InsuranceNewsNet Magazine | June 2024

Economic conditions remain ripe for an ongoing annuity sales boom. But the Department of Labor’s new fiduciary rule expansion could be a major disruption.

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The Power of Persuasion — with Lynne Franklin

PAGE 10

Inherited annuities: Helping to stretch generational wealth

PAGE 36 ‘Magic number’ for comfortable retirement surges

PAGE 44

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IN THIS ISSUE

INTERVIEW

10 The power of persuasion

Lynne Franklin, a self-described neuroscience nerd, describes how advisors can do a better job of connecting with clients to get them to say “yes.”

IN THE FIELD

14 Building a bridge

By Susan Rupe

Deshawn Peterson is helping the next generation of financial professionals while helping existing advisors expand their practices.

FEATURE

By John Hilton

The Department of Labor’s new fiduciary rule expansion could be a major disruptor for booming annuity sales.

27 The 2024 Annuity Thought Leadership Special Section

Two elite companies offer their unique perspectives on product, process and the future of an ever-changing annuity marketplace.

32 Would you rather purchase items retail or wholesale?

By Ernest Guerriero

Why paying for life insurance premiums through a qualified plan might be a better option for your client.

ANNUITY

36 Inherited annuities: Helping to stretch generational wealth

By Susan Rupe

How to spread out tax liability while allowing an inheritance to continue growing.

HEALTH/BENEFITS

40 3 trends impacting employee benefits management

By Kim Buckey

Employers face a number of challenges in enrolling workers in health benefits.

ADVISORNEWS

44 ‘Magic number’ for a comfortable retirement surges upward

By Ayo Mseka

Americans believe they need $1.46 million for a comfortable retirement. Can advisors help them attain that goal?

BUSINESS

46 3 essential technologies to have in your toolkit

By Jonathan Georges

The technology tools advisors need to serve clients more effectively.

IN THE KNOW

48 How tech will revolutionize health care and life insurance

By Ken Leibow

Groundbreaking platforms are helping address inefficiencies while uniting underwriting professionals.

The resurgence of annuities and the DOL rule

The landscape of retirement planning has experienced a significant shift in recent years, thanks in part to the resurgence of annuities as a cornerstone financial product. With the rise in interest rates, annuities have come back into the spotlight, offering financial professionals and advisors renewed strategies to enhance their clients’ retirement outcomes. There is a shadow on the horizon, though, as the industry wrestles with the impact of the Department of Labor’s Retirement Security Rule.

Annuities historically have been viewed with a mix of skepticism and interest, often due to their complexity and the perception of high fees. However, the recent upward trend in interest rates has shifted this perception. Higher rates translate directly into more attractive annuity payouts because the funds accumulated within these financial instruments can now grow at a quicker pace. This shift is particularly important at a time when traditional bonds and fixed-income

investments are offering diminishing returns relative to historical standards.

A significant impact

The new fiduciary rule, however, will have a significant impact on the sale of annuities, especially in how these products are marketed and sold to retirement investors. The rule redefines “investment advice fiduciary” under the Employee Retirement Income Security Act and tightens standards to ensure that financial advisors act in the best interests of their clients, particularly when it comes to rollovers into individual retirement accounts and the purchase of annuities.

Under the new rule, financial advisors who provide investment advice or recommendations for a fee will be considered fiduciaries if they are in a professional relationship where a retirement investor expects to receive recommendations that are in their best interest. This includes advice on buying annuities. The rule aims to protect retirement investors by requiring advisors to adhere to a

fiduciary standard, thereby ensuring that the advice given is prudent, loyal, and free from conflicts of interest.

One of the significant changes is the removal of the “regular basis” and “mutual understanding” requirements from the previous five-part test, which allowed advisors to avoid fiduciary status under certain technicalities. Now, any advice that has a significant impact on retirement investment decisions, such as the purchase of an annuity, could place the advisor under fiduciary obligations if the other conditions are met.

Stringent guidelines

Moreover, the rule includes stricter compliance requirements for fiduciaries, including enhanced disclosure requirements about fees, costs and potential conflicts of interest. These changes will require that advisors not only disclose more comprehensive information but also follow stringent guidelines to ensure their advice aligns with the investors’ best interests.

For the sale of annuities, this means that financial advisors and insurance agents will need to carefully evaluate how — and whether — they can recommend specific products, in order to ensure compliance with the new fiduciary standards.

As we go to press, the new rule is set to take effect on Sept. 23. Legal battles are anticipated.

Many in the industry expect that the significant changes in the new fiduciary rule will require time and education to master. What many fear, however, is a loss of revenue as the stringent guidelines impact their ability to sell and reduce commissions.

At the end of the day, these strictures may well impact not only advisors, but also many Americans — especially those who are not high net worth — whose financial advisors either can’t or won’t make specific product recommendations based on the new rule.

This new rule will not only cast a shadow across the industry, but also may well cast that same shadow across the people the industry is there to serve.

John Forcucci Editor-in-chief

Leading the charge in retirement security:

Ibexis’ commitment to

excellence and innovation redefines industry standards

In this conversation with Nate Gemmiti, CEO of Ibexis, we explore how the company is disrupting the industry after launching its first annuity as Ibexis just two years ago. From innovative products to a distribution model elevating independent marketing organization partners and more, Gemmiti shares insights into how Ibexis is pioneering a path to greater financial certainty for retirees.

What key factors contributed to Ibexis’ remarkable growth last year, and how do these distinguish it from other carriers?

We’ve experienced tremendous growth. We launched our new product for the first time at the end of 2020, so 2023 was our first year of sales. Even annualizing sales growth for last year, we had 160% growth yearover-year rate, so it was a phenomenal year.

This growth stems from a mix of financial strength, the backing of a major financial institution, innovative products and a technology-driven platform. For products that are supposed to be safe retirement savings products, financial strength is very important, and we’re proud of our A-rating.

This combination distinguishes us in the market and cultivates stability, creativity and operational efficiency.

We also prioritize organic growth over acquisitions. This strategy focuses our efforts on producing high-quality products and fostering solid partnerships with firms and advisors. It allows us to sidestep the hurdles of integrating legacy assets, so we can stay at the forefront of technological innovation and remain incredibly efficient.

Following recent enhancements to your FIA Plus series, what sets your annuities apart?

We believe clients and advisors deserve solid alternatives as opposed to just rate shopping. Both of our products, at their core, are your traditional annuities. The plus feature on both of them offer additional functionality, or “optionality,” that built onto the base product. Clients can use these products just as they would any other product or they can take advantage of the additional functionality available.

This “optionality” caters to changing economic conditions and market fluctuations and offers a competitive edge that addresses varying risk appetites and market dynamics that can change over the life of the product.

For example, with the FIA Plus, over future periods, clients have the option to expose any gains to a partial loss in exchange for significantly higher caps and participation rates. It’s a different risk decision, but it’s an option to discuss with clients. This may sound similar to a registered index-linked annuity; however, with the FIA Plus the agent doesn’t need to be securities licensed and the client can’t lose their premium. This makes it a RILA alternative for insurance-only agents.

This is just one example of various alternatives available to clients, which enhances the value proposition for financial professionals and gives them meaningful talking points, such as risk preferences and potential returns, during annual client reviews.

Efficient processing is key to improving the agent and client experience. In what ways is Ibexis leading the charge in operational efficiency?

Clients deserve to have their policies promptly issued, and advisors deserve to be promptly paid for their work. I appreciate the frustration when neither of those happen.

However, because we don’t have legacy system issues like I mentioned earlier, we are able to operate on a 100% e-application system that utilizes DocuSign, allowing us to completely eliminate paper apps and almost all not-in-good-order requirements. We are striving to be leaders in operational efficiency. It isn’t an afterthought. It’s one of the core value-adds we’re putting in the market.

I’d also note that in order to drive outcomes, you need access to good information. Internally, we’ve built large internal data and reporting frameworks that allow us to monitor all of the relevant service matrix. This data allows us to see where our focus should go to ensure the entire infrastructure is working the way we expect. For example, I get metrics on our call center, and just recently I saw that our average hold time was around 5 seconds. As for processing times, we have high standards, typically issuing new business that comes in with cash in two business days.

Delivering exceptional service is paramount in today’s competitive landscape. Can you highlight how Ibexis is setting new standards in service excellence for agents and advisors?

One of the ways Ibexis is providing exceptional service is through our client and advisor portal. It allows access to necessary information such as case notes on individual policies and enables advisors to track the progress of applications.

The portal enhances transparency and streamlines operations, which contributes to the high level of service. From our company’s inception, we’ve operated like other insurance companies wish they could but can’t because they are bogged down by outdated systems and processing standards.

Ibexis is taking an innovative approach to distribution that sets it apart in the industry. Could you explain your distribution strategy and how it benefits your partners and the industry?

Ibexis selectively partners with primarily IMOs to create deep relationships that prioritize feedback loops. This gives us insight into the tools our partners need to be successful. What’s also different is that the partners we work with all flow under the IMO hierarchy, so we don’t have the typical competition between channels.

Ibexis is making a name for itself in the industry by being a disruptor. What does that look like?

There are a number of great fixed annuity companies out there. It’s very competitive. To be successful, we aim to disrupt the status quo and offer the market more, and perform better, while ensuring we run a financially responsible business that upholds our commitments to clients.

Because at the core, we are in the trust business — earning the trust of our clients and the trust of our advisors.

Different insurance companies are good at different things, and we believe we’ve hit the mark with a combination of financial strength, tech-driven operations, innovative products, and the backing of a large global financial institution. Our goal in everything we do is to maintain agility, efficiency and financial strength while delivering good products and service.

Looking forward, what exciting developments can the industry anticipate from Ibexis?

We’re focused on innovation. This year, we’ve rolled out enhancements to our FIA Plus, including an attractive bonus as well as a bailout rate that offers additional security. We’re also conceptualizing our next fixed indexed annuity. We’re doing that by listening to our IMO partners on what agents and clients want with the intention of designing a product that reflects those insights.

To learn more about the Ibexis FIA Plus series, visit ibexis.com/fia-plus

Spiraling insurance costs spur homeowners to seek alternatives

Due to  spiraling — and in some cases unaffordable — costs of insuring one’s dwelling, more and more people are opting for insurance coverage for what they might truly need — say, fire and flood — and are willing to take the risks for any other calamity that might befall them, essentially seeking “a la carte” insurance coverage.

“People are saying ‘Hmm, is there a way that I can jettison all those other coverages to make my policy more affordable?’” says Robb Lanham, chief sales officer for HUB Private Client Insurance. “So suddenly, the industry is seeing an explosion of coverages being written in the non-admitted world.”

This flexibility in designing coverage may also be crucial for carriers in order to stay profitable and maintain their customers, Lanham said. Due to a confluence of factors like climate change, regulation, inflation and litigation, the very nature of insurance policies is becoming unsustainable, and they may eventually collapse on themselves, he said.

RETIRE AT 65? NO WAY, 7 IN 10 SAY

Age 65 has traditionally been the golden age, the age at which most Americans think they can retire. But a large percentage of pre-retirees believe retirement at 65 is an unattainable goal.

The majority of pre-retiree investors (69%) agree that the norm of retiring at 65 doesn’t apply to them, according to Nationwide’s ninth annual Advisor Authority survey, powered by the Nationwide Retirement Institute. The survey also found that two-thirds (67%) of pre-retirees expect to face more challenges in retirement than their parents and grandparents had to face.

This stress is shifting the perception of life as a retiree, especially for those closest to retirement age. Four in 10 pre-retirees (41%) said they would continue working in retirement to supplement their

income out of necessity, and more than a quarter (27%) plan to live frugally to fund their retirement goals. What’s more, pre-retirees say their plans to retire have changed over the past 12 months, with 22% expecting to retire later than planned.

ECONOMIST PREDICTS ‘MINIMAL RISK’ OF GLOBAL RECESSION

“At this point, it will take a lot to derail this economy,” Pierre-Olivier Gourinchas, economic counselor and director of the research department at the International Monetary Fund, told CNBC in a recent interview. Despite the ongoing rumblings of geopolitical uncertainty, the IMF nudged its global growth outlook slightly higher to 3.2% in 2024 and projects the same rate in 2025.

“When we do the risk assessment around that baseline, the chance that we would have something like a global recession is fairly minimal,” Gourinchas said.

He cited strong economic performance by the U.S. and several emerging market economies, along with inflation

QUOTABLE

My sense is still that the Fed has itchy fingers to start cutting rates, and I don’t fully get it.

— Former U.S. Treasury Secretary Lawrence Summers

falling faster than expected until recently despite weaker growth in Europe.

MILLENNIAL WEALTH GAP FUELS NEW CLASS WAR

Most millennials struggle with student debt, unaffordable housing and low savings. But an elite group of millennials are surpassing previous generations in their wealth and fueling a new class war in that age group. That’s the word from a University of Chicago study on life course trajectories and wealth accumulation in the U.S.

According to the study, the average millennial has 30% less wealth at the age of 35 than baby boomers did at the same age. Yet the top 10% of millennials have 20% more wealth than the top baby boomers did at the same age.

The study finds that millennials have faced repeated financial headwinds. Coming of age during the financial crisis, they have lower levels of homeownership, larger debts outweighing assets, lowwage and unstable jobs, and lower rates of dual-income family formation. At the same time, the authors say the top 10% of millennials have benefited from greater rewards for skilled jobs.

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The P wer of Persuasion

Lynne Franklin has a unique definition of persuasion. Learn her secrets to helping a client reach their own decision and say “yes.”

An interview with Paul Feldman, Publisher

Lynne Franklin’s experience as a social worker taught her everything she needed in order to survive in the business world. That started her on a path of answering the question: “How do you get others to do what you want?”

