InsuranceNewsNet Magazine - March 2019

March 2019

IS HOLISTIC PLANNING THE ANSWER TO THE

RETIREMENT CRISIS? How a shift in thinking can help consumers become better prepared for retirement.

PAGE 18 State Regulators Driving the (Best Interest) Train PAGE 6

Peter Sheahan: Thriving on the Edge of Disruption PAGE 12

Ask Yourself These 3 Questions to Identify Your UVP PAGE 52

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IN THIS ISSUE

View and share the articles from this month’s issue

» read it

MARCH 2019 » VOLUME 12, NUMBER 3

18

FEATURE

Is Holistic Planning The Answer To The Retirement Crisis?

By Cassie Miller How a shift in thinking can help consumers become better prepared for retirement.

INFRONT

6 State Regulators Driving The (Best Interest) Train

By John Hilton The fiduciary battleground is moving to the states as more of them look at bestinterest regulations.

INTERVIEW 10 Thriving On The Edge Of Disruption

An interview with Peter Sheahan Peter Sheahan wants you to get into your discomfort zone and be more successful because of it. In this interview with Publisher Paul Feldman, Sheahan describes how you can flourish in the midst of disruption.

INSIGHTS

54 NAIFA: ‘Only So Many Hours In A Day’ 55 M DRT: Holistic Financial Planning 56 LIMRA: Disruption: The Threat Is Real

online

www.insurancenewsnetmagazine.com

HEALTH/BENEFITS

40 More Than Pushing Product: Delivering Benefit Solutions

By Dan Johnson Focusing solely on voluntary benefit products misses the bigger picture of offering a solution for the client.

ADVISORNEWS

44 Go To The Head Of The Class By Serving Millennial Educatorss

IN THE FIELD

By Doug Wolff Public school teachers can’t fund retirement with their pensions alone.

Here is how you can serve this market segment.

26 Teaching, Planning And The Pursuit Of Happiness

By Susan Rupe Christy Aleckson dreamed of being a teacher. Instead of spending her life in front of the blackboard, she teaches financial lessons to her clients while helping them find their happiness.

INBALANCE

48 How To Make A Smooth Flight Through Airport Security

By Bryce Sanders Take some of the stress out of air travel by following these hints.

LIFE

32 How To Tell Owners That Perm Is Not A Black Hole

50 Take A Hike: The Benefits Of A Lunchtime Walk

By John “Hutch” Hutchinson Business-owner clients may be reluctant to buy permanent life insurance.

But they may not be aware of the number of problems the product can solve for them.

ANNUITY

36 N .Y. Advisors Face Tough Standard

By John Hilton The fiduciary fight over annuity sales is finding its ground zero in New York.

By Susan Rupe Get into a walking routine and reap the physical and psychological rewards.

BUSINESS

52 3 Questions To Identify Your Unique Value Proposition

By David Miller Clients need to be wowed, given all the competition in the market.

INSURANCENEWSNET.COM, INC.

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PUBLISHER Paul Feldman

EDITOR-IN-CHIEF Steven A. Morelli

MANAGING EDITOR Susan Rupe

SENIOR EDITOR John Hilton

ADVISORNEWS MANAGING EDITOR Cassie Miller

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Copyright 2019 InsuranceNewsNet.com. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@ insurancenewsnet.com, send your letter to 275 Grandview Ave., Suite 100, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 115, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 115, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 275 Grandview Ave., Suite 100, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein.

2

InsuranceNewsNet Magazine » March 2019

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WELCOME LETTER FROM THE EDITOR

Pushing Off The Side

I

just did not trust the water.

That is not a problem unless you were learning to swim. And that was my problem as I stood next to a pool at summer camp watching other kids doing laps in swim class.

I could not even get on a foam board and kick my way across. It had been a few weeks and the counselors had given up on me. Eye rolls had replaced the usual encouraging words they greeted me with as I crept to the pool.

“I am lame,” I told my 11-year-old self, pushing me into spiraling self-doubt.

“Why do I need to swim?” I reasoned.

“I live on land.”

But I experienced a minor miracle in a neighbor’s pool during a weekend. It wasn’t much of a pool — one of those circular above-ground numbers that were popular in (and the screaming bane of) neighborhoods in the 1970s.

All you could really do in those pools was chase after each other in circles, which I was doing on a foam board while attempting to run in the water. Soon, running turned into kicking and I realized I was swimming.

At that moment, I was amazed at how easy it was. The water held me. I could leap and it would catch me.

I tossed the board and dog-paddled around, eventually turning it into a crawl.

Now, instead of dreading Monday, I couldn’t wait. The counselors dropped their eye rolls — and their jaws — as I swam back and forth. I left on Friday terrified of water and on Monday I was lapping the pool.

So, that was lesson No. 1 for me: If other people can do it, so can I.

Leaps Of Faith

I was contemplating leaps of faith as we were putting this month’s magazine together. From beginning to end, it is full of change.

The InFront tells how some states are toughening their suitability and fiduciary standards in the wake of what they see as federal inaction. The LIMRA column at the end of this issue confronts disruption 4

InsuranceNewsNet Magazine » March 2019

head on, as does the Paul Feldman interview with Peter Sheahan, who says disruption should be our new comfort zone.

The key is not being scared of the leap. But that is easy to say. I am certain that one or more of those camp counselors tried to tell me that I was safe in the water. After all, it was a shallow pool and plenty of people were available to rescue me.

But I had told myself I did not even need to learn how to swim. I did not care if I ever swam. But once I let the water catch me, I realized the thrill of swimming. Without that, I would have never experienced floating on my back in the warm, calm Gulf of Mexico while gazing at a royal blue sky.

In this month’s main feature, AdvisorNews Managing Editor Cassie Miller profiles some advisors who decided to step away, at least partially, from commissions and assets under management to a fee-only practice, including one who left the life insurance world to do it.

I am not suggesting that advisors cannot accept commissions and fees on assets. In fact, I think those agents and advisors serve the many millions of people who cannot afford fees for service.

These advisors in the feature are also uncomfortable with how many Americans cannot afford fees and are left on their own without help. They are looking at different ways to help, including pro bono work.

They could easily copy what many others do and constantly look for ways of going up market, where the bigger bucks live. That is a key reason that even though fewer families are covered by life insurance than any time since World War II, overall premium grows.

Everybody In The Pool

No one is knocking success. Insurance and financial advising are ways to make good money while helping other people improve their financial lives.

But here is the thing: We are in a retirement crisis. What we have all done has not worked. Yes, some people are rocketing from well-off to WOW! They

probably have advisors who helped get them there and insurance agents to protect them on the way there and beyond.

Nearly half of workers, 45 percent, say they have less than $25,000 in savings and investments; 26 percent say they have less than $1,000, according to the Employee Benefit Research Institute.

More than three-quarters, 76 percent, expect to work into retirement. But, according to federal labor statistics, only 12 percent of those over 65 are working full-time.

Also, according to EBRI, having a retirement plan (IRA, defined benefit or contribution plan) makes a considerable difference. Of people who did not have any retirement plan, 69 percent had less than $1,000 in savings. Not only are these folks unprepared for the medical and living expenses of retirement, they are also one big bill away from poverty.

Why you? Why should you help?

Because I suspect that the number of struggling Americans bothers you, too.

Many of the insurance agents and financial advisors I have known have been driven by service. I have teared up listening to agents describing the first time they brought a benefit check to a widow.

