InsuranceNewsNet Magazine - February 2020 by InsuranceNewsNet

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How Empathy in Marketing Leads to Client Trust PAGE 10

Help Women Business Owners Be Financially Secure PAGE 34

A Matter of Taste: Becoming a Scotch Whisky Expert PAGE 50

February 2020

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If you’re a financial advisor selling life insurance and not closing 80% of your appointments — but would like to — then you need to try the career-making and business-doubling strategy, 360 Life Planning. Everything you need, from training and marketing materials to presentations and invitations are prepped for you. All you have to do is practice and present. The result? Advisors following this time-tested strategy average an 80% closing ratio! The reason it works so well is because 360 Life Planning helps millions of middle class Americans uncover their true financial needs — things they most likely never thought about. And — most importantly — it reveals how almost anyone can afford to have it all, including a dream retirement.

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Life & Annuity Masters is a founding member of AIMCOR Group, an industry-leading National Insurance Marketing Organization that focuses on enabling new distribution, engaging consumers and delivering financial security to American families across all ages, income levels and cultural back¬grounds. Simply put, Life & Annuity Masters and AIMCOR are focused on building what needs to be there as opposed to protecting what has been there.

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FEBRUARY 2020 » VOLUME 13, NUMBER 02

FEATURE

Suitafiduciary? Where Insurance Regulation Is Going By Steven A. Morelli and John Hilton

New York’s Regulation 187 inspires dread for many insurance professionals who don’t even operate in that state. Will agents leave the business or will the regulation open more opportunities?

INFRONT

8M ass Disruption: The Latest State Reg Rattles The Industry

INTERVIEW

10 How Content Marketing Drives Real Results How can an insurance or financial professional rise above the competition and be the first choice for a consumer looking for help? Try empathy, says Michael Brenner. The CEO of the Marketing Insider Group tells how injecting your marketing message with a good dose of empathy leads to client trust.

ANNUITY

38 A nnuity Index Linked To Industry Disrupters By Susan Rupe What do companies such as Amazon, Apple and Facebook have to do with annuities? They are among the innovative companies that make up the Nasdaq-100, the index built into a number of indexed annuities.

HEALTH/BENEFITS

42 It’s All About The Bennies With Gen Z

IN THE FIELD

28 From Stay-At-Home Mom To Insurance Evangelist

By John Hilton Massachusetts is widening the fiduciary scope to cover more suitability business.

online

www.insurancenewsnetmagazine.com

By John Hilton Sheryl Moore took a leap of faith to enter the insurance industry. Today her companies — including Moore Market Intelligence and Wink Inc. — are the top sources of expert information in the business. Moore describes how she educated herself about a complicated industry and uses her knowledge to enlighten others.

LIFE

34 Help Women Business Owners Find Financial Security By Jenna R. Washatka The number of women-owned businesses is on the rise, and their owners have a unique set of life insurance needs.

By Susan Rupe Generation Z is emerging into the workforce, and they place a high value on employee benefits, particularly those that will help them achieve financial stability.

ADVISORNEWS

46 Why Stable Value Funds Ease Risk Anxiety For Millennials By Kent Bartell Millennials are planning ahead for retirement, but they are skittish about risk.

INBALANCE

50 A Matter Of Taste: Becoming A Scotch Whisky Expert By Bryce Sanders What exactly is scotch and what makes it different from American spirits?

BUSINESS

52 The Easy Yes: How Clients Tell You What They Really Need By Lloyd Lofton You don’t need to give a sales pitch if you listen to understand instead of to respond.

INSURANCENEWSNET.COM, INC.

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InsuranceNewsNet Magazine » February 2020

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Build a Million-Dollar Business Helping Middle America “What if you could finally figure out your client’s financial needs for their secure financial future and, in doing so, create a million-dollar business for yourself?”

peak with Jon Dault for five minutes and try not to get thrilled about working in the life insurance and annuity business. The passion the 28year industry veteran has for helping his clients — everyday middle-class Americans — coast through life debt-free and showing them how to achieve any financial goal can be felt with every word he says. Today, the jovial partner of Life & Annuity Masters can be found teaching his 360 Life Planning program to insurance agents, financial planners and financial advisors. The program is a unique strategy to remove the financial burden virtually every American faces. What makes this program so special isn’t the fact that agents following it average an 80%-85% closing ratio, or that the average commission per case is $20K-$50K. It’s not even that these monster commissions are coming from working with middle-class families. No. What makes Jon’s program so unique and

powerful is that it helps agents and advisors who follow it fall in love with their jobs more every day because his program holds the key to solving the financial riddles that every single person faces throughout life. The advisors who follow it feel fulfilled, and the clients they service attain a peace of mind that brings many to tears. “It’s not about products. It’s about education and helping people solve the riddle of how to afford the life they want. I don’t even sell life insurance to my clients. Depending on their situation and goals, they choose it,” he stated. It’s a system that any financial planner with a passion for helping hardworking Americans can adopt.

A system that came from the very clients who initially turned him down.

he wasn’t closing them. One day, frustrated, desperate and ready to give up, Jon did the unthinkable: He called every single person he had met with and asked each person to explain what it was they thought he would do for them and what they were looking to accomplish by seeing a financial planner. He wanted to know, because from his perspective and the information given to him, he was building solid plans. Their collective responses would mark a pivotal moment not only in his career but also in their lives and the lives of every financial planner he would come in contact with. Their answers were the building blocks for what his system — now arguably the most effective appointment strategy in America — would become. What people want — and what we all fail to articulate — is a financial plan for how to spend the money we have in the

After eight months in the life insurance business, Jon felt like he couldn’t sell anybody. No- “I was so impressed with the close ratios body. Nothing. He knew and results my advisors experienced using the products inside and this system that we all joined forces and out. He held successful ap- launched the 360 Life Planning platform.” pointments. He connected — Tommy Aiken with his prospects … but

SPONSORED CONTENT

smartest way in order to afford the things we’ll need or even want, rather than simply how to save what we have. Every prospect has different goals, dreams and plans, each coming with its own unique and hefty price tag. There are home projects, weddings, retirements, medical concerns, car payments, grandchildren, vacations, college tuitions and more. Prospects aren’t looking for a policy for policy’s sake. Rather, they all want to know how to afford any of life’s great expenses, without having to work until 80, taking another mortgage or drowning in debt.

To a man with a hammer, everything looks like a nail … or does it?

Taking their words to heart, on his very next appointment, he put the feedback to the test. He had nothing to lose. Nothing else worked. He ditched the cold, generic fact-finders and boilerplate plans in favor of a specific style of thought-provoking interview and follow-up questions, ones that peered deep into a client’s unique situation and goals. Step by step, his interrogation walked them through every stage of life they could expect and their goals within those stages. Most important, he offered solutions to the taboo question “How are you going to pay for X?” By the end of these appointments, it was his clients, not Jon, who built the plans. They worked out how to become debtfree and secure 150% of their income for retirement — and know the date when

they could retire. What’s more, they knew that their money would never run out and that when they died, they would leave 100% of their net worth probate-free and tax-free to their children. Reflecting on that first new appointment, Jon confided, “The guy said, ‘This is unbelievable. What do we do next?’ I said, ‘We need to get you some applications.’ The client’s wife, feeling a wave of uncontrollable relief, started crying. The husband started crying. And I started crying with them.” The appointment wasn’t a fluke. What he discovered through speaking with his failed clients was how to effectively learn what it is that people actually want, rather than projecting onto them what products he wanted them to have. Case after case it was the same story, closing more than 88% of the time with tears flowing as frequently. Jon found himself elevating the lives of nearly nine out of 10 middle-class prospects he met with. He showed them how to plan for future events, how to spend money efficiently, and how to finally live free of the financial stress that so many walk around with. And he did it while averaging $20K-$50K in commissions per case.

You don’t need to chase whales. You simply need to understand how to communicate with people. For 12 years his system remained unaltered and his success ratio unchanged.

He knew the impact he was having on the families he served. He knew that if more planners adopted this simple-to-follow strategy, even more financial futures could be saved. And he knew this revelation was too helpful to keep to himself. But there was a problem. Many insurance companies and independent IMOs were resistant to this new theory of how products could be sold — by allowing the client’s unique situation to decide the best solution for their specific needs. His plan needed a different sort of IMO. One that was truly holistic in nature. One that saw the same flaws in how the current financial institutions and systems work. One that was willing to truly put the client’s needs first. That would happen one fateful day when he met with David Ellis, the founding partner of Life & Annuity Masters. “It was like finding a soul mate. We shared the same beliefs regarding how to approach what’s best for a client, and how to effectively help them. He was familiar with what I was doing. And he got it.” Today, Jon Dault heads up 360 Life Planning. Along with fellow agent trainer Tommy Aiken, he and David Ellis are teaching insurance agents, financial advisors and financial planners across the nation how to use his life-altering program to help America’s middle class through life’s financial hardships, while making five-figure commissions per case — with an 80%+ closing ratio — in the process.

For more information regarding how 360 Life Planning works and how you could get started today, visit

www.360LifePlanning.com Life & Annuity Masters is a founding member of AIMCOR Group, an industry-leading National Insurance Marketing Organization that focuses on enabling new distribution, engaging consumers and delivering financial security to American families across all ages, income levels and cultural backgrounds. Simply put, Life & Annuity Masters and AIMCOR are focused on building what needs to be there as opposed to protecting what has been there.

WELCOME LETTER FROM THE EDITOR

Burn Or Burnish?

rand is burned on your skin. The word “brand” comes from an old Germanic form of “to burn.” It was associated with the mark that was burned into the skin of animals and later stamped on products. It is no secret that branding has become a top concern of businesses over the past century or so. Today, people have even become comfortable with speaking about themselves as brands. But brand is not what a company or person says it is. Any statement starting “our brand is …” is aspirational. It is what someone hopes the brand will convey. Content marketer Michael Brenner said in this month’s interview with Paul Feldman that his view of branding was redirected by a statement he heard more than 20 years ago: “Brand is something that exists in the mind of a consumer. You can’t intercede into their brain. You can only try to influence it.” Brand is not the logo, but the action. Today, brands are not burned but earned.

was “designed by clowns, who in turn are supervised by monkeys,” according to an internal email released from within the company. Boeing’s failures damage not only its own brand, but also the image of the United States worldwide. Marketing and brand-burnishing are not going to undo that company’s self-inflicted damage any time soon. In the financial space, this advisor had a mission statement that gleamed like gold. “In an era of faceless organizations owned by other equally faceless organizations, [advisor name] Investment Securities LLC harks back to an earlier era in the financial world: The owner’s name is on the door. Clients know that [advisor name] has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm’s hallmark.” That advisor’s name was Bernard L. Madoff, the perpetrator of a $65 billion Ponzi scheme.

You Are What You Do

The insurance industry has its own issues. This is a business built on an image of helping widows and orphans, but when it came to ensuring death benefits were paid, companies were not always so upstanding. States had to sue many of the major companies to force them to check the Social Security Death Master File to see whether their insureds had died and pay death benefits to the beneficiaries. It is not as if the companies were unaware the file existed. The investigation was “initiated after it was discovered life insurers used the DMF database to their benefit to identify deceased annuity holders, so they could stop making annuity payments to them, but failed to use the database to identify deceased life insurance policyholders and failed to pay benefits to their beneficiaries,” according to the California Department of Insurance. It is difficult for consumers to feel as though they are in the good hands of a neighbor who’s there after that neighbor looked the other way when it came to fulfilling promises.

Expectation is the root of the brand. We expect Coke to taste a certain way and when it didn’t with New Coke, the company had to scramble for its life. Even when we see people we know, we expect them to behave a certain way. And if somebody is always funny, we will probably smile a little just upon seeing that person. One of the reasons companies are having more difficulty in marketing is that consumers have become cynical, largely because they expect companies are lying. For example, guess which company’s mission statement this is: “Connect, Protect, Explore and Inspire the World through Aerospace Innovation.” Boeing. After two 737 MAX crashes within six months and the information that has come out since, it is difficult to believe Boeing is protecting and inspiring the world through aerospace innovation. This is a company whose own workers said it was risking people’s lives by cutting corners, deceiving regulators and lying to airlines. One worker said the 737 MAX 6

Rules As Rehab

InsuranceNewsNet Magazine » February 2020

We can also point at tricks with caps, participation rates and illustrations as other practices that challenge the industry’s credibility. In our main feature this month, we look at the implications of the regulatory squeeze being felt by insurance agents and brokers from new rules being shaped by various agencies on the state and national levels. Most of the rules have “best interest” at their center.

Client-First Standard

Regulators might feel they have a mandate because consumers don’t trust insurance companies for their practices and agents for their sales tactics. We all know that some agents might talk a good game about taking care of their clients but really are looking for the next prospect for a big commission and then moving on. The image of an insurance agent at the kitchen table might warm the heart, but when I had one at my table last year, all he wanted to know was how much in premium I was willing to pay each month. The suitability and fiduciary standards each have their proponents. But both areas have their wrongdoers. And both standards have their place. The essential problem is the insurance brand has been tarnished over the past few decades by unscrupulous sellers. New York’s new Regulation 187 holds insurance companies accountable for the actions of agents, which is difficult to carry out with independent sellers. But this problem creates opportunity for insurance marketers that can ensure agents are following documented procedures. Nobody wants to load onerous rules on the distribution chain, but regs like this can be a way to earn the public’s trust. Americans have an expanding retirement crisis that the insurance industry can help solve. Being the hero would go a long way to burnishing the brand. It would certainly be better than being burned. Steven A. Morelli Editor-in-Chief

INFRONT

Mass Disruption: The Latest State Reg Rattles The Industry Massachusetts is widening the fiduciary scope to cover more suitability business. By John Hilton

n an industry looking for consistency in regulations, one state could be considered an outlier, but two states is a trend. And that is why some insurers and producers are alarmed by a fiduciary proposal in Massachusetts. The industry had long ago written off New York — which approved tough best-interest standards in 2018 — as a liberal state with the leverage to enact tough regulations. After all, Wall Street isn’t moving from Manhattan. The plan all along was to push out best-interest standards through the National Association of Insurance Commissioners that all the remaining states could adopt. “I think that we will end up in a good

place with the 49 states,” Iowa Insurance Commissioner Doug Ommen said at the NAIC summer meeting in August. Then Massachusetts put forth its proposal, which would impose a uniform fiduciary conduct standard on broker-dealers, agents, investment advisors and investment advisor representatives providing financial advice to any clients in Massachusetts. If the rules become law, financial recommendations and advice must be based on “what is best for the customers and

from the Massachusetts Securities Division, which would seem to exclude insurance products, some industry observers are skeptical. Some aspects of the rule would appear to cover insurance products if sold as part of a sales quota or bonus award, said Larry J. Rybka, chairman and CEO, Valmark Financial Group.

Governor Recruited

Industry trade associations coordinated an opposition response during a public

If the Massachusetts fiduciary rules are adopted, the commission-based model might go the way of the dinosaur. clients, without regard to the interests of the broker-dealer, advisory firm and its personnel,” Secretary of the Commonwealth William Galvin has said. While the fiduciary proposal came

hearing last month in Boston. Some said the rule was so punitive that firms might stop doing business in Massachusetts. Massachusetts Gov. Charlie Baker, a Republican, joined the fray, releasing

Entity

Regulation

Effective Date

Key Mandate

National Association of Insurance Commissioners

Annuity Sales Model

Likely sent to states for potential adoption early in 2020

Specific documentation of best-interest recommendations

New York

Regulation 187

Aug. 1, 2019, for annuity sales; Feb. 1, 2020, for life insurance

Extends best-interest requirement to in-force policies and life insurance

Massachusetts

Fiduciary Proposal

No date set

Places IARs, agents and brokers under a fiduciary standard when providing financial advice

Securities and Exchange Commission

Reg BI

June 30, 2020

Requires identification of conflicts of interests and financial incentives

Department of Labor

Fiduciary Rule

Unknown

Unknown, since it has yet to be released

InsuranceNewsNet Magazine » February 2020

MASS DISRUPTION: THE LATEST STATE REG RATTLES THE INDUSTRY INFRONT a letter calling on Galvin, a Democrat, to rescind the fiduciary proposal. Baker echoed concerns that the rule will cause confusion in the industry and conflict with other regulations. The Securities Division will consider all public comments, said a spokeswoman for Galvin. But Baker does not have an official role in the regulatory process, she added. Regulators will next go through the comments received with no clear timeline for the next step, but the process has moved quickly to date. Meanwhile, industry representatives are holding out hope for nationwide rules authored by the NAIC and the Securities and Exchange Commission. Both are nearing completion. If the Massachusetts fiduciary rules are adopted, the commission-based model might go the way of the dinosaur, said Kevin Mayeux, CEO of the National Association of Insurance and Financial Advisors. “This likely shift by many broker-dealers and their reps from a commission-based model to a fee-based practice will have a costly, negative effect on many of the small and midsized investors,” Mayeux said at the public hearing.