Franklin’s journey took her from positions such as a reporter for a weekly banking publication to jobs with public and investor relations agencies to starting her corporate communications and marketing practice — Lynne Franklin Wordsmith — in 1993.

A self-described “neuroscience nerd,” she studies how the brain works, how this affects the choices people make, and how to create communications that move their minds to action. A professional speaker and trainer on persuasive business communication strategies, Franklin works with entrepreneurs and business leaders.

Franklin is the author of Getting Others To Do What You Want. In this interview with Publisher Paul Feldman, she describes how we can do a better job of connecting with clients to get them to say “yes.”

Paul Feldman: I love the title of your book: Getting Others To Do What You Want. How do we get others to do what we want?

Lynne Franklin: Well, first, because I’m a neuroscience nerd, I study all the boring brain research. And then I try to figure out what this means in the real world to help us do a better job of connecting. If I had to boil it down, I’d say I fast track leaders to be seen, heard and promoted.

All of this is about figuring out ways to better connect with other people, to make sure that your message lands in a way they can see it, hear it and feel it. And then to help them make a good decision about whether what you propose is what they ought to do. So it’s not just my opinion. It’s based on science.

Feldman: Where do we start?

Franklin: We start with knowing who other people are. It’s one thing to want to know more about yourself and how you are in the world, but it’s a little hard to sit across the table from somebody and figure out who they are.

I have my own four-quadrant system. The acronym for it is MIND. In this instance, “M” stands for movers. These are the people who want to get stuff done, and want to be “large and in charge” and in control of the situation. What they’re mostly afraid of is not being in charge and not being in control.

“I” stands for people who are igniters. They want to ignite, change and lead change, and have people follow them and be inspired by them. What they’re afraid of is that people will not follow them and will not see the contribution they make.

Then we have “N,” which is for nicers. These are people who want everybody to be involved and play well together. What they are afraid of is being excluded.

And finally, we have “D” for detailers. These are the people who cannot get enough information. Detail is where they live. What they’re afraid of is making mistakes. They figure the more details they get, the less likely they are to make a mistake.

You can sit across the table or Zoom or anywhere, watch how people are and figure out which of these are their primary styles.

Feldman: Once you’ve figured out who they are, what can you do with that knowledge?

Franklin: You decide how you will present the information you have to share with them in a way that is most comfortable for them. So, for example, if we’re talking about the movers, these people want just enough information to be able to make a decision. If we’re talking about the detailers, the absolute opposite is true. They want as much detail as you can give them. If we’re talking about the igniters, these are the people who want to get information in a way that shows how they can inspire others and get others to follow them. And if we’re talking about nicers, they want to see how everybody can work together to get to where we want to go as a group.

It’s about having this basic understanding of how people operate. The truth is, we all have all four of these characteristics. But we have a primary style. By observing what people are saying and doing, you can figure out which of these characteristics is their primary style. Then you have a

MIND Method ™

to Fast-Track Rapport, Reduce Judgments and Improve Understanding

clue of how best to share the message that you want to deliver to them.

Feldman: That makes sense. Let’s say you’re with somebody who is a mover. How do you connect with a mover?

Franklin: What you want to do is present enough information to show them how they can make a good decision. Don’t give them a whole lot of information. Just give them enough, because you want them to know that the decision is theirs.

One thing you can watch for is whether they show any indications through their body language — whether they’re showing any nervous tics, whether they’re not making eye contact with you anymore, or whether they are checking their phones or doing something else. At that point, you know you’ve gone on too long.

When you see signs like that, stop and ask them, “Do you have any other questions?” Or you can ask them, “What can we do to move this forward on your behalf?” Movers are the people who are used to being leaders.

Feldman: If you recognize that your client is an igniter, how do you work with them?

Franklin: If you’re dealing with an igniter, you want to show your appreciation of them. You indicate that you’ve heard what they have to say, that you’ve been listening closely. You appreciate their viewpoint. And as a result of understanding what their viewpoint is, this is what you recommend for them to get to where they want to go.

Once again, you look for those nervous signs that someone is not paying attention to you. If you observe any of those signs, you know it’s time to move on.

Feldman: What about nicers? How do you work with them?

Franklin: Nicers will sit there and smile at you all day long! These people are afraid of conflict. They are not going to ask you questions about things because they don’t want to be perceived as being pushy or not being nice. So you need to

Source: Lynne Franklin

show them how what you propose helps them meet their goals. And those goals are usually community based: What do they want for their family? What kind of legacy do they want to leave? Listen carefully to what they say they want to have in community, usually with their family. Then talk to them using “If I were you” statements. Because nicers often won’t ask questions. They are afraid of conflict. So you can say to them, “If I were you, I’d be curious about this,” and go in that direction to make sure you’re giving them enough information.

Feldman: That leaves us with detailers. How do you work with them?

Franklin: Once again, you cannot give them too much information. Be prepared to get lots of questions that drill down into the details.

You’ll also want to give them information that is printed, or you give them some kind of additional data they can access after the conversation is over. Because detailers are afraid of making a mistake, they use information to soothe themselves. They think, “The more information I have, the less likely I am to make a mistake.” Detailers will take a long time to make a decision versus a mover who will hear just enough information and then go ahead.

Feldman: One of the things you talk about is the Persuasion Cycle. Talk us through that.

Franklin: The Persuasion Cycle comes to us from Dr. Mark Goulston, who, among other things, does hostage negotiation and consulting for federal agencies. As Goulston was doing this kind of work, he started paying attention to the point when you know that people stop resisting you if they’re standing on a ledge and you’re talking them off the ledge. What’s that point? What’s the process of getting to that point? You need to take them from the point where they’re not going to jump off the ledge to where they step off safely. He mapped out this cycle for us. I’ll look at the 10,000-foot view, and then I’ll talk a little bit more in detail about the different steps that are particularly applicable to us as people who are giving customers insurance and financial advice.

Listening to people, we kind of already know early on what it is that they need. We’re ready to jump into that. But we have not yet earned the right to do that because if we do that now, we will push people back into resisting.

First, everyone starts at the top in resisting and our goal is to move people from resisting to listening to considering, from considering to willing to do, and then from willing to do to doing.

Neuroscience is why we start in resistance. Back in the days when we were in the jungle, our brains only had one job, which was to keep us alive. So, our brains were constantly standing on the horizon looking for physical and verbal risks and threats and trying to get us out of the way.

So, whenever you present a new idea to a current client or a prospect, part of their brain is asking: “Is this going to kill me? Am I going to get in trouble for doing this?” People automatically resist you. It’s like there’s an actuary living in their brain, and everything goes to the actuary first. How do we move people out of that? Here are the ways this applies to all four personality styles I described earlier.

The first thing you do is listen. There are two main types of listening. The first is listening to respond, which is hearing what is being said, processing that information, and then, while they’re speaking, you figure out what it is you’re going to say next. This is where we live most of the time, which serves us just fine. But when you’re trying to move somebody from resisting to listening, all you’ll get when you listen to respond is data. You’re not going to build a connection.

To move people along, we need to

create a connection. So, you opt for the second type of listening, which is called “listening for understanding and empathy.” This means we’re not only paying attention to what it is that they’re saying, we’re also paying attention to their body language. Do they look nervous or frightened? We’re also paying attention to their tone of voice.

We’re paying attention to their emotions, so that we’re getting a picture of the whole person — not just what they’re saying. Concentrating on them takes energy. But it’s good energy because you’re picking up the entire picture of who this person is. Then, when it’s your time to speak, you can draw on so much more.

Most of us wander through our lives feeling chronically unseen and unheard, and when somebody gives us their entire attention and focus, we appreciate that. Then something else happens, and it’s called the rule of reciprocity. When we have given somebody all of our attention, sooner or later most people will notice this. They really do want to hear what you have to say at that point, because you’ve listened so well to them. That’s how we move people from resisting to listening. We listen to them first.

Feldman: How do you move people from listening to considering?

Franklin: We start by asking good questions and paraphrasing what we’ve heard. Here’s the biggest mistake people make — especially those of us who are skilled in our areas in insurance and financial advising.

Listening to people, we kind of already know early on what it is that they need. We’re ready to jump into that. But we have not yet earned the right to do that because if we do that now, we will push people back into resisting.

This is why during the “listening” to “considering” phases, asking questions — paraphrasing what has been heard to make sure that we’re understanding correctly — deeper listening is important.

It’s when we have this kind of information, we can then start proposing ideas because the prospective clients are feeling that we’ve built up enough goodwill with them and we’ve shown them we’re paying attention. Now we have something to suggest to them.

That moves them into the considering phase, which is when we can actually provide information to them. So don’t rush to create a solution. What you’re trying to do in this front part of the cycle is to create connection. You do that by listening, asking good questions and paraphrasing.

When they’re considering, you’re trying to answer their questions. Their questions get more specific about what it is that you are able to do with them or the solutions you’re proposing, because that moves them into willing to do.

And frankly, once they’re in the “willing to do” space, that’s a snap.

Agents and advisors know their offerings and the needs of this person they’re speaking with. That’s the easy part. So, it’s this whole front end of the cycle where we’re trying to get buy-in, moving people from “resisting” to “listening” to “considering” — that’s the toughest part.

You may end up thinking, after you’ve gone through this, that the person is in “willing to do.” And you get excited about this. OK, so now, we can actually make a difference for this person. But at that point you may end up with them saying, “Well, you know, I have to think about this,” or “I’m going to have to talk to my wife or my spouse about this.”

Here’s the thing about persuasion. Most of us think it’s a binary thing, that it’s a yes or no. It’s actually a process, which is what this whole Persuasion Cycle thing is about.

When people say what appears to be a “no,” that doesn’t mean “no,” really. It means they’re confused.

Feldman: How do you take that final step, so that they’re finally willing to commit?

Franklin: There’s usually something missing. We must be able to turn to them — and everybody will have their own language — and ask, “Is there anything I could have said or done that would have made it possible for you to say yes to this?” And then shut up. Because when we ask a person a direct question like that, most of the time people will be able to come back to us and say, well, you didn’t talk to me about this, or I don’t understand this. Then you can say, “My bad. Let me tell you a little bit more about that.”

There’s a sales coach by the name of

Brian Tracy who calls this The Doorknob Close. And he says, when you ask this kind of question, 50% of the time people you thought were going to say no to you will say yes to you, because what you’re dealing with is buyer’s remorse. People are suddenly afraid of something that they don’t know, and if you can walk them through that thing that they don’t know, they’re more willing to say yes to it.

You can see that when you’re moving somebody from “resisting” to “listening” to “considering” to “willing to do,” instead of requiring people to make a quantum leap to say yes or no, you’re moving them along in this process. That’s what makes this great. It’s bite-size pieces rather than quantum leaps.

Once you get somebody to “willing,” and you know your customers well, you can take them from saying “yes” to “glad to do it.”

Feldman: So, would you call that persuasion?

Franklin: Let me give you my definition of persuasion. And it’s not like anybody else’s. Persuasion is presenting your ideas in a way that people can see them, hear them and feel them — and then make a good decision about whether what you’re proposing is what they ought to do. And if it is, then to say “yes” faster. And if it’s not, then to say “no.”

But along the way, you have built such goodwill with them that should they ever need what you do, they’ll come back to you. Or if they run into somebody else who needs what you do, they’ll refer you.

So being persuasive is not about getting everybody to say yes to you, because everybody shouldn’t say yes to you. It is actually about helping people make good decisions. Which means you’re never a salesperson. You’re an advocate on behalf of your current or prospective customers.

It’s not the hard sell. I think most people confuse persuasion with being manipulative. No, it’s all about helping people make good decisions because you listen well to what they have to say, and you play it back to them, and you show them what you can do and help them get to where they want to go.

It’s not sales. It’s persuasion.

It gives them a chance to make a good decision.

With Foresters Financial™, you can have the confidence to o er more life insurance. Our consistent financial strength is our hallmark and vision for the future.

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Deshawn Peterson

is helping build a bridge for the next generation of financial advisors while he works to help investment advisors build their own practices.

By Susan Rupe

Deshawn Peterson was turning 30 when he fell in love — with the financial services business.

Peterson is vice president of advisor relations with PPB Capital Partners in Conshohocken, Pa. PPB works with wealth advisors to help them implement alternative investments into their clients’ portfolios.

Earlier in his life, Peterson had a taste of financial services. While he was a student at Western Michigan University, he worked in collection services at National Bank, now part of PNC Bank.

“But then I think I was just done with the business,” he said. “In retrospect, this was between 2007 and 2009. It was a crazy time with the economy.”

Peterson began working in the technology field after graduation and eventually moved to China, where he spent several years studying Mandarin and absorbing Chinese culture. But while he might have been done with finance, the financial world wasn’t done with him.

About a decade after leaving the bank, and while he was in China, Peterson was approached by an independent broker-dealer, who told him their company worked with high net worth expatriates and needed help growing their U.S. base. Was he interested?

“I was turning 30 and thinking a lot more about long-term decisions,” he said. “So I said yes. And I walked into the training the first day, and they started teaching me about financial planning, about things like compound interest. I was all in. I thought, ‘I wish I had learned this in high school.’ I’ve been in love with the business ever since.”

What Peterson said he loved most when he was a new advisor was having conversations with those who worked in the wealth business.

“I have friends who were at founding offices, venture capital firms, private

equity, and I just enjoyed their conversations,” he said. “I love how nuanced it was, so precise and complicated. It was so much to learn because no one person was smarter than the other.”

Curiosity led to a career

Peterson described himself as “curious by nature,” which helped lead him to PPB.