It is easy to do the eye roll at all these people who have not prepared for retirement. You can look at all the markers of bad decision-making and shake your head.

But are you in the business of judgment or helping? Doctors don’t look at someone whose lifestyle choices led to a disease and just say, “Oh well, sucks to be you!”

You are the professional America needs now. Try a little bit, a toe in the water. Maybe a pro bono case here and there or perhaps helping a community group.

You might find it leads to more fulfillment that the big cases ever brought.

Maybe you will develop the courage to take the leap and see where the water takes you.

Steven A. Morelli Editor-in-Chief

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INFRONT

State Regulators Driving The (Best Interest) Train The fiduciary battleground is moving to the states as more of them eye best-interest regulations.

By John Hilton

S

tate officials coast to coast appear determined to force a best-interest standard upon parts or all of financial services, particularly annuity sellers.

New lawmakers were barely seated for January sessions when new best-interest ideas were put forth in Maryland and Nevada. While the situations were very different, the trend is clear.

So clear that longtime industry folks are saying it’s time to cut a deal. That is, embrace a “reasonable best-interest standard,” as characterized by Gary Sanders, vice president of government relations for the National Association of Insurance and Financial Advisors.

Some annuity sellers have been slow to accept that message. After all, the industry mobilized to defeat the Securities and Exchange Commission’s Rule 151 in 2010 and again toppled the Department of Labor fiduciary rule last year.

But times have changed, Sanders said. Today, the SEC and the National Association of Insurance Commissioners are producing rules. And several states have rules in the works.

Taking a hard-line opposition to those rules is not a “real viable approach to what is happening right now,” Sanders explained. “It’s important as a general rule not to be saying ‘No’ to everything that comes down the pike. We think it’s important to be favor of something.”

The rest of 2019 promises to be eventful as these best-interest ideas coalesce.

Officials from the SEC, NAIC and DOL and many industry leaders themselves claim to want a harmonized standard.

Whether they get there is anyone’s guess.

But the states are clearly driving the rush to rules.

6

InsuranceNewsNet Magazine » March 2019

Struggling To Lead

The NAIC tried to get back in front of the best-interest issue in 2018, without success. A working group could not reach consensus on key issues that divided liberal states such as New York from conservative states such as Iowa.

New York led the way in disregarding the NAIC, adopting its own best-interest rule that takes effect in August for annuity sales and six months later for life insurance. It requires annuity sellers to put the customer’s best interest ahead of their own.

Meanwhile, comments were due Feb. 15 on a tentative NAIC draft annuity sales model law.

A group of independent marketing organizations are unhappy with the lack of forceful opposition to the rules from key industry trade associations.

A letter signed by 14 IMO executives was sent to the leading trade associations that represent annuity sellers. They say trade groups are too accepting of

best-interest ideas put forth by the NAIC. “We have been reading about and watching developments at the NAIC concerning ‘best interest’ and scratching our heads why our trade associations seem to be going along with the NAIC proposal and not fighting against warrantless regulations,” the letter reads.

Likewise, the IMO execs did not appreciate the trade group response to the New York rule.

“These concerns are exacerbated by seeing New York so easily twist best interest into a fiduciary duty with no challenge whatsoever by the life insurance industry,” the letter reads.

Representatives from both the Insured Retirement Institute and the American Council of Life Insurers both pledged to work for all of their members. Both groups received the IMO letter, as did NAIFA. “We’re still working with our members on comments on the NAIC proposal but they will reflect our commitment to a uniform, harmonized best interest standard

State

Key Restrictions

Compensation Impact

Status

New York

• Only the consumer’s best interests can be factored into a recommendation.

• Insurers required to develop training for producers. Rules cover insurance agents.

• Cannot use “financial advisor” or “financial planner” titles without proper licensing.

The regulation does not ban commission sales, but the producer must be able to show that the product was the most appropriate fit for the consumer’s financial needs and objectives.

Approved and going into effect in August 2019 for annuity sales, and six months later for life insurance sales.

Nevada

• Establishes a fiduciary duty status on brokers and registered reps for virtually all activities related to customer interaction.

• Permits an “Episodic Fiduciary Duty Exemption” for a variety of situations.

• Outlines lengthy list of fiduciary breaches, including excessive fees, failure to provide pertinent documents and putting own interest ahead of client’s.

• Does not cover insurance agents.

The regulation does not ban commission sales, but the producer must be able to show that the product was the most appropriate fit for the consumer’s financial needs and objectives.

Legislation creating the regulation was passed in the summer 2017. Nevada officials accepted public comment on the rule details through March 1 and are expected to finalize those rules this year.

Maryland

• Makes both brokers and insurance agents fiduciaries with “a duty to act in the best interest of the customer without regard to the financial or other interest of the person or firm providing the advice.”

The regulation does not ban commission sales, but the producer must be able to show that the product was the most appropriate fit for the consumer’s financial needs and objectives.

Legislation was introduced in February 2019 and faces a long road to adoption.

New Jersey

• Would implement a uniform fiduciary duty status on all broker-dealers, agents, investment advisers and investment adviser representatives registered to do business in the state.

• Details are scant, but Gov. Phil Murphy said New Jersey will develop “the strongest investor protections in the nation.”

No firm details on compensa- A Notice of Pre-Proposal tion limits. was filed by the New Jersey Bureau of Securities on Oct. 15, 2018.

Public comment was accepted for two months.

An actual rule had yet to be released by the time this issue went to press.

DRIVING THE (BEST INTEREST) TRAIN INFRONT of care for annuities and securities transactions across all state and federal regulatory platforms,” said Whit Cornman, director of media relations for ACLI.

‘Fiduciary Duty’

In Maryland, the Financial Consumer Protection Commission is recommending that a “fiduciary duty standard” be placed on broker-dealers and insurance agents doing business in the state.

The commission cited the failure to enact financial regulations by state and federal officials as reasons to get tough on brokers and agents.

“Since [the] SEC and the state insurance regulators have proposed standards that largely preserve the status quo, individual states may need to provide greater protections that investors expect from financial professionals who provide investment advice,” the report reads.

State Sen. James Rosapepe introduced a bill extending the fiduciary duty standard in 2018, but parts of it were tabled after financial industry lobbyists raised concerns. Rosapepe re-introduced the Financial Consumer Protection Act of 2019 last month.

The American Retirement Association was one of those groups that has concerns with the bill, said Andrew Remo, legislative affairs director for the ARA. The main concern is that new rules will fail to harmonize with the Employee Retirement Income Security Act of 1974.

The pre-emption clause in ERISA ensures that the federal statute supercedes any state laws relating to employee benefit plans.

If state laws conflict with ERISA standards, it will create problems for advisors attempting to comply, Remo said.

So far, Maryland officials have not shown “any sort of acknowledgement of the fact that ERISA advice is already subject to a federal fiduciary standard,” Remo explained.

Other states are also writing bills that conflict with the pre-emption clause, Remo said.

“Ultimately, I think if states continue to ignore that, I think there’s a strong legal case to be made that there needs to be a carveout here for ERISA plans,” Remo said.

Nevada Shocks

Nevada regulators shocked the industry in early January 2019 when it released tough

draft fiduciary regulations on broker-dealers and registered representatives.