Embracing Best Interest

For producers and distributors, harmonization of rules took precedence in 2019. In the spirit of true negotiation and compromise, the industry largely embraced a best-interest standard in the hopes of achieving consistent regulations across states and regulatory bodies. For annuity sellers, the NAIC model

“We fear the draft regulation may create more confusion.” Gov. Charlie Baker of Massachusetts

law is the vehicle of hope. On Dec. 30, the NAIC Life Insurance and Annuities (A) Committee voted 11-1 to approve the annuity sales standard. New York cast the No vote. New York adopted its own tough standards that took effect for annuity sales on Aug. 1, 2019, and for life insurance sales on Feb. 1, 2020. New York regulators have repeatedly pushed the NAIC for tougher annuity rules and to cover life insurance sales as well. NAIC regulators mostly dismissed New York’s suggestions. The model articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. The new regulations will commit the agent to extra work and documentation to establish the consumer’s profile. Agents will need to find out and document things like a consumer’s financial

“My office has seen firsthand the serious financial harm that investors and savers have suffered as a result of conflicted financial advice.” William Galvin, Secretary of the Commonwealth

situation, insurance needs and financial objectives. The rule specifically does not establish a fiduciary duty, nor does it ban agents from recommending products with a higher compensation structure. But the agent must be able to show that such a recommendation is in the consumer’s best interest. All that remained as of press deadline was for the NAIC Executive Committee and Plenary to vote on the model, which appears to be a mere formality. The rules would then go to the states for adoption. Jason Berkowitz, chief legal and regulatory affairs officer for the Insured Retirement Institute, predicted that many states will be eager to adopt the new annuity model, while some others will come along relatively quickly. “We’ll be pushing for this to be adopted across the country,” he said in December. “I think you will see an early rush of states that will want to get out on this quickly.” When it is formally adopted, the new NAIC annuity model is expected to harmonize well with the impending best-interest regulation drawn up by the SEC, as well as what is expected from the federal Department of Labor. InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback. com. Follow him on Twitter @INNJohnH.

February 2020 » InsuranceNewsNet Magazine

INTERVIEW

How Content Marketing Drives

Real Results Michael Brenner shows how empathy is the engine that motivates

InsuranceNewsNet Magazine » February 2020

mpathy drives the best content marketing — and content marketing drives results in business today. Last month, Michael Brenner explained how empathy helps build meaningful connection. In this installment, he expands on how empathy can add real value to content marketing, rather than act as an adjunct for advertising. Brenner acknowledges that ads are already empathetic, speaking to client needs. As a content marketer, Brenner argues there is more than just getting the ad right. After all, we all have been bombarded with ads, some great ones, in fact. We all have seen commercials that might have even brought a tear to our eye. But what was the product or service? We probably don’t even remember that. Why? Because we know that it is a company trying to sell us something. The message — if there is one — does not get past that wall. Engagement is on the level where trust lives. If we know the company or professionals can be trusted to do what they say they will do, we might take the next step. That trust is earned when we know those professionals know their stuff. That message can’t be “Trust us, we know what we’re doing.” That expertise has to be demonstrated. As CEO of the Marketing Insider Group, Brenner has helped more than 75 brands and many other professionals build business through real content marketing. Can you as an insurance agent or financial advisor break through the noise to rise to the top of the page when somebody Googles for a professional in your market? Yes, you can be a leader in your own market, and in this discussion with Publisher Paul Feldman, Brenner explains how you can rise to top of mind through empathetic messaging. FELDMAN: Some of the best ads and marketing material I’ve ever seen are highly empathetic. Why don’t we see more of that in all advertising? BRENNER: You’re absolutely right. The problem is the context of what ads are today. It’s becoming more difficult to advertise, even with empathetic stories

HOW CONTENT MARKETING DRIVES REAL RESULTS INTERVIEW that resonate with people. Advertising is almost by its very definition not empathetic. It’s selfish. It’s “I am a company trying to sell you something that you may or may not need.” It’s a relatively well-documented fact that people are less trusting of brands, largely because their experience with brands is through advertising. FELDMAN: Most of the advertising I see is just about the advertiser or product, rather than making it about the customer and the content. How do you get your clients to focus on the value? BRENNER: I use a Venn diagram with clients and say, “In the left circle is the company that wants to promote itself. It’s the natural instinct of a brand to want to promote itself to survive. On the righthand side is another circle, and that’s the audience. And the audience doesn’t give a crap about brands. The audience has needs that it wants to solve, and it sometimes will hand over its money to do so. But it doesn’t care about brands and less so now if it ever did. So, the overlap of those two circles is where I think companies can help their audience through the content that may help them become educated or in some cases entertained.” That’s how I define the role of content in today’s ecosystem — it’s actually empathetic. It’s where a company resists its natural tendency to promote, and decides to try to help, even where it may not help to sell products. In my book, I tell the story of Cleveland Clinic, which literally put empathy into their mission statement. They realized that it wasn’t the fact that they had the best doctors and surgeons and nurses that attracted patients. It was the fact that people felt that Cleveland Clinic’s doctors and nurses and surgeons cared about them as patients. That drove the creation of the blog Health Essentials, which is one of the best examples of branded content that I’ve ever seen. FELDMAN: When it comes to creating content, I have heard too many people say, “Well, we don’t want to give away our secrets or too much of our information unless they become a client.”

What do you tell people who are stuck on that mindset? BRENNER: I hear it. It’s probably the No. 2 or 3 objection. The answer is FOMO, fear of missing out. If you don’t, your competitor will. Why would you throw up the white flag and never even try to compete in the battle for attention and trust by saying that you’re so smart and your content is so good that you wouldn’t share it with people who aren’t clients?

more stuff?” I’m not critical of people who ask these questions because it’s a journey everybody has to go through. But the answer is that today’s consumer picks the brands or the people to work with that they know, like and trust. Trust is not as much of a personal relationship today as it used to be. We have online relationships with people long before we have personal ones. So we tend to work with a real estate agent who shares with us what homes

WHAT YOU NEED TO KNOW You will never be able to reach your customers as long as you think of them as statistics and not people. Admit that you don’t know what you don’t know, because it will allow you to learn. Find the people in your organization who know the customer best and listen to what they have to say. Ask! When you don’t know, ask. Find out what questions your customers are asking and set out to answer those questions. Nobody does it alone. Call upon your co-workers and employees to help reach your customers and answer the questions they are asking. — Mean People Suck: How empathy leads to bigger profits and a better life, Michael Brenner, 2019

I think that mindset is relatively dead, if not dying a pretty rapid death in all industries. But I definitely hear it from folks who are in the later stages in their career. We did have a world where content was a little bit more of a common thing, especially in the financial and insurance industries. You got a letter from your advisor with the stock tips and things like that. That sort of paternalistic world doesn’t exist anymore. FELDMAN: What are other objections that clients express about content marketing? BRENNER: The most common objection is just simply, “How does this help me sell

have sold in the neighborhood in their newsletter, versus the one that just sponsors the high school football game. It says, “List your house with me,” because we’ve learned that they’re sharing information that’s helpful to us. FELDMAN: Are brands simply what they tell people they are? BRENNER: That’s the traditional view of branding and it has evolved over the years. I graduated from college in 1993. I remember at the time, Jack Trout and Al Ries had just written their book about branding. [Positioning: The Battle For Your Mind] And I went to a conference and I

February 2020 » InsuranceNewsNet Magazine

INTERVIEW HOW CONTENT MARKETING DRIVES REAL RESULTS remember the guy saying, “Brand is something that exists in the mind of a consumer. You can’t intercede into their brain. You can try to influence it.” This notion of brand existing outside of the company has been around for 25, 30 years. Some industries have accepted it more slowly over time. The pharmaceutical industry is certainly one that is taking its time. Health care in general is taking its time. The financial services industry, and I’m bucketing insurance into that, has gotten on board relatively quickly. That’s because the amount of information and education required for consumers to make financial service decisions in banking and insurance and other areas is relatively high. So it didn’t take a lot of information to decide whether I want a pack of Wrigley gum versus whatever other kinds of gum there are. But to decide on what kind of life insurance policy to get, that’s a relatively high amount of information for that purchase decision. Companies have realized that providing helpful content, being empathetic or seeming empathetic helps to drive purchase decisions. FELDMAN: How does a smaller insurance agency or company compete with larger ones that have more resources?

estate industry, but they’re competing with these large companies that are now trying to take over the listing market, and then selling leads to individual agents. So, where somebody used to be widely known as the local real estate expert, they are now facing some headwinds from the

FELDMAN: Insurance agents can write content and put it on their site, but how does it start ranking on Google? BRENNER: The days of what we call SEO [search engine optimization] used to be very, very black box, a scientific secret.

Trust is not as much of a personal relationship today as it used to be. We have online relationships with people long before we have personal ones. Nextdoors and the Zillows and the other apps that are taking over there. Zillow is creating 50 pieces of content a week but only one piece of their content every two weeks is on the Seattle market. In this example, we create content about the real estate market in Seattle ev-

Today, there are no more secrets anywhere. There’s no tactical advantage that one company has over another. Anyone can rank first for a search term if you publish quality content frequently, something that publishers have done forever. CNN doesn’t wake up one morning and decide that there’s nothing interesting coming out of the White House, so they don’t publish anything on politics. They publish articles on politics every single day. And that’s what brands need to do as well, in order to rank for specific keywords. So that’s the trick. Then once we capture that reader’s attention, typically we try to get them to subscribe so that they’re getting a newsletter or some sort of email every day or every couple of days that shows them what else you publish. And then move them on to some deeper level. For my real estate clients, we typically do a buyer’s guide to real estate in the fill-in-the-blank market or a real estate investor’s guide in the fill-in-the-blank market. That allows them to put up a form

It didn’t take a lot of information to decide whether I want a pack of Wrigley gum versus whatever other kinds of gum there are. But to decide on what kind of life insurance policy to get, that’s a relatively high amount of information for that purchase decision. BRENNER: I don’t have any insurance agent clients, but I do have real estate agents who work in a supercompetitive market, as I’m sure you can imagine. Where they all begin with me is, “Hi, I’m an agent at a high-income area outside of Seattle. And when somebody types in ‘real estate agent, Seattle,’ I want to show up first.” I don’t want to get too deep into the real 12

ery single day. And after four weeks, my client was ranking for that search term. When people typed in “best real estate agent or real estate market, Seattle,” her website showed up. They saw where the best schools were. They saw what the median income was. They saw the top doctors. All the kind of stuff you might search for when you’re looking to move into an area. They found it on her website.

InsuranceNewsNet Magazine » February 2020

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INTERVIEW HOW CONTENT MARKETING DRIVES REAL RESULTS

PIXAR AND THE HERO’S JOURNEY Pixar’s formula is a variation of Campbell’s hero’s journey. The Pixar Storytelling Formula is simple: • Once upon a time ... • Every day ... • One day ... • Because of that ... • Because of that ... • Until finally ...

Once upon a time, there was a sad but devoted widowed fish father named Marlin. And every day he warned his son, Nemo, of the danger of going out into the open ocean. One day, Nemo decided that he would do it anyway, so he swam out into the open water because he was a curious and rebellious kid. Because of that, Nemo was kidnapped by a diver. Because of that, Marlin traveled the ocean and met his new friend, Dory, until finally Marlin and Nemo were reunited.

FELDMAN: In your career with content marketing, what did you find that consistently worked? Is it all in the headline? Is it an engaging first paragraph? Is it the length of the content? BRENNER: If the goal for the marketer or for the brand is to generate reach, then I think the headline certainly matters quite a bit. I think you probably know that 80% of engagement happens only at the headline level, and only 20% of people follow down through. And you lose another couple of percentage points into the first paragraph and all the way down. When it comes to reach, I think attracting attention really starts with that headline. When you get to conversion, what we found is that there must be some clear 14

BRENNER: We don’t do promotional content. We’re here to create customerfocused content that answers customer questions based on content we know engages. So yeah, that’s in the charter with us upfront. FELDMAN: You’ve been doing content marketing for quite some time. What kind of changes have you seen from when you first started to what you’re seeing today?

For example:

that says, “If you’re interested in investing in the Seattle real estate market, here’s a buyer’s guide. And click here if you’d like to receive a call from Mary Smith.”

FELDMAN: If you have a client whose instinct is to always be promoting, what do you do with that?

call to action. And I usually use with my clients, the journalistic model of what, why, when and how. The call to action is usually the when and how: “You need to learn these five steps tomorrow. Here’s a webinar.” With conversion generally it was not yet promotional, not yet product, but thought leadership. So, it’s an event, a live event, a webinar series, or an expert, authoritative white paper. FELDMAN: How important is it to have a giveaway, like a white paper, to be successful? BRENNER: If you want to measure leads, then yes. Like with the programs we offer, we actually start with the buyer’s guide. For example, the first real estate client we had, she closed a big lease deal within the first 30 days. So it can happen quickly when you take that sort of tripwire approach of using an article that relates directly to your lead form offer.

InsuranceNewsNet Magazine » February 2020

BRENNER: Well, first of all, I’m disappointed in the number of people who think they’re doing it but aren’t. My tweetable line on that is that marketing with content is not the same thing as content marketing. So, what is content marketing? It’s really brands that act like publishers like you. They pick a series of pillars of an industry or an audience and they publish frequently with quality coverage of those topics — frequently, consistently. And that leads to some form of business value. There are very few brands that are doing that. I would say it’s 20%, 25% of brands. It’s the Cleveland Clinics and Capgeminis that I’ve mentioned in the book. No. 2 is they’re scaling on the production side with what in the industry we call employee advocacy. And I hate that term, because to me, it sounds like, “Here’s a press release; please share it.” That is one of the big areas of growth now. The future of marketing is really with employees. Marketo is the example in the book that talks about how they built an engagement platform. And those engaged employees who worked at a company that they felt sucked a lot less became contributors to their platform. They became sharers of their content. So Marketo became seen as a great place to work, because people saw all these employees who are sharing stuff and creating stuff. And then there’s the technology side. You’ve got artificial intelligence and personalization and visual content expectations. All those things that I think people spend a lot of time talking about, but there’s really not a lot of great examples of success out there yet.

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NEWSWIRES

SECURE Act Becomes Reality The most significant legislation affecting retirement became law. President Donald

Trump signed the retirement-savings law called Setting Every Community Up for Retirement Enhancement, or the SECURE Act of 2019. The bill raises the age for required minimum distributions from 70½ to 72 years old. Workers now can continue to contribute to their IRAs after age 70½. Small businesses can now band together to offer 401(k) plans to their workers. The SECURE Act SECURE Act Highlights will allow employer-sponsored 401(k) plans to » Raise RMD age from 70½ to 72. add annuities as investment options. » Allow IRA contributions after However, the new law scraps what is known as age 70½. the stretch IRA. Under the new law, Americans » Annuities permitted as investwho inherit an IRA must now withdraw the ment options in 401(k)s. money within 10 years of the account owner’s death, along with paying taxes. Surviving » Eliminates stretch IRAs spouses and minor children are still exempt. Read more in InFront on Page 8 of InsuranceNewsNet Magazine.

ACA INDIVIDUAL MANDATE RULED ILLEGAL

AMERICANS RACK UP RECORD DEBT

Low interest rates are fueling record A federal appeals court amounts of borrowing as Americans ran dealt a blow to the up a record high of nearly $14 trillion in Affordable Care Act. household debt at the end of third-quarThe 5th U.S. Circuit ter 2019, the Federal Reserve Bank of New Court of Appeals ruled York reported. But even though debt is at that the ACA’s individ- a record level, it isn’t as high a percentage ual mandate is uncon- of the U.S. economy as it was a decade stitutional because ago. Household debt is now about 73% a 2017 tax bill elimi- of U.S. gross domestic product, down nated the requirement from 83% in 2009. that Americans must Mortgage debt is about two-thirds of either carry insurance or pay a penalty. household debt, and that level has been But the three-judge panel put off the stable for the past 10 years. But student question of whether the ACA can stand debt is climbing — doubling since 2009 without the mandate to carry insurance. — and is now the second-largest category Judges asked the lower court to go back of debt. Student loan debt is $1.5 trillion, and evaluate which provisions can sur- nearly 8% of GDP and an increase from vive. This will set the stage $0.9 trillion in 2009. for a high stakes review of Another Year Older Credit card debt the law ahead of the 2020 And Deeper In Debt hit a record in 2019, election. with nearly $1 trillion As of 3Q 2019, Americans had: The decision to move charged to plastic. the case back down the ap- » $1.5 trillion in student loan debt. Consumers will add peals ladder makes it likely » $1 trillion in credit card debt. $80 billion to their that another ACA showtabs this year, accorddown before the Supreme » $13.9 trillion in mortgage debt. ing to projections Federal Reserve Bank of New York, Court, should the case SOURCE: from WalletHub, WalletHub make it there, will have to with the average wait until after 2020. credit card debt per

QUOTABLE Unfortunately, Federal Reserve policy is held captive to trade negotiations. In 2020, the Fed will surf the wave of news coming from Washington and Beijing. — Chad Morganlander, portfolio manager at Stifel Nicolaus

household hitting $8,701 during the third quarter, up 4% compared with the same period in 2018.

