InsuranceNewsNet Magazine - June 2015 by InsuranceNewsNet

INSIDE Why Agents & Their Clients Should Love Annuities PAGE 29

How Annuities Soothe Retirement Anxiety PAGE 36

Push-Pull Dynamic Heats Up Annuity Awareness Month PAGE 44

What are older Americans secretly worried about? The answers might surprise you. Download our free market report now.

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IN THIS ISSUE

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JUNE 2015 » VOLUME 8, NUMBER 6

58 LIFE

58 NAIC Proposes Rules to Put Restraints on IUL Illustrations

28 INFRONT

THE BIG ANNUITY ISSUE

12 A n Employee Looks Back at a Haphazard 401(k) Journey By Cyril Tuohy The 401(k) plan was in its infancy as his life in the post-college world was beginning. Here is how his retirement fund grew as his career matured.

It’s National Annuity Awareness Month and it’s the perfect time to shine the spotlight on the product that can help Americans solve the problem of running out of money in retirement.

36 How Annuities Soothe Retirement Anxiety

INTERVIEW

14 How to Create Your Playbook for Ultimate Success An interview with Maribeth Kuzmeski Maribeth Kuzmeski found her passion – football – early in life. She turned her love for the game into a strategy called Red Zone Marketing. In this interview with InsuranceNewsNet Publisher Paul Feldman, Kuzmeski gives the details on how you can craft your own playbook and become Most Valuable Player to your clients. 2

InsuranceNewsNet Magazine » June 2015

60 How to Compete and Win the Illustration War By Gonzalo Garcia and Elizabeth Michel Aggressive IUL illustrations aren’t doing your clients any favors. Here’s how to put together an honest scenario.

29 Why Agents & Their Clients Should Love Annuities By Cyril Tuohy Investors often think of annuities as complicated, expensive and intimidating. Here’s how you can help your clients put aside their doubts and embrace annuities.

By Susan Rupe A truce could come to the battle over index universal life illustrations.

By Linda Koco The fear of outliving their retirement assets is keeping your clients awake at night. Here’s how annuities can help relieve their jitters.

44 Push-Pull Dynamic Heats Up Annuity Awareness Month By Cyril Tuohy The idea is to draw consumers in to the idea of annuities and have them call their agents directly.

47 Annuity Thought Leadership Series – Special Section

Four thought leaders weigh in on how best to reach consumers, educate them and sell them “income for life.”

HEALTH

66 4 Fallacies About Selling Individual Disability Insurance By Doug Waters Advisors often stumble when they want to open a discussion on individual disability insurance. Here are some ways to pivot the conversation in the right direction.

FINANCIAL

72 How to Avoid the ‘Widow Tax Trap’ By Gregory B. Gagne The tax benefits to a Social Security claiming delay and how your clients may be affected.

ANNUITIES EXCHANGE

ALSO IN THIS ISSUE JUNE 2015 » VOLUME 8, NUMBER 6

77 N AIFA: The Magic Book to Help Boost Your Sales

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74 BUSINESS

74 Personal Branding: Sometimes Less Is More By Drew Gurley You might advertise, “We give personal service.” That doesn’t tell your clients how you are different from any other advisor.

INSIGHTS

76 MDRT: A Client’s Financial Plan Must Match Their Comfort Level By Donald Speakman Doing the right thing for your clients will keep your relationship going for a lifetime.

By Elie Harriett Every Medicare beneficiary has this book. Here’s how it can be your ticket to open more sales.

78 T HE AMERICAN COLLEGE: The ABLE Act: A Powerful Tool for Special Needs Planning By Adam Beck A new savings vehicle can give your clients another option in providing for family members with special needs.

80 L IMRA: Retirement Income Planning Is More Than Hitting the Right Numbers By Judy Zaiken Emotions and mindset play a crucial role in setting up the right retirement plan for your client.

EVERY ISSUE 10 Editor’s Letter 26 NewsWires

42 AnnuityWires 56 LifeWires

64 HealthWires 70 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 WRITER Cyril Tuohy WASHINGTON BUREAU CHIEF Arthur D. Postal VP FINANCES AND OPERATIONS David Kefford PRODUCTION EDITOR Natasha Clague VP MARKETING Katie Hyp CREATIVE STRATEGIST Christina I. Keith CREATIVE DIRECTOR Jake Haas SENIOR GRAPHIC DESIGNER Carlos Centeno GRAPHIC DESIGNER Shawn McMillion

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Robelynn H. Abadie, RFC, CAP

Kim G. Allen, LUTCF

Stephen D. Andersen, RHU

Peter C. Browne, LUTCF

Mark A. Cecil, CFP

Abadie Financial Services Baton Rouge, LA

United Professional Advisors Watertown, NY

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PRB Wealth Management New York, NY

Wealth Advisors Group Bethesda, MD

Jarrod F. Hirschfeld

Josh A. Jalinski

John C. Kenan

Patrick J. Kenney, CPA

Brett A. Moldenhauer

Wilcox Financial Toledo, OH

Jalinski Advisory Group Toms River, NJ

Southeast Financial Services Greensboro, NC

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Moldenhauer & Associates Orchard Park, NY

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2015 MDRT Top of the Table Ameritas salutes our valued field associates who have attained the highest levels of MDRT membership.

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The Ostrove Group White Plains, NY

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Moldenhauer & Associates Orchard Park, NY

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Tax Favored Benefits Overland Park, KS

Wilcox Financial Toledo, OH

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Ameritas® and the bison design are registered service marks of Ameritas Life Insurance Corp. Fulfilling life® is a registered service mark of affiliate Ameritas Holding Company. © 2015 Ameritas Mutual Holding Company

DST 1364 5-15

2015 MDRT Court of the Table

Brian J. Anderson

Michael R. Archambault

Michael S. Arteca

Rob Branch III, ChFC, CFP

Stephen L. Bruneau, CLU, CFP

David White & Associates San Ramon, CA

Boston 128 Companies Weston, MA

Independent Financial Solutions Westbury, NY

20/20 Financial Advisers of Daytona Ormond Beach, FL

Boston 128 Companies Weston, MA

David J. Fazzini, LUTCF

Michael J. Gilliam, LUTCF

Raneshwar K. Gupta

David R. Guttery, RFC, RFS, CAM

Lindsay N. Haas

Premier Planning Group Phoenixville, PA

Carillon Group Chesterfield, MO

Total Asset Planning Cincinnati, OH

Nowlin and Associates Trussville, AL

Hoffmann Agency New Braunfels, TX

Frank C. Kinter, CLU, ChFC

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Merle D. Miller, RFC

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This information is provided by Ameritas速, which is a marketing name for subsidiaries of Ameritas Mutual Holding Company, including, but not limited to: Ameritas Life Insurance Corp., 5900 O Street, Lincoln, Nebraska 68510; Ameritas Life Insurance Corp. of New York, (licensed in New York) 1350 Broadway, Suite 2201, New York, New York 10018; and Ameritas Investment Corp, member FINRA/SIPC. Each company is solely responsible for its own financial condition and contractual obligations. For more information about Ameritas速, visit ameritas.com. Any agency referenced is not an affiliate of Ameritas or of any of its affiliates. DST 1364 5-15

Carl J. Buzzeo WPA/Pittsburgh Financial Center Pittsburgh, PA

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Miami Agency Coral Gables, FL

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Capital Concepts Hickory, NC

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ICS Financial Gainesville, FL

Learn why so many high-performing MDRT leaders and managers choose us as their primary provider. Visit www.ameritasagents.com Ameritas® and the bison design are registered service marks of Ameritas Life Insurance Corp. Fulfilling life® is a registered service mark of affiliate Ameritas Holding Company. © 2015 Ameritas Mutual Holding Company

WELCOME LETTER FROM THE EDITOR

Teach or Lose I

f you think that annuities do not need an awareness month, try this Google search: “Should I buy an annuity?” You will face a page of warnings and “helpful” advice. In fact, the first thing on the list is a guide from Forbes that pretends to be an unbiased information source. It even has the imprimatur of an Investopedia logo on it. But it does not take long for the misinformation to start. This is the fourth paragraph: When you think about it, investing your whole portfolio into a single investment doesn’t make sense for any financial instrument. These investors put themselves at considerable risk by placing all of their eggs in a single basket. They were also often whacked with innumerable hidden fees on their life savings. Many saw their monthly income drop as the investment markets took a tumble. That is a perfect description of what an annuity is not. This would be true of stocks, mutual funds and other equities — pretty much anything but annuities. Security is precisely why someone buys an annuity. Of course, variable annuities suffer in down markets, but those are securities, basically mutual funds in an insurance wrapper. Fixed index annuities come closer to the Forbes description, but there is a floor against loss. Remember the “zero is the hero” rallying cry from the 2008 crash? It gets goofier. The next paragraph uses that previous misinformation to launch into the land of fabrication. Because of this situation, many states now regulate the percentage of annuities you can hold in your 10

InsuranceNewsNet Magazine » June 2015

portfolio, and for good reason. If you’re thinking about putting annuities into your portfolio, first consider a limit on the total. So, according to this, some states will tell me that I cannot put all my money into an annuity. I cannot find a reference to any state that would say individual consumers could not put all of their money into an annuity. Under what authority could they even do that? I can lose all my money in the stock market, but does any state tell me that I cannot put it all into equities? Well, maybe they should, according to this Forbes scare piece. Of course, agents and advisors are under regulations and guidelines that would prevent them from advising clients to put all their money into an annuity. But even then, the advice would have to be either unsuitable for the client or not in their best interest to be considered improper. This writer took an inaccuracy — that many saw their monthly income drop as the investment markets took a tumble — then went on to say, “Because of this situation …” leading to nonexisting regulation: “Many states now regulate the percentage of annuities you can hold in your portfolio.” Not only is this the first item in the search, but it is one of the most annuity-friendly pieces on the first page. The next item, from CNN, highlights this piece of advice: “Typically you should consider an annuity only after you have maxed out other tax-advantaged retirement investment vehicles, such as 401(k) plans and IRAs.” Under the headline “How do I know if buying an annuity is right for me?” the article spends the first three paragraphs warning against annuities until the fourth, which recommends mutual funds. The next article in the search is from Suze Orman. I don’t think it’s too much of a

spoiler to reveal that she doesn’t have glowing things to say. Here is how she introduces the subject: “This is the great blanket investment to cover you when you’re about to retire, or retired, right? Not so fast.” She goes on to talk about the horrible commissions and fees associated with annuities. As you read all this and the ancillary arguments for the fiduciary standard, you would think every investment firm is run by monks with no financial concerns for themselves. Apparently, they seek only the financial well-being of their clients and accept mere pittance to stave off starvation. But, in fact, we all know that they do pretty darn well. They make money even when clients lose theirs. The finance industry built its vast fortune on fees. And I think I saw a couple of movies that seemed to indicate they can get awfully rich by doing really slimy things. This is not to say that the insurance industry is inhabited only by saints. It has its own problems and delinquents. But its main mission is to protect money. When clients buy an annuity, they are purchasing protection. That is the product and the business at their essence. Some annuities and their sellers do go out of their way to make annuities sound like sexy investments. That has come back to bite many of those folks when regulators start nosing around. But, generally, companies have tightened their oversight. That was especially true with stronger suitability rules that went into effect after the Securities and Exchange Commission tried to regulate fixed index annuities with Rule 151A. Companies have also reduced complexity. Frankly, even many agents didn’t understand some of the complicated products of 10 to 15 years ago. In the end, a business is only as good as its ethics. If people are geared to separating clients from their money, they will figure a way around the rules. At the center of this debate is an American public unprepared for retirement. In fact, people are pretty anxious about their later years, according to the 2015 Retirement Confidence Survey from the Employee Benefit Research Institute and Greenwald & Associates. According to that survey, 65 percent of Americans said they were not at all confident or not too confident that they will

TERM LIFE THAT WILL HEAT UP YOUR SUMMER! have enough money to live comfortably through their retirement years. Another 21 percent were somewhat confident. Only 12 percent were very confident. That means about 88 percent of Americans were less than very confident that they will be able to live comfortably in retirement. That’s an extraordinary level of anxiety out there. After all these years of a bull market and with all the advisors riding it, ordinary Americans are not much better off. We all know where that money is going — right to the top. What is left for middle Americans? They are unlikely to have a pension. They might have a 401(k) in which they managed to save something. According to the U.S. Department of Labor, the median amount in a private retirement plan for workers in the public and private sectors is $44,000. To put that into perspective, a year in an assisted living facility for one person is $43,000, according to Genworth’s annual Cost of Care Survey. Annuities can help Americans save and build on those savings. The products also offer choices for living benefit withdrawals along with other options. You don’t need a half million dollars in investable assets to talk to an insurance agent. You just need to pick up the phone and call. The insurance industry does not have all the answers, although it has some important solutions for consumers. But consumers are not getting straight information on these products when they seek it. Instead, they are being misled by a segment of the financial services sector for its own gain. Obviously, we need greater annuity awareness. A couple of groups that we feature in this edition are focusing on the cause. In fact, we at InsuranceNewsNet will be doing our part. We are starting an effort to get better information to consumers, call attention to the segment’s importance in the American economy and help uphold high standards within the industry. We will be rolling out those campaigns in the next few months. With some of these efforts, maybe this time next year when people search for “Should I buy an annuity?” they will find a straight answer to help them write the next chapter of their lives. What will you be doing to help the cause? Steven A. Morelli Editor-In-Chief

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INFRONT TIMELY ISSUES THAT MATTER TO YOU

An Employee Looks Back at a Haphazard 401(k) Journey After more than two decades of socking away funds in a defined contribution plan, a workplace investor recalls the mistakes he made and the lessons he learned. By Cyril Tuohy

mid the gloom and doom headlines about ill-prepared retirees, this is a happy retirement investing story. But this happy story is one that has transpired quite by chance. My first experience with the defined contribution system dates back to 1991. That was when, three years out of college, I snagged my first full-time job working as a reporter for a small daily newspaper in southern New Jersey. The paper holds one of the most memorable newspaper titles in the industry. It was called Today’s Sunbeam. It declared itself the community’s “good morning” newspaper. Even if some of my big-city friends weren’t sure whether I worked for a newspaper or for a bread distributor, I couldn’t have cared less. The job paid a salary before taxes of $14,533 a year, I was getting some of the best training in local journalism I could have hoped for, and the job came with benefits. One of those benefits was something called a 401(k), which no one at the office had really heard of before. My editor at the time mentioned in passing that the 401(k) was something that I should take advantage of. The human resources department included information about it in their welcome package. Off I went and set aside a portion of every paycheck into my 401(k). I don’t recall the percentage I set aside, but I remember the company making a matching contribution. I had enough good sense to recognize that it was free money, and I took advantage of it. 12

InsuranceNewsNet Magazine » June 2015

Twenty years ago, Cyril Tuohy was contributing $66.94 a week into his 401(k) account. He is shown here relaxing on a Caribbean cruise while his retirement account was steaming along as well.

Although I started my job in February 1991, my records indicate I didn’t begin contributing to my 401(k) until August 1992. That month, the records show, I put aside $25.99 of every weekly paycheck. Net pay after taxes and my pension contribution: $198.21 a week. It was my first investment, and I told my father about it. He, too, was impressed and thought it shrewd that I sock away money for my retirement. He was 66 at the time and well aware of the power of compound interest. I was 25 years old, and the brochures distributed by human resources were enough for me. I sank my retirement savings into an aggressive growth fund run by Twentieth Century Funds. I don’t recall that I received any formal investment advice, and there was certainly no discussion about fees. I’m sure the company had a toll-free number, but I never once picked up the phone to speak with anyone there. At the age of 24 in 1991, I belonged to the leading edge of Generation X. Unbeknown to me, I had become an early adopter among workers offered 401(k)

plans, which were then gaining in popularity among employer-sponsored plans. Since I had never heard of a defined benefit pension plan, I had never even considered another savings option. I figured a 401(k) was enough for me. I understood the general concept of higher risk and higher reward, and that the more years you had before retirement, the more risk you could take. I also assumed that every dollar in principal that I put in would be there for me, with interest, when I reached age 80 — if I lived that long. Rarely did I compare notes with colleagues about what I was doing with regard to taking advantage of the 401(k) plan. The conversation simply didn’t come up. We had other things on our minds. Like millions of other Gen Xers in their 20s, I was mostly carefree. Unlike millions of millennials today, I had neither college debt nor credit card debt. There was no Internet in those days, at least it wasn’t available to us. Early versions of Microsoft Excel were on the market, but none of us owned or were supplied laptops, so we didn’t have access to the software and compound interest graphs and pie charts that are so easy to come by today. I did exactly as I was supposed to do: Put away a percentage of my income and forget about it. At the end of 1992, I joined a larger newspaper that paid overtime. It was owned by the same company that owned my previous newspaper, so the retirement account assets carried over without my having to move money in or out. My records show that out of my 1993 calendar year earnings, $1,546.40 went toward my defined contribution. Gross earnings that year: $20,485. In calendar year 1994, I put away another $2,374.77. My 1995 earnings records show that I’d set aside $3,165.78 that year.

AN EMPLOYEE LOOKS BACK AT A HAPHAZARD 401(K) JOURNEY INFRONT The retirement balance on the mutual fund statements was starting to add up. Because I kept setting aside principal year after year, my balance always seemed to me to be growing. I never paid attention to the market, and I still had not lived through a recession. In 1998, I left New Jersey for New York and joined a large trade publishing company that used Putnam Investments to manage its retirement accounts. I moved the retirement balance — more than $31,000 — from my New Jersey employer into a Roth Individual Retirement Account (IRA) opened at Vanguard, where my father had his retirement holdings. In New York at my new employer, I again put away between 12 percent and 15 percent of pretax income into the Putnam New Opportunities fund, an aggressive growth fund. By then, the Internet had exploded and the dot-com bubble was in full swell. A 401(k) seemed fail-safe. Then, I did exactly as I wasn’t supposed to do. Every week or two for about a year, I would go online and watch my account

and financial media websites. That made it easy for employees to get an idea — for the first time and without any paid outside help — of accumulated balances after 20, 30 or 40 years of investing. Even when the Nasdaq collapsed in March 2000, because of the contributions I had made, my account kept growing and I was immune to the sting of a contracting market. When I lost my job two years later, the account balance had grown to more than $35,323. I transferred that into a new rollover IRA at Vanguard in 2007. Over the next decade, from 2003 to 2013, I squirreled away from 12 percent to 17 percent of pretax income in the 401(k) at my next job. Again, when the 2008 recession hit, the balance kept growing because of the growth in the principal. Then, in February 2013, my retirement contributions hit a dead end after I was terminated. No more employer-sponsored benefits, no more automatic withdrawals, no more company matches. It was a moment I knew would come. The 401(k) account balance, which stood at more than $110,000, was trans-

Since I had never heard of a defined benefit pension plan, I had never even considered another savings option. I figured a 401(k) was enough for me. grow — which is what advisors tell you not to do. I wasn’t alone, of course. Millions of employees were checking their balances as well, and the defined contribution system was giving us the burden of managing our own retirement funds. I’d read enough to know that markets move up and down, that investing for retirement is a long-term proposition, and that any middling retail investor such as myself had better focus on the job instead of checking the retirement account balances. But the Internet was new, compound interest calculations and modeling scenarios were popping up on mutual fund

ferred from Fidelity to my rollover IRA at Vanguard. It was the end of the line, at least temporarily. I have not contributed to my IRA since, but dividends and the capital gains keep my rollover and Roth IRAs growing. I’m planning to contribute again later this year after slaying a remaining medical bill or two, but I don’t know whether I’ll ever be able to set aside 15 percent of my income again. No matter. The funds are reaping the golden — if counterintuitive — rule of long-term investing, which is that it’s more important to set aside money early than it is to save later. I’ll turn 49 next month. In a year,

I’ll be eligible to join AARP. Better to experience a couple of fallow years at 50, than to wait to save money at 27 instead of at 25. The employer-sponsored defined contribution model has served me well. There is no more convenient way to build up a retirement nest egg than through automatic payroll deductions — although I have no idea how much in fees it has cost me. Looking back, I’ve done better than most people, judging by retirement surveys. Yet good fortune has befallen me more by happenstance than by starting with a clear accumulation strategy, which my father occasionally talked about with me. I did make two mistakes, though. The first was not setting aside money as soon as I could at my first job instead of waiting nearly a year and a half to begin saving. The second was not setting aside enough cash in liquid savings. Obsessed with, or perhaps bludgeoned by, the retirement fund industry’s focus on accumulation, I’ve found myself short of cash once or twice, and have had to seek temporary help from family. Personal treasury management isn’t the responsibility of retirement investing, of course, but it raises the question: Where are the liquid savings features that deduct a portion of payroll straight into a bank savings account? Whether I would have done as well under a defined benefit plan with a professionally managed pension, I’ll never know. I do know this: I’ve done better than most because I’ve been fairly disciplined, yet this new experiment in defined contribution retirement funds has left me looking back on a somewhat haphazard journey. My retirement funding experience leaves me with a “cobbled” feel, and I’m not sure that’s the best way for our nation to approach retirement funding. Without a doubt, though, I also was lucky. InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril. tuohy@innfeedback.com.

