MIKE STERANKA WANTS TO TELL YOU EXACTLY WHAT TO DO
EVERY DAY...
THE
NEW SHORTCUT TO MASSIVE BUSINESSWHY GROWTH ...HERE’S YOU SHOULDINSIDE LISTEN COVER INSIDE COVER
Mike Steranka’s Systems and Procedures Are Your Shortcut to
Massive Business Growth
There are plenty of mega-producers out there who are sharing their “secrets” to reaching and staying at the top. The problem is they never truly reveal exactly what they do — day in and day out — so you can replicate their level of success. What if you could actually see what a mega-producer does during a typical day? Or, even better, what if you had a cheat sheet to mimic their very steps?
Mike Steranka, author of The E-Myth Financial Advisor
Now, for the first time ever, Mike Steranka has made such a tool available. It’s called the Daily Practice Building Guide, and it is essentially Mike himself personally walking you through 365 individual days, one at a time, to truly structure a world-class financial firm.
Finally, something that really works. This is not sales strategy. This is not a seminar system. This is not any kind of intangible “idea.” This is not attached to a commitment to an FMO or IMO.
This is a STEP BY STEP, done-for-you master course with 1,095 action items that create practice structure, consistent activity and increased revenue. If you have even a modicum of a dream to grow your business to epic proportions, you owe it to yourself to check out this incredible system – especially since you can try it with ZERO OBLIGATION and TOTALLY FREE for 14 days.
The Complete Master Course comes with: • Practice Building Guide • Daily Opportunity Guide Workbook • Appendix
Keep your New Year’s Resolution — for yourself and your planning firm — with free access at:
www.BestPractice2016.com
Your clients have probably seen his ads. But is he still a threat to annuities? PAGE 42
PLUS Chet Holmes: How to Get More Dream Clients in 2016 PAGE 10
Can a Ganjapreneur Get Life Insurance? PAGE 34
What Millennial Advisors Think Boomers Need to Know PAGE 58
Your clients deserve clear direction for their financial strategy. We provide the compass.
As an advisor, you depend on trusted collaboration from a partner who has your clients’ best interests in mind and who can help you guide them toward their financial goals. Great-West Financial ® is committed to advisors and brokers who need innovative thinking for their clients. We offer insurance, retirement income, and business solutions designed to fit the demands of today.
$441.1 billion assets under administration
AA
Standard & Poor’s Ratings Service for financial strength1
125
years serving customers
1
LE ARN MORE 800 -520 -7271 greatwest.com
Financial data as of December 31, 2014. Standard & Poor’s rating (Very strong, second highest of nine categories) is for Great-West Life & Annuity Insurance Company and is subject to change. This rating does not pertain to the investment performance of the underlying fund, other insurance affiliates or subsidiaries, or non-insurance affiliates of subsidiaries of the company. Great-West Life & Annuity Company is an indirect, wholly owned subsidiary of Great-West Lifeco Inc. A Member of the Power Financial Corporation Group of Companies®. “A Member of the Power Financial Corporation Group of Companies” is the registered mark of Power Corporation of Canada. Great-West Financial® refers to products and services provided by Great-West Life & Annuity Insurance Company (GWL&A); Great-West Life & Annuity Insurance Company of New York (GWL&A of NY), White Plains, New York; their subsidiaries and affiliates. GWL&A is not licensed to conduct business in New York. Insurance products and related services are sold in New York by its subsidiary, GWL&A of NY. The trademarks, logos, service marks, and design elements used are owned by GWL&A. ©2015 Great-West Life & Annuity Insurance Company. All rights reserved. (10/15) PT244028 FOR ADVISOR USE ONLY.
Last Year, 500 of the BIGGEST IUL Producers Attended Our IUL Sales University
This year will be EPIC.
ALL Mega Producers Receive Our Turnkey Marketing POWER SYSTEM: • IUL Lead Program • Six Revolutionary Client Presentations • Guaranteed College Scholarships to 300+ Private Universities
FIRST 50 Registered
Agents Receive FREE Registration, Airfare, Hotel & Transportation
Call 1.855.601.9442 to Reserve Your Spot www.MegaProducerEvent.com
IN THIS ISSUE
View and share the articles from this month’s issue
» read it
online
www.insurancenewsnetmagazine.com
JANUARY 2016 » VOLUME 9, NUMBER 1
42
ANNUITY
42 H ow to Counter Ken Fisher’s Annuity Hate Machine By John Hilton The self-proclaimed annuity hater is stepping down as head of Fisher Investments, but he has not backed down from spewing venom about annuities.
22 INFRONT
8 S EC Sneaks On Board the Fiduciary Train
FEATURE
By Steven A. Morelli What separates the high-earning advisors from their lower-earning counterparts? What role does diversification have in an advisor’s success? We break down the results of our 2016 Agent Study to find out what it takes to be a top earner.
By John Hilton Political gridlock is one factor preventing the Securities and Exchange Commission from enacting its own fiduciary standard.
10
44 S ales Surge for FIAs, but Income Riders Pose Risks
22 Profiles of Success
LIFE
34 How Can a Ganjapreneur Get Life Insurance? By Ted Jenkin With more states legalizing the sale of marijuana, opportunities exist for those who want to serve this growing market as well as the individuals who patronize it.
By Linda Koco Ever since guaranteed income riders debuted, they have been contributing to fixed index annuities’ sales growth and to their risk profile increase.
HEALTH/BENEFITS
48 S hifting Trends and Priorities Demand New Solutions By Drew Niziak As companies plan for the year ahead, they must tailor the benefits they offer employees to what’s trending — and what employees need.
INTERVIEW
10 How to Get More Dream Clients in 2016
An interview with Chet Holmes Everyone needs a “stadium pitch,” a strategy for attracting clients faster and in greater numbers. That is one of the nuggets of sales wisdom from Chet Holmes, author of The Ultimate Sales Machine. In this interview with InsuranceNewsNet Publisher Paul Feldman, Holmes describes his method for cutting through the clutter and motivating your audience to buy.
2
36 36 Evaluating When to Replace SplitDollar Life Insurance
InsuranceNewsNet Magazine » January 2016
By Louis S. Shuntich Your clients could face an unwelcome tax surprise with their split-dollar policy. Here is how you can help your client decide whether it’s worth keeping the coverage.
56 FINANCIAL
56 The Elephant in the Room for Couples By Mark E. Caner Married clients don’t want to think or talk about the day when they will become widowed. Here is how you can guide the conversation.
PROTECTED BY WHOLE LIFE. FUELED BY AN INDEX. Whole life plus the upside potential of index-linked participation. It’s the next generation of life insurance. ■
Whole Life Guarantees
■
Index-Powered Upside Potential
With Guardian’s new Index Participation Feature (IPF), whole life is about to give protection a bright new future, and a new dimension of cash value growth potential for your clients. Now they can link up to 100% of the cash value of paid-up additions on select policies to the performance of an index – at a competitive cap – while the floor and policy’s inherent guarantees offer additional downside protection from stock market volatility. IPF is a patent-pending whole life rider innovation only from Guardian, a mutual company.
■
Greater Flexibility
Producers, please visit:
NextGenWholeLife.com/InsuranceNewsNet
®
The Guardian Life Insurance Company of America New York, NY 10004-4025
For Producer Use Only – this advertisement is not intended to be used in the sale of life insurance. All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. The Index Participation Feature (IPF) is a rider available with select Guardian participating whole life polices. IPF provides an adjustment to the dividend paid under the policy. This adjustment, subject to the cap, participation rate and floor, may be positive or negative based on index performance. Adverse market performance can create negative dividend adjustments, which may cause lower overall cash values than would otherwise have accrued had IPF not been selected. Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors. Riders may incur an additional cost. Rider benefits may not be available in all states. Rider Form Number: 15 IPR. 2015-9596 (Exp. 08/17)
How to Generate an Endless Flow of Referrals from CPAs and Attorneys How to Generate an Endless Flow of Referrals from CPAs and Attorneys
Referrals are the lifeblood to a strong business. Having quality names at your disposal will help you create a strong vibrant business vs. a business that is running on thin air.
Attend This FREE Training Webinar!
Referrals are the lifeblood to a strong business. Having quality names at your disposal wil help you create a strong vibrant business vs. a business that is running on thin air.
One of the top advisors and a bestselling author reveals the exact system his clients are using to get referrals from CPAs and Attorneys. His method is already working around the country: • One client has 17 divorce attorneys sending him business • Another client has 10 CPAs and nursing homes referring folks to him Attend his live training webinar exclusively for INN readers. Discover exactly how he does it and start getting referrals from CPAs and Attorneys!
Sign up for the FREE webinar today:
www.ultimatemarketingmagician.com/inn
ALSO IN THIS ISSUE JANUARY 2016 » VOLUME 9, NUMBER 1
58
61 NAIFA: Position Yourself in Front of the Right People By Toni Harris Identifying your target market keeps you from chasing after the world.
BUSINESS
58 3 Things Millennial Advisors Think Boomers Need to Know By Michael R. Panico Baby boomers will depend on the younger generation of advisors to help them navigate the golden years. Here are some ways in which millennial advisors can solve their boomer clients’ retirement challenges.
62 T HE AMERICAN COLLEGE: Questions DOL Needs to Answer By Craig Lemoine Before the Department of Labor moves any further on the fiduciary rule, some issues must be clarified.
64 LIMRA: Successful Social Media Use Leads to Greater Consumer Access By Norah Denley Social media can solve the problem of getting the right information to the right people at the right time, and in the right format.
INSIGHTS
60 MDRT: Regulation and Demographics Affect 2016 Annuity Landscape By Curtis Cloke For those who keep up with the changes, there will be opportunities to thrive.
EVERY ISSUE 6 Editor’s Letter 20 NewsWires
32 LifeWires 40 AnnuityWires
46 Health/Benefits Wires 52 FinancialWires
INSURANCENEWSNET.COM, INC.
3500 Market Street, Suite 202, Camp Hill, PA 17011 tel: 866-707-6786 fax: 866-381-8630 www.InsuranceNewsNet.com PUBLISHER Paul Feldman EDITOR-IN-CHIEF Steven A. Morelli MANAGING EDITOR Susan Rupe EDITOR-AT-LARGE Linda Koco SENIOR EDITOR John Hilton SENIOR WRITER Cyril Tuohy VP FINANCES AND OPERATIONS David Kefford PRODUCTION EDITOR Natasha Clague VP MARKETING Katie Frazier CREATIVE STRATEGIST Christina I. Keith AD COPYWRITER John Muscarello CREATIVE DIRECTOR Jake Haas CORPORATE ACCOUNTANT Darla Eager
GRAPHIC DESIGNER GRAPHIC DESIGNER ADVERTISING COORDINATOR TECHNOLOGY DIRECTOR WEB DESIGNER REGIONAL ACCOUNT MANAGER (NORTHEAST) REGIONAL ACCOUNT MANAGER (CENTRAL) REGIONAL ACCOUNT MANAGER (SOUTHEAST) REGIONAL ACCOUNT MANAGER (WEST) SALES RELATIONSHIP COORDINATOR
Copyright 2016 InsuranceNewsNet.com. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 3500 Market Street, Suite 202, Camp Hill, PA 17011, fax 866-381-8630 or call 866-707-6786. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 866-707-6786, Ext. 115, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 866-707-6786, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 866-707-6786, Ext. 115, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 3500 Market Street, Suite 202, Camp Hill, PA 17011. Please allow four weeks for completion of changes.
Bernard Uhden Shawn McMillion Sharon Brtalik Joaquin Tuazon Kevin Crider Tim Mader Craig Clynes Brian Henderson Emily Cramer Ashley McHugh
Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein.
Turn Retirement Dreams into… Retirement Realities.
®
American Equity - The Company to Turn to for Guaranteed Lifetime Income.
Competitive Payout
Five Lifetime Income Benefit Options
No Fee Option
The one who works for you!™ 6000 Westown Pkwy, West Des Moines, IA 50266 | life.american-equity.com | 888-647-1371 FOR AGENT USE ONLY. NOT FOR USE IN SOLICITATION OR ADVERTISING TO THE PUBLIC.
16 INN 01.16 ©2016 American Equity. All Rights Reserved.
WELCOME LETTER FROM THE EDITOR
We Always Need Another Hero
C
an you imagine wanting to hear a story so badly that it is your dying wish?
leading corporations in your area, and you want to land his or her business. But probably the best investment of time is putting your That was the situation with own life in the context of a hero’s journey. Daniel Fleetwood, a Star Wars What is a goal that you are particularly proud fan in Texas who was dying of cancer. His of accomplishing? You can then reverse-engiwife and eventually thousands of others neer your story. campaigned for him to see the latest installOnce you have accepted the mission, you ment of the franchise — Star Wars: The Force cross into the adventure. You must then face Awakens — months before it would be resetbacks. It can’t be easy — no struggle, no leased in theaters. story. They got their wish, and the 31-year-old After an early victory is snatched away, saw the movie days before he you should have a period in the died. That is an obvious testament wilderness when all seems lost. It’s to the power of a story. just you and the predators growling But it isn’t just any story. The around your camp. Star Wars series is a Hero’s JourWe’ve all been there. In those ney, the most important theme moments, usually two things apthroughout history. Our religions pear: an inner strength that we and mythology are built on it. didn’t know we had and the humilGeorge Lucas created the Star ity to admit that our goals can’t be Wars myths from a mold presentmet alone. ed by Joseph Campbell in his 1949 With this resolve and help book The Hero With a Thousand from new compatriots, we rally Faces. In it, he identified the comand win. Then the satisfying stoponents of the hero epic. ry ends with a return journey and Once you have seen the forthe prize or wisdom improves the mula, you recognize it in virtually ordinary world. every journey story. You can use This is very simplified, but the these elements for your own story. accompanying chart fills in details Of course, that doesn’t mean for the full story. It might seem silyou would want to unspool your ly to recast your story into an epic tale at every cocktail party when myth, but look at your entertainanyone asks, “What’s your story?” ment. It’s all story. In fact, look at But it informs everything when business and politics — all storyyou have a Core Story. driven. So, why shouldn’t that be The Core Story is a concept your story? Why is yours less valuThe Star Wars series is a Hero’s Journey, the most important theme throughout history. Once you have seen the formula, that was developed by Chet able than any other? you recognize it in virtually every journey story. Holmes, who is the subject of Wouldn’t a hero’s journey thread Publisher Paul Feldman’s intermeaning into everyday life? It imview this month. Actually, the article is from with movies such as “E.T.”, which opened with bues the teller with pride and the listener with the transcript of the conversation that Paul a family being an actual family with all its ec- inspiration. had with Chet five years ago for our first pub- centricities. Your listeners need to be able to Joseph Campbell once said, “A hero is lished Feldman Interview. place themselves there. someone who has given his or her life to Paul was reminded of how important that The hero has to be ordinary at first as well. something bigger than oneself.” His example interview was to him as he was reviewing the “What, go get a ring, take it to the evil empire also showed that gift can be the story that original article for a book that he is creating of Mordor to toss it into the Crack of Doom? reveals the way to greater things, such as the from some of the key interviews. Chet was Ah, I might be a little too booked up for the security of one’s realm or the answer to a dya hero to him through written material and next few weeks to do that. It could be any ing wish. audio. You also might have listened to Chet seemingly insurmountable task in your life or Your epic awaits. or others on your tape deck as you traveled to business. client appointments. Even if you had heard it Position it as the impossible objective. Steven A. Morelli a dozen times, the story it told sustained you Maybe it’s about the CEO of one of the Editor-In-Chief 6
time and again. Chet’s core story idea is used in the service of a marketing message, but it is a good idea for a business or a personal foundation. When you have it down, it serves as a base, a reminder of who you are. The model also can serve to shape any experience or lesson into a compelling narrative. Campbell’s structure has many parts, but the basics of the journey can be broken down. It starts out with the picture of an ordinary world. Steven Spielberg did this effectively
InsuranceNewsNet Magazine » January 2016
SPONSORED
HOW TO GO FROM “TOP PRODUCER” TO “RECOGNIZED FINANCIAL EXPERT” WITH JUST ONE UNIQUE MARKETING PIECE, YOU WILL BECOME THE AUTHORITY IN YOUR FIELD, PILLAR OF YOUR COMMUNITY ( AND REPLACE YOUR SEMINARS! )
Have you reached a level of success so high that you’re struggling with “What’s next?” Or are you teetering on the edge of greatness, trying to find the one thing that will get you over the mark? The solution, believe it or not, is to Star in Your Own Documentary Film. You only need 3 reasons why: 1. It is the Ultimate Marketing Piece that no one will be able to touch. Our 3-time Emmy Award-Winning Director, Nick Nanton, will craft a beautiful movie featuring the story of you and your business, including a showcase of the lifestyle your services afford for your clients. Your credibility won’t be in question as we show your community involvement, the respected community leaders with whom you are friends, and the difference your services have made in so many lives. Host a movie premiere in your town (talk about the perfect prospecting party!), invite the most qualified client in town, then let us flood Big Media with your movie. We’ll air portions of your film on major network affiliates and write and submit national press releases. Meanwhile, prospects will be calling your office, ready to meet with the celebrity whom they trust to genuinely care about their families and their futures. And clients will be handing your DVD out to all their friends, bragging that they know you. (How about that for getting referrals?) Once you star in a feature-length documentary film, you will have instant elite celebrity status … which is exactly what takes you to the Top Advisor in your community.
2. It can replace your seminars and give you your life back. Just send your staff to your seminars and have them play your movie, while you stay home with your family. It means that you will look your very best every single time, and never worry again about a lackluster presentation because you’re not feeling well or you have your mind on other things. It means that your prospects will perceive you as so elite, you don’t even attend your
Now, you may think no longer having to stand in front of those crowds is reason enough to start filming, but having a prospecting tool that can work without you 24/7 means even more. It means having dinner with your family every night instead of watching strangers eat while you make that same speech. It’s reclaiming your personal time and finally being able to live the lifestyle you want and deserve. 3. It will be a cherished treasure for you and your family. It isn’t even possible to convey how you’re going to feel when you see your movie. Your children or your grandchildren will be captured in this moment of time, their lives illuminated in cinematic splendor. Your business will be documented for future agents to learn from and to aspire to. And you, as the star of the film, will be recognized as a leader in your community and your field. And your film will last forever as a tribute you leave behind one day. It will be an heirloom like no other. This film is your legacy.
3-time Emmy Award-winning director, Nick Nanton, enjoying a fun day on location in Oaxaca, Mexico shooting the documentary, Armonia. own presentations. We’ve seen it happen, and it’s been proven to draw in virtually the same amount of appointments as you would receive if you actually attended. This is why, when we make your documentary film, we’ll ask about your current presentation so we can weave its messages into your story.
And the best part is … It’s Fun and it’s Easy. In just a couple of days, with just a few hours of your own time, we will make your movie. Our multi-Emmy Award-Winning film team will plan everything out for you, and you’ll have a blast just showing up and being part of the magic. • There is only one question:
Are YOU ready to be a Recognized Financial Expert?
Find out how you can star in your very own movie by calling (888) 224-5870 or visit www.BlockbusterAdvisor.com today. Your legacy awaits.