With some calling the latest state regs tougher than the Securities and Exchange Commission’s best-interest proposal, it isn’t all bad news for those who sell annuities in Nevada.

For one thing, commissions remain acceptable under the draft proposal, say experts from Stradley-Ronon’s Fiduciary Governance Team.

“Commissions are seemingly preserved as a method of compensation, but the Proposal imposes ‘best interest’ and ‘reasonable compensation’ requirements,” write lawyers for Stradley-Ronon, a Philadelphia law firm.

Comments were due March 1 on the rules, which fill in the details of a 2017 law passed by the legislature and signed by then-Gov. Brian Sandoval, a Republican.

Critics say the Nevada rules lack details and definitions, a common complaint.

Under the proposal, broker-dealers and sales representatives are subject to a fiduciary duty when providing investment advice. But there’s an Episodic Fiduciary Duty Exemption for BDs and reps that qualify.

The exemption states that their fiduciary duty ends after giving the advice.

But reps cannot qualify for the exemption if they hold themselves out as any of the following: “advisor,” “adviser,” “financial planner,” “financial consultant,” “retirement consultant,” “retirement planner,” “wealth manager,” “counselor” or any other title the state deems appropriate.

Barbara Roper, director of investor protection at the Consumer Federation of America, is bullish in the Nevada proposal.

“There’s a lot that we like about the Nevada proposal, particularly with regard to the scope of its coverage,” she said.

“The SEC can and should learn from how Nevada handles issues related to ongoing duty, hat-switching, holding out, and recommendations regarding account type.”

Like the SEC rules, the Nevada proposal does not apply to insurance agents.

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.

March 2019 » InsuranceNewsNet Magazine

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have come to expect, but for extended years of coverage. In fact, on average, for the same length of coverage, the price of this product is about two times more affordable than the cheapest or the most competitive GUL* in the market, Holweger explains.

“We’re excited to revolutionize the market and help meet an important need for consumers and financial professionals,” he adds. •

INTERVIEW

F O E G E D H NG ON T E

THRIVI

table — r o f m o c t e g o t lls how e t n a h a e h t zone S r r o e f t m Pe o c is d e h t in and successful — 10

InsuranceNewsNet Magazine » March 2019

THRIVING ON THE EDGE OF DISRUPTION INTERVIEW

W

e have all heard about the big, bad bogeyman — disruption — and how it is supposed to propel us into a future without agents and advisors if we’re not careful.

But after 10 or so years of looking over our shoulder, we might be forgiven if we discount the threat. And even though PETER SHEAHAN warns people about disruption for a living, he would agree with you.

Sheahan would point out that disruption looks like a long way off until it is here. When disruption shows up, it is difficult for a business to recover from it — sort of like planning for a flood as the water is pouring through the door.

So, how does a person or a business prepare for disruption? That would be the next question, but Sheahan would say it is the wrong one. In his latest of his seven books, Matter: Move Beyond the Competition, Create More Value, and Become the Obvious Choice, Sheahan tells how to identify an individual’s or company’s edge of disruption and use it as a competitive advantage.

In this interview with INN Publisher Paul Feldman, Sheahan reveals how to stop fearing disruption and why it is better to run toward it.

of what large amounts of high-quality data can do. We see that in the mortgage industry where places like Rocket Mortgage are able to massively reduce the heavy lift, for either the broker or the customer to get their information aggregated and their needs met.

It poses risks to brokers and agents if you’re bringing value that’s easily replicated to a client. That’s a threat.

Nothing replaces a great relationship-based salesperson. Nothing replaces

FELDMAN: Agents and advisors have heard about a massive disruption for years, but the impact is not always well defined. How do you see disruption playing out?

SHEAHAN: One, I'd say fair enough. Two, I'd say change is actually really slow until it's not.

The question is what assumptions are you making about how disruptive this could be? You could think about the P/C space. People talked about the disruption of direct-to-consumer models in property and casualty insurance for decades. This crept up slowly and slowly and slowly and then we woke up one day, up to nine out of 10 consumers went direct.

The risk of that happening in annuities may not be as high because the complexity and the product variability is higher.

Complexity will probably prevent that level of rapid transition but when it happens, it happens quickly.

I'm not big on this whole “innovate or

SHEAHAN: It's already playing out in a pretty meaningful way, but not necessarily at the sales and agent level.

We're seeing the operations platforms at companies being completely rebuilt.

The amount of manual labor and inefficiency that exists in the value chain is crazy. It doesn't make for a good quality experience and it doesn't make for agency efficiency and productivity. I think you'll certainly see disruption continue unabated at the manufacturing level.

Over time, we'll start to see the benefits

die” mantra. But I will tell you one thing I've learned is that the people who are most happy in the late stages of their careers are the ones who find meaning in the work that they do.

Just protecting what you have created and not doing or learning anything new doesn't create that meaning. My challenge for these guys is, what could you do to continue to learn or grow yourself?

What opportunities do these present?

Forget technology as a disruptor. What

I will tell you one thing I've learned is that the people who are most happy in the late stages of their careers are the ones who find meaning in the work that they do. proximity to the local community. We have to make sure we're creating value above and beyond process and transaction, and above and beyond access to product.

FELDMAN: You mentioned that disruption has not been as meaningful at the agent level. What would you say to agents who aren’t too worried about disruption?

about technology as a massive efficiency creator within your practice? So, now you're taking two days off a week for the same economic return. What about the joy that comes from the learning curve of leaning into that? The edge of disruption doesn't always have to be radical, drastic stuff. Your edge of disruption could simply be half a day, make the same return, working 25 percent less by leveraging tech.

Now I think maybe my final response to that is I don't see any of the big carriers waking up anytime soon and just completely abandoning their brokers. It's still distribution-dominant for the industry.

FELDMAN: You mentioned the “edge of disruption.” Can you explain that for our readers and how they would find that for themselves?

SHEAHAN: Your edge of disruption is a combination of things. It is what exists at the edge of your capability. It's probably not in your core daily activity. It's not in your standardized processes in your business. But you know you have the ability to serve in a new way and have a bigger impact than you're currently having. That's one circle.

The second circle is that the emerging investor consumer or client has needs that the client places disproportionate value against because no one sorted them for him. So, you have this circle around your capability and what's in the edges of March 2019 » InsuranceNewsNet Magazine

11

INTERVIEW THRIVING ON THE EDGE OF DISRUPTION

Your Capability

Change

ge The Edsruption of Di

Consumer Needs

Where those three circles overlap is what we call the edge of disruption. What are the opportunities for differentiation?

What are the opportunities to stand out of the crowd? that, and you have this circle of investor and consumer need and what sits at the edges of that.

Then you have the third and final circle, which is what's changing — things like data analytics, demographic change.

Things like a greater propensity for consumers and investors to self-serve and access through technology.

Where those three circles overlap is what we call the edge of disruption. What are the opportunities for differentiation?

What are the opportunities to stand out of the crowd?

FELDMAN: What about people who are later in their career?

SHEAHAN: You're the 55-year-old guy making 180-grand a year and you're asking yourself the question, “Why should I bother?”

It’s because it's going to be hard to make $180,000 next year. It's going to be harder in five years because not everyone is going to sit around and rest on their laurels and be complacent with that stuff.

The edge of disruption might simply be what is a more clearly defined value proposition that's differentiated and delivering a client experience that is worthy of that 12

InsuranceNewsNet Magazine » March 2019

promise. That's an edge of disruption.