When Workers Say They Will Retire 22%

Before age 65

24%

At age 65 After age 65 Do not plan to retire

40% 14%

RETIREMENT AGE KEEPS CREEPING UP

Sixty-five may not be the magical age it used to be. More American workers say they expect to stay on the job beyond the six-and-a-half-decade mark. More than half of workers (54%) said they expect to stop working sometime after age 65 or never retire at all, according to the Transamerica Center for Retirement Studies. Nearly one-quarter (24%) said they plan to retire at 65, and 22% said they plan to retire earlier. Most of those who said they plan to keep working cited financial reasons for wanting to stay on the job. But many also pointed to other reasons, such as maintaining their health and avoiding social isolation. American workers may also be driven to work longer because they are worried about the future of Social Security, the Transamerica report said. Three in four workers said they are concerned that Social Security will not be there for them when they retire.

DID YOU

KNOW 72% of Generation Z consumers visit a physical bank branch at least

monthly, the highest percentage of any age group. Source: Adobe Analytics

InsuranceNewsNet Magazine » February 2020

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COVER STORY

Suitafiduciary? Where Insurance Regulation Is Going

New York’s Regulation 187 has many in the insurance industry worried about a tighter regulatory grip. But is there a middle way? By Steven A. Morelli and John Hilton

ew York’s Regulation 187 inspires dread in many insurance professionals who don’t even operate in that state. The rule represents greater momentum toward tighter restrictions spreading nationally. Insurance companies have pulled products from New York in advance of the rule, and agents are reshaping their practices because of the new requirements, which went into effect this month for life insurance. Annuities fell under the reg in August. Andy Villa of 1789 Wealth Strategies in

Rochester said he expects fellow New York insurance agents will be leaving the business. But he is OK with that. In fact, he is a rare insurance advisor admitting publicly that he is looking forward to the reg. “I think 187 is great because it forces insurance professionals to actually act in the best interest of the client,” Villa said, “but also to be educated globally on all the products that are in the space.” Villa put his finger on one of the issues for many insurance companies, marketing organizations, broker-dealers, agents and advisors. The rule treats insurance sales as something resembling a fiduciary standard where sellers must look at a wide

InsuranceNewsNet Magazine » February 2020

range of options for clients. Because independent agents tend to sell a small number of products they know well, the best-interest model is a fundamentally different way of doing business. In New York, agents would be required to show that they recommended a product because it was in the best interest of their client. How do agents show they acted in the client’s best interest? That is not entirely clear. How many products should an agent consider? And if they expanded that scope of products, would their independent marketing organization or broker-dealer sell it? If they are company agents, how

SUITAFIDUCIARY? WHERE INSURANCE REGULATION IS GOING COVER STORY wide are their product horizons? Villa said those questions demonstrate the friction between a fiduciary-like best-interest standard and an industry built on the suitability standard. “If you work at a career shop, that is a whole life producer, and your contract is predicated on how much core product you sell,” Villa said. “Well, the carrier’s going to have to produce products that they typically don’t want to sell.” Insurance companies are on the hook for the seller’s behavior under New York’s rule, which “requires insurers to establish standards and procedures to supervise

from regulators will lead to a dramatic shift in the sales force. “You’re going to have fewer people selling life, disability, long-term care insurance products over time, because the process to get products approved is significantly more onerous than charging someone a fee to manage their million-dollar portfolio,” Villa said. “There’s obviously work involved in that [the AUM model]. But you don’t have underwriting issues. You don’t have carrier issues. You don’t have all these things that are out of your control. With AUM, everybody knows the market is irrational. You

Still Room For Independent Agents

Despite the persistent push of regulation, the independent insurance agent will survive, said George Hanley, managing director in regulatory and operations risk practice at Deloitte. “I think they will survive,” Hanley said. “It brings certainly a higher standard and a more exacting, best-interest standard to the sale of life insurance. But I think the industry is moving in the direction of providing choice and providing informed recommendations to customers and agents doing their needs analysis and

“You’re going to see people migrate from the insurance business to the assets-under-management fee business because it’s less invasive.” — Andy Villa, Rochester, N.Y., insurance agent recommendations by agents and brokers to consumers with respect to life insurance policies and annuity contracts issued in New York State so that any transaction with respect to those policies is in the best interest of the consumer and appropriately addresses the insurance needs and financial objectives of the consumer at the time of the transaction,” according to the state’s Department of Financial Services. That sounds a lot like a fiduciary standard, which is music to Villa’s ears. Consumers and wealth are changing and so should their management, he said. “It was simple before but it’s getting more and more complex because people have more wealth, so they expect more detailed information,” Villa said, adding that brokers in the suitability sphere will have to make some tough choices. “They have to decide which channel they’re going to go down and they typically go down the path of least resistance, which is the AUM [assets under management] model. So for me, I’ve made the opposite choice. I’ve gone down the insurance path because I believe that we should be treating insurance like assets. And we should be treating the education to the consumer, just as you would modern portfolio theory for your IRA.” He believes the ratcheting pressure

build tolerances and you build behaviors around what that means to the client.” Villa’s voice is one of many calling for a more challenging standard for insurance agents and brokers. Other states — including Nevada, New Jersey and now Massachusetts — are pursuing a tighter standard after the Trump administration took back the Department of Labor’s conflict of interest standard. Although Villa considers himself an insurance agent, he does have a leg up on the stricter standards because he sells variable products, which require a Series 6 license and strict documentation requirements from the Financial Industry Regulatory Authority (FINRA), although he is still under the suitability standard. He also has a Series 7, allowing him to sell financial products. He is already documenting his sales across the board and said he can show how he acts in the best interest of his clients. Villa said he suspects that many of his colleagues are not ready to take this step — and don’t want to be. “I think ultimately you’re going to see a flight,” Villa said. “Like I said earlier, you’re going to see people migrate from the insurance business to the assetsunder-management fee business because it’s less invasive.”

determining the products that best match with the client needs.” Agents will maintain their important position in the distribution network as long as they make a few tweaks in the way they sell products, Hanley explained. And that means adapting to what will emerge as best practices for things such as meeting clients, documenting information and executing the sales process. It is not only New York and a few other states tightening standards. Other regulators working on rules include:

» The National Association of Insurance

Commissioners is expected to send a best-interest annuity sales standard to states for adoption early in 2020. The model articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. Another NAIC subgroup is discussing changes to tighten up the controversial Actuarial Guideline 49 issued in 2015 to further regulate illustrations and disclosures.

» The Securities and Exchange

Commission is targeting brokers with its Regulation Best Interest, scheduled to take effect in June.

February 2020 » InsuranceNewsNet Magazine

COVER STORY SUITAFIDUCIARY?

» The U.S. Department of Labor is ex-

pected to release its reworked rules early this year governing the sale of insurance and financial products with retirement account dollars, likely to harmonize with the SEC’s rule.

There has been plenty of communication across regulatory bodies in an effort to harmonize rules, a significant concern of the industry. It is likely that a standard will emerge that ends up being very consistent, Hanley said. “You have to take a long view of this,” he said. “Even though it may seem fragmented and disjointed and there will be some unique requirements in a lot of ways there, they’re all designed to do the same thing.” The November general election could see control of Washington, D.C., swing to the left. If that happens, the rush to coalesce regulations around a best-interest standard could get disrupted. Some presidential candidates on the Democratic side are sure to support reviving President Barack Obama’s fiduciary regulation that died in a federal appeals court. The labor secretary who ushered that fiduciary rule, Thomas Perez, is now head of the Democratic National Committee. Politics aside, Hanley said the commission-based compensation model should survive. Critics of the Obama-era rule proposal claimed the DOL was trying to eliminate commissions. The SEC was “very clear” that there’s a place for brokerage and commission-type business, as well as advisory and feebased business, Hanley noted. “It’s not going to swing one way or the other,” he added. “And I think that the insurance business appropriately has a model that allows for the sale of commission-based products. The regulations are designed to make sure that they’re done in a thoughtful form and a transparent way to consumers. So I don’t see that model changing.”

Valmark CEO Larry J. Rybka said the form was developed in 1995 and has been available for his advisors to use in the fact-gathering phase. In New York, it has moved from voluntary to mandatory. “I think people who haven’t been paying much attention to this think, ‘Oh, I’ll just sign some more forms at the end,’” Rybka said. But the requirement to justify best interest starts at the recommendation, when it’s too late to start worrying about documenting. “Carriers are responsible for making sure this is suitable and that there’s documentation and processes that show this is in the client’s best interest,” Rybka said of New York’s rule. “But for the first time, we need to tie what the client told us about their goals, their cash flow, what they want to do.” Without first documenting the client’s needs, it is difficult to build the trail back from product to need. “So it moves way up in the process,” Rybka said. “You’re not doing the paper after you have everything issued and you’re then coming back and saying ‘How do I document this?’ You have to document how you came up with this recommendation [and this] carrier.” THE LIFE INSURANCE DESIGN QUESTIONNAIRE® INSURED INFORMATION CLIENT NAME(S):

2. ________________________________________

1. _____________________________________

2. ________________________________________

GENDER: (M/F)

1. _____________________________________

2. ________________________________________

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1. _____________________________________

2. ________________________________________

POLICY OWNER: _____________________________________________________________ STATE OF OWNERSHIP: __________

FINANCIAL INFORMATION WHAT IS THE EXPECTED SOURCE OF PREMIUM PAYMENTS? ________________________________________________________ HAS A FINANCIAL PLAN BEEN COMPLETED? ❏ YES ❏ NO (IF NO, PLEASE LIST THE FOLLOWING DETAILS. IF YES, ATTACH A COPY OF THE FINANCIAL PLAN.) CLIENT 1

CLIENT 2

JOINT

ANNUAL INCOME INCOME TAX RATE LIQUID ASSETS CASH, CDs, SECURITIES QUALIFIED PLANS TOTAL LIQUID ASSETS OTHER ASSETS BUSINESS INTERESTS REAL ESTATE RESIDENCE OTHER TOTAL ASSETS LIABILITIES/DEBTS MORTGAGES REVOLVING DEBT OTHER TOTAL LIABILITIES NET WORTH (Assets - Liabilities) LIQUID NET WORTH (Liq Assets - Liab) FINANCIAL GOALS AND OBJECTIVES

Document, Document, Document

Villa’s broker-dealer, Valmark, of Akron, Ohio, helped him with tools for managing clients — tools that also prepared him to comply with New York’s new standard. Two documents are key in the process, particularly a 13-point life insurance design questionnaire.

One of the sheets from Rybka’s 13-point life insurance design questionnaire.

1. _____________________________________

DATE(S) OF BIRTH:

This is one of the key points of the new rule for Rybka. He said companies have been relying too long on contracts and the distance between the contract and the actual sale. If a client felt he was misled about the

InsuranceNewsNet Magazine » February 2020

The no lapse guarantee is subject to the terms and conditions contained in the policy and may not be in effect even if premium payments are made. Please review the policy carefully. Additional agreements may be available. Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements. Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods. Policyholders could lose money in this product. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

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COVER STORY SUITAFIDUCIARY? WHERE INSURANCE REGULATION IS GOING demand documentation showing why the sale served the client’s best interest or demand a refund for the consumer. “And if the carrier can’t produce that documentation, there’s a strong argument for rescission,” Rybka said. “So the client gets his money back without a trial, without a FINRA arbitration. The carrier says, ‘Here’s your $500,000.’ And there’s a chargeback, because every contract has a chargeback. That is the big stick. That is why everybody’s paying attention to this.” Although carriers were motivated to set up systems to ensure documentation, Rybka instead had companies review and accept Valmark’s process. “We didn’t want to have ‘OK, here’s the Prudential best-interest track for documenting, here’s Lincoln’s and here’s the Nationwide track.’ So we created a single track, because carriers are allowed to delegate this duty as long as they can show that they are auditing this not just for people who complain, but [also for] periodic audits.” Would he like to see more 187s in other states? — Larry J. Rybka, CEO, Valmark Yes, because he said he feels other jurisdictions income he could expect from an indexed are letting consumers down. He is disapuniversal life product because of an op- pointed by how the NAIC’s AG 49 illustimistic illustration, the insurer would tration and annuity disclosure standards usually fall back on the arcane agreement, are turning out, basically letting the life Rybka said. industry operate at what he sees as a low“The carrier’s defense uniformly er standard of care. has been, ‘You were given a contract,’” Rybka is well aware that he is in a tiny he said. “’When this was delivered, it minority of sellers who favored 187. spelled out all the charges that were go“I wrote a letter in favor of Reg 187,” ing to come out of this and everything Rybka said of submitting public comment that can change and that has been there. to the state. “And out of the blue, this reSo, yeah, you didn’t read the contract.’” porter calls me and he says, ‘I understand But that won’t necessarily fly in New you’re the only person who wrote a letter York now, Rybka said. The state might favorable to Reg 187, who isn’t a consumer

“The carriers have been able to say pretty much, ‘I didn’t know that this was Grandma’s last money.’”

InsuranceNewsNet Magazine » February 2020

advocate or a lawyer. You’re actually involved in the distribution. I want to hear why.’ And my answer was, ‘I really think a consumer does have a right to know who’s paying you, what products you have available.’” Rules like New York’s could go a long way to cleaning up the industry’s image, he said. And the disconnect between insurer and seller has been damaging, in Rybka’s estimation. “The carriers have been able to say pretty much, ‘I didn’t know that this was Grandma’s last money,’ or ‘I didn’t know that they had surrendered their 401(k) and took all their savings and put it into this.’ They have had plausible deniability.”

A New Suitability/Fiduciary Standard

Villa may have gone the broker-dealer route for what he said is the best service for his clients, but John Terry moved away from operating a broker-dealer and back into insurance as chief marketing officer of Vision Advisors, an IMO in Hot Springs, Ark. And as Villa predicted for other insurance advisors, Terry took the RIA route for insurance. But Terry said advisors in the broker-dealer world cannot serve the client’s best interest because of their restrictions. Registered representatives are too limited to offer the range of products in the service of their clients, Terry said. “Essentially, a broker-dealer is going to give a registered rep a list of products that they can sell,” Terry said, “and if there’s a better product that’s offered by an insurance company that’s not on that approved list, that Series 6 or 7 rep can’t sell that additional product. If we look at the breadth of products that are available today, and if there are 30 different solutions and a broker-dealer offers three, well, you’ve left a number of opportunities that could potentially be a better solution for the client.” Because broker-dealers don’t want to supervise every product available, they end up with only a few annuity, life and long-term care carriers, Terry said. He saw FINRA’s supervisory structure more as a barrier in serving clients rather than as an effective means of holding brokers accountable. “We made the conscious decision to leave the Series 6 and 7 space because of

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Products are issued by The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Guarantees are based on the claims-paying ability of the issuer. Dividends are not guaranteed. Product, product features and rider availability vary by state. Registered products distributed by Ohio National Equities, Inc., Member FINRA. D-514900.INN 2-20 ©2020 Ohio National Financial Services, Inc

February 2020 » InsuranceNewsNet Magazine

COVER STORY SUITAFIDUCIARY? WHERE INSURANCE REGULATION IS GOING

“If there are 30 different solutions and a brokerdealer offers three, well, you’ve left a number of opportunities that could potentially be a better solution for the client.” — John Terry, CMO, Vision Advisors

the amount of regulation that FINRA was putting on broker-dealers, who in turn were passing on significant burdensome regulations to their registered reps,” Terry said. “As a result of that, it really limited the opportunity that the broker-dealer rep had in order to have access to a broad depth of product to meet specific client needs.” In his view, different advisors serve different needs that are not confined to one discipline. “Broker-dealers are fantastic at helping people accumulate assets,” Terry said. “But how do we create sustainable income for a lifetime? We do the wealth transfer planning. In my opinion, the B-D community is not well suited for that. And it’s not really an area they’ve embraced.” Of the 200 most active agents on Vision Advisors’ books, about 30% hold a Series 65 license, which is a significant shift from a decade ago when nearly all of the agency’s advisors were insurance-only, Terry said. It allows agents to work with all the client’s assets for a consistent approach, rather than a philosophy and 24

strategy that would clash with another advisor’s and confuse a client. Terry expects the Series 65 trend to continue with insurance agents. Rather than moving insurance to the fiduciary standard, insurance agents can become fiduciaries. “A good financial advisor should be acting in the best interest of their client anyway,” Terry said. “That should be the standard of conduct whether we’re under a suitability standard, like we are today in the insurance industry, like the broker-dealers are, or you’re under a fiduciary standard on the Series 65 side.” The process should always be client first, product second. “The thing that I teach producers when I’m doing sales training is your role is to identify the client’s problem,” Terry said. “Find out what their concerns are, what keeps them up at night, what challenges they’re facing. And then find a way to solve the problem. What is the financial tool that you’re going to use to initiate that problem-solve to help them accomplish their goals and dreams for the future? If