INFRONT TIMELY ISSUES THAT MATTER TO YOU
SEC Sneaks on Board the Fiduciary Train he Securities and Exchange T Commission has been unable to follow through on its 2011 recommendation for a uniform fiduciary standard. But the SEC doesn’t want to be left behind while the Department of Labor forges ahead with its own fiduciary rule. By John Hilton
I
f 2016 is destined to be the year of fiduciary, the Securities and Exchange Commission does not want to be left behind. The agency has long been unable to follow through on its own January 2011 recommendation for a “Uniform Fiduciary Standard of Conduct for BrokerDealers and Investment Advisers.” The Department of Labor stepped into the vacuum and produced a restrictive fiduciary rule that has agents pondering substantial changes to their business models. DOL staff are bunkered in Washington and are expected to publish the final rule in the spring. “In this business you learn to live with whatever regulators may do,” said A. Raymond Benton, owner of Benton & Co., a fee- and commission-based planner in Denver. Just when it seemed the SEC would be left behind in the race to adopt fiduciary regulations, the agency made a surprise announcement: It would release its own fiduciary proposal in October 2016. The release date was made public shortly after House Committee on Financial Services subcommittee members subjected an SEC official to tough questioning. Legislators pressed SEC Division of Investment Management Director David Grim about the logic of the DOL going first. “Aren’t they pre-empting your work, Mr. Grim, in your opinion?” asked Rep. French Hill, R-Ark., a former broker. “DOL and the SEC have different 8
statutes and different mandates,” Grim said. “Won’t that be confusing for investment advisors and their clients to have these two different competing standards that are actually in conflict with each other?” Hill shot back. Grim left the question unanswered, and lawmakers left the hearing unfulfilled. DOL opponents note that the DoddFrank Act of 2010 specifically authorized the SEC to lead the way on an expanded fiduciary standard. DOL supporters say the
the Grim hearing. “It ought to be the same rule. The stricter rule ought to apply to non-IRA accounts.” A legislative attempt to force the DOL to wait for the SEC seems destined to fail. The Retail Investor Protection Act, sponsored by Rep. Ann Wagner, R-Mo., passed the House but is stalled in the Senate. President Barack Obama vowed to veto the bill if it reaches his desk. “The Obama administration and the (DOL) believe that the American people need to be protected from themselves, that they are not smart or capable enough to control their own retirement savings,” Wagner said.
Political Gridlock
A closer look at the SEC reveals why the agency is so slow to respond. The five-person panel is made up of politically
David Grim, director of the SEC Division of Investment Management, responds to a question from Rep. Carolyn Maloney, D-N.Y., during a House Financial Services Committee subcommittee hearing in October.
SEC has done nothing because it is hamstrung politically and lacks leadership. Having the SEC go first seems to make more sense, since an SEC regulation would apply to all securities investment accounts. The DOL rule requires a best-interests standard on 401(k) and individual retirement accounts. “It’s absurd to have two sets of rules,” Rep. Brad Sherman, D-Calif., said during
InsuranceNewsNet Magazine » January 2016
appointed commissioners — two Democrats, two Republicans and an independent representative. Everything from enforcement actions to regulatory decisions is apt to get hung up amid the disputes between the two sides. When SEC Chairwoman Mary Jo White, the independent commissioner, declines to take a side, nothing gets done. Two new commissioners are about
SEC SNEAKS ON BOARD THE FIDUCIARY TRAIN INFRONT to step into the fray. Hester Peirce and Lisa Fairfax are slated to join the SEC as Republican and Democrat members, respectively, pending their confirmation by the U.S. Senate. But the new members are unlikely to change the atmosphere. Fairfax was previously appointed to the SEC Investor Advisory Committee,
The rule calls for added layers of paperwork, arduous disclosures and a significant amount of record keeping. Many industry observers expect to see an exodus of advisors from the business. Still other advisors are resigned to working under the new fiduciary rules and have already started adapting to them.
Mary Jo White, chair of the SEC, looks on during a meeting of the commission. Crafting a fiduciary rule is a high priority for the SEC, White declared earlier this year, although she has declined to offer specifics.
a committee created by Dodd-Frank. Peirce, meanwhile, published a 2012 book titled “Dodd-Frank: What It Does and Why It's Flawed.”
SEC Timeline
According to documents filed with the Office of Management and Budget, the SEC must follow the same rulemaking process as the DOL. That means publishing the proposed rule in the Federal Register, holding a public comment period and then publishing the final rule. In other words, if the SEC publishes its proposed rule in October 2016, it will be about 18 months behind the DOL. While the twin rulemaking tracks might seem odd, the SEC will have the advantage of seeing the reaction to the DOL's efforts. A summer comment and public hearing exercise yielded fierce industry opposition to the DOL rule. Frustrated agents say the DOL rule will serve only to limit consumer access to retirement planning advice. But despite thousands of comments and petitions, the DOL is trudging ahead. Opponents of the proposed rules insist the overwhelming majority of agents and advisors already act in the best interest of their clients, even if they are legally bound to follow a suitability standard.
“As with anything, you go through stages,” said Juli McNeely, owner and president of McNeely Financial Services in Spencer, Wis., and immediate past president of the National Association of Insurance and Financial Advisors. “I’ve got less anger now and more sadness that I’m going to have to change.” By the time the SEC’s final rule is published, the two-year period from 2015 to 2017 will likely see the most far-reaching changes in how advisors conduct their business in decades – perhaps even since the adoption of the Investment Advisers Act of 1940. “I’m preparing my practice to be a fee-only practice,” McNeely said. “It just makes me sad that consumers will not be able to find that advice, and that’s not why regulators should be changing things. It’s counterproductive.”
DISCOVER HOW ONE FINANCIAL PROFESSIONAL WROTE
$5,000,000 IN 50 DAYS!
Get access to field-tested strategies to help you close more sales and increase your practice’s profit. One of our financial professionals, Brian W. out of Austin, TX has adopted this Income Allocation model in his business and in 50 days he has written over $5M in production.
To get FREE instant access to the Income Allocation Model Brian followed, visit:
IncomeAllocationU.com
Editor’s note: InsuranceNewsNet Senior Writer Cyril Tuohy contributed to this story. InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@ innfeedback.com.
January 2016 » InsuranceNewsNet Magazine
9
For financial professional use only – not for use with consumers. Success rate based on actual results. Results may vary and are not guaranteed.
10
InsuranceNewsNet Magazine Âť January 2016
HOW TO GET MORE DREAM CLIENTS IN 2016 INTERVIEW
T
his is a bit of a departure from the usual format for our interview feature, but this one is a little more personal for me. I am compiling my favorite interviews into book form, and it has been a gratifying process for a number of reasons. First of all, I am really excited to be able to package these into one volume of wisdom for readers. Many of the people I've interviewed were virtual mentors for me. Although the instruction wasn’t face to face, I absorbed their lessons through books, CDs and tapes that I wore out from listening (remember cassette tapes?). They inspired me to start InsuranceNewsNet and learn new ideas, and they accompanied me during the difficult times that any entrepreneur endures. The other gratifying part of this process is revisiting my early interviews with people I considered rock stars in my earlier days — people such as Chet Holmes. January 2016 » InsuranceNewsNet Magazine
11
INTERVIEW HOW TO GET MORE DREAM CLIENTS IN 2016 Chet’s interview was the first that we published when we started this series in 2010. I have to confess that I was nervous about speaking with him because here was a guy I had been listening to for many years, and this time I would be able to ask him questions. Of course, Chet put me at ease and shared his wisdom. He wasn’t a big name like Tony Robbins, but he was an inspiration to Tony and later became his business partner. I was always amazed that more people didn’t know about Chet, because many of his ideas have become the foundation of successful business and personal management. His clients included major companies such as Pacific Bell, NBC, Citibank, Warner Bros., GNC, Wells Fargo, Estee Lauder, Merrill Lynch and W.R. Grace. Chet had been talking for decades on being strategic and getting beyond the next tactic. He distilled his ideas into the 2007 book “The Ultimate Sales Machine” (which I think everyone should read). But Chet’s key lesson was focus. He was excellent at removing the sales shellac to reveal the real value in a message or a mission. A method he employed was to do what was called a “stadium pitch,” which was part of his greater concept of the “core story.” The stadium pitch was the message that you would deliver to a stadium full of every one of your prospective clients. The idea was a way to synthesize your value proposition into its most efficient and compelling form. When I looked back at the transcript of our conversation, I saw that Chet had used the stadium pitch to launch into a model of how an insurance agent and agency can hone a highly effective strategic focus. We used only part of that discussion in the version we published in 2010. We typically have about 10,000 words in our transcription, which we edit to about 3,000 for print. I constantly use Chet’s principles in developing marketing strategies, and I think anybody in sales should be familiar with these techniques. In this interview, he drew an excellent outline of how people can stand out in their market. Make no mistake, Chet’s methods are old-school sales techniques that get you in front of prospects in a position of authority. As this year unfolds, we face quite a bit of uncertainty. The Department of Labor’s 12
fiduciary rule is one factor, as is the Security and Exchange Commission’s version of that rule later this year. The American economy itself seems to be undergoing a slow upheaval that is difficult to gauge. The upcoming political campaigns will be getting more intense, if that is even possible. All of us will be looking toward the people who can bring clarity to the conversation and leadership to their clients and communities. You can be that voice of clarity whenever you speak if you know how to craft the message. In this conversation with
Chet we focused on the insurance sale, but these ideas can transfer to any purpose. I hope you enjoy this discussion as much as I enjoyed revisiting it. FELDMAN: Most insurance sales are one-on-one or in small groups, so why is it important for agents to know how to deliver a stadium pitch? HOLMES: Business people need insurance, but they don’t even know that. Most people are very unsophisticated about this kind of thing. So, that’s a scary phone
The Stadium Pitch
A strategy for both attracting clients faster and in greater numbers. This is the foundation of the “Core Story Concept.” Imagine you could present in a massive stadium to every one of your potential clients. What would you do? What is the title of your stadium pitch? It should be focused on THEM, not you. It should be something that rivets their attention and keeps them in their seats.
You can begin to see how much stronger your stadium pitch will be when you have hard data that can rivet the attention of your audience from the start. Outline your stadium pitch.
Now say it in a single sentence. This is your slogan/strategic position, the statement that goes under your logo every time.
InsuranceNewsNet Magazine » January 2016
Keep it simple with an uncomplicated Indexed Universal Life product
Simplistic Indexed Universal Life insurance from Kansas City Life Insurance Company offers: • Simple product design • Simple low-cost policy • Simple to explain and sell • Simple to understand and buy
For information about a career with Kansas City Life Insurance Company, call Don Krebs, MSM, CLU®, ChFC®, LLIF, Senior Vice President, Sales and Marketing
800-258-4525, ext. 8120 January 2016 » InsuranceNewsNet Magazine
13
INTERVIEW HOW TO GET MORE DREAM CLIENTS IN 2016 call for an agent to make. How do you develop the strategy for what to say? A stadium pitch is strategic. It establishes your credibility and educates. FELDMAN: Do you usually find that people are unprepared to make a strategic pitch to large groups? HOLMES: When I ask an audience of 1,000 people whether I could put them in front of 300 wealthy individuals, how many would be ready to present to all of them, maybe two raise their hand. If I asked them what they wanted to accomplish in that stadium, they would say they want to make a sale. When I ask, “What else?” they would ask, “What else is there?” There are 14 strategic objectives that you should want to achieve in that stadium,
but let’s talk about just one of them: establishing a high level of credibility and expertise. This is when someone says, “That guy is way smarter and more impressive than my current insurance agent.” How are you going to do that and do it quickly?
So then I make it harder. I tell them to pretend that the audience doesn’t have to stay if they hear the title and feel that they already have that part of their life covered. You know the Buyers' Pyramid, so only 3 percent of the audience is going to want to hear something with one of those titles.
FELDMAN: How do you help insurance agents develop an effective stadium pitch?
FELDMAN: I’m familiar with the Buyers’ Pyramid from your book, but would you mind explaining what it is and how it applies here?
HOLMES: The first thing I do is have people write their stadium pitch. Then I get things like, “Why I’m better at giving you insurance than somebody else” or “The five ways I can help you better than the next agent” or “Why you should buy your insurance from me instead of anybody else.” Most of those titles are focused on themselves.
HOLMES: For decades, whenever I’ve done a live event, I have been able to poll thousands of people at a time and ask them if they were “in the market” for such things as tires, cars or home remodeling. I found that, across the board, only 3 percent of any market is in the “buying mode” now for anything.
Defining Your Audience
A great stadium pitch will drive your potential buyers up the buying pyramid.
3% Buying now 7% Open to it 30% Not thinking about it 30% Thinking they’re not interested 30% Definitely NOT interested! 14
InsuranceNewsNet Magazine » January 2016
ASK AND YOU SHALL RECEIVE INTERVIEW
Turn your toughest disability cases into commission. We’ll provide the coverage for you.
We proudly underwrite the many difficult cases normally declined by standard disability carriers. Our underwriters specialize in working with individuals with moderate to severe medical conditions. Our non-standard, tailored plans deliver the core coverage your clients deserve.
Benefit amount up to $10,000 per month Some of the impairments we consider: Diabetes, Heart Conditions, Cancer, Arthritis, Asthma, Obesity
To download our free whitepaper, visit ToughestDICases.com
If you have a tough impaired disability case, send a brief description to our underwriters at ToughestDICases@IDUinc.com
(844) 209-9633 Not available in all states. Refer to Policy contract for Explanation of Benefits, Exclusions and Limitations.
January 2016 Âť InsuranceNewsNet Magazine
15
INTERVIEW HOW TO GET MORE DREAM CLIENTS IN 2016 They are at the top of the pyramid of five key groups. The other four groups are the 7 percent who are open to considering such a purchase, 30 percent who are not thinking about it at this time, 30 percent who don’t believe they are interested based on the information at hand, and 30 percent at the bottom who are definitely not interested. So, the average person would walk out. A slightly more strategic type might say, “I’m here to tell you the five ways people are underinsured.” That’s better, but it still sounds like you are trying to sell me insurance. A strategic title would be where nobody would leave the room. That might be, “I’m here to tell you the five ways you and your family can be financially devastated.” The audience would say, “Well, let’s hear the first way, because I’m not leaving if that’s your title. I need to hear how my family can be financially devastated.” FELDMAN: That is definitely a stronger title. And, of course, can’t that title be used for marketing other than a stadium pitch?
People ask what the secret is to becoming a karate master. It’s not doing 4,000 karate moves. It’s doing 12 moves 4,000 times each. That’s what makes a master. HOLMES: We would use something like that for what we call the Best Buyer or Dream 100 mailers. I typically find, in any business, there are 100 clients who would dramatically change things if you got them. We would use titles like that to make our best offers to them. FELDMAN: Isn’t that what you did when you worked with Charlie Munger,
Warren Buffett’s business partner? HOLMES: Yes, when Charlie put me in charge of ad sales for one of his magazines. It had a list of 2,200 potential advertisers. And when I did an analysis of the market, I found 167 of them bought 95 percent of the advertising in the industry and none of them were in the magazine. We were No. 15 in the industry.
HELP MANAGE
$400 BILLION IN FEDERAL RETIREMENT MARKET ROLLOVER ASSETS
CALLING ALL ADVISORS:
Help us Train and Manage These Qualified Retirees Gain access to exclusive marketing systems that will change the way federal retirees can manage their retirement information - and how you can reach the Federal Retiree market. We are the National Leader in the Federal Space. Before you turn the page, ask yourself this one question, “When was the last time I had the opportunity to become the go-to advisor for an underserved $400 Billion market?”
Take the 1st Step – Watch Our Video and Secure Your Territory: www.PublicSectorProfits.com 16
InsuranceNewsNet Magazine » January 2016
HOW TO GET MORE DREAM CLIENTS IN 2016 INTERVIEW They used to do this monthly campaign in which they targeted the 2,200, and it was kind of wimpy. I took the same budget, and we spent it on 167 executives. Suddenly, people who never heard of us before were hearing from us so intensely and from every direction that within six months we had 29 of them in the magazine. That alone doubled ad sales for the magazine. We doubled it again the next year by keeping them in the magazine and bringing in another 30. The next year, we doubled it again by bringing in the rest of the 167 ideal buyers. It was amazing. It was the biggest advertising success story in that industry. So, every industry has a small niche of ideal buyers. The problem is that people go after all buyers. But here was the lesson: When the best buyers buy, other best buyers buy faster. That’s not easy to say. Anyway, it is worth going after them. FELDMAN: I would like to ask more about the mailer. Once you have sent it, what is the follow-through?
and I can look up the file, but can you give me an idea of what your business is doing annually? How much are you pulling out of it? Thank you. Let me tell you about this report we can put together for you …” I am going to use that report as leverage to get an appointment. But the whole
wealthy. Are you interested in creating wealth that lives beyond your generation? Yes? This report discusses that as well as things that can devastate you financially. We have distilled all this research to five key strategies that will protect you against financial devastation and help build lasting, generational wealth.” You tell him that your company sent the mailer to hundreds of companies like his and you’ve had a tremendous response, so you are doing a tour to deliver the report in a 28-minute presentation. “I am coming through your area in the next two weeks, so when is good for you?” FELDMAN: Suppose he asks you to just send the free report?
“What’s going on in your industry that would really motivate that buyer to take a SERIOUS LOOK at your solution?”
HOLMES: In the example of the stadium pitch, we’re expanding it to a Dream 300. What would you say to them? You would say, “Here are the five ways that you can be financially devastated in your family or your business” and then make an offer. In a mailer, the offer would be “Call now for a free report.” When the person calls for the report, you take down his information and then say you need to ask a few questions because you have a lot of information designed to help people be more financially successful. The person most likely will agree, and now you have permission to start asking questions. You find out he is a first-generation business owner. “Are you planning to pass the business on to other family members? Oh, you’re looking to sell. We selected you because of the size of your business,
focus has to be on them, not on you. If you start saying, “What kind of life insurance do you have?” and “I’d love to come talk to you about your life insurance,” all of a sudden you went from being a strategist to being a tactician. FELDMAN: What is the report, and how do you position it? HOLMES: You say, “We did research on what makes companies and generations
HOLMES: You say, “We tried to do this as just a written report but nobody would read it, and our real objective is to help you be more successful. That’s why we do these tours.” Your fallback would be doing it right over the Internet with something like GoToMeeting. You can direct them to the Web address and do the 28-minute presentation that way. FELDMAN: What would the report focus on, and how would someone put one together?
HOLMES: When you walk out into that stadium, the first thing you want to do is say something that makes people say, “Wow.” The way you do that is to look at data over time. For example, you could say that 20 years ago, all of America was employed by 4 million businesses. Take a guess at how many businesses there are today. The prospect is sitting there saying I have no idea, and you click and say 28 million. That means a lot of people like you started their own businesses. And you move on to market data. That’s an example of interesting data points that capture attention.