How do I use new technology either at a practice level or a marking level to get that done? How do I double the effectiveness of my prospecting and triple my conversion rate?

They're gray questions. They all sit in the edge of your capability, the edge of your consumer need, and the overlapping, emerging and converging of change and disruption.

FELDMAN: What are some ways to differentiate yourself in a world in which everyone seems to be copying each other?

SHEAHAN: We did a lot or research on this and we published a book called Matter that really looked at what the areas were.

So I am going to give you the five headlines but then I'm going to tell you what it has to do with insurance.

No. 1 is: What are the higher-order problems?

There are problems the clients will resolve, such as “Hey, I need some life insurance.” But there are some higher-order problems, such as, “I need income protection for retirement.” One thing is

easy and one thing is hard. Where are you, which problem are you positioned against?

You might still sell a core life insurance or annuity product I might need. But one problem, insurance versus income, has a high kind of criticality in the mind of the investor. One is potentially a greater threat to them.

No. 2 is: Where is the complexity that the consumer is afraid to lean into?

Where is the complexity other providers avoid? Can you create a set of solutions or remove friction that allows you to absorb that complexity for the consumer and can you help them to see value in that?

No. 3 is about friction and ease of doing business. We've seen these across every category. People like it to be easy.

Everyone thinks that Amazon's kicking everyone's ass because they're cheaper.

Amazon's not cheaper, they're easier.

Amazon is friction-free. It removes a whole bunch of physical and temporal constraint as well as transparency. And yes, they're price-competitive.

No. 4 is related to risk, which I know sounds strange given you're selling risk products. But we saw across all categories when you were able to remove risk from someone's life or from their balance sheet

THRIVING ON THE EDGE OF DISRUPTION INTERVIEW or a transaction that they had, they will place value on that.

Then No. 5 is purpose. It’s the feeling as though you were doing well by doing good or that you were choosing to buy from people who had that that same philosophy.

But there was this underlying piece that we saw particularly in professional services. That was expertise. In times when people are facing change and uncertainty, they gravitate toward people who have a confident, expertise-based point of view.

We are seeing vertical expertise emerge in a more prevalent way. If you want to be seen as a thought leader, then you better have leading thoughts.

FELDMAN: Then there is delivering those thoughts.

SHEAHAN: Yes. It's a part of having an elevated perspective, and there are two sides to that. One is we must have some leading thoughts, genuine expertise and a point of view. But if you have a worldclass point of view and no one knows about it, what's the point?

but I would say there's probably not an industry on the planet that doesn't get more access to content than the financial services industry does.

Everyone's got a conference. Everyone's got a newsletter. Everyone's got a monthly market update. Everyone's got a calculator. You're inundated with this stuff.

But it's shocking how few agents and brokers make use of that content. Next time you go to a conference, make a set of notes on what you've learned and put it as a point of view to your clients.

You start with a mindset of, how do I share what I learned? Because if you're in the financial services space, you're always learning.

It doesn’t have to be sheer market stuff.

It's stuff like the three reasons people failed to follow through with life insurance even though they need it. What did you learn about human nature and risk aversion and unwillingness to act?

FELDMAN: You also talk about not being vanilla with your opinion.

SHEAHAN: Yes, having a strong point of view. I mean, let's be clear. Content-based

Everyone's got a conference. Everyone's got a newsletter. Everyone's got a monthly market update. Everyone's got a calculator.

You're inundated with this stuff.

But it's shocking how few agents and brokers make use of that content.

We saw across some industries a lot of interesting stuff happened where people have been holding on to things they knew, but they didn't realize the market would find those things intensely valuable.

They didn't want to share those thoughts because they didn't want to give away the value. But at the same time, they were being commoditized because they weren't seen as valuable enough.

FELDMAN: How do you make thought leadership a way of life?

marketing is where everyone's doing all their work right now and so there's so much content it's insane.

The only things that are cutting through are things that are unique. So, if you're not bringing something unique, don't waste your time. Just make five more phone calls.

NEXT MONTH: Peter Sheahan reveals how to align your business with your strengths.

SHEAHAN: That's a pretty big question, March 2019 » InsuranceNewsNet Magazine

13

FIND NEW

CUSTOMERS

BY SELLING

BY SELLING

SUPP MED MED SUPP r Great Door Opener r High Demand Product t Seniors with Assets s Multiple Carrier Options s Turnkey Online Training g Live Agent Support

SPONSORED CONTENT

HOLISTIC IMO GRANTS ADVISORS ABILITY TO SOLVE

EVERY CLIENT NEED

It

began simply enough: just a cup of coffee, two people and a dream.

Those dreamers were David and Nancy Ellis, husband-and-wife founders of Life & Annuity Masters. And the one thing they knew for certain sitting around the kitchen table that morning more than 25 years ago was that the benefits every other agency boasted just weren’t good enough for Life & Annuity Masters’ agents — or their clients.

So, they set out to develop one of the Life & Annuity Masters’ corporate headquarters, Simi Valley, Ca. premier insurance organizations in the This holistic approach is proven to my experience in advanced markets, country that focused on agents and establish stronger relationships, build product design, high-end point of sale, their business.

They started with a foundation built greater trust, and allow agents and ad- and industry designations of Chartered on the belief that their agents and ad- visors to operate in the genuine interest Life Underwriter, Chartered Financial Consultant and Board-Certified Estate visors would be partners, not just em- of their clients.

Planner fill that gap in the high-end ployees or contractors. Next, they made a commitment to always offer the most Q: Why did you join Life & Annuity business and estate planning areas.

With his vision and our leadership, comprehensive and customized solu- Masters, and what do you bring to we feel we provide the best solution to tions, products, training and underwrit- your role as CMO? agents’ top concerns. Whether you are ing. Finally, they pledged to A: I’ve been in the busi- an MDRT agent or just starting out, the find just the right team to ness over 25 years and two basic issues are always how you see execute their unique vision. worked in various capac- more qualified prospects and how you Enter Tim Whitmore, ities for MetLife, AIG, place more cases. chief marketing officer and I feel we are uniquely qualified to Pacific Life and others. the newest edition to the Over the years, I’ve held solve both concerns on all levels.

Life & Annuity Masters’ My experience, combined with many roles but never leadership team. Whitfound a company that has David and Nancy’s vision and passion, more is not only carving the passion, vision, and allows Life & Annuity Masters to build out time to go on appointamazing team and family something truly unique in the brokerments, place business and Tim Whitmore, atmosphere that is Life & age industry, and we are extremely extrain partner agents on Chief Marketing Officer Annuity Masters. David cited about our plans for 2019. sophisticated planning techniques, but he also has teamed up and I spoke for five months before his with several law firms, which allows Life passion and vision convinced me to Q: Growth is the major focus for most & Annuity Masters’ partners to satisfy join them. He convinced me the only producers. Discuss how your experinearly every client need, from insurance part Life & Annuity Masters was miss- ence can help agents onboarding with and retirement plans to advanced estate ing was someone who had high-end Life & Annuity Masters grow their own planning expertise. David and I feel practice. planning, taxes and even legal matters.

SPONSORED CONTENT

among others. We also work with niche companies that increase business value up to 10 percent overnight just by identifying inefficiencies.

Q: What kinds of agents can work with Life & Annuity Masters?

Life & Annuity Masters has an in-house training room, where agents are regularly educated on products and the latest advanced sales techniques.