InsuranceNewsNet Magazine » February 2020

we’re doing that, we’re acting in the best interest of the client.” Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@innfeedback.com. John Hilton is senior editor of InsuranceNewsNet. He has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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FutureMark 10, 10 LT (Contract Series 416/4416). BeneBooster guaranteed minimum death benefit rider (Rider Series 2182). Products are single premium deferred fixed indexed annuities underwritten by Americo Financial Life and Annuity Insurance Company (Americo), Kansas City, MO, and may vary in accordance with state laws. Products are designed and exclusively marketed by Legacy Marketing Group, an independent, authorized agency of Americo. Some products and benefits may not be available in all states. Certain restrictions and variations apply. Consult contract and riders for all limitations and exclusions. The Optimizer administrative fee of 1.00% will be deducted from the Accumulation Value at the end of each contract year, including the first. FutureMark, BeneBooster, and FUSION Strategy are service marks of Legacy Marketing Group. The S&P 500 Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and has been licensed for use by Americo Financial Life and Annuity Insurance Company (“Americo”). Standard & Poor’s ®, S&P 500 ®, and S&P ® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones ® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Americo. Americo’s Product is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index. The SG Columbia Adaptive Risk Allocation Index (“Index”) is the exclusive property of SG Americas Securities, LLC (together with its affiliates, “SG”). SG has contracted with Solactive AG to maintain and calculate the Index. “SG Americas Securities, LLC”, “SGAS”, “Société Générale”, “SG”, “SG Columbia Adaptive Risk Allocation Index”, et al. (collectively, the “SG Marks”) are trademarks or service marks of SG. SG has licensed use of the Index and the SG Marks to Americo Financial Life and Annuity Insurance Company (“Americo”) for use in fixed indexed annuities. SG has licensed use of certain marks from Columbia Management Investment Advisers, LLC or its affiliates (collectively, “Columbia Management”) and sub-licensed use to Americo. Neither SG, Solactive AG, Columbia Management nor any other third-party licensor has been authorized to act as an agent of Americo or has in any way sponsored, endorsed, sold, promoted, structured or priced any fixed indexed annuity or provided investment advice to Americo. Such parties make no representation regarding the advisability of purchasing, selling, or holding product linked to the Index, including Fixed Indexed Annuity and shall not be liable for any related loss or payment thereof. Obligations to make payments under the fixed indexed annuities are solely the obligation of Americo. Neither Americo nor SG are obligated to invest annuity payments in the components of the Index. The Index levels are net of a 0.50% annual maintenance fee, calculated and deducted daily. The Index also deducts fees to cover rebalancing, replication, and other costs. The total amount of these fees is unpredictable and depends on a number of factors. These fees and costs, which are increased by the Index’s leverage, will reduce the potential positive change in the Index and increase the potential negative change in the Index. While the volatility control applied by the Index may result in less fluctuation in rates of return as compared to indices without volatility controls, it may also reduce the overall rate of return as compared to products not subject to volatility controls. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. Additional information is available at https://www.sg-columbia-index.com. * Available upon death, surrender, or annuitization, less any withdrawals, surrender charges, and applicable premium tax. Rate on contracts issued in 2020. AF1473v1219 20-600-2 (01/20)

FOR AGENT USE ONLY. NOT FOR USE WITH CONSUMERS.

the Fıeld

A Visit With Agents of Change

S Insurance

From Stay-At-Home Mom To

Evangelist

How Sheryl Moore grew into one of the life and annuity industry’s leading product experts By John Hilton

InsuranceNewsNet Magazine » February 2020

heryl Moore found herself alone at just about the worst time in life to be alone. A single, stay-at-home mom of three kids with no child support and no job, she calculated her child care costs at $455 a week. And that’s even if she could find a job. Facing few options, Moore moved from St. Louis back to her mom’s home in Des Moines — and discovered a career waiting for her. “For me, the answer was insurance,” she said, “because Des Moines is the second-largest insurance hub in the U.S. I knew if I worked in insurance and the company I worked for got bought out or acquired by somebody else or went under, that I wouldn’t have to worry about missing a paycheck and not being able to provide for my kids.” That was more than 20 years ago. From that first entry-level job in customer service, Moore asked questions and learned, asked more questions and got to know the right people who had the best answers. She learned fast in a business not known for producing fast learners. After a few years mastering product development, competitive intelligence and marketing, Moore took a leap of faith and started her own company in 2005. Today, she is one of the industry’s top experts on product performance and pricing. “I really trust her impressions and instincts,” said Denny Southern, president of annuities and retirement planning for AmeriLife Group. “She’s got a real moral compass to her opinions. Sheryl is very much about the end consumer in terms of what she talks about, and she really wants to see the industry evolve around that.” The journey from there to now has been filled with stunning success and the worst tragedy. Known for her warm smile and engaging personality, Moore openly shares details of both the good times and the bad. Through it all, Moore keeps starting new projects and growing. Her main businesses are Wink Inc. and Moore Market Intelligence, and related competitive intelligence tools, including AnnuitySpecs, LifeSpecs and Wink’s Sales & Market Report. “I consider myself like an insurance evangelist,” Moore said. “It’s my job to take these very complex products and

FROM STAY-AT-HOME MOM TO NSURANCE EVANGELIST IN THE FIELD

break them down into easy-to-understand terms and use my storytelling to help people understand why all this is important.”

‘Negative And Inaccurate’

At some point along the way up the ladder at that first job, Moore was informed by her employer what a great deal the company 401(k) was and she signed up. With her contribution and the company match, she quickly built a little pot of savings.

headaches that come with running a company, was a challenge for Moore. After all, her college major was psychology and she wanted to be an FBI profiler. “I didn’t even know how to budget for an employee,” Moore recalled. But she paid $50 to the state of Iowa to incorporate and Moore Market Intelligence was hatched. Next, she “bought a bunch of books,” including HTML For Dummies, and sat down to create a website.

“I do tread a very fine line between being an advocate of this industry and helping to educate people on this business, its distribution and its products.” Then the dot-com bubble burst in 2000-02. The “risk-averse” Moore lost money and wasn’t happy about it. “I didn’t know how to stop the bleeding,” she recalled. “I didn’t know there were options for rolling over a 401(k). I didn’t understand that. There were money market accounts where I could transfer my funds and basically get a very low fixed rate of interest. But I didn’t know what to do.” Moore responded in her typical fashion: researching data and cajoling superiors about her investment options. That’s when she learned about the product that would become her bread and butter — annuities. But Moore had the benefit of an audience with an insurance executive, who explained how an indexed annuity worked. Most people rely on information they find themselves, but Moore didn’t like the “negative and inaccurate information” she found on the internet. That experience inspired Moore to want to teach people how annuities work. In 2004, she took a job with “a big insurance company” as annuity product manager. Eight months later, her job was eliminated due to the company demutualizing and Moore found herself at another crossroads. “I decided that I had to start my own company,” she said. “At first I was like, ‘Wow, I’m going to educate people about insurance and annuities, because that’s something I’m really passionate about.’ But it didn’t take long before I realized that does not pay the bills.” Figuring out what did pay the bills, along with all the responsibilities and

Moore started by offering AnnuitySpecs, with product and rate information for indexed annuities. She quickly followed with LifeSpecs, with the same information for indexed life insurance products.

Major Growth Phase

The key to Moore’s success is simple: taking the expertise she gained in competitive intelligence, market research and product development while working at one company and sharing it with all companies — on a subscription basis. “When I was in the competitive intel world, I was like, ‘I am going to do something like this, but way better,’” Moore recalled. The key is knowing the right company executives and gaining their trust so they will share their product information. That is where Moore’s gregarious personality and boundless energy helped her make contacts and open doors. Moore also knows how to tweak the optics to gain acceptance but then dial it the other way to challenge preconceptions. Just as her business is all numbers on one side and advocacy on the other, Moore has two sides to her approach in the insurance industry culture. When she was a customer service representative, to help be taken seriously by executives, she dressed in the bestquality clothing she could afford. But as she started presenting to company execs, she favored one of her 40 pairs of sequined or glittered Converse All-Stars onstage. Moore wears a respectable suit when meeting industry execs. The suit acts as

a cloak of respectability but it also hides a secret. “Nobody knows with a few exceptions,” Moore said. “But I am absolutely covered in tattoos. Like I have almost no skin showing underneath my suit. And I use that to shock people because it’s like, yes, this is insurance. I am destroying all your preconceived notions about this industry and I am passionate about this business. And I am insurance.” It is part of her ability to relate on any level. “She’s not a top-down person,” Southern said. “She will speak her mind with a CEO, but she can spend equal time with a marketer at an event. She treats everybody with equal respect.” As the years went by, Moore added more products and more employees. Her market research team covers all deferred annuities on AnnuitySpecs, and all cash value life insurance products except for variable life on LifeSpecs. “We’re still expanding actively every year and moving into new lines of business,” Moore said, adding that future product additions include variable universal Moore mixes her corporateconservative suit with a dash of fun with one of her 40 pairs of bedazzled Converse All-Stars.

February 2020 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change between being an advocate of this industry and helping to educate people on this business, its distribution and its products.”

Tragedy Strikes

Moore rarely unveils her many tattoos in a professional setting, but says she is proud of them all. She appears here with her staff.

life and single-premium and deferred annuities. “I’m super, super blessed because I have a wonderful staff. I have 10 employees today, and they’re the funniest, most brilliant, hardworking people that I’ve ever had the opportunity to work with.” Moore does not endorse any products, but that has not prevented her from speaking out about trends she finds troublesome and anti-consumer. In particular, life insurance illustrations are on her radar. Moore is frequently heard during committee conference calls commenting on illustration regulations being considered by the National Association of Insurance Commissioners.

Moore with her family, from left to right, daughters Aaliyah and Alexis; late son AJ; and husband Jeremiah.

Being outspoken, also about media mischaracterizations of annuities has gotten Moore in trouble in the past. “There were insurance companies who would literally go on the record as saying, ‘We love Sheryl’s passion, but she’s a liability. We can’t align with her,’” Moore said. “I do tread a very fine line 30

InsuranceNewsNet Magazine » February 2020

In July 2013, Moore’s 16-year-old son, Alexander Betts Jr., known as AJ, committed suicide. The teen had been outed as gay about 18 months earlier, and endured bullying for that, as well as for being multiracial and having a cleft lip, said Moore. Moore’s world lapsed into darkness, a depression that lasted several years. The intense pain of losing a child turned her into “a walking zombie” around the office while the business continued around her. “I would say the biggest way that it has changed me is that I was the happiest person I’ve ever known in my life before he died,” she said, “and I’ve never been that happy since — not even for a second.” From AJ’s tragic death came life. Two days after his funeral, Moore found out she was pregnant with her now 5-year-old son, despite previously having had surgery to prevent pregnancy. Moore calls her son a “miracle baby.” Moore would go on to have another son, and she keeps busy away from the office with her four children: Alexis Linea Betts, 21; Aaliyah Jeanae Betts, 19; Jackson Alexander Moore, 5; and Xander Paul Moore, 2. At the time of AJ’s death, Moore was pursuing a law degree as another way to achieve credibility with some old-guard insurance executives. “Nobody’s taking me seriously,” Moore recalled about that period. “They see me as this young girl who can’t know anything. I constantly had people say to my face, ‘How can how can you know anything about this? I’ve been in this business longer than you’ve been alive.’” While she mourned, Moore’s outlook changed to defiance and she dropped the law degree idea. From then on, Moore said, she ceased caring what people think and chose to rely on her knowledge of the industry and its products. But she remains an outspoken woman in what remains a very white, conservative, male-dominated industry. That, too, is something Moore is eager to change. “I’m going to make people realize that insurance doesn’t have to be about 65-year-old white guys,” she said. “I want people to realize that insurance is fun, believe it or not. Insurance is about young people who really have a lot of passion for what they’re doing.” InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback. com. Follow him on Twitter @INNJohnH.

Got a Story? Tell Us!

Do you know someone who would make a compelling profile story? Shoot us a quick email telling us who it is and why you think so. Send it to editor@insurancenewsnet.com, and put PROFILE in the subject line.

February 2020 Âť InsuranceNewsNet Magazine

LIFEWIRES

Can Vapers Get Life Insurance? Tobacco users usually face higher

What’s The Deal With Vaping And Life Insurance? • Nicotine vaping usually means rated as tobacco user.

life insurance premiums, but what • Marijuana use is its own underwriting about those who vape? The answer: It category, whether vaped or not. SOURCE: Business Insider depends. Nicotine-based e-cigarettes may seem safer than traditional cigarettes because you’re not burning anything, but you are still inhaling nicotine, Business Insider reports. Until mid-2019, Prudential had treated e-cigarette use as non-tobacco use in its underwriting process. But the insurer has since backtracked, likely because of an outbreak of mysterious lung diseases and deaths among vape users. Marijuana is a different story. Many insurance companies are looking at marijuana in its own category, without regard to delivery system. That means you may be able to smoke, vape or consume edibles, and the same marijuana rules will apply. Other carriers treat marijuana use the same as tobacco use, with higher premiums as a result. Still others will decline coverage to marijuana users. “We negotiated these retiree life insurance benefits with the company, and they are a critical part of our collective bargaining agreements with Alcoa,” said USW International President Tom Conway. “The company agreed to provide these benefits. Abruptly cutting off this coverage is not only immoral, it’s unlawful.”

USW SUES OVER RETIREE LIFE INSURANCE

The United Steel Workers took Alcoa to court to protest the aluminum manufacturer’s termination of life insurance benefits for about 8,900 retired union workers. The USW filed suit in federal court in Indiana after Alcoa notified retirees in December that life insurance coverage would be eliminated at the end of 2019. The company gave the retirees a check equal to a fraction of the face value of their life insurance coverage and a federal 1099 tax form, since the payment would be taxable. The lawsuit was filed as a class action, and three Alcoa retirees have joined the complaint as proposed class representatives. DID YOU

KNOW

KUVARE BUYS LINCOLN BENEFIT LIFE

Kuvare US Holdings completed its acquisition of Lincoln Benefit Life. The purchase adds 200,000 policyholders to Kuvare’s customer base. Lincoln Benefit is the third life insurance business acquired by Kuvare since 2016. Kuvare also owns Guaranty

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Income Life and United Life. In a statement, Kuvare’s CEO, Dhiren Jhaveri, said the Lincoln Benefit acquisition reinforces Kuvare’s commitment “to deliver great insurance solutions to the middle market.”

NEW PRODUCT NEWS

The beginning of a new year marks the launch of some new life insurance products. Here are a few. » Ohio National released Virtus IUL II, an enhanced indexed universal life insurance product that features affordable death benefit protection paired with expenses among the lowest in the industry for accumulation-focused IULs. The expanded selection of indexed account options can help clients achieve their cash accumulation goals for a variety of planning needs. » Penn Mutual introduced Guaranteed Whole Life, which offers a customized payment period, cash value accumulation, an annual non-guaranteed dividend, and ability to access part of the death benefit if the policyholder experiences a chronic or terminal illness.

New York Life will mark its 175th anniversary in 2020. Source: New York Life

InsuranceNewsNet Magazine » February 2020

UNIFY THE PROFESSION one voice. one community. Why Are We Forming a New Organization? By joining forces, we can make a greater impact for our members and the people they serve. We have the opportunity to represent and bring our entire profession together, advancing and growing the work we do. We will significantly strengthen the advocacy efforts on behalf of the profession, offer more impactful leadership and professional development programs, all to elevate the profession and give the entire field a more impactful voice. This is about securing the future of the profession.

Ways to Take Action Become Founding Member today and help enhance the member experience and make a meaningful difference in the future of the profession. To learn more or donate visit unifytheprofession.org.

“

AALU and GAMA’s leadership to come together to form a new organization is welcome news for the profession and a gamechanger for our efforts.” - Warren May Chairman, Industry Alignment Group National VP, Principal Financial Group

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LIFE

Help Women Business Owners Find Financial Security Establishing trust with a woman business owner is the first step to working with her to meet her financial security needs. By Jenna R. Washatka

Women Taking The Reins Overall growth in women-owned businesses has continued unabated during the period between 2007 and 2018.

s a woman in the financial services industry, I am often struck by how few of us are out there. Yet it wasn’t until recently I realized this underrepresentation extends to female clients and business owners as well. A 2015 study by Strategy Marketing USINESS OWNERSHIP, showed a staggering 87% of women who NUES are in the market for a financial professional can’t find one they can connect with, and men are nearly twice as likely en-owned businesses, which as women to be approached by a financial hat areprofessional. at least 51% owned, The problem goes deeper. As women, one orwe more Over the face females. unique financial challenges. For example, many business of us earn less than men ages have become do in the same role. This means smaller y boomers and Gen Xers tobut it also transsalaries in the short-term lates into smaller retirement savings and erations. lower Social Security benefits. We also tend to live longer than men. ned businesses increased a So, not only do we face these income challenges, we n 1972 often and 2018, risingour from have to make money last longer. To make things worse, the Centers for ) in 1972 to 12.3 million (40% Disease Control and Prevention reports many from women230,000 struggle with disabilymentthat surged ities later in life, not to mention disability old. Revenues rose from rates among women are$8.1 rising and disabilities can even further reduce our cash of all firms revenue) in 1972 flow. And many of us are caregivers for al firmsaging revenue) 2018children — a or other parents,inyoung relatives, putting even more strain on our 7. time and resources. A relationship with a trusted financial advisor would go a long way toward addressing these financial pressures. These challenges extend to women business owners, who face unique finanriod 2007-2018 showed cial pressures of their own. Just as one en-owned businesses has research shows example, Babson College women have a significantly more difficult e last 11 years:

• The number of women-owned businesses surged 58%, while all businesses increased only 12%.

nds

34 InsuranceNewsNet en-owned businesses Magazine ll businesses increased

• Total employment by women-owned businesses rose 21%, while for all businesses it declined 0.8%. • Total revenue of women-owned businesses jumped 46%, while revenue for all businesses increased 36%.