January 2016 » InsuranceNewsNet Magazine
17
INTERVIEW HOW TO GET MORE DREAM CLIENTS IN 2016
How Chet Holmes Bought Whole Life Insurance I had one guy pitch me insurance who was brilliant. He said “We have this whole life policy,” and he compared it to term. He showed me what I would be paying for a $3 million term policy for 20 years. It was $4,000 a year, and over 20 years it was ridiculous how much it would cost. Then he said, “But if you spend $4,000 a month, after the first two years 100 percent of that is going into a savings account that you get to keep. And that savings account will earn at least 4 percent guaranteed and maybe earn as much as 10 percent. But where's the cost of your insurance after two years? A hundred percent of this money is now going into your bank account. So you get to keep it. Yes, you might spend more money in the first two years, but look at over time. And he just made it look like the insurance was free. I'm sure you guys have all heard that before, but he did a great job. That was years ago, and now I'm to the point where my wealth can compensate for my debts without any insurance. But I still have whole life.
You can hire a third-party researcher or look into studies available on the Internet. The important thing is that it establishes your authority and credibility. You will need information that gives real insight into the prospect’s situation. But the minute you turn into a salesperson, you’ve lost credibility. What you’re teaching them is a righteous setup for a deeper understanding of what insurance can do and how it really protects the family. But you’re not selling insurance — oh my God, don’t start selling insurance. Then you get to the end, and it’s tongue in cheek, but the actual words on your 18
PowerPoint slide say, “And now a word from our sponsor.” And at that point you ask, “Would you like to hear a little bit about what we do?” If you’ve done a great job and it was all great education, they will want to show it to their wives and employees. Then you’ve got a serious growth strategy. FELDMAN: The key would be getting the relevant information that also has impact. HOLMES: You want them to say “wow” 10 times in 10 minutes. It takes work to develop the information and then practice
to present it. It’s what we call commitment to mastery, and this is the key ingredient. My father was a Marine combat instructor, so I started studying karate very, very early. And people ask what the secret is to becoming a karate master. It’s not doing 4,000 karate moves. It’s doing 12 moves 4,000 times each. That’s what makes a master.
Like this article or any other? As seen in the
July 2012 issue
Life
Annuities
of InsuranceNew sNet Magazine
Health July 2012
InsuranceNewsNet Magazine » January 2016 Exclusive digital report for LIMRA Member Companies and
Take advantage of our award-winning journalism, customizable licensure and reprint options. Find out more at innreprints.com.
BREAKTHROUGH! Annuity, Life and RIA advisors are adding IUL to their client portfolios by using the Family Financial Miracle Digital Marketing System. It’s all DONE FOR YOU and it’s FREE! Created by America’s IUL expert and producer, Merle Gilley. The system has enabled advisors to unlock millions with new, old and cold prospects.
“
LET ME PROVE HOW THE MY FAMILY FINANCIAL MIRACLE MARKETING SYSTEM CAN HELP YOU SELL MORE IUL THAN EVER BEFORE. IUL Selling Expert, Merle Gilley
”
GET YOUR HANDS ON MERLE’S IUL BOOK FREE! INCLUDES A FORWARD BY ED SLOTT, CPA
GO TO WWW.MIRACLEADVISOR.COM F
O RO
P
The digital marketing system plus the book resulted in a million dollar PREMIUM case. I never would have gotten it if I wouldn’t have used the system. Frank A., Producer January 2016 » InsuranceNewsNet Magazine
19
NEWSWIRES
Big Premium Hikes for Medicare Drug Plan Many seniors will end up spending more of their retire-
ment funds at the pharmacy. Rising drug costs have overtaken a long stretch of stable premiums for Medicare Part D coverage, so seniors are facing sharply higher premiums to help them buy the medications that keep them going. Government spending on the program also has risen significantly, driven by pricey new drugs, notably for hepatitis C infection. The cost for the hepatitis drugs in the Medicare program is expected to be $9.2 billion this year, nearly doubling from 2014. Because of the prescription program’s financial structure, taxpayers cover most of the cost for expensive medications. Three out of four adults infected with hepatitis C are baby boomers, the group now entering Medicare. Medicare’s prescription plan serves about 40 million older and disabled people. Benefits are provided through a variety of insurance arrangements. Stand-alone drug plans that work with traditional Medicare are the most popular, accounting for more than half of beneficiaries — about 24 million people. Indicators signal rising costs across the program. Most notably, the maximum deductible for prescription coverage will rise by $40, to $360. That’s the biggest increase in the deductible since the inception of Part D in 2006. Nationally, average premiums are going up by more than 15 percent in five of the top eight plans, according to the Kaiser Family Foundation.
THE RETIREMENT EXPECTATION GAP
When most people think of retirement, the image is of a carefree couple relaxing on the beach. But the reality for most people falls starkly short of that idyllic image. A new report by the Transamerica Center for Retirement Studies found that two-thirds of workers aged 50 or older expect to work past 65. But the reality is that the median age at which current retirees left the workforce was 62. Not only that, two-thirds of those who did leave the workforce did so because of work-related reasons such as job loss, a reorganization or a buyout. And only 5 percent of retirees actually are working in retirement. As a result of this expectation gap, many 50-somethings have only limited retirement nest eggs; the center found just $135,000 in median savings in retirement accounts for this age group. That may explain why their worries about retirement tend to relate to outliving their savings. They are also nervous about not being DID YOU
KNOW
?
20
able to support their families or maintain access to reasonably priced health care.
AVERAGE WAGES INCREASED IN 2014
Americans’ wallets got fatter in 2014 than in the year before, although the biggest gains may be filtering to the top. The average American took in $44,569.20 in 2014, according to data from the Social Security Administration. It marks an increase of 3.5 percent from 2013. However, 67 percent of wage earners made less than or equal to the average. Median compensation came in at $28,851.21 for the year, up from $28,031.02 in 2013.
ADVISOR CONFIDENCE RUNNING HIGH
A majority of independent registered investment advisors (RIAs) are projecting firm growth in 2016, according to the results of a study from Schwab Advisor
Annual spending by people aged 65 to 74 averaged $46,757 in 2013. Source: U.S. Bureau of Labor Statistics
InsuranceNewsNet Magazine » January 2016
QUOTABLE Premiums are going up. Deductibles are going up. — Tricia Neuman, a Medicare expert with the Kaiser Family Foundation
Services. Half of all advisors who participated in the study expect their firms to grow between 5 and 10 percent this year, with 32 percent anticipating growth between 11 and 20 percent, and 15 percent projecting growth rates over 20 percent. Independent advisor confidence in the S&P 500 Index is at its highest point in three years, and 67 percent of advisors predict the S&P 500 will increase in the next six months. While confidence in the S&P 500 is high, advisors strongly agree that there will be continued market volatility and that geopolitics and global markets will adversely influence U.S. markets over the next six months. While firm growth is broadly anticipated, it is not without challenges. When asked to cite the growth challenges they face, advisors ranked a more complex compliance environment, technology integration and establishing internal processes, and balancing client services needs with business operational needs as the top contenders.
DIGITAL ADVICE MARKET WILL REACH $489 BILLION BY 2020
The march of the robo-advisor keeps on going. The digital advice market will grow to $489 billion in assets under management by 2020, according to Cerulli Associates research. Large retail direct firms are now offering digital advisory services that have more assets than any of the startups that pioneered this product category. The entrance of large retail direct firms will be one of the major drivers of growth for digital advice. In the short time that retail direct firms have been offering digital advisory services, they have captured considerable market share. “To be successful, digital advisors will need to develop a strategy that incorporates the human element into their service model,” said Tom O’Shea, associate director at Cerulli.
Indexed UL Can’t Should Be Sold to Seniors IT’S ABOUT TIME SOMEONE SET THE RECORD STRAIGHT.
Nobody can deny that seniors dominate as the biggest and most sought-after market for agents and retirement planners. But advisors are getting some bad advice these days when it comes to selling Indexed UL to this lucrative group.
MORE THAN 90% OF THE AGENTS WE TALK TO BELIEVE THE SAME MYTHS: • “Seniors simply can’t get approved”
• “Underwriting on an IUL policy takes too long”
• “There’s not enough time for the policy to grow”
• “IULs are best sold to Gen Xers and Millennials”
• “Fees are too high to capture gains”
WHAT AGENTS NEED TO KNOW.
Agents are being done a huge disservice by excluding Indexed UL for their senior clients. If this is your mindset, make no mistake: you’re missing out on one of the best ways to fulfill your moral obligation to senior clients by offering them a way to control their taxes and their losses, receive tax-free income and have a tax-free benefit to pass on to their heirs.
WHAT IS YOUR TIME WORTH?
Doesn’t it make more sense to stay in the market you’re comfortable selling in? We guarantee every minute of this webinar and the information included will be worth your valuable time.
Just a few of our 2015
MYTH-BUSTING STATS in the Senior Market:
» » »
$15 MILLION of paid IUL target premium 300 Apps Approved in 21 days or less Plus! Cash with app on every IUL sale
WE’RE UNVEILING THE TRUTH
Attend our FREE Webinar: Selling IUL to Seniors – A Missed Opportunity Register today and educate yourself – you owe it to your practice and to your senior clients.
www.IULforSeniors.com
January 2016 » InsuranceNewsNet Magazine
21
An InsuranceNewsNet Poll Shows Over-$100,000 Producers Succeed With Diverse Businesses and Midsized Shops By Steven A. Morelli 22
InsuranceNewsNet Magazine Âť January 2016
PROFILES OF SUCCESS: 2016 AGENT STUDY FEATURE
M
ost InsuranceNewsNet readers are selling products traditionally associated with insurance. However, our higher-earning readers tended to have practices that are more hybrid, selling financial products in addition to insurance. That was one of the more interesting observations we derived from a poll of InsuranceNewsNet readers in October. It is clear that life insurance is still the producers’ bread and butter, with the highest percentage of INN readers (81 percent) reporting that they sell term life. Other life insurance products followed
term life as the most popular products sold by INN readers, with 51 percent selling universal life, 46 percent selling whole life and 45 percent selling indexed universal life. After those life insurance products came the first mention of annuities, with 42 percent of readers selling fixed index annuities. The next most popular annuity was traditional fixed, coming in at No. 8 with 28 percent of readers selling it. Health-related products follow FIAs in reader popularity, with 30 percent of readers selling long-term care insurance, 29 percent selling disability insurance and 27 percent selling individual
health coverage. (The poll, taken of more than 200 InsuranceNewsNet magazine and online readers, has a confidence level of 95 percent.)
Higher Earners vs. Lower Earners
The product lineup is similar when comparing the lower earners — those making less than $100,000 annually — with higher earners who were making more. However, some key differences between the two income groups emerged. The higher-earning producers tended to sell more life insurance and annuities than did the lower-earning group.
Sales of which product line account for the majority of your total annual commission? 50% 40% 30% 20%
Long-term care
Disability insurance
Group/worksite
Property/casualty
Other
Health insurance
Securities
Annuities
Life insurance
10%
Which of the following products have you sold within the past 12 months? (Overall) 90% 80% 70% 60% 50% 40% 30% 20%
Variable life
Other
Worksite/payroll
Variable universal life
Medicare
Critical illness
Group health
SPIAs
Variable annuity
Medicare supplement
Individual health
Final expense
Fixed annuity
Disability income
Long-term care
Indexed annuity
Indexed universal life
Whole life
Universal life
Term life
10%
January 2016 » InsuranceNewsNet Magazine
23
FEATURE PROFILES OF SUCCESS: 2016 AGENT STUDY
Meanwhile, the lower-earning group sold a higher percentage of health products than did those in the higher-earning bracket. The four top-selling life insurance products were the same for each group, but the percentage of those products sold by the lower-earning group trailed the higher-earning group by an average of 10 points. The difference becomes starker when looking at annuity sales. Among the higher earners, 46 percent sold FIAs, compared with 39 percent of the lower earners. Where traditional fixed annuities were concerned, 36 percent of the higher-earning group sold them, compared with 20 percent of the lowerearning group. Single-premium immediate annuities were sold by 27 percent of the higher earners and 10 percent of the lower earners. The sales of traditional annuities and SPIAs point to readers using them for income and retirement planning for their clients because these products tend to be used for the income stream and tax advantages they offer. Health insurance tends to be less lucrative than other insurance sales, but there were differences in the type of market served by the two earner groups. The higher earners tended to sell long-term care and disability by a larger margin, which may indicate that this group of advisors uses the supplemental products as income protection in their overall planning for clients. Variable annuity sales were where the greatest difference between the two groups of advisors showed up. Forty percent of the higher earners reported selling VAs, compared with 10 percent of the lower earners. The gulf was not as great for variable universal life — sold by 18 percent of higher earners versus 4 percent of lower earners — but still significant. The difference between the two groups also is reflected in the licensing that allows the sale of variable products, with more of the higher earners holding those licenses.
Which of the following products have you sold within the past 12 months? Earning over $100k annually
Earning under $100k annually
Term life
Universal life
Whole life
Indexed UL
Indexed annuity
LTC
Variable annuity
Disability income
Trad. fixed annuity
SPIAs
Final expense
Individual health
Medicare supplement
Variable universal life
Group health
Worksite/payroll
Critical illness
Variable life Medicare
Licenses and Designations
Speaking of licenses and designations, a greater percentage of the higher earners held a Series 6 or 7 license.
24
InsuranceNewsNet Magazine Âť January 2016
Advantage and disability 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
50% PROFILES OF SUCCESS: 2016 AGENT STUDY FEATURE
Put Your Marketing on Autopilot, and Turn Prospects Into Clients
WITHOUT SPENDING A SINGLE
of high earners expect to get income from fees next year, versus 30% for lower earners
The Series 6, which allows the sale of variable products, was held by 43 percent of the higher earners and 17 percent of the lower earners. The Series 7, which also allows the sale of other securities, was held by 38 percent of the higher earners and 8 percent of the lower earners. Only a few of the lower earners (7 percent) said they expected to get a Series 6 or 7 in the next five years. By the way, the difference was clear at the top of the range. Of producers making more than $200,000 annually, half of them had a Series 7, which requires what is considered the most difficult of the securities exams. The spread between the under- and over-$100,000 groups is wider for pro-
ducers who collect fees. Of the higher earners, 60 percent expect to derive some income from fees next year, versus 30 percent of the lower earners. The margins between the two earnings groups were closer when it comes to readers who hold insurance designations, such as Life Underwriter Training Council Fellow or Chartered Life Underwriter. However, here again, a higher percentage of the higher earners held such designations. Another wide difference between the two earning groups was membership in professional organizations — one association in particular. Substantially more of the higher earners — 37 percent — belonged to the
In the past 12 months, has your commission and fee income….. Earning over $100k annually
Astonishing new video reveals how to imprint yourself in the minds of 4 of the 5 consumers who search for an insurance agent online and much more… After you watch this video you’ll realize that your competition doesn’t stand a chance against you in 2016.
Get instant access at:
Earning under $100k annually
SAFEMONEYAUTHORITY.COM
Increased
or call
844.651.0741
Stayed the same
Decreased
0%
10%
20%
30%
40%
50%
60%
January 2016 » InsuranceNewsNet Magazine
25
FEATURE PROFILES OF SUCCESS
8 Presentation Mistakes That Are
Killing Your Sales
Presentainer™, Dave VanHoose has just exposed some frighteningly common mistakes advisors are making every day – and it’s got some so-called seminar experts up in arms! What does this mean for you? It means there’s a chance you’re making one or more of the following 8 mistakes. It also means there’s an even better chance a couple of simple tweaks to your routine could make a huge impact on your results. Read on to see if any of these sales-killing presentation mistakes are familiar: 1. Not Using a Strong Introduction
6. Failing to Build Value
2. Too Much Teaching
7. Being Short-Sighted
You need to be in a position of power the moment you start talking. Which means, you need to somehow establish yourself as an authority before you even begin. The best way to do this is to have someone else introduce you a certain way. Let’s face it — we don’t “take” power. It’s something we have to be granted by others. Training complex ideas and jamming two hours of material into a 45-60-minute presentation causes confusion and can make you look a bit frazzled as you try to plow through concepts. And while it’s great when your audience walks away smarter and more knowledgeable, it’s even better when they don’t walk away. The reality is, your prospects would rather just be entertained — it’s called Presentaining™.
3. Using Outdated Strategies
Today’s consumers are much smarter than the consumers of the 80s and 90s, for whom traditional presentation and communication strategies were developed. For example, your prospects know they’re going to be sold to. Waiting until the end of your presentation to mention the offer just gives this “elephant in the room” ample time to stink the place up.
4. Not Engaging by Using Emotions
Emotions trigger decisions to buy. Emotions turn a curiosity or a want into a need. To fire up emotions, you should be telling engaging stories, which is what your audience wants to hear anyway. Stop talking about features and start using stories to show the benefits of the benefits.
5. Not Using All Available Tools of Persuasion
A presentation isn’t simply about what you say and what visual aids you use. You are placing your whole self in front of an audience, so use the extra opportunities, such as body language and tonality, to your advantage.
People don’t value things that feel “cheap” — and “free” is even worse than cheap. If you’re immediately saying your strategy session is free without using any techniques to establish its value, not only will you get fewer takers, but those who do schedule will have lackluster engagement when they attend. Many presenters don’t think long-term. Yes, the goal is to book appointments or secure second appointments, but are you thinking beyond scheduling? There are ways you can plant seeds during your initial presentation that will help you all the way up to closing the sale and even beyond, like with referrals and ongoing business.
8. Failing to Include the Irresistible Offer “The Irresistible Offer” is that thing that has fast food patrons pushing up to the counter and ordering without the cashier having to sell to them. It’s your cheeseburger that your audience is starving for and yes, they probably even want fries with that. Working it into your presentation is as simple as using established copywriting law and a little reverse engineering.
FREE KIT!
Are you ready to incorporate the Irresistible Offer, eliminate the other 7 mistakes and see your current numbers multiply tenfold? – “tenfold” because that’s exactly what happened when Presentainer™, Dave VanHoose discovered and implemented strategies he’s now making available in a comprehensive kit at:
www.FreePresentainerKit.com
Accept your free gift today, which includes: R The Presentainer™’s FIELD GUIDE to Sell More NOW R Influence in Action EXCLUSIVE Footage 26
R Success by Design Blueprint R Irresistible Offer Architecture™ Guide
Magazine » January 2016 StopInsuranceNewsNet earning a tenth of your potential. Download your free Presentainer™ kit at www.FreePresentainerKit.com.
So you need E&O insurance?
PROFILES OF SUCCESS: 2016 AGENT STUDY FEATURE
57% of lower earners work out of their home, compared with just 22% of higher earners
National Association of Insurance and Financial Advisors (NAIFA), compared with 19 percent of the lower earners.