“When I put all I had learned in the back of my mind, I think it was an equilibrium moment when I started at PPB because I was looking for a change,” he said. “I was looking to learn, and I wanted to be in a smaller company where I can see the outcome of my efforts. I wasn’t familiar with this particular sector of financial services when I started here, but now I feel like I’m on a fast track, growing and learning. So even though I’ve been here for two years, I feel like I’m aging as far as my acumen, learning and speaking to the smartest people in the world. Every day is a new day.”

At PPB, Peterson works with registered investment advisors to scale their private markets programs.

internally. How can we take this business decision and build a strong partnership?

“There are three main pillars to this. The first one is using differentiated fund managers. The second one is devising custom solutions — taking the advisor’s best ideas and helping them execute those ideas. The third is providing operational efficiencies. We really try to be a partner with advisors and help them go where they’re trying to go.”

Getting the word out on FPA NexGen

Peterson isn’t working only with advisory firms who want to grow. He is also active in the Financial Planning Association and is public relations coordinator for the FPA NexGen community. FPA NexGen is made up of new and aspiring financial planners who come from a variety of life experiences and backgrounds. The community is a place for those who are early in their career to connect with their peers, share insights and learn how to be a better financial planner.

I wasn’t familiar with this particular sector of financial services when I started here, but now I feel like I’m on a fast track, growing and learning. Every day is a new day.

“We’re trying to meet advisors where they are in their alternative investment journey, and we help them scale that to where their end goal is,” he said. “We’re not here to push a product on them. We’re trying to plug into their system and say, ‘How can we build some additional efficiencies? How can we streamline? How can we make a team of eight feel like a team of 15?’

“We’re not coming in saying this is the greatest strategy of the year or trying to pick stocks or assets for them. We’re really just saying, you want to allocate to alternative investments, it can be burdensome and create a lot of bottlenecks

He said his involvement with FPA came after he went on Google to find a professional association or similar group that would help him advance in his career. Peterson said he found several organizations after his online search, but FPA was the only one that responded to him after he requested more information.

“After my first call with FPA, I felt as though I had found my tribe,” he said. “This is our hub to trade problems and trade questions and all be in a similar space. Every day, I ask myself how we can get the word out there to people who are new in the business that there is a space for them here.”

the Fıeld A Visit With Agents of Change

NexGen has three main initiatives over the next year or so, he said. The first is strengthening its social media presence, particularly on LinkedIn. The second is streamlining the local leadership and increasing communication among the various chapters. The third is to encourage NexGen members to contribute original content to industry media outlets, to share members’ expertise and perspective.

into my humanity and helped me connect with people,” he said. In addition to studying Mandarin, Peterson spent his time in China tapping into his entrepreneurial spirit, learning about importing and exporting.

“My time in China was a huge culture shock, but I wanted to do something. I didn’t know anyone there. I just wanted to go by myself and see if I could do it. And it turned into a phenomenal experience.”

We don’t have enough people coming into the business. So we try to create that bridge for opportunities for mentorship, networking and growth, professionally and personally.

One of the hurdles he sees FPA NexGen facing is “bridging that gap between the up-and-coming in the business and those who are already established.”

“There are countless executives out there who are retiring or leaving the business. We don’t have enough people coming into the business. So we try to create that bridge for opportunities for mentorship, networking and growth, professionally and personally.”

A trip to China is a life-changer

After Peterson had spent a couple of years working in technology after graduating from college, he had a big regret — he had never traveled or studied abroad. He decided to go to China but kept that decision to himself for a year. When he was ready, he bought a ticket, quit his job and went to Shanghai.

“I figured if it didn’t work out, I could always return home and go to grad school,” he said.

Peterson spent seven years in China. He spent part of that time studying at Donghua University, where he learned Mandarin Chinese. Eventually, he went to work for the IBD that launched his financial services career.

“Studying Mandarin helped me tap

Outside of work, Peterson enjoys physical fitness activities. He has done CrossFit and trail running. He currently participates in Spartan racing, which involves racing through and around 20 obstacles on an off-road trail course featuring water and mud. Spartan racers climb walls and ropes, crawl under barbed wires, maneuver on monkey bars and throw a spear as part of the challenge.

His next big goal is to compete in an Ironman triathlon.

“I like challenges, and I like trying difficult things,” he said.

An annuity is intended to be a longterm, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to nonqualified distributions. Please consult a tax advisor for specific information. There are charges and expenses associated with annuities, such as surrender charges (deferred sales charges) for early withdrawals. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its subsidiaries, have a financial interest in the sale of their products.

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

An annuity term, Earnings income withdrawn subject If the other deferral value. a Roth from penalties distributions. advisor There associated surrender charges) These and educational are not applicable circumstances. considered does that anyone from) Securian subsidiaries, in the Insurance Minnesota in all New Securian a New Minnesota New insurance Both in St. and features Each the financial policies

Securian name Inc., and Life Insurance

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 X @INNsusan.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are subsidiaries of Securian Financial Group, Inc.

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Annuities selling strong, but for how long?

Economic conditions remain ripe for an ongoing annuity sales boom.

But the Department of Labor’s new fiduciary rule expansion could be a major disruption.

By John Hilton

On the surface, everything is A-OK in the life of an annuity producer. Huge numbers of Americans are at or nearing retirement age, annuities are selling like umbrellas at the beach and retirement plan rules are evolving to boost those sales even higher.

But dark clouds are not just lurking — they sit directly overhead and threaten to drop buckets of rain on producers.

The dark clouds, of course, are from the Department of Labor’s Retirement Security Rule. It is the department’s fourth swing at sweeping nearly all annuity producers into a fiduciary standard.

As of press time, the new fiduciary standard is set to take effect on Sept. 23, when annuity producers will need to adhere to the Impartial Conduct Standards. They include the agent gives advice that is in the best interest of the participant, receives no more than reasonable compensation and makes no materially misleading statements.

Compliance with these initial standards is no small ask of independent producers, said Fred Reish, partner at Faegre Drinker and a longtime expert on the Employee Retirement Income Security Act law.

the Fifth Circuit in its 2018 decision vacat ing a previous fiduciary standard.

Yet, “the underlying rule is still proba bly violative” of the Fifth Circuit ruling, a Midwestern insurance executive said.

Sales unaffected by rules changes

While the rules are changing and stress is high, Americans continue to buy annuities in numbers never seen before. And it’s not merely producers frantically pushing out sales before the rules change; Americans genuinely love annuities.

First-quarter 2024 sales of $113.5 billion were 21% higher than in Q1 2023 and the highest first-quarter results since LIMRA started tracking sales in the 1980s, the or ganization said.

“Favorable economic conditions and rising investor interest in securing guar anteed retirement income have resulted in double-digit sales growth in every product line,” said Bryan Hodgens, head of LIMRA research.

Fixed-rate deferred annuities led the way, with $48 billion in first-quarter sales, 16% higher than in Q1 2023. FRD annuities remain the primary driver of annuity sales growth, representing more than 42% of the total annuity market in the first quarter.

“ Satisfaction of the duty of care the duty of loyalty for rollover recom mendations will be the most problematic [compliance requirements].”

— Fred Reish, partner at Faegre Drinker

“Insurance companies and intermediaries will need to help independent producers with the initial compliance requirements” of the ICS and fiduciary acknowledgment, Reish said.

“Of those, satisfaction of the duty of care and the duty of loyalty for rollover recommendations will be the most problematic,” Reish explained. “That is a big change and will require education and information support for independent producers.”

For sure, legal battles are coming. But analysts say the insurance distribution world cannot rely on the courts to stop the fiduciary rule yet again. In its 476-page rule, the DOL takes meticulous care to address every fault found by the U.S. Court of Appeals for

“Eighty-five percent of FRD sales are short-duration products [less than five years]. Higher interest rates combined with insurers’ ability to offer, on average, better crediting rates have propelled prod uct sales to another level,” Hodgens noted.

But sales were strong across the board, with fixed-indexed annuities ($29.3 bil lion) and income annuities ($4 billion) setting records. Registered indexed-linked annuity sales rose a whopping 40%, to $14.5 billion.

The Federal Reserve is backing away from interest rate cuts, but Chairman Jerome Powell has not taken the op tion off the table. But annuity sales are simply too good to stop anytime soon, LIMRA forecasts.

“Favorable economic conditions and rising investor interest in securing guaranteed retirement income have resulted in double-digit sales growth in every product line.”

— Bryan Hodgens, head of LIMRA research

“While there are potential regulatory and economic headwinds in the second half of the year, LIMRA expects annuity sales to continue to perform well,” Hodgens said.

New York rules for all

To get a sense of how unpopular the DOL fiduciary standard is with the insurance industry, consider New York state and its Regulation 187. In 2019, New York amended the rule to add significant liability and training requirements and a stiff best-interest mandate for all insurance product sales.

Regulation 187 is very comparable to the DOL fiduciary rule. In response, many insurers refuse to do business in New York.

But it will be impossible to ignore a nationwide fiduciary standard. Industry opponents say it will result in Americans who most need advice and annuities unable to get help.

That market tightening might already be happening. LPL Financial is reportedly denying some annuity sales if the client already has at least 50% of their portfolio in one or more annuities.

“Similar to other wealth management firms, LPL maintains guidelines with regard to annuity concentration,” LPL said in a statement to InsuranceNewsNet. “However, it is not a one-size-fits-all rule, and we collaborate with agents and advisors in scenarios where a client may have 50% or more of their portfolio in annuities.”

From the DOL perspective, the rule modernizes the long-outdated 1975 ERISA regulatory regime. Lisa Gomez, assistant secretary, Employee Benefits Security Administration, called the fivepart test for establishing fiduciary duty ineffective for the retirement plans of today. When the test was created, employee 401(k) plans did not exist, Gomez said.

“If you hold yourself out as giving individualized advice that the investor can rely upon to advance their best interest, then that’s what you must do,” she said. “That means your advice should adhere to a professional standard of care.”

The DOL noted the number of indexes available in the market has grown from a dozen to at least 150 since 2005.

“Many of these indexes are hybrids, including a mix of one or more indexes as well as a cash or bond component,” the

rule states. “More than 60% of premium allocations for new fixed indexed annuity sales in mid-2022 involved hybrid designs.”

Compensation in the crosshairs

The most relevant rule changes are to compensation and the exemptions producers would use to continue receiving commissions. Two exemptions allow annuity sellers to collect a commission: Prohibited Transaction Exemption 84-24, which dates to 1977, and PTE 2020-02, an alternative created by the Trump administration.

Amended several times over the years, PTE 84-24 allows producers to receive commissions when retirement plans and IRAs purchase insurance and annuity contracts. Under PTE 2020-02, if an “investment professional” gives fiduciary advice to a retirement investor, the “financial institution” is also considered a fiduciary.

ERISA’s fiduciary responsibility rules mandate that ERISA plans pay no more than “reasonable compensation” to service providers, which include advisors. The definition of reasonable compensation isn’t fully known yet.

The DOL eased up in some areas with the final rule. For example, some differential compensation will be permitted, and new language allows reps and agents to make sales pitches and conduct investor education without triggering fiduciary status.

“DOL has recognized that a variety of sales activity does not give rise to fiduciary status,” Groom Law Group wrote in its analysis. “This opens up a range of possibilities for interactions amongst sophisticated parties to remain non-fiduciary in nature in a way that may not have been possible under the Proposal.”

The final amendment allows both cash and noncash compensation from any and all sources, subject to compliance with the exemption’s Impartial Conduct Standards and other applicable conditions, Groom added.

Perhaps most importantly, the rule does not create a private right of action — that is, lawsuit exposure — a difference from the 2016 fiduciary rule.

Still, industry opponents are not impressed with the concessions the DOL offered in its final rule.

“The DOL is conducting an ideological

“More than 4.1 million Americans will be turning 65 each year through 2027. Most of them will not have access to traditional pensions and will need options for lifetime income like annuities provide.”

— Susan Neely, president and CEO of the American Council of Life Insurers

campaign to ban commissions, as evidenced by their inflammatory and offensive framing of this rule when they initially proposed it, the un-American and absolute disgrace of the lightning pace at which they have pushed this rule through, and the lack of questions or even spirited debate on the substantive issues within this rule,” said Marc Cadin, CEO of Finseca.

In its economic analysis, the DOL estimated that 1,577 career insurance agents, 86,410 independent agents and brokers, and 16,398 registered investment advisors will be affected by the new rule. The industrywide revenue hit could be about $325 million to $530 million per year over the next 10 years, the department concluded.

The DOL estimated that 442 life insurance companies underwrite annuities and will be affected by the amendments. The DOL based its figures on separate impact analyses provided by Morningstar and an academic paper prepared by a team of researchers led by Vivek Bhattacharya.

Retirement investors rolling over retirement funds into fixed indexed annuities would save over $32.5 billion in the first 10 years and over $32.5 billion in the subsequent 10 years, in undiscounted and nominal dollars “due to decreased pricing spreads,” Morningstar said in a comment letter.

IMOs in the clear

The big winners, if anyone can be labeled with such a term, in the new DOL proposal are independent marketing organizations. IMOs (and the related field marketing organizations) escaped significant regulatory burdens in the rule. In fact, the DOL suggests marketing firms could be part of the solution to troublesome conflicts of interest.

“These entities do not have supervisory obligations over independent insurance producers under State or Federal law that are comparable to those of the other entities, such as insurance companies, banks, and broker-dealers, nor do they have a history of exercising such supervision in practice,” the rule states of IMOs, FMOs and BGAs. “They are generally described as wholesaling and marketing and support organizations that are not tasked with ensuring compliance with regulatory standards.”

The decision to leave marketing organizations alone is significant and a major change from the DOL’s 2016 fiduciary philosophy. With that rule, marketing organizations were deemed a “financial institution” with substantial responsibilities and liabilities for annuities sold by their associated producers.