2007-2018 GROWTH RATES FOR WOMEN-OWNED BUSINESSES VS. ALL FIRMS Women-owned Firms 58% 21% 46%

All Firms 12% -0.8% 36%

Number of Firms

Employment

Revenues

SOURCE: 2018 State of Women-Owned Businesses Report, commissioned by American Express.

time men do in obtaining start-up agent with Strategic Financial Group In than the meantime, while the number of all firms increased funds for business enterprises. And the in Naperville, Ill., and a mother of two by 1.0% annually between 2018, the said number underrepresentation remains: Only 2007 44% and young children, it well: “As an adviof of women in management, executive or sor, your goal should women-owned businesses grew 4.2% each year.always be to build a ownership positions work with a financial relationship first. If your No. 1 goal is to There was an uptick in the annualsell growth rateclients for the professional. something, will negatively perceive that right away.” most recent year: 6% for women-owned firms and 1.6% Building Relationships And Stalker makes intentional, genuine efEstablishing Trust forts to engage with women in her comfor all firms. First and foremost, in working with munity. Much of her networking happens women business owners, you must through connecting with other workestablish trust and build a relationship. ing moms, women-in-business events TRENDS INOhio THENational GROWTH RATE OF THE NUMBER Hillary Stalker, an career through her local chamber of commerce,

» February 2020

OF WOMEN-OWNED BUSINESSES VS. ALL FIRMS 58%

businesses generated less revenue per firm ($29,200) than women-owned businesses as a whole ($143,100). Necessity and flexibility entrepreneurs frequently started businesses in this category.

per firm than women-owned businesses as a

14% to 12%. These businesses generated

whole: $86,300 vs. $143,100.

less average revenue than women-owned businesses generally: $110,000 vs. $143,100.

HELP WOMEN BUSINESS OWNERS FIND FINANCIAL SECURITY LIFE

philanthropic events, and fun activities » Executive bonus Thelunches. three industries in whichplans women-owned PERCENTAGE OF WOMEN-OWNED FIRMS IN THE TOP FIVE INDUSTRIES such as wine nights and (162 plans) — FOR NUMBER OF FIRMS, EMPLOYMENT AND REVENUE businesses have the highest total employment “By being genuinely interested in An employer makes are healthcare and social assistance (20%), knowing and helping others,” Stalker said, a potentially tax-de23 accommodations and food services (16%) and % “the door to a conversation opens much ductible bonus to 20 administrative, support and waste management 17 quicker than being on services a mission to collect a key employee in 16 15 15 (13%). the most business cards. I genuinely care the form of life in12 11 13 9 9 9 9 10 9 three industries in which women-owned about what is going onThe in my clients’ lives. surance premiums 6 6 5 5 businesses have the highest total revenue are 4.3 5 4.2 2.9 You have to care.” to provide needed 1.4 wholesale trade (17%), retail trade (15%) and When working with female clients, an coverage. When a HC & Prof/Sci/ Admin/Supp/ Retail Trade Construction Wholesale Other Accom/ professional, scientific and technical services (10%). Social Asst Tech Svcs Waste Svcs Trade Services Food Svcs effort to be respectful goes a long way. For permanent prodStalker, meaningful conversation is often uct is used, cash Firms Employment Revenues intertwined with a needs analysis. accumulation can “Instead of just asking, ‘What do you supplement the emdo?’ it’s important to ask how she got ployee’s retirement THE FIVE INDUSTRIES IN WHICH THE NUMBER OF WOMEN-OWNED The growth rate in the number of women-owned there,” she said. “For example, start with, and other lifetime BUSINESSES GREW THE MOST BETWEEN 2007 AND 2018 firms between 2007 and 2018 increased the ‘Jenny, I see you own most a therapy practice, cash needs. for these five industries: utilities (151%), Utilities 151% could you tell me more about that?’ That other services (126%), construction (94%), Other Services answer is going to be jam-packed with dif» Split-dollar life 126% accommodations and food services (85%) and ferent avenues of how you can connect.” — An Construction 94% administrative, support andinsurance waste management employer shares the services (70%). Accommodation & Food Svcs 85% Serving An Underserved Market benefits of one life Admin, Support, Waste Mgmnt Svcs 70% Opportunity abounds for financial profes- insurance policy sionals — arguably, for female financial pro- with a key employee SOURCE: 2018 State of Women-Owned Businesses Report, commissioned by American Express. fessionals in particular — to significantly to provide affordexpand their client base by seeking out able life insurance State of Women-Owned Businesses, 2018 more female clients. InTheparticular, women protection (and business owners represent an underserved potentially cash accumulation) to that business, a business owner can take steps market with an impressive growth poten- employee while offering the employer to see to the success of her enterprise after tial, according to the 2018 State of Women- the opportunity for cost recovery when she leaves the company. There are finanOwned Businesses Report, commissioned the split-dollar ends. cial products that can help a business by American Express. continuation plan succeed, whether it be Advisors have a number of financial 3. Disability planning. a funded buy-sell agreement or, in many product solutions to meet the needs of After age 65, women live longer than men, family businesses, life insurance to equalwomen business owners. but University of Michigan researchers ize inheritances among heirs. found women are more likely than men to 1. Key person insurance. spend these additional years dealing with Changing A Traditional Mindset Key person life insurance is the Swiss disabilities than men, as well as dealing These product solutions for women Army knife of business insurance. It can with more disabilities than men have at business owners are virtually the same hedge against loss of a key person to cre- that age. This makes disability insurance as product solutions for their male counate fringe benefits for the key employee, an important consideration for women terparts, but it certainly seems jarring fund a buy-sell agreement, act as leverage and women business owners, in particular. that 87% of women believe they can’t for a bank loan or create a capital source There are several kinds of DI products find a financial professional they can for the business. on the market. For example, individual connect with. Keep in mind when working with DI can serve as “paycheck insurance” By paying greater attention to our habwomen business owners, sometimes to protect the insured in the event of a its and working to establish trust, we can simple and often inadvertent language qualifying disability. A business over- initiate respectful dialogue and build rechoices can be exclusionary. For example, head expense policy reimburses essential lationships with women for their specific avoiding using phrases like “key man” business expenses (e.g., rent, payroll, etc.) financial needs. insurance and opt instead for the more upon the owner’s qualifying disability, inclusive choice, “key person.” and premiums are generally tax-deduct- Jenna R. Washatka, ible. And a disability buy-sell policy can JD, CLU, ChFC, is an advanced planning 2. Recruiting, retaining and be used to fund part of the purchase price consultant for Ohio rewarding key employees. for a buy-sell agreement triggered upon National Financial Services. Jenna may Many business owners need power- disability of a business owner. be contacted at ful fringe benefits to retain top talent. jenna.washatka@innfeedback.com. Consider two non-qualified fringe ben- 4. Succession and estate planning. efits that use life insurance: By planning ahead for the future of her February 2020 » InsuranceNewsNet Magazine

ANNUITYWIRES Voya Sheds The Remainder of Its Annuity Business

Voya Sells Off Annuity, Life Block

2018 Sold portions of its annuity

Voya is shedding the remainder of its annuportfolio to Athene ity business. In a $24 billion deal, the company will sell to Resolution Life its fixed and variable annuities that were left after Sold the rest of its annuity the 2018 sale of substantially all its varibusiness to Resolution Life able, fixed and fixed indexed annuities. Voya CEO Rodney Martin Jr. said exiting the annuity business will allow Voya to focus on its retirement, investment management and employee benefits businesses. In June 2018, Voya sold nearly all its individual fixed and fixed indexed annuity policies to Athene. In Voya’s most recent move, the company will sell its remaining individual life insurance and fixed and variable annuities.

2019

METLIFE DROPPED ANNUITIES TOO SOON, SEC SAYS

MetLife has agreed to pay $10 million after the Securities and Exchange Commission charged it w it h t wo errors in its accounting for reserves assoc i at e d w it h its annuities businesses. Accord i ng to the SEC’s order, MetLife improperly released reserves for annuity benefits associated with MetLife’s Retirement and Income Solutions Business, which resulted in an increase in income. For more than 25 years, MetLife’s practice was to presume annuitants had died or otherwise would never be found if they did not respond to only two mailing attempts made approximately five and half years apart. MetLife later determined that its processes for locating and contacting unresponsive annuitants were insufficient to justify the release of reserves. To correct this error, MetLife increased reserves by $510 million as of the end of 2017. DID YOU

KNOW

PLAINTIFFS ABANDON SECURITY BENEFIT LAWSUIT

A class-action lawsuit alleging that Security Benefit Life defrauded consumers by implementing a “fraudulent scheme” involving a proprietary index used in two fixed indexed annuities was quietly withdrawn. The lawsuit, filed Oct. 16 in a California federal court, was closed with a two-sentence brief asking the court for a “voluntary dismissal.” The lawsuit targeted two of Security Benefit’s FIAs, the Total Value and Secure Income annuities, both of which offer the Annuity Linked Trader Vic Index (ALTVI), which is based on commodities and currencies futures along with a volatility control. The index is offered as an option along with traditional indexes such as S&P 500. Generally, annuities are marketed with a cap or participation rate that leaves owners with less than 100% of the

CONTINUE?

YES / * NO *

QUOTABLE We remain optimistic for [annuity] growth in 2020 and beyond. — Wayne Chopus, Insured Retirement Institute president and CEO

market gains. In exchange, the client is protected against market losses. The plaintiffs claimed Security Benefit marketed its TVA products as “uncapped” and with a “100% participation” rate.

SCHWAB SET TO LAUNCH RETIREMENT INCOME ROBO

Charles Schwab is offering consumers a subscription retirement income robo advisor that acts like a virtual annuity and produces a predictable paycheck. The Schwab Intelligent Income launched in January as an addition to Schwab’s $360-a-year subscription advice product announced in early 2019. In announcing the robo, Schwab said it would enable clients to extract paychecks efficiently from a mix of taxable and nontaxable accounts. “More than half of our existing digital advice clients are over the age of 50, and Schwab Intelligent Income aims to solve the retirement income concerns that are so common for this population,” said Tobin McDaniel, Schwab senior vice president of digital advice and innovation.

Nearly two-thirds of pension funds are considering dropping guaranteed benefits to new workers within the next five years.

InsuranceNewsNet Magazine » February 2020

Source: Mercer’s 2020 Defined Benefit Outlook

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ANNUITY

Annuity Index Linked To Industry Disrupters

GLOBAL INFORMATION SERVICES

Technology

Health Care

57%

Financials

18%

Consumer Goods

Telecommunications

2018

2017

-19%

2018

2017

2016

Sector Average 24%

15%

-34%

Industry Breakdown in Nasdaq-100 and S&P 500 as of September 30, 2019

23% 2% 1% 13% 6% 19%

Consumer Goods

Sector Average 24%

Utilities

Basic Materials

Oil & Gas

22%

18%

57%

Financials

Utilities

57%

40%

14%

Industrials

15%

Basic Materials

83%

57%

22%

Consumer Services

22%

Telecommunications

2015

Technology

40%

Industrials

2014

12%

Health Care

83% 57%

2013

S&P 500

10Y SALES GROWTH

Consumer Services

2012

2011

NASDAQ-100

10-Year Across Figure 4:Sales 10-YearGrowth Sales Growth across Industries Industries in Nasdaq US LargeMid Mid Benchmark in Nasdaq US Large Benchmark

Why would an advisor who is recommending an FIA to a client want the Nasdaq-100 as that annuity’s index as opposed to another index, such as the S&P 500? “With the Nasdaq-100, you are getting an increased exposure to companies that are on the cutting edge,” Slen said. “You are getting exposure to these companies in a higher weight and higher concentration.” “The Nasdaq-100 is not made up of startup companies,” Slen said. “It’s pretty clear the Nasdaq-100 is made up of largGLOBAL INFORMATION SERVICES er companies than the S&P 500 median. Nasdaq-100 brings all types of innovation Figure 4: 10-Year Sales Growth acrossin Industries in and disruption, but largely the large Nasdaq US Large Mid Benchmark cap space. 10Y SALES GROWTH Another key component of the Technology Nasdaq-100, Slen said, is market cap. Consumer Services Comparing the average, median and Health Care minimum market caps of the Nasdaq-100 Financials and the S&P 500 between December 2007 Industrials and September 2019, the average market Telecommunications cap has been higher in the Nasdaq-100 Consumer Goods than the S&P 500 in 10 of those years. Basic Materials The median market cap has been higher Utilities for theOilNasdaq-100 than the S&P 500 in & Gas each of the past five years. Source: Nasdaq, FactSet, From Calendar Year End of 2008 to 2018 As of September 2019, the medians were $31.96 billion for the Nasdaq-100

Figure 5: Industry Breakdown in Nasdaq-100 and S&P 500 as of September 30, 2019

A Shifting U.S. Economy

2010

orporations such as Amazon, Apple and Microsoft are commonly known as “disrupters” because of their roles in upending the way we go about our daily lives. But what do these corporations have to do with annuities? Game-changing modern-day industrials such as Amazon, Apple, Facebook, Intel and Microsoft are the backbone of the Nasdaq-100 index, which is built into 20 fixed indexed annuities across multiple carriers. In a recent webinar, Efram Slen, the head of index research for Nasdaq Global Information Service, discussed the Nasdaq-100 index and its value to annuity clients. But before he began his breakdown of the Nasdaq-100 index and how it relates to annuities, the president and CEO of a 35-year-old insurance marketing organization discussed the climate of the fixed indexed annuity marketplace over the past 15-20 years.

2009

By Susan Rupe

On The Cutting Edge

“The annuities of today are not the annuities our parents grew up with 30 or 40 years ago,” said Mark Williams, president and CEO of Brokers International. “The growth of the indexed annuity has been astounding over the past 15-20 years. Not only does it offer a client upside potential of market returns, with little to no downside risk, it also has changed the landscape of the annuity in general. Today, we are seeing an explosion of indexed annuities in the marketplace, and a lot of that growth is driven by the indices that are inside these products.” When “Nasdaq” is mentioned in stock market news, what is really being report3: 10-Year Performance of the is an ed is theFigure Nasdaq Composite, which Nasdaq-100 and S&P 500 index of all the stocks listed on the Nasdaq NASDAQ-100 S&Psaid. 500 Stock Market, Slen He described the 800 Nasdaq Composite as the barometer of 700 the Nasdaq exchange. 600 The Nasdaq Composite measures all 500 common stocks — both domestic and 400 international — listed among the more than3002,600 stocks listed on the Nasdaq stock200 market. The Nasdaq-100, whose index100 is built into annuities, comprises the 100 largest, nonfinancial companies listed on the Nasdaq stock market. Source: Bloomberg, As of September 30, 2019 The Nasdaq-100, as Slen described it, is made up of disrupters, game-changers 2008

Understanding the Nasdaq-100 index and its value to your annuity clients.

and forward-thinkers — also known as the new industrials. “So many of these companies are impacting and changing the way we live our lives,” he said. “They are at the forefront of innovation.” The current value of related exchange-traded products among Nasdaq-100 companies exceeds $100 billion.

4% 0% 2%

U.S. economic growth is shifting from heavy industry to technology and consumer services.

-19%

Oil & Gas

-34%

Source: Nasdaq, FactSet, From Calendar Year End of 2008 to 2018

38 and InsuranceNewsNet Magazine in Nasdaq-100 S&P 500 as of September 30, 2019»

Source: Nasdaq, S&P

February 2020

SOURCE: Nasdaq

GLOBAL INFORMATION SERVICES

ANNUITY INDEX LINKED TO INDUSTRY DISRUPTERS ANNUITY Figure 4: 10-Year Sales Growth across Industries in Nasdaq US Large Mid Benchmark

Figure 3: 10-Year Performance of the Nasdaq-100 and S&P 500

700

Consumer Services

57%

Health Care

57%

600

83%

Your Greater Life Starts with Catholic Order of Foresters Financials

500

40%

Industrials

400

22%

Telecommunications

300

18%

Consumer Goods 200

Sector Average 24%

15%

Basic Materials

Join a committed TEAM: Utilities

2018

2017

2016

2015

2014

2013

2012

2011

100 2010

SOURCE: Bloomberg, As of September 30, 2019

10Y SALES GROWTH

S&P 500

Technology

2009

The Nasdaq-100 TR Index (TDX) has outperformed the S&P 500 TR Indes (SPX) 10 out of the past 12 years.