Prospecting
Prospecting is by far the most difficult aspect of selling insurance, according to the advisors who responded to the survey. But here again, members of the two income groups experience this difficulty in different ways. Among the lower earners, 73 percent found prospecting the most difficult. That challenge was followed by 33 percent who said their greatest sales challenge is “clients don’t recognize need.” For the over-$100,000 earners, 50 percent named prospecting as their most difficult challenge. The next three challenges were named by about 25 percent of this group, and two of them were related to the underwriting process. One was “clients don’t recognize need,” the same as was reported by the lower earners. The other two obstacles reported by the higher earners were
“difficulty in getting through underwriting” and “applications are too long.” The over-$200,000 group’s response to their greatest sales challenge was intriguing. Although prospecting was still the leading challenge for this group, it was named by only 36 percent of them. But “clients don’t recognize need,” was a close second, cited by 32 percent. The two underwriting concerns also were named by 25 percent of the over$200,000 group. But even though prospecting was named as the top sales challenge by all of the groups, not many of them are spending an enormous amount of time on prospecting. Of the under-$100,000 crowd, 61 percent spend less than 25 percent of their time prospecting; 37 percent spend less than 10 percent of their time on it. For the higher earners, that climbs to 77 percent saying they spend less than 25 percent of their time prospecting. That climbs further still for the over$200,000 crowd, with 84 percent saying
Lower earners' largest business expense is MARKETING, while for higher earners it’s EMPLOYEE SALARIES. January 2016 » InsuranceNewsNet Magazine
27
We hear that!
Get Your E&O Coverage Rate Instantly! Broad Coverage at the Lowest Rates Choose your coverage and receive your certificate in minutes. You’ll experience, no underwriting, no lengthy application, instant eligibility, 10 yes/no questions and set rates. Eliminate your E&O headache at an incredible price! •
Rates as Low As $44 a month
•
Flexible monthly payment options available (pay in full and save money)
•
Broad coverage
INN readers will get access to a discounted rate. Get your rate instantly by:
Calling 866-277-7162 or visit InterWebInsurance.com. We’ll give your case special consideration if you had a “bump in the road” or need broader coverage.
FEATURE PROFILES OF SUCCESS: 2016 AGENT STUDY
they spend less than 25 percent of their time prospecting, and 39 percent say they spend less than 10 percent of their time hunting new clients. Everybody agreed by a huge margin that referrals are the best way to prospect, with 65 percent of the lower earners, 61 percent of the higher earners and 70 percent of the over-$200,000 group favoring referrals. But the second-place methods of prospecting were very distant, and very different among the earning groups. The lowest-earning group bought leads (9 percent). The higher-earning group used “strategic alliances with attorneys, CPAs or other financial professionals” (11 percent). The over-$200,000 crowd used seminars (11 percent). It’s clear that prospecting is part of everybody’s future, but of course to different degrees. Of the lower-earning group, 66 percent said at least 75 percent of their business comes from new clients; of the over-$100,000 group, 48 percent said 75 percent of their business is new. That drops to 43 percent for the over-$200,000 crowd.
Time and Place
Time is money — at least the time correlated with income. It is often said that it’s best to work smarter rather than longer. These folks are smart (we’ll see that in a bit), but they are also putting in long hours. Of the lower-earning group, 42 percent spent more than 40 hours a week working at their insurance/financial profession, with 3 percent spending more than 60 hours weekly. The higher earners were more likely than their lower-earning peers to burn the midnight oil at work. Of the over$100,000 set, 59 percent did more than 40 hours a week, with 11 percent exceeding 60 hours weekly. Of the over$200,000 crowd, 63 percent did more than 40 hours weekly, with 11 percent topping 60 hours a week. The adage “The more you learn, the more you earn” also rang true for our readers. The survey indicated that education levels seem to correlate with income. Of the lower-earning group, 28% had less than a bachelor’s degree. Of the
28
InsuranceNewsNet Magazine » January 2016
What do you find to be the most challenging aspects of selling insurance? Earning over $100k annually
Earning under $100k annually
Prospecting Client needs Underwriting Negative opinions Making the sales Lack of support Prefer other products 0%
10%
20%
30%
40%
50%
60%
70%
80%
In addition to your life and/or health license, what licenses and/or designations do you hold? Earning over $100k annually
Earning under $100k annually
Series 6 Series 7 LUTC CLU ChFC P&C 0%
10%
20%
30%
40%
50%
What professional organizations do you belong to? Earning over $100k annually
Earning under $100k annually
NAIFA FSP MDRT 0%
10%
20%
30%
40%
PROFILES OF SUCCESS: 2016 AGENT STUDY FEATURE
70%
of producers spend less than 25% of their time prospecting despite it being their greatest challenge. higher-earning group, 23 percent had less than a bachelor’s, and of the top-earning group, it was 12 percent. Members of all the groups have put in their years. Of the lower-income group, 81 percent had an insurance license for at least 10 years, with 42 percent holding one for more than 20. Among the over-$100,000 group, 98 percent held a license for more than 10 years, with 71 percent of this group having been licensed for more than 20 years. All of the producers in the over$200,000 group had their licenses for more than 10 years, with 75 percent of them licensed for more than 20 years. But besides spending time in their work and careers, the higher earners clearly had a different kind of business. Of the lower earners, 57 percent worked out of their home. More than half of them — 52 percent — were the lone employee in their practice.
NEVER
But only 22 percent of those in the over-$100,000 group worked out of their residence. The largest percentage in that earning group, 44 percent, worked in offices with two to five people. Of the over-$200,000 producers, only 6 percent worked out of their home, and 39 percent worked with two to five people. The different business models were reflected by the expenses incurred by the different earning groups as well. Marketing was named as the top expense for the lower-earning group, with 34 percent of this group naming it their top expense. Employee salaries were the biggest expense for the higher earners, cited by 39 percent of the over-$100,000 group and more than half (51 percent) of the over-$200,000 producers. A majority of producers across all the earnings were the owners or principals of their agencies. Of the lower-earning group, 75 percent owned their agencies.
52%
AGAIN • View all your commissions • Access commission schedules at your fingertips • Track payments so you can project your income
&
NEVER MISS A
DETAIL
• • • • • •
Beneficiaries Case studies Policy statements Policy values Production reports And more!
ACCESS 24/7
of lower earners are more likely to be in a single-person agency, compared with just 15% of higher earners.
January 2016 » InsuranceNewsNet Magazine
MISS A COMMISSION
To start organizing your business with a FREE GIFT visit
www.Back9NeverMiss.com
29
FEATURE PROFILES OF SUCCESS: 2016 AGENT STUDY
Of the higher earners, 79 percent owned their agencies. Among the top earners, 77 percent were the agency owners. Many of the owners and principals don’t have succession plans in place despite the fact that a large majority of them have been in business for more than 20 years. Of the lower-earning group, 65 percent said they have no succession plan. In the higher-earning group, 48 percent had no plan, while 35 percent of the top-earning group are without a plan.
Putting It Together
The different income ranges seem to fall in line with certain business models. Those making less than $100,000 tended to work out of their homes by themselves. They tended to be focused on life insurance, with a good amount of health insurance thrown in. Once producers crossed the $100,000 line, they tended to be working in an office, usually with a small staff of up to five people. They also put in long weeks, with many going past 60 hours. The members of this group also tended to hold other licenses, particularly ones that allowed them to sell variable products and other securities. But one of the more intriguing findings in the survey was that term life was the most commonly sold product, followed by other standby forms of life insurance. The top earners also get involved with industry groups, especially NAIFA. Along with their insurance and securities licenses and at least a bachelor’s degree, they tended to have at least a few designations, such as a CLU. The survey seems to bear out what many observers say about an insurance career: You earn what you learn, and you get what you give. Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@insurancenewsnet.com.
30
InsuranceNewsNet Magazine » January 2016
35%
of producers have their own website to market their agency online. What do you find to be the most effective method of prospecting for new clients? Referrals
Attorneys/CPAs
Other
Seminars
Purchased leads
Direct mail
Online leads
Cold-calling
0%
10%
20%
30%
80%
40%
50%
60%
70%
of producers expect their income to increase next year, while only 7% expect their income to decline.
WAR ON ANNUITIES FEATURE
NAIFA HELPS YOU
GROW
Your professional association has never been more important to your career than it is today.
YOUR BUSINESS
NAIFA’s LUTCF Successful insurance and financial services careers are deeply rooted in product knowledge and effective sales skills. The new NAIFA LUTCF curriculum combines product-focused education with hands-on sales training to help newer advisors thrive in a competitive industry.
Errors & Omissions Coverage CalSurance for NAIFA members includes multiple coverage benefits and customizable coverage options for individuals and agencies. The NAIFA/CalSurance Risk Management/Loss Control Seminar can save you up to 10% on your policy for the next three policy terms.
College for Financial Planning NAIFA’s partnership with the College for Financial Planning includes a 15% discount for NAIFA members. Founded in 1972, The College created the Certified Financial Planner™ (CFP®) certification and is the exclusive provider of eight additional industry benchmark designations, Series Exam Prep courses, and three Master of Science degrees.
NAIFA’s Advisor Today Magazine Advisor Today is the premier source for practice management content and industry news. NAIFA SmartBrief All the insurance and financial news you need, every day, in a two-minute read.
These are just a few examples of how NAIFA benefits your career. Join today and start growing your business like never before.
Go to www.NAIFA.org/ItPays or call 1-877-866-2432.
January 2016 » InsuranceNewsNet Magazine
31
LIFEWIRES
COLLEGE DEGREE
Life Insurance – The Cure for Student Debt? The news is filled with alarming headlines about the mushrooming cost of attending college and the stranglehold that student debt has on young people and their families. What does this have to do with life insurance? Actually quite a bit, according to LIMRA research. LIMRA research has found that some families, but not many, are using life insurance to help pay for college. This year’s Insurance Barometer Study revealed that one in five consumers said it was one of the reasons why they bought life insurance. The U.S. Labor Department says the cost of college tuition grew by nearly 80 percent between 2003 and 2013. And LIMRA research has found that for those under 35, education loans make up almost 70 percent of their debt. With statistics like these, financial professionals can encourage consumers to invest early in a whole life policy for college savings, and reap the benefits that can’t be found in traditional college savings plans. Another plus for parents saving up for their children’s college education? Life insurance policies typically are not figured into financial aid eligibility.
CHINESE COMPANY TO ACQUIRE FGL
The trend toward foreign companies merging with American life insurers continues. The latest transaction involves Anbang Insurance Group merging with Fidelity & Guaranty Life. China-based Anbang will acquire FGL for $26.80 per share. It is expected that FGL’s solid life insurance platforms will enhance the growth of Anbang’s business while accelerating FGL’s ability to further extend its policyholder base, the company said in a statement.
LIFE INSURERS PAY OUT RECORD DIVIDENDS
Some life insurance policyholders will receive a nice chunk of change, as a few of the nation’s leading life insurers announced they will pay out record dividends in 2016. New York Life announced that participating policyholders will receive a record payout of $1.7 billion in 2016. Of the $1.7 billion being distributed, individual life insurance policyholders are expected to receive more than $1.6 billion, also a record payout. The 2016 payout to the company’s life DID YOU
KNOW
?
32
insurance policyholders represents a 37 percent increase in dividend payout in the four years since the 2012 distribution of $1.19 billion. This marks the 162nd consecutive year that New York Life has paid a dividend to policyholders. MassMutual also is paying out a record dividend of $1.7 billion. The payout is a nearly $100 million increase over 2015, and this is the fourth consecutive year it has reached a new record. The 2016 dividend marks nearly two decades that the company has consecutively announced an estimated dividend payout exceeding $1 billion. Guardian Life will pay $836 million in dividends to the company’s individual life policyholders in 2016, representing the largest such payout in company history. Company officials said that Guardian has paid out a dividend every year since 1868. Penn Mutual will pay $48 million in dividends for 2016. This figure represents a 17 percent increase over the 2015 dividend and a 61 percent increase over just five years ago.
David O’Malley, who began his career as an intern at Penn Mutual, was named the company’s president and chief operating officer. Source: Penn Mutual
InsuranceNewsNet Magazine » January 2016
QUOTABLE
We’ve all been chasing the one percenters. — David Long, chairman of the National Association of Independent Life Brokerage Agencies, speaking about the need for advisors to serve the middle market.
LIFE CARRIERS REACHING SALES MILESTONES
In addition to paying out record dividends, some life insurers hit sales milestones. New York Life announced an 11 percent increase in sales of individual recurring premium life insurance through agents for the first three quarters of 2015, and a 4 percent increase in the number of policies sold through agents. In the fraternal benefit market, the Knights of Columbus announced it had surpassed the $100 billion mark in the amount of life insurance in force. The $100 billion milestone caps a year in which the Knights of Columbus set a record for insurance sales, with $8 billion sold.
METLIFE AIMS FOR CARBON NEUTRALITY
The words “life insurance” and “carbon neutrality” usually aren’t heard together. But MetLife announced that it is going green by becoming the first U.S.-based insurer to achieve carbon neutrality, with the goal of making that a reality by the end of this year. MetLife will achieve its goal through real reductions in energy use and greenhouse gas (GHG) emissions, not simply through the purchase of carbon offsets. In addition, MetLife will require its top suppliers to publicly disclose their GHG emissions and mitigation efforts for the first time. Among the insurer’s green goals is to reduce all its energy consumption by 10 percent by 2020. Since 2005, MetLife has reduced energy consumption across its U.S.owned offices by 25 percent as a result of facility upgrades and capital improvement projects.
Discover a BOLD way to increase business
Business Owner Life-stage Design (BOLD) is a complimentary marketing system that helps you help business owners: • Grow their business. • Retire comfortably. • Maximize their estate. Call our Life Sales Support Team at 1-888-413-7860, Option 1 to learn about BOLD strategies that can help you and your business owner clients succeed.
hij abc INSURANCE | INVESTMENTS | RETIREMENT
Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. Securian Financial Group, Inc. www.securian.com 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. Both companies are headquartered in Saint 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. 400 Robert Street North, St. Paul, MN 55101-2098 • 1-800-820-4205 ©2015 Securian Financial Group, Inc. All rights reserved. F82624-27 1-2016 DOFU 1-2016 29952
For financial professional use only. Not for use with the public. This material may January 2016 » InsuranceNewsNet Magazine 33 not be reproduced in any form where it would be accessible to the general public.
LIFE
earning how the legalized L marijuana industry works can help advisors add more green to their bottom line. By Ted Jenkin
S
o, what the heck is a “ganjapreneur” anyway? If you have nothing important to do for a few hours and you want to laugh out loud, take a gander at www.ganjapreneur.com/marijuana-slang. This is a website where you can see just about any marijuana slang you could ever imagine. Ganja is another widely accepted name for cannabis. Although the term “ganja” is often attributed to Rastafarian culture, it is in fact the Hindi word for hemp, which was introduced to Jamaica by Indian indentured servants. Lately, its usage in Western society has become incredibly mainstream and in some cases grossly overcommercialized. Thus, the everincreasing ranks of ganjapreneurs are those who start businesses centering on the substance known as marijuana. As somebody who deals in life insurance, your first instinct is to tell yourself that nobody who smokes marijuana or puts it in their body in any way is ever going to stand a chance of being approved for life insurance. In fact, even if they don’t smoke any marijuana, what would be the chances of being able to obtain some sort of buy/sell or key person life insurance if they have an all-cash business? Even if you are in one of the several states where marijuana is legal or almost half of the country where some form of medical marijuana is legal as well, how will you convince the insurance company that you would be a good risk profile for life insurance? What a difficult dilemma for the fast-growing ganjapreneur population in America! What’s funny about this topic is that I’ll bet every person who has sold life insurance has faced this question with a 34
Chris Warner of Always Greenest collective measures out marijuana at PotLuck, a medical cannabis expo in San Diego. prospect at some point. The prospect is filling out the application, and the question comes up about whether or not they smoke. The prospect asks, “Do they mean cigarettes or some other type of substance?” The insurance agent politely chuckles under their breath and then replies, “They mean any type of smoking.” Then the prospect responds with, “I’ll sign up for this life insurance, but it will take me a few weeks before I can take a medical exam. But I have never smoked in my entire life.” Have you ever come across this situation in your career? My guess is that you have at one point or another. Any good life insurance agent can put two and two together, but what can or should you do for the ganjapreneur who needs life insurance? Let’s take a quick look at the current ways in which insurance companies are dealing with marijuana smokers. The first question is, how will insurance companies begin to put in place an underwriting policy for marijuana users? Underwriting is still a part objective/part subjective process in which the life insurers ultimately need to assess a customer’s risk to the insurance company. When dealing with
InsuranceNewsNet Magazine » January 2016
companies that do have a policy, you’ll be able to guide your clients along more easily because they will know how the severity of their marijuana use will affect their overall rating. Before the advent of medical marijuana and legalized marijuana, trying to get guidance from a life insurance company was really a crapshoot. For most prospects who are general marijuana smokers, you will likely have to classify them as smokers, the same as you would classify someone who smokes cigarettes. Depending on the insurance company, your prospect would pay the table rates of what a smoker would pay — which could double their rates. There are still some carriers that say marijuana is illegal everywhere and thus will not underwrite a marijuana smoker, so do your homework in advance. Since insurance carriers are varying more widely these days, your prospect won’t get preferred rates if they admit to smoking marijuana even recreationally, but they could still get a standard nontobacco rate for having only a “celebratory joint” here and there. Sometimes, insurance carriers call these people social marijuana smokers. Go figure!
Photo: K.C. Alfred/ZUMA Press/Newscom
How Can a Ganjapreneur Get Life Insurance?
HOW CAN A GANJAPRENEUR GET LIFE INSURANCE? LIFE For your ganjapreneurs, it will be important that they keep excellent books and records of their business. Despite the fact that their local bank may not allow them to open an account, there is no reason they should not maintain a balance sheet and profit-and-loss statements as well as file a tax return. Remember, for those of you who have had to underwrite the owners of all types of businesses, this business wouldn’t differ from any other cash business you have had to underwrite for a buy/sell, key person, or other types of life or disability insurance. The next challenge that you may have with ganjapreneurs is being able to prove their income or the value of their business. Many different types of businesses exist within this growing industry. You will run into your biggest problem in working with those ganjapreneurs who truly have a cash businesses, because they are selling marijuana in states that recognize this as a legal activity. This is where the fact that it is a cash business makes it nearly impossible to keep banking records for the business. As with any other cash business, you should do
7
Your prospect won’t get preferred rates if they admit to smoking marijuana even recreationally, but they could still get a standard nontobacco rate for having only a “celebratory joint” here and there. your best to talk to those business owners about what they declare on their tax returns, because the tax returns will affect things such as getting a mortgage and getting disability insurance. The information on the tax returns also could affect how much life insurance the business owners will buy in the future.
With little real market data on the valuations of marijuana businesses, trying to put a value on one of them is speculative at best. However, you will have to do your best to help your clients if you are going to deliver the right amount of death benefit for their family or the right amount of buy/sell or key person insurance for the business. Remember to take into account how much more difficult it will likely be in the future to maintain a marijuana business license and what the real multiple should be on the cash flow within the business. What may have seemed like a joke in the past will become a big business for the insurance agents who learn how ganjapreneurs work within their industry. If you can figure out this market, you might be able to add some green to your bottom line by selling more life insurance. Ted Jenkin is the co-CEO and founder of oXYGen Financial, a financial advisory firm in Atlanta. Ted may be contacted at ted. jenkin@innfeedback.com.