That rule, along with subsequent regulation efforts, is cited for driving merger and acquisition activity among marketing organizations. Smaller IMOs are viewed as not having the muscle to provide the watertight record-keeping, up-to-the-minute compliance, education, professional training and legal services for producers with whom they do business.

A major challenge

The DOL Retirement Savings Rule might take effect, but the end result likely won’t be known for a year or two. Many analysts say the department is playing the long game. The 2016 rule spurred much change in how the industry sold annuities.

Many of those changes remained even after the Fifth Circuit tossed out the rule two years later. Meanwhile, industry lobbyists continue to press for positive legislation for annuity sellers — specifically, a third version of the SECURE Act.

Many of the provisions of the SECURE Act of 2019 and its successor, SECURE 2.0, passed in 2023, are taking effect on staggered timelines and are removing the barriers to annuity sales in retirement plans.

That is the kind of legislation the annuity industry wants to see.

“More than 4.1 million Americans will be turning 65 each year through 2027,” said Susan Neely, president and CEO of the American Council of Life Insurers. “Most of them will not have access to traditional pensions and will need options for lifetime income like annuities provide. Now more than ever, public policy should expand and not limit people’s options for retirement.”

InsuranceNewsNet

Senior Editor John

Hilton 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 X @INNJohnH.

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

How annuities can help younger generations secure their future by GBU Life PAGE 28

Protect clients’ retirement savings by recommending an index that is designed to fit their needs by Oceanview PAGE 30

How annuities can help younger generations secure their future

As younger generations, particularly millennials and Gen Z, look toward their future, the retirement landscape presents challenges. Traditional pillars of retirement stability, such as Social Security and pensions, may be less reliable or available down the road. For members of these rising generations, a key aspect of retirement planning is diversification.

Nationwide Retirement Institute’s 2023 Social Security Survey showed that 45% of Gen Z and 39% of millennials don’t believe Social Security will be there when they retire.1 This lack of belief is not unfounded, as 2024 research shows 79% agree — America faces a retirement security crisis.2

While 401(k) plans are a primary vehicle for retirement savings, they focus on asset accumulation, as does most of the recommendations around preparing for retirement. This can leave individuals without clear guidance on converting those assets into a steady income stream. It is important to know when to convert to these funds to help create a smooth road into retirement.

“Where defined contribution plans like a 401(k) fall short is that there’s no prescription for what to do with those accumulated assets. And you don’t live on assets; you live on income,” said Lesley Mann, SVP/ CMO, GBU Life.

Despite being credited as the generation that saves the most, according to Vanguard,4 roughly 23% of Gen Z don’t expect to ever be able to retire, per a recent McKinsey & Company study.5 This dichotomy highlights the complex relationship between saving habits and retirement expectations among younger generations.

Millennials and Gen Z are often characterized as “job hoppers,” driven by a quest for personal and professional growth. While this may lead to increased income and satisfaction, it can result in fragmented retirement savings and difficulty maintaining consistent contributions to traditional retirement plans. The lack of loyalty-inspiring benefits, such as pensions, reduces the incentive for younger generations to stay with a single employer for an extended period.

The rise of the gig economy and the increasing prevalence of nontraditional employment further complicate retirement planning for younger generations. Limited access to employer-sponsored retirement benefits makes it chal-

“Where defined contribution plans like a 401(k) fall short is that there’s no prescription for what to do with those accumulated assets. And you don’t live on assets; you live on income.”

— Lesley Mann, SVP/CMO, GBU Life

The gradual disappearance of traditional pensions has further exacerbated the problem, leaving younger generations with fewer options to secure their financial well-being in retirement.

Younger generations face new challenges

Younger generations have unique characteristics and face new challenges that shape their approach to retirement planning. For instance, Gen Z members are on track to become the most educated in history, fueled by a desire to acquire new skills and secure a better future.3 However, they must navigate an overwhelming amount of information from various sources, not all of which is reliable or accurate.

The financial pressure of paying down student loan debt while trying to save for retirement, a rising cost of living, and uncertainties younger generations have encountered growing up — such as a recession, a pandemic, climate change, and social unrest — can lead to decisions that often times are better made with professional guidance.

Members of Gen Z have developed a pragmatic and cautious approach to finances, influenced by witnessing the financial challenges their Gen X parents faced during periods of economic instability. This has led to heightened financial stress and concerns about the future economy, with a significant portion of Gen Z reporting constant worry about their financial well-being. Consequently, younger generations prioritize stability and security.

lenging to plan for long-term financial security if traditional retirement plans are perceived as the only option. However, those in the annuity industry should recognize that alternative solutions exist to help millennials and Gen Z secure their financial future.

Personal savings may not be enough

Personal savings play a crucial role in preparing for retirement, and the U.S. Bureau of Economic Analysis (BEA) tracks personal savings rates to gauge the population’s savings awareness. While these rates can vary, they indicate a general trend toward increased savings awareness, but simply saving money in a bank account (or under a mattress) is not sufficient to ensure a comfortable retirement.

Larry Fink, CEO of BlackRock, recently highlighted the disparity between the effort spent on increasing life expectancy and the effort dedicated to helping people afford those extra years. He stated, “As a society, we focus a tremendous amount of energy helping people live longer lives, but not even a fraction of that effort is spent helping people afford those extra years.”6 With the potential for extended life spans due to medical breakthroughs, the need for robust retirement solutions becomes even more pressing.

The critical question that most Americans struggle to answer is, “How much retirement income will I have?”

While employer-sponsored 401(k), TSP, 403(b), or 457 plans are excellent vehicles for saving, they fall short when it comes to generating reliable income you can’t outlive.

Position a potential solution to millennials and Gen Z

In light of these challenges, individuals must take personal responsibility for their retirement security. Relying solely on employer-sponsored plans or government programs may not provide the necessary level of financial stability in retirement. Exploring personal, private, and tax-advantaged options can help individuals create a more secure and comfortable future.

Annuities serve as a compelling solution, offering a systematic approach to wealth-building for retirement, with the added benefit of guaranteed income for life — similar to the nearly extinct defined benefit plans. By incorporating annuities into their retirement planning, younger generations can create a more comprehensive and resilient strategy for financial security.

Millennials and Gen Z want to plan ahead and have some measure of security in their retirement, which is why a flexible premium fixed indexed annuity can be a good fit for them. The younger generations are often conservative with their money and may not trust big banks and institutions. A fixed indexed annuity, where they cannot lose money, can provide them with the security and peace of mind they’re looking for.

Annuities can be marketed to younger generations who worry about running out of money in the future. Studies have shown that people with annuities tend to be happier in retirement. Research indicates annuity owners are more likely to be satisfied with and confident about their retirement outlook compared to non-owners. In fact, 96% of annuity owners are confident they’ll be able to retire at their planned retirement age, while only 68% of non-owners share this confidence.7

Targeting younger demographics to grow your business

Financial professionals may overlook younger generations as annuity prospects, focusing on “bigger fish” with larger amounts to invest. However, millennials and younger cohorts make up over 50% of the population,8 with millennials expected to represent 75% of the workforce by 20259 and Gen Z poised to replace boomers. They are also in a position to gain more economic power with the Great Wealth Transfer and as they progress in their careers. So, ignoring this demographic would be a missed opportunity for financial professionals.

While younger individuals may not have large sums to invest initially, annuities allow them to start small and keep contributing every year, with agents earning commissions on each contribution. By starting to work with the millennial and Gen Z generations now, financial professionals can establish long-term relationships and grow their business as these individuals’ wealth accumulates.

GBU and its agents do not provide tax, legal or investment advice. Please consult with a legal or tax professional prior to the purchase of any contract. GBU Life is the marketing name for GBU Financial Life (GBU), Pittsburgh, PA Life insurance underwritten and annuities are offered by GBU.

When positioning annuities to younger generations, it’s essential to focus on the benefits that resonate with their unique needs and concerns. Emphasizing features like market-linked crediting, minimized downside risk, and the ability to adjust contributions as life circumstances change can make annuities more appealing to younger investors with dynamic lifestyles and evolving financial priorities.

To effectively reach younger generations, financial professionals must also meet them where they are and speak their language. Leveraging digital platforms, social media, and educational content can spark interest in obtaining valuable insights into the benefits of annuities. Collaborating with trusted influencers and thought leaders who have a strong following among younger generations can also help build credibility and trust.

Securing financial futures of next-gen clients

As the next generations navigate the complexities of retirement planning, annuities can be a powerful tool to help achieve financial security. By understanding the unique challenges faced by millennials and Gen Z, as well as characteristics that could make them ideal candidates for an annuity, you can help these generations take control of their retirement destiny.

It’s imperative we present solutions like annuities — with their growth potential, protection features, and customization options — as a compelling path forward. Annuities can provide younger generations with the stability and security they seek, while also offering flexibility to adapt to their evolving needs and circumstances.

By working together to promote financial literacy, innovation, and inclusivity, we can create a more supportive and empowering environment for younger generations as they navigate the path to long-term financial security.

GBU’s flexible premium fixed indexed annuity offers a range of features that appeal to younger generations, including growth potential, multiple crediting options, “boosted rates,” and generous liquidity features. These align with the desire for flexibility, security, and growth many millennials and Gen Z look for in financial solutions.

To learn more about the FutureFlex FIA and how it can help your clients, including younger generations, achieve their retirement goals, visit gbu.org/ff-fia

1. https://nationwidefinancial.com/media/pdf/NFM-23094AO.pdf

2. https://www.nirsonline.org/reports/retirementinsecurity2024/

3. https://www.pearsonaccelerated.com/blog/gen-z-more-likely-to-go-to-college/

4. https://corporate.vanguard.com/content/dam/corp/research/pdf/generational_changes_in_401(k)_behaviors.pdf

5. https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/future-of-america/ how-does-gen-z-see-its-place-in-the-working-world-with-trepidation

6. https://www.blackrock.com/corporate/investor-relations/larry-fink-annual-chairmans-letter

7. https://www.investmentnews.com/life-insurance-and-annuities/opinion/understanding-the-behavioralbenefits-of-annuities-247656

8. https://www.brookings.edu/articles/now-more-than-half-of-americans-are-millennials-or-younger/

9. https://teamstage.io/millennials-in-the-workplace-statistics/

Protect clients’ retirement savings by recommending an index that is designed to fit their needs

The choice of index on a fixed indexed annuity can significantly impact clients’ ability to navigate market volatility and economic uncertainty. It makes a difference in whether a client is able to safeguard retirement savings while achieving growth over the long term.

For financial professionals looking to provide clients with a balanced approach to retirement planning, aligning with a carrier that offers easy-to-understand indices that cater to different client needs and market conditions can be helpful.

One such carrier, Oceanview Life and Annuity Company, selects indices based on a proven track record, transparent methodologies and strong governance. Their approach helps provide clients with credible, reliable options to grow and protect their retirement savings.

A combination of growth potential and risk management

The S&P 500 Daily Risk Control Index with 5% and 10% volatility target options, available on Oceanview’s Harbourview FIA, stands out for its dynamic allocation strategy, which provides a smoother return profile over time and offers clients the opportunity to participate in the market’s growth while reducing the impact of downturns on their retirement savings.

timing the market. This gives them peace of mind knowing their retirement savings are protected from market turbulence while still having the opportunity to grow when conditions improve.

Helping clients achieve a more secure retirement

The S&P 500 Daily Risk Control Index can be an excellent choice for clients who want to participate in the growth of the S&P 500 but are also concerned about market volatility and potential losses. This might include clients nearing retirement, those with a moderate risk tolerance, or anyone seeking balance between growth and protection in their retirement savings.

The S&P 500 Daily Risk Control Index helps clients achieve their goals by mitigating the impact of market volatility to help them stay on track toward their long-term objectives without being derailed by short-term market fluctuations.

While the S&P 500 Daily Risk Control Index makes for a compelling solution, the additional options available on the Harbourview FIA, such as the Nasdaq-100 and the Russell 2000, give clients the ability to diversify within the product as well, which can provide an added layer of protection against market volatility.

“The FIA market is a relationship market, it’s a ‘trustme proposition’ from carrier to agent to client, so there’s a lot to be said about maintaining transparency and trust from carrier to agent, so they can have the same relationship with their clients. That’s what we’ve focused on when choosing an index.”

— Ben Faught, Oceanview chief actuary

However, what truly sets the index apart is its extensive live performance history. With over a decade of historical data available, the S&P 500 Daily Risk Control Index provides a level of transparency that is rare among FIA index options.

The wealth of information available on the index allows financial professionals to have more meaningful conversations with their clients about how it might perform in various market environments. Having access to such comprehensive data is invaluable in helping clients make informed decisions about their retirement savings.

Real-world protection during market turbulence

The S&P 500 Daily Risk Control Index is designed to outperform many similar indices in volatile market environments. During periods of high volatility, such as February to March of 2020, the index allocates more to cash, providing a level of protection against market downturns. In less volatile markets, the index can maintain a higher allocation to the S&P 500, allowing for greater participation in the market’s growth potential.

Clients benefit from this built-in risk control feature without having to make active investment decisions or worry about

Alignment with philosophy and commitment

Offering a volatility-controlled index is important to Oceanview because it aligns with their commitment to providing secure, client-centric retirement solutions. Many clients prioritize stability and protection in their retirement savings, and this index helps address those concerns while still offering growth potential.

With an “A” (Excellent) rating from A.M. Best*, Oceanview’s commitment to financial professionals goes beyond products and indices to offer financial strength and stability that financial professionals and their clients can count on.

Differentiating in a competitive market

In today’s competitive annuity market, financial professionals need differentiators that create meaningful value for clients. Taking the time to understand an index’s features and benefits can assist in choosing one that best fits clients’ needs and helps them navigate the challenges of today to achieve a more secure retirement tomorrow.