NASDAQ-100 800

2008

When Performance Matters

Oil & Gas

-19%

-34%

• Life Products designed Source: Bloomberg, As of September 30, 2019 was 84% as of the end Source: Nasdaq, FactSet, From Calendar Year End of 2008 to 2018 and $22.51 billion for the S&P 500. The 10-year sales growth exclusively for Catholics smallest company in the Nasdaq-100, of 2018. Consumer services and health at $9.5 billion, has been larger than the care made up the second- and third-highFigure 5: Industry Breakdown in Nasdaq-100 and S&P 500 as of September 30, 2019 smallest company in the S&P 500, at $3.5 est categories in the Nasdaq-100 and both • Help clients achieve financial NASDAQ-100 S&P 500 57% sales growth in the billion, for the past 11 years. sectors showed success with Catholic Values In addition to providing guaranteed 10-year period ending in 12% December 2018. lifetime income, what makes an FIA at- Health Care The technology,7% health care and finan• Customized marketing tractive to consumers is upside potential cial companies on the Nasdaq-100 also 22% with minimal downside risk. FIAs pro- Technology have had tremendous dividend growth support and training tect consumers from market volatility, and are poised for more dividend growth 14% Consumer Services which has been a factor in the financial in the future, Slen said. Technology23% • Advanced sales support world over the past decade. has shown2%a 249% cumulative dividend Telecommunications 1% Looking at the Nasdaq-100 versus growth since 2009, followed by financials • Highly rated by AM Best and the S&P 500 over the past 10 or more Industrials at 153% and health care at13%88%. 6% KBRA years, both indexes have experienced Although the Nasdaq-100 story has 19% funvolatility, Slen said. The Nasdaq-100 has Financials been one of growth, Slen said, the been more volatile than the S&P 500 damental data behind that growth have • 3rd Largest Catholic Fraternal 8% since 2008, because the Nasdaq-100 has improved over the past deConsumerdrastically Goods 6% with over 3.7 billion of Life in a higher concentration of companies cade despite a volatile economy. Earnings 4% force that are more volatile. But he noted the have Utilities skyrocketed, which shows how the 0% Nasdaq-100’s bottom 50 companies out- companies on the Nasdaq-100 have ma2% Basic Materials performed the index’s top 50 companies tured as they increase revenues and reover the past 10 years. duce costs. Costs have been controlled, 5% & Gas were bought back, dividends have Slen showed a comparison between the Oilshares Nasdaq-100 and the S&P 500 on annual increased and the price-to-earnings ratio total returns, which reinvest dividends. Source: Nasdaq,has S&P contracted. The comparison showed the Nasdaq-100 Since 2003, the Nasdaq-100 had a comtotal return outperformed the S&P 500 pound annual growth rate of 20% in earntotal return in 10 out of the past 12 years. ings, 12% in revenues and 25% in dividend value while experiencing an 11% drop in Consumer Services, Biotech price-to-earnings ratio. NASDAQ.COM/GLOBALINDEXES What is fueling the Nasdaq-100’s growth? “The shift in fundamentals has resultThe two main drivers, Slen said, are ed in significant outperformance over consumer services (companies such as other U.S. large cap indexes,” Slen said. Amazon) and health care (especially bioSusan Rupe is mantechnology companies). editor for The underlying story behind the rise aging InsuranceNewsNet. She in the Nasdaq-100 is that the U.S. econ- formerly served as comomy’s growth is shifting from traditional munications director for industries such as metals and petroleum an insurance agents’ asto new sectors such as e-commerce and sociation and was an award-winning newspaper reporter and editor. Contact her at technology. susan.rupe@innfeedback.com. Follow her Technology made up 60% of the on Twitter @INNsusan. Nasdaq-100 as of September 2019, and its

57%

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February 2020 » InsuranceNewsNet Magazine

HEALTH/BENEFITSWIRES Drug Prices Drop For 1st Time Since 1973

Prescription Drug Prices Dipped Slightly In 2019 It cost a bit less to fill that prescription in

• Drug prices dropped 1% from 2017 to 2018. • The last price drop was in 1973, with a 0.2% drop.

2018, as drug prices dipped by about SOURCE: Department of Health and 1% over the previous year, the Department Human Services of Health and Human Services reported. It was the first price drop in 45 years, HHS said. HHS experts said the last time retail prescription drug prices declined was in 1973, when they went down by 0.2%. The price drop was for retail pharmacy prescriptions, not medications administered in hospitals or doctor’s offices. The HHS report found that spending on prescription medicines at pharmacies accounted for 9% of the total $3.6 trillion national health care tab in 2018. HHS found that nearly nine out of 10 prescriptions dispensed were for generic drugs, which puts downward pressure on prices.

OBESITY EPIDEMIC EXPANDS

MEDICARE FOR ALL WILL COST JOBS

In the midst of the political debate on Medicare for All, one of its biggest proponents said a government-run health care system will cost jobs in the insurance sector. Sen. Bernie Sanders, I-Vt., told a group of supporters at a political rally that jobs would be lost if private health insurance is eliminated. But he suggested job retraining as a way to help those who would lose their jobs in the transition to a government-run system. University of Massachusetts Amherst economist Robert Pollin told Kaiser Health News in 2019 that Medicare for All could cost 2 million jobs. Sanders’s Medicare for All plan would include what he called a Just Transition Program, “which will help everybody in the industry for a five-year period maintain their income, get the job training that they need to get another job.” DID YOU

KNOW

Americans, particularly women, continue to pack on the pounds. Nearly 40% of U.S. adults were considered obese in 2016, but almost half of U.S. adults will be considered obese by 2030, according to a report in the New England Journal of Medicine. Women, African Americans and people in low-income households are particularly vulnerable to what researchers called “severe obesity,” which is typically a body mass index of over 35, or about 100 pounds of excess weight.

Americans Are Getting Bigger Nearly 40% of all adults over the age of 20 in the U.S. — about 93.3 million people — are currently obese. SOURCE: Journal of The American Medical Association

As the scale goes up, so do the health-related risks of carrying excess weight. In 2019, the American Cancer Society found that obesity-related cancers are rising, including a third of liver cancer deaths linked to obesity.

QUOTABLE The real problem around making sure that people have access to affordable coverage is really addressing the high cost of health care. — Seema Verma, administrator for the Centers for Medicare & Medicaid Services.

Obesity rates are above 35% in all 50 states, but areas of the southeastern U.S. and Midwest are projected to be close to 60% in the next 10 years.

INSURERS, PHARMACIES LOOK AT PRIMARY CARE

They are household names for health insurance or the drugstore where you stop when you need aspirin. But CVS He a lt h, Hu m a n a, Walgreens, Walmart and UnitedHea lth Group are branching out to become primary care providers. These companies operate hundreds of clinics that directly market themselves as primary care providers or provide a majority of primary care services. They all plan to open even more clinics this year. Why the move to primary care? For insurers, primary care is viewed as a less-expensive way to lower downstream health care spending. For pharmacies, primary care is another income stream as drugstore chains face competition from Amazon and other online retailers. At the same time, fewer Americans are using primary care. Researchers have attributed that decline to millennial and Generation X patients who prefer convenience over seeing the same physician.

The minimum age to buy tobacco products in the U.S. was raised to 21. Source: Associated Press

InsuranceNewsNet Magazine » February 2020

Source: Food and Drug Administration

HEALTH/BENEFITS

It’s All About The Bennies With Gen Z The newest generation to enter the workforce is concerned about financial stability, studies from two carriers revealed. By Susan Rupe

eneration Z is beginning to burst into the workplace, and this youngest group of workers is determining benefits to be a deal breaker when it comes to accepting a job offer. Benefits are so important to Gen Z that 60% of this age group said they would accept a lower starting salary at a job in return for a strong benefits package, a Lincoln Financial Group survey revealed. The oldest members of Gen Z are taking their initial steps into the world of work and poised to overtake the millennial generation as the largest age group in the workplace. As more members of Gen Z graduate from school and enter the workforce, benefits carriers are paying attention to what this group wants out of their workplace benefits. The findings show these young adults are serious about benefits. Nontraditional benefits or perks such as wellness programs or access to an onsite gym may be popular with Gen Z, but benefits such as these aren’t necessarily what this youngest generation considers when choosing an employer. What Gen Z really wants, carriers say, is a strong benefits package that will help them become financially secure. The finding that 60% of Gen Z would rather have good benefits than a higher starting salary was surprising to Eric Reisenwitz, interim president, group protection, Lincoln Financial Group. Lincoln Financial surveyed Gen Z to learn more about their benefits preferences. But Reisenwitz said that statistic is in line with Gen Z’s need to achieve financial security. 42

Who Is Generation Z? Generation Z is the population segment born between 1997 and 2010, and numbering

about 61 million people. The oldest members of that generation are in their early 20s. The Great Recession was a defining event in the lives of Gen Z, as they saw how the economic downturn affected their parents’ financial situations. Gen Zers are digital natives, with the internet being part of their lives since they were born. Gen Zers are known for being

independent, self-confident and autonomous. They are

interested in entrepreneurship, environmentally aware and adept at multitasking. Gen Z saw how the Great Recession hurt their parents’ finances, and they want to shield themselves from the effect of an economic downturn, Reisenwitz said. “So they are looking for employers who will help them find ways to save money and become more financially stable,” he said. “This generation is thinking more about retirement than workers of other generations did when they were that age.” Traditional benefits are still top of mind with Gen Z, the Lincoln Financial survey showed. “Seventy-two percent said health

InsuranceNewsNet Magazine » February 2020

insurance is important to them, and 24% think dental insurance is important,” Reisenwitz said. “But what was surprising to us was that 50% are saying they want their employer to offer life insurance at work. We’re talking about 18- to 23-yearolds, so that is a significant percentage of young adults who want to obtain life insurance through the workplace.” In particular, Gen Z workers are interested in benefits that will help them manage their student loan debt, the survey showed. Gen Zers are known for being digital natives who were born into a world where they have access to any kind of information at their fingertips. But this generation is looking to their fellow humans for advice on benefits, Reisenwitz said. “Interestingly enough, a lot of Gen Zers are looking to their parents for advice. And they’re looking to their benefits counselors or their HR teams at their workplace. But they’re also interested in getting information online through whatever app they have.” That combination of getting information both online and by having a dialogue with someone they trust will guide Gen Z through the benefits education and selection process, Reisenwitz said. “We are seeing Gen Z has a high level of interest in wanting to have a dialogue about their benefits options,” he added. “Then once they decide what they want to do, they definitely want to have access to information. They definitely want to be able to do it on their own and find it on their own and get information on their own. But they’re willing to talk and get information the old-fashioned way.” Gen Z’s benefits needs will evolve as this generation begins to move through the various milestones of adulthood. Benefits brokers need to think about the best way to address those needs, Reisenwitz said.

The New Face of Work

values are essential

vs. 44% total population

vs. 39% total population

Employees wantHEALTH/BENEFITS their companies to offer programs IT’S ALL ABOUT THE BENNIES WITH GEN Z

that reflect their values and interests, including diversi & inclusion programs as well as international assignme

Focused on their finances

Coming of age during the Great Recession, they remain worried about financial stability. Even at a young age, Gen Zers are worried about both their shortterm and long-term finances.

54%

rank finances as their #1 source of stress

66%

2in3

Accidental insurance

55%

vs. 43% total population

Implications In addition to offering benefits related to financial wellness, offer benefits that address both short and long-term financial worries. This means protecting them from unexpected financial setbacks through voluntary benefits.

Critical illness insurance Hospital indemnity insurance

say having more non-traditional benefits would help reduce stress

Say retirement plans are a must-have benefit

Cancer insurance

SOURCE: MetLife

“Brokers can provide a huge advantage to the employers they serve by providing information on what a 22-year-old coming out of college with $50,000 in student loans is thinking about when they get their first job. And then thinking about what happens five years later when they are buying a house or starting a family or things along those lines.”

Retirement Plans A Must-Have

Gen Zers consider a number of factors when looking at a prospective employer, MetLife research revealed. More than salary or benefits, Gen Zers want to be proud of where they work. These young adults are looking to their employers to help relieve their financial stress and protect them from financial

Always on – always on th

They believe their employers can and should help them do more to reduce stress and help them with their financial well-being.

believe their employers should help with financial well-being

Bradd Chignoli, MetLife senior vice president for group benefits. “The top thing we learned in our survey is that % Gen Z is really focused % on financial protection,” he said. “That’s notsay surprising Gen Zin diversity when and you consider are interested hasinclusion a significant amount of student debt.assignm programs international aresurvey necessary This told us that Gen Z wants nontraditional benefits that would help them reduce debt.” That means the traditional medical, retirement, dental insurance are important to them, Chignoli said. But Gen Zers also are interested in benefits such as telecommuting and unlimited paid time off as well as voluntary benefits such as critical illness or accident insurance or legal insurance. Those benefits help people control unexpected expenses so that their financials remain stable. Another characteristic of Gen Z is up withand smart phones thatGrowing they are flexible always on theand se experiences, embrace flexibility a move, so the way they they access informahow theymust workbeand interact. tioninon benefits flexible as well, the MetLife study showed. ...and new wo Flexibility Gen Zersmeans still respecting appreciate traditional like gig and c the lives of Gen Zers outside channels of work...such as handbooks, company and provider websites and in-person sessions to engage with and learn about their benefits. But they also want to engage with their benefits and employers % on mobile apps and social media. That desire for flexibility as Genof employed Z say employers continues to evolve as a workforce is are keygig work known for recognizing vs. 34% total popu to benefits brokers and their employer outside-of-work clients to create the best benefits packaglives is a must have es for that generation, Chignoli said. vs. 37% total population “It’s about helping their employer clients understand how best to create employee benefits packages, how to make it easy to access information on how the benefits programs can help Gen Z in their personal lives, and how they can make benefits relevant today and tomorrow for themselves and their growing families.”

setbacks, MetLife’s report “Meet Gen Z: The New Face Of Work” said. More than half (54%) of Gen Zers said finances are their top source of stress, as compared with 42% of the total population. Two-thirds of Gen Zers said they believe their employers should help them with their financial well-being and say nontraditional benefits would help reduce their stress. Retirement plans are a must-have employee benefit, according to 55% of Gen Zers. Voluntary benefits such as accident insurance, critical illness insurance, hospital indemnity insurance and cancer insurance were cited by Gen Zers as valuable to their financial security. These benefits all tie in to Gen Z’s quest for financial peace of mind, said

Half

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @ INNsusan.

February 2020 » InsuranceNewsNet Magazine

Financial facts and figures powered by AdvisorNews.com

Hey, Planner! What’s Your Plan?

Maybe it’s an updated version of the cobbler’s kids not having shoes, but it turns out a majority of financial planners are not planning for themselves.

More than half (55%) of financial planners don’t have a business plan in place, according to a Financial Planning Association and SEI report

“Advisory Firms in 2030: The Innovation Imperative,” based on an online survey. The poll found numerous indications that planners are woefully underplanning. The report writers had five recommendations to help planners face the future.

THINK beyond 12 months.

How will you distinguish yourself to reach your long-term goals, such as increasing assets under management?

IDENTIFY your niche. Where is your business coming from?

LISTEN to your clients.

This does not mean saying “uh-huh” more intently but perhaps putting together a client advisory board.

SCHEDULE your planning. You need two full days to build out a frame for a 10-year plan.

Investors Winging It

Even Americans who have taxable investment accounts don’t know a whole lot about investing, according to a FINRA survey. Two-thirds of U.S. adults who own taxable investment accounts fail to correctly answer more than half of the questions in a 10-question quiz of investor knowledge, said

the FINRA Investor Education Foundation. Some of the key findings were: think that the past perfor46% mance of an investment is a good indicator of future results. understand that the main 30% advantage of index funds over actively managed funds is general-

GET techie.

Audit your tech and ask tough questions about what you need to scale and improve your client’s experience.

Low Rate Is Fate, Fed Prez Says

ly lower fees and expenses.

feel they have access 75% to the information needed to make investment decisions without an advisor.

of investors 72% with advisors still make investments

Just days after the United States took out Iran’s top chaos-instigator in Iraq and provoked fears of escalating conflict, the Federal Reserve Bank

of New York President John Williams promised that things will remain nice and boring on the Fed front.

“There’s been a process of going through the stages of grief about a low neutral rate,” Williams said, according to The Wall Street Journal. “These factors are basically the hand we’ve been dealt for the next five to 10 years.” Williams told attendees at an economic conference in San Diego that the inflation rate has been so consistently near the Fed’s 2% target rate despite Nic and loe significant events that he did not foresee its rising anytime soon. peoplew, Also at that conference, former Fed chairman Ben Bernanke assured at. tendees that the central bank still had levers to pull if any recession shows up one of these years, adding that asset purchases (quantitative easing, as you might remember) and public communication are still trusty tools.

Big Firms Get Small Fine From FINRA

FINRA sanctioned five big-name firms for violating Rule 2090, FINRA’s “Know Your Customer” rule. Rule 2090 “requires member firms and their associated persons to use reasonable diligence to determine the ‘essential facts’ about every customer and the authority of each person acting on behalf of such customer,” FINRA said. 44

InsuranceNewsNet Magazine » February 2020

on their own sometimes.

think their 29% portfolio will outperform the market. their portfolio 4% think will underperform. used 7% had BrokerCheck.

Source: FINRA

The five firms permitted customers to open custodial accounts to transfer property to a minor beneficiary without the need for a formal trust, yet failed to establish or maintain reasonable supervisory systems to monitor whether custodians transferred control over custodial property in a timely manner, FINRA said. The firms — Citigroup, J.P. Morgan, LPL, Morgan Stanley and Merrill Lynch — were “slapped” with a combined fine of $1.4 million. FINRA said the firms, which did not contest the findings, also agreed to review their systems.