SURPRISING TRUTHS THAT ARE REDIRECTING PRODUCERS
It’s time to consider that you may only be making a third of your potential – and it’s not your fault. This brand new FREE report reveals: • The eye-opening truth about vesting that can help producers get ahead • The training shortcuts that could be damaging your bottom line • Why some leads are so difficult to convert – and where “easy leads” can be found • How to increase your volume by 20% • And more … (#6 is quite interesting)
If you’d like your shot at making 3x the national average for producers, read this revealing FREE report.
Download yours today at www.my7truths.com January 2016 » InsuranceNewsNet Magazine
35
LIFE
Evaluating When to Replace Split-Dollar Life Insurance our client’s split-dollar covY erage could turn into a ticking time bomb. Here is how you can help your client decide whether to keep the coverage or replace it. By Louis S. Shuntich
A
substantial number of people with existing equity split-dollar life insurance arrangements failed to take advantage of grandfathering opportunities that could have saved them some taxes. The chickens are coming home to roost for those who did not bail out of pre-Jan. 28, 2002, equity split-dollar life insurance arrangements before Jan. 1, 2004. This could result in a ticking tax time bomb, which you can help defuse.
But First, Some Background
The evolution of split-dollar life insurance has covered several periods. It began 36
in 1955 with the Internal Revenue Service’s view that split-dollar was an interest-free loan that entailed no tax consequences. The IRS revisited split-dollar in 1964 through 1966. At that time, the IRS decided that split-dollar resulted in the transfer of economic benefits to employees in the form of current life insurance protection that could be measured using either the IRS’ P.S. 58 rates or the insurance company’s alternative term rates if they were lower and available to all standard risks. During this period, the IRS did not, however, clearly address the tax treatment of “equity” cash values that were attributable to the employer’s premium contributions and accrued for the employees' benefit. The first attempt to raise this issue appeared in an IRS Technical Advice Memorandum (TAM). This was controversial because the IRS ruled that besides being taxed on the value of current life insurance protection, employees also were
InsuranceNewsNet Magazine » January 2016
liable for taxes on the cash values as they accrued for the employees’ benefit. The public reaction over the taxation of equity cash values, as well as disagreement regarding the proper use of insurers’ term rates to measure the value of employees’ current life insurance protection, led the IRS to issue two notices and temporary regulations. These were meant to provide interim guidance on the tax treatment of split-dollar until final regulations were issued and became effective for arrangements entered into on and after Sept. 18, 2003.
Tax Treatment of Cash Values
To understand the controversy over the taxation of cash values that accrue for the employees' benefit, it is necessary to compare the “non-equity” and “equity” approaches to split-dollar. In that regard, under the non-equity type of plan, the employer’s interest in the policy’s cash value is equal to the greater of the cash
January 2016 Âť InsuranceNewsNet Magazine
37
LIFE EVALUATING WHEN TO REPLACE SPLIT-DOLLAR LIFE INSURANCE value or its total premium advances. This results in the employer owning any cash values in excess of its premium contributions. On the other hand, if the equity approach is used, the employer’s interest is limited to the amount of its aggregate premium contributions, with any excess belonging to the employee.
Valuing the Employee’s Life Insurance Protection
IRS Notice 2002-8 governs how to measure the value of an employee’s life insurance protection under a split-dollar agreement. Notice 2002-8 provided the following guidance. » P.S. 58 rates may not be used after 2001, except for split-dollar arrangements in effect before Jan. 28, 2002. » The final regulations do not allow the use of an insurer’s alternative term rates for arrangements entered into after Dec. 31, 2003, unless they are available to all standard risks for initial issue one-year term insurance on policies that are actually sold by the insurer. » Taxpayers may use the Table 2001 rates (published in Notice 2001-10) for new arrangements until further guidance is published.
Replacing Policies Under Pre-2002 Split-Dollar Agreements
In Notice 2002-8, the IRS also gave taxpayers a set of grandfather rules through which they could avoid adverse income tax consequences on the termination of pre-Jan. 28, 2002, equity split-dollar plans under the forthcoming final regulations. The first two choices were either to terminate the plan or convert it to a loan arrangement before Jan. 1, 2004. Alternatively, taxation on the employee’s share of the cash value could be avoided as long as the arrangement was kept in effect and the employee annually reported the value of current life insurance protection as taxable income. It has become apparent that a substantial number of those with existing equity split-dollar arrangements did not take advantage of the grandfathering opportunities under Notice 2002-8. As a result, those who did not bail out of pre-Jan. 28, 2002, equity split-dollar life insurance 38
It has become apparent that a substantial number of those with existing equity split-dollar arrangements did not take advantage of the grandfathering opportunities. arrangements before Jan. 1, 2004, could find themselves in a predicament. That is because the tax cost of continuing or terminating these arrangements increases with the passage of time. The higher cost of continuing these plans relates to the annually increasing term life insurance rates that are used to measure the value of the coverage that the employee is taxed on each year. In addition, the escalating cost of termination stems from the employee’s increasing share of the policy’s cash value that will be taxed to the employee at the end of the plan. That leaves the question of what to do when a policy audit uncovers one of these ticking time bombs and possibly indicates that the taxpayer may be better off with a new replacement policy.
Replacement Considerations for Equity Plans
When considering replacement, you must understand that the transaction probably will be treated as a termination of the split-dollar arrangement and will take the policy outside the protection of the grandfather rules of Notice 2002-8. This means that in the case of an equity plan, the the employee may be taxed on the employee's share of the cash value when the plan terminates. That requires comparing the potential premium savings to the employer and any other advantages of the replacement to the possible taxes incurred by the employee on the equity cash value of the existing policy when the plan ends. It should be noted that even when replacement is not an issue, if the policy has accumulated little or no equity, it may be advisable to terminate the plan unless the employee is in bad health and needs the
InsuranceNewsNet Magazine » January 2016
coverage. This is because the tax on the reportable economic benefit will increase with the employee’s age until it may force a termination of the plan. At this point, the employee may be taxed on an even larger amount of cash value.
Replacement Considerations For Non-Equity Plans
In the case of non-equity plans, beyond the usual replacement issues, the question related to split-dollar is what effect taking the plan outside the grandfather rules of Notice 2002-8 has on the reporting of the annual economic benefit from the coverage. In that regard, it means going from using the life company’s lower alternative term rates on the existing policy to using IRS Table 2001 for the replacement policy unless the new carrier has a qualifying alternative term contract. To put that into perspective, you should understand that for a client aged 55, the Table 2001 rate is only around a third of the P.S. 58 rate but may be several times higher than a company’s alternative term rate. Consequently, the decision rests on whether the possible premium savings and other advantages of the replacement policy override any higher reportable income to the employee on the new coverage if the policy is to be maintained under a new non-equity split-dollar arrangement. If replacement is not an issue, then it comes down to determining at which point the plan will have to be terminated because the reportable economic benefit to the employee is too high to justify the coverage. But again, the coverage may be worth keeping if the employee needs it and is in poor health. Louis S. Shuntich, JD, LLM, is director, advanced consulting group, Nationwide. He may be contacted at louis. shuntich@innfeedback.com.
Like this article or any other? As seen in the
July 2012 issue
Life
Annuities
of InsuranceNewsN
et Magazine
Health July 2012
Take advantage of our award-winning journalism, customizable licensure and reprint options. Find out more at innreprints.com.
LIFE
|
ANNUITIES
|
MEDICARE SUPPLEMENT
Financing Retirement
Multi-Select Series
mul ti-y e a r gua ra ntee d annuity t m
3 -year to 10 -year MYGA
BUCKET LISTS
Royal Select
Customized for Senior Needs... Pick Your Bucket
f i x e d i n d e x e d a n n u i t yt m
➤
➤ Royal Select 8% Premium Bonus1 is added to the value of the single premium. ➤ Guaranteed Lifetime Withdrawal Benefit available with 6.50%2 Income Account Accumulation Rate 3. ➤ Waiver of withdrawal charges for terminal illness, home health care and nursing home benefit.4
Premium
3 The income account value is not available for withdrawal or cash surrender and is only used to calculate the guaranteed lifetime withdrawal benefit amount. The Guaranteed Lifetime Withdrawal Benefit is available at the time of application for an additional annual fee of 3/4% of the accumulation value of the base contract. Rider form GLWB210 and state-specific variations where applicable. 4 For eligible qualifying event. Not available in all states. Rider form DA520 and state-specific variations where applicable.
BONUS
1
1 The 8% premium bonus vests over a 10-year period. Non-vested bonus amounts will be recaptured for surrender or withdrawal amounts exceeding the penalty-free amount. Annuities with a premium bonus may have lower fixed account interest rates and lower caps on indexed accounts than a similar product without a premium bonus. 2 Rate applies to the first ten policy years, based on rate at issue.
Multi-Select Options of a 3-year to 10-year Rate/Guarantee Period 5 Multi-Select Rate Guarantee Period 3-Year
4-Year
5-Year
6-Year
7-Year
8-Year
9-Year
10-Year
1.80%
2.25%
2.70%
2.90%
3.05%
3.15%
3.20%
3.25%
5 Rate based on $20,000 or more in premium for the initial guaranteed period. Interest rates effective 12-1-2015 and are subject to change. Call for current rates. The Oxford Life Multi-SelectTM annuity is issued by Oxford Life Insurance Company. A comprehensive description of the policy benefits, costs, exclusions, limitations and terms is available to you upon request. An investment in this contract is subject to possible loss of principal and earnings, since a surrender charge and market value adjustment may apply to withdrawals or upon surrender of the contract. Not available in all states. For more information, please refer to policy form ICC14-MYGA0814, DA520 and state-specific variations where applicable. Financial Strength Rating
A M
Call Today for more information
BEST A- Excellent
*Effective as of 5-7-2014. For the latest rating, access www.ambest.com A.M. Best assigns ratings from A++ to F, A++ being superior ratings.
AN830P
888-203-6221 www.oxfordlife.com
2016 » to InsuranceNewsNet Magazine — FOR PRODUCER USE ONLY — Not intended for solicitingJanuary or advertising the public.
39
ANNUITYWIRES
Indexed Annuities Have Record-Breaking 3Q
A
Indexed annuities continue to be the engine driving total annuity sales, according to LIMRA. Indexed annuities had a record-breaking third quarter, with total sales of $14.3 billion, up 22 percent and 10 percent higher than the previous best quarterly results. Year-to-date indexed annuity sales rose 7 percent to $38.4 billion. Overall annuity sales totaled $60.6 billion in the third quarter, improving 4 percent compared with the prior year, LIMRA reported. However, for the first nine months of 2015, total annuity sales were 2 percent lower than the prior year, at $175.3 billion.
WATCHDOG PUSHES FOR STRONGER CDA GUIDANCE
A financial watchdog and consumer group wants to see stronger financial protection in the form of disclosure that would apply to contingent deferred annuities (CDAs). The Center for Economic Justice is seeking to spell out in more detail the fiduciary and suitability requirements by which unregistered CDAs are sold. National Association of Insurance Commissioners experts are considering a draft document on financial solvency and market conduct regulation of insurers offering CDAs. Many group annuities offered to 401(k) plans rely on certain exemptions from the Securities and Exchange Commission. Annuities that fund retirement plans, therefore, are not registered and “likely utilized by CDA insurers,” according to written comments submitted by the CEJ. “Registered CDAs are subject to SEC disclosure requirements, including the delivery of a prospectus, and FINRA’s advertising and marketing rules. Nonregistered CDAs are not subject to these requirements,” the organization wrote. CDAs are a relatively new innovation in the annuity market, and panels of NAIC experts have spent the past two years DID YOU
KNOW
?
40
QUOTABLE
There was definitely a flight to safety with every fixed product except fixed immediate and structured settlement annuities recording positive growth. — Todd Giesing, assistant research director, LIMRA Secure Retirement Research, speaking on annuity sales figures
discussing the finer points of CDA regulation and periodically revising NAIC guidance for financial solvency and market conduct for insurers offering CDAs.
might begin to show interest if only someone would explain their use and value.
WOMEN NEED TO GET UP TO SPEED ON ANNUITIES
Multiemployer pension plans continue to be awash in red ink. The deficit racked up by the federal agency that insures pensions for about 40 million Americans reached a record level – increasing by 23 percent to $76.4 billion. The agency’s program for so-called multiemployer pension plans continues to account for a large share of the deficit, $52.3 billion. Multiemployer plans are pension agreements between labor unions and a group of companies, usually in the same industry. They cover about 10 million workers. The deficit reported for the year ended Sept. 30 was the widest in the 41-year history of the Pension Benefit Guaranty Corp. It has now run shortfalls for 13 straight years. But the rate of increase slowed from last year, when the deficit nearly doubled to $62 billion from $36 billion in the previous fiscal year.
Annuities? What are they? Most American women can’t answer that question. Not even one-quarter of the women surveyed are knowledgeable about fixed or variable annuities, according to a new study from Insured Retirement Institute (IRI). The annuity finding may be discouraging to annuity professionals, but the IRI researchers see it differently. This lack of familiarity can set the stage for annuities to be presented as solutions that address concerns many women have about retirement, the IRI researchers said in the report “Women’s Perspectives on Saving, Investing and Retirement Planning.” In general, women are “more receptive to financial products, such as annuities” that can help protect against future events, the researchers said, alluding to events that may adversely impact certain areas of women’s lives that concern them most. If women are informed about how annuities work in retirement, they may take the time to become more knowledgeable about the products. That is, those who don’t know about annuities
New York Life was the top seller of fixed annuities in the first three quarters of 2015, with sales of $6.7 billion. Source: LIMRA
InsuranceNewsNet Magazine » January 2016
PENSION INSURER POSTS RECORD DEFICIT
The gap widened in recent years because the weak economy triggered more corporate bankruptcies and failed pension plans. If the trend continues, some experts say the agency could need an infusion of taxpayer funds to pay retirees, who are guaranteed their pensions by law.
Increase your client’s earning potential with a newly offered index from Great American Life
Help your clients manage risk and gain the potential to earn more with an uncapped indexed strategy tied to the S&P 500 Risk Control 10% Index, now available on many Great American Life Insurance Company fixed-indexed annuities. Call us today to learn more at 800-438-3398, ext. 11999.
The S&P 500 Risk Control 10% Index refers to the S&P 500 Average Daily Risk Control 10% USD Price Return Index. For more information, visit www.US.SPIndices.com and search keyword SPXAV10P. Products issued by Great American Life Insurance Company®, a member of Great American Insurance Group (Cincinnati, Ohio) Form numbers and features may vary by state. Not available in all states. For producer use only. Not for use in sales solicitation. The S&P 500 Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Great American Life Insurance Company®. Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Great American Life®. Products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruption of the S&P 500 Index. 4212-SP
January 2016 » InsuranceNewsNet Magazine
41
ANNUITY
How to Counter Ken Fisher’s Annuity Hate Machine I s the King of Annuity Hate fighting a losing battle? By John Hilton
T
he Ken Fisher Watch has yielded good news and bad news in recent weeks. First the good news: Fisher will likely not be as big a thorn in agents’ sides once he steps down later this year as head of Fisher Investments. The bad news is the annuity-hating Fisher is seemingly on a PR campaign to keep his empire running smoothly. Fisher, known for his nationwide “I HATE Annuities. And you should too.” campaign, consented to several high-profile interviews recently. The Fisher blitz fired up opponents in the financial field who say annuities are a desperately needed source of guaranteed retirement income for many Americans. Fisher, who began the ad campaign in 2013, likens annuities to Ponzi schemes that rip off clients. “He’s really doing a disservice to the population,” said David Littell, program director of the American College of Financial Services, which offers financial education for securities, banking and insurance professionals. “Income annuities have an important role in retirement income planning. “People who have more guaranteed income in retirement are happier. There have been several studies over the years that make that very clear.” Fisher, 65, has been a columnist for Forbes for 31 years and is also No. 211 on the Forbes 400 list of richest people, which estimates his worth at $3.1 billion. He has long railed against annuities in his columns and in many of his 11 books. The strategy helped Fisher establish an investment empire — his firm serves nearly 20,000 clients, with $68 billion under management. Fisher, who did not respond to requests for comment, has said his team moves aggres42
“I’ve spent my life adoring wealthy people and trying to help them. There’s a huge world of people trying to help poor people, and not enough people trying to help wealthy people.” — Ken Fisher, during a recent Bloomberg podcast
sively to convert people who respond to his anti-annuity ads. So how can agents counter a billionaire with a powerful, national multimedia campaign backing him? With an honest discussion about annuities, said Jack Marrion, author of “Change Buyer Behavior And Sell More Annuities.” It might not be a quick, sexy soundbite, but agents who patiently explain the benefits of annuities have truth on their side, he added. Marrion offers five reliable sales tips: » Just the facts, ma’am. Show clients the “real money” value in specific dollar terms, stressing the guarantee. » Reframe the psychological distance. Ask clients to recall a point from the past, for example, 20 years ago. From that standpoint, 20 years into the future seems awfully near. » Make it part of the whole. Accentuate the crucial role annuities play in a balanced, responsible retirement portfolio. » Paint the next wall. Remember that a client who is set with two-thirds of their
InsuranceNewsNet Magazine » January 2016
retirement income is highly motivated to finish the job. The right annuity can complete the portfolio. » Pivot around regret. Show the client the safest return from an annuity first, then present options to increase income.
Explosive Growth
Fisher’s anti-annuity campaign is very successful at generating new clients. When he began his aggressive strategy to buy annuity owners out of their contracts in 2012, his personal wealth stood at $1.7 billion after 33 years in the business. In the three years since, he has added $1.4 billion to his worth. Fisher Investments accepts only clients with at least $500,000 to invest. Fisher is a more vocal example of the divide between investment advisors and insurance agents, Littell said, and annuities are often caught in the crossfire. But the irony of Fisher’s campaign is that annuities are best-suited for the wealthier clients that he seeks, Littell pointed out. “Annuities are a better deal for people who live longer,” he explained. “And wealthier and better-educated people,
HOW TO COUNTER KEN FISHER’S ANNUITY HATE ANNUITY at least on average, live longer. So they live a reasonably long life, and they might end up with more security of their income and more wealth if they annuitize a portion.” Littell’s father, William James Littell, died Nov. 17 at 104 years old. He had spent many years as vice president of the family business, F.J. Littell Machine Co., in Schaumburg, Ill. William Littell had lived at Presbyterian Homes in Evanston for the past 24 years. Were it not for his annuity holdings, the elder Littell likely would not have lived so comfortably and happily free of worry, his son said. “He always talked about how much he liked (his annuities),” Littell said. “There’s the satisfaction element of it.
due diligence and decide who they’re going to listen to and evaluate both sides.” Littell, 62, owns several annuities for the income guarantees. Even a simple comparison shows how annuities are a better option for typical retirees, he said. For example, someone with a $1 million nest egg drawing down the standard 4 percent would have $40,000 annually to finance a comfortable retirement. “But you don’t really have any liquidity,” he noted, because a person would need to maintain the $1 million to generate enough income to draw on. “But if you bought an annuity to generate the same income, maybe it costs you $700,000,” Littell said. “Now you really do have $300,000 that you can do anything you want with.”
If success is your objective, make MDRT your goal. The benefits of MDRT membership are now even better. Members now have online access to careershaping insights in the Resource
“I think he (Fisher) is moving more and more out of the mainstream. I don’t see as much resistance, even from five years ago, to having an annuity income as part of the solution.”