A: Our training and marketing tools allow agents to prospect more efficiently and learn techniques such as pulling money out of C corps tax-free to generate tax-free income for executives or pulling money out of 401(k)s without a penalty while the client is still employed and under 59½. That money is rolled into a product that protects the principal. We also show agents how to generate tax-free income for high net worth clients while paying pennies on the dollar using someone else’s money. Our online calculators for backcasting and 401(k) alternatives help our partners close more business. These calculators and tools take complex strategies and present them in a simple fashion to clients to fill their needs no matter what they may be.

How many sales could you make if these strategies and tools were in your toolbox?

We’ve also added strategic partners such as The BluePrint, which provides an asset management solution for IARs, RIAs and other advisors who manage assets. Other partners we’ll be announcing very soon will turn our firm into a one-stop shop, no matter what an agent or advisor needs.

Q: Can you give us some hints of the strategic partnerships under development?

A: We’re an IMO. And just like many IMOs out there, we offer fixed products both on the insurance and annuity sides. But clients want to be able to go to one advisor and have that advisor be able to access whatever their client may need.

Our current strategic partners, such as Oshins & Associates, LLC; The BluePrint; Ferruzzo and Ferruzzo, LLP, and more to be announced soon help us fulfill our goal of being a holistic IMO. We are also partnering with a firm that offers P&C coverage for affluent clients and their businesses.

So, whether you’re an insurance agent, an RIA or a duly registered advisor, we have a solution for you.

Q: What will those relationships mean for agents partnering with Life & Annuity Masters?

A: The relationships mean that we are positioned to elevate agents and provide solutions to their clients no matter what their needs are. I say this because I don’t know of an IMO out there that offers wealth strategist solutions, advanced estate planning with attorneys who have 40 years of estate planning practice under their belts, business valuation, tax-deferral strategies, business succession planning, and affluent P&C,

A: We have seasoned agents who are MDRT and agents who are looking for an IMO that is going to truly partner with them and take them to the next level. For agents trying to get to the MDRT level, we provide in-person trainings and events, where they get the opportunity to talk with our moreseasoned producers.

Recently, we have had agents join us who have not been happy with their current IMO due to acquisitions, mergers and other factors. Throughout the year, we will announce new partners and sponsor them in InsuranceNewsNet Magazine.

Life & Annuity Masters is large enough to provide everything an agent needs but small enough to have that family feel.

If you are looking for an IMO that has a family atmosphere, treats you like a partner and is invested in your success to elevate your business to the next level, give us a call. •

If you’d like to be a part of Life & Annuity Masters' holistic, one-of-a-kind business approach, visit www.HolisticIMO.com or dial 844.443.9324 to speak with us today.

LIFE M&ANNUITY A S T E R S

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.

NEWSWIRES

Government Shutdown Had $11B Price Tag The 35-day partial shutdown of the U.S. government that ended Jan. 25 came at a

cost — about $11 billion, to be exact. The Congressional Budget Office estimated that price tag for the shutdown and said the government closure took 0.2 percent off the nation’s annual economic growth forecasts.

The shutdown, triggered by a fight over funding for President Donald Trump’s proposed border wall with Mexico, was the longest in U.S. history.

The CBO said the partial closure hurt economic growth because it affected roughly 800,000 workers and delayed federal spending on goods and services. Even though much of the money would be recouped after the government reopened, the CBO calculated $3 billion will never be recovered. The CBO warned the full impact of the closure — which left hundreds of thousands of federal workers and contractors without pay — may be larger.

UNIVERSAL HEALTH CARE MOVES TO FRONT BURNER

The Medicare For All drumbeat is getting louder as one of the first Democrats to announce her candidacy for president said she backs universal health care and wants to get rid of private health insurance as we know it.

Sen. Kamala Harris, D-Calif., told CNN she favors put- Sen. Harris, D-Calif. ting Medicare For All into practice and is OK with dumping the current private insurance system to accomplish that goal. She also accused private insurers of thinking only of their bottom lines and of burdening Americans with paperwork and approval processes.

“The idea is everyone gets access to medical care,” she responded when asked if people who like their insurance would get to keep it.

Harris’s comments came a few days after the Kaiser Family Foundation announced the results of a poll showing that 56 percent of the public supports a single-payer plan, compared to 42 percent who oppose the idea.

But the poll found wide disparities when respondents were questioned on

the issue in different ways. When people were told that Medicare For All would “guarantee health insurance as a right for all Americans,” 71 percent agreed. But support fell to 37 percent when people were told that the proposal would “require most Americans to pay more in taxes.”

TAKING AIM AT HIGH DRUG COSTS

No sooner was he inaugurated as California’s newest governor when Gavin Newsom declared open season on prescription drug costs. Newsom’s health agenda includes direct government negotiation of drug prices.

The new governor wants to use his state’s purchasing power to help drive down prescription drug costs by allowing government programs, health insurers and private businesses to join together to negotiate directly with the pharmaceutical industry.

If Newsom’s plan is successful, it would create the largest direct purchaser of prescription drugs in the nation.

The Trump administration also has prescription drug costs in its crosshairs as it convened a White House roundtable on lowering drug prices. The administration proposed requiring pharmaceutical companies to list drug prices in TV ads.

DID YOU

KNOW Global debt reached $66 trillion through 2018, about double what it was in 2007. Source: Fitch Ratings

?

16

InsuranceNewsNet Magazine » March 2019

QUOTABLE The economy is like a frat party at 4 a.m.

Late in a party, people start doing strange things.

— Jim Coulter, co-founder of private investment giant TPG

HOW DID TAX CUTS AFFECT THE ECONOMY?

Remember the $1.5 trillion tax cut package passed at the end of 2017? When the biggest overhaul of the tax code in 30 years was passed, the White House predicted the massive fiscal stimulus package would boost investment and job growth. But did it?

It depends on who you ask.

A report from the National A ssociation of Business Economics said the tax-cut package appeared to have no major impact on busines ses’ c a pita l investment or hiring plans in 2018. The association’s most recent quarterly poll showed that while some companies reported accelerating their investments because of lower corporate taxes, 84 percent of respondents said they had not changed their investing or hiring plans.

However, in the goods-producing sector, the lower tax rates had an impact, with 50 percent of respondents from that sector reporting increased investments at their companies, and 20 percent saying they redirected hiring and investments to the U.S. from abroad.

Meanwhile, the Congressional Budget Office reported the nation’s economy in 2018 was almost $400 billion bigger and there were about 1.3 million more jobs created than the CBO had expected at the beginning of the year.

INSURANCE INVESTMENTS RETIREMENT

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Every day, you face fierce competition as you grow your business.

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When clients are looking for a guaranteed return at a place they can trust — you’ve got next.

An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty.

If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. There are charges and expenses associated with annuities, such as deferred sales charges for early withdrawals. Guarantees are subject to the financial strength and claimspaying ability of the issuing insurance company.

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 its products.

Securian Financial Group, Inc. securian.com 400 Robert Street North, St. Paul, MN 55101-2098 ©2018 Securian Financial Group, Inc. All rights reserved.

F92339-7 1-2019 DOFU 1-2019 672012

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.

COVER STORY

L IS HOLISTIC PLANNING THE ANSWER TO THE RETIREMENT CRISIS

?

Emphasizing the long term and the big picture could get more consumers retirement-ready.