You just had your best year ever.

MDRT is the premier association for elite insurance and financial services professionals. Members use our global network, dynamic events and unmatched resources to connect, share insights and explore the potential of whatâ&#x20AC;&#x2122;s next. MDRT. Where the best keep going.

Find out if you qualify at apply.mdrt.org

Why Stable Value Funds Ease Risk Anxiety For Millennials Stable value funds have three unique product benefits that can be attractive to millennials saving for retirement. • Kent Bartell

mployees of all age groups have trouble making educated choices about investing in their retirement plan, but millennials often face some unique challenges as compared with other generations. Because of this group’s age range, millennials aren’t all in the same stage in life. Some are pursuing higher education, some are starting their first jobs and others are climbing the corporate ladder. In addition, a large portion of millennials still have student loan debt. This can influence their retirement savings decisions and impact their ability to save adequately in the long run. Contributing to a defined contribution plan now, even in small amounts, can create larger earnings over time. But when it comes to investing, millennials tend to be more risk-averse than their parents. The reasons range from experiencing an economic recession to saving to buy a home or a host of other factors. Given the growing number of millennials in today’s workforce, now can be a great time to talk to clients in this age bracket about adding a low-risk investment product — stable value funds — to their defined contribution plans. The Principles Of A Stable Value Fund Because stable value funds are designed for investors who are looking for a retirement plan with a guaranteed return of principal and interest, along with competitive crediting rates and liquidity, they are inherently less risky than many other investment options. Many stable value funds also have locked-in quarterly interest rates, so the investment is more stable than an investment tied to an individual business 46

or stock. As you make the case for clients to consider stable value funds, highlight how these three unique product benefits can be attractive to millennial employees: 1. Capital Preservation

Depending on the carrier, a stable value fund’s crediting rate typically is contractually guaranteed and known to a client in advance. The rate is often locked into place every quarter or at least semiannually. Some insurers even guarantee that the crediting rate will never fall below 1%. This level of certainty may be what

comfort of knowing they have the freedom to move their money to other investments whenever they want. There are generally no restrictions or penalties for the individual investor. 3. Yield

Holding steady through marketplace volatility, stable value funds serve as a lowrisk investment vehicle that provides a guaranteed yield — no matter what. The product can provide the liquidity and principal-protection features of money market products but with the higher yields that are comparable with intermediate-term bonds. Stable value funds are backed by a high-quality, well-diversified portfolio

After a millennial plan participant becomes more comfortable with investing in general, they may then ultimately decide to switch at least some of their investments to riskier assets. it takes to assure millennials their hardearned savings will be protected. Explain to millennial plan participants that they’re at an ideal age to capitalize on the guaranteed crediting rate because the longer the fund is invested, the more time the investment has to grow. In most cases, millennials will be working for at least two more decades, providing a reasonable time frame to accrue a sizable sum for retirement. 2. Liquidity

InsuranceNewsNet Magazine » February 2020

of fixed-income options. These types of diversified investments can protect investors from the market fluctuations that are experienced in higher-risk investments, such as the stock market. Millennial employees may feel reassured to hear that if we experience another economic recession, their hard-earned money would not take a hit. Stable Value Fund Education: The Key To Smarter Plans A lack of awareness about stable value funds is often the deciding factor in an employee’s choice not to invest in one. It is up to financial advisors to fill that educational gap. By doing so, you will help plan participants make meaningful choices about their retirement while boosting your own credibility.

WHY STABLE VALUE FUNDS EASE RISK ANXIETY FOR MILLENNIALS

What Is Stable Value? Stable value is an investment vehicle of fered by def ined contribution plans and used by participants. Stable value provides the following unique combination of benefits: • Principal preservation. • Stability and steady growth in principal and earned interest. • R eturns similar to intermediate bond funds with the liquidity and certainty of money market funds. • Benefit-responsive liquidity, which means participants transact at contract value (principal plus accrued interest).

Stable Value Funds Are Used In Defined Contribution Plans Stable value funds are a core investment in def ined contribution employee benefit plans: • $839 billion invested in stable value assets. • 179,000 defined contribution employee benefit plans. • O ffered in approximately three-quarters of all defined contribution plans. • 4 01(k) allocations to stable value funds have ranged between 17% to 37% over the life of the Aon 401(k) Index. Source: Stable Value Investment Association

Many employers may also be new to stable value funds, so it’s important to explain the product structure in a way that’s easily digestible. Here’s a one-sentence overview: Stable value funds are a relatively low-risk asset class that focuses on capital preservation while providing steady, positive returns to employees in qualified and nonqualified retirement plans.

And here’s how you can summarize the benefits: The product can offer employees the liquidity and principal-protection features of money market products, but with the higher yields that are comparable to intermediate-term bonds. Getting Into The ‘Millennial Mindset’ As you prepare to meet with clients and discuss how to reach this demographic, first get yourself into the millennial mindset. Whether you are a millennial, have millennial children or work with millennials as colleagues, you know that student loan debt can be a source of financial stress. The thought of owing a large sum of money and the amount of time it can take to pay it off can be overwhelming. Being mindful of the sensitivity around this issue can help you craft your conversations about retirement savings best practices. When possible, provide real-life examples to demonstrate how stable value funds can offer millennial employees a safe and profitable investment vehicle for their hard-earned money. Often, clients will take comfort in hearing you speak from experience about how others have benefited from adding this product to their plans. Additionally, highlight how starting to save early can help employees grow their savings over time with compounded interest. If a client is worried about market volatility, stable value funds offer a good way to get more stability with an appealing interest rate. An important note to highlight is that during the 2008 economic crisis, stable value funds were among a select few retirement plan investments that earned a positive return. For employees who sold at the market bottom and therefore may still be digging out from losses they incurred during the Great Recession, this investment security could be especially appealing. Retirement readiness will continue to be an increasingly important concern among millennials in the coming years.

As a result, plan sponsors and employees are looking to their financial advisors to recommend products that will help set them on a solid path, such as stable value funds. The capital preservation, liquidity and yield that stable value funds provide can be a great choice for millennials in nearly any stage of their career. These product benefits can help boost employees’ retirement balance and prepare them for whatever the future may bring. Kent Bartell, CFA, is the director of investment research at The Standard. He has more than 25 years of experience in portfolio management and financial services. Kent may be contacted at kent. bartell@innfeedback.com.

February 2020 » InsuranceNewsNet Magazine

INBALANCEWIRES

Intermittent Fasting? Help Or Hoax?

Intermittent fasting has been a dietary buzzword recently. But is it a good idea to restrict your eating to a certain time window each day or particular days of the week? Here’s what some nutrition experts have to say. The New England Journal of Medicine reported that intermittent fasting may lead to weight loss, even without cutting calories. But there is even more evidence that eating on a restricted schedule can slow the aging process and slow the onset of age-related illnesses such as heart disease, cancer and diabetes. Those who practiced intermittent fasting showed some health benefits even if they didn’t lose weight. The researchers believe a process called metabolic switching is the cause of most, if not all, of IF’s benefits, according to the study. The study’s authors said they believe intermittent fasting could become a standard part of a healthy lifestyle. body mass index — they found long hours significantly raised the risk of high blood pressure.

QUOTABLE The problem is there’s too much cheap food, high in fat, sugar, and salt.” — Francesco Branca, World Health Organization

Eight million people die from tobacco-related illnesses every year, of which 7 million die from direct tobacco usage and 1 million die from secondhand smoke.

MALE SMOKING ON THE DECLINE

LONG HOURS = HIGH BLOOD PRESSURE?

Those long hours spent sitting at a desk job could be harming you in ways you don’t realize. A new study suggests working long hours behind a desk might raise the risk of undiagnosed high blood pressure or hypertension even when readings in a doctor’s office are normal. Researchers at Laval University in Canada found that those who spent long hours on the job were 66% more likely to have sustained hypertension and 70% more likely to have so-called masked hypertension — blood pressure that is normal in the doctor’s office, but high at other times. When the researchers analyzed the blood pressure data accounting for factors that might affect the risk of hypertension — such as job strain, age, gender, education level, occupation, smoking and

Move over, Marlboro Man. Cigarette smoking and other forms of tobacco use aren’t the macho thing they once were, the World Health Organization reports. The WHO reported that global use of tobacco is on the decline, with 60 million users kicking the habit over the past 20 years. Women had been the driving force behind the numbers of people who quit, but men are jumping on the antismoking bandwagon, the WHO said. WHO estimates 2 million male users will quit by the end of 2020 and 6 million will quit by 2025, bringing down the projected estimate of 2025 to 1.087 billion users. Although the numbers of people who quit are encouraging, the fact that more than 1 billion people worldwide still use tobacco was a concern of WHO officials.

DID YOU

NEW FATHERS SHOULD BE SCREENED FOR POSTPARTUM BLUES

New fathers aren’t screened for postpartum depression, and some health experts believe that should change. Studies estimate that anywhere from 2% to 25% of new fathers are affected by depression, according to researchers at the University of Wisconsin-Madison. Depression often looks different in fathers than in mothers, the researchers said. In addition to the familiar symptoms of depression — such as persistent sadness, loss of interest in previously enjoyable activities and trouble eating and sleeping — men may mask their symptoms by throwing themselves into work or by drinking more. Fathers with postpartum depression are also less likely than mothers to ask for help, and a lack of awareness about paternal depression could be making it more difficult for them to tackle the problem, the researchers said.

KNOW The number of 12- to 17-year-olds who experienced a major depressive episode in the past year increased by more than 50%.

Source: Centers for Disease Control and Prevention

InsuranceNewsNet Magazine » February 2020

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= $832K Total Paid Out Call your IMO, or the Legacy Marketing Group® Sales Team at 855-505-8757, or visit www.FutureMarkBeneBooster.com to receive a sample illustration! FutureMark 10, 10 LT (Contract Series 416/4416). BeneBooster guaranteed minimum death benefit rider (Rider Series 2182). Products are single premium deferred fixed indexed annuities underwritten by Americo Financial Life and Annuity Insurance Company (Americo), Kansas City, MO, and may vary in accordance with state laws. Products are designed and exclusively marketed by Legacy Marketing Group. Some products and benefits may not be available in all states. Certain restrictions and variations apply. Consult contract and riders for all limitations and exclusions. Legacy Marketing Group and any licensed insurance agent/agency shown on this ad are independent, authorized agents/agencies of Americo. The Optimizer administrative fee of 1.00% will be deducted from the Accumulation Value at the end of each contract year, including the first. FutureMark and BeneBooster are service marks of Legacy Marketing Group. * 25% for issue ages 0–75; 15% for issue ages 76–85. ** View illustration at www.legacynet.com/IllustrationSample_AF1471v1219.pdf. HYPOTHETICAL EXAMPLE assumes $200,000 premium in FutureMark 10 allocated in the Two-Year SG Columbia Adaptive Risk Allocation Index Point-to-Point With 115% Participation Rate. Rate effective December 29, 2019, and subject to change. Keep in mind that past performance is no guarantee of future results. Any such example must not be regarded as guaranteed or as an estimate of future performance, unless it is based solely on the minimum guaranteed interest rates. Strategy may not be available in all states. Results prior to the Index’s actual existence are simulated and based on back-testing. The results obtained from such back-testing should not be considered indicative of the actual results that might be obtained from an investment in the Index. The actual performance of the Index may vary significantly from these results obtained from back-testing.

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INBALANCE

A Matter Of Taste: Becoming A Scotch Whisky Expert Throw away the rocks and dump the soda. Here’s what you need to know about scotch. By Bryce Sanders

cotch is a popular beverage. Are you surprised? Did you think “brown liquor” was losing popularity? The U.S. became the first billion-pound export market for scotch in 2018, according to the Scotch Whisky Association. You may have a desire to develop an expertise in scotch, enabling you to hold your own in conversations with friends who consider themselves knowledgeable in this area. Good news! Unlike becoming an expert in insurance, there are no exams to pass. Becoming an expert on scotch comes from learning the basics, tasting a variety of types and determining your personal preferences.

What Is Scotch Whisky?

It’s an alcoholic drink, brown in color, made from either malt or grain. In the U.S., it’s typically about 40%-43% alcohol by volume, or 80-86 proof. Some whisky, described as “cask strength,” can have a higher alcohol level. The word “scotch” is meant to signify it was made in Scotland. The French contend Champagne comes only from that named region in France; the Scots have a similar argument about their whisky. 50

How Is It Made?

Scotch is made by one of two processes. As a scotch enthusiast, you don’t need deep technical knowledge of how it’s made. When people ask the time, they don’t want to hear how you build a watch. Malt whisky is made only from malted barley using pot stills. The process involves four stages: Malting, mashing, fermentation and distillation. Glossy photos show shiny, copper stills and men raking grain. Technology has made the traditional process easier while retaining the character. The other method of production is for grain whisky. The patent still process is more continuous. The blend is malted barley and other unmalted cereal grains. The process is similar to the pot still method, but more automated. Final distillation takes place in the patent (or Coffey) still. Takeaway: The four steps are: malting, masking, fermentation and distilling. Methods vary.

Where Does It Come From?

Like the French with Champagne, the Scots are very particular. Scotch whisky comes from Scotland. Ireland produces whiskey, but it’s called Irish whiskey (with the “e” added in the spelling for anything other than Scotch, Canadian and Japanese whisky). We produce whiskey in the U.S. Jack

InsuranceNewsNet Magazine » February 2020

Daniel’s is famously known as Tennessee whiskey. We Americans usually call our product bourbon, after Bourbon County, Ky., where it is produced. Japan produces their version. Suntory is the famous name. Your local warehouse club might carry a whiskey produced in India. Takeaway: Scotch whisky comes only from Scotland.

Blends vs. Single Malts

Different people want different things. Some people simply want a pleasant beverage, while others prefer something with character. The advantage of different tastes is the ability to differentiate and try to guess the location or identity of the scotch.

Scotch 101: How Do You Say It? A Pronunciation Guide To Some Varieties Of Scotch

Auchentoshan - OCKun–TOShun Chivas Regal - SHIvas REE-guhl Dalmore - dalMORE Oban - ooBAN Glenlivet – glenLIFfit Glenfiddich – glen FIDdich Lagavulin - lagaVOOlin Glenkinchie - glen KINsee Talisker - TALisker Source: whiskycast.com

A MATTER OF TASTE: BECOMING A SCOTCH WHISKY EXPERT INBALANCE You know blends as famous brands. Johnnie Walker, Dewar and Chivas Regal are familiar names. They blend scotches from different regions of Scotland to produce a certain profile or taste. Single malt is the product that attracts the attention of enthusiasts. Single malt scotches are produced by different distilleries, much like Bordeaux wines come from different chateaus. They have different flavors. Takeaway: Blends are big brands, aiming at a middle-of-the-road flavor. Single malts have character. They have a different taste.

3. Islay. Islay malts come from a small island west of the Scottish coast. They have a smoky flavor because they also use peat fires to dry the barley. Famous names are Bowmore and Lagavulin.

top, called the Glencairn. It’s named after the company that makes them. Takeaway: Scotch on the rocks or scotch and soda are not how serious scotch fans drink their favorite beverage.

4. Lowlands. This is a big region geographically but Lowland malts are less popular than Highland malts. The area is known for blended scotch. Lowland malts are often triple distilled. Glenkinchie and Auchentoshan are two examples of single malts.

What To Eat With Scotch

Aging Is Important

It’s been said people mellow with age. It works the same way with Scotch. If you tasted whiskey immediately after distillation, you might think you were drinking gasoline! Not a pleasant taste. Like wine, Scotch whisky is usually aged in wood casks before it’s bottled and sold. Some air gets in, evaporation takes place, the spirit mellows and improves. Some distilleries use sherry casks or wine barrels to pick up additional flavors. Aging takes place in the barrel. The aging stops when the whiskey is bottled. One of the most famous blends is Johnnie Walker. It comes in several tiers based on age: Black Label is 12 years old, followed by Green Label at 15 years, then Johnnie Walker Aged 18 Years and finally Blue Label, assumed to be 25 years old. Takeaway: The longer the whisky is aged, the smoother (and more expensive) it becomes.

What Makes It Different?

Single malt scotch comes from six primary regions of Scotland. They are: 1. Highlands. The area is pretty big. Highland malts are made from 100% malted barley, often dried over peat fires. The distillers use the pot still method. Highland malts are associated with a smoky, medicinal taste. Dalmore and Oban are popular names. 2. Speyside. This region is smaller than the Highlands or Lowlands. Speyside malts are light and grassy or rich and sweet. Familiar names are Glenlivet, Macallan and Glenfiddich, which are also the best-selling single malts in the world.

So what foods go with scotch? Let’s assume you are drinking with friends, not drinking scotch throughout a three-course meal. Smoked salmon is a pretty good choice because it’s another major Scottish export. Dried fruits and unsalted nuts work well too. This is good because it’s in the bar snack category. Cheeses, especially cheddar, go well with scotch. Let’s be obvious and include a glass of water so you don’t end up drinking too much. Takeaway: You want some food in your system. Assortments of unsalted nuts are probably the easiest snacks to find.