Zone on the new mdrt.org.
— David Littell, program director of the American College of Financial Services
There’s all the research that shows it gives you more security and it increases the sustainability of your retirement income over the long haul.” Harold Evensky, chairman of Evensky & Katz/Foldes Financial, once called “the Dean of Financial Planning” by Don Phillips, then CEO of Morningstar, is a former critic of annuities. He now says immediate annuities will be “one of the most significant investment vehicles of the next decade.”
‘Evaluate Both Sides’
Fisher is contributing to the retirement readiness problem, said Evensky, who teaches financial planning at Texas Tech University. Inappropriate annuity sales are an issue, he added, but have nothing to do with the product itself. “It does a disservice to many people,” Evensky said of Fisher’s campaign. “It’s incumbent on investors to do their own
Deferring Social Security is universally recognized as a crucial part of good financial planning, Littell said. And Social Security acts the same as an annuity in providing lifetime income in perpetuity. In short, Fisher is fighting a losing battle, Littell said. “I think he’s moving more and more out of the mainstream,” he added. “I don’t see as much resistance, even from five years ago, to having an annuity income as part of the solution from the investment community. I don’t know if we’re coming to complete agreement, but I think we’re coming to more of an agreement.” InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@ innfeedback.com.
January 2016 » InsuranceNewsNet Magazine
43
To learn how to become a member of MDRT, visit joinmdrt.org.
ANNUITY
Sales Surge for FIAs, but Income Riders Pose Risks F ixed index annuity sales keep climbing, but so does their risk profile. The guaranteed income rider is a key factor in this trend. By Linda Koco
A
s fixed indexed annuity (FIA) sales continue their meteoric rise, their risk profile has been increasing as well, according to an FIA market report from Fitch Ratings. The guaranteed income rider is a key factor in this trend. Ever since these riders debuted in 2006, they have been contributing to FIAs’ sales growth as well as to their risk profile increase, Fitch said. About those sales: Between 2007 and 2014, FIA sales rose by 93 percent, the analysts said, citing figures from LIMRA Secure Retirement Institute (LIMRA SRI). By comparison, sales of other fixed annuities declined by 1 percent in the same period, and sales of variable annuities declined by 24 percent. Along the way, FIAs grabbed market share too. During the first six months of 2015, FIA sales represented 21 percent of all annuity sales, up from 10 percent in 2007, Fitch said. Several factors contributed to this growth, the analysts noted. These include the low interest rate environment; the expansion of distribution into bank, broker/ dealer and wire house channels; and insurers’ declining appetite for the risks associated with selling variable annuities (VAs). But income riders were “one of the main drivers,” the analysts said. The features also have become extremely popular. When the riders are available, for example, consumers elected them for 68 percent of annuity contract purchases, the Fitch researchers said, citing LIMRA SRI figures.
A New View
This growth in income riders has not been without side effects. For instance, their incorporation in FIA products has 44
Total Annuity Sales by Year (Fiscal Year in $ Mil.) 300
VA Sales
All Other Fixed Annuity Sales
Fixed Indexed Annuity Sales
250 200 150 100 50 0 2007
2008
2009
VA – Variable annuity.
2010
2012
2013
2014
2015 YTD
Source: LIMRA Secure Retirement Institute compiled by Fitch Ratings
increased the carriers’ “exposure to tail risk,” Fitch said. In addition, according to the report, the riders have added asset-liability management challenges for carriers due to the riders’ impact on both the “duration and convexity of liability.” And since use of riders is a relatively new trend, not yet a decade old, “there is limited long-term industry experience around policyholder behavior,” the researchers said. They went on to report the riders’ relative newness means it is unclear how contract holders will behave in a rapidly increasing interest rate scenario or a significant equity market downturn. This is of particular concern since surrender charge periods have become shorter. Fitch’s report paints a much different picture of the FIA business than the researchers described in the pre-rider days. Back then, Fitch viewed the FIA business as being less exposed to interest rate risk than traditional declared rate annuities, the analysts said. The FIAs’ more modest base policy guarantees contributed
InsuranceNewsNet Magazine » January 2016
2011
to that assessment. So did the FIAs’ greater surrender charge protection and their use of market value adjustment features, they said. Also, the more stable profit margins historically associated with the FIA business as compared with those of traditional fixed annuities spoke to a less risk-prone assessment. The analysts attributed this characteristic to FIAs’ greater crediting rate flexibility as compared with that of traditional fixed annuities.
Other Risks
Risk in the products is appearing from other trends too. For example, the Department of Labor's (DOL) proposed fiduciary rule, now awaiting release in its final form, is a looming factor. The proposed rule does not require FIAs to undergo the same compliance procedures and fiduciary contract that VAs do, the analysts allowed. However, “FIAs sold within a tax-qualified retirement plan (including individual retirement accounts) would be subjected to the new impartial conduct standards,” they said.
SALES SURGE FOR FIAS, BUT INCOME RIDERS POSE RISKS ANNUITY
The risk is that the new standards could IMPACT COMMISSION RATES, product design and FIA sales growth. Those standards “specify that advisors must provide advice that is in the client’s best interest and not recommend assets that pay advisors what the DOL called ‘unreasonable compensation.’” The risk is that the new standards could impact commission rates, product design and FIA sales growth, Fitch said. The entry of private equity players into the FIA market presents another risk. The trend began a few years ago, and as of June 30, four of the 10 largest FIA writers, based on sales, were owned by private equity firms, Fitch said.
This “wave” of new entrants has caught the attention of regulators and spurred more stringent oversight, the analysts noted. As Fitch sees it, the risk here has to do with the firms’ overall business objectives. “These firms believe that through their investment management and deal-structuring capabilities, they will achieve higher returns in this business than traditional life insurance companies,” the analysts wrote. “However, Fitch believes these private equity firms are increasing investment risk in the
search for additional yield.” Still another risk the analysts spotlighted is the increased complexity of FIA products. Although this gives policyholders more flexibility in choices, “whether FIA carriers have the proper risk control measures in place to handle the complexity is still largely untested,” the analysts said.
The Scent of Risk
The press copy of the Fitch report does not quantify the level of risk that Fitch has detected in the FIA market. However, in the annuity business, if there is even the whiff of rising risk, that can put product availability, richness and pricing into play. Based on the report, the scent of risk is already in the air. For annuity professionals, including those in other annuity lines as well as in FIAs, that means it’s time to watch for risk-based shifts in the FIA market. InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.
www.tbrins.com Who to Partner With As a professional producer, you need accurate and timely information, not only about products but also about the marketplace in general. Partnering with an agency that has their finger on the pulse of the ever-changing marketplace, whose primary focus is on Senior products, and that holds contracts with A and A+ rated carriers that offer the best solutions for your clients, is a compelling reason to do so.
Why The Brokerage Resource? We have the best selection of Senior Life and Health Insurance products for your clients. Among our list of highly rated carriers for Medicare Supplement are: Mutual of Omaha, Cigna, Aetna, United Healthcare (AARP) and Medico. We don't require any contractual obligations that require you to be captive. You retain your independence; while we help you maximize your time – so you can concentrate on the needs and solutions for your clients. Our expert Marketing and Sales team will help you choose carriers and products that are a correct fit for you and your clients.
Call us today, and let us help you expand your growth potential. 800.928.4998
January 2016 » InsuranceNewsNet Magazine
45
HEALTH/BENEFITSWIRES
UnitedHealth May Exit ACA Marketplace The nation’s biggest health insurer initially stayed on the sidelines when the individual marketplaces created by the Affordable Care Act began enrolling people back in 2014. Now UnitedHealth Group is causing anxious ripples in an already nervous health care pond with its announcement that it may quit selling individual marketplace coverage in 2017. UnitedHealth announced that it will take hundreds of millions of dollars in losses related to its ACA business. This was an abrupt shift from a month earlier, when the company said it would expand into 11 more exchanges next year. Medical claims have come in higher than expected on the exchanges overall, company officials said. UnitedHealth initially sold coverage on only four exchanges before expanding to 24 for the current enrollment season. Despite the expansion, the exchange coverage remains a small part of UnitedHealth’s business.
NATIONAL GUARDIAN TAKES ON THE LTCi MARKET
So many insurers have fled the long-term care insurance market over the past few years that it is big news when a carrier announces it will dive in where others are getting out. National Guardian Life will take the plunge into the LTCi market with a policy slated to debut in the first quarter of 2016. National Guardian is an independent mutual life insurance company based in Madison, Wis. Founded in 1910, it sells pre-need, final expense, and group accident and health insurance, and has an A- rating from A.M. Best Company, according to the company website. A report by the U.S. Department of Health and Human Services shows that at least 26 LTCi carriers, many of them national brands, left the LTCi insurance market between 1996 and 2012. The same report said that there were 102 companies selling policies in 2002 but that there were only about a dozen active players “selling a meaningful number of policies” by the end of the decade. DID YOU
KNOW
?
46
NATIONAL HEALTH SURVEY NEEDS TO SLIM DOWN
It has been nearly 60 years since the Centers for Disease Control and Prevention began the annual task of asking Americans about their health habits. Along the way, the 75-question National Health Interview Survey has bloated to 1,200 potential questions, and fewer Americans want to spend the time it takes to complete it. It takes the average family about 90 minutes to complete the survey. Not only is the survey longer and more time-consuming, but a smaller percentage of the public are willing to give up their information. Whereas about 95 percent of those who were asked to take the survey 60 years ago agreed to do it, today about 70 percent of those who are asked – about 50,000 people – are willing. In 1956, President Dwight D. Eisenhower signed a law creating the health interview survey. The purpose was to learn how common chronic illnesses and disabilities were, and to learn about the
Nearly 20 million Americans are covered by health savings account-eligible insurance plans, up 13 percent from last year. Source: U.S. Department of Health and Human Services
InsuranceNewsNet Magazine » January 2016
QUOTABLE In retrospect, we should have stayed out longer. — UnitedHealth CEO Stephen Hemsley
characteristics and behaviors of people who had them. The survey began in 1957. It was placed under the CDC’s umbrella in 1987. The survey’s data became the basis for measuring the nation’s progress in fighting disease. In addition to tracking the prevalence of health conditions ranging from arthritis to cancer, the survey was the first federal household survey to track the growing popularity of cellphones.
TWO-THIRDS HAVE CHRONIC HEALTH CONDITION
Speaking of the nation’s health, the number of Americans who say they have a chronic health condition continues to grow. A survey commissioned by the Transamerica Center for Health Studies found that nearly two out of three Americans (62 percent) have been diagnosed with a chronic health condition. Being overweight was the most common condition, followed by high blood pressure and high cholesterol. The findings show that white Americans (67 percent) are the most likely to report being diagnosed with a chronic health condition. AfricanAmericans are shown to have the highest rates of high blood pressure and Type 2 diabetes (24 percent and 10 percent, respectively). Asian-Americans are generally least likely to report having any chronic health conditions, even though 41 percent of this population have one. The study found that most Americans (82 percent) are able to afford routine health expenses, compared with 41 percent of the uninsured. However, two in five Americans overall (41 percent) report an increase in premium costs over the past one to two years.
NEW PRODUCT! Life Insurance that offers a Death Benefit PLUS Supplemental Income for Retirement. Signature Plus Indexed Universal Life Insurance from American National Insurance Company offers FOUR OneYear Indexed Interest Crediting Strategies and a Fixed Account. PLUS Interest Rate Enhancement • In addition to providing a death benefit with no income tax, Signature Plus Indexed Universal Life offers an Interest Rate Enhancement.1 • The Enhancement may increase the crediting rate for the fixed account and indexed crediting strategies starting with year eleven. • The extra percentage rewards policy holders for their loyalty by boosting long-term accumulation values which may allow for higher supplemental retirement income. • The enhancement is not dependent on policy performance and is in addition to the cap, floor, or specified rate. 1) The Interest Rate Enhancement is not guaranteed and may range from 0-1% and may fluctuate over the life of the policy. The Signature Plus Indexed Universal Life Insurance policy is not a registered security or stock market investment and does not directly participate in any stock or equity investments or index. When you buy this policy, you are not buying an ownership interest in any stock or index. American National Insurance Company and its agents do not make any recommendations regarding the selection of indexed strategies. American National Insurance Company and its agents do not guarantee the performance of any indexed strategies. There is not one particular interest crediting strategy that will deliver the most interest under all economic conditions. Policy Form Series: IUL14; IRER15 (Forms may vary by state). American National Insurance Company, Galveston, Texas. For Agent Use Only; Not for Distribution or use with Consumers.
IMG15874 | 12.15
888-501-4043 | img.anicoweb.com
HEALTH/BENEFITS
Shifting Trends and Priorities Demand New Solutions By listening to what their workers really want, employers can tailor the right benefits to their workforce. By Drew Niziak
W
hat do a Hollywood celebrity and a health care-providing employer have in common? They both need to stay up to date with the latest trends to stay relevant. In an era when health trends have the power to shape what employees expect, employers must stay informed so that they may continue providing the benefits options that their workers actually need. In 2015, we witnessed constant change in the health care industry, and it’s no secret that 2016 will follow the same pattern. Smart employers know what workers want to see in their benefits package: health care benefits that meet their unique needs and won’t break their budget. Here are what the best workplaces will take note of in 2016.
plans with no deductible), we can look at the impact of both trends together. Using this approach, the average deductible for all covered workers in 2015 was $1,077. This is a 67 percent increase from $646 in 2010 and a 255 percent jump from $303 in 2006. Essentially, coverage is costing the typical consumer more than they earn at work. The changing financial climate forces employees to prioritize what care they can afford, leaving many in danger of an unexpected problem resulting in major
48
» Millennials want to spend money efficiently. Health care plans that provide high-value services at low cost will appeal to millennials seeking out insurance. Many millennials are balancing student loan debt on top of other expenses,
Coverage is costing the typical consumer more than they earn at work. This is where supplemental coverage comes to the rescue.
Voluntary Insurance Strategy is Shifting
According to a new analysis by the Kaiser Family Foundation, insurance deductibles have outpaced the average increase in workers’ wages. Among covered workers with a general annual deductible, the average deductible amount for single coverage was $1,318 in 2015. That figure is similar to the previous year’s average annual deductible of $1,217, but is a jump from the $917 average annual deductible in 2010. Looking at the increase in deductible amounts over time does not capture the full impact for workers because the share of covered workers in plans with a general annual deductible also has increased significantly, from 55 percent in 2006 to 70 percent in 2010 to 81 percent in 2015. When we examine the change in deductible amounts for all covered workers (assigning a zero value to workers in
largest generation in the United States, representing one-third of the total U.S. population in 2013. Knowing this, employers must keep this generation top-of-mind. Here are a few things employers should know about millennials and workplace benefits.
debt. This is where supplemental coverage comes to the rescue. If employers offer it, employees who feel they may be at risk can apply for cost-effective benefits coverage that could help bail them out in these sticky situations. This way, employees won’t have to skimp on care when they need it most. As workers continue to cut corners financially, employers need to show them that their needs matter by paying extra attention to how they can get more bang for their buck when it comes to health care coverage.
Focus on Needs of Millennials
People can’t stop talking about millennials — and there’s a good reason why. Millennials, the group of Americans born between 1980 and the mid-2000s, are the
InsuranceNewsNet Magazine » January 2016
so employers should aim to choose a plan that acknowledges these unique financial circumstances. » Millennials need their employee benefits to fit their lifestyle. This generation is more than just a group of young people glued to their phones. They are students, mothers, fathers and full-time employees. Due to the variety of life stages millennials are going through, it is important that employers offer benefits tailored to the specific needs of each worker. A firsttime mom will need a different plan from that of a recent college graduate who is working full-time in a new city. » Millennials consider technology to be a staple. Due to the technology boom
THE QUESTIONS THAT HELP FIND THE RIGHT DISABILITY COVERAGE HEALTH
By Our Standards,
Most Social Security Seminars FAIL Every 8 seconds a Boomer turns 62 and makes the wrong choice. If your seminars are failing, you’re failing them, too. This exclusive FREE REPORT digs deep into the 4 big reasons seminars are failing — like attracting “take-the-carrot-and-run” prospects — and then explains exactly how to turn all 4 reasons on their head…
…with these results: •
60-70% of attendees sign up for a one hour “Strategy Session” with advisor
•
Average assets per class attendee are $500,000 to $1.5 Million
•
$25,000 to $35,000 in commission
Whether you’re currently using seminars or not, you owe it to yourself and the uncertain Boomers in your local community to read this free report now. The opportunity could never be greater because of the recent changes to allowable filing strategies. Get your copy instantly at
www.StopFailingBoomers.com This free gift is brought to you by:
We help position financial advisors as educators, not salesmen. It’s part of how Vick & Associates challenges the traditional way of thinking and helps build financially stronger communities – with advisors earning greater revenue and their neighbors enjoying more secure and happy retirements. See how we can help you make a positive impact in your community at www.StopFailingBoomers.com. January 2016 » InsuranceNewsNet Magazine 49
HEALTH/BENEFITS SHIFTING TRENDS AND PRIORITIES DEMAND NEW SOLUTIONS
Percentage of Covered Workers Enrolled in a Plan With a General Annual Deductible of $1,000 or More for Single Coverage, by Firm Size, 2006-2015 63 61 58
All Large Firms All Firms
50
49
46
All Small Firms
46
41
40
39
38 35
34 32
31 28
27
22
21 18
13
12 8
NOTE: These estimates include workers enrolled in HDHP/SO and other plan types. Average general annual health plan deductibles for PPOs, POS plans and HDHP/SOs are for in-network services. SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2015.
9
6
2006
2007
22
17
16
10
26
2008
2009
2010
2011
2012
in the health care sector, millennial policyholders expect an almost instantaneous response when they make an insurance claim. Health care providers continue to adapt to changing technology trends by integrating new products and platforms into their claim processes. Technology can make the claim filing process as easy as possible. Finding a provider that uses tech-friendly products will make employers seem knowledgeable and keep millennials happy. As a generation that is quickly making up a majority of the workforce, millennials are expecting their needs to be acknowledged and met. By considering the lifestyle, technological and budget concerns of millennials, employers can better appeal to this expanding group.
now also expecting doctors to come to them. A number of physicians are getting out of their office — not to make house calls, but to make cubicle calls. These on-site doctors and clinics are a growing trend in workplace wellness because of their convenience, and smart employers are taking note. The Henry J. Kaiser Foundation, in its 2015 Employer Health Benefits Survey, revealed that providing employees with access to medical care at the workplace cultivates productivity, enhances a company’s reputation as being a desirable place to work and reduces health care costs. These outcomes should be an employer’s main goals for a happy workplace and happy employees.
Convenient Doctor Visits
Offering employees extended time off is another trend that business owners are seeing across the board. With so many
With the increasing convenience of benefits materials and claims, employees are 50
Increased Vacation Days
InsuranceNewsNet Magazine » January 2016
2013
2014
2015
parents of young children in the workforce and so many employees engaged in activities outside of work, companies are supporting the efforts by allowing “floating” birthday or work anniversary holidays — one or two days per year that employees may use as they see fit. This allows employees to balance their work and family lives by taking an extra day off that is still paid by their employer. As companies plan for the year ahead, they must tailor the benefits they offer employees to what’s trending — and what employees need. By getting creative and listening to what workers want, employers will be armed and ready. Drew Niziak joined Aflac in January 2013 in his current position as senior vice president of Aflac broker sales. Drew may be contacted at drew. niziak@innfeedback.com.