June 2015 » InsuranceNewsNet Magazine

InsuranceNewsNet Magazine Âť June 2015

HOW TO CREATE YOUR PLAYBOOK FOR ULTIMATE SUCCESS INTERVIEW

hen it comes to any professional sport, no team can ever win without a playbook, especially when it comes to the NFL. A playbook can be a team’s most valuable asset, and if their opponent gets hold of it, it’s game over. The playbook lays out the plan for every player on the team, so everyone knows exactly where to go and exactly what to do. NFL teams are some of the best-run companies in the world. Why? Because everything is spelled out and everything is choreographed — from concessions, ticket sales and marketing to the halftime show. They have systems and processes in place for nearly everything. It makes perfect sense why Maribeth Kuzmeski is on a mission to arm advisors and insurance professionals with their own playbook, to bring their game to a new level. From an early age, Maribeth fell in love with the game of football — taught to her by, of all people, her grandmother! But football turned into a very apt model for an advisor’s success because it is built around strategies for advancing on the field. Aren’t there days that you feel like you’re fighting for every yard and the end zone doesn’t seem to get any closer? Successful people learn early on that building a good plan is only part of succeeding. The sticking with it is the hard part. But it doesn’t stop there, because your plan has to change and evolve over time, especially when you experience successes and growth along the way. Many successful advisors have turned to Maribeth to become the best at what they do. She and her firm, Red Zone Marketing, specialize in working with advanced financial professionals. In fact, many readers will recognize her from appearances at industry events such as Million Dollar Round Table’s annual convention. She has written seven books, including Red Zone Marketing and The Connectors. In this interview with InsuranceNewsNet Publisher Paul Feldman, Maribeth gives practical advice on how to build a game plan and how to execute it like a pro.

FELDMAN: What does a playbook for success look like and how do you set one up? KUZMESKI: We start by looking at what you really want. How many clients, the types of clients, the target market — and then we put it into a very simple game plan. The plan is something that you could imagine putting on your wrist like a quarterback does when he’s going out. He’s looking at the plays and he says, “OK, this is what I have to do.” If we always know what our priority plays are, we get less caught up in the latest, greatest, hottest thing that likely won’t make us any money. It is not complex. It isn’t stuffed on your shelf someplace. It’s something that’s in front of you on a regular basis and so you can see that these are the things that you need to do to be successful. And not just you, but everybody on your team. FELDMAN: What are some “musts” that should be in every advisor’s playbook?

KUZMESKI: Referral conversion as well as referral acquisition need to be in the playbook. There are two primary ways that clients come to a financial advisor or an insurance agent. They’re coming from referrals or from an active marketing tactic. So let’s talk about referrals first, because that is where most of the clients come from. It’s been shown that 85 percent of new clients will come from referral-based sources. That could be a strategic alliance with another professional or from somebody who knows you in the community or from a client. What must happen today to make those referrals successful is very different from what used to happen. What happens is that you have people who know how great you are and they will tell others about you. Most of the time, we don’t even have to ask for referrals and we get them. The problem starts because when somebody gives a referral today, the first thing the other person will do is search for you online. Therein lies the first step of the problem. Using a football analogy, as you’re moving down the field, you’re doing good work for your clients. Things are going well. They start to talk about you. Now you’re in the red zone, but the biggest fumble in the red zone is when somebody goes and searches for you online, they either can’t find anything or you don’t have a picture on your LinkedIn profile or your profile doesn’t say anything compelling. When someone finds your website or whatever profile you might have online, they don’t feel that you’re the right fit. By the way, they’re not looking for you online to figure out why they should come in and see you. They’re looking for you online to figure out why they shouldn’t. Advisors and agents often give their potential clients a reason not to come in and it’s one of the biggest problems today. And it’s an easy fix. Referral conversion is: When prospects look for you online, have you said the things that are targeted? Is your messaging precise enough so that person who goes there says, “I’m in the right place. This is where I have to go.” This isn’t about tweeting 20 times a day, June 2015 » InsuranceNewsNet Magazine

INTERVIEW HOW TO CREATE YOUR PLAYBOOK FOR ULTIMATE SUCCESS it’s having an online exposure that people can find. It can’t be that you put up something online today and you don’t look at it again for a year. It’s something that needs to be changed consistently because it is so critical to attract new business. Then the next part of the playbook is those marketing tactics that you’ll use to entice someone to come in and see you. That’s a whole laundry list of things that you could do, depending on what you feel your propensity is for doing those things. For example, seminars still work. If that’s in your playbook, that’s great, except what are you going to do in terms of making that seminar the best one possible. That goes back to messaging. If people go to a dinner seminar and they don’t schedule an appointment, it might be because of you. It may not be because of them. A lot of times you say, “Well, the wrong people are in the room.” But if you are enticing and compelling and your messaging is precise, they may have a greater interest in coming in to see you. FELDMAN: What are some good, bad and ugly examples of messaging you’ve seen advisors use?

turned them away.” Well, it doesn’t exactly work like that because you can use the proper niches so that you can still capture the types of clients that you want. For instance, we call this a simple, repeatable statement of value so it’s not just a “this is our value proposition” and it’s not some plain vanilla “we work with individuals and families and businesses.” A simple, repeatable statement of value typically is one that entices the other person by talking their language. So, an advisor says they work with corporate executives getting ready to retire from companies such as Abbott Labs.

“If you’re a football fan, you know that the red zone — that unmarked territory between the defending team’s 20 yard line and the end zone — is the most critical and magnified part of the field. Often, it determines whether a team wins or loses a game.

KUZMESKI: I’ll start with the ugly. It doesn’t sound so ugly, but it is if I go to an advisor’s website and I see this on the front page: “We work with individuals and families and businesses.” That is their differentiating statement. Well, that doesn’t differentiate you from anybody because if you say you work with individuals and families and businesses, what you’ve just done is you’ve said you work with everybody. The problem with saying that you work with absolutely everybody that could possibly be alive on earth is that I don’t actually believe you could work with everybody. That’s where targeting and niche focus are really critical. The problem that I’ve heard from agents and advisors is, “Why do I want to pigeonhole myself? I don’t want to be in the position where an executive comes to my website and I say I work with business owners and I just

Likewise, in business, the Red Zone is that unmarked territory where you either win or lose a client.”

with business owners, or maybe more precisely you say you work with entrepreneurs, then I say, maybe he can work with me. But it’s being specific in your wording. It’s not being crazy or kitschy. It’s being who you are. Typically that’s best communicated by whom you are associated with. So, let’s say you really do work with individuals and families and businesses. Then the question is, how can you be more specific? It’s taking a look at what the categories are. If you said you work with executives and I’m a physician, am I interested in working with you? Probably more so than if you said you work with individuals and families. You have to be in that right position so that you’re at least not turning them away. When you’re doing it verbally, you can have a pocketful of simple, repeatable statements of value. For instance, we have an advisor who works with all sorts of people and works with a large firm. When he went to a particular business function, he didn’t know the people there but he knew they were teachers. He went there and they asked, “What do you do?” which is a typical question and one that many advisors cannot answer in a compelling way. He said, “I’m a financial advisor at XYZ Company and actually we work with a lot of teachers. We’ve found that a lot of teachers right here in this county are making mistakes on their 403(b) selection.” One of the teachers asked, “What kind of mistakes?” The next thing you know, he has a conversation started and he’s holding court with the teachers. One of them said, “I probably should come in and bring my statements because I’m probably making the same mistakes that you’re talking about.” All of a sudden you become a lot more interesting than what typically happens to a financial advisor or insurance agent when they go to a business function and somebody asks, “What do you do?” And they say, “I’m a financial advisor,” and that person no longer wants to talk to them at all.

InsuranceNewsNet Magazine » June 2015

I’ve heard from advisors who say that if they say they work with people who are getting ready to retire from Abbot Labs, what about someone who is a corporate executive at Pfizer? Is that person interested? Well, they’re not uninterested, because they know the advisor works with people like them. So, when you get very specific about whom you work with, it is the most powerful way to be enticing to that person. Maybe it’s business owners, and that’s OK. “Business owners” would be a generalization, but it’s specific enough— if I’m a business owner and you say you work

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INTERVIEW HOW TO CREATE YOUR PLAYBOOK FOR ULTIMATE SUCCESS It’s changing the message so that it’s in your favor. The only way you can make it in your favor is by making it about them, because if you make it about you, the only person you’re talking to is yourself.

touch with my clients, it seems like everything is better.” He said he did not have time to call them during a typical day. I said, “Put a 30-minute block on your calendar every single day in the morning — not at the end of the day because you’ll never get to it. And just commit to 30 minutes. Tell your assistant, ‘No calls come in while I’m making these outbound calls.’” He started doing this and found he also had to put a 30-minute block of time at the end of each day to return calls because he wasn’t reaching everybody and they were calling him back. He generated

some of the clients whom we work with. With this particular advisor, he was calling his current clients. Those are not difficult calls. But calling to develop new strategic alliance relationships is more difficult. FELDMAN: You have said that having Those are the calls when you say, “I a good plan is important, but that don’t feel like doing it today. I just don’t the execution is everything. What are feel on top of my game.” That’s where the some tips that you give to advisors to problems start. help them execute their plans? Some days you don’t feel on top of your game, but making the calls is better than KUZMESKI: One of the things I hear a lot not making them. If you feel uncomfortfrom agents and advisors is that someable about doing something, the key is times things simply get out of control. preparation before you do it. The home office called and If you’re going to call a strateyou’ve got to prepare these regic alliance and you’re not sure ports. You had a whole bunch of what you’re going to say, it would Million Dollar Producer Tip #73 other things on your list and you make sense that you would just didn’t get to do it. Day after spend 30 minutes on Monday day, it sort of feels like that. You figuring out what you’re going to have to change the way that works say when you make the call on because you have only so much Tuesday. That’s scripting it out time in the day. and feeling more comfortable One thing to keep in mind is with what you would say. All of your efforts at creating great every single financial advisor is Maybe doing a quick Google client experiences and keeping in on even footing in terms of time. search and maybe figuring out on touch will be for naught if someone No advisor has more time than LinkedIn who this person is or else in your company drops the ball. another advisor. When you look who you know that he knows can at some of the greatest leaders in make an introduction better. That If someone in your marketing departthe country and the world, they little bit of preparation makes a ment faithfully contacts a client or control their time. big difference. The problem with prospect every month, but a client So you must get absolute a lot of financial advisors is that service representative consistently about your time because the they are extroverts, and extroonly thing that matters is exeverts will feel like they can wing it misspells a name, gets the address cution. Motivation matters with when they go into a situation. wrong, or fails to follow up on a execution – are you motivated But the introvert would say, request or complaint, the entire to do what you need to do? Talk “I don’t know what to say” and first about simply making time they would put off making the company suffers the consequences. for it, then you can talk about call. But if the introverts and the From 85 Million Dollar Tips For Financial Advisors, Maribeth Kuzmeski, 2015 the actual execution of some of extroverts both could be more the tasks that you may or may prepared going into that call, it’s not want to do, but it starts off always better, especially for an exwith figuring out what you’re going to so much activity, so much new business, trovert because an introvert will be more do with your time. and ended up with something he didn’t prepared. We work with a lot of Type A, atten- expect, which was referrals. It was simAn extrovert, if they convince themtion deficit disordered financial advisors, ply by doing what he knew he should be selves to be prepared, will be off-theand their minds go a million miles an doing, which is just getting back in touch charts good. Otherwise, an extrovert will hour. They’re brilliant. They do all these with some of his clients. get off the phone and say, “Why did I say wonderful things, but their time gets That 30-minute block of time is what that? I didn’t mean to say that.” But if they away from them because of that. We did it and allowed him to help control his were prepared, they might have had a recommend putting 30-minute blocks of day. We’ve seen advisors put two-hour better script to follow. time on your calendar. It’s not the entire time blocks on their calendar and not day blocked up with 30-minute blocks start it at all because it’s too big of a time FELDMAN: What are some tips that of time, but only for really critical things block. But you probably can block off you give to advisors when they aren’t that you need to do. that 30 minutes, unless it’s a critical, dire feeling motivated to make those calls For instance, we have a financial advi- emergency for somebody in your family. and take that 30-minute block of sor at a firm who says, “If I can just get in That has been a big game-changer for time?

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InsuranceNewsNet Magazine » June 2015

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INTERVIEW HOW TO CREATE YOUR PLAYBOOK FOR ULTIMATE SUCCESS KUZMESKI: If I’m an athlete and I am just doesn’t seem to work, especially ally good at that seem to excel in financial getting ready to go out for the big game, with so many changing things that hap- services. I may not feel my best. My legs might pen in the environment for a financial I make the clarification that it’s not hurt. I might have a cold. Something advisor today. You’ve just got to figure someone who’s an extrovert or charismight not be feeling exactly right, but out what you can do today to keep your- matic, because we think of extroverts I’ve got to go play. self motivated. as being connecters and maybe having a The preparation that an athlete will high level of social intelligence. But extrodo before going on the field sometimes FELDMAN: Have you found a common verts like to talk, and talking is not a good is extravagant. I mean they will focus on denominator for greatness and suc- characteristic for social intelligence, lisvisualization and meditation. cess with advisors? tening is. So when you look at those who The mind, more so than the body, is are good listeners, those who are curious, what you need to prepare for when you’re KUZMESKI: I look at this particular top- sometimes we say, “She really cares.” making phone calls, obviously. ic a lot because when I first started as a That’s a common thing I hear financial So, what do you need to do? Is it listen- marketing consultant working with fi- advisors say: “This is my main differening to music? Is it reading something? Is nancial advisors, I realized that there tiator – I really care.” Well, a lot of adviit just focusing and remembering sors say that and actually there is why you have to do this? Somesome truth to that, but what does times people hire a coach. There that actually mean? It means, Million Dollar Producer Tip #74 are accountability coaches out when you come right down to it, there who will say, “You need to that they’re able to listen and afmake 10 calls this week or whatfect their clients so they feel like ever it is and I’ll talk to you on they’re cared for as opposed to Friday.” Sometimes that motivates saying I really care for you. people. It’s pretty amazing because But I think every person is we work with top advisors who In football, when the star runmotivated differently. You can set gross more than a million dollars ning back fumbles the ball, your goals for the day, set your and some of the most successthe coach doesn’t wail, “That’s goals for the week and then see if ful insurance brokers, yet when you’re reaching them. Some peowe look at what they’re actually it! We’re never going to run ple just aren’t geared that way. doing, there is no similarity in the ball again!” That would be We have one advisor who says marketing tactics. There is no to his assistant, “I need to do similarity in if they are asking for absurd, right? And it’s equalthis, this and this today. If I do referrals or they’re in this niche or ly absurd to try a marketing not do these things I’ll give you that niche. We used to get calls all $20 to make sure I do them.” She the time – and we still do – asktactic only once — seminar says, “Why should I make sure ing what are the tactics that you’re marketing, for instance — and you do them if you’re going to recommending to the top advigive up just because you got give me $20?” sors you’re working with? Then they switched it around I wish that it were some great lackluster results. so that he would put $20 in a bowl red zone marketing strategy that when he did what he needed to I came up with, but it’s not. The From 85 Million Dollar Tips For Financial Advisors, Maribeth Kuzmeski, 2015 do. That pile grew and then they advisors were successful when would either have a nice dinner they came to us. We helped them or he’d give the money or a department was something different between some- get to their next level and sometimes we store gift card to the assistant. But it was one who was already a top producer and helped them continue and increase that something where they were both now someone who wasn’t. social intelligence as well, though it’s motivated. I looked at things like their self-es- not a main consulting tactic that we use. It started off a little silly and it ended teem, self-advocacy, motivation, drive Sometimes we have to go back and revisup to be something that actually worked, and type of personality. It really came it social intelligence because what made so it just depends on what’s going to get down to their social intelligence and I that advisor successful was their ability to you moving forward. wrote an entire book about this called connect and communicate. The worst thing that I see happening The Connectors. But if they become larger and stop is you think back and say you could have Social intelligence does not mean that communicating with their clients and done more. You could have been better. somebody is charismatic and an extro- their strategic alliances and their staff is You could have had more clients. vert. Social intelligence means that you doing more of the communication, we You have to figure out a way to moti- can connect and communicate with the see the referrals go down, business is vate on a daily basis so it’s not like you’re other person effectively. It is about read- down and they ask what’s the difference? looking at a long time span, because it ing the other person. Those who are re- What’s going on?

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INTERVIEW HOW TO CREATE YOUR PLAYBOOK FOR ULTIMATE SUCCESS They haven’t been communicating. That social intelligence hasn’t been radiating and their staff has to be more socially intelligent and we’ve got to be able to train them to do that because social intelligence is something that we can learn as opposed to IQ or something we’re born with. Social intelligence, we can learn. We can learn the tactics of how to be more socially intelligent and on any given day we could be really socially intelligent or not so socially intelligent depending on who we’re talking with. It’s about focusing that social intelligence when we really need it.

might ask about their health because they need to know how the prospect’s health is if they’re going to put together any kind of reasonable solution or insurance policy. If prospects are not sure that they want to do business with that advisor, they will likely say good or fine and they are not telling the truth. They don’t want to tell them because they’re not sure they want to work with them. I don’t want to give you my medical history. I don’t even know if I want to do business with you. But if we ask the question differently, we get an answer and why do we want that answer? To come

out about their mother’s health history, because once you open the door and they walk through it, they kind of keep going. We call it asking big questions and it can be done with anyone by adding a few words into a regular question. The words are “the biggest thing,” “the best thing,” “the worst thing,” “the one thing,” “your favorite thing.” So when you’re talking to a business owner, you might ask in the course of the conversation, “What’s your biggest challenge?” Business owners have a thousand challenges and they talk to very few people about any of them. They’re not walking down the street saying, FELDMAN: How do you im“Hey, I had trouble making payprove your social intelligence? roll this week.” They’re not telling Million Dollar Producer Tip #66 anybody these things. They’re KUZMESKI: The first thing that not telling their spouse, their emwe look at is listening. As I said, ployees or the guy they’re going it’s such a basic thing, but it golfing with. But they tell you beworks. cause you might actually be able If you think about the last to help them. They’re divulging To calculate the lifetime value of meeting that you had with a clisomething that’s very important your clients, you’ll need to take ent, how much time did you to them and when that happens spend listening and how much the relationship changes. into account revenue generated, time did you spend talking? We’ve A lot of times, I’ll hear from referrals, future potential, influence, done surveys of some of the top financial advisors who have a sotime spent servicing and other financial advisors for the past cially intelligent receptionist who nine years and we’ve looked at a knows just as much about the clifactors, both quantitative and lot of things with their meetings – ents as the financial advisor does, qualitative. The reason you may do they have an agenda, how long but she’s never been in any of the want to go through this rating are the meetings, what types of meetings uncovering all the fiexercise is so that you can meetings they have. nancial planning sorts of things. The top advisors consistently But that person knows what the concentrate your marketing efforts come in listening more than 50 name of the woman’s dog is and on the clients who mean the percent of every single meeting. what kind of allergies she has. most to your business and the Now when we also look at it, You go down the list of all these when we get more adept – and things that that receptionist prospects who fit that same profile. we’ve done some focus groups knows. Why? Because she was on this – we have an advisor in a good listener. Often I’ve heard From 85 Million Dollar Tips For Financial Advisors, Maribeth Kuzmeski, 2015 Sarasota, Fla., who said, “If I can financial advisors say, “If I ever listen for 85 percent of the very lost this one person, I’d probably first meeting I have with somebody, the up with a good solution, of course, but lose some clients,” because that person sale just closes itself.” health is one of the top three of clients’ is very socially intelligent and connectSo, we got more in depth. What does really important things. If we’re listening ed with those clients. It’s all about those that mean? Why does that happen? It’s about their health we’re actually going a connections. like the relationship between a psychol- little bit deeper in our relationship with ogist and a patient. The patient knows that person. nothing about the psychologist; the psyInstead of asking, “How’s your health?,” chologist knows everything about the you ask, “What’s your biggest health conpatient. cern?” They have to answer that question. What kind of questions are you ask- It’s too big of a lie, so they’ll think about it Take advantage of our ing to be more socially intelligent? I’ll and they’ll give you some answers. Typaward-winning journalism, customizable licensure and give you an example of a question that a ically when you ask a question like that, reprint options. Find out typical advisor might ask as part of a con- they will give you on average five answers more at innreprints.com. versation with a first-time prospect. They to that one question. You might even find

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NEWSWIRES

Pimco Hires Bernanke As Advisor What does a former Federal Reserve chairman do after he is no longer chief of the nation’s central bank? He becomes an advisor. Ben Bernanke signed up for two advising gigs in a span of two weeks. Bond fund giant Pimco hired him as a senior advisor, and he also became an advisor to the hedge fund Citadel. That’s on top of his public speaking deals and his role as a distinguished fellow in residence at the Brookings Institution. Bernanke will provide economic advice to Pimco’s fund managers and will occasionally interact with the firm’s clients, Pimco said. Former Fed officials frequently take their economic skills and their contacts to Wall Street after their tenure ends at the bank. Pimco hired Alan Greenspan, the Fed chairman before Bernanke, in 2007 to provide economic advice. Paul Volcker, Fed chairman in the late 1970s and most of the 1980s, went to work for an investment firm after he left the Fed as well. Bernanke served two terms as chairman of the Federal Reserve, from 2006 through 2014, spending most of his term dealing with the 2008 financial crisis and the economic aftermath left in its wake. His post-Fed career has been good to him. He has given dozens of paid speeches, with his speaking fee reportedly as high as $250,000.

ACA TOOK A BITE OUT OF TAX REFUNDS

Some Americans found that their tax refund checks were smaller than they had anticipated, thanks to the Affordable Care Act (ACA). H&R Block reported that 61 percent of their clients who received federal subsidies to help pay for their health insurance saw their tax refunds reduced by an average of $729. The reason: They had underestimated what their 2014 household income would be when they signed up for insurance on a health exchange back in 2013. That means any individual earning up to $45,960 (or $94,200 for a family of four) was eligible for a federal subsidy. Those who received a subsidy based on estimated income that turned out to be lower than their actual income had to repay a portion of the subsidy. Roughly 13 percent of the H&R Block-prepared returns involving health insurance subsidies saw no change in their refunds, while about 25 percent acDID YOU

KNOW

tually saw their refunds increase by an average of $425 because those filers had overestimated their 2014 incomes. Filers who remained uninsured for more than three months in 2014 were subject to a penalty. The average penalty paid was $178 among its affected clients, H&R Block said.

