.

“Given the massive role insurance plays in the lives of consumers and businesses,

being directly accountable to these insurance consumers is important,” he said.

Elected commissioners are answerable to the public but often take political donations from the very insurance companies they will end up overseeing.

Jim Donelon of Louisiana is one of two state insurance commissioners up for election this year. He calls campaign fundraising “the regrettable part” of running for office. Still, Donelon is a huge cheerleader for elected over appointed commissioners.

The second-longest-serving insurance commissioner in the United States, Donelon assumed office in 2006 and won five successive terms. Mike Kreidler of Washington, also elected, is the most senior insurance commissioner, having been in office since 2000.

Appointed commissioners last, on average, just three years, Donelon said, “much too short to learn what is a very complicated role as the regulator of insurance.”

Furthermore, having to face the voters keeps a commissioner accountable, he added.

“You have to get to the middle of the electorate,” he explained. “If you’re too far right, you’re going to get beat by the left. If you’re too far left, you’re going to get beat by the right. At least that’s my state’s situation.

“When you are appointed by a governor, you’re really part of that governor’s cabinet. You do what he or she wants done. Those governors tend to be not engaged in insurance and tend to be more extreme than regulators who get elected to be regulators.”

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.

Birnbaum

Donelon

Pro bono financial planning benefits society and advisors

By James Lee

We all have seen the studies and data pointing to the ongoing financial struggles facing large numbers of Americans, especially those in lower-income communities. For many, those challenges are outside their control and carry a significant financial burden. No matter the source of someone’s financial struggles, they deserve to have the necessary access to sound financial planning advice that only qualified financial planners can provide.

As someone who has volunteered many hours over the years to make financial planning more accessible through pro bono advice, I know there has been great value in this work — not only for the people I have helped, but for me as well. Offering my time and guidance has made me a better financial planner, and I like to believe it also made the profession better. Here’s how.

It expands knowledge in other areas. When you serve individuals and families facing various challenges, it requires you to better understand issues that you might not address in your traditional client relationships. From basic financial issues such as credit and debt to helping people cope with the financial fallout from a serious medical diagnosis, volunteering as a pro bono financial planner can force you out of your comfort zone to consider the multitude of issues facing those in underserved communities.

It sharpens relational skills. Many professions such as financial planning require practitioners to acquire finely tuned relational abilities to guide people through their financial challenges effectively. Few issues are drive stress and emotion as much as financial well-being does, which means financial planners need to

up their ability to build the trust that is central to this profession. By working with individuals and families facing financial challenges, you can hone your emotional intelligence, which translates to building relationships with all your clients.

It helps you focus on your personal passions. Because everyone can benefit from receiving sound financial advice from a qualified, competent financial planner, there are opportunities to focus your volunteer work on those populations that most resonate with you. Do you have a desire to help veterans and those actively serving in the military? How about working with families impacted by a cancer diagnosis? Or providing financial counseling to women coping with widowhood or domestic violence? There are several pro bono programs available where you can focus on the specific interests you have.

It elevates the financial planning profession. A cornerstone of any profession is the willingness of its members to use their knowledge and skill to improve other people’s lives. The medical and legal professions are excellent examples of the role pro bono work plays in elevating the respect those professions have received for centuries. As we work to establish financial planning as the next great profession, the volunteer work we do as a community will push the profession forward and elevate the stature of all financial planners.

It’s gratifying to help others. Doing right by others just feels good. When you can engage with someone struggling to

address even the most basic financial challenge, it leaves them — and you — feeling better. The satisfaction you will feel from working with someone for even a couple of hours to improve their life will, in turn, make your life and work better.

It’s simply the right thing to do. Martin Luther King Jr. once said, “The time is always right to do the right thing.” When it comes to pro bono financial planning, it is simply the right thing to do. Many people facing financial hardship simply don’t have access to the advice qualified financial planners can provide. By increasing access for underserved communities, we expand our reach and exhibit the transformative power that financial planning provides all while empowering people to feel more confident about their own financial situations.

Are you ready to do the right thing? If so, I encourage you to explore the many avenues available to get started in offering pro bono financial planning. Explore the opportunities available to you through the Financial Planning Association or the Foundation for Financial Planning.

Getting started is easy, but you must take that first step.

James Lee, CFP, CRPC, AIF, is the 2023 president of the Financial Planning Association and president of Lee Investment Management in Saratoga Springs, N.Y. He may be contacted at james.lee@innfeedback.com.

How offering your time and guidance can make you a better financial planner.

Financial Planning Association® is the leading membership organization for CERTIFIED FINANCIAL PLANNER™ professionals and those engaged in the financial planning process.

Financial literacy is contagious

When it comes to improving the financial literacy of Main Street Americans, insurance and financial professionals are crucial.

By Win Havir

Bridging the financial literacy gap in our country is largely a matter of education. When people understand money matters, they are equipped to make better decisions and put themselves on a more solid financial footing. When it comes to improving the financial literacy of Main Street Americans, insurance and financial professionals are crucial.

The latest Financial Industry Regulatory Authority National Capability Study reveals some troubling statistics for us to contemplate as we recognize April as National Financial Literacy Month:

» Sixty-six percent of American adults cannot pass a basic financial literacy quiz.

» More than 40% lack retirement accounts.

» Fewer than 50% have emergency savings.

» Fewer than 30% have financial plans in place.

» Fewer than 20% use the continuing services of financial professionals.

I have an interesting perspective on financial literacy and Main Street consumers because I work directly with school system employees in the St. Paul, Minn., area. Whether the schools are in the inner city or the surrounding suburbs, you can’t get much more “Main Street” than teachers, guidance counselors, principals, coaches and other educational system employees.