To explore the S&P 500 Daily Risk Control Index and crediting strategies on Oceanview’s Harbourview FIA, visit https://bit.ly/3Juyve6

Life

insurance needs gap grows in 2024

U.S. life insurance ownership has remained relatively steady since 2021, with about half of adults reporting having coverage. The 2024 Insurance Barometer Study, now in its 14th year, finds a record number of American adults (42%) — representing 102 million adults — saying they need (or need more) life insurance. Importantly, 37% of consumers say they intend to purchase coverage within the next 12 months.

The study, conducted jointly by LIMRA and Life Happens, reveals middle-income Americans (those with a household income of $50,000 – $149,999) represent the largest market opportunity for the industry. Four in 10 middle-income Americans, or 50 million adults, acknowledge they live with a life insurance coverage gap. This group also expressed a greater intent to buy life insurance (54%) than the general population.

In 2024, women were less likely than men (46% versus 57%) to report having life insurance. This 11-point difference is the largest it has ever been over the 14 years of the study. This is not due to lack of awareness about their need for life insurance. Fortyfive percent, or 54 million women, say they live with a coverage gap, and more than a third (36%) — and nearly half of younger women — say they plan to purchase life insurance in 2024.

LOBBYISTS SAY STATE BANS ON GENETIC INFORMATION UNNECESSARY

Fallout from a 2020 Florida law banning life insurers from using genetic information is a classic good-news, bad-news situation for the industry.

The good: No additional states adopted similar laws in the years since. The bad news is that Florida passed a bad bill that mischaracterizes how life insurers use genetic information, said Curt Leonard, regional vice president, state relations, for the American Council of Life Insurers, during a recent LIMRA conference.

Roughly half of the states have some form of genetic information privacy bill under consideration, he added. The Florida law bars life insurers from requiring or asking for genetic information or using genetic test results in any manner. A person can volunteer DNA information from a genetic test — such as BRCA or

another mutation — to insurers, but they are not required to do so.

Health insurers have long been banned from using genetic information under the Genetic Information Nondiscrimination Act, signed into law on May 21, 2008.

GLOBE LIFE ACCUSED OF RAMPANT INSURANCE FRAUD

Globe Life is reeling after a report accused brokers at subsidiary American Income Life of widespread insurance fraud, including writing policies for dead and fictitious people, and an alleged kickback scheme that netted millions for senior executives.

Shares of Globe Life dropped more than 50% following the report from Fuzzy Panda Research, which took a short position on the company. Globe Life denied the allegations, and the stock recovered some of its losses.

Fuzzy Panda alleged that third-party policy sellers known to have committed

Pacific Life launched

We’ve had quite a roller coaster ride in the last few years since the pandemic in terms of sales, that’s for sure.

insurance fraud contributed over 60% of the new business at Globe Life’s American Income Life unit.

The report claimed that Globe Life and AIL executives were involved in a bribery and kickback scheme that a lawsuit estimates netted them more than $65 million. Fuzzy Panda said it has spoken with a former executive who sent more than 200 emails detailing fraud to senior executives. The research firm claims to “have documents to prove it.”

MASSMUTUAL PARTNERS WITH INSURIFY TO OFFER CLIENTS

P/C

MassMutual financial professionals can now offer their clients and prospects property/casualty insurance, thanks to a partnership between MassMutual and Insurify. Insurify is an insurance comparison platform that provides real-time quotes from more than 100 P/C carriers.

With this offering, financial professionals affiliated with MassMutual can offer clients seamless, online insurance comparison from more than 100 P/C insurers in one place.

The MassMutual/Insurify partnership also has added commercial P/C insurance for business clients.

— Karen Terry, head of LIMRA’s individual products research team

Would you rather purchase items retail or wholesale?

An analysis of the benefits of paying life insurance premiums through your qualified plan.

By Ernest Guerriero

You’re a business owner, and you’re considering purchasing life insurance. How do you wish to pay the premium? You generally have three options:

1. Write a personal check.

2. Have your business pay the premium.

3. Have your qualified plan write the check.

Of these options, only option 3 allows a tax deduction for the insurance premium through contributions to the plan When you purchase business or personal property, do you want to purchase it retail or wholesale?

Now the question is, “How do you wish to pay the premium?” Using after-tax or tax-deductible dollars? Let’s look at the math. You own a closely held business, you’re 51 years old, in a 40% tax bracket, looking to retire in 10 years and considering purchasing $484,711 of permanent life insurance. (See chart below.)

“How do you wish to pay the premium?” Using after-tax or tax-deductible dollars? Let’s look at the math.

The premium for death benefit is $15,000; in a 40% tax bracket, you would need to earn $25,000 to pay the premium. Considering the premium is in a qualified plan, contributions to the plan, within limits, are tax deductible; therefore, the after-tax cost of the premium is $9,000.

A portion of the premium that is not tax deductible represents the pure death

In Plan versus Out of Plan After-Tax Analysis

benefit, or the current economic benefit stated as the one-year term rate for the amount at risk (face amount minus cash value times the stated year’s rate). For example, the first-year economic benefit cost is $1,220; taxed at 40%, this individual would pay $488 for $484,711 of death benefit.

Fast-forward 10 years. This policy has the potential for dividends; however, we will review only the guaranteed values in this article. The guaranteed value in 10 years is $105,300. A qualified plan has several exit strategies for life insurance that are beyond the scope of this article; I will focus on only one strategy, which is taking a distribution of the policy. I will also assume the fair market value of the policy is the cash value.

Considering the tax savings, the economic benefit cost, the cash value and tax upon distribution, over the course of 10 years, you would be better off by $110,309 having your qualified plan pay the premiums with tax-deductible dollars. Factoring in the tax savings and taking a distribution of the policy from the plan, you would net $115,312, whereas

Tax

Net

if you paid for the life insurance with after-tax dollars, you would net $5,003.

But what if you die while the life insurance is in the plan? After all, you needed the death benefit to begin with, you were looking for an alternative to pay the premium and using tax-deductible dollars made sense in your situation.

For our example, death occurs in year 10. The impact on your beneficiary would be $379,708 ($484,711 minus the cash value of $105,003), which would pass income-tax free to your beneficiary. The $105,003 of cash value plus your other investments in the plan would be a taxable distribution, which may be transferred to an individ-

$60,000 $0

ual retirement account to further delay taxes and continue tax-deferred growth.

Let’s look at the math from another perspective, the actual premium inside the plan versus the premium being paid outside the plan. (See chart above.)

For $484,711 of permanent death benefit, the total premium cost over the 10-year period for this 51-year-old is $34,688 ($3,469 per year) for a permanent policy. This represents the annual cost of the premium plus the tax cost (economic benefit), minus the tax savings and the net after-tax distribution — as opposed to $144,987 ($14,499 per year) for the same policy.

For this article, we considered paying

the tax from the policy, which is one option. To maintain the full policy’s death benefit and cash value, the tax could have been paid with other discretionary dollars. I usually recommend setting up a sinking fund with the tax savings from the deduction to the plan and using that fund to offset the taxable distribution.

Incorporating life insurance in the investment lineup is a fiduciary consideration and therefore must be for the benefit of all participants and their beneficiaries.

Do the math. How do you want to pay for the insurance?

Ernest J. Guerriero, CLU, ChFC, CEBS, CPCU, CPC, CMS, AIF, RICP, CPFA, is the past national president of the Society of Financial Service Professionals and currently a board trustee for the National Association of Insurance and Financial Advisors. He is the director of business markets for Consolidated Planning. Contact him at ernest.guerriero@innfeedback.com.

ANNUITY WIRES

Annuity sales up 21% in first quarter

The first quarter was very, very good for annuity sellers. Not quite another record, but $113.5 billion in sales was 21% higher than in first-quarter 2023.

QUOTABLE

While there are potential regulatory and economic headwinds in the second half of the year, LIMRA expects annuity sales to continue to perform well.

Quarterly sales fell just shy of the record set in the fourth quarter of 2023, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey, representing 84% of the total U.S. annuity market. They are the highest first-quarter sales results since LIMRA started tracking sales in the 1980s, the organization said in a news release.

Total fixed-rate deferred annuity sales were $48 billion, 16% higher than first-quarter 2023 sales. FRD annuities remain the primary driver of annuity sales growth, representing more than 42% of the total annuity market in the first quarter.

Among other product lines, fixed indexed annuity sales had a record first quarter. FIA sales totaled $29.3 billion, up 27% from the prior year.

MORNINGSTAR STUDIES COMBINING ANNUITIES WITH TARGET-DATE FUNDS

Investment researcher Morningstar examined the trend of combining annuities with “target date” funds in a recent report. Those funds hold investments that grow more conservative as retirement gets closer.

For example, a target-date portfolio usually would start out investing entirely in stocks, then, over the decades, gradually move into bonds

In recent years, about a dozen fund groups have incorporated annuities with target-date funds in an attempt to provide investors with more income in retirement. Congress has passed a pair of SECURE Act bills designed to remove

barriers to annuities in retirement plans. These target-date funds “are looking to succeed where others have fallen short by including insurance against running out of money in the form of annuities,” the Morningstar researchers wrote.

Costs tend to run lower for funds that use straightforward income annuities compared to more complex variable annuities, the latter of which might add 0.5% to 1% in additional yearly fees, Morningstar noted.

NATIONWIDE ANNUITY HEAD TO RETIRE

After a nearly four-decade career at Nationwide, Eric Henderson, president of Nationwide’s annuity business, plans to retire at the end of the year.

Henderson has led Nationwide’s annuity team since 2007 and has served as president of Nationwide Annuity since 2019.

Under Henderson’s leadership, Nationwide expanded its digital and technology capabilities. Henderson capped his career by leading Nationwide’s annuity business to three consecutive record sales years.

“Throughout his career, Eric has displayed tremendous resiliency and courage to successfully manage risk and lead teams through challenging economic conditions and turbulent markets,” said John Carter, president and chief operating officer of Nationwide Financial.

— Bryan Hodgens, head of LIMRA research

Henderson

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Inherited annuities: Helping to stretch generational wealth

How to spread out tax liability while allowing an inheritance to continue growing.

By Susan Rupe

Baby boomers are set to pass $68 trillion in wealth to their children. A significant portion of that wealth may be transferred through annuities. As a result, some beneficiaries could face an unwelcome tax burden.

A new study shows that using structured annuities with income benefits on the portfolio’s efficient frontier substantially increases the likelihood that clients will have assets left at age 100.

How can advisors educate clients about this challenge and help them identify smarter planning solutions? At a recent webinar held by the National Association for Fixed Annuities, Dan Kozlowski, regional vice president at MassMutual Ascend, presented insights on ways inherited contracts may provide a way to spread out tax liability, while allowing an inheritance to continue growing.

A nonspousal beneficiary of an annuity or an individual retirement account

may have the option of transferring the death benefit into an inherited annuity contract. This approach can help spread out the beneficiary’s tax liability while allowing the inherited assets to keep growing.

“An important thing I always like to mention is that nonqualified or inherited nonqualified annuities were not part of the SECURE Act,” Kozlowski said. “A nonqualified stretch does not have to be liquidated in 10 years like a qualified or inherited IRA does.”

Inherited annuity contracts provide the following benefits to nonspousal beneficiaries:

• Continue the annuity’s growth. Assets may continue to grow, which can provide a significant boost to an inheritance over time.

• Spread income-tax impact over time. Money will not be taxed until a distribution is taken.

• Designate specific beneficiaries. One day, your client can pass their loved one’s generosity on to future generations.

The nonqualified stretch

A nonqualified stretch annuity is not subject to restrictions under the SECURE Act, Kozlowski said. It provides an opportunity for a nonspousal beneficiary to stretch the annuity, while limiting their tax liability.

“The ideal situation for this would be, let’s say my dad purchased an annuity 20 years ago, it grew to $1 million and he took out $100,000 before he died. I want to avoid adding $900,000 to my adjusted gross income this year. That is a tax-inefficient distribution.”

Instead, a nonqualified stretch would enable a nonspousal beneficiary to stretch the nonqualified annuity over their life expectancy instead of taking a lump-sum death benefit.

A new study shows that using structured annuities with income benefits on the portfolio’s efficient frontier substantially increases the likelihood that clients will have assets left at age 100.

A nonqualified stretch annuity provides an opportunity for a nonspousal beneficiary to stretch the annuity, while limiting their tax liability.

Leaving a legacy

Kozlowski provided an example of how a stretch concept can provide a legacy to future generations.

In this example, at age 65, John purchases a nonqualified annuity with a $100,000 purchase payment. For this example, a 4% interest rate on the annuity is assumed.

John died in year 11 of the annuity contract at the age of 75 and did not take any distributions from the annuity.

John’s widow, Jane, inherited the entire account value of $153,945. Jane died in year 21 of the contract at age 80, leaving a remaining account value of $227,877.

John and Jane’s daughter, Alison, inherits that remaining account value. She could choose to take it in a lump sum, but instead, she chooses to stretch the payments and begins receiving them based on her life expectancy.

Alison dies at age 75, having taken $306,126 in distributions. Her daughter, Mary, inherits the remaining account value of $190,899. Mary can either take

the remaining account value in a lump sum or receive distributions totalling $239,983 over the remaining 11 years in her expected lifetime.

Kozlowski compared this approach to that of using a spousal IRA as a stretch IRA. In the example he provided, John purchased an IRA for $100,000 at age 65. He began taking the required minimum distributions at age 72 and took $20,361 in total distributions before dying at age 75. John’s widow, Jane, inherited the entire account value of $132,371. She elected to treat the IRA as her own, taking RMDs when she reached age 72. Jane died at age 80, having taken $52,652 in total distributions.