FIDUCIARY RULE WOULD ALLOW COMMISSIONS

A proposed new fiduciary standard led to concerns about what would happen to some advisor commissions. Agents and advisors can still charge commissions on the sale of products into retirement accounts, according to officials at the National Association of Insurance and Financial Advisors (NAIFA), as well as an industry lawyer. The proposal introduced by the Department of Labor (DOL) also expands the definition of fiduciary to include a wider range of advisors and insurance agents if they are paid for advice related to a sale in a tax-advantaged retirement account.

Victims of elder financial abuse lose an average of Source: Allianz Life

InsuranceNewsNet Magazine » June 2015

$30,000

QUOTABLE

Most people don’t realize how expensive this care can be until a parent or family member needs it. And then it’s a real shock. — Joe Caldwell, director of long-term services at the National Council on Aging

Under the rule, agents and advisors would have to sign an agreement that provides a “best interest contract exemption” by specifically committing the agent to act in the best interest of the client. Before the rule was released, many observers in the financial and insurance industry thought the focus on “conflicted” advice and payments might lead to a crackdown on commissions. “Fiduciaries must provide impartial advice in their clients’ best interests — and cannot accept payments creating a conflict of interest — unless they satisfy one of two, possibly three, exemptions,” said Juli Y. McNeely, NAIFA president. She said the exemptions are “lengthy and will require careful reading,” but, in general, the advisor and the client would be required to enter into a written contract that has specific provisions. These will include that all advice be in the best interests of the client, “that conflicts be clearly disclosed, and that procedures be in place to encourage advisors to make recommendations in the client’s best interests,” McNeely said.

ELDER CARE COSTS KEEP CLIMBING

One year in a nursing home now costs nearly as much as three years of tuition at a private college. The median bill for a year in a nursing home is now $91,250, according to the annual “Cost of Care” report from Genworth. And it keeps going up. The cost of staying in a nursing home has increased 4 percent every year over the past five years, the report said. Last year, the median bill was $87,600. Often enough, people wind up spending their savings until the last $2,000, and at that point Medicaid, the government’s

[NEWSWIRES] health insurance for the poor, starts covering the bill. Less-intensive care remains much cheaper than staying at a nursing home, according to Genworth’s survey. One year in in an assisted-living facility runs $43,200. A year of services from an agency’s home health aides runs $45,760. The Genworth survey found wide differences from state to state. In Oklahoma, for instance, the median cost for a year in a nursing home came out to $60,225. Alaska had the highest costs, with one year at $281,415.

SEN. WARREN TAKES AIM AT ANNUITY SALES INCENTIVES

Diamond-encrusted “Super-Bowl style” rings. Cash or stock options. Cruises. iPads. “Obscenely high commissions.” Sen. Elizabeth Warren, D-Mass., is targeting all of these. Elizabeth Warren Warren wants the largest U.S. annuity issuers to send her detailed information on the incentives annuity issuers use to get agents and brokers to sell their product, especially to those people nearing retirement. The senator argued that the offering of sales incentives such as those mentioned is a potential conflict of interest. “I am concerned that these incentives present a conflict of interest for agents and financial advisors that could result in these agents providing inadequate advice about annuities to investors and selling products that may not meet the retirement investment needs of these buyers,” Warren said in her letter. She demanded a “list of all incentives” awarded by the companies to agents, brokers, sales and marketing organizations, and field marketing organizations; marketing documents provided to agents; other incentives and the qualifications for earning those incentives; information on the number of these incentives awarded to these entities; the total value of the incentives; and a copy of the company policy regarding disclosure to customers of these incentives. The companies included AIG, Allianz, Aviva, Axa, Jackson National, Lincoln Financial, MetLife, Nationwide, New York Life, Pacific Life, Prudential, RiverSource Life, TIAA-CREF and Transamerica. The American Council of Life Insurers (ACLI) immediately responded to Warren’s letter on behalf of the industry, citing the importance of annuities as part of a long-term

Millions of Consumers Are ‘Credit Invisible’ A lot has been reported about the number of Americans who are over their heads in debt. But not so much has been heard about the 45 million adult Americans who are living off the grid — the credit grid, that is. These folks don’t have credit reports or scores, the Consumer Financial Protection Bureau reported recently. About 26 million people — or one in 10 consumers — are what the bureau calls “credit invisible.” This is because they haven’t used credit cards or loans that create a credit report. Another 19 million have credit reports, but the information is so scant or old that scoring formulas can’t come up with a reliable credit score. Consumers without much of a credit history may not be able to get credit, or if they do, are likely to have to pay more for it. But people who fall into the credit gulf pay the price in other ways too. Employers sometimes look at credit reports when deciding whom to hire or promote. Landlords may use credit reports to decide whether to rent to a tenant. Some insurers use credit reports when they set rates for coverage. More than 80 percent of all adult Americans — close to 189 million people — have a current credit report on file at one of the three major credit bureaus, the bureau found. plan for retirement, and included in the letter a long list of state and federal rules and regulations that govern the sale of annuities. “Saving for retirement is crucial, and making sure those savings last a lifetime is equally important. Annuities can do both,” the ACLI letter said. “They help people save and then provide a guaranteed stream of retirement income they can’t outlive.” The ACLI letter argued that, “From product development to advertising to sales, life insurers offering annuities must comply with state and federal laws and rules that help protect consumers’ interests.”

FED PROMISES TO KEEP LIGHT HAND ON INSURANCE

The Federal Reserve sought to reassure skeptical members of the Senate Banking Committee and concerned state regulators that it will not unilaterally impose international capital standards on domestic insurers. But the insurers might be subjecting themselves to international standards as they delve into other markets, said Mark Van Der Weide, deputy director of the Fed’s Division of Banking Supervision and DID YOU

KNOW

1/3

Regulation, in committee testimony. Van Der Weide also pointed out to the committee that some of the insurance holding companies subject to Fed supervision “are internationally active firms that compete with other global insurers to provide insurance products to businesses and consumers around the world.” In his comments to the committee, Michael McRaith, director of the Federal Insurance Office (FIO), also noted international regulation is a two-way street. McRaith told the Senate panel that the FIO’s latest report indicates that in the last 10 years, the pace of globalization in insurance markets has increased exponentially and is expected to continue to grow in the coming years. “Insurers based in the United States are pursuing opportunities for organic growth in new markets,” McRaith said. “The FIO strongly supports continued growth of the increasingly international insurance market and the prudential standards that promote consistent and rigorous oversight across jurisdictions.”

of consumers surveyed said they believe financial professionals are highly trustworthy. Source: Deloitte

June 2015 » InsuranceNewsNet Magazine

NNUITIES have been getting a lot of press lately â&#x20AC;&#x201D; not always in the best light, of course. But behind the noisy headlines is a product that can help Americans solve one of their key concerns, whether they have enough for retirement. So we are taking the opportunity of National Annuity Awareness Month to shed light on what agents and consumers ought to know about annuities. And, perhaps even more important, why sellers and buyers ought to feel good about them.

INSIDE

Why Agents & Their Clients Should Love Annuities PAGE 29 InsuranceNewsNet Magazine Âť June 2015

How Annuities Soothe Retirement Anxiety PAGE 36

Push-Pull Dynamic Heats Up Annuity Awareness Month PAGE 44

WHY AGENTS & THEIR CLIENTS SHOULD LOVE ANNUITIES FEATURE

Why Agents & Their Clients Should Love Annuities Consumers say they need what annuities provide — a guaranteed income stream in retirement. So why are people scared off by the word “annuity”? Here is how to ease consumers’ fears.

By Cyril Tuohy

he story surrounding annuities is a textbook example of the adage that there are two sides (at least) to every story. Many people love annuities and what annuities can do for them. Consumers cherish the host of guaranteed income features that annuities offer. But mention the word “annuity” and some clients are likely to recoil behind a phalanx of objections — real or perceived — that include high fees, surrender charges and inflexible product designs. Google the expression “love or hate annuities,” and up come financial advisor Ken Fisher and talking head Suze Orman, blaring on about why they detest annuities. Several Google pages on, though, other articles show how annuities can improve your life. Even the same financial advisor can change his or her mind about annuities. Harold Evensky, chairman of Evensky

& Katz/Foldes Financial, recently told a financial planning publication he’d had a change of heart regarding annuities. Now he endorses immediate annuities as a vital tool to secure a client’s standard of living in retirement. Then there’s Social Security, the most far-reaching annuity program ever invented. Detractors say the safety net program is headed into the red and won’t last much longer in its current form. Social Security recipients, on the other hand, might just take to the streets if pol-

iticians even hint at lowering these benefits — long-known, along with Medicare, as the third rail of retirement politics. Individual surveys reveal similar rifts among consumers over annuities. People who don’t know anything about annuities tend to discount them, yet surveys show people who own them would recommend them to friends and family by overwhelming margins. What is it about annuities that attracts and repels people all at the same time? For advisors, opportunities abound to

What Is Your Impression of Annuities?

28% 12% 39% 21% Favorable

Unfavorable

Neutral

Don’t Know

Source: TIAA-CREF 2015 Lifetime Income Survey June 2015 » InsuranceNewsNet Magazine

INTERVIEW WHY AGENTS & THEIR CLIENTS SHOULD LOVE ANNUITIES

Have You Purchased an Annuity or Do You Plan to in the Future?

explain what annuities do and how they fit into a guaranteed income strategy.

Consumers of Two Minds

14% 9%

Of the following, there’s no doubt: Support for what annuities are designed to accomplish remains rock solid and consumers want the income guarantees that annuities provide. TIAA-CREF’s 2015 Lifetime Income Survey released earlier this year found that out of a random sample of 1,000 adults nationwide, 48 percent of respondents said that having guaranteed income to cover living costs should be the primary goal of a retirement plan. This is a 14percentage-point increase from 2014. Yet only 28 percent of the 1,000 survey respondents said they had a favorable impression of annuities, and 12 percent had an unfavorable impression of them. The good news for advisors is that 39 percent of the respondents in the TIAACREF survey said they remained neutral in their impression of annuities, which means people are open to discussing them. “Once people realize what annuities are designed to do, they open themselves up to have a conversation,” said SterSterling Raskie ling Raskie, a fee-only

Yes, I have already bought an annuity

No, but I plan to at some point

61% No, I do not plan to buy an annuity

No, but I plan to when I retire

9% I don’t know

Source: TIAA-CREF 2015 Lifetime Income Survey

advisor and planner with Blankenship Financial Planning in New Berlin, Ill. More problematic, perhaps, for the annuity industry is that 61 percent of people said they had no plans to buy an annuity in the future, the survey found. So, although 100 percent of retirees stand to collect — and rely heavily in some cases — on an annuity known as Social Security, more than six out of 10 adults say they have no intention of going into the marketplace to buy a product de-

signed to achieve the same goal. It’s an incongruence not lost on Ed Van Dolsen, president of retirement and individual financial services at TIAA-CREF. “For many Americans, annuities are often unknown or misunderstood, which is unfortunate since they are the only way to generate retirement income that cannot be outlived,” he said. For retail investors, annuities often come across as complicated, expensive and even intimidating.

Consumers Want Guarantees Only 7% of advisors are not worried about their clients’ longevity risk.

The majority of advisors are very concerned their clients may outlive their assets.

Just over a third have minor concerns about the longevity risk of their clients.

34%

Clients are proactively asking about guaranteed income solutions.

59%

Source: Advisor Perspectives on Retirement Planning, LIMRA Secure Retirement Institute (2012)

InsuranceNewsNet Magazine » June 2015

Six in 10 advisors say guaranteed income solutions, like annuities, are well-received by their clients.

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FEATURE WHY AGENTS & THEIR CLIENTS SHOULD LOVE ANNUITIES

Annuity Owners and Nonowners Agree on Top 3 Reasons for Guaranteed Lifetime Income Households with an annuity

Households without an annuity

38% 33%

31% 25% 16%

Offers peace of mind

Produces a stable & predictable income

14%

Addresses concerns about running out of money

Source: “Annuities: Love Them When You Know Them, Hate Them When You Don’t” LIMRA Secure Retirement Institute, 2014

For consumers, the idea of handing over a portion of their life savings only to see the balance disappear into corporate coffers if they die a day after buying the annuity leaves a bad taste in their mouths. That’s all true, annuities experts say, but it pertains only to certain kinds of annuities. The objections people put forth in an effort to disparage annuities represent only half the story. “I don’t like painting annuities with broad [brush] strokes,” said Assaf M. Pinchas, a wealth manager with Allegiance Financial Group in Vienna, Va. Today, the market supplies dozens of different annuities to fit every need, and many annuities — designed to protect people against living too long — come with all sorts of features designed to hedge against the risk of an annuity buyer dying too soon. Six out of 10 advisors said guaranteed income solutions, such as annuities, are 32

InsuranceNewsNet Magazine » June 2015

The objections people put forth in an effort to disparage annuities represent only half the story. well-received by their clients, according to “Advisor Perspectives on Retirement Planning” issued by LIMRA Secure Retirement Institute (SRI). Jafor Iqbal, assistant vice president for LIMRA SRI, said he was “astonished” to find that eight out of 10 annuity owners were “moderately conversant” about their annuities and the features annuities offer.

“They know what they own and why they own it,” he said. “They also believe that annuities are a good fit for their financial needs.” LIMRA SRI published the report “Annuities: Love Them When You Know Them, Hate Them When You Don’t.” LIMRA data show that 70 percent of annuity owners — people who know how annuities work and what they are designed to do — said they would recommend them to friends and relatives, Iqbal said.

Shifting the Perception

Is the term “annuity” in need of a makeover? Perhaps, although strict regulatory guidelines prevent advisors from discussing annuities by any other name. Getting people to think about lifetime income isn’t lost on annuity proponents. Referring to annuities in terms of “guaranteed income” and “lifetime income” is a good start.

ANNUITIES: WHY CONSUMERS SHOULD LOVE THEM FEATURE

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FEATURE WHY AGENTS & THEIR CLIENTS SHOULD LOVE ANNUITIES

Annuity Sales Estimates 2005–2014 Year

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Variable Annuities

$137

$160

$184

$156

$128

$141

$158

$147

$145

$140

Fixed Annuities

$80

$78

$73

$109

$111

$82

$81

$72

$84

$96

$216

$239

$257

$265

$239

$222

$238

$220

$230

$236

Total

*Sales in billions of dollars.

Sheryl J. Moore, president and CEO of Moore Market Intelligence, a firm that tracks the annuity industry, said thinking of annuities as guaranteed income “can be helpful to people in thinking about annuities and the benefits of annuities.” “I have seen a push by industry groups to educate people on how an annuity would be helpful,” she said. And many people will need all the help they can get when it comes to guaranteeing income. The leading edge of the baby boom generation, which turned 65 in 2011, still benefited from professionally invested defined benefit plans. But as more boomers turn 65 every year, more of them will have to rely on the savings accumulated through an employer-sponsored retirement plan. However consumers perceive the $236 billion annuity industry, advisors say education remains the most effective antidote to perceptions, misperceptions and outright falsehoods surrounding annuities. Thomas Brueckner, president and CEO of Senior Financial Resources Inc. in Nashua, N.H., and Strategic Asset Conservation in Scottsdale, Ariz., Thomas Brueckner spends weeks on the “seminar circuit.” “The whole idea is to be talking to the right people in the first place; not only to people for whom your specialty is a fit, 34

InsuranceNewsNet Magazine » June 2015

Source: LIMRA Secure Retirement Institute, U.S. Individual Annuities Survey

Advisors have an uphill battle when it comes to selling annuities and that’s why consumers need to get into a conversation about annuities. but to their peers and referrals as well,” Brueckner said. Advisors have an uphill battle when it comes to selling annuities and that’s why consumers need to get into a conversation about annuities. Broker/dealers and registered representatives who derive their income from assets under management — an average of 1.3 percent every year on a growing amount — aren’t about to play up annuities, where the average compensation is 0.63 percent per year. For registered reps, Brueckner said, citing a financial columnist, placing retirement funds in an annuity amounts to committing “annuicide” (with the registered reps trailing commission). “Don’t expect to hear about fixed in-

dex annuities from your stockbroker,” said Brueckner, who also hosts radio shows on retirement planning. “It’s hysterical the way some advisors denigrate annuities.” Explaining how annuities work and where they fit in a retirement program is a test of patience, said Carrie Turcotte, president and senior financial consultant with Crest Financial Strategies in Chattanooga, Tenn. Turcotte, whose services are offered through LPL Financial, said that in some cases it has taken years to make a sale. She added that annuities, almost by definition, require that advisors be willing to enter into a relationship — not a transaction — with clients. “The hostility you can face at simply the mention of annuities as a product to consider is fascinating,” she said. She added that in one case, where an annuity was “the perfect solution,” the client objected to her getting paid through annuity products. But when complicated annuity products fit tightly into a long-term retirement program, adds Turcotte, “they are beautiful.” InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril. tuohy@innfeedback.com.

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RedHotMediaLeads.com June 2015 » InsuranceNewsNet Magazine

FEATURE HOW ANNUITIES SOOTHE RETIREMENT ANXIETY

How Annuities Soothe Retirement Anxiety Planning for retirement isn’t always about dreaming of a sandy beach in the sun. Preparing for the postworkforce years can dredge up all sorts of negative emotions. Here are some ways in which annuities can smooth the way to the next phase of life.

By Linda Koco

ne day, advisor Joe Lucey received a call from a commercial airline pilot who wanted to come in and talk about financing retirement. The pilot, whom we’ll call George, said he had heard Lucey talking about retirement planning on Secured Retirement Radio, a weekly show that Lucey hosts. That commentary prompted George to call for an appointment. When George explained his purpose, he seemed calm enough, recalled Lucey, who is president of Secured Retirement Advisors in St. Louis Park, Minn. But it didn’t stay that way. George, then age 58, explained that he had been planning to retire at his airline’s mandatory retirement age of 65. But he had developed a medical problem. The resulting surgery was successful, but George realized that early retirement may now be in the cards. He 36

InsuranceNewsNet Magazine » June 2015

and his wife had not planned for that, so his question was: “What do I do?” It turned out that there were a lot of concerns lurking underneath that simple question: When to retire? When to take Social Security? What to do with the 401(k)? What happens if the airline’s pension plan fails? And what if his current return to good health changes quickly, even before the target retirement date arrives? Then George’s “biggest fear” spilled out, Lucey said. That fear was, “Will we outlive our savings?” Lucey set to work and helped the couple establish an income plan — which includes but is not limited to an annuity with a lifetime income rider — to address that very question. More on this later.