When it comes to financial literacy, I often find myself teaching the teachers. Although they are universally intelligent people and may be experts in geometry, biology, music or English (and all of them

certainly have a strong understanding of the children they educate), I often find they are befuddled when it comes to concepts such as creating budgets, repaying student loans, preparing for retirement and protecting their financial well-being.

Helping our clients understand the basic tenets of financial literacy is vital to our own success. After all, no one will purchase life insurance if they don’t understand the importance of protecting their family’s financial security and mitigating risk. No one will plan for retirement if they don’t understand how short-term sacrifices can pay off in the long run.

It is important for us to help each client understand their relationship with money and to develop their “money story.” I encourage the educators I work with to pay

is contagious. The more people we have talking about it and sharing these basic financial concepts, the better.

In my work with NAIFA, we are advocating to formalize this process in our schools. In Minnesota, we support a bill that would make passing a personal finance class a requirement for high school graduation. The course would teach students about the process of taking out loans, how interest works, basics about insurance and home mortgages, and what payroll deductions are, among other topics. Eight states currently make a personal finance course part of high school graduation requirements, nine more will implement such requirements in coming years, and several others have proposals under consideration.

themselves first — create a savings plan and stick to it. Then, create a budget for paying other people — for bills, clothes, entertainment and luxury items. I help them create financial goals, understand the “magic” of compound interest, and know the importance of managing risks and protecting their assets and families.

Helping them understand the basics makes it much easier when we get into the nitty-gritty of 403(b) plans, Roth IRAs, public service loans, insurance options or annuity products.

My hope is that educating the educators will create a trickle-down effect. When they have a strong base of financial understanding, they have something they can pass down to their own children. And as influential coaches, teachers and counselors, they can pass their financial understanding along to their students as well. Financial literacy

Educated consumers make our job as financial professionals much easier. I consider teaching an important part of my job and take great satisfaction in knowing that I am helping improve financial literacy in my community. It’s good that we shine a spotlight on education and personal finance during National Financial Literacy Month, but as financial professionals we know financial literacy is a subject, we need to keep at the top of our syllabus year-round.

Winona “Win” Havir, CPCU, CLF, LUTCF, FSS, LACP, AIC, is executive vice president of business development at Educators Insurance Resource Services, representing the Horace Mann Companies.

win.havir@innfeedback.com.

She is also a member of the NAIFA board of trustees. She may be contacted at

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

The more people we have talking about it and sharing these basic financial concepts, the better.

Financial professionals can help guide through turbulent times

LIMRA research shows investors who work with a professional are more likely to have weathered the ups and downs of the market.

By Matthew Drinkwater

The year 2022 will probably go down as one of the most challenging in history for individual investors in the U.S. They were forced to contend with a significant stock market sell-off and rapidly increasing interest rates that eroded the value of bonds held in their portfolios — all during a time of high inflation. Such volatile environments can demonstrate the value of having a trusted financial professional to help make appropriate investment decisions and navigate the economic storm — and underscore the need for products with some level of downside protection.

LIMRA recently looked at retirement investors ages 40 to 85 with at least $100,000 in household investable assets, some of whom work with financial professionals to help make financial and investment-related decisions and others who did not. The research examined the degree to which working with financial professionals can improve their clients’ retirement security, as well as the impact of working with a financial professional on an investor’s reaction to current economic trends. Specifically, in light of the market volatility, would clients now be interested in products with downside protection?

The benefits of working with a financial professional are clear. For example, controlling for wealth, investors who consult with financial professionals are more likely to have created a plan for managing income, expenses and assets in retirement, and are more likely to have performed key planning activities such as estimating how long assets will last in retirement.

Agree With the Statement, “Stock Market Volatility Has Made Me More Interested in Investments With Downside Protection”

They also have higher confidence in their ability to live the retirement lifestyles they desire. It’s less clear, however, that clients will react differently than non-advised investors to economic conditions or will be amenable to the protection solutions their financial professional recommends in response to such conditions.

The U.S. stock market, as measured by the S&P 500 index, lost about 20% of its value during 2022 and was highly volatile for much of the year. Such bear market conditions often cause a “flight to safety” and can spark interest in products with downside protection. Indeed, interest in products with downside protection is strong, with nearly half (47%) of those surveyed expressing at least some willingness to consider them. This high level of interest is borne out in LIMRA’s annuity benchmarking, which shows that the share of industry sales directed at “protectionoriented” product types has increased substantially over the past several years.

Within each wealth category, investors working with financial professionals — defined as any paid professional, such as a financial advisor, investment broker, banker or mutual fund representative who helps with the household’s financial and investment decisions — were significantly more likely than other investors to express interest in protection-based products. Wealthier investors (those with $500,000 or more) were more likely than less-wealthy investors to be interested in such products. Given the strong

connection between wealth and financial sophistication and knowledge, it is possible that wealthier investors have some familiarity, if not actual experience, with these products. Wealthier investors also tend to have higher exposure to the stock market and have more to lose overall without downside protection following a long bull market before 2022.

Financial professionals who do not have these products on the shelf are probably operating at a disadvantage in these economic conditions. At the same time, many of those surveyed (38%) were neutral toward “investments with downside protection,” possibly because they are unfamiliar with fixed indexed annuities, registered index-linked annuities or other structured products. Given this lack of familiarity and the complexity of some product designs, financial professionals must take the time to ensure that their clients understand these products well enough to make informed decisions.

Connecting the dots between economic conditions, investment solutions, and the specific needs and preferences of each client will be essential, regardless of how the markets change going forward.

Matthew Drinkwater is corporate vice president, annuity and retirement income research, LIMRA. He may be contacted at matthew.drinkwater@ innfeedback.com.

More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.

Source: Retirement Investors — Key Trends and Opportunities, LIMRA 2023 Somewhat agree Strongly agree

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