John and Jane took a total of $73,032 from the IRA before their deaths. They left a remaining account value of $134,614, which their 48-year-old daughter, Alison, inherited.

Alison could take the entire amount in a lump sum payout but chose to stretch the IRA payments and begin receiving them based on her life

expectancy. The final payment must be made within 10 years of Jane’s death. Alison received $191,405 in distributions over 10 years.

If Alison died within the 10-year period, any remaining payments can continue for her sole beneficiary, her daughter, Mary.

“Seeing the tax liability spread out over three generations gives you a unique opportunity,” Kozlowski said.

“Think of some of your older clients who have nonqualified annuities, and bring their beneficiaries into this discussion as far as what might be available to them from an inherited standpoint.”

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 X @INNsusan.

Walmart exits the health care business

After slowing down its plans to establish a chain of health center superstores, Walmart announced it is exiting the health care business. The nation’s largest retailer launched Walmart Health in 2019 and grew it to 51 locations in five states.

But the company said it could not financially justify its efforts to maintain a health care business. “Through our experience managing Walmart Health centers and Walmart Health Virtual Care, we determined there is not a sustainable business model for us to continue,” Walmart said in a statement.

About half the Walmart Health clinics were in Florida , and last fall Walmart announced a partnership with Orlando Health, a private, not-forprofit network of community and specialty hospitals. That effort, too, is winding down, CNBC reported.

The medical centers were geared toward patients with no or poor insurance coverage in underserved areas and were located next to or inside Walmart Supercenters. They offered a range of services, including primary and urgent care, labs, X-rays and diagnostics, dental, optical, hearing, and behavioral health and counseling in one facility.

MEDICARE RECIPIENTS PUT OFF CARE AS COSTS RISE

Just because someone is on Medicare doesn’t mean they aren’t affected by rising health care costs. More than half of Medicare recipients (53%) told a KFF survey that they are paying more for their health care than they were a decade ago. In 2022, households receiving Medicare spent an average of $7,000 annually on health care costs, up from $4,600 in 2013.

Older Americans on Medicare told a Commonwealth Fund survey that they are responding to these rising outof-pocket costs by putting off care But putting off care frequently leads to more problems down the road. Of those

who said they put off care because they couldn’t afford it, 3 in 5 said those delays led to their becoming sicker.

Like with other goods and services, the record inflation seen from 2020 to 2022 impacted health care costs. The COVID-19 pandemic also had an influence on the rising cost of care, stretching hospital resources thin and introducing more long-term illness into the population for those living with long COVID.

LAWSUIT ALLEGES FAKE OFFERS OF CASH TO ‘CAPTURE’ PROSPECTS

A health insurance operation based in Florida used internet ads that falsely promised cash subsidies in order to sign up clients across the country and replace their agents, a lawsuit contends.

QUOTABLE

If states do not increase Medicaid payments to nursing homes, facilities are going to close.

The scheme was carried out by Enhance Health, TrueCoverage, Speridian Technologies, Number One Prospecting and t wo individuals who ran it, according to a lawsuit that seeks class action status. The suit claims the defendants operate a criminal enterprise that targets low-income consumers who are eligible for coverage under the Affordable Care Act. The suit alleges prospects were lured in by internet ads promising free monthly subsidies that could be used for groceries, medical bills, rent and other expenses. Once prospects provided personal information including names, birth dates and states of residence, agents working in call centers were instructed to follow sales scripts deflecting questions about the subsidies because the companies knew they could not be provided, the suit states.

NEARLY 1 IN 4 DUMPED FROM MEDICAID ARE UNINSURED

Nearly one-quarter of adults who were dropped from Medicaid coverage as part of the great unwinding said they are now without health insurance, KFF reported.

While 23% reported being uninsured, an additional 28% found other coverage — through an employer, Medicare, the Affordable Care Act’s insurance marketplace, or health care for members of the military.

Of adults enrolled in Medicaid before the unwinding, about 35% who tried to renew their coverage described the process as difficult, and about 48% said it was at least somewhat stressful.

Oregon is providing air conditioners for Medicaid recipients in an attempt to prevent the health effects of extreme heat.

— John Bowblis, research fellow with the Scripps Gerontology Center at Miami University

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3 trends impacting employee benefits management

High costs and a lack of understanding by employees are among the challenges facing employers in getting workers enrolled in benefits.

By Kim Buckey

The impact of inflation is still being felt by almost every American business, employee or consumer — and it has had a ripple effect on the cost of health care (and health care coverage). How employers bal ance employee priorities and preferences with budgetary constraints becomes es pecially critical in a competitive environ ment touched by financial insecurity.

A recent survey by Optavise delved deeper into employer concerns about these rising costs as well as communica tion challenges and employee retention. The results provide insights into the chal lenges organizations face as they navigate their benefits package planning and execution. Here are three of the pivotal forces shaping the landscape of modern benefits management.

1. Economic uncertainty

Looking ahead to the next one to two years, around one-third of employers say they’re

Employer health insurance costs surged by an average of 6% in 2023 compared to 2022, KFF reported, and projections indicate a further uptick of 6.4%, 7% or even 8.5% in 2024. Those cost increases also trickled down to employees, who experienced an overall cost increase of 3.3% in 2023, encompassing premiums and out-of-pocket expenses — eating away at most of the average 4.4% pay increase that year. With this context, employers are struggling to contain costs without sacrificing the quality of their benefits packages or passing even more of the burden down to their workforce. In fact, half (51%) of employers in the Optavise survey said that inflation affected what benefits they were able to offer in 2024. Projecting ahead, employers cited

several factors preventing them from adding to their benefits packages in the coming years. More than 60% said cost to the company was the biggest hurdle, followed by increased out-of-pocket costs for employees (46%) and broader economic uncertainty (46%). These concerns are limiting the scope of benefits employers can provide, potentially limiting their ability to attract and retain top employees.

2. Communication challenges

Financial pressures are also affecting employee decision-making with respect to their benefit choices. More than half (53%) of employers report that employees’ lack of understanding of the value of their benefits is a barrier to getting employees to enroll. Benefits are complex and can be confusing, and too many employees are unwilling to invest the time to research which options make the most sense for them or to understand how participation can ultimately save them money or provide additional financial security.

In addition, although most employees rely on their employers for benefits information, many organizations struggle to provide employees with these resources. As a result, some employees turn to friends or the internet to get their information, the Optavise survey found. This is in line with other survey findings, which show that more than a quarter of employers say that a lack of resources to effectively roll out and communicate offerings (27%) and a lack of one-on-one benefits counseling (25%) are barriers to getting employees to enroll in a benefits program.

Complicating matters, there are discrepancies between what resources employers say they provide and what employees say they provide. For example, 61% of employers report offering presentations and group sessions with human resources, while only 30% of employees say they were offered this. Similarly, 26% of employers report sending text messages about benefits, but only 7% of employees say they received texts from their

employers.

Either employees are unaware that these resources are available, indicating a lapse in communication, or those resources aren’t resonating with employees, making them simply forgettable. Either way, it’s clear that finding the most effective and useful ways of reaching employees about benefits is essential for employers to drive engagement in their benefits program and boost employee satisfaction.

3.

Employee retention

As the job market and broader economy continue to shift, retention remains a paramount focus for employers — 84% of employers said they had made changes to keep employees. By investing in comprehensive retention strategies, employers can nurture loy-

cost-effective, with affordable premiums that can be paid by the employer, employee or a combination of both, depending on the type of benefit.

Employee demand for flexibility has extended to job structure, with flexible work arrangements emerging as a key factor in enhancing employee well-being and satisfaction. Already, many companies are exploring innovative strategies to introduce greater flexibility to their workplace cultures, including implementing on-demand schedules, offering shortened work weeks, experimenting with new shift structures and times, and facilitating job-sharing arrangements. Although not all industries provide equal opportunities for flexible work, it’s important for employers to consider what they can do to provide flexibility to their workforce, given the long-term benefits.

Employee demand for flexibility has extended to job structure, with flexible work arrangements emerging as a key factor in enhancing employee well-being and satisfaction.

alty and commitment among their workforce, reducing turnover risks and ensuring employee loyalty. These strategies encompass not only additional benefits offerings but also flexible work arrangements to support work-life balance.

When asked how important add-on and voluntary benefits are to their workforces, 87% of all employers surveyed say that these benefits are at least moderately important to their employees. When asked which programs employers added in the past three years, respondents cited mental health programs or services (53%), physical wellness incentives (43%), and voluntary coverages such as buy-up life insurance (44%), accident insurance (43%) and short-term disability (42%). A third of respondents are considering adding financial wellness, caregiving benefits or programs and mental health support programs in the next one or two years, providing an added level of flexibility for employees to choose programs that meet their individual needs. Plus, such programs tend to be quite

As employers navigate changes related to rising costs, improving communication, and altering benefits packages, organizations must take a strategic approach that addresses both current and future needs. Identifying and implementing cost-effective benefit programs and work arrangements can be a challenge for budget- and resource-strapped employers. A good benefits partner — whether it’s a broker, consultant or other third-party vendor — can fill this need; in fact, 60% of survey respondents indicated that they’d like to use more third-party vendors to support their business over the next three years. With expertise and resources, employers can be confident that their benefits will be well received by employees while improving their ability to attract and retain top talent.

Kim Buckey is vice president of client services at Optavise. Contact her at kim.buckey@innfeedback.com.

Retirement confidence hasn’t rebounded from

2023

Workers’ and retirees’ confidence in a comfortable retirement took a nosedive in 2023 and hasn’t fully recovered yet, according to the 34th annual Retirement Confidence Survey conducted by the Employee Benefit Research Institute and Greenwald Research.

Overall, two-thirds of the workers and three-fourths of the retirees are very or somewhat confident about having enough money to live comfortably in retirement, which is unchanged from 2023 . The survey also shows that workers and retirees are confident that government programs such as Social Security and Medicare will provide benefits of equal value to today and believe they understand the program.

While Americans’ confidence has not returned to prior levels, there are signs that it is making a positive recovery as 68% of workers and 74% of retirees are confident they will have enough money to live comfortably throughout retirement. However, this is not a significant increase from last year.

Perhaps contributing to this positive trend upward is workers’ and retirees’ increased confidence in their income. According to the U.S. Census Bureau, wage growth is now outpacing inflation growth.

Americans are starting to feel this shift as 28% of workers and 32% of retirees who are confident feel that way due to their finances. However, inflation remains a top reason for Americans’ lack of confidence Among those who do not feel confident, 31% of workers and 40% of retirees cite inflation as the reason why. Additionally, 39% of workers and 27% of retirees who are not confident feel this way due to their lack of

Affluent Americans driving the economy

Although doom and gloom seem to dominate much of the nation’s economic news, there is one population group that still has it pretty good. Wealthy baby boomers are fueling a sustained boost to the U.S. economy, the Associated Press reports.

Benefiting from outsized gains in the stock and housing markets over the past several years , they are accounting for a larger share of consumer spending — the principal

The $1M racial wealth gap

A wealth gap has plagued American workers and families for generations. Now that gap has grown even bigger. New research by the Urban Institute found the average wealth of white families in 2022 reached a record high of more than $1.3 million compared to about $227,000 for Hispanic families and $211,000 for Black families. This report marks the first time the institute has recorded a seven-figure disparity in average wealth for both Black and Hispanic households . The median wealth for white families was $284,000 compared to $62,000 for Hispanic families and $44,000 for Black families.

The report shows how racial and gender gaps in earnings, retirement savings and emergency savings can contribute to a lifetime lag for individuals and families. But homeownership is the primary driver of wealth-building in the U.S. , the report said, and it continues to lag for Black families. The average white homeownership rate has increased from about 65% in 1960 to 73% in 2022, according to the report, while Black homeownership has gone from 38% to 44% in the same period.

Here they come!

Each year between now and 2027, 4.1 million Americans will turn 65.

Source: U.S. Census Bureau

driver of economic growth — than ever before. And much of their spending is going toward higher-priced services like travel, health care and entertainment.

Even with rising interest rates, stock and home values have kept rising as well , enlarging the net worth of affluent households. Household wealth grew by an average of 5.5% a year in the decade after the 2008-2009 Great Recession. But since 2018, it’s accelerated to nearly 9%. All told, Americans’ wealth has ballooned from $98 trillion at the end of 2018 to $147 trillion five years later.

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‘Magic number’ for a comfortable retirement surges upward

Americans believe they need $1.46 million to have a comfortable retirement. Can advisors help them meet that magic number? • Ayo Mseka

Americans’ “magic number” for a comfortable retirement has reached an all-time high of $1.46 million, rising much faster than the rate of inflation and swelling more than 50% since the pandemic began. Over a five-year period, that magic number has jumped by a whopping 53% from the $951,000 target that Americans reported in 2020.

These are among the latest findings from Northwestern Mutual’s 2024 Planning & Progress Study, the research series that explores Americans’ attitudes, behaviors and perspectives across a broad set of issues impacting their long-term financial security.

Additional survey findings

The magic number for a comfortable retirement — $1.46 million — is a 15% increase over the $1.27 million reported last year, and greatly exceeds today’s inflation rate, which hovers between 2% and 3%, said Erik Stephens, CEO of NOVA Capital, Northwestern Mutual. The study also found generational differences, he noted. For example, many young people today recognize the value of retirement planning and building wealth early on, and they appear to be getting a significant and faster head start than their parents and grandparents did.

As Stephens pointed out, the average age when Americans started saving for retirement is 31, but for Generation Z, it’s 22. This average age is also much earlier than it is for baby boomers, who, on average, started at age 37. Meanwhile, only half of boomers and Generation X believe

they’ll be financially ready to retire when the time comes, and they have to think about how they’ll pay themselves in retirement, he added.