Retirement Risk and Anxiety

George is not the first to feel this anxiety and he won’t be the last. For decades, researchers have been documenting the risks people face as retirement nears. In recent years, they’ve increasingly zeroed in on baby boomers and subsequent generations, since the majority of them will not have traditional private pensions and will likely need to cobble together a patchwork of other financial approaches. Risk isn’t always a bad thing. In small or

measured doses, it can spark excitement, energy and enthusiasm. But if risk threatens to sap financial security, it can become a feeding ground for fear and anxiety. It is this threat to retirement security that policymakers, researchers, retirement plan providers and retirement advisors are addressing. As long ago as 2006, before the last major recession, the Government Accountability Office (GAO) was warning that boomers and future generations will face serious challenges in this area. The retirement security of these generations “will likely depend increasingly on individual saving and rates of return as guaranteed sources of income become less available” the GAO wrote in a report that year. “This reflects the decline of coverage by traditional defined benefit (DB) pension plans, which typically pay a regular income throughout retirement, and the rise of account-based defined contribution (DC) plans.” GAO and a host of other researchers have identified a myriad of such risks over the years. They point to uncertainties about future Social Security benefit levels, declines in private-sector DB plans, difficulty in choosing and managing DC plan assets, cost increases for medical

Give your Give your

HOW ANNUITIES SOOTHE RETIREMENT ANXIETY FEATURE

Give your

MOST MOST POWERFUL POWERFUL

and long-term care, inflation, financial re- retirees); second was having enough monsponsibilities for aging parents, outstand- ey to pay for adequate health care (73 pering loans (mortgage, school loans, credit cent and 46 percent); and third was having card, etc.), rising housing and/or reloca- enough to pay for long-term care (68 pertion expenses, and unanticipated “shock cent and 52 percent). events,” among many others. Runners-up included the possibility of Is it any wonder that the Senate began a depleting savings (66 percent and 41 perseries of hearings on “Retirement (In)Se- cent) and maintaining a reasonable stancurity in America” in October 2010? dard of living for the rest of life (65 percent Five-term Sen. Tom Harkin, D-Iowa, and 41 percent). then chairman of the Senate Committee on Health, Education, Labor, and Pensions Where Do Annuities Fit In? and now retired, opened up the subject by Practitioners who work with annueasily allows TRAKto: easily allows you to: talking about risk: “Nearly halfTRAK of the old- ities know that annuity products could you est baby boomers who will turn 65 next help some consumers manage some of • Social Security strategy • Socialwith Security strategy with year are at risk of not having sufficient re- these risks. high buy-in (as the prospect high buy-in (as the prospect tirement resources to pay for basic retireThese practitioners always add that helps create it!) helps create it!) ment expenditures — food, fuel, housing, annuities will not be the only solution clothing, that type of thing — and unin- and that, in some cases, an annuity won’t • Striking illustrations of • Striking their illustrations of their sured health care costs.” be the solution at all. But in view of the retirement income gap retirement income gap Some people think exposure to risk is obvious need for a guaranteed income less problematic once a person the stream and the simmering consumer •enters Compelling illustrations • Compelling of illustrations of post-retirement period of life. But the So- anxiety about how to fund retirement, your solutions your solutions ciety of Actuaries (SOA), which tracks re- advisors ask, “Couldn’t an annuity help tirement risks closely, said risk continues. with some of this?” all Not this and much Do all this with and much more with In fact, the SOA keeps aDo Managing incidentally, the GAO touched on more TRAK. It’s simple and fast TRAK. It’s and simple and you fast and you Retirement Risks chart (http://bitly.com/ the point a few years back, when discusscan use it without having can use to it without make having to make innm0515-soa) on its website that identi- ing immediate annuities. a BGA commitment or display a BGA commitment or display fies and discusses the most prevalent risks In an April 28, 2010, letter to the Senin the post-retirement periodcarrier of life. The ate Special Committee on Aging, a GAO branding. carrier branding. current chart includes 15 biggies, among official noted, “Annuities offering lifetime them longevity, inflation, interest rates, income generallydoes provide retirees more TRAK even paycheck TRAK even does paycheck income thanworks they would receivegreat analysis and analysis with and works great with conservative investments, qualified from plans, too! qualified plans, too! “Nearly half of the oldest such as bonds.” But this official noted that, based on indusbaby boomers who will turn also try figures back then, “only 3 TRAK helps setof me TRAK behelps set me apart be($8 billion) total an- apart 65 next year are at risk of not itpercent cause helps act as cause a it helps trusted me act as a trusted nuities sold in 2008me were fixed advisor , and my clients advisor, see and me my clients see me immediate annuities.” having sufficient retirement that wayThe instead of as a that product way instead of as a product GAO letter did name resources to pay for salesman. basic – Rick M., CA salesman. – Rick M., CA some “disadvantages” in connection with the products, preretirement expenditures.” sumably ones affecting the low Use TRAKusage. inThese your next appointment, Use TRAK in your next appointment, include lack of sufstock market, death of spouse,and unexpected see ficient assets to buy such an annuity, lack how easy it is! and see how easy it is! health care needs and costs, and ability to of liquidity, no inflationFREE adjustment, notrial Redeem your Redeem at your FREE trial at live independently, as well as bad advice, death benefits, and a higher cost to buyers www.tryTRAK.com www.tryTRAK.com fraud or theft. who decide to add annuity options that It’s not only retirement professionals address some of those issues. who say these risks are weighing heavily The 2010 GAO letter also discussed on Americans. Consumers themselves challenges presented by several other insay this. In 2013, for example, both pre- come products and approaches, and then retirees and retirees told SOA researchers concluded with a statement that seems to what concerned them most about retire- sum up the forces driving retirement anxment. First was keeping the value of sav- iety even to this day: ings and investments up with inflation (77 “Workers are increasingly finding percent of pre-retirees and 58 percent of themselves depending on retirement

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June 2015 » InsuranceNewsNet Magazine

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FEATURE HOW ANNUITIES SOOTHE RETIREMENT ANXIETY

Retirement Savings on Thin Ice Where retirement savings are concerned, plenty of Americans are Life insurance ownership declines. The percentage of famiskating on thin ice. For instance, 36 percent said they have saved less lies owning cash value life insurance, other managed assets and than $1,000, according to a 2014 survey from the Employee Benefit “other” assets also declined between 2010 and 2013, the Federal Research Institute (EBRI) and Greenwald & Associates. Reserve reported. In addition, 68 percent who had annual household incomes Boomers expect less. Middle-income baby boomers are of less than $35,000 reported having less than $1,000, the expecting less in retirement than the previous generation, acresearchers said. Among those who had saved for retire- cording to the Federal Reserve. That’s less retiree health inment, 38 percent reported having less than $25,000. surance from former employers (60 percent), less financial So why didn’t they save, or save security (47 percent) and less care more, for retirement? Cost of living and provided by family members (47 How confident are you day-to-day expenses were the reasons percent). But some expect to exabout having enough money these Americans gave, the researchers perience greater mental stimulasaved for retirement? said. Debt was a problem, too, for 58 tion and more physical activity in percent of workers and for 44 percent retirement, according to The Bankof retirees as well. ers Life and Casualty Company Of course, some people do save. In Center for a Secure Retirement. not at all confident not too confident fact, the EBRI/Greenwald researchers Inadequate finances continue. found that 18 percent of Americans in Baby boom and Generation X cli2014 were very confident about havents are struggling with inadeing enough money for a comfortable quate savings by working longer — retirement. That’s up from 13 percent to age 65.3 today from age 63 a somewhat confident very confident the year before, a positive uptick from decade ago, according to nearly Source: EBRI/Greenwald the lows of the 2009-2013 era. two-thirds (63 percent) of surYet 24 percent were not at all confident about having enough veyed advisors. Client worries include job loss, fear of outsaved for retirement in 2014, a figure that’s “statistically unchanged” living savings, rising cost of health care and long-term care from 28 percent in 2013. (and associated insurance policies), ultra-low interest rates, In other studies, evidence keeps mounting that the retirement and volatile equity markets, according to First Clearing. future for many Americans may be less than charmed. Pre-retirement standard of living flatlines. Over half (52 Ownership of retirement accounts declines. Ownership of percent) of American households are at risk of being unable such assets as individual retirement accounts (IRAs), Keoghs, to maintain their pre-retirement standard of living, slightly and defined contribution plans such as 401(k), 403(b) and thrift down from just 53 percent three years earlier, reported The savings accounts fell below 50 percent in 2013. This continued National Retirement Risk Index published by the Center for the downward trend seen in 2007-2010 surveys, according to Retirement Research at Boston College. the Federal Reserve. – Linda Koco

24% 19% 37% 18%

savings vehicles that they must self-manage, where they not only must save consistently and invest prudently over their working years, but must now continue to make comparable decisions throughout their retirement years,” the letter said. “These decisions may prove difficult for many, as workers are faced with a large variety of available investment options, governed by a multiplicity of laws, regulations and agencies.”

Taking Annuities to Small Business

A concern for annuity practitioners is that annuities ranked near the bottom of sources that small-business owners plan to use to fund their retirement years. That’s according to a Guardian survey 38

InsuranceNewsNet Magazine » June 2015

released a few months ago. Of nearly 1,500 respondents, only 22 percent said they will use annuities to fund their retirement. In fact, more owners plan to rely heavily on the success of their business to fund their retirement (38 percent) and from the sale of their business (36 percent) than on annuities, Guardian said. By comparison, Social Security came in first place at 71 percent. Second place went to savings and investments (stocks, bonds, etc.) at 68 percent, and third to individual retirement accounts (60 percent). Agreed, Social Security is a generic form of an annuity, but the public does not view it in the same category as “annuities.” Most people consider it a “government program.” So the value of annuities gets routinely overlooked in the

Social Security discussion. The Guardian findings may be of concern to annuity professionals because the small-business market is a prime market for many insurance and financial advisors. “The challenge for the industry is to get people to accept that the annuity is a very good tool they can use to transfer the risk of outliving their assets to an insurance company,” said Doug Dubitsky, vice president of Guardian Retirement Solutions.

It’s Like a Pension

People love the idea of having a pension plan like the one their parent had, “because it guarantees a paycheck for life,” he said. But when it comes to their own retirement, many are so focused on

FINALLY, WHAT YOU REALLY NEED FOR YOUR BUSINESS: accumulating money they may overlook that they don’t have a traditional pension, and they don’t think about creating their own income stream. “They retire with a big lump sum, sometimes the biggest amount of money they’ve ever had, but they don’t know if it is enough,” Dubitsky said. That means advisors and the retirement providers have a role to play in this new retirement marketplace. This role is “helping people translate assets into income. Our role as an industry is providing the solution, not the product,” he said. The approach he recommends is to do basic needs analysis, including the customer’s lifestyle goals (housing type, family arrangements, hobbies, travel, etc.), as well as basics such as food, shelter, clothing, etc. Look at spending and how the income plan can help the client accomplish their goals. Then help identify when to take income, how much to take and what uses will be required (i.e., long-term care expenses, death benefit, inflation factor, management of market risk, etc.). The solutions come first, followed by products that implement the solutions, he said. “Do it in bite-sized pieces,” he suggested, adding that the resulting income plan will help deal with the risks that are triggering retirement anxiety. The annuity tools can range from immediate annuities to annuities with living benefit guarantees and/or long-term care riders, and deferred income annuities. If a client worries about giving up liquidity, “point out that you won’t be taking all of the assets, and that liquidity doesn’t mean the ability to pull out all of one’s money by next week. Liquidity in retirement planning means guaranteed income I cannot outlive,” Dubitsky said. If an advisor can get that point across, “it opens up a whole new conversation, and small-business owners get it,” he continued. “They work in an environment of cash flow, so they know the importance of consistency.” Apparently, small-business owners are actively looking to their financial advisor for retirement guidance. Nearly half (48 percent) told Guardian researchers that they spoke to their advisor in making financial preparations for retirement. Only two other actions came ahead of that — the owners said they saved money for retirement (77 percent) and invested in real estate (54 percent).

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FEATURE HOW ANNUITIES SOOTHE RETIREMENT ANXIETY But not any old advisor will do. By a whopping 83 percent, the owners said the top characteristic they look for in an advisor is trustworthiness. They also want someone who is knowledgeable (78 percent), has integrity (74 percent), is experienced (71 percent) and listens to client needs (71 percent).

Back to George

It’s safe to say that George — the pilot who became Joe Lucey’s client — did not read the many reports and studies on retirement anxiety. In fact, Lucey said that George did not demonstrate much anxiety at all. As indicated above, George had said he just wanted to know what to do. It’s that way with a lot of pre-retirees, Lucey said. But once they start discussing their confusion, it rapidly becomes clear that they have many fears around retirement. One of them is resistance to making shifts. “Most people, not just pre-retirees, are afraid to change,” he said. “We often see people who have been very conservative with their investments since 2008. Now they are still afraid to go into the markets, even though the markets are up.” But others, who stayed invested all along, now wonder if they should pull out, only to worry they might miss out on further gains if they do. The advisor’s work ultimately ends up being about helping people address such anxieties, he said. That takes more than talking about products and services. It also takes listening, questioning, educating and enlightening. Often it entails unpacking a client’s ideas about saving for retirement. DC plans at the workplace often encourage continuous investing, and so do mutual fund companies, Lucey said. As a result, many boomers approach retirement with the thought that they should continue investing or, at the very least, “never” take money from their 401(k) until they’re age 70. “Our industry has done a poor job of letting people know that they can do something other than invest,” Lucey said. For some clients, a Social Security maximization program, or an annuity funded with assets from existing investments, might give them greater lifetime income, but if that involves repositioning invested assets, they may balk. For George, the question was, where 40

InsuranceNewsNet Magazine » June 2015

would the retirement income come from? He and his wife had pulled all their money out of the stock market in 2008 and they were still in cash in 2012, Lucey recalled. The answer required setting the target retirement date for George plus factoring in other goals and lifestyle preferences. Due to George’s health issues, they set the retirement age at 60. The planning moved on from there. The plan does include a fixed index annuity with a guaranteed living benefit rider for a portion of the assets. Clients who are still focused on investing tend to think of annuities as a swear word, Lucey noted. But not George. “Since he is a pilot,

of their husband’s desire to keep working — and because they too want to have more money for retirement.” On the surface, that’s socially acceptable, Juge said. But neither one is enjoying life, neither seems especially worried and neither is making a retirement plan. Anxiety is right behind the curtain. It comes out in the planning sessions Juge has with the couples. “This is a very soulful journey,” she explained. “It’s not about numbers. It starts with the reality that looms ahead — which is that the clients will die.” Everything unfolds from there — the worries, the regrets, the hopes and the

“Our industry has done a poor job of letting people know that they can do something other than invest.” George also has a pension plan as well as a 401(k). Because of that, he was familiar with annuities and the concept of building a lifetime income stream.” How’s it going? “George retired recently; his anxiety is down, and he is happy with the plan — and so is his wife,” said Lucey.

Not a Fluke

Is it a fluke? Probably not. Melody Juge, president of Life Income Management and an investment advisor representative of a registered investment advisory firm in western North Carolina, recounted seeing her own clients present with a lot of questions but no obvious anxiety. But once planning started, they too revealed uncertainties and worries. A good many are couples who are stuck in ruts, indicated Juge, who is a RetireMentor for MarketWatch. “Many of the husbands are deeply rooted in their identity as a man who brings home the bacon and has control,” she said. “It’s hard for them to let go of work, so they keep putting off retirement for one more year. They have enough money but want to have more.” “As for the wives, they want to travel and do things, but they hold back because

plan. Juge works with the couples to build a retirement plan that incorporates fun and interesting things they want to do before they get too old to do them. “It’s built around expenses and how much money the client wants to have guaranteed,” she said. Some ask, “Can we really afford it?” Juge said she teaches them how it will work based on what is now known, and she also reminds them the future may bring unexpected developments. At the beginning, many people seem to be disappointed in how their lives have turned out, she noted. That’s in addition to feeling fear and anxiety. But as the couples begin to develop their retirement plan with her, the cloud begins to lift, she said. Some go on vacations, others take classes, some paint rooms that don’t need repainting and still others pull money out to spend on the grandkids. “I can see the spark in their eyes. They’ve started having fun — knowing that they are going to die later on.” And the anxiety? It goes away, she said. InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.

June 2015 Âť InsuranceNewsNet Magazine

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ANNUITYWIRES

Sales of Annuities/LTC Combos Skyrocket

320M

Annuities with long-term care (LTC) insurance benefit features continue to take hold among consumers. The combo products sold nearly $320 million in total first-year premium in 2013, according to new research conducted by Milliman and published by the Society of Actuaries (SOA). That is based on six such plans offered by five carriers. The $320 million total might seem like a drop in the bucket to those accustomed to seeing industrywide annuity production in the billions of dollars. But this is for an annuity line that is still quite new. The 2013 figure is up from $44 million in 2012 (when just five plans were tracked) and from nearly $25 million (for the same five plans) in 2011, according to the research findings. When the researchers looked at the same five plans over all three years, the 2013 figure was still up noticeably — to $120 million — compared with the prior years studied. Several product developers have been predicting a ramp-up of this kind would occur once consumers learned that annuities with LTC benefits were available.

2013 $44M 2012

FIDELITY & GUARANTY COULD FACE ‘POTENTIAL SALE’

The future ownership of Fidelity & Guaranty Life (FGL) is a bit less certain. The carrier’s top stockholder, HRG Group, issued a statement that it is “exploring strategic alternatives” that include “potential sale” of the company or of “all or part of HRG’s interest in FGL.” HRG, formerly Harbinger Group, owns nearly 81 percent of the company. The news comes at a time when FGL is enjoying strong growth in its fixed annuity business. The company ranked 11th in fixed annuity sales in 2014. This was up from 20th place one year earlier, according to 2014 estimated industrywide sales results reported by LIMRA Secure Retirement Institute. The carrier sold more than $2.5 billion in fixed annuity sales for the year, LIMRA said. In its core fixed annuity line — fixed index annuities — the company ranked in seventh place industrywide at yearend 2014, according to Wink, Inc. That’s up from 12th place in the Wink rankings the year before. The 2014 index sales reached nearly $1.8 billion, according to Wink figures. In a February statement on financial 42

InsuranceNewsNet Magazine » June 2015

results, HRG attributed FGL’s increased annuity sales and fixed index annuity sales to “ongoing marketing initiatives with existing distribution partners as well as the launch of new products.” A statement from Omar Asali, HRG president and CEO, suggests those strong increases are likely one of the key factors in HRG’s decision to float the idea of a potential sale now.

AMERICAN GENERAL EXPANDS ITS ANNUITIES DISTRIBUTION

American General has partnered with Primerica, the largest independent financial services marketing organization in North America, to introduce the Power Series of Index Annuities. The Power Advantage 7 and Power Advantage 10 index annuities are tailored exclusively for Primerica and issued by American General. They combine principal protection, growth potential and tax deferral. They also provide lifetime income that can be guaranteed to rise for up to 10 contract years through the Lifetime Income Plus guaranteed living benefit rider. For asset accumulation, the Power Advantage 7 and Power Advantage 10 index annuities offer a range of index interest crediting strategies and a fixed interest account. Through the Lifetime Income

Plus optional guaranteed living benefit rider, available for an annual fee, these annuities also provide lifetime income that is guaranteed to rise for up to 10 contract years, as long as withdrawals are taken according to the rider’s terms. In addition, individuals have the opportunity to double their retirement income potential under the rider if no withdrawals are taken before the 10th contract anniversary.

RETIREES WISH THEY’D LEFT SOONER

When it comes to retirement, those who have left the workforce are singing the “coulda shoulda woulda” song. If they could retire all over again, nearly half would have done it earlier — four years earlier to be more specific. That’s according to a New York Life survey of retirees ages 62-70. Forty-six percent of those in that age group with $100,000 of investable assets said they would have retired earlier if they could be sure they would have the same level of financial security they had when they actually left their working days behind. In addition, the survey revealed that both men and women reported similar feelings about retiring earlier: 47 percent of men would have retired sooner and 46 percent of women would do the same.

QUOTABLE Retirees, if given the opportunity, would want four or five years at the front end of their retirement, when they are healthiest, most active and able to get the most out of their retirement savings. — David Cruz, senior managing director, New York Life

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ANNUITY

Push-Pull Dynamic Heats Up Annuity Awareness Month he coalition’s campaign aims to T bring consumers to agents. By Cyril Tuohy

here’s momentum building around annuities, and that’s good news for the annuity industry, which this month celebrates its second annual National Annuity Awareness Month (NAAM). Call it a “rise and shine” moment for guaranteed income products. As the sun rises on its way to solstice on June 21, the Society for Annuity Facts and Education (SAFE) plans to shine the light on annuities by “pushing” articles and factual information about annuities out to consumers. “The idea is to get this information in front of consumers so that people will know about annuities,” said SAFE President Sheryl J. Moore, who is also president and CEO of Wink Inc. and Moore Market Intelligence, a leading source of annuity industry data. “What that means for agents is that consumers are better-informed before they get into a conversation about these 44

InsuranceNewsNet Magazine » June 2015

products with an agent or a financial advisor,” Moore said. Included in the SAFE marketing push are videos, articles and information blasted through social media channels. “Social media is integral to the delivery of this message,” she said. Eventually, SAFE may harness other channels such as TV, print media or other forms of advertising, but for now SAFE is looking to get the most out of its promotional dollars, and that means using the Web and social media channels. Moore said that the best way for agents to take advantage of NAAM is to send links to articles and information on annuities they see or receive from SAFE or a partner like the National Association for Fixed Annuities (NAFA) that is part of the Coalition for Annuity Awareness. “They can piggy back on NAFA and SAFE, and we want to remind them that if they get an email or a message from NAFA or SAFE, they should pass it on to others,” Moore said. “The idea is to take the message of

NAAM viral and that’s something that agents can really help with,” she said. “We want to have agents get some skin in the game when it comes to NAAM.” That’s the “push” half of the story. The other half consists of the “pull” marketing through which SAFE and its coalition partners want to generate traction. By pushing information out to consumers, and kindling consumer interest in annuities, there’s an opportunity for agents to do potentially less prospecting so that would-be annuity buyers, “pulled” into thinking about a future secured through guaranteed income, will approach advisors and say, “Help me out with my situation.” The idea is to draw consumers in and have them call their agents directly, or to reach out to trusted sources of information about annuities who will then refer consumers to a licensed agent qualified to sell an annuity. Consumers may even find themselves asking friends and relatives for advisor referrals, or resorting to Facebook and other social media “friends” to refer them

PUSH-PULL DYNAMIC HEATS UP NATIONAL ANNUITY AWARENESS MONTH to trusted financial professionals that friends work with. SAFE board member Pat Simasko, a partner at Simasko Law in Mount Clemens, Mich., says that what SAFE wants to do is have consumers ask their advisors about annuities, or even put advisors on the spot and ask why advisors haven’t mentioned or recommended annuities. “Having an awareness of what an annuity is is a good thing and hugely important,” he said. The need for accurate information around annuities has never been greater, especially with lawmakers discussing the need for guaranteed income, and NAAM will provide some buzz to get people thinking about annuities and approaching their advisors. Moore said that’s an opportunity for advisors, not necessarily to sell to clients, but to educate clients and have them walk out of an agent’s office and say, “This guy cares about me.” “Suitability is a big issue these days now, so if you want to make a suitable sale, the best thing you can do is lock up the relationship (not the sale, necessarily) with the client,” Moore said. “Talk to the client about what an annuity is and how it works.” Janet Terpening, senior director of operations for NAFA, said advisors and industry professionals should consult www.annuretirement.com, the new online home of NAAM and a repository of information and resources about the value of annuities. “We believe it is critical to provide consumers with accurate and complete information regarding what annuities are, how annuities work and how annuities might benefit them,” Terpening said. NAFA has three monthly webcasts planned for 10:30 a.m. Central Time on June 4, June 11 and June 25. Terpening said the first webcast will feature annuity expert Jack Marrion, the second will feature a coffee talk from Capitol Hill and the third will feature NAFA’s new executive director, Charles “Chip” Anderson. NAFA’s Annuity Leadership Forum is scheduled from June 17 to 19 in Washington, D.C. Terpening also said that this year NAFA targeted its monthly webcasts on agent and financial advisors education, what

issues they face in the field, and some of the compliance issues agents are coming up against. Agents are encouraged to download white papers from NAFA’s home page at www.NAFA.com, and the website’s Annuity Marketing Portal allows agents to cobrand the white papers, which agents can bring with them to client briefings. Pam Heinrich, general legal counsel for NAFA, said the coalition has also asked governors to declare June 2015 as Annuity Awareness Month. She said Iowa, home to some of the nation’s largest life and annuity companies, is the first state to approve the request, and Moore will receive the proclamation at a signing ceremony with Gov. Terry Branstad.