Fun Facts About Scotch 1. Proper spelling is important. Although we Americans talk about “whiskey,” in Scotland, their preferred spelling is “whisky,” dropping the “e”.

5. Islands. They aren’t an official region, but you will come across Island malts. They vary, but often have a smoky flavor. Jura and Talisker are the names you are most likely to see. 6. Campbeltown. Campbeltown is in southwestern Scotland, at the foot of the Mull of Kintyre. It was once a thriving distillery region but only a few distilleries remain there today. Scotch from this region is known for its dryness and sometimes pungent taste. Prominent names include Glengyle and Springbank. Takeaway: Scotland has more than 120 malt whisky distilleries. Many single malts have a smoky flavor. Age mellows the taste while increasing the price.

How Do You Enjoy It?

While vodka and gin are often served in mixed drinks, scotch is traditionally enjoyed on its own. A small amount of your scotch is poured into a standard tumbler. Some people add a few drops of spring water to help release the aroma. There’s a type of glass, wider at the bottom than the

2. Water of life. Many cultures had a high-alcohol distilled beverage, often given to people who were dying from a serious illness or injury. Back when there were no anesthetics, it was meant to ease the pain or transition to the afterlife. This was called “eau de vie” or water of life. The word “whisky” has similar linguistic roots. 3. Enter St. Patrick. Irish whiskey has been gaining in popularity. The brands Bushmills and Jameson have been around forever. It’s been said St. Patrick introduced the distilling of spirits to Ireland in the fifth century. 4. Minimum aging. If a Scotch whisky has no age listed on the label, it must have been aged for a minimum of three years. Bryce Sanders is president of Perceptive Business Solutions, New Hope, Pa. He provides high net worth client acquisition training for the financial services industry. He is the author of Captivating The Wealthy Investor. Bryce may be contacted at bryce.sanders@innfeedback.com.

February 2020 » InsuranceNewsNet Magazine

BUSINESS

The Easy Yes: How Clients Tell You What They Really Need Listen to understand instead of to respond and you will find you don’t need to give a sales pitch. By Lloyd Lofton

y wife doesn’t usually call me during the day when I’m working out of town. I was ending the day with 100 salespeople in one of my seminars when I felt my cell phone vibrate. I stepped out of the meeting room at the end of the day to return her call. “When you get home, I want you to look at a car,” she told me. Now we had two vehicles. I had a Mustang convertible and she had a Ford Explorer Sport Trac pickup truck. Our kids weren’t old enough to drive, so I asked the obvious question: “Who’s getting a new car?” I already knew the answer. She always gets the new car. She drove the kids to school, to their extracurricular activities and to the store. I was on the road most 52

weeks, so my car was either parked at the office, the airport or at home. She told me she found a new car she really liked, and she wanted to trade my car in; I could take her truck. I agreed to see it on Saturday morning after I got home late Friday night.

which was something my wife had always liked. I didn’t care about a moon roof one way or the other, even though both our vehicles had one — but, OK, I looked at it. Before pulling out of the lot, I adjusted my seat, steering wheel, side view mirrors

Because the salesperson sold the benefits of the features he saw my wife adjust during her test drive, he ensured she already felt she owned that car. The Test Drive

On Saturday morning, we went to the dealership to see the Ford Taurus she liked. She introduced me to the salesperson, and we got in the car to take a test drive. As I was getting adjusted to the driver’s seat, the salesperson commented from the back seat about the moon roof,

InsuranceNewsNet Magazine » February 2020

and the air conditioner — making the car fit me better. While I was doing these things, the salesperson said, “Lloyd, see that blue button just above the air conditioner? Push it for a second, until the temperature feels right for you.” As I found this blue button, I wondered why he was focused on this, but I pushed it and cool

THE EASY YES: HOW CLIENTS TELL YOU WHAT THEY REALLY NEED BUSINESS air started to come out. Just as this happened, he leaned into the front of the car, pointed and said, “Now see that red button on that side of the air conditioner? Push it and, Debbie, tell us when it feels right for you.” As soon as my wife said it was good, the salesperson said, “Now, Lloyd, when you and Debbie are taking your drives to look at antiques, you can keep your side of the car as cool as you like it and Debbie can keep her side of the car warm enough to feel comfortable all the time. That’s a nice feature, isn’t it?” I immediately looked at my wife and commented, “Someone’s been talking!” Clearly, my wife had already talked with the salesperson about our drives, how I liked my side of the car cool and how she was always cold. And he illustrated how she could keep her side as warm as she wanted. He wasn’t selling the “feature” of the air conditioner; he was selling me on the “pain” my wife felt when we drove together and she felt cold, while he sold her the “benefit” of how she could keep her side of the car warmer. This guy knew what he was doing, for sure! He listened to understand instead of listening to respond like most salespeople. During the test drive, he also pointed out other features that — interestingly — were things my wife commented on over the years. Things like the driver’s seat having a memory for two different positions, meaning when I got in the car and hit the No. 2 button, the seat adjusted to fit me, and my wife could always get the seat back to what was most comfortable for her when I wasn’t driving the car.

The Sales Pitch That Never Happened

What the salesperson was doing was having me adjust the things we used the most, in the order we used those things. As he was doing this, he was getting me, as he did my wife, to take emotional ownership over the car. When we got back to the lot, he directed me to park in a particular spot, right next to our car. I wonder why? When we went inside the dealership after the test drive, what do you think we went inside to discuss — which car we

Finding The Yes 1. Pay attention to the things people adjust the most, in the order they make those adjustments when they get behind the wheel. 2. S ell the problems people have. Ask questions about how and why they use the things that affect their life. 3. F ind the benefit. Features are what a product has or does. Benefits are why someone would want those features – what’s happening now that they want to change? 4. L isten to understand, don’t listen to respond. It’s OK for them to buy for their reason. They don’t have to buy for your reason. 5. Welcome objections. Questions gather information, and objections disclose information by revealing what the prospect needs in order to buy today! might buy or how much we were going to pay for that car? If you said how much we were going to pay for that car, I wholeheartedly agree! Because the salesperson sold the benefits of the features he saw my wife adjust during her test drive, he ensured she already felt she owned that car. Then he sold me on how the benefits of those features would make my wife’s life easier and more comfortable if she were driving that car. The only question he left for me to answer was how much I was going to pay for that car. Now I’m sure you want to know — yes, we drove off that lot with that car and a

happy wife! So, let me ask you: How can you help your prospect adjust your product or service to fit them? Customers build a relationship with you, your company and the problem they want to solve. You’re always selling the experience! Lloyd Lofton is the founder of Power Behind the Sales. He has hired and trained thousands of salespeople in his 30-year career, helps sales teams capture lost sales and speaks across multiple verticals. Lloyd may be contacted at lloyd.lofton@ innfeedback.com.

February 2020 » InsuranceNewsNet Magazine

INSIGHTS

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

Prospecting: Taking The Long View Think about the long term when reaching out to potential clients. By Howard Sharfman

inancial advisors are planners in more than one way. We help our clients plan for the future, and also plan for our own business growth. To keep a business profitable year to year requires a pipeline of prospects who are ready to become clients. However, a long-term prospecting approach is key to maintaining a viable business through your retirement and beyond.

Prospecting Essentials

Before you solidify a long-term approach, you must be highly skilled in the basics of prospecting. One of the main strategies I use is to prospect in places where my ideal clients already are instead of casting a wide net. For example, if I am looking to attract clients in the private equity industry, I look to my private equity networks. One of the easiest mistakes to make in this stage is to waste your prospecting efforts by limiting the size of clients you will take on. You must be comfortable with evaluating any opportunities that come your way from that pool, even if they seem small in the grand scheme of financial planning. Although not every prospect will be ready to implement a full financial plan and explore all the presented solutions, you can establish relationships with your target market that will sustain your practice and potentially lead to more opportunities built on trust. 54

Allocate Your Efforts

Although you want your business to be successful in 2020, you also want to sustain and grow your practice for five, 10, 15 years or more. I recommend distributing your time spent prospecting across short-range, mid-range and long-range prospects. Short-range prospects have an immediate need that you can fulfill. Mid-range prospects may take one to three years to take action. On the other hand, you may stay in touch with long-term prospects for 10 years before they decide to work with you. Although these clients may not be ready to address their financial challenges in the near future, a long-term approach demonstrates your ability to prioritize clients’ best interests and wait until the time is right for them. Relationships you establish now may become your best opportunity in 10 years’ time.

Create Advocates

We recently paid a death claim for a policy that was written by my firm in 1934. This is a tremendous example of how every touch point you make can lead to long-term relationships and new clients. We made a promise 85 years ago that resulted in us working with one family for five generations. My predecessors set me up for success, and through a long-term approach I can do the same for my successors. I know that a promise I make now will be fulfilled even beyond my retirement. What you communicate while prospecting has the potential to reach an even larger network beyond family relations. Every prospect you speak to can be a referral source, no matter how much

InsuranceNewsNet Magazine » February 2020

time has lapsed. For instance, a prospect may hear of a colleague with a financial planning challenge five years after they speak with you – even if the solution you presented had not been a fit for them. Or, I may mention to all prospects the work my firm does with nonprofits in case they sit on a nonprofit board or know someone who does. You never know who your message will reach and what it may lead to.

Build Your Knowledge

From the onset of my career until now, I have found it valuable to learn from industry greats to build on my success. Before going into a prospecting meeting, I may watch a video on the MDRT Resource Zone from Ben Feldman’s 1981 annual meeting presentation on prospecting from the client’s point of view. I’m always looking to learn from the best, emulate their strategies and allow them to influence my own. Idea sharing can be life-changing, which is why I find it so essential to share my own experiences with others. Feldman or anyone else in our industry can help another producer help another family achieve financial stability through shared learning, and I hope my approach on long-term prospecting will do the same. By using a long-term outlook, we keep clients’ priorities top of mind and sustain our firms for years to come. Howard Sharfman, senior managing director of NFP Insurance Solutions, has been recognized as an innovative leader in the insurance business for over two decades. He is a 25-year MDRT member. Howard may be contacted at howard. sharfman@innfeedback.com.

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.

Finding Success In The Limited, Extended Care Planning Market In conversations with prospects, bring up the need for care often, approach them with a starter policy and do drip marketing two weeks before their next birthday. By Craig Roers and Ayo Mseka

he limited and extended care planning industry has grown exponentially in recent years as companies and advisors work together to help Americans plan and pay for their future care needs. In this interview, Craig Roers, head of marketing with Newman Long Term Care, offers some helpful hints for finding success in the LECP market. NAIFA: Brief ly describe the LECP industry. Craig Roers: The LECP industry comprises insurers and advisors who are committed to proactively helping people plan for their future care needs. Using insurance and other planning options, we can help protect families from the devastating consequences of an extended-care event. There is no one right solution for everyone, so we represent a variety of solutions to help people select the best options to fund their future care. NAIFA: Why is there increased focus on the LECP industry right now? Roers: As baby boomers are nearing retirement, we are becoming more aware that many of them have done little to prepare themselves or their families for what could be the biggest risk to their retirement income — a long-term care event. If they don’t have a written plan in place and that plan is not communicated, their families will go into crisis mode. They will do what they can to make the best of a bad

situation, but many unintended caregivers will put their own careers, finances and health at risk to take care of their loved ones. We are also starting to hear more horror stories of those who did not have care plans in place, such as families devastated by providing care to a loved one, or are worn down to the point at which they take drastic actions that hurt themselves or those around them. Many of those situations can be avoided by putting a plan in place and making sure that family members know it’s there for them to tap into when it’s needed. We don’t want to see our loved ones turning to GoFundMe campaigns to help them pay for care if we can help guide them now. NAIFA: What best practices should agents and advisors use to serve their clients and expand their practices? Roers: Here are a few winning strategies. • Unless your clients already have longterm care insurance, make sure you have the discussion again at each client review. Like with most things, clients often need to hear about this several times before they will act. Don’t just ask them once and check off that box forever. Many times, people are not yet in the right place to buy. But by continuing to have this conversation with them (whether via reviews or drip marketing), you will be the advisor who they will turn to when they do have a life trigger (most often a loved one needing care) that drives them to create their own solution. • Center the conversation on what the insurance will do for their caregivers, not just what it will do for the clients. If most people truly understood the physical, financial and emotional toll that caregiving can take on their families, they would never think of putting that burden on them. LTCi not only helps ensure that the policyholders can receive the care they want and where they want it,

but it also provides their loved ones with the resources that can help them be care managers instead of care providers. • Stop showing fully loaded Cadillac plans right out of the gate. You are only giving prospective buyers sticker shock. Open with a more affordable starter policy that covers just their biggest risk, and then allows them to buy additional coverage if they think they will need more care or a higher daily benefit. A basic policy can be designed for most budgets. It’s better for them to have bought a smaller policy that only covers 50% to 80% of their actual care costs than to show them a comprehensive plan that costs too much and having them end up buying nothing. • Do annual drip marketing to prospects two weeks before their next birthday, reminding them that LTCi is priced based largely on health and age. They still have 30 days to save with their “younger age” after their birthday, but the deadline of a birthday can be a great trigger for them to act now. • Make sure you communicate to your clients’ loved ones their preferences for care and how they plan to fund that care. Let them know that this should not be a decision they force their family to make. Putting a written plan in place helps prevent their families from having to make some tough decisions. Craig Roers is head of marketing for Newman Long Term Care, where he has worked for the past 21 years. He is also one of the sponsors of NAIFA’s Limited and Extended Care Planning website. Craig may be contacted at craig.roers@innfeedback.com. Ayo Mseka is editor-in-chief of Advisor Today, the official publication of the National Association of Insurance and Financial Advisors. Contact her at Ayo.Mseka@innfeedback.com.

February 2020 » InsuranceNewsNet Magazine

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.

INSIGHTS

Those Who Care For Others Need Financial Care Research shows that caregivers are coming up short on life insurance and other essential financial protections.

Top Reasons For Not Enough Life Coverage 45%

It is too expensive

27%

Other financial priorities

By James T. Scanlon

aregivers, by definition, protect the ones they love. But who protects the caregivers? Since February includes both Valentine’s Day and Life Happens’ “Insure Your Love” campaign, it’s the perfect time to look at the needs of caregivers, as well as the people they love. An unpaid family caregiver is anyone who devotes part of their time tending to the needs of family members who are unable to look after themselves. Caregivers include parents of young children, as well as adult children caring for aging parents or other relatives. A recent LIMRA study of U.S. adults ages 18 to 64 finds that 36% (77 million) self-identify as unpaid family caregivers. Among these, 43 million are current caregivers. Two-thirds of these caregivers have regular jobs. Among employed caregivers, 80% work full time.

Needing Financial Security

Caregivers have much higher levels of financial concern than do typical working-age adults. This is especially true for matters related to life insurance. Higher concern levels are also evident for financial risks related to disability and longterm care coverages. Life insurance is an essential product for those with dependent family members. According to a LIMRA study, 30 million current caregivers do not own any life insurance, or do not have enough life insurance coverage. There are various reasons caregivers give for not having enough life coverage, including:

23%

Haven’t gotten around to it

22%

Not sure how much I need

15%

Not sure what type to buy Don’t like thinking about it

12%

» It is too expensive (45%) » Other financial priorities (27%) » Haven’t gotten around to it (23%) » Not sure how much I need (22%) » Not sure what type to buy (15%) » Don’t like thinking about it (12%) Among caregivers who say they do not own life insurance, 87% say they should own it. This means that 11 million current caregivers believe they should own life insurance, but do not. Core protection products — such as life insurance, disability insurance and long-term care insurance — are essential to protecting both caregivers and their dependent family members. In addition to feeling the need for life insurance, more than 75% of caregivers believe primary wage earners should own disability coverage, and that everyone should own long-term care insurance. Disability insurance is important for caregivers, particularly if they are also wage earners. A disability can put the caregiver and the person they care for at risk and can affect people at any point in their career. In fact, according to LIMRA research, more than 25% of today’s 20-year-olds will be out of work for a year or more due to a disability before they reach retirement age.

InsuranceNewsNet Magazine » February 2020

Disability insurance ownership among caregivers is 17%. The gap between attitudes and behavior regarding disability insurance, however, is larger than with life insurance. In all, 68 million caregivers believe they need disability insurance coverage. This includes 63 million who do not own disability insurance, and 5 million who do not have enough coverage. Caregivers appear to be more sensitive to the need for long-term care insurance than for life or disability insurance. In all, 4 million current caregivers own LTCi. Another 39 million caregivers do not own LTCi, or do not have enough coverage. The high levels of financial concern in the caregiver community suggest a desire for financial solutions. Yet, according to LIMRA research, only 22% of caregivers have a primary financial advisor (compared with 37% of consumers overall). This suggests a wide opportunity for financial advisors to fulfill this unmet need. Caregivers provide support out of love and duty. They may benefit from the help financial professionals can provide with regard to ensuring that care will continue to be provided, even if the caregiver’s ability to do so changes. James T. Scanlon, M.S., is senior research director at LIMRA. He leads LIMRA’s research program focused on insurance markets. He may be contacted at james.scanlon@innfeedback.com.

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