BY CASSIE MILLER

18

InsuranceNewsNet Magazine » March 2019

iliya Jones may not be certain of the answers as she looks for a new way to serve clients while the financial and insurance industries shift to a more client-centric approach. But she knows what she does not want for her Portland, Ore., financial firm.

And that is doing business as usual, where the commission-based world focuses on product and the fee-based side focuses on assets. What about the people who have broader needs beyond a single product but do not have the assets to manage? Is it about the client or about the money?

As the operations director at Modernist Financial, Jones sees that vast slices of the population don’t have the $1 million in assets that her firm requires. And she is in the right firm to do something about it.

A prominent slogan greets visitors to Modernist’s stark red and black homepage: “Believe in plenty. Believe in enough.”

The first sentence might be familiar to advisors — the second, not so much. It’s a new direction toward balance for clients, and for advisors.

Many agents and advisors are looking for that balance as the insurance and financial industries find their way in a more fiduciary-focused world. Especially now as more Americans age into an uncertain retirement.

As reported in the National Institute on Retirement Security’s September 2018 report: “Retirement in America: Out of Reach for Working Americans,” more than 59 percent of households (100 million people) do not have any type of retirement account assets, whether in an employee-sponsored 401(k) type plan or an individual retirement account.

A new type of advisor is emerging, shaking up traditional, outdated approaches and placing greater emphasis on getting ordinary workers retirement-ready.

This new breed breaks the industry mold, helping it to shed its self-serving stigma. “We do some volunteer work for people who are underserved or just starting out in their career, so we are serving people whose situation doesn’t make sense for them to hire an advisor. But, with a little bit of a boost and a little bit of help, they could be set up on a really nice path,” Jones said. “Our long-term goal is to find a way to serve the middle that’s left behind.”

IS HOLISTIC PLANNING THE ANSWER TO THE RETIREMENT CRISIS? COVER STORY

Barrier To Entry

with $75,000 or more in annual income.

Additionally, gaining financial literacy elsewhere isn’t readily accessible to a large portion of the population. A FINRA survey concluded that only 31 percent of respondents have been offered financial education at school, college or their workplace.

This hurdle to financial literacy and advice led to the rise of a new, modern financial planning model called holistic planning or financial life planning.

Holistic planning emphasizes the longterm, big picture, by requiring that advisors spend more time understanding the individual and unique financial situations

Photo credit: Molly Quan

Fee-based advisors have been touted as superior to advisors and firms who work on a commission-based model. However, most fee-based advisors still have minimum income or asset requirements that must be met before they will take on a client.

“Our minimum is a million,” Jones said. While it isn’t evocative of what the financial picture looks like for millions of everyday Americans, TD Ameritrade’s FA Insight Study found that the median client has around $1 million of assets under management, making Jones’ minimum AUM average by industry standards.

“Our minimum is a million. So the long-term goal for the firm is to be able to serve the whole income spectrum.”

— Liliya Jones

Some advisors choose to work with only high-net-worth clients or ultra-highnet-worth clients, leaving middle-income Americans with significantly lower incomes more vulnerable to being ill-prepared for retirement. This is a trend that Jones would like to see change.

“We are very aware that this is a highnet-worth demographic and that it is not touching a lot of other people who also need help. So the long-term goal for the firm is to be able to serve the whole income spectrum,” Jones said.

Individuals with lower incomes are much less likely to be prepared for retirement than those with higher incomes, according to a 2016 Financial Industry Regulatory Authority study, “Financial Capability in the United States.” Only 18 percent of respondents with annual incomes of less than $25,000 have a retirement account, compared to 87 percent

clients face as opposed to traditional advisory models, which take information such as a client’s age and income and plug it into a financial model. Holistic planning is more accessible to individuals in lower income brackets. Holistic advisors ask clients strategic questions to help them visualize their current financial situation and map out a strategy to get it where they want it to be.

Change Is Difficult

At Modernist Financial, this transition is already in sight. “We have our eye on that down the line,” Jones said. “Right now, we do pro bono work. So we’ve put together a workshop that is personal finance and cash flow-themed that we do for nonprofits here in town.”

The team at Modernist Financial is using those classes to refine their curriculum in the hopes that it could become a

group class or paid seminar for people in the middle of the income spectrum.

Ashley Foster is farther down the road with his practice in Houston. He started his career in the insurance world, climbing rapidly at New York Life. But he was dogged by the feeling that clients were being lost in the process. That is when he decided to make his leap into the fee-only financial world.

Progressives such as Foster say change is coming to the financial services industry as more and more advisors embrace the holistic approach, but it’s slow.

“Very few do serve these groups because the industry is still geared toward serving that high-net-worth client. Especially in the financial advisory business — change happens very slowly in any business, but especially in ours,” said Foster, who founded Nxt:Gen Financial Planning. “You’re starting to see more of that monthly retainer-ish fee-for-service models starting to take place. But most traditional firms choose to work with high-net-worth clients because they are more geared toward the product sales side of the business.”

For Foster, the changeover was gradual and followed his own changing values.

He began his career as a financial advisor more than 10 years ago with a Fortune 100 life insurance company. Those first few years were financially challenging, he said, and he worked hard to keep his practice afloat during the Great Recession.

“Even though my income was variable, expenses such as my car note, student loans and rent were fixed. I had to be creative in handling my finances in order to stay ahead of my expenses,” Foster said.

“Mastering financial basics and learning how to employ smart financial strategies got me through the tough times.”

But his success was not satisfying. As his practice grew, he found his career becoming less and less fulfilling.

“I was helping the wealthy keep more of their money, yet my friends were still recovering from the effects of the Great Recession. I was in a more sales-oriented role, needing to hit sales targets to satisfy the demands of my contract and management.”

In 2014, Foster enrolled in Rice University’s Certified Financial Planner course, an experience he said changed his perception of financial planning.

“As I went through the course, I learned

March 2019 » InsuranceNewsNet Magazine

19

Photo credit: Sarah Williams, Silhouette Studio

COVER STORY IS HOLISTIC PLANNING THE ANSWER TO THE RETIREMENT CRISIS? how financial planning is not about selling products, but of taking a client through a process to discover needs, wants and values in order to create a road map for their future.

I found value in this and began to transition my practice into focusing more on holistic planning,” Foster said.

“It wasn’t until I started running into other young professionals who needed financial advice that I realized I was unable to effectively deliver it within a traditional financial advisory firm. This is why I created Nxt:Gen Financial Planning. I am an independent private practice that focuses on holistic planning for young professionals. I am also a fee-only financial planner, which means I do not sell products, earn commissions nor receive third-party compensation. As a fee-only planner, I am charged with being a fiduciary to my clients.”

For advisors looking to transition, Foster said it requires an assured level of commitment.

“I saw the conditions in the market beginning to change. In reality, this was the way of the future and I wanted to get ahead of the curve,” Foster said, adding that it involved a shift in thinking.

“Because it requires a big shift in the way you’ll be doing business.”

The picture looks different for each advisor, but that doesn’t mean transitioning to a fee-only compensation model is impossible. For advisors who are commission-based and have developed a clientele from product sales, Foster suggests taking the smaller step of becoming a fee-based business model. In this way, advisors aren’t starting from scratch to develop a client base and the bottom line isn’t as severely impacted during the transition period. From there, advisors can choose either to stay in the feebased model or continue the transition to fee-only, dropping all product-based and commission-based clients.