The need for accurate information around annuities has never been greater, especially with lawmakers discussing the need for guaranteed income. Proclamations are pending in Arizona, Georgia, Kansas, Kentucky, Minnesota, North Carolina, Texas, Utah and Wisconsin. The submission process is active in four more states. Heinrich also urged NAFA members to participate in the Annuity Leadership Forum by traveling to Washington for the Forum’s Hill Walk scheduled for June 18. Virginia Harriett, a New Jersey-based financial planner and member of the national board of the Society for Financial Service Professionals, which belongs to the coalition, said many people are “nervous” about annuities, and June is a perfect opportunity for advisors to step in, set the annuity record straight and calm people. “Some people are nervous about what they are buying, and that’s why education is important, because there is such a variety of annuities out there,” she said. NAAM is in its second year, and SAFE hopes to get more agents and consumers

ANNUITY

involved with the education campaign. The more people get involved, the more value NAAM will bring to the marketplace, SAFE officials said. Philip L. Holstein, a member of SAFE’s board, said advisors can spread the word about the value of annuities with the “safety first” mantra. “You can’t talk about a guaranteed mutual fund or a guaranteed private investment account, but you can talk about guaranteed income from an annuity,” Holstein said. Holstein says annuities are backed by companies that are tightly regulated. The people who run annuity companies take their responsibilities seriously, he said. Annuity companies are well-capitalized and the products they sell are designed not to fail. Holstein, president of Mountaintop Capital and a former financial advisor, said annuities can be understood, “but professional guidance is necessary” — all the more reason for advisors to brush up on the latest developments in the sector. When people object that annuities are too complicated, financial advisors would do well to remind them — gently — that mutual funds, life insurance and even many bank accounts can be complicated. Demand for annuities is increasing as baby boomers move deeper into retirement age and more of them look for ways to guarantee income. It’s important, therefore, for advisors to be familiar with retirement products people are likely to ask about. U.S. annuity sales in 2014 rose only 3 percent to $235.8 billion, according to LIMRA’s Secure Retirement Institute’s Individual Annuities Sales Survey, but niches within the annuity market experienced double-digit increases. Fixed indexed annuity sales surged to a record $48 billion last year, an increase of 23.9 percent from 2013, according to Beacon Research. Sales of income annuities last year reached a record $13 billion, an increase of 18 percent over 2013, Beacon also said. InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril. tuohy@innfeedback.com.

June 2015 » InsuranceNewsNet Magazine

Issuers: Integrity Life Insurance Company | National Integrity Life Insurance Company | Western-Southern Life Assurance Company 46

InsuranceNewsNet Magazine Âť June 2015

Special Sponsored Section

nnuities have found the spotlight right on time. America’s largest generation has just begun to retire. They are healthy, active and creative and are looking forward to enjoying their lifestyles for many years to come. Meanwhile, annuities have become more diverse and innovative, while their stigma is lessening. So how can producers capitalize on this golden era of annuities? In this special section, four thought leaders weigh in on how best to reach consumers, educate them and sell them “income for life.”

INSIDE Can Your FMO Show Proof? How One FMO Is Crushing Stereotypes While Shattering Production Records — with Mark Lindsey PAGE 48

The Difference in the Details: How to Win Over the “21st Century Retiree” — with Jonathan Illig PAGE 50

What Moves a Producer to the Next Level? The Answers Are Coming From Karlan Tucker PAGE 52

The Specialist: How Wade Dokken’s Focus on Specialization Has Led to Billions of Dollars in Annuity Sales PAGE 54 June 2015 » InsuranceNewsNet Magazine

The Big Annuity Issue • Special Sponsored Section

Can Your FMO Show Proof? How One FMO Is Crushing Stereotypes While Shattering Production Records

ith fewer than 400 producers and well over a billion dollars in premiums annually, The Revolution is one of the most intriguing stories in the FIA industry today. During this Q&A we speak with owner and producer Mark Lindsey about a remarkably simple concept that has produced unprecedented results. Q: What is your personal background as an agent? A: I’ve been in the insurance business for many years but I began to sell FIAs in 2002. Due to risk, I’ve always had a fear of the stock market, so I had a real appreciation for the products immediately. I began providing FIAs to my clients and probably due to my own personal passion for the products, I saw success quite quickly. Q: With the success you’ve had on the personal production side, what made you stop and start your own FMO? A: Actually, I’ve never stopped writing FIAs. The satisfaction I receive from helping people keep their money safe has prevented that. Since I started The Revolution in 2008, I’ve written over $20 million in premium annually with the only exception being the last couple years where I wrote over $10 million. I had to cut back a bit based on The Revolution’s rapid growth. As far as why I started The Revolution, it was really out of frustration. After years in the business, I became more educated on the FMO distribution channel and was very disappointed to find a significant lack of transparency. It was surprising to see organizations making so much money when the producer was the one really hauling the mail. I looked at several FMOs but the lack

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InsuranceNewsNet Magazine » June 2015

of a true understanding when it came to selling to the consumer shocked me. In other words, I found that the people who ran and worked at the shops that were trying to recruit me and help me produce more had never produced themselves. It just didn’t make any sense so I knew it was time for something different and started The Revolution. Q: What were your initial goals for The Revolution, and have you met them? A: Going in, the goals were extremely simple. Create an organization that was built for producers, by producers. No silly software or sales kits that I had seen countless times in the past. We wanted to work with a few dozen agents and teach them hands-on exactly how I became successful. And we planned to have a small-to-midsize organization, 200 maybe 300 million in premium annually, at the most. As you know things obviously changed, at least when it comes to a small-to-midsize organization. Q: That’s interesting because from an agent count standpoint, you still are a smaller organization yet your production numbers are anything but small or midsize. How did that happen? A: Between the few dozen producers, I noticed pretty quickly our numbers were very impressive. Producers I assisted went from a couple million in premium annually to over 10, 15 even 20 million annually. So it wasn’t long before we were at the $350-million mark, which of course was already more than I had ever anticipated. At that point, I realized I could help a lot more producers, which in turn would allow them to help a lot more people, so I decided it was time to really go for it. I figured with the right people and structure we could do over a billion in premium annually. I had a tremendous staff but I needed someone with experience running an FMO, so I brought in Sam Kavitsky to be the president of the company. At that point, we began to ramp up everything, but I was adamant that we maintain a hands-on training approach and not lose the camaraderie. That’s really the difference with The

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Revolution compared to other organizations. That’s why we’ve shattered records when it comes to the amount of premium we write despite having fewer than 400 producers. That’s why we wrote well over a billion dollars last year with roughly 325 producers.

Q: Some agents say they don’t do seminars because they can’t fill the room or at least fill the room with the right prospects. What would you say to those agents?

A: I’d say, for the most part, they’re absolutely right. FMOs often rely solely on the mail vendor to fill the Q: What are some other things you have in place to room and typically speaking, sign an exclusive agreehelp producers achieve these amazing results? ment with one company for better pricing. I believe doing it that way is a huge mistake. At The Revolution, we A: Unlike other organizations, I created exclusive terrihave a team of people whose sole job is planning our tories so that producers would not be at risk of losing a producers’ seminars. Each agent has a seminar specialclient to another. By doing this, every Revolution agent ist and depending on where they live, their budget and is completely open with sales even the time of the year, the vendor ideas and strategies. They know that is chosen varies. No one com“We’ve shattered it won’t hinder their business and pany is perfect. So you could have a records when actually only further improve it mail house that has great numbers ,because several minds working in one state and awful numbers in it comes to the together is obviously better than You need an objective opinamount of premium another. one working alone. I set a rule ion from someone who specializes in the very beginning that if we in this and that’s what our seminar we write despite help you increase your business, I team brings to the table. They know having fewer than ask in return that you help other how to focus on ZIP codes without 400 producers.” Revolution agents increase theirs. exhausting them, when to go back So besides the monthly trainings and which filters to use depending at The Revolution, you can mentor with several 10-, on your location. Filling the room is a science, and to 15- and 20+-million-dollar producers. You can watch save a few dollars upfront only to see a far inferior rethem do their seminars live, even sit in on their client turn on your investment makes no sense. appointments. Our producers don’t charge anything or Q: How much does the system cost? take any commission; it’s just what you do if you’re in The Revolution family. A: Zero. I’m glad you asked because a lot of companies sell their systems but we never have and never will. If Q: Isn’t it a big risk to limit your recruiting numbers it works, there is no reason I shouldn’t give it away to with territories? Revolution agents. We make our money on premium at A: That’s certainly what everyone told me when I The Revolution, nothing else. When our producers see started The Revolution. I obviously see it very difsuccess, we see success. If they don’t, we don’t. That’s ferently and the numbers clearly speak for themthe way it should be. selves. FMOs have thousands, even tens of thouQ: So what should an agent do if they want to check sands of agents, whereas The Revolution will never out The Revolution? even come close to a thousand. In fact, we turn down multimillion-dollar producers weekly because A: Just give us a call at 866-584-6809 and ask about our they’re in an area that is already locked up by a next training. You can also send us an email at info@ Revolution agent. It may sound crazy at first, but revolutionmo.com or just communicate through our that’s the reason why our producers write so much site www.revolutionmo.com. If you’re interested, business. You can never have the close relationmove quickly because our remaining territories are beships like we do when you have countless agents ginning to disappear and it may not be long before we and multiple systems. You can’t have trainings that shut down all recruiting efforts. are as productive or even a competitive atmosphere where no one is left out. With a small number of producers and one proven system, we can have real friendships and remarkably valuable trainings where helping others isn’t something you feel you need to do, but rather something you want to do because it’s mutually beneficial. June 2015 » InsuranceNewsNet Magazine

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The Big Annuity Issue • Special Sponsored Section

The Difference in the Details: How to Win Over the “21st Century Retiree”

onathan Illig, Brokers Alliance’s Executive Sales Consultant, has been in the business of annuities for nearly 20 years, specializing in helping producers through his unique practice of collaboration and his obsession with details. In this Q&A, Illig discusses how to approach the current generation of annuity prospects and how the key differentiators at Brokers Alliance — emphasis on process, customization, current information and technology — make selling to the “21st Century Retiree” easier than ever. Q: When you started working with Brokers Alliance two years ago, what was it like transitioning to the newer technology and the current processes they have?

reflects on that agent’s degree of professionalism.

Q: How does Brokers Alliance’s cutting-edge technology impact agents specifically? A: The senior market has changed dramatically; it now largely consists of boomers who are completely comfortable with technology. They are searching for information on the Internet and video is their overwhelming choice for learning. So we produce very professional conceptual video presentations for agent websites and other marketing collateral; plus we have the capability to have the individual agent on the videos. We like to customize as much as we can for the agent. And we’re big on social media, because that’s where it’s at. It’s about fishing where the fish are. Brokers InsuranceNewsNet Magazine » June 2015

Q: You say Brokers Alliance really emphasizes customization. How does your experience help in this regard?

A: I’ve been doing customization almost forever in the IMO space; it’s not new to me. I’m of the opinion that when agents meet with clients and prospects that everything they put in front of them — whether it’s a document, a PowerPoint, whatever — needs to reflect that agent’s business image and not that of a carrier or a marketing company. Details matter. EvDetails matter. ery little thing reflects on that agent’s deEvery little thing gree of professionalism.

A: At first it was a bit of a challenge for me. They have much more updated core systems. This is a very high-tech firm internally. And I do a lot of the videos we put out to the producers and so I had to adapt very quickly. Brokers Alliance is very focused on content, so one of the major things I do here is produce it. A lot of that content ends up in various videos and other technology so I’ve had to learn to write to new and different formats.

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Alliance as a company makes extensive use of social media to promote ourselves; therefore, we know what works and what does not, and we can pass this experience on to the agent. We do a lot helping agents leverage all of our prospecting tools on social media.

Q: But customization isn’t just branding. It’s also the content, correct?

A: Yes, exactly. A great example is that we do a lot of customized seminar work. What I’ve found in my career, especially with client presentations, is there is no silver bullet that works exactly the same for every producer. These presentations have to reflect both that individual’s specific business, the product specializations of their practice, as well as, frankly, their experience. We also focus upon the delivery method the agent is comfortable with. For example, many agents use our customized laptop presentations to explain concepts and ultimately even products, whereas others are more comfortable with written materials or even a “yellow pad” approach. We even go so far as customizing for an agent who has different types of major audiences. We customize the background look of the workshop to reflect each audience, such as police officers versus real estate agents. It’s minor but subtle little things that you do that go a long way to build trust with an audience. A big part of our job here at Brokers Alliance is to do everything that we reasonably can do to ensure the success of each agent who’s writing through us. Sometimes it’s very subtle little things and sometimes it’s bigger things.

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Q: It sounds like it would be a fun, interesting puzzle to try to put these together — that challenge of crafting the exact right seminar or presentation for each agent.

probably need an update of the actual graphics. People make a lot of mistakes in PowerPoint. You see a lot of this older stuff using dark backgrounds and overly flashy animations. Use white backgrounds, something easy to view. It needs to look modern. What I often say to people A: It is. And I pull from what we call “components,” is, think of what you would see on TV. of which Brokers Alliance has all kinds, so typically I’ll Another thing is a lot of agents still use ways of preshow them different components and ask, “Do you want senting information that work on the World War II gento include this? Do we need to modify this a little bit?” I eration, but this new group of baby boomers are more always tell them, “You have to be honest. You’re not godemanding and they want more factual detail. Back in ing to hurt my feelings. It’s your name, not my name on the day, it used to be a lot of emphasis on emotion, but it, so we have to make sure you’re that doesn’t work with the “21st delivering what it is that you feel Century Retiree.” If they just focus on the is going to work for you.” Of That’s another thing that resecurity and guaranteed course, we give them a lot of adally sets us apart — our focus on income aspects of these vice because quite often they say, process over product, meaning enproducts and quit trying “What do you think?” And I say, gaging the client first in a detailed to make them appear like process that mathematically reveals “I think you should talk about they’re going to perform this with this particular group.” their specific, individual need for like actual investments guaranteed income and then inQ: How does the level of coltroducing them to the financial do, agents are going to be laboration with agents through tools that provide the solution. Our much more successful. Brokers Alliance differ from unique Retirement Income Forecast your experiences elsewhere? process allows the agent to take the concept of retirement income security from a sort of nebulous idea and funnel A: From the collaboration standpoint it’s very simiit down to the client’s specific need; it makes it real to the lar. What’s different with Brokers Alliance is the imclient. Once the client can see their specific problem, they mense range of resources that we have available for are interested in the financial tool that will solve it. our agents’ benefit. I like to quote Stan Haithcock who’s a writer on MarketWatch. He has a great phrase I wish I had invented: Q: Such as the video studio and social media experts? “We sell these products for what they will do, not what they might do.” A: Yes, all that, but also content. One thing that realIf they just focus on the security and guaranteed inly sets Brokers Alliance apart as far as content is that come aspects of these products and quit trying to make we focus on keeping our agents informed about what them appear as though they’re going to perform like acis happening in the financial markets and the econotual investments do, agents are going to be much more my through our Monthly Summary of Economic and Fisuccessful. Because boomers are looking for what these nancial News for the Life and Annuity Professional and products do. You don’t have to lie about them. Here at with specific sales concepts based upon current events Brokers Alliance we always say, “Let the numbers speak through our weekly Smart Move of the Week. Both are for themselves.” delivered to the agent in written and video format and are designed to be used with consumers seamlessly. Overall we call it “current event marketing.” The more an agent is accurately informed, the better they can accurately inform their prospects, which leads to more Get more insider tips from the expert on marketing sales and, importantly, informed decisions on the part to the “21st Century Retiree.” Download Brokers of the client, which translates into highly suitable sales. Alliance’s FREE white paper, “Why ‘Content’ Matters for the Growth of Your Business,” at Q: And using current information is a great way for . producers to revitalize their workshops and presentations that they feel may have gone stale, yes?

Are you marketing effectively to the 21st Century Retiree?

www.21stCenturyRetiree.com

A: Yes, but if an agent’s presentation is outdated, it needs more than just current information. They June 2015 » InsuranceNewsNet Magazine

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The Big Annuity Issue • Special Sponsored Section

What Moves a Producer to the Next Level? The Answers Are Coming From Karlan Tucker

arlan Tucker may be a founder and CEO of an FMO, but he’s also one of the top producers in the country, and he continues to see his own clients in what is essentially a laboratory — a lab that is constantly developing newer, more effective sales techniques that maske up Tucker Advisors’ unmatched training. In this Q&A, Tucker shares why he created his FMO, discusses the opportunities in annuities and reveals some key methodologies straight from his “lab.”

• 33 years in the business

• 1,000+ seminars

• 5,000+ client interviews

• 2,500+ current personal clients

• Graduate of the Aileron Institute • Qualified for American Equity’s Chairman’s Club 7 times – Top 10 agents out of 27,000

Q: How did you come to create your own FMO?

• Only person to qualify for the Chairman’s Club as both an owner of an NMO and a personal producer

A: I was having great success in my personal indexed annuity practice. Advisors began to find out and call me for help to achieve similar levels of success. I needed the FMO platform to provide a way for me to be compensated for the time, ideas and proven marketing and closing techniques that I was sharing.

• 7-time Top of the Table qualifier

Q: What are advisors looking for from you and your FMO? A: When the independent advisor is asked what can your FMO do for you that creates the most value, their No. 1 answer is always “Get me more leads.” I wanted to take this a step further because advisors can’t necessarily turn leads into appointments. We have a proprietary system in which we deliver appointments that are preset, date and time. They’re prequalified and they’re ready and willing to meet with that individual advisor to talk about FIAs, life insurance or managed money. Q: What’s the biggest obstacle that holds advisors back from closing sales? A: Self-confidence. That’s why self-confidence is the key focus of all my trainings. It’s that ability to make a recommendation and stand your ground kindly when a person throws out an objection. This isn’t about pressure. This is about conviction. People care more about your confidence than they do about your competence. 52 52

STATS: Karlan Tucker

InsuranceNewsNet Magazine » June 2015

• Founder & CEO of: - Tucker Advisors Inc. - Karlan Tucker & Associates • Clients include: - Brian Tracy, world-class sales trainer and author - Dr. Laurence Kotlikoff, America’s foremost expert on Social Security - Dr. David Babbel, Professor Emeritus, Wharton School, advisor to the World Bank - Dr. Marshall Goldsmith, New York Times best-selling author

I had an advisor call me the other day and say, “Karlan, I offered the 16-year term like you taught me, but they didn’t want that, so I offered them the 10-year term.” I said, “They didn’t buy, did they?” They didn’t, because he backed off his recommendation, and the minute you vacillate or get wishy-washy, you’re showing you don’t believe in it, and they’re not going to either. Also, studies have been done that show that most advisors ask for the sale only one time. I encourage advisors with what I call my 12-3-7 rule. Ask a minimum of 12 questions to uncover issues and problems they

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You have to spend money. If you don’t have it, raise it. If you don’t believe in yourself enough to raise the money, come to our training; then you’ll raise the money.

CLOSER LOOK: Karlan Tucker’s The Art of Selling Academy “I teach five modules over three days to elevate our advisors’ success to a level they have not previously experienced. This training is directed at FIA, life and managed money sales. Whether you do just one or all three, you will greatly benefit.” Academy Curriculum: 1. The Art of Marketing 2. The Art of the Question 3. The Art of Providing Solutions

4. The Art of Dramatically Increasing Your SelfConfidence 5. The Art of Closing

have in their home. Build them big so that the people need big solutions. Then you’ve got to find at least three problems that you can offer three substantial solutions to. And then get seven no’s. No one is going to object seven times, but the reason I tell my advisors to get seven no’s is that it’s such a ridiculously high number. If they have that in their minds, then they will attempt to get a close a second time or the third time or maybe the fourth if necessary. All of a sudden their closing ratio goes through the roof just because of that concept. Q: What are the most important things someone needs to focus on if he or she wants to grow as an advisor? A: First, you need the desire to want to grow. Are you dissatisfied with your current income? Second, be humble. Are you coachable, thirsty and willing to pay the price to get better? Third, do you believe in yourself enough to spend money on yourself in the form of training and marketing? Often I believe more in the advisor than they do, which is why, for those who qualify, we pay for their airfare and hotel to spend a few days with me. Q: What if an advisor isn’t in a place yet where he or she can spend more money? A: I’ll tell you this story. About 20 years ago, I complained to my wife I wasn’t as busy as I wanted to be, and she said, “How many workshops or seminars a month are you doing?” I answered, “One mailing and two events.” She said, “Why don’t you do two mailings and four events?” I said, “Well, that’s twice the work, twice as much money, twice the risk.” Then she told me to either put up or shut up — wives have a way of getting right to the point. So I decided I would do twice the marketing and my income doubled. It wasn’t rocket science.