Failure To Survive Failure To Survive:
When traditional term underwriting timetables hinder a business from acquiring death benefits for Key Person, Buy-Sell, and Loan Indemnification situations, Failure to Survive Insurance can be underwritten and issued in a matter of days making last minute deals possible.
Disability • Life • Medical • Contingency
Petersen International Underwriters
(800) 345-8816 F www.piu.org F piu@piu.org January 2016 » InsuranceNewsNet Magazine
51
FINANCIALWIRES
Debt Is Keeping College Grads at Home If more of your clients are fussing that Junior may never move out
of the house, they can blame the high cost of student debt. More than one-third of college students said that their high debt levels will result in their moving back home after graduation, according to a survey conducted on behalf of the American Institute of CPAs. The same percentage of students said that they might have to take a job outside their field of study in order to pay off their loans. Although most college students who have student loans (59 percent) say their loans will take less than a decade to pay off, a majority (79 percent) didn’t know exactly how much they will have taken out in loans in total upon graduation. More than one in three (36 percent) had either no idea or a vague idea of the total amount of their loans upon graduation. More than two in five (43 percent) had a general idea of the amount of their loans, while only one in five (22 percent) knew the exact amount of their loans in total upon graduation. Three-quarters of college students (75 percent) acknowledged that their student loan debt would require some sacrifices in their lives post-graduation. Two in five (40 percent) said that they would have difficulty purchasing a home. Additionally, 29 percent believed their student loan debt would make it difficult for them to save for retirement. Loan debt is also impacting students’ family plans, with three in 10 (31 percent) stating they would be forced to delay having children and one in four (26 percent) saying they would need to postpone getting married.
GEN XERS FAILING TO SECURE THEIR FINANCIAL FUTURE
Generation X is so worried about a pending retirement crisis that they are paralyzed when it comes to planning for their own post-working years. That’s among the findings in the Generations Apart study commissioned by Allianz Life. The majority (92 percent) of Generation X believe that Americans are in the midst of a national retirement crisis, and an even greater number (94 percent) believe it’s critical to build their own financial security in retirement, according to the survey. Yet more than two-thirds of that age group are so bogged down by uncertainty
DID YOU
KNOW
?
52
whenever they think about retirement, they don’t take any action to secure their financial future. Gen Xers put off retirement planning in part, the study found, because of the confounding issues they need to manage. Nearly three-quarters believe it is almost impossible to figure out what their retirement expenses are going to be. And 67 percent feel the supposed targets for how much is needed to fund retirement are way out of reach for them. Yet despite these feelings, there is some delusion about what they expect from retirement. More than half (55 percent) of Gen Xers see themselves having a relaxed, easy time of it in retirement, and 46 percent report they will just figure out retirement when they get there.
AMERICANS’ TOP PRIORITY: KEEPING UP WITH BILLS
For the fourth consecutive year, getting caught up on the bills is the runaway winner among Americans’ highest financial priorities. A new Bankrate.com report says
Bankrate.com of all age andPUBLIC levelsOFFERING of Source: THEAmericans AVERAGE RETURN ON groups AN INITIAL was 20 percent thiseducational year. The average increase reported in the first day (or “pop”) is 13 percent. attainment higher
net worth than they had one year ago.
Source: Renaissance Capital
InsuranceNewsNet Magazine » January 2016
QUOTABLE
Savers are losers. And many parents are still telling their kids to save money. Why would you save money when every central bank is printing money?” — Robert Kiyosaki, author of Rich Dad Poor Dad
that 38 percent of Americans name their highest financial priority as keeping up with current living expenses. Paying down debt runs a distant second (21 percent), followed by saving (18 percent). Both men and women noted improved financial security versus one year ago. Women noted a slight deterioration in comfort level with both savings and debt compared with one year ago, but they feel more secure in their jobs and report higher net worth and an improved overall financial situation compared with one year ago. Americans under age 50 feel more secure in their jobs, while those ages 50 and older feel less secure. Millennials remain the only age group to feel more comfortable with their savings than they were one year ago. The number of millennials more comfortable with their debt outnumbers those less comfortable by nearly two to one, while other age groups are more evenly split.
MIDDLE CLASS ‘ERODING,’ MORGAN STANLEY SAYS Much of America is carrying a massive debt, and that debt load is weighing particularly hard on those in the lower income rungs. Wealthy families have been able to pay off much of their debt in recent years, but poorer families have not. The large number of Americans with high debt burdens is leading to what Morgan Stanley called the “eroding” of the middle class. Wages aren’t growing for those in the lowest income levels, creating a debt trap that they can’t escape. The lowermiddle class and poor came into the great recession with a lot of debt, and they haven’t been able to pay it down since.
FINANCIAL
The Elephant in the Room for Couple
for example, reported that those who believed that their financial professional understood them and their goals were more likely to remain a client of that professional after their spouse’s death. Certain standard planning elements — such as insurance, investments, taxes and legal documents — require attention when a spouse dies. More specifically, what information needs to be easily accessible and exactly what processes should be in place when one partner dies? Here is information couples need to share with one another: » Names and contact information for all key financial professionals — insurance agent, accountant, attorney, banking contact, etc. Where will this information be kept? Is there one professional who can help coordinate with the others when a spouse dies? » The existence and location of wills, insurance policies and other legal documents, such as powers of attorney, living wills, trusts, etc. » The location of real estate documents, including mortgage company statement, titles, deeds, rental or lease agreements, etc.
P repare spouses for, and guide them through, the time when two become one. By Mark E. Caner
C
ircuses may be phasing out pachyderms, but financial professionals can’t dismiss the elephant frequently occupying their offices. When working with spouses, the immediate need includes helping a couple develop a game plan that anticipates what — beyond the pressing financial, legal and tax considerations — eventually will confront one partner when the other dies. The companion concern comes to the forefront when that “someday” arrives. Then the need becomes helping the surviving spouse (almost four times as likely to be the woman, according to the U.S. Census Bureau) address practical financial concerns at a time when grief can be emotionally and mentally crippling. 54
According to the most recent census, only 2.7 percent of men were widowed (approximately 3 million), compared to 9.6 percent of women (approximately 11.4 million). Moreover, data from the Social Security Administration shows that a man reaching age 65 today can expect to live to age 84.3, while a woman turning age 65 today can expect to live to age 86.6. Given these realities, a financial professional can expect to work more often with widows than with widowers. Regardless, the same considerations apply.
Pragmatic Advance Planning for Couples
Financial professionals who retain surviving spouses as clients are generally those who had worked with both partners when they were a couple. Doing so underscores how important it is that the professional actively engage each partner equally during the planning process. A study of women investors by Russell Investments,
InsuranceNewsNet Magazine » January 2016
» The location of car titles, registrations, loan or lease agreements and insurance. » Benefits department contact information if spouses work or have worked and are entitled to benefits such as a pension, 401(k) plan, stock options, employer-provided life insurance, etc. » Proof of military service if eligible for benefits. » Safe-deposit box. Do both spouses have the box number and a key? There should be a list of its contents — kept somewhere other than in the safe-deposit box itself. » Is there a secure online vault for key documents? How is it accessed? » Spouses’ Social Security numbers and where original cards are kept. » Financial accounts and statements, credit card numbers and contact
THE ELEPHANT IN THE ROOM FOR COUPLES FINANCIAL
15% LOWER PREMIUMS 100% MORE REWARDS 200% EASIER TO TALK ABOUT
up to
*
John Hancock is changing the conversation about life insurance. Now John Hancock Life Insurance with Vitality lets you offer your clients rewards for living healthy, with up to 15%* lower annual premiums and savings from top national brands such as Amazon.com, Hyatt, Royal Caribbean International, and more. See how you can be part of the new conversation at www.JHRedefiningLife.com.
live healthy • earn rewards • save money • JHRedefiningL ife.com *Premium savings based on a comparison between a policy with Vitality at Platinum Status and a policy without Vitality (will vary by product type and other factors, including nonguaranteed elements). *Rewards may vary based on the type of insurance policy purchased for the insured (Vitality Program Member), the ownership and inforce status of the insurance policy, and the state where the insurance policy was issued. The merchants represented are not sponsors of the John Hancock Vitality program. The logos and other identifying marks attached are trademarks of and owned by each represented company and/or its affiliates. Please visit each company’s website for additional terms and conditions. *For Financial Professional Use Only. Not for use with the public. *Insurance products are issued by John Hancock Life Insurance Company (U.S.A.), Boston, MA 02117 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595. Vitality is the provider of the John Hancock Vitality Program in connection with life insurance policies issued by John Hancock. Insurance policies and/or associated riders and features may not be available in all states. MLINY091415004 January 2016 » InsuranceNewsNet Magazine
55
FINANCIAL THE ELEPHANT IN THE ROOM FOR COUPLES information, and tax records for the past five years. » Original birth certificates, marriage license, divorce decrees and naturalization papers if applicable (needed when applying for Social Security benefits). » Passwords and access information for banking, investment, tax and other accounts. » Funeral arrangements or preferences. While many couples are uncomfortable discussing the inevitable, planning for it can provide a sense of security and relief.
Navigating the Grief Process
Even clients who possess extensive experience with finances may be plagued by distraction and disorientation following a spouse’s death. The survivor may experience a range of emotions, including shock, denial, anger, anxiety, guilt, depression and more. How can the financial professional help? Empathetic listening sets the tone for a supportive relationship. Encouraging the survivor to lead the conversations is helpful, as is being open to discussing more than finances. Still, wanting to talk about something and knowing what to say are two different things. A firm recognized for its work in training financial professionals how to support clients in times of grief, loss and transition suggests the following questions and comments: » What kind of a morning has this been for you? » I can’t imagine being in your situation. » Would you like to tell me what this has been like? » What is different for you now compared with the last time we met? » What do you wish people knew about your experience right now? » Who has been supportive to you, and in what ways? » How has this been easier and how has it been harder than you anticipated?
56
» I know that when people ask how you are, they usually don’t really want to know. I want to assure you that I do care and will always listen to the truth, even when it’s hard. Grieving is not a linear process — it ebbs and flows. Financial professionals need to realize this and to work with the bereaved accordingly. In addition, there are financial issues the surviving spouse must address. Providing options as well as a time frame can be helpful. For instance, “I can’t imagine what you are go-
Help the widower or widow change the spouse’s accounts and their joint accounts to his or her own name. Likewise, update beneficiary designations as needed. Depending on the number of accounts and other assets, this could necessitate a dozen or more death certificates. It is better to have too many than too few. And extras should be kept. Something as seemingly mundane as the transfer of a dog license registration, for example, may require proof that the surviving spouse now has sole ownership of the couple’s pet.
Those who believed that their financial professional understood them and their goals were more likely to remain a client of that professional after their spouse’s death. ing through now. I would be happy to talk to you and help you when you are ready. When would you want me to call you?” Create a specific time for future contact.
Understand the Demands of a Changed Dynamic
Financial professionals can play a central role in guiding a client through what is often a two-year process of finalizing the past and embarking on the future. In the short term, what is needed is an assessment of the immediate financial situation, particularly cash flow. Professional guidance here is critical. Ask what is coming in, going out and what will change (such as a reduction in Social Security benefit or pension income). Find out what insurance options are available through work or with personal policies. Help determine whether some assets will need to be liquidated or if new ones need to be invested. Helping the client manage cash flow — and hopefully maintain a desired lifestyle — can help create a solid foundation that supports both the grieving and the future planning processes. Encourage the surviving spouse to consult an attorney in regard to developing an estate-planning timeline for actions such as probate closing, estate tax filing and funding of bypass trusts. Other immediate issues include applying for Social Security, veteran's or employer benefits. Verifying health insurance benefits is also a priority.
InsuranceNewsNet Magazine » January 2016
Moving through the process, it is also important to help a surviving spouse avoid common mistakes. Examples may include rushing into decisions with longterm ramifications, becoming a “checkbook” for children and relatives, or falling prey to salespersons or others who may be motivated solely by their own selfinterest. Offering to give professional perspectives and options can help provide advice in a positive way. As your now-single client works through the initial phase and begins to look ahead, the financial professional can help develop a plan of tasks and target dates that are broken into manageable segments. This includes re-evaluating and reallocating an investment portfolio in terms of new realities and future goals, reassessing insurance needs, examining potential tax changes, and encouraging consultation with an attorney to review the estate plan and other documents. It is important to empower your client — for example, with active listening and responsive service — as he or she begins constructing a vision, financial and otherwise, for the future. Mark E. Caner, AEP, ChFC, CLU, CFP, is president, W&S Financial Group Distributors. Mark may be contacted at mark.caner@ innfeedback.com.
If you sell
annuities the Department of
Labor proposal and upcoming ruling may
put you out of
business! Visit aapnow.org to learn more now. January 2016 Âť InsuranceNewsNet Magazine
57
BUSINESS
3 Things Millennial Advisors Think Boomers Need to Know T he younger generation will be the boomers’ advisors, and this is what they have to say about that. By Michael R. Panico
B
aby boomers are expected to live longer than any other generation in all of human history. Whether they realize it or not, these baby boomers will increasingly turn to millennials to solve the challenges that increased longevity will bring. Nearly half of all financial advisors are over the age of 55, according to Cerulli research. In other words, most advisors are getting ready to retire themselves! As a result, baby boomers will depend on the younger generation of financial advisors to help them navigate their golden 58
years. Here are three pieces of advice that millennial advisors can give to their baby boomer clients.
1) Don’t Restrict Yourself to One School of Thought
Our culture tends to be overly obsessed with labels and superlatives. Consensus just doesn’t sell the same as controversy does. As a result, so much of the dialogue on retirement planning sounds less like rational analysis and more like the barbs thrown about during a political debate. Think about it: How often have you seen some “unbiased” article sing the praises of one financial product while smearing another? This type of polarizing discourse is disingenuous at best and dangerous at worst. It’s the context that matters. What might
InsuranceNewsNet Magazine » January 2016
be a great solution for you might be a terrible idea for your neighbor if they have an entirely different set of goals or circumstances. If there were a one-size-fitsall financial strategy that solved all your woes without risk, we’d all be perfectly aware of this miracle product. But as we all know, this kind of perfection doesn’t exist. You would do well to remind your boomer clients that in the world of finance, all reward is tied to some element of risk or sacrifice. Financial products typically will emphasize some combination of growth potential, safety or liquidity — but never all at the same time. As a result, retirees most likely will need to deploy a combination of strategies to address the different challenges that life may present over time (cash for emergencies, annuities for
3 THINGS MILLENNIAL ADVISORS THINK BOOMERS NEED TO KNOW BUSINESS additional income, investments for longterm growth, etc.). Millennial advisors have grown up in the era of information overload. They understand better than most people how to navigate through all the clutter online and in the media to find the truth hidden among the hype. Advise your clients to avoid anyone or anything that speaks in absolutes; they probably have an agenda that may not align with that of your clients.
2) Avoid Using History as a Guide
Twenty years ago, cell phones filled up an entire briefcase and computers weighed as much as a small child. Today the two technologies are paired seamlessly and fit in your pocket (or on a wristwatch)! Millennial advisors have grown up in an environment where technology and innovation change on a daily basis. As a result, we tend to look forward, not behind. Unfortunately, many financial advisors have their philosophies rooted firmly in the past. Many commonly espoused mantras are not only outdated — they also may be patently false. Too many of your baby boomer clients are basing retirement assumptions on 7 to 8 percent annual rates of return, the 4 percent withdrawal rule or the “safety” of systematically moving out of stocks and into bonds. These old maxims have lost their relevance in an era that has been defined by heightened market volatility, historically low interest rates and increased longevity. Over the next 20 years, we are sure to witness amazing strides in technology and our way of life. But we’ll also be exposed to the consequences of our government’s ballooning deficits, underfunded social programs, escalating health care costs and the impact of soon-to-be increasing interest rates. Stop and consider for a moment the enormous gravity of the retirement planning process. We take for granted that clients and advisors are working together at attempting to provide retirement income that must be capable of lasting two, three or even four decades! If anything goes wrong, that client may be forced back into the workforce, out of their home or to endure an undesirable standard of living. Millennial advisors have a more grounded perspective. The only thing we can be certain of is uncertainty, and our
Gamblers know that the difference between having a $100 steak for dinner versus lining up at the $5.99 buffet depends on the turn of a card or a roll of the dice. Why should anyone take that same chance with their retirement income? egos suffer no damage when we acknowledge that we cannot predict the future. Who warned you about the tech bubble bursting or the financial collapse of 2008? What great boom or bust comes next? Nobody knows! To justify any financial planning strategy on historical experience alone is entirely vacuous and a disservice to the respect and care that the retirement planning process deserves.
3) Think Like a Pensioner, Not a Gambler
Baby boomers were in the workforce en masse during the 1980s. For nearly 20 years, the stock market took off like a rocket. From January 1980 through January 2000, the S&P 500 increased by more than 1,468 percent! Meanwhile the millennials entered the workforce — in the new millennium, of course. Form January 2000 to the present day, 16 years, the S&P 500 has increased only 126 percent. That’s a big difference and mostly due to greatly increased volatility — twice during the past 16 years we’ve experienced market corrections of nearly 50 percent. Millennials can still appreciate what the stock market is capable of delivering, but our expectations are certainly more cynical. What the stock market giveth it can taketh away — often violently so. A retirement plan built on the market’s cooperation may be a recipe for disaster. A generation ago, most retired Americans had two checks they could depend on: Social Security and an employer-provided pension. Pensioners are often the happiest and most confident of retirees. They define retirement by the checks arriving like clockwork in the mail each month. In addition, having been afforded
the opportunity to estimate their pension benefits well in advance meant they could adjust their monthly budgets and lifestyle to fit comfortably within the limits of that income. Unfortunately, pensions have been getting phased out in favor of 401(k) and other contributory plans. Therein lies the problem: Pension checks are scheduled to arrive as long as your client lives, but 401(k) and individual retirement account withdrawals last only as long as your client’s account has a balance. As a result, a retiree’s monthly budget and lifestyle may change year to year based on the turns of the market. And there’s no guarantee, especially during this era of increased longevity and market volatility, that your client’s investment portfolio can sustain itself to act as a source of income for the full duration of their retirement. Gamblers know that the difference between having a $100 steak for dinner versus lining up at the $5.99 buffet depends on the turn of a card or a roll of the dice. Why should anyone take that same chance with their retirement income? Millennials care about the boomers. Boomers are our parents, our teachers and our role models. We don’t want to see our boomer clients forced back to work or out of their homes if and when their sources of income run dry. Millennial advisors should convince boomer clients to consider gambling only with those dollars they can afford to lose. Michael R. Panico, CFP, is CEO of Arcadia Financial Group, Salem, N.H. He may be contacted at michael.panico@innfeedback.com.
January 2016 » InsuranceNewsNet Magazine
59
MDRT INSIGHTS
The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.