“If your current business model isn’t going to support that shift, it’s just not worth it,” Foster said. “Ask whether your business model can support doing this.”

Foster leapt with both feet into the fee-only world, handing off his product-based clients to his partner so that he 20

“I saw the conditions in the market beginning to change. In reality, this was the way of the future and I wanted to get ahead of the curve.”

— Ashley Foster would be able to act as a fiduciary moving forward.

“But if you have a lot of insurance business that is paying you a lot of trails and things like that, going fee-only may not be something for you,” Foster said. “You may want to go fee-based.”

Untapped Potential

Generation X and millennials are included in the groups not adequately prepared for retirement.For these youthful groups, retirement is still a long way off, but other financial concerns could affect their retirement savings without the help of a planner.

For Foster, it was a no-brainer that he wanted to serve younger clients.

“They are not being served in all reality,” Foster said, explaining that because of their financial situations, they are not ideal clients for traditional advisors.

“There’s really nobody to turn to in the fee-only space, traditionally. On the other end of the spectrum, you have your typical — I’ll just call them financial sales people. You have a conversation with that individual. Typically, the conversation focuses on products, you pay for product if there’s a need and then there’s no real holistic look at your situation,” Foster said.

“So, the younger client doesn’t have the option of going to a fee-only professional because a fee-only advisor manages millions of dollars, causing the barrier to entry to be too high. Your traditional financial advisor/insurance agent is really the only option that they have if

InsuranceNewsNet Magazine » March 2019

they want to work with somebody face-to-face. Typically, those agents do not take a look at a person’s situation holistically because they’re not compensated for that; they’re compensated by selling product. I can understand that because I did it for 10 years.”

Three in four consumers ages 35-44 say they would be very interested in a financial product providing a greater amount of guaranteed lifetime income than a non-guaranteed alternative, even if they were unable to access the principal investment, according to the National Institute on Retirement Security’s February 2018 report, “Millennials and Retirement: Already Falling Short.”

Yet, the same report found that 66 percent of millennials have nothing saved for retirement.

To combat this shortage, several states have implemented state-run retirement plans. Most operate in a voluntary auto-IRA format, but several models have popped up as state-run plans have become more popular.

However, this solution isn’t popular with everyone. The National Association of Insurance and Financial Advisors believes using state funds to better educate young workers about retirement is a much better use of resources.

“NAIFA believes limited state-government resources would be better used educating workers about the need to save for retirement and helping them take advantage of the abundant private-sector options already available. Several states have passed legislation to create marketplaces to serve as resources for employers and workers seeking information about retirement planning and connecting them with private-market retirement plan providers,” said Kevin Mayeux, NAIFA CEO.

Retirement Crisis 2.0

The current retirement crisis is largely due to lack of adequate savings for a multitude of reasons, including but not limited to access to planning, consumer debt and financial education. However, the next retirement crisis could be caused by something more ominous — student loan debt.

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21

17-02

COVER STORY IS HOLISTIC PLANNING THE ANSWER TO THE RETIREMENT CRISIS?

What Does FINRA Tell Us About the Financial Capability of Americans and Retirement?

FAST FACT

FAST FACT

02

01

A MAJORITY OF AMERICANS HAVE NOT DONE MUCH RETIREMENT PLANNING.

RESPONDENTS WITH LOWER INCOME LEVELS ARE MUCH LESS LIKELY TO BE PREPARED FOR RETIREMENT THAN THOSE WITH HIGHER INCOMES.

Figured Out 44% Don't Know 56%

Fifty-six (56) percent of respondents have not tried to figure out how much they need to save for retirement.*

FAST FACT

Only 18 percent of respondents with less than $25,000 have a retirement account, compared to 87 percent with $75,000 or more income.**

03

FAST FACT

WAS FINANCIAL EDUCATION OFFERED BY A SCHOOL OR COLLEGE YOU ATTENDED, OR A WORKPLACE WHERE YOU WERE EMPLOYED?

No Answer 10%

04 “I WORRY ABOUT RUNNING OUT OF MONEY IN RETIREMENT”

Yes w/o Attend 10%

Yes & Attend 21%

No 59%

Only 31 percent of respondents report having been offered financial education at school, college, or workplace, and 21 percent say they participated.***

The 2015 NFCS finds that more than half of Americans (56%) are worried about running out of money in retirement.

Women are somewhat more likely than men to be worried about retirement.****

Source: FINRA Investor Education Foundation, "Financial Capability in the United States 2016," July 2016. *p. 15 **Ibid. ***p. 32 ****p. 16

Source: Georgetown University McCourt School of Public Policy

Debt in America: 2018 Facts & Figures” says the total outstanding student debt in 2017 was a $1.4 trillion. Of that $1.4 trillion, those between the ages of 30 and 39 hold the largest amount of outstanding student debt at $461 billion. That breaks down to roughly $33,000 per person.

The Center for Retirement Research at Boston College’s June 2018 study “Do Young Adults With Student Debt Save Less For Retirement?” uncovered that college graduates with student loan debt accumulate 50 percent less retirement wealth 22

InsuranceNewsNet Magazine » March 2019

by age 30, compared to those without loans.

Foster said, “Here’s someone who has $150,000 of student debt.

They’re not even thinking that they should ever retire. Because they have this massive ball and chain that follows them.”

Seniors Are Struggling, Too

At one time, individuals depended on pension plans for retirement savings. Today, pensions are hard to come by and Americans are becoming more dependent on their assets to generate sufficient retirement income.

Many Americans now rely on other retirement savings accounts, such as 401(k)s and IRAs. Now left to manage retirement on their own, individuals are realizing they saved too little after it’s too late.

Citing these struggles and those of his younger clients, Foster said, “I see the need for holistic planning.”

As the demographics shift, the importance of having adequate retirement income will be paramount in alleviating the pressure on social programs such as Social Security to care for those who have not saved nearly enough for a sustainable retirement.

But, like young adults, seniors with little to no assets and a fixed income face a barrier to entry to gain access to informative financial advice.

Mitchell Kraus, a financial planner from Santa Monica, Calif., volunteers his services to a local organization for two hours each month. He sits with retirees and those approaching retirement age, reviewing their financial plans or pointing them in the right direction to be in a better position as retirement nears.

The concerns he hears from seniors reinforces the significance of financial planning on alleviating those fears, Kraus said. “With that population, what I hear is, ‘How am I going to make the few dollars that I’ve saved last the rest of my life?”

Kraus said. “There’s generally not enough savings.’”

Agreeing with Kraus’ assessment, Jones asked “Where can we address some of the need? “We know we have a retirement crisis — that’s what the data shows — so how do we try and examine this in the context of the economic system that we have and try to solve it from there?”

“I think it could be interesting to have more of a culture that expects a certain amount of pro bono work. I think having a little bit more of that expectation imbedded in the financial industry would be nice.”

According to Jones, the industry may need to do some soul-searching to find a solution to the retirement savings gap.

She proposes instituting and accepting a fiduciary rule as an industry — something the industry has lobbied against. She also said lowering the Social Security eligibility age, increasing access to state-sponsored retirement plans and raising the minimum wage all could help close the gap.

“If we say as the financial services industry that we are interested in people’s financial well-being, those are the things that would increase that,” Jones said. “I think we can think a little bit bigger.”

AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback. com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.

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March 2019 » InsuranceNewsNet Magazine

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USAA, based apply to non-retirement accounts they’re taxed to invest. ing informati advisers, credit report, t, schedule at home can their own retirement looms. down ground rules and living at home too percent you had says Mr. Field, d investment sector. “Althoug to have high dividend yields, make for ark in the higher yields, through to shareholders.

If they up your ally affect investme in advising clients on how als from death retirem and Health Division ofThe neweffect rch and consu rule doesn’t is genius becaus RAM – it frees accounts secure of personal budge ss on goals long as 60, and “we that benchm on BrokerCheck,” tool for registere chased a long-te money on a monthly premi- if they need it. tend l of the taxes, he added.

John Story, down for those. And it doesn’t dramatic viewing her of sectors can Fron- income is passed the policyholder’s for all accounts to their advice on withdraw auto insurance, rent-free ride. “If you make a live in roommate n-based global resea help keep your there, you can thor- This at a time when stocks leave for the Life progre nt has a similar . munications to menta will upon tricklenision number telecom standard ge track ing never dividend This perce , iary clearly any spend of “This opportu Commis limited stocks, standard duciary 70 e to a fi nts o. in a l covera rang rather And some have like unload here, so says. “Maybe she’ll - to the benefic yielding already think more “I’dstill nt for da The Bosto fiduciary standard y is going s and Exchang were held to Dividend-paying the ride in g the moveme concentrated tor’s appointments notes. in San Antoni caregiver actuall From medica of 2017’s top are hidden costs convenient, you may by applying a it possible to ences with boome : FTR) delivere who already The Securitie they are Kern says. as long as you’re accounts.”

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Foguth founder of

I

n a 2018 survey, consumers ages 55-75 were asked this question: Which of the following is most important to you when selecting who handles your retirement and financial planning?

A. SERVICES B. CREDIBILITY C. LOCATION D. PRICE/FEES The overwhelming supermajority of consumers answered that the financial advisor’s credibility was the most important consideration in their decision-making process. Given the current landscape we see in the retirement planning market space, this answer should not be a surprise to anyone. Major financial media personalities, competitors and some politicians are pushing the idea that having a basic life insurance license (even perhaps in conjunction with a securities license) is not enough for the typical financial professional today. Because of this, both consumers and advisors are looking for the differentiating “x factor” that will push the relationship over the goal line so

ER CARE FOR

URE OUT ELD

HOW TO FIG

that the parties end up doing business together.

So what could it be? Simply put, Americans at every level find you more credible when you are famous, published or featured as a subject matter expert (or a combination thereof), whether through a news article, a TV appearance or a book. In fact, public relations is the single biggest driver behind any advisor’s credibility. Sure, designations at the end of your name help show that you are educated, but at the consumer’s first glance, letters such as CFP, CLU, ChFC or RICP may as well read E-I-E-I-O. What is more impactful is becoming “the expert” in order to make prospects conclude that you are, in fact, just that. You instantly become reliable, and your opinions, suggestions and recommendations are immediately valid.

In an increasingly competitive landscape, differentiating yourself is critical. While your competition is mailing the same old plain-vanilla invitations to dinner seminars or educational workshops at libraries, wouldn’t it be nice if yours stood out by including the logos of outlets where you have been featured? Which invitation or website is more apt to catch a consumer’s attention: the one that looks like everyone else’s, or yours, boasting being

of an investor’

need

3 THINGS

TO REME

yield.

featured in The Wall Street Journal, Forbes, USA Today, CNBC, Kiplinger, Time magazine, etc.?

Unfortunately, hiring a PR or media firm as an agent or advisor can cost thousands of dollars per month. Some even pay PR firms a retainer of a few thousand dollars per month to hopefully (yes, hopefully) be featured in various financial news outlets. They know they need the competitive edge in order to differentiate themselves in their markets, so they feel it’s necessary to pay large sums of money for some basic deliverables.

ENTER M&O MARKETING’S INTERNAL PR FIRM

With over several thousand news and media placements, M&O does exactly what other professional PR firms do for advisors, except that it is both free and handled completely from A to Z. As one $20M Michigan advisor put it, “I told M&O that I wanted to become rich and famous and that the order didn’t matter. Since then, I’ve been featured in various news and media outlets dozens of times, and they even pitch me to local news stations to appear for expert content-related segments. It’s been an absolute home run for my business.”

Unlike the ordinary pay-to-play PR firm, M&O has the process built out

SPONSORED CONTENT

from start to finish to get you featured and published in various financial media outlets. It starts out with a consultation phone call to get to know you, your key areas of expertise, and what subject matter you will be best able to comment on. M&O even keeps you out of trouble by offering its in-house compliance and legal departments to you, so you can rest assured you won’t say anything you shouldn’t or anything that could get you in regulatory trouble.

After you’ve been featured, you receive a framed reprint of the news article to hang in your office. Some of M&O’s advisor clients have had so much success with the PR program that they have run out of wall space to hang their placements. Imagine the impact your “wall of fame” will have on new prospects walking through your office on the way to the conference room to discuss their finances with you. Again, all of this helps amplify your credibility. But it doesn’t stop there. In order to achieve the largest impact, M&O uploads every news feature to your website and within your seminar presentation(s).

YOUR VERY OWN BOOK

For those who have always wished to write a book or want something they’ve written over their career to be published, M&O also has an internal publishing company. While costs and time frames vary, many of M&O’s top advisor clients have books of their very own. What better way to show a prospective client your financial philosophy than through

a book? Better yet, your book will be featured in your office, on your seminar mailer, in your seminar presentation(s) and on your website, and made available for purchase on Amazon.

HOW DOES THIS ALL IMPROVE YOUR BOTTOM LINE?

Added credibility through public relations undoubtedly adds to your bottom line, but there’s a more complex formula than just that...

• Financial news media placements = A more credible website/Google SEO/seminar invitation

NEXT STOP: TV

The holy grail for media credibility is undoubtedly television. After a few financial media placements, M&O is able to pitch you to your local news station to become the local financial expert. While M&O does not position TV appearances as a lead source, several of its top advisor clients admit to receiving some inbound calls after their TV segments.

EMMY-WINNING CLASS TRAINING

The last component that advisors receive through M&O’s PR firm is storytelling and communication training by in-house public speaking coach Roop Raj, an Emmy Award-winning Detroit-based news anchor and featured TEDx speaker. In the news media world, reporters have to captivate viewers’ attention within seven seconds or viewers tune out and change the channel. In the public speaking and financial sales worlds, not much is different.

Prospects are going to decide if they like you enough to consider making an appointment within just 30 seconds of your opening. Wouldn’t it be nice to be trained by one of the best in show business to connect with your audience and prospects as fast as possible? Learning neurolinguistic programming and how to use the inflection of your voice, dress appropriately, and use your hands and body language to engage are just some of the things Roop coaches you through in M&O’s exclusive Spotlight training.

• A more credible website/Google SEO/seminar invitation = Increased seminar turnout • Increased seminar turnout = Increased appointment-setting ratio • Increased appointment-setting ratio = Increased annuity sales closing ratio • Increased annuity sales closing ratio = Bigger, better sales • Bigger, better sales = More referrals • (Repeat)

BOTTOM LINE

Public relations is the single most powerful credibility-building tool that attaches your name and company brand to recognizable publications as an expert