Q: How can an advisor who’s already very successful get to the next level? A: Time management. If you’re a big producer, it’s time to start delegating. You should never be answering your own emails, answering the telephone, paying the bills, checking the mail. But advisors are cheap. They don’t want to pay a $15- or a $20-an-hour administrative assistant, but for every hour of the day that you’re doing the admin’s work, you’re paying yourself $15 or $20 an hour. Q: What is the biggest opportunity for advisors looking to grow their annuity business? A: There are many. Boomers retiring need secure income. They need more than one paycheck. Our exclusive relationship with America’s foremost expert on Social Security, Dr. Laurence Kotlikoff, is key. The market is at historical highs. We all know about “buy low, sell high” but few can do it. Our modern-day FIAs don’t take people out of the market. Instead they help people participate in a different way, one that allows them to capture their gains. Many Americans think the choice is either pay for the kids’ college education or retire, but not both. We show them how their kids can have a private education at the cost of a public one and not sacrifice retirement in the process. As you might expect, there is a huge demand for this. Q: Why do you continue to write business of your own? A: I love making a big difference in people’s lives, both those of my clients and those of our independent advisors. I have sold since I was 22. It’s in my blood. Right now, I average between $1.5 and $2.5 million in fixed index annuity sales every month. Not only does it provide for a good living but also it keeps me very sharp for training our advisors on what’s working best now, today.

FREE GIFT from Karlan Tucker Want a tested and proven way to create urgency and change clients’ perceptions of annuities? Access one of the most powerful sales tools developed by Karlan Tucker. It’s called “The Milk Truck Story” and it’s yours FREE at

www.MilkTruckStory.com.

June 2015 » InsuranceNewsNet Magazine

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The Big Annuity Issue • Special Sponsored Section

The Specialist:

How Wade Dokken’s Focus on Specialization Has Led to Billions of Dollars in Annuity Sales

hen Wade Dokken was just 29 years old, he was hired to be the national sales manager for a brand new variable annuity company — American Skandia. In 11 years, he brought that company from having just $1 million in sales the previous year, with only 18 employees and no ratings, to become the largest variable annuity company in the United States, with just over 1,800 employees and about $43 billion in total assets. In this conversation, Dokken discusses how he’s creating the same colossal level of growth for his own company, WealthVest. It’s set to hit $1.5 billion in sales in just its sixth year, following his simple formula: index annuities, specialization and a true passion for financial advisors. Q: How were you able to grow American Skandia on such a large scale? A: The way we made it happen was specialization. We only did variable annuities. We woke up every morning trying to make them better. Then we looked at what was going on at Charles Schwab and the RAA marketplace generally and understood that people were no longer working with a family of funds. They were beginning to pick which individual manager was the very best at a small-cap international growth fund or which manager was the best at a large-cap value fund and so on. Q: When did you decide to start your own company and what were your goals? A: In 2009, I started putting together the framework for WealthVest with my partner Lincoln Collins who was

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InsuranceNewsNet Magazine » June 2015

chief operating officer at Skandia and became CEO of Hartford Life Europe. We were watching the disintegration of the stock market and made some key observations. No. 1 was, after two major stock market drops between 2000 and 2007, there was going to be a significant move away from risk. No. 2 was, for the older element of the baby boom generation, there was going to be a big movement from accumulation to decumulation. I also want to add that both of us throughout our careers have been very, very focused on creating financial efficiency in products. Our goals have been to add a lot of thoughtful analysis to the index annuity product line, to work with carriers who could make it far more lean and therefore have a lot more consumer value and to be highly focused on FINRA reps in addition to agents. Q: Why index annuities? A: We think index annuities have fantastic accumulation where there’s a strong opportunity to make between 4.5% and 6% over 10 years without having a down year. And, obviously, you have income levels that are much higher than you could safely take from a portfolio of stocks and bonds. WealthVest now has an expectation of doing nearly $1.5 billion this year in index annuities primarily. We work with over 250 broker/dealers. Three major life insurance companies have hired us to do most of their product marketing for the broker/dealer marketplace. And we think that the index annuity place generally will reach $100 billion much sooner than later. Q: You grew Skandia through specialization, and it seems you’re continuing that practice at WealthVest as you focus on index annuities. How else is the idea of specialization implemented at WealthVest? A: First of all, our company has a very large sales force of field wholesalers — people who run the branch offices of agents and advisors. Historically, companies in our space have sales forces of people just on the phone. We

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Gainfully “I Love Advisors This Much” In a time when marketing is rapidly shifting towards the digital world — where consumers are going — trusted, compliant content has become a hot commodity for advisors looking to prospect online. Now there exists one source for advisors to find exactly what they need. Gainfully is a brand new platform created solely for financial professionals to collect and share trusted and compliant resources. It’s centered around social media marketing, similar to HubSpot or Hearsay, except it’s entirely free. And even though Gainfully was co-founded by Wade Dokken and Lincoln Collins, it is neither owned by nor affiliated with WealthVest. Advisors don’t have to be contracted with WealthVest and WealthVest has zero access to user information to use for recruitment. They created Gainfully solely to help all advisors grow their businesses. Powerful digital marketing. 100% free. No strings attached. Get started at www.GainfullyPro.com.

believe that the most sophisticated advisors still best relate to people who are in their branch offices and are adding real value both in a relationship and in face-toface product training, whether they’re part of a high-end firm or it’s just an individual office of agents. And our wholesalers include people who’ve done it at a very, very successful level, like Les Sutherland who was president of MetLife Distributors and Kevin Connor, who was president of Hartford Life Distributors, where I think he had in the range of 450 wholesalers, and his team raised something like $30 billion of variable annuities in 2007. So this is a specialization that’s hardwired into our company and that we’re very successful at executing. Another specialization is, we’re really focused on people 55 and up. We are all about the near-retiree who has a limited period of time left for accumulation and wants to take a lot of risk out of that accumulation, which is soon to be transitioning to income. Also, they want to make sure they don’t outlive their money. To us, that’s an index annuity. And one more thing is that we’re really specialized in products that are much leaner and have much higher income benefits and much higher accumulation benefits to consumers than maybe the traditional product. Q: How are you able to do that? A: We make sure the insurance company spends a lot less on distribution than they normally do and then

they can spend that money on the consumer. Quite often this means we get paid less but on the flip side, we can get the ability to sell a product first or on a proprietary level. I know broker/dealers appreciate limited distribution. I know broker/dealers don’t want to have five or 10 FMOs calling on them. They want people who they know are compliant and people who they know are very, very focused on doing it their way. And that’s us. Q: How involved are you in product development? A: We’re very active in product development so we can work very closely with our partners to help them create these products that are, in fact, superior for consumers. Q: Is it exciting to be involved in creating new products? A: Here’s what’s interesting. I love financial advisors. I have spent a career being interviewed by The New York Times and The Wall Street Journal arguing why financial advisors are good. The reason I know that to be a fact is, you could pick almost any subject and there’s somebody who has a service that I desperately need and can’t compete with. I am never going to be capable of doing my taxes. And the guy who does my taxes is a trusted friend, he’s a specialist and he makes my life fundamentally better. I think the vast majority of financial advisors are equally if not more important to an American’s life. And so that’s really exciting to me because we just made it better. Retirement is a cool thing. It’s a relatively new thing in America, considering our current life longevity and financial security. The fact that something actually called retirement exists is probably one of the largest societal changes that we have encountered in thousands of years. And I think it’s a really noble calling to be in the business of helping Americans enjoy their retirement.

Ready to become an FIA specialist?

The Role of Fixed Index Annuities in an Optimized Portfolio

Learn more about WealthVest and download the free white paper Wade Dokken co-authored with national annuity expert, Jack Marrion, “Rethinking Retirement: The Role of Fixed Index Annuities in an Optimized Portfolio,” at

www.FIAspecialist.com.

June 2015 » InsuranceNewsNet Magazine

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LIFEWIRES

LIMRA: Americans Overestimate Cost Of Life Insurance Americans are attempting to play “The Price Is Right” with life insurance, but are getting the price wrong. A recent LIMRA study shows that 80 percent of consumers misjudge the price of term life insurance — guessing that the cost of coverage is much higher than it actually is. The study found that nearly one-third of Americans believe they need more life insurance and more than two in five said they would feel a financial impact within six months if the primary wage-earner died. However, the majority of Americans (54 percent) said it is unlikely they will purchase life insurance within the next 12 months. The reason? They believe life insurance is too expensive. “Only about a third of consumers knew that their credit histories and driving records could affect how much they pay for life insurance, and less than half realized their hobbies and lifestyle could impact the cost of their life insurance policy,” said Todd A. Silverhart, corporate vice president and director of LIMRA Insurance Research. “In addition to believing life insurance is too expensive, our research has shown that consumers are intimidated by the process of buying life insurance — four in 10 don’t know how much they need or what to buy. Having a better understanding about the factors that influence pricing might help consumers feel more confident and encourage them to pursue getting coverage they believe they need.”

LIFE INSURERS CHALLENGED BY COMPETITIVE LANDSCAPE

What keeps chief financial officers at life insurance companies awake at night? According to a Towers Watson survey, CFOs at North American life insurance companies say they continue to face sizable competitive challenges to their profitability. But only about 20 percent said they are well prepared to respond to this competitive environment. Life insurers cited competition (61 percent) and cost management (61 percent) as the top challenges to their profits this year, and seem only somewhat better prepared (46 percent) to address the cost pressures, according to the survey. Insurers also acknowledge that the competitive environment is the biggest challenge to their growth objectives. The majority said the economic environment and regulatory landscape are the main impediments to meeting their risk objectives. In response to their various DID YOU

KNOW

29%

challenges, insurers are trying several measures, such as expanding into new products or markets, increasing distribution, and implementing or improving risk management processes, including financial discipline, and risk and capital processes.

TWO HOLDING COMPANIES TO MERGE

Pan-American Life Insurance Group and Mutual Trust Financial Group announced they will merge their holding companies. An agreement to combine Pan-American Life Mutual Holding Co. and Mutual Trust Holding Co. was announced by both companies. The merger will strengthen the combined company’s position as a premier life, accident and health insurance provider in the Americas, according to the announcement. Upon closing, the combined company will continue to operate as a mutual insurance holding company with approxi-

of millennials cited saving for vacation as a priority over purchasing life insurance. Source: LIMRA

InsuranceNewsNet Magazine » June 2015

QUOTABLE Life insurers face difficult market conditions characterized by moderate return on equity, flat to sluggish sales growth and protracted low interest rates. — Elinor Friedman, Towers Watson

mately $1 billion in revenues, $5.5 billion in total assets, 1.5 million covered lives and 1,650 employees. The combined company will also have approximately $1 billion in total capital. Upon completion of the merger, Mutual Trust Life will operate as a wholly-owned subsidiary of Pan-American Life.

METLIFE’S WHEELER TO RETIRE IN AUGUST

Bill Wheeler, MetLife’s president of the Americas since 2011, will retire in August to pursue “other interests.” Wheeler has held the position of Bill Wheeler president since 2011 and has been with MetLife for 17 years. “Bill made a significant contribution to MetLife’s success. Most recently, as our first president of the Americas, Bill took on some of our biggest challenges, and he has done an excellent job delivering on them. Bill has driven solid financial and operational performance,” MetLife chairman, president and CEO Steve Kandarian said. Kandarian credited Wheeler with completing one of MetLife’s strategic pillars, the “successful restructuring and transformation” of the company’s U.S. retail businesses, which are headquartered in Charlotte. MetLife, the largest U.S. life insurer, said it had reached its goal of creating more than 1,300 jobs at its Charlotte headquarters after it announced plans in 2013 to establish a hub in the city.

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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. F82624-4 3-2015 DOFU 3-2015 A00923-0215

For financial professional use only. Not for use with the public. This material may not be reproduced in any form where it would be accessible to the general public. June 2015 » InsuranceNewsNet Magazine

LIFE

NAIC Proposes Rules to Put Restraints on IUL Illustrations verly optimistic predictions of O index universal life yields could be reined in under illustration rules expected to be adopted by the National Association of Insurance Commissioners. By Susan Rupe

truce could come to the battle described in this month’s article “How to Compete and Win the Illustration War” (page 60). The National Association of Insurance Commissioners (NAIC) is expected to adopt new rules governing the illustrations to be used in selling index universal life (IUL) products. These rules are expected to be phased in beginning Sept. 1. One area that would be affected is the so-called “guardrail” that limits the expected yield that can be illustrated when selling IUL to prospects. The NAIC Life Insurance (A) Committee is expected to vote on passing the rules by early summer. After the Sept. 1 phase-in, it is likely that implementation of the new rules 58

InsuranceNewsNet Magazine » June 2015

will be completed March 1, 2016. As Washington Bureau Chief Arthur D. Postal reported on InsuranceNewsNet.com previously, the proposed rules would allow agents to show prospects a document that supported crediting rates in the 6-to-7-percent range, although so-called “guardrails” mandated by the proposal could limit actual likely yields to as low as 4.5 percent. The proposal also puts limits on loan leveraging. Provisions detailing information on policy loans and establishing additional standards would go into effect for all new illustrations on policies sold on or after March 1, 2016. The IUL illustration changes are the result of several months of debate and compromise among the NAIC, several state insurance departments, the American Council of Life Insurers, and a coalition of life insurance carriers including MetLife, Pacific Life, Allianz and New York Life. In its proposed guidelines, the NAIC said it sought to address the lack of uniform guidance in illustrating IUL. For

example, the NAIC said that two illustrations that use the same index and crediting method often illustrated different credited rates. The lack of uniformity can be confusing to potential buyers and can cause uncertainty among illustration actuaries. In particular, the NAIC proposal provides guidance in determining the maximum crediting rate for the illustrated scale and the earned interest rate for the disciplined current scale. According to a draft of the proposed rules, limits would be placed on the policy loan leverage shown in an illustration. The rules also would require additional consumer information such as side-by-side illustration and additional disclosures that would help consumers understand the product. The rule would limit the credited rate for the illustrated scale for each index account, according to the draft guidelines. Under the guidelines, the average annual credited rate for the benchmark index account would be calculated for the 25-year period beginning on Dec. 31

NAIC PROPOSES RULES TO PUT RESTRAINTS ON IUL ILLUSTRATIONS of the calendar year that is 65 years prior to the current year (for example, Dec. 31, 1950, for 2015 illustrations), and for each 25-year period starting on each subsequent trading day afterwards, ending with the 25-year period that ends on Dec. 31 of the prior calendar year. The proposal also addresses the caps that are shown with the illustrated scale. If the insurer offers a benchmark index account with the illustrated policy, the illustration actuary would use the current annual cap for that benchmark account. If the insurer does not offer a benchmark index account with the illustrated policy, illustration actuaries would use their judgment to determine a hypothetical, supportable current annual cap for a corresponding index account that meets the definition of a benchmark index account and use that cap. For other index accounts using other equity, bond, or commodity indexes or other crediting methods, illustration actuaries would use their judgment to determine the maximum credited rate for the illustrated scale. The parameters of

The NAIC said it sought to address the lack of uniform guidance in illustrating IUL. The lack of uniformity can be confusing to potential buyers and can cause uncertainty among illustration actuaries.

LIFE

the scale would be required to have “the appropriate relationship to the expected risk and return” of the benchmark index account. As for policy loans, the proposed rules state that if the illustration includes a loan, the illustrated rate credited to the loan balance shall not exceed the illustrated loan charge by more than 100 basis points. The proposed rules state that the basic policy illustration also shall include a ledger using the alternate scale shown along with the illustrated scale. In addition, the basic policy illustration shall include a table showing the minimum and maximum average annual credited rates. Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com.

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June 2015 » InsuranceNewsNet Magazine

LIFE

How to Compete and Win the Illustration War 15.84%

ere is how you can put together H an honest illustration and beat someone else’s rosy scenario. By Gonzalo Garcia and Elizabeth Michel

e discovered a way to compete and win in the world of illustration warfare. We were presented with a case from a financial advisor who was competing against a major carrier’s indexed universal life (IUL) policy illustration that was packaged as a life insurance retirement plan (LIRP). In our opinion, the interest rate used in the illustration was aggressive. However, we do not wish to tell you how you should be running or presenting client illustrations. Instead, we want to help you compete against these aggressive illustrations. We also want to give you some things to think about as you and your prospects discuss planning opportunities that involve life insurance projections. Before getting into the specifics of that competitive situation and the tool that we used to educate the advisor and the client, let’s remember the basics of how life insurance illustrations are used to project future policy values. There are two broad types of illustrations (and here, let’s focus on UL insurance): (1) sales illustrations used in the initial sales process to help explain a policy; and (2) inforce illustrations that reproject a policy after it has been placed in force. As insurance professionals know, an illustration is an approximation using assumptions that may or may not occur. That is a fact — just as you cannot predict with any degree of certainty what a 401(k) plan account will be at retirement, you cannot accurately predict how a UL insurance policy will perform in the future. Assumptions are just that — assumptions. To frame the discussion, above is a chart of the 10-year Treasury rate as of Dec. 15, 2014. 60

InsuranceNewsNet Magazine » June 2015

The 10-year Treasury rates from 1870 to 2014

9 8 7 Black Monday

6 5

Black Tuesday

4 3 2

2.12%

1 0 1880

1890

1900

1910

1920

1930

1940

This chart is instructive in that the bulk of a carrier’s investment portfolio, which drives both returns and options pricing for IUL products and thus crediting rates, is invested in 10-year Treasury bonds. Life insurance crediting rates reflect, to a certain extent, the ups and downs of the economy with some lag due to the longterm investment nature of bonds. The important aspect to note here is the sequencing of returns. This chart has ups and downs. And so do the crediting rates of insurance carriers. A problem occurs when you project a flat (and typically high) rate of return and expect that sequencing to persist. In the 1980s, UL products were illustrated at 10-12 percent. In the 1990s, variable universal life (VUL) products were illustrated at 10-12 percent. IULs now are being illustrated at 8-10 percent. In hindsight, the UL and VUL illustration rates now are considered very aggressive and have led to client disappointment and dissatisfaction. Are we repeating an unhappy history with our high IUL illustration interest rates? One conclusion from the crediting rate conundrum could be “Don’t buy life insurance.” Another could be “Buy term and invest the difference.” The lesson is, however, that an educated consumer is a happy consumer. The more clients know about life insurance and how it really works, the more they will appreciate life insurance and respect the advisor who educates them.

1950

1960

1970

1980

1990

2000

2010

With that background, here is our LIRP fact pattern: 1. Male client age 48 2. Preferred rate class 3. $24,000 of premium per year for 19 years (to age 66) 4. Option 2, minimum non-MEC (Modified Endowment Contract) death benefit, then Option 1 thereafter 5. Taking distributions of $116,389 per year starting at age 67 for 20 years (withdrawal to basis, then loans thereafter) 6. The income solve included the objective of keeping the policy in force to age 120 (minimum cash value) As we reviewed the illustration from this major carrier and tried to compare it to other products, we realized that the return assumption on the IUL illustration was 9 percent. That is not a typo. Nine percent! Referring back to the chart, do you see a consistent 9 percent sequencing of returns? No, you don’t. And your prospects and clients won’t either. However, although we knew that, we needed a way to compare “apples to apples” and to help the client understand the im-

NEW ACTUARIAL GUIDELINES CHANGE THE WAY ADVISORS WILL SELL INDEXED UNIVERSAL LIFE Beginning September 1, 2015 new actuarial guidelines will slash the amount of cash value that advisors can illustrate within Indexed Universal Life (IUL) products. How can advisors show the benefits of IUL with one of the biggest selling points – cash accumulation – slashed to only a 1% positive arbitrage? Advisors will soon have to change their sales strategy when it comes to positioning an IUL. Don’t get caught illustrating IUL the old way. Learn how to powerfully position some little-known benefits that Peak Pro has been using for years to sell IUL in any market! Request our Free White Paper today to uncover: » What you need to know to adhere to new actuarial guidelines » A powerful sales strategy that most advisors don’t use – but should! » New concepts that will open the door to more business owner clients » How an IUL can help protect your clients while replacing one of their priciest policies

FREE WHITE PAPER: How to position IUL without relying on cash value accumulation Learn how to Sell IUL within the New Actuarial Guidelines. Request our Free White Paper at: www.NewIULSales.com or call us directly at: 866-268-2640 June 2015 » InsuranceNewsNet Magazine

LIFE HOW TO COMPETE AND WIN THE ILLUSTRATION WAR pact of illustrated interest rates. Toward that end, we recently had heard about a tool that can help assess the viability of a proposed planned premium. This tool is a generic planned premium testing device that provides useful guidelines and benchmarks for situations in which a planned premium is not fully guaranteed to maintain a policy in force for life — such as UL, IUL and VUL. There are other ways you can assess the reality of an illustration, such as running multiple illustrations at deferring interest rate assumptions. But the tool we employed uses generic product standards as a way to normalize differences in policy expenses. This tool allowed us to independently test the lifetime sufficiency of a planned premium. Further, we believe that such a planned premium assessment and recalculation help the advisor communicate a rationale for an amount of initial planned premium that will be managed over the insured’s lifetime. This is similar to how pension actuaries advise their clients on the funding of a defined benefit pension plan. You start with an initial expectation and then manage the contribution on the basis of ongoing results and experience. First, performing such an assessment recognizes that a permanent life insurance policy is a financial investment that must be managed. Second, life insurance can be analogized to a retirement plan. This analogy is appropriate both from what a life insurance policy can do for a client (provide a pool of assets to tap for retirement) and how a policy can be affected by economic factors. Much has been written about the linear nature of life insurance illustration assumptions inherent in products that do not provide linear returns, especially IUL and VUL products. The life insurance industry uses linear returns to help explain the possible outcome of an insurance plan or strategy, but products such as VUL and IUL are anything but linear. The tool we employed uses the process of historic rate randomization to estimate the success probability of an illustration as opposed to the linear nature of the tools used by insurance company software. It runs 1,000 different scenarios to provide results. It is a terrific illustration reality check and a great educational tool for clients and prospects. This article is not intended to provide a detailed explanation of the tool we used. For purposes of this article, it is sufficient 62