Why the magic number has risen

There are several reasons why the amount for a comfortable retirement has risen so high so quickly, explained Stephens. “One of them is consumer sentiment,” he said. “The recent experience with inflation is expanding people’s expectations for the cost of everything, including a comfortable retirement. As we often say, in 2023, the soaring cost of eggs symbolized inflation in America. Today, it’s nest eggs.”

In addition, Stephens said, “Our research shows that people plan to live longer in retirement and in general, which means they expect to need more money. Interestingly, younger people feel like they’ll need well beyond the $1.46 million magic number — as much as $200,000 more.”

Finally, Stephens added, people are worried about the future of Social Security after reading and hearing about it in the news. “If the Social Security trust fund reserves run out of money by 2033 — as experts predict — then people may have to shoulder more of the financial burden,” he said. “It’s especially concerning to those who have not had access to

Source: Northwestern Mutual

a pension plan. No doubt, all these considerations are putting on the pressure to plan and stay disciplined.”

What it means for financial professionals

For a financial professional, knowing that younger people are more attuned to retirement planning at an earlier age can make for easier conversations. It also can make it more likely that a client will stick to a plan, added Stephens, as he explained some of the implications of the survey’s findings for financial professionals. “For those nearing retirement, the conversations can be more challenging for those who may be unprepared, but that’s where a professional’s expertise in either saving or strategically spending resources can be invaluable,” he added.

It’s also important for a financial professional to explain that everyone’s magic number is different, depending on unique circumstances. Some people may need to save more, others less. “In any case,” Stephens said, “done well, a comprehensive plan can preserve thousands of dollars for the golden years.”

Hallmarks of a plan done well

So, what are the hallmarks of a plan done well? “A comprehensive financial

plan must be tailored to the individual,”

Stephens said. “Everyone has unique hopes, expectations and challenges that the plan must address. It’s critical for the plan to meet today’s needs and the needs of tomorrow — solid enough to meet defined goals, but flexible enough to change as an individual’s circumstances change. A strategy that increases wealth while also mitigating risk — including life insurance — is ideal.”

In addition, Stephens said, a strong personal connection between the financial professional and their client is key to any plan’s success. “That’s because even the best plan won’t work if the client is not brought in on the approach or is willing and able to do the work needed over time,” he said.

Minimizing taxes on retirement savings

The survey also said that only three in 10 (30%) Americans have a plan to minimize the taxes they pay on their retirement savings. Among them, the top 10 strategies employed are:

1. Making withdrawals strategically from traditional and Roth accounts to remain in a lower tax bracket (32%).

2. Using a mix of traditional and Roth retirement accounts (30%).

3. Making strategic charitable donations (24%).

4. Using a health savings account or other tax-advantaged health care account (23%).

5. Using products such as permanent life insurance or annuities for the tax benefits (22%).

6. Making Roth conversions prior to taking required minimum distributions or Social Security (19%).

7. Using qualified charitable distributions from an individual retirement account (17%).

8. Making contributions to other tax-advantaged accounts such as a 529 savings plan (14%).

9. Using the basis paid into the cash value of permanent life insurance to remain in a lower tax bracket (13%).

10. Taking advantage of a qualified longevity annuity contract to set aside funds for later in retirement (13%).

When asked to share additional strategies for minimizing taxes on retirement

savings, Stephens first pointed out that it is always important to consult a tax professional to discuss any tax-related matters.

“That said,” he added, “we know that only 30% of Americans have a plan to minimize the taxes they pay on their retirement savings. We also know that putting money into a 401(k) may not be enough to retire comfortably if the plan doesn’t address the impact of taxes on retirement income. Most people don’t realize that their retirement income will likely be taxed at 30% when they withdraw and spend it. When they recognize the impact, it’s often too late for them to adjust.”

One strategy is “deduction bunching,” Stephens added. “In a perfect world, it would be more tax efficient to gift appreciated securities than cash to the charity or organization of your choice. By doing so, you may be able to avoid paying the capital gains. You could then use that cash to repurchase the securities at the new market price. If cash flow permits, you could deduction bunch these by giving multiple years of appreciated securities to a donor-advised fund in a single year. This may allow you to take a larger itemized deduction in the year in which the gift was made, taking the standard deductions in the alternate years.”

Other ideas shared by Stephens:

• Harvesting long-term capital gains if you are in a low tax bracket.

• Placing favorable assets in nonqualified accounts, and placing others that produce income in IRAs or a Roth IRA.

• “Cross billing” a Roth IRA — in other words, paying for IRA fees from taxable accounts.

“A comprehensive financial plan can help people get to and through retirement by minimizing exposure and preventing anyone from paying more in taxes than they should — potentially preserving thousands of dollars in their nest eggs,” Stephens said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.

3 essential technologies to have in your toolkit

Technology enables advisors to take on new roles as they provide information to clients.

By Jonathan Georges

The role of financial advisors is evolving in today’s digital environment. Consumers are now experience-seekers who strive to educate themselves and expect on-demand access to information and expertise. At the same time, the demographics of a financial advisor’s client base are changing, with more women expected to capture a significant amount of the great wealth transfer in the coming years and Cerulli reporting a whopping $72.6 trillion is predicted to pass down to Generation Z and millennial heirs.

Clearing the bar created by these changes will require advisors to modernize alongside their clients in an effort to remain pertinent. This is a process that’s enabled by the integration of digital technologies that parallel the kinds of capabilities today’s consumers are accustomed to seeing in other industries and service lines. Advisors don’t have to be early adopters and avid fans of technology,

but they do need to embrace the ongoing digital transformation and consider ways that tech can be used to upgrade their practice.

Advisors must focus on three essential technologies to be successful in the modern market.

1.

Client relationship management solutions

CRM solutions designed specifically for financial advisors can improve prospecting, customer onboarding, client support and communication — resulting in increased efficiency and customer satisfaction.

Intelligent forms, auto-completion capabilities and electronic signatures all are features of today’s CRMs that help speed up the data collection process. The integration of these “expected” features helps align wealth management processes for customers with the client experiences they are used to outside of the financial services industry.

CRMs also enhance advisor-client communication. Integrated data and email functionality make it easy to exchange and confirm information. Builtin forms and templates enable advisors to easily build and execute targeted

marketing campaigns. Filters and segmentation tools mean advisors can focus on subsets of their clients who share very specific needs. And activity management features ensure that no steps, tasks or meetings get overlooked. Everything happens when the client expects it, every time. All client calls, meeting notes and documentation can be connected to the client record and “frozen” when a task is completed, creating automatic and bulletproof audit trails for compliance purposes.

2. Modern financial planning solutions

There was a time when financial planning was a back-of-the-envelope calculation, unstructured and based on ad hoc interactions. But that approach is too variable, unreliable and incomplete to meet client needs today. Today’s investors expect a streamlined discovery process that is participative, easy and fast. They want discovery to be underscored by planning solutions that are designed to uncover a client’s entire set of personal circumstances, objectives and constraints methodically, strategically and repeatably. The best digital solutions enable

advisors to more easily comply with increasingly stringent client-focused regulatory reform, creating better solutions for consumers.

Many digital planning solutions are now integrated with made-to-order CRMs, and with these, advisors can easily access a client’s current situation and future financial requirements. There’s no need for advisors or clients to reenter data, and the streamlined discovery process makes it easy to uncover a full range of investment needs.

This type of holistic and complianceoriented financial planning software enables advisors to easily build comprehensive financial portraits of a client’s current situation and use integrated guidance to create credible, needs-based plans for their future. Clients can be confident that the solutions they are presented with are the ideal match to their range of future needs.

3.

Portfolio design and analytics software

Comprehensive portfolio design and analytics tools enable advisors to easily create professional and persuasive investment pro -

comparison functionality. With this automated feature, advisors can easily fulfill the requirement that they show their clients investment products that are similar to the ones they’re recommending. And instead of that time being spent clicking back and forth between investment products, advisors can refocus it toward building and improving client relationships.

By providing a more omnichannel experience for clients and streamlining service processes, this software helps bring the financial advising experience in line with modern client expectations.

Successful advisors understand the importance of modern technology and take steps toward organizational tool adoption.

Technological change and demographic shifts have started an evolution when it comes to the role of advisors. As a result, wealth management professionals must not wait to embrace the new tools that are surfacing but should take steps to implement them in their practice.

The advisors who achieve the greatest success today aren’t content to play a product fulfillment role. Instead, they act as partners in their clients’ lives. They focus not just on their clients’

Design and analytics software is a big leap forward for advisors, as these tools enable advisors to up their analysis game and provide even higher-quality advice to their clients in a time-efficient manner.

posals, investment policy statements and portfolio analysis reports. These tools have the capacity to perform institutionalgrade investment and portfolio analytics on those recommendations, helping advisors streamline the due diligence process for their investment solutions. Design and analytics software is a big leap forward for advisors, as these tools enable advisors to up their analysis game and provide even higher-quality advice to their clients in a time-efficient manner.

In some cases, portfolio design and analytics software will also include a built-in investment product

financial future but also on the larger client journey and their clients’ overall goals — the security of their family and enjoyment of life. Understanding where and how to leverage technology and tools to achieve this objective is an essential part of the evolution of the role of a financial advisor.

Jonathan Georges is vice president, wealth industry principal, Equisoft. Contact him at jonathan.georges@ innfeedback.com.

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the Know In-depth discussions with industry experts

IHow tech will revolutionize health care and life insurance

Overcoming challenges with technology and uniting underwriting professionals.

By Ken Leibow

n today’s rapidly evolving world, where digital transformation is reshaping every sector, both the health care and life insurance industries are at a critical juncture. As we navigate a landscape marked by fragmented services, cumbersome legacy systems and escalating customer expectations, the need for innovative, technologically advanced solutions has never been more urgent.

In the health care sector, groundbreaking platforms such as the Medix app are making significant inroads by offering holistic, data-driven health care management. Simultaneously, in the life insurance industry, software solutions such as EXL LDS and Swiss Re Underwriting Ease are setting new standards by streamlining traditional, inefficient processes. Furthermore, professional associations such as the Association of Home Office Underwriters play an instrumental role by fostering a community of well-informed, skilled underwriters equipped to handle the complexities of today’s insurance challenges.

Medix Global stands as a beacon in the health care industry, established with a vision to harness the full spectrum of medical expertise, advanced treatments and cutting-edge technology. Since its

inception in 2006, Medix has been instrumental in changing health trajectories for its vast customer base through personalized, data-driven medical responses that transcend borders. The effectiveness of such innovative health care solutions is underscored by a global health expenditure that is expected to reach $10 trillion by 2024, according to the World Health Organization.

Central to Medix’s innovative approach is the Medix app, a holistic medical command center that integrates various health services into a seamless interface. This app not only allows users to manage their health with unprecedented precision but also leverages proprietary artificial intelligence and data analytics developed over two decades. The app provides comprehensive medical coordination, medical record management, real-time consultations and personalized health insights, all aimed at enhancing the user experience and improving medical outcomes.

For example, in digital health management, a study by McKinsey estimates that the use of health apps and wearable devices will reduce hospital costs by 16% in the next five years due to better data-driven decision-making and patient management.

Technology in life insurance: Addressing inefficiencies

Similarly, the life insurance industry, traditionally bogged down by manual and outdated processes, is undergoing a significant transformation. Companies face pressures from increased competition and the need for rapid adaptation to market conditions. This has led to the adoption of technologies such as EXL LDS and Swiss Re Underwriting Ease, which streamline the entire life cycle of insurance processing from application intake to underwriting.

EXL’s LifePRO Digital Suite, which includes the LDS software, automates new business and underwriting processes, eliminating manual data entry and physical document handling. It enhances accuracy, service quality and market responsiveness.

For example, after integrating LDS, a regional insurance company in the eastern U.S. reported a 36% increase in application processing efficiency and a 20% reduction in operational costs over three years. Application submission rates for this company increased from 33% in 2018 to 45% by the end of 2021, alongside achieving annual savings of $250,000 in licensing and software costs previously required.

Enhancing underwriter efficiency

Swiss Re’s Underwriting Ease focuses on improving the efficiency of underwriters by consolidating all relevant medical underwriting information into a single interface. This aids in streamlining the application review process, significantly reducing the time spent on each case and enabling quicker decision-making. The system is noted for cutting down underwriting review times by up to 50%, significantly reducing costs associated with ordering medical requirements, and increasing placement rates through faster processing.

A key component of this efficiency is the integration and normalization of electronic health records. As underwriters gain increased access to EHRs from vendors or health information exchanges, the challenge of managing this raw clinical data efficiently becomes evident.

innovation, investing in research and analytics to further enhance speed and cost efficiencies for carriers and clients while developing improved data-driven underwriting capabilities.

This integration of EHRs into Swiss Re’s Underwriting Ease is a testament to the company’s commitment to revolutionizing underwriting processes, ultimately increasing placement rates and reducing operational costs through smarter, more efficient data management.

Uniting underwriters across borders

AHOU serves as a pivotal organization in the life insurance and financial services industry. Founded in 2002 through the amalgamation of the Home Office Life Underwriters Association and the Institute of Home Office Underwriters, AHOU has grown into an international

The synergy between technological advancements and professional development initiatives is setting a new paradigm in health care and life insurance.

While EHRs hold the potential to create comprehensive health profiles, the data often comes in nonstandard formats that can hinder automation and require significant manual intervention.

To address this, Swiss Re is taking steps to normalize EHR data effectively, adhering to health care and industry standards to ensure accuracy and reduce the risks of underinformed decisions. This normalization is critical not only for improving the user experience but also for enhancing automation efficiency. By reducing the time underwriters spend navigating complex cases and various data interfaces, Swiss Re Underwriting Ease helps streamline the entire underwriting process.