Regulation and Demographics Affect 2016 Annuity Landscape C hanges in federal regulations, increasing longevity and a variety of new products hitting the marketplace are among the annuity-related issues bringing challenges and opportunities this year. By Curtis Cloke
A
s the old saying goes, “The only constant is change.” As we move into 2016, that expression couldn’t ring more true for the annuity industry. From government policies to demographics and product innovation, the tectonic plates of the annuity business are shifting rapidly. For some advisors, the signs point to trouble ahead. However, for those who keep up with the changes and adapt to them, there is, and will be, plenty of opportunity to thrive. With this in mind, the following are a few key issues to keep your eye on in 2016 and beyond.
Uncle Sam: Here to Help?
The federal government is at crosspurposes when comes to annuities. Some developments have been positive. For example, the Treasury Department adopted a rule that allows a portion of a retiree’s pretax assets to be funneled into a qualified longevity annuity contract, which is a form of a deferred lifetime income annuity. It allows a delay of required minimum distributions on that money up to age 85. This change should boost the use of annuities with individual retirement accounts and 401(k) plans. Congress also made changes to the way spousal benefits can be claimed under Social Security. The net result will be smaller benefit amounts for many married couples and divorcees. While bad for retirees, it will present advisors with an opportunity to use annuities to fill any resulting income gaps. However, the Department of Labor is in the process of requiring a fiduciary standard for financial professionals advising 60
people about their retirement accounts, including their options for rolling over their 401(k) funds into IRAs. Ostensibly the purpose is to protect consumers from hidden fees or from advisors pushing products with higher commissions. The practical impact could severely restrict client choices for achieving a secure retirement. Annuities provide guaranteed income for life at a time when people really need this type of product, but annuities are a commission-based product. The extent to which these commissions are permissible or whether they constitute “reasonable compensation” is up for discussion. The final regulations are due out early this year, and it is possible Congress could require additional changes.
Demographics Drive Change
More and more baby boomers are rushing headlong into retirement. For annuities, another important demographic change is life expectancy. With life expectancy increasing, annual payouts on lifetime income annuities will go down. The National Association of Insurance Commissioners is requiring insurance companies to use the 2012 Individual Annuity Reserving Tables by the end of 2016. These tables determine the minimum level of capital reserves that carriers must have in place for their income annuity policies. As life expectancy rises, so will the reserve amount required to protect their policyholders. The 2012 Mortality Table projects further increases in life expectancy in upcoming years and thus will require higher levels of reserves over time. This will continue to put downward pressure on the payout rates that carriers are able to offer to policyholders. The reduction in payouts could be offset by future increases in interest rates, although low rates seem to be the “new normal.” It does present advisors with a planning opportunity in the interim. Clients can lock in higher payout rates if they purchase a lifetime income annuity prior to 2017.
InsuranceNewsNet Magazine » January 2016
The Demand for Annuities
The reductions in Social Security spousal benefits noted previously, along with continued stock market volatility, should create continued demand for lifetime income annuities as clients near retirement. These would include fixed annuities such as single-premium immediate annuities and deferred income annuities. Uncertainty in the stock market also should give clients in their 40s and 50s a reason to consider annuities that transition from asset accumulation to lifetime income. Fixed index annuities and variable annuities with a guaranteed lifetime withdrawal benefit would serve this market segment well. Some new products that combine a variable annuity with a deferred income rider also could be considered for this market. Variable annuity guarantees have proved particularly challenging to our industry in recent years. Carriers must grapple with unpredictable markets and an array of new investment options. The trend is toward new variable annuities that protect principal by linking returns to a major market index and providing a buffer against losses. For example, a 10 percent buffer means the insurance company would absorb up to a 10 percent loss in a year. So if the index declined by 15 percent, the client’s account would go down by only 5 percent. Our industry is growing and adapting to changes in government policies, demographics and the overall economy. We are uniquely positioned to help clients achieve their most fundamental retirement goal: stable income with peace of mind. Curtis Cloke, CLTC, LUTCF, RICP, is an award-winning retirement expert and CEO of Thrive Income Distribution System. Curtis is a 16-year Million Dollar Round Table member with eight Top of the Table and two Court of the Table qualifications. Curtis may be contacted at curtis.cloke@innfeedback.com.
NAIFA INSIGHTS
Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.
Position Yourself in Front of the Right People F ollow these four steps to get known, get connected and get paid. By Toni Harris
M
arketing is necessary to make sure your community knows who you are, what you do for a living and how you can help people achieve their goals. Done correctly, marketing will position you in front of the right people who may be ready to buy. Done wrongly, marketing is a waste of time. Your marketing efforts must set you apart from the competition. Here are four key strategies you must implement if you want to achieve marketing success.
1. Determine your target market.
Whom do you serve? If your answer contains the word “body” — such as anybody, nobody or everybody — you need to narrow your target market. A target market is a niche that you carve out for yourself so that you know where to aim your marketing efforts. In my coaching and speaking practice, I had a difficult time narrowing my target market. I figured that if I targeted only certain areas, I would miss out on other opportunities. However, by not creating a target market, I was not making any progress and was merely running in circles. Now that I’ve narrowed my niche to working with financial professionals, it is amazing how many doors have opened up. Narrow your focus and the doors will fling wide open.
2. Build client relationships through strategic networking techniques.
Now that you know your niche, it’s important to seek out the people who constitute your niche. Where does your target market hang out? If your niche is an occupation such as information technology professionals or engineers, start attending their local association meetings and begin connecting with them.
The networking event is the start to building relationships. It is not the time to ask for the sale. Instead, ask for a 30minute, one-on-one coffee date with your new connection to build on the relationship. During the coffee date, ask your prospect how you can support him in his business. If you can share a resource or a referral, give it to him. This endears him to you, and the relationship begins to blossom. Of course, your prospect wants to know how he can support you — and that is your opportunity to share. This single strategy gets you more business than any other strategy because the prospect feels as though he knows you and you have made it clear how he can refer you to others.
3. Develop strategies to prevent procrastination.
Have you ever lost business because you didn’t follow up in a timely manner? If you are a procrastinator, you must put systems in place to overcome procrastination and be accountable. I was cured of procrastination when I lost a deal that could have earned me a $3,000 commission. My coach recommended that I use a simple to-do list of tasks that have to be done. If it’s on the list, it gets done. If it’s not, it won’t, period. What system do you use to follow up?
4. Use speaking engagements to showcase your expertise.
your arsenal. Why? Because speaking is like fishing with a net, not a pole. When you are speaking in front of an audience, you are seen as the expert. The audience wants to, at the very least, have a discovery session with you. If you use speaking engagements to market yourself, it is imperative that you employ follow-up strategies such as surveys, email and social media marketing to stay connected. When I was an advisor, this strategy was by far the most effective strategy I used to get appointments. So when you are out networking, always ask the organizations represented at these events for a chance to speak at their meetings and get-togethers. These groups are always looking for engaging speakers to educate their audience. With these marketing tips, you can streamline and significantly enhance your marketing efforts. Identifying your target market keeps you from chasing after the world. Building relationships turns your networking contacts into contracts and increases your referrals. And speaking showcases your expertise and helps get you more appointments. Toni Harris is a motivational speaker, marketing strategist and certified coach. Toni may be contacted at toni.harris@ innfeedback.com.
When it comes to marketing, speaking is probably the strongest tool you have in January 2016 » InsuranceNewsNet Magazine
61
THE AMERICAN COLLEGE INSIGHTS
With over 87 years of experience, The American College is passionate about helping students expand their knowledge and opportunities as financial professionals.
Questions DOL Needs to Answer T he Department of Labor’s proposed fiduciary rule will have wide-ranging repercussions in the insurance world. By Craig Lemoine
W
e put on our backpacks in 2008, navigated the Dodd-Frank Act and used a collective walking stick in 2010 when the U.S. Securities and Exchange Commission held hearings about adopting a fiduciary standard. Five years later, our regulatory journey has coincided with the river of more than 10,000 baby boomers retiring every day. This critical juncture of a major regulatory shift with a tremendous influx of retirees has led the Department of Labor to propose an industry-changing conflict of interest rule that, if implemented, would have repercussions that will be felt throughout the retirement planning world. The proposed rule expands the fiduciary protections currently extended to employees covered by employer pension funds to include individual retirement account and 401(k) plan holders. It also could cover investment or withdrawal advice given to IRA owners and other retirement plan participants. This expansion of a fiduciary standard will include a broad swath of financial service professionals who are not currently required to hold to a fiduciary standard. Broker/dealers and their registered representatives, as well as insurance agents, would be considered fiduciaries if they provide allocation or account distribution advice to an IRA account participant. The proposed rule will fundamentally change the way brokerage and insurance companies interact with consumers in retirement planning settings. Advice and products that previously were held to a less stringent suitability standard now will be viewed through a more sharply focused fiduciary lens. The intention is to better protect consumers and to address the dramatic expansion of traditional, Roth and rollover IRA dollars resulting from the initial application of the Employee Retirement Income Security Act in the 1970s and 1980s. Additional justification for the new rule stems from consumers’ inability to distinguish between a financial 62
advisor, who currently holds a fiduciary duty, and a broker or agent, who may or may not. The rule may fundamentally change the role of insurance agents working with retirees. This rule would require an insurance agent to hold to a fiduciary standard for both their underlying insurer and their retiree customer. Having two masters opens the door to further questions and clarifications; it also opens the door to a legitimate fear of increased agency costs and possible litigation. We recently commented on the proposed rule and asked the DOL to clarify certain expectations. These questions must be answered before the department moves forward with implementation.
The rule may fundamentally change the role of insurance agents working with retirees. 1. Is the fiduciary standard a proxy for product fees and expenses? Will preference be given to exchange-traded funds and passive investment vehicles over actively managed funds? 2. Does the DOL consider investment and insurance products with lower fees superior to those with higher fees? Are other factors (performance, experience, financial strength, management) considered in meeting a fiduciary standard? 3. What is the relationship between insured retirement income products (such as fixed and deferred annuities, mutual funds, and money market instruments) and the underlying financial strength of the offering company? Assume a retiree is in good health and requires guaranteed income. Their primary source of investable assets is an IRA. If an AAA-rated insurer can generate an annual guaranteed inflation-adjusted income stream of $40 for every $1,000 invested and a B-rated insurer can generate $60 for every $1,000 invested, would both meet a fiduciary standard of care? 4. Surrender charges provide disincentives for consumers to liquidate an
InsuranceNewsNet Magazine » January 2016
investment or insurance product within a short time frame. These disincentives can increase performance by allowing an insurer or investment company to choose less-liquid products and increase yields. Will products with surrender charges be permitted under the best-interest contract exemption? Will a preference be given to investment and insurance products without surrender charges? 5. Has a rigorous rules-based standard (similar to FINRA Rule 2111) been evaluated as a mechanism for reducing excessive IRA costs and fees? 6. How will arbitration occur between advisors and consumers? Who will bear the cost of this type of arbitration? Will arbitrating an agency/principal standard be costprohibitive for financial service firms that work mostly with middle- and low-income consumers? 7. Raising the cost of doing business may disenfranchise some IRA owners from working with financial service professionals. Are robo-advisors better positioned to help low- and middle-income Americans than financial service professionals currently operating under a suitability standard of care? 8. How will lower- and middle-income Americans learn to use automated tools if they are not working with financial service professionals? How can insurance agents meet potential fiduciary standards of care? What type of education and compliance programs will we need to implement if this rule is enforced? Which organizations are best suited to strike a balance between consumer security and industry interests? Now is the time to gear up and get prepared for the new DOL decisions, which could be implemented as early as next spring. We will need your voice and your continued support on what is sure to be a long and winding road. Craig Lemoine is director of The American College Northwestern Mutual Granum Center for Financial Security. Craig may be contacted at craig. lemoine@innfeedback.com.
MARKETPLACE Become a Published Author
THE EASIEST WAY TO AUTHOR YOUR BOOK You Speak We Write You Profit Download our FREE ebook to learn more at www.24HourPaperback.com
ADVERTISER INDEX Advertiser
Website
3-Mentors
www.incomeallocationu.com
American Equity
life.american-equity.com
888-647-1371
5
American National
img.anicoweb.com
888-501-4043
47
Back 9
www.back9nevermiss.com
29
Bedrock Financial
www.publicsectorprofits.com
16
Brokerage Resource
www.tbrins.com
Brokerage Solutions
www.betterthanannuity.com
63
Brookstone Capital
www.riakickoff.com
IBC
Celebrity Branding
www.blockbusteradvisor.com
College of Financial Planning
www.cffpinfo.com/lutcf
53
Family First Life
www.my7truths.com
35
Five Star Marketing
www.bestpractice2016.com
FC
Great American Insurance Group
Your Book in Your Hands in 90 Days
Pg 9
800-928-4998
888-224-5870
45
7
800-438-3398, ext 11999
41
800-520-7271
IFC
Great-West Financial
www.greatwest.com
Guardian Life
www.nextgenwholelife.com/insurancenewsnet
Imeriti Financial Network
www.megaproducerevent.com
855-601-9442
1
Impaired Disability Underwriters
www.toughestdicases.com
844-209-9633
15
Interweb Insurance
www.interwebinsurance.com
866-277-7162
27
John Hancock
www.jhredefininglife.com
Kansas City Life
www.kclife.com
Market Domination
www.ultimatemarketingmagician.com/inn
4
MDRT
www.joinmdrt.org
43
Minnesota Life
www.securian.com
888-413-7860 opt 1
33
Mutual Trust
www.mutualtrust.com/opportunity
800-323-7320 ext 5300
37
吀栀攀 瀀爀漀搀甀挀琀 琀栀愀琀☠
NAIFA
www.naifa.org/itpays
877-866-2432
31
∠ 伀昀昀攀爀猀 ─ 挀漀洀洀椀猀猀椀漀渀 ∠ 䤀猀 戀攀琀琀攀爀 琀栀愀渀 愀渀 愀渀渀甀椀琀礀 ∠ 䤀猀 攀愀猀礀 琀漀 最攀琀
Ohlson Group
www.safemoneyauthority.com
877-844-0900
25
Oxford Life
www.oxfordlife.com
888-203-6221
39
Paperback Expert
www.24hourpaperback.com
63
Peak Pro Financial
www.iulforseniors.com
21
Petersen International
www.piu.org
PT Services
www.ptservicessb.com
63
SafeMoney
www.safemoney.com
63
Speaking Empire
www.freepresentainerkit.com
26
Triquest USA
www.miracleadvisor.com
19
Tucker Advisors
www.sellwithtucker.com
855-454-2638
BC
Vertical Vision Financial
www.10millionin2016.com
855-226-1785
ins
Vick & Associates
www.stopfailingboomers.com
1,000’s of small business owners in your area need financial advice. Let us connect you with them.
www.PTServicesSB.com
砀㌀
Phone
䜀攀琀 礀漀甀爀 䄀最攀渀琀 䤀渀猀椀搀攀爀 䜀甀椀搀攀 琀漀搀愀礀 愀琀 眀眀眀⸀䈀攀琀琀攀爀吀栀愀渀䄀渀渀甀椀琀礀⸀挀漀洀
3
55 800-258-4525 ext 8120
800-345-8816
January 2016 » InsuranceNewsNet Magazine
13
51
49
63
More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.
LIMRA INSIGHTS
Successful Social Media Use Leads to Greater Consumer Access S ocial media provides increased opportunities for education and information about how we as an industry can help solve problems. By Norah Denley
I
n financial services, the use of social media is becoming social business. Although financial services companies were slow to adopt social media use at first, they quickly ramped up their use of the most popular platforms. The same is true for advisors, as LIMRA research has found seven in 10 young advisors are using social media, and six in 10 companies have programs in place to support their advisors’ use of social media. In recognition of this shift, the 2015 LIMRA/LOMA Social Media Conference for Financial Services and Silver Bowl Awards promoted the theme “Social Media to Social Business.” The awards recognize social media excellence and innovation highlighting best practices in the financial services industry. When we interviewed our award recipients about their winning entries and the future of social media in financial services, several themes emerged.
More Integration
The award winners said they foresee more companies integrating social media into their overall marketing strategy — both digital and traditional media. Several said they expect to see more direct call-to-action messages in social media. They specifically are looking at more micro-targeting of audiences, using the right message at the right time so the call to action is relevant and appropriate. In addition to increased integration with marketing, the award winners said they believe social media will be part of efforts such as relationship building, referral and lead generation for advisors, agent recruitment, and customer service. 64
The finalists and winners of the Silver Bowl Awards demonstrate how social media can be used to achieve strategic business success within the framework of today’s social environment.
More Insight
We know from recent LIMRA research that when it comes to finances, people need the help of an expert. From knowing how much to save for retirement to understanding the importance of life insurance, consumers lack confidence in their abilities to make financial decisions. The challenge is getting the right information to the right people at the right time and in the right format. The Silver Bowl winners see this as an opportunity. They are excited by the increased access to consumers afforded by social media, bringing with it the potential to better understand needs and interests of key markets. At the same time, social media allows consumers easier access to companies — and increased opportunities for education and information about how we as an industry can help solve problems.
More Humanity
LIMRA research has found that people who work with advisors trust them and remain loyal. In today’s digital world, the need for the human touch remains. However, that human touch is being made increasingly through digital channels
InsuranceNewsNet Magazine » January 2016
today. Social media allows the industry to be present at conversations we normally wouldn’t be and to remain top-of-mind with helpful information and support. Social media, used correctly, is “marketing” in the same way that attending a chamber of commerce meeting or local charitable event is marketing — it allows you to get your name out there, meet people and establish relationships. As we begin to understand the “omnichannel consumer,” we see that it’s not about one way to reach them, i.e., online, offline, digital, social or face to face. The opportunity is being able to reach and serve people in ways that work best for them. As one of our winners said, “Consumers want to hear from real people; they want to hear real thoughts and they want value. Social media is just another way to connect with people.” Norah Denley is a senior analyst with LIMRA’s distribution and technology research team. Norah may be contacted at norah.denley@innfeedback.com.
KICK OFF
AV N AI OW LA BL E!
2016 WITH A WINNING
GAME PLAN Find out how to give your clients the nimble approach they’re looking for in today’s volatile markets. Get everything you need to succeed in 2016 with the Brookstone RIA Starter Kit. Download today to learn: • How to attract and retain the best clients • What the right (or wrong) platform could do for your practice • 4 ways to maximize your growth and profitability • PLUS! The industry’s #1 advisor training guide
Get it free today at
www.RIAkickoff.com
$3 BILLION IN FIA PREMIUM
PROVES OUR SYSTEM WORKS! 25-30 Appointments - not leads - per month on average. We provide the appointments and the training; you close and reap the rewards!
Tucker Advisors’ average sale is $107,000. If If If If
you you you you
close close close close
10% from 30 appointments - earn $25,680 20% from 30 appointments - earn $51,360 30% from 30 appointments - earn $77,040 40% from 30 appointments - earn $102,720
Do you want to earn this quarterly, monthly or weekly? Karlan Tucker will show you how.
BUILD A RELATIONSHIP WITH US. 855.454.2638 www.SellWithTucker.com