InsuranceNewsNet Magazine » June 2015

to know what the end game is: the probability of success of a set of assumptions in an illustration. So let’s go back to the 9 percent illustration with $24,000 of premium and $116,389 of supplemental income for our 48-year-old prospect. We ran our tool with the illustration assumptions provided by the advisor and, no surprise here, the success probability of this scenario was zero. Zero! Our next step was to request the same illustration from the carrier using a 6 percent return and solving for income to produce the same cash value result at maturity. The carrier illustration produced an income solve of $54,538, and the tool produced a success probability of 56 percent. So basically, the advisor is asking the client to “invest” $24,000 per year or $456,000 over 19 years to get a “coin toss” result on this retirement income supplement strategy. Would your client like those odds? Probably not. More important, does your client even understand that these illustrations are projections that will vary significantly depending on future performance? Perhaps you would want to ask this prospect if he or she would be willing to sign off, accepting that the possibility of success is either zero or 56 percent. “Just for my files,” you say. Alternatively, you may want to have your prospect share the results and have your competitor produce an illustration that has a higher probability of success. You can tell your prospect, however, that there is good news! We took another leading carrier’s IUL product and ran it at five different interest rates to illustrate how dramatically the selected interest rate assumption can impact the probability of success. Here are the results. MAJOR LIFE INSURANCE COMPANY Interest Rate Assumed 6.91% 6.00% 5.50% 5.00% 4.50%

Assumed Income 106,215 85,656 75,385 65,512 55,188

Probability of Success 9% 38% 59% 74% 86%

Notes: Male age 48 PNT, $24,000 Premium Paid to Age 66, 90% Confidence Level, 100% COI multiplier

So does your client want a 9 percent chance that his LIRP will actually pay out the stream of payments projected? Or an 86 percent chance? Using this tool, you have a definitive way to show your clients

the impact of the illustrated rate assumption, and together you can make an educated decision about which interest rate assumption to use. Today, transparency is the coin of the realm — and can make the difference between making a sale and not making a sale. In our brokerage general agency, we see product illustrations every day, we see hundreds of them every week, and we are constantly amazed at what advisors are showing clients. As an industry, have we not learned the lessons of UL in the ’80s or of VUL in the ’90s? If we have not learned these lessons and continue to illustrate IUL at 9 percent with low premium solves and/or lofty income streams for clients, then we are doomed to continue to disappoint clients and not meet their expectations. Further, we hurt our own industry, diminishing the confidence in the great value that a well-designed life insurance program can deliver. We have found that using this tool is invaluable in helping advisors bring real value and meaningful expectations to clients instead of showing illustrations that we know will never deliver the illustrated results. The results and reports can reside in your client’s file to demonstrate your due diligence. You can then rerun the illustrations and the assessment tool every three to five years to continue to manage your client’s life insurance investment. Of course, this also gives you a reason to meet your client to review the results and, perhaps, sell other financial products. Clients and prospects are desperate for great advice. Producers who offer great advice using innovative tools will not just survive — they will thrive. Competing on illustrations using the interest game is a recipe for disaster. Competing as a thoughtful, consultative producer will result in educated, happy clients and lots of future referrals. Gonzalo Garcia, CLU, is a partner at AgencyONE. Gonzalo is responsible for business development at AgencyONE. He can be contacted at Gonzalo. Garcia@innfeedback.com. Elizabeth Michel, JD, is chief marketing officer at AgencyONE. She has held senior positions with large, national brokerages including Crump and National Financial Partners. She can be contacted at liz.michel@ innfeedback.com.

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June 2015 » InsuranceNewsNet Magazine

HEALTHWIRES

ER Visits Rise Under ACA One of the arguments used by many to support the Affordable Care Act (ACA) was that fewer Americans would use the local emergency room as their primary health care provider if they had health coverage. But a recent poll shows that the opposite has occurred. Three-quarters of emergency physicians say they’ve seen ER patient visits going up since the ACA took effect. A poll released by the American College of Emergency Physicians (ACEP) shows that 28 percent of the doctors surveyed saw large increases in volume, while 47 percent saw slight increases. This is a big change from last year, when fewer than half of doctors reported any increases in ER patient visits. Isn’t this running counter to the purpose of getting everyone insured to keep them from using the ER every time they get sick? The answer is that there simply aren’t enough primary care physicians to handle all the newly insured patients, said ACEP President Mike Gerardi, an emergency physician in New Jersey. In addition, some physicians won’t accept Medicaid because of its low reimbursement rates. That leaves many patients who can’t find a primary care doctor little choice but to turn to the ER.

SOME WINNERS, SOME LOSERS IN ACA WORLD

The Affordable Care Act has changed the landscape for health insurers, with some And the profiting and others struggling. losers are ... Here’s a rundown of who’s doing well and who’s not. Operating earnings soared 35 percent for UnitedHealth’s health insurance business in the first quarter. The nation’s largest insurer also saw strong growth from its Optum segment, which provides pharmacy benefits management as well as data technology services and runs clinics and doctors’ offices. Anthem recorded a 25 percent Medicaid enrollment gain compared with last year’s first quarter. Humana was the only top insurer to miss analyst expectations for the first quarter, with officials saying that hospital admissions — an expensive form of care — were starting to pick up. Meanwhile, Assurant said it will sell or shut down its health insurance division that has struggled financially since the ACA took effect. Assurant Health, headquartered in Milwaukee, was expected to report an operating DID YOU

KNOW

loss of up to $90 million in the first quarter following a loss of $64 million last year. The company, which reported $2 billion in revenue last year, has sold health insurance to individuals in 41 states and on 16 marketplaces set up under the ACA. It sold health plans to small employers in 34 states.

NO MORE SOCIAL SECURITY NUMBERS ON MEDICARE CARDS One of most common places for Social Security numbers to be found is on Medicare cards. But that will become a thing of the past, in an effort to change the way doctors are paid for treating Medicare patients and to prevent identity theft. President Barack Obama signed a bill removing the numbers from the cards, which is something federal auditors and investigators have recommended for more than a decade. The move was prompted by the rise of electronic health records and recent cyberattacks. “The Social Security number is the key to identity theft, and thieves are having a field day with seniors’ Medicare cards,” Congressman Sam Johnson, R-Texas, said. More than 4,500 people sign up for Medicare daily. Medicare enrollment could reach up to 74 million people by 2025.

UnitedHealthcare will cover services provided through phone or video consultations with medical professionals. Source: Boston Globe

InsuranceNewsNet Magazine » June 2015

QUOTABLE If you look at the issues of affordability, access, and quality, we’ve been working on it for 100 years. — U.S. Health and Human Services Secretary Sylvia Mathews Burwell

RURAL HOSPITALS STRUGGLE TO STAY OPEN Like the general store on Main Street or the drive-in movie theater at the edge of town, hospitals are disappearing from rural America. A total of 50 rural hospitals across the nation closed their doors since 2010. The pace of these closures has been increasing, with more hospitals closing in the past two years than in the previous 10 years combined, according to the National Rural Health Association. That could be just the beginning of what some health care analysts fear will be a crisis. An additional 283 rural hospitals in 39 states are in danger of shutting down, and 35 percent of rural hospitals are operating at a loss, according to iVantage Health Analytics, a firm that works with hospitals. Most of the rural hospital closures so far have occurred in the South and Midwest. Of those at risk, nearly 70 percent are in states that have declined to expand Medicaid under the Affordable Care Act, although some experts are hesitant to draw a causeand-effect correlation. Hospital closures are hitting urban areas as well. Big city hospitals have been closing at about the same rate as rural ones during the past five years. But patients in major metropolitan areas have a number of alternatives if a local hospital closes. When a rural hospital closes, people might have to travel dozens of miles to reach the nearest hospital, an inconvenience that can sometimes be a matter of life or death.

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HEALTH

4 Fallacies About Selling Individual Disability Insurance I nsurance agents know their clients need IDI but don’t know how to move the conversation. By Doug Waters

any advisors would agree that their clients need individual disability insurance (IDI). However, many of these same advisors choose not to sell it. This could be because they do not feel informed enough about the product. Maybe they do not want to dilute their focus on their primary area of expertise. Or it may be that they simply do not know an effective way to transition the conversation to IDI. Anyone who depends on income to pay the bills and maintain a standard of living 66

InsuranceNewsNet Magazine » June 2015

needs to protect that income. What if a client gets sick or injured and is unable to work? The last thing you as the financial advisor want to hear is a disabled client asking, “Why didn’t you warn me?” I have heard some advisors openly admit that they know they need to sell IDI. Some even express fear that they may be missing an opportunity to protect their clients’ incomes. They are just not sure how to incorporate IDI into their sales. Fortunately, there are simple and effective ways to add IDI to your practice. After hearing advisors tell me the following perceived stumbling blocks to selling IDI, I have some advice on how you can position the product efficiently and effectively.

Where do I start the conversation?

My assumption is that advisors who are meeting prospects for the first time will always lead with their strength. That strength is the product or service they know best, which drives the majority of their revenue. This may come with a practiced conversation starter, allowing for a skilled opening and high engagement from prospects regarding how the product can help fill a need they have. In my talks with advisors over the years, I have picked up some effective ways to transition from other products to a conversation about IDI. Just knowing where to start — how to get people

First, get your clients to agree that they would, in fact, suffer financial loss if an illness or injury left them unable to work for an extended period of time. thinking about their need for income protection — is the first and most important step in selling IDI. Here are five examples of how to pivot from different products to IDI: Financial plans with periodic contributions “The best financial plan in the world will survive only as long as your income survives. Before we part today, let’s agree on a plan to make sure your income will continue even if you cannot work. Otherwise, all this planning we just did could be for naught.” Life insurance “Congratulations on getting this life insurance policy in place. If you are not here to provide for your family, they will still have a source of income. However, what if you get seriously sick or injured and survive? You might not be able to work for years, if ever. Who will take care of you and your family then?” Individual health insurance “This health insurance will make sure the doctor, hospital and pharmacy get paid. But if you get seriously sick or hurt, who will make sure you get paid? Let’s talk about how to protect your income if you are not able to work.” Long-term care insurance “It is likely that the need for long-term care will arise late in life. But what if some serious illness or accident strikes during your working years? Wouldn’t you need your income to continue?” Group long-term disability (LTD) In this instance, consider talking with your employer clients and discuss layering IDI on top of existing coverage they might have with you. “Group LTD is a great foundation of protection for your employees. But, as you know, the group plan is structured in a way that does not fully cover your executive team and other higher-earnJune 2015 » InsuranceNewsNet Magazine

HEALTH 4 FALLACIES ABOUT SELLING INDIVIDUAL DISABILITY INSURANCE ing employees. Let’s look at filling in the gaps left by group LTD with individual disability insurance.”

Advocacy groups such as the Council for Disability Awareness or Life Happens have good resources on how to start conversations about IDI with your clients.

Whom do I target?

Not everyone on your client roster is a candidate for IDI. People with high net worth (more than $10 million), those who are older than 60 or who derive most or all of their income from passive sources (e.g., ownership of rental properties) are not eligible for or simply do not need IDI. However, clients younger than 60 who generate most, or all, of their earnings through full-time work and depend on those earnings to maintain their standard of living need income protection. The best prospects for IDI are business owners and people in white-collar occupations with above-average incomes.

I am not an IDI expert.

Fear of the unknown can be a big sales inhibitor. IDI contracts, with their

Infographics and statistics can help simplify the concept in relatable terms. unique array of provisions and choices, may seem daunting at first glance. Many advisors are reluctant to begin discussing a product they are not completely comfortable with, and they are hesitant to commit the time it takes to become an IDI expert. First, focus on the need, not the solution. Job one is to get your clients to agree that they would, in fact, suffer

financial loss — or even ruin — if an illness or injury left them unable to work for an extended period of time. Second, rely on one of the many IDI brokerage agencies around the country to be your expert for IDI case design, proposal assistance and support. There is nothing wrong with saying to a client, “I am going to take your information back to my office and work on putting

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4 FALLACIES ABOUT SELLING INDIVIDUAL DISABILITY INSURANCE HEALTH

Many advisors are reluctant to begin discussing a product they are not completely comfortable with, and they are hesitant to commit the time it takes to become an IDI expert. some proposals together for you.” If you send the IDI brokerage office the client’s basic information, that office will put together recommended designs and proposals for you.

This will distract from my core business.

Advisors often balk at devoting precious time to introducing a new prod-

uct for fear that their core business will be diluted. If that is stopping you from selling IDI, consider teaming up with an IDI expert as a referral resource and split commissions. This obviously needs to be someone you know, like and trust. For help in finding potential producers, ask your IDI brokerage agency. If you get your clients sensitized to the need for income protection, it is a perfectly

natural step to say, “I will have my IDI specialist contact you.” There is too much at stake for your clients’ well-being to avoid the IDI conversation. Armed with proven transition statements and your own firm belief in the need for this important piece of financial protection, you can succeed in the IDI arena. Doug Waters, CLU, RHU, REBC, is second vice president of individual disability income insurance sales, Standard Insurance Co. Doug may be contacted at doug.waters@ innfeedback.com.

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June 2015 » InsuranceNewsNet Magazine

FINANCIALWIRES

401(k) and IRA Balances Hit Record Highs

3.6

There’s some classic “good news/bad news” in the latest word on retirement saving. The good news is that balances in 401(k)s and individual retirement accounts (IRAs) have reached record highs, according to new data from Fidelity. But the bad news is that it may not mean much for the average American’s retirement. The average 401(k) balance at the end of the first quarter was $91,800, up 0.5 percent from last quarter’s then-record numbers and up 3.6 percent from a year ago, according to the Fidelity analysis. IRA balances also reached a record, with Fidelity reporting that the average balance at the end of the first quarter was $94,100, up 5 percent from last quarter. Among consumers who have both a 401(k) and IRA, combined balances average $267,200, up 2.2 percent from last year. Much of the increase was the result of more consumers saving for retirement and increasing their contributions. The average contribution rate remained at 8.1 percent of employees’ salaries, a record set during the fourth quarter, while employer contributions climbed from 4.1 percent in the previous quarter to 4.4 percent. But now for the bad news — an Employee Benefit Research Institute study found that one in five elderly Americans dies broke. Of those 85 or older who died between 2010 and 2012, roughly one in five had no assets except for their house, according to the analysis. The average home equity was about $140,000. Roughly one in eight of those households had no assets at all.

KNOWING WHAT TO DO BUT NOT FOLLOWING THROUGH

Americans know what they need to do financially, but what they actually end up doing is another matter, according to the 2015 Northwestern Mutual Planning & Progress Study. Whether it’s short-term saving or long-term planning, Americans know they need to improve their finances and they even know the steps they need to take. But following through on that knowledge is where Americans fall short. The study revealed the following about the discrepancy between people’s intentions and their actions: 58 percent believe their financial planning needs improvement , and 21 percent are “not at all confident” they’ll be able to reach their financial goals; but when asked what steps they have taken to plan for their financial futures, 34 percent said none. 67 percent of adults expect more financial crises such as what we experienced in 2008, yet only 38 percent are confident their financial plans can withstand market cycles, 70

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and 23 percent do not believe their plans can weather economic ups and downs. 67 percent consider themselves savers, yet over half said their debt is equal to or greater than their savings. Despite serious concerns about retirement, 43 percent have not spoken to anyone about retirement planning. Over the last four years, the number of Americans age 25 and older who identify themselves as “non-planners” and having no established financial goals has doubled from 7 percent in 2012 to 14 percent in 2015.

MILLENNIALS FEELING BETTER ABOUT FINANCES

Pity the millennial generation — saddled DID YOU

KNOW

with student debt and facing dismal job prospects. Not so fast! Millennials have a better feeling about their finances than do other age groups, according to a Bankrate study. Consider the following. Thirty percent of millennials said their savings are in better shape now than a year ago, twice as many as the 15 percent who are less comfortable. In total, 20 percent of Americans are feeling better about their savings (including only 13 percent of those aged 50 and older). One-third of millennials report their overall financial situation is better than it was a year ago, compared with only 19 percent of 50-and-olders feeling the same way. The only dark spot in this situation is millennials’ net worth. This is where this age group lags behind their elders. Only 18 percent of under-30s reported their net worth is higher than it was last year, compared with 29 percent of those ages 30-49.

MANY HIGHER-INCOME HOUSEHOLDS LIVING PAYCHECK TO PAYCHECK

It’s not just lower-income households who find themselves with too much month left over at the end of the money. Many higher-income households report they also are not saving as much as they should, according to a recent SunTrust survey of households earning $75,000 or more annually. Nearly a third of these households live paycheck to paycheck at least sometimes and 44 percent agreed that spending on lifestyle purchases – like dining out and entertainment – causes them to save less than they should each month. For millennials with the same household income, that number jumps to 71 percent. Among those who are in households earning $75,000 or more annually, one-third said a lack of financial discipline sometimes holds them back from achieving their goals. Among those who are not saving as much as they believe they should because of spending on lifestyle purchases, 68 percent blamed dining out as the main reason. Among millennials, 70 percent blamed dining out.

FOR MEN

FOR WOMEN

$139,000 $82,000

THE AVERAGE RETURN ON AN INITIAL PUBLIC OFFERING was 20 percent Average retirement this year. The average increase in the first day (or “pop”) is 13 percent.

account contains:

Source: Renaissance Capital Source: Bankrate

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11/13

FINANCIAL

How to Avoid the ‘Widow Tax Trap’ An IRA strategy can lead to a bigger income stream. By Gregory B. Gagne

dvisors are bombarded with information surrounding the advantages of a delayed Social Security claiming strategy. Most of this information provides some perspective on coming up with the “optimal” strategy to collect the maximum benefit amount and ensure the client’s income against living too long. Although the various claiming strategies are attractive to improving a client’s lifetime income, the improved tax benefits that may be achieved over the long term by delaying the claiming age are equally important in the client’s overall long-range plan. Here are the tax benefits to a claiming delay and how you may consider their impact on your clients.

The Traditional Thought Process

Clients typically believed that taking Social Security at age 62 was a wise choice. The rationale for this often was “I’m not going to live long, so I need to grab my 72

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benefits before the system goes broke!” This also would allow the client to leave the retirement portfolio (I will call it an individual retirement account or IRA for the remainder of article) to continue its tax-deferred growth. This is a strategy that most clients believe is sound.

The Issue

Let’s assume the client does not need to withdraw any funds from the IRA because they are living on the Social Security income. The IRA portfolio should continue to grow tax-deferred. That sounds great on the surface, but the postponed distributions and increased IRA value will yield unintended consequences later in life. When the client reaches age 70½, required minimum distributions (RMDs) will begin. When these start, the distribution as a percentage of the account is minimal (see Internal Revenue Service Publication 590 for distribution tables), allowing the IRA account to continue to grow on a tax-deferred basis. All this sounds fine until a spouse pass-

es away. This will create a new financial planning problem that didn’t exist previously — the client’s change in filing status from “married” to “single.” This frequently leads to what we call “bracket creep,” with the surviving spouse actually jumping into the next federal marginal tax bracket. For 2015, married couples can have taxable earnings of up to $74,900 and be taxed at the 15 percent federal tax bracket, but the single filer is taxed at 15 percent to a maximum of only $37,450! After that, she jumps into the 25 percent marginal bracket and potentially could move to an even higher bracket. Most estate and financial plans are structured so that the surviving spouse will be the primary beneficiary of the IRA portfolio. The surviving spouse will become the sole IRA owner and find herself as a single taxpayer subject to the single taxpayer income tax rate structure. It gets worse! She will most likely “fail” the provisional income test on her Social Security benefit. Now 85 percent of her reduced benefit (she can keep only one Social Security benefit) will be counted

HOW TO AVOID THE ‘WIDOW TAX TRAP’ FINANCIAL as taxable income and will likely be taxed at the 25 percent marginal bracket for the rest of her life. We refer to this problem as the “widow tax trap.” This is the plan so many uninformed prospects are following without understanding the consequences of taking their Social Security early and leaving the IRA account alone. Advisors understand that taxes will need to be paid on the IRA one day. The question is: Who will pay the tax — the married couple, the now single person (widow or widower) or their beneficiaries? Let’s look at why a delayed claiming strategy may yield a better outcome.

The Solution

First off, delaying Social Security will result in about an 8 percent increase in annual benefit for each year of delay. This is a good reason to delay, but it’s not the only reason. We advise clients to delay Social Security so that we have “bandwidth” within the client’s tax planning to start a drawdown of the IRA for cash flow planning.

Without the Social Security, clients do not need to worry about failing the provisional income test and paying taxes on their Social Security benefits. Without taking the Social Security, we will have more room within the plan to begin a “cash flow bridge” using the IRA account for the client’s cash flow needs. This allows clients to delay the onset of Social Security, enjoy the 8 percent increase in the benefit caused by the delay and, most important, begin reducing the value of the IRA portfolio. The client will use the IRA distribution ahead of age 70½ either to live on or possibly to begin converting some of it to a Roth IRA. The goal is to reduce the IRA portfolio value so that by age 70½ the required distributions will be reduced and the Social Security income potentially will avoid the pitfalls of the provisional income test. This will result in a tax-free benefit to the client. IRA distributions are counted toward the Social Security “provisional income test.” But if the IRA account value is reduced, the required minimum distribu-

tion will be lower because the account value has been reduced, impacting the RMD calculation. In addition, Roth IRA distributions do not count toward the provisional income test. Roth IRAs have no required distribution to contend with, and the distributions from the Roth will typically be income tax-free! It is important to understand the tax benefits that can be accomplished for a client when you combine the delayed claiming strategy with an IRA distribution strategy. Managing the claiming strategy for Social Security — not only from a cash flow planning view, but from a tax planning view — may yield the best of both worlds for your client: income for life with improved after-tax cash flow and a tax-free legacy for the heirs. Gregory B. Gagne, ChFC, is managing member of Affinity Investment Group. He may be contacted at greg. gagne@innfeedback.com.