The system uses advanced data organization and language technologies to evolve underwriting practices, making them faster and more consistent, cost-effective and accurate. Swiss Re continues to lead in underwriting

association boasting over 2,750 members. This union created a powerful voice for professionals in life, health and living benefits underwriting.

AHOU is committed to enhancing the underwriting profession, the education it relies on and the careers of those within the field. The organization focuses on fostering a deeper understanding of mortality, morbidity and risk management among its members. Through these efforts, AHOU aims to propel underwriters’ careers forward, ensuring they are equipped with the knowledge and skills necessary to excel in an evolving industry.

Recognizing the importance of continuous professional development, AHOU offers a variety of networking and educational opportunities throughout the year. These are designed to cater to underwriters at every career stage — from newcomers to seasoned leaders.

AHOU’s comprehensive approach to education includes the association’s

annual conference, held this year May 5-8 in Boston. The conference theme was “Embrace the Underwriting Revolution.” The event brought together industry professionals for learning, networking and sharing best practices.

These resources are not only accessible but also available on demand, allowing members to engage with content that is most relevant to their needs and schedules. This flexibility ensures that AHOU members can stay at the forefront of the industry, regardless of where they are in their career journey.

Theirs is a future-oriented approach. By providing its members with tools to understand and assess risks better, AHOU not only supports their immediate educational needs but also prepares them for future challenges. This forward-thinking approach is crucial in an industry that continuously adapts to new technologies and changing demographic trends.

The synergy between technological advancements and professional development initiatives is setting a new paradigm in health care and life insurance. Organizations such as Medix Global and AHOU, along with technologies such as EXL LDS and Swiss Re Underwriting Ease, are not only addressing the immediate challenges faced by these industries but are also paving the way for future innovations. These developments are critical in ensuring that health care and life insurance professionals are not only able to meet the current demands of their fields but are also well prepared for the challenges of tomorrow.

As these industries continue to evolve, the integration of technology and enhanced professional training will undoubtedly play a pivotal role in shaping a more efficient, responsive and customer-centered future. This transformative journey is a testament to the power of innovation and collaboration in driving significant industry change, ultimately improving the lives of millions around the globe.

Ken Leibow is founder and CEO of InsurTech Express. Contact him at ken.leibow@innfeedback.com.

LGBTQ+ and life insurance: Is it a matter of trust?

A growing number of young adults identify as LGBTQ+. How can the industry gain their trust?

By Steve Wood

As a consumer markets researcher, I am constantly seeking insights into different demographics. That’s the easy part. The hard part is trying to distill those findings into digestible chunks without diminishing any of the unique needs of the market in question.

According to a recent Gallup Poll, an increasing number of younger adults identify themselves as part of the LGBTQ+ community. The 2024 Insurance Barometer Study, conducted jointly between LIMRA and Life Happens, surveyed 454 LGBTQ+ Americans between the ages of 18 and 75 to gain insights into the attitudes and behaviors regarding various aspects of life insurance shopping, knowledge and products.

To learn how best to reach and be successful with this growing market, we can look at some key differences around financial concerns, retirement preparedness and perceptions of key interactions throughout the life insurance purchase process.

As the LGBTQ+ survey sample mirrors the Gallup Poll’s findings, it is important to compare findings to younger adults. When compared to all Americans, LGBTQ+ express significantly greater financial concerns, particularly retirement and emergency funding.

It is compelling to note that LGBTQ+ individuals tend to show greater concern than Generation Z and millennials as a whole. Having enough money for a comfortable retirement has been the top concern of all demographics for all 14 years of the Barometer Study, but four of the other five specified in the figure are generally all related to “emergency funding.”

Forty percent of LGBTQ+ individuals report owning life insurance, which lags the combined Gen Z and millennial

group, at 46%, which is five points below all Americans (51%). The data do not tell us why these heightened concerns exist for the LGBTQ+ cohort. However, we can perhaps make some inferences.

The data cannot be explained solely by household income levels, as there are no marked differences between populations. There are likely some underlying socioeconomic issues at play here. Universal acceptance of LGBTQ+ community members has not been achieved across the country, and that may be fostering the creation of personal networks of safety nets. Fewer LGBTQ+ adults are married and even fewer have children. This affects life insurance ownership rates as well as financial security. More LGBTQ+ adults are flying solo financially as a result and therefore have elevated levels of financial concern.

How can these concerns be addressed?

“Purchase life insurance! Buy an annuity!” If only it were that easy for the industry. Reality does not work so simply. Purchasing many types of life insurance products can be a very confusing — and personal — experience. Purchasing life insurance often requires fluid draws and several face-to-face conversations. Discussing one’s mortality with a financial professional can be a difficult step along the purchase journey. We know that many of these professional relationships require a higher level of trust than most other transactions. Is trust a factor when it comes to the lower

levels of life insurance ownership and higher levels of financial concern in this cohort?

The Barometer Study data suggests that it at least plays a role. Regionality, incomes, age and race/ethnicity were ruled out as contributing factors. LGBTQ+ adults do not feel discriminated against with regard to applications and underwriting, as sexual orientation is not part of those processes.

But the LGBTQ+ community is twice as likely to mistrust both insurance companies and financial professionals as compared to the general population. That mistrust acts as a barrier preventing those meaningful and detailed conversations that must occur when purchasing a more comprehensive life insurance policy.

Is this mistrust warranted? Is the perceived bias unfair? Conscious? Unconscious? Regardless, about one of every six LGBTQ+ adults reports that they do not trust insurance companies and/or the people who work for them.

Discussions around beneficiaries and family dynamics with all potential clients must be conducted in a fair, honest and equitable way. Customers need outreach and education for us to best serve them — but do we also need more outreach and education regarding LGBTQ+ issues and concerns? The data says yes.

Steve Wood is consumer markets research director with LIMRA. Contact him at steve.wood@innfeedback.com.

Cruising to a bright future in financial services

An experience that brought financial professionals and students together shows that the future is in good hands.

By Corey Anderson

One of the best-kept secrets in this business is the Financial ConNextion cruise, where professionals and college students come together for a weeklong educational event. Participants earn the trip by competing against students from other schools. Groups of two write papers exploring two different financial services occupations. Past entries have reviewed actuarial science, financial planning as a support staff, becoming a property/casualty broker and other career options. In the end, the students learn a lot about themselves and about occupational choices they have after they earn their degrees. Most of the students are majoring in insurance, finance, actuarial science or similar fields, but some are general business majors.

I admit that prior to going on the cruise, my opinion of today’s college students was not a positive one. I had at least partially bought into a stereotype that they are entitled and self-absorbed, and I was worried that the future of our industry was in rough shape. So, I finally said yes to my friend and founder of the cruise, Teri Getman. She had been asking me to come speak on the cruise about my specialty of income protection/disability insurance, as we protect the most valuable asset for many graduating college students — their ability to earn an income.

Our future is bright

My first cruise was in February 2023 and within 15 minutes of showing up at the precruise hotel, I knew our future is much better off than I thought. These students did their homework. One group interviewed more than 30 professionals to learn about

the good, the bad and the ugly of the particular occupation they chose.

One team that really struck me was a pair of actuarial science majors who were first-generation college students and could communicate better than many young insurance/financial planning professionals.

One of them realized from all the interviews that she needed to change her career outlook, as she didn’t want to do all the studying, take all the tests and jump through all the hoops required to get to the top in actuarial science. Most actuaries end up sitting for four to six certificates over time. She realized that wasn’t going to work for her when she wanted to have a family and not be working 40+ hours weekly while also studying 40+ hours a week.

Her project teammate, another young woman, communicated with the best of them, has a great personality and is ready to take on the challenges of getting to the top of the actuarial profession. I would be willing to bet that she becomes a CFO or CEO of a major insurance company someday, although I probably shouldn’t place bets when discussing actuaries.

The cruise includes more than 15 hours of classroom education that the industry professionals and students complete together. Most of the professionals shared insights about their practice specialties, how they run their business or specialty topics within their fields. We even had a couple who offered sessions on professional etiquette.

It ended with a competition

I attended each session. I loved what the professionals shared and absolutely enjoyed all the questions from the students. As the cruise neared its end, there was a competition for scholarships for the top groups of students. Groups from six different universities made final presentations on such topics as why being fee-only versus fee-based would fit them better or

why they want to specialize in life insurance or property/casualty insurance.

Each student came out of this experience with around 20 raving fans in the profession who are more than willing to help each of them get interviews, internships, mentors, etc. After my first cruise, I pledged to go the next year and sponsor a student, which I did this past February. I am already signed up for next year and am sponsoring a student for $1,500. Will you join me?

This year, two of my good friends in the industry joined me along with their spouses. Thanks to Cheryl Canzanella Lewis and John Richardson for participating. We are all signed up for next year, and our spouses are looking forward to it! We, as established professionals, need to ensure the health of our industry and the future financial well-being of our clients and consumers by encouraging the upcoming generation of agents and advisors. There are programs at colleges and universities around the country providing students with a good foundation of financial knowledge. Financial literacy courses in high schools are sparking the interest of students trying to decide what to do with their lives.

NAIFA is doing its part by offering Future Leaders, a program that provides encouragement and education to students looking at financial services careers. The Financial ConNextion cruise is another program growing this next generation and ensuring that the future of our industry looks bright.

Corey Anderson, DIA, of Albertville, Minn., is the president and founder of DI GEEK, specializing in disability income insurance. He is NAIFA-Minnesota’s vice president for advocacy and was the 2012 NAIFA Young Advisor Team Leader of the Year. Contact him at corey.anderson@innfeedback.com.

Climbing mountains starts with one step

The industry must be united in championing the cause of financial security.

By Maggie Seidel

Finseca stands as a beacon of unity in the financial security profession, dedicated to championing the cause that inspired our name: Financial Security for All.

Since our inception in 2020, Finseca has orchestrated the consolidation of four industry organizations. Among them are GAMA, which represents career agency leadership, and AALU, formerly known as the advocacy organization for advisors. NAILBA, which represents independent distribution and the brokerage marketplace, and Forum 400, the bastion of excellence for top-tier life insurance agents, have also joined our ranks.

At the core of Finseca’s mission lies the reunification of the entire financial security profession. Our diverse membership encompasses licensed insurance agents, career agency leaders and brokerage general agents. Many of these professionals also hold positions as registered representatives of broker-dealers or are representatives of registered investment advisors, with some carrying credentials in all three domains. In addition, our membership is composed of essential team members, representatives from respected carriers and affiliated advisors, including legal and financial experts. Collectively, we understand that it’s only through working together that the cause of financial security for all can be brought to new heights.

We are growing at one of the fastest rates of any professional association. Finseca comprises nearly 10,000 financial security professionals. We collectively refer to our members and the broader profession as financial security professionals.

Creating a movement

Finseca’s strategy is clear: We will take every opportunity to spread our message and share the power of holistic financial planning and

the professionals who provide it. In short, we believe we are creating a movement.

Today, we have a $12 trillion protection gap, and tens of millions of Americans have little to no retirement savings, according to reports from LIMRA. This is why we see what financial security professionals do as a calling rather than a job. Financial security professionals work very hard to ensure that millions of Americans will never have to struggle with their financial security. There is a growing awareness of this situation.

A recent study from the American Council of Life Insurers, for example, showed that most Americans are concerned about the current economy and are looking for alternative ways to save money and access tools that will provide a lifetime income stream. The answer is simple: Independent research by Ernst and Young illustrates that a holistic financial plan is an essential element in achieving financial security. In fact, according to this study, consumers with a diversified retirement portfolio that includes permanent life insurance, savings through investments and guaranteed income from annuities get better outcomes.

Policymakers and regulators must come to our side

We believe that delivering financial security to all is only possible if we all work together. We need policymakers and regulators at the state and federal level to come alongside financial security professionals so their work can reach more people, not fewer. However, we have serious concerns about the rise of the regulatory state and the impact it is having on an already challenging compliance burden.

For example, if the Securities and Exchange Commission wins its ongoing legal challenge in SEC v. Cutter, more compliance and greater regulatory burdens may be coming your way. Finseca formally opposes the SEC’s actions, and you can read our legal brief at finseca.org. Now, to be clear, Finseca supports an appropriate level of regulations to ensure that consumers

are protected. But we also recognize that there are occasions when well-meaning regulators go too far and actually hurt the people they are trying to protect.

In order for Finseca and our industry to be successful, I think it’s fair to say we can’t keep playing defense — especially since all the profession ever tries to do is get their clients to take action that is in the best interests of the clients’ financial security.

For example, New York Regulation 187 had a real impact on the marketplace. Specifically, from 2019 to 2021, individual life insurance premiums climbed 11.5% across the United States but only 3.6% in New York. That means ordinary New Yorkers are missing out on opportunities to provide financial security for themselves and their loved ones. This cannot continue. Governments at every level should be encouraging the work that financial security professionals do because at its core it leads to peace of mind for their constituents. As mentioned previously, the data is clear — holistic financial planning, including life insurance and annuities, is objectively better for consumers. With greater scale and a stronger voice, we can have significant influence on public policy.

I think all of this can be summed up with some very simple truths. We must connect more Americans with financial security professionals. We must exponentially grow the financial security profession and make their jobs easier, not harder. We need policymakers and regulators to work with the profession so it can serve more people.

Financial security for all is not just an aspiration — it’s very possible. But climbing mountains starts with a simple step. And for our movement, step one is for the financial security profession to come together as one.

Maggie Seidel is executive vice president of external affairs and chief of staff at Finseca. Contact her at maggie.seidel@ innfeedback.com.