THE MUST HAVE DESIGNATION FOR RETIREMENT INCOME PLANNING. START TODAY! RICP.TheAmericanCollege.edu Or Call: 888-263-7265 Top Advisors Credentialed by:

With the flood of baby boomers heading toward retirement, effective retirement planning has become the focus of many financial advisors. More than 5,000 advisors have registered for The American College’s fastest growing designation to date, the RICP®. What are you waiting for? June 2015 » InsuranceNewsNet Magazine

BUSINESS

Personal Branding: Sometimes Less Is More W ould you shop at a grocery store just because it had “the cleanest floors in town”? Then why would anyone go to an insurance agent who offers “the best in trusted service”? By Drew Gurley

ess is more for great brands, whether you’re talking about Apple or Abe Lincoln. (Yep, Abe was a brand — think “Honest Abe.”) Yet, this truism is shattered consistently by the misguided notion that more is better. One of our high-potential agents has a great attitude, work ethic and willingness to learn. He has everything going for him except one thing: He’s all over the board. One minute, he’s chasing a final expense opportunity and the next, a corporate benefit plan. He’s a jack-of-all-trades and master of none. Then there’s my favorite auto repair 74

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shop. A big sign at the entrance says “We fix everything.” And, to their credit, these guys are pretty good. But nobody fixes everything! It is simply not believable. Great brands — individual or corporate — pound home a singular promise, over and over and over. Round up 100 independent agents and ask them what they do. I’ll bet 95 of them would answer with some product as the central theme: “I sell (life or health or all) insurance.” Ask employees of Apple what their company does and 100 percent would reply, “Innovation.” There would be no mention of iAnything. Innovation was Steve Jobs’ gift to Apple. I am drawn to Apple products because they will help me do things I never imagined I could do. If I were a customer of one of those 95 insurance agents mentioned earlier, I simply would be buying a product. That’s not a promise. This information is for those looking to break out of the sameness that shows itself

throughout much of the insurance business. It is about building a personal brand that is more than just a shallow slogan abusing the words “service” and “trust.” It requires answering four seemingly simple questions. Let’s dig into each now.

Who are you?

When Chrysler found itself with three wheels in the financial ditch in 1982, its CEO, Lee Iacocca, took perhaps the biggest gamble in corporate history by going on national TV and telling us, “If you can find a better car, buy it.” Not only was Iacocca risking Chrysler’s brand with such boldness, he was risking all the personal brand equity he had accumulated over an illustrious career. During his years at Chrysler and at Ford Motor Co., Iacocca had gained the trust of American car buyers through a career of building creative, reliable cars Americans wanted, most notably the Ford Mustang. Iacocca’s gamble with this Chrysler TV ad paid off.

PERSONAL BRANDING: SOMETIMES LESS IS MORE BUSINESS Defining who you are starts with a personal assessment of your beliefs, passions, skills, attitudes and other qualities that determine how you deliver your personal brand. What best describes your strengths? How do you believe others describe you? Who are you? What are your weaknesses? The heart of a great brand is a rock-solid positioning — an aspiWhat are your target rational statement clients’ particular that captures who needs? you are, whom you serve and their unique needs. If you haven’t defined your positioning in a conscious way, then those around you already have done it for you. They know your strengths and weaknesses, and they have a perception of you, whether you know it or not. Analyze yourself and take your brand for a test ride with your current clients to determine whether the qualities that you’ve identified are important as well as distinctive. I warn you: Be prepared to go back to the drawing board.

What business are you in?

Summit Coffee is a small coffee shop in the college town of Davidson, N.C. The coffee shop’s owners applied for a small business grant that required them to describe their business. Here is a synopsis: “We are a coffee shop. We are a bar. A music venue. A day care. An office.” “We are Davidson. We are Main Street. “ “We’re old and rustic. Modern and creative.” “We are Tim and Beth. Becky and Dave. Alex and Jesse.” “We are a neighbor. An escape. A welcoming. A friend. A Thank God It’s Friday at 5 p.m.” “We are Summit. We are lucky.” Old and rustic? Modern and creative? As good as these all sound, which are they? To define who you are, first answer these questions from the client’s perspective: » Why am I buying insurance? (Possible answers: protection for my family, security, my peace of mind, my family’s peace of mind.)

» Why does it matter whom I buy it from? (Possible answers: they’re local, friendly, trustworthy, smart, timely, encouraging, creative, thoughtful.) Second, answer these questions from your perspective: » What is insurance? (Possible What business are answers: safety, you in? smart, financially wise, you never have enough, something I love.) » What is your What unique benefit function? (Possible do your clients answers: salesperson, receive from creator, collaborator, you? organizer, friend, information provider.) » What one thing would I like my clients to say about me? (Possible answers: He did what they said he would do. I was surprised at all the options she showed me. He made me feel comfortable. For the first time, I actually understand what I’m buying when it comes to insurance.)

What are your target clients’ particular needs?

I love this concept: “People don’t want to buy quarter-inch drills; they want quarter-inch holes.” Steve Jobs told us 30-odd years ago that customers have no idea what they want. Not so my grandmother. Last year, she decided it was time to move back to the town where she spent her childhood. We peppered her with questions. Did she want a house or a condo? What about a yard? How many bedrooms? Unfortunately, she wanted a hole and all we had were drills. “I want to be near Wal-Mart and a hospital,” was her ultimate reply.

nificant advantage over your competitors who are guessing at client needs and product marketing features.

What unique benefit do your clients receive from you?

Our industry is filled with empty differentiation: personal service, low rates, etc. Do you really think these are the things that our clients want? I think these are only the ante to the game. It’s like clean floors in a grocery store. Imagine what we would think seeing this headline in a grocery store ad: “We have the cleanest floors in town.” Well, what do clients think when they see “We give personal service” in an insurance ad? Real differentiation occurs at a higher level of customer need. Let’s look at some of the superstars of differentiation: » Starbucks. It delivers a community-type customer experience. It is a place to be seen. A place to work. A place to relax. » Harley-Davidson. It sells a promise of freedom and camaraderie. If Harley only sold motorcycles then Sturgis would be just another small town. » Whole Foods. It encourages customers to achieve a healthier lifestyle by being more informed about and engaged with what they eat. It is a trusted authority in its space. A strong brand requires trust at some level, whether you’re selling coffee, motorcycles or annuities. Here’s the great news: The vast majority of agents spend no time thinking about anything other than how to sell what’s in their bag.

Don’t Be Those People

I know you’re dying to know how it worked out for my grandma: She’s eight minutes from Wal-Mart and nine minutes from the hospital. Grade your listening performance daily. Hold yourself accountable. If you are stuck on a bad behavior, seek out a good friend or colleague and ask them to help you uncover why you are having difficulty changing. When you strive to improve your listening skills, you’ll become a better advisor.

“People don’t want to buy quarter-inch drills; they want quarter-inch holes.” Talk to your clients and prospects. What keeps them awake at night? What are their goals? What are their hopes? After you get the answers to these questions, you can come back to demographics such as age and income. Now you’re at a sig-

Drew Gurley is co-founder of Redbird Advisors. Drew may be contacted at drew.gurley@ innfeedback.com.

June 2015 » InsuranceNewsNet Magazine

MDRT INSIGHTS

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

A Client’s Financial Plan Must Match Their Comfort Level T reating clients like family and recommending the right products for their needs are crucial to forging a lifelong financial relationship. By Donald Speakman

ith Annuity Awareness Month upon us, it’s important to be aware of the many options our clients have, whatever their investment approach. The three most important factors when evaluating a client’s suitability for an annuity product is their age, health and risk tolerance. I have learned that annuities are an effective retirement vehicle for clients who want to have some growth. An added benefit for conservative clients is that an annuity provides an underlying guarantee in a very uncertain economic world.

How to Build a Successful Annuity Practice in Today’s Market

Years ago, the way to gain clients was through seminar selling. This is how we built our business. It was an efficient way to get a lot of people in one room and tell them about your services and financial planning opportunities. From there, we asked for referrals from each person at the seminar. Today, however, the market is flooded with seminars, which has made this method a bit more difficult.

Customer Service

Once you attract clients, the next step is retaining them. The practice of treating clients as you would treat your family continues with exceptional customer service. Meet with every client and keep in touch with them. Some ways in which to keep in touch are by sending them a newsletter, an email blast or even a magazine containing positive stories.

Conservative Versus Aggressive

As a financial advisor, it is difficult to be all things for all people. Therefore, developing a specialty in a certain type of annuity is key to building success in annuity sales. For clients who seek safety, security and growth potential, a variable annuity may be preferred over a fixed annuity. Variable annuities have a lifetime guarantee, growth rate and income. Although variable annuities cost more than other investments, they provide protection to a client’s portfolio that is often unattainable with other tools. Fixed annuities provide a means to mitigate risk while maintaining a steady income, which is ideal for retirees who want a known income stream to supplement their retirement income. On the other hand, clients who like the excitement of stocks, trading funds and other investment options can choose a more aggressive investing approach. With either approach, it’s important for the client’s comfort level to match their financial plan in order to create a successful, long-term client relationship. 76

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dad are sitting in front of you. What would you do for them? If the recommendation you’re making is not one you would make for your own parents, then it’s not the right recommendation. Having this moral compass helps you show your clients you’re truly invested in their interests. I’ve always used a soft approach with lower-cost products that have lower fees and lower commissions that may be more helpful for investors who are starting out. Clients are much more willing to work with you and trust you overall when they know you have their best interests in mind.

How to Remain Successful

Not only are seminars a harder sell, clients today are less trusting of people. This makes it especially hard to educate prospects about financial planning. Because of these changes, my practice adopted a referral-based system for new clients. When a friend hears of something great that their advisor did for another friend, they’re much more likely to feel positive about working with them.

The Importance of a Moral Compass

You should always treat clients as if they were members of your own family. Imagine in your first meeting that your mom and

You will reach a certain point in your practice when you won’t need to add many new clients. Planning for your clients’ lifelong financial needs will become a lifelong partnership. Once you hit that point, the key is to take care of your clients. Occasionally this will generate a referral, but working to attract new clients is no longer a big part of the business. After doing something for almost 40 years, if you’ve done it the right way and you’ve done the right thing for people, you will have a positive relationship with clients that will last a lifetime. Donald P. Speakman, MSFS, CFP, is a 37-year MDRT member, a 31-time Court of the Table qualifying member and a 31-time Top of the Table qualifying member. Donald may be reached at donald.speakman@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.

The Magic Book to Help Boost Your Sales Download your free full copy at bitly.com/ innm-medandyou

T he key to opening the sales conversation is already in the hands of every Medicare beneficiary. By Elie Harriett

he baby boomers have been crossing the threshold of age 65. This means that the most populous generation the United States has ever produced is enrolling in Medicare. With these large numbers of new Medicare beneficiaries aging in to the nation’s original universal health care system, the opportunities to position yourself as the financial savior of American retirees have never been greater. Here are some things you can do as an insurance professional to increase your sales to Medicare beneficiaries. These ideas are not meant to replace a thorough discussion of your client’s health insurance options, but to supplement those options with ways that can help your clients maintain a high quality and standard of life later in their lives. The magic book to carry with you at all times is the 2015 Medicare & You guide. The size of the book varies, depending on where you live. In my region, it is 152 pages long. Of those 152 pages, 148 list what Medicare covers and four pages list what Medicare doesn’t cover. Those four pages are your ticket to more sales. Every Medicare beneficiary has this book. If you can have them open up their book instead of using yours, the impact of what you are about to show them will be even greater. Turn to page 62, “What is NOT covered by Part A and Part B.” Draw your clients’ attention to the first three points: dental, eyeglasses and dentures. I always have supplementary insurance available if a client asks me about these things. The health care-buying public is still accustomed to having these services offered as part of their health insurance. In fact, the public expects these services to be offered as part of their health plan. But if you are

on Medicare, those services usually are not offered. So that can become a point of discussion and a part of your sales. The last point on that page and the following three pages are the key to another insurance discussion: longterm care. The next page, “Paying for long-term care,” defines what Medicare will and will not cover. The information in the middle of page 63 is your ticket to a larger discussion — “Here are some of the different ways to pay for long-term care: 1. Long-term care insurance.” By an amazing coincidence, you are in a position to offer that very product! This is a product that the government, in its own book, will tell beneficiaries to consider if they have concerns about this need not being covered. There is no better way to gauge your clients’ interest than to show them that line from their own book. It gets better. Many states’ insurance departments have separate Medicare shoppers’ guides available to order free or download from the Web. These shoppers’ guides tell the public that Medicare and most Medicare health plans do not cover long-term care. Some of these state guides also tell people to seek out long-term care insurance as an option. In a quick Internet search of 10 different states, I found only two that did not have a state-specific Medicare shoppers’ guide available for public download. If you are seeing clients and they mention this important lack of coverage as a concern, you know what your next discussion will be. Please keep in mind that if you have to follow Scope of Appointment rules because of the product you intended to offer at the appointment on that day (usually

a Medicare Advantage or a prescription drug plan), you can’t have ancillary or long-term care discussions on the same day that you are talking about the advantage plan or drug plan. You can gauge the interest of your prospects and clients, and return to them in a few days to see whether that interest is genuine. Sometimes, the simplest tools available to you are the best. In this case, your best tool to open a conversation for additional sales is already in the hands of every Medicare beneficiary you see. If you know where to look, your key to uncovering important concerns and more sales may have been delivered to them, courtesy of the federal government, before you got to them. Elie Harriett is a NAIFA member and co-owns Classic Insurance & Financial Services Co., specializing in Medicarerelated insurance. Elie may be reached at elie.harriett@ innfeedback.com.

June 2015 » InsuranceNewsNet Magazine

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.

The ABLE Act: A Powerful Tool for Special Needs Planning A new tax-advantaged savings vehicle can be used to help disabled individuals access funds for education, housing and other expenses. By Adam Beck

he ABLE Act has emerged as a hot topic in special needs planning circles — among attorneys, financial planners and insurance advisors. The ABLE Act refers to the Achieving a Better Life Experience Act, a bipartisan piece of legislation signed into law by President Barack Obama in December 2014. It amends Section 529 of the Internal Revenue Code, the portion known to many families as a tax-advantaged savings vehicle for college costs. The ABLE Act expands the possibilities of Section 529 so that it includes provisions to create tax-free savings accounts for individuals with disabilities. For special needs families, the good news is that the ABLE Act presents a real opportunity for parents to leave more money to their disabled child. However, without careful planning when funding an ABLE 529 account, generous intentions may have an unwelcome impact. Under the provisions of the ABLE Act, beginning in 2016 (or possibly 2017, depending on the state), disabled individuals will be able to keep up to $100,000 in a Section 529 plan. They may use the funds for education, housing, transportation and other expenses. Any assets in the ABLE 529 account will not be calculated as part of the individual’s financial limits used for means-tested programs like Supplemental Security Income and Medicaid. Planners will want to work with a guardian to ensure that the disabled individual and the person handling their dayto-day financial matters knows where to place certain funds. That’s nothing new; disabled individuals have long had to either spend down their own funds or place them in a Special Needs Trust to avoid the loss of government benefits. 78

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The use of life insurance proceeds is another area of particular concern to special needs planners. A frequent conundrum for special needs families lacking substantial wealth is that leaving a child with too many assets can render them ineligible for government benefits, including Supplemental Security Income and Medicaid. Once the ABLE Act is in effect, funds for an ABLE 529 account can come from life insurance proceeds, up to a state-established limit, usually around $300,000. And while some families may choose to fund an account with life insurance proceeds, most families would be best advised to avoid such an approach. Indeed, the ABLE 529 accounts might better be used as a supplement to Special Needs Trusts, especially for families with any substantial assets. The annual contribution limits to an ABLE account are the same as annual gift limits for estate taxation purposes, currently $14,000 per person per year. Families may want to consider directing life insurance proceeds to a Special Needs Trust and making only selective gifts to the ABLE 529 account. Once an ABLE

529 account accumulates a balance in excess of $100,000, the account holder loses Supplemental Security eligibility and remains eligible only for Medicaid. The age of the account beneficiary is another potentially limiting issue. A key point for advisors is to encourage families to have a disability documented, even if they are not currently planning to create an ABLE 529 account. As is the case with Supplemental Security Income, it is required that a disability be diagnosed and documented prior to age 26 for an individual to be eligible for an ABLE 529 account. The practical details of how ABLE 529 accounts will function have yet to be clarified, as both states and financial institutions must first determine regulations and implementation strategies. The availability of ABLE 529 accounts is undoubtedly good news for the special needs community, but it brings with it new complexities. It will benefit low- and middle-income families the most. Families with more substantial assets will need even more careful planning to ensure that established limits are understood and considered. This underscores the opportunities and challenges that exist in financial and insurance planning for special needs families and the importance of consulting a qualified professional. The Chartered Special Needs Consultant (ChSNC) designation available from The American College of Financial Services is one example of a credential tailored to the special needs planner. The ABLE Act gives these planners and the families they serve a powerful tool, but it must be handled cautiously, especially when used in conjunction with the other tools in the special needs planning toolbox. Adam Beck, Esq., is assistant professor of health insurance and interim director of The American College MassMutual Center for Special Needs. Adam may be contacted at adam.beck@innfeedback.com.

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June 2015 » InsuranceNewsNet Magazine

LIMRA INSIGHTS

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.

Retirement Income Planning Is More Than Hitting the Right Numbers Y our client’s emotional attitude toward retirement savings is as important as the amount of money saved. By Judy Zaiken

hen an advisor meets with a client to discuss retirement income strategies, there’s more to the process than ascertaining the right numbers. Although it’s important to look at the percentage of income replacement and possible withdrawal rates, advisors also need to know their client’s money mindset. In order to devise a retirement income strategy that is “right” for someone, it’s important to understand their emotional attitude to their savings. LIMRA Secure Retirement Institute (SRI) studied the preferences of 2,000 preretirees and retirees ages 50-70 with at least $100,000 in household assets. We asked which income product features they deemed most important. From their responses, we were able to identify three distinct money mindsets: Guarantee Seekers want to know their income won’t disappear. They would be interested in converting additional savings to a pensionlike contractual guarantee. They do not want to worry about how long their money will last. Asset Protectors have been saving money for a long time. They plan to live off the interest and dividends of their savings. They are not comfortable “invading principal” and do not want to see their account balances decrease. Estate Planners are financially savvy. They know equity markets generally outperform risk-free fixed investments and can withstand volatility to maximize their upside potential. They believe their investment decisions will outperform those of most investment advisors. They want personal control over investment decisions and the flexibility to adjust income and spending as their needs change. We asked people to choose from among 10 competing money attributes 80

InsuranceNewsNet Magazine » June 2015

and rank the five that were most important to them. Based on their responses, we were able to better understand their money mindset. The people in each of these categories can look very similar on paper. They may even share the same demographic profile, wealth level and lifestyle ambitions. Because their attitudes toward money are so different, the real divergence among them appears in the product attributes they value most. Understanding a client’s money mindset provides clues to recommending the right income solutions for them. “Guarantee Seekers” will want certainty and peace of mind. They are not seeking maximum income potential, but rather a stable and predictable monthly income. According to LIMRA SRI research, this segment has the highest rate

MONEY MINDSET PROFILES Clients express their top savings attitudes to form their most likely Money Mindset

GUARANTEE SEEKER

1 Income is guaranteed for life 2 Income is adjusted for inflation 3 Income amount will remain the same throughout retirement

ASSET PROTECTOR

4 Income can be converted into a lump sum 5 Initial investment amount is preserved 6 Returns on investments are guaranteed

ESTATE PLANNER

7 Ability to make occasional withdrawals in excess of regular payment 8 Control over how investments are managed and/or allocated 9 Income amount has the potential for investment growth 10 Income amount can be changed as needs change Source: Affluent Investors Market Segmentation, LIMRA Secure Retirement Institute, 2015. Actual research included cluster analysis of 2000 preretirees and retirees (ages 50 -75 with at least $100,000 in household assets).

of ownership for deferred and immediate annuities (46 percent collectively). Guarantee Seekers are least likely to own individual stocks, mutual funds and corporate/municipal bonds. “Estate Planners” will not be interested in converting savings to a guaranteed income stream. Investment growth and control are important to them. According to our research, Estate Planners have the highest ownership rate of individual stocks (69 percent), mutual funds (75 percent) and exchange-traded funds (19 percent). “Asset Protectors” are reluctant to take risks. They want guaranteed fixed rates of return without putting their principal at risk. This segment worries about running out of money in retirement and wants to hedge against unexpected future expenses. Our research shows Asset Protectors have the highest rate of ownership of certificates of deposit (44 percent). Asset Protectors are likely to own other conservative assets such as annuities (31 percent) and government bonds/Treasury notes (30 percent). We believe these findings can be applied to a simple questionnaire to help advisors develop a customized approach to address their clients’ emotional attitudes. This subjective assessment, combined with a thorough look at the numbers, can make for a more effective retirement income strategy. So when an investor meets with a financial professional for the best advice, it should be framed in the context of the client’s emotional money mindset. And on this topic, one size definitely does not fit all. Judy Zaiken, CLU, ChFC, is the corporate vice president and research director for LIMRA Secure Retirement Institute, covering both the institutional and retail businesses. Judy may be reached at judy.zaiken@ innfeedback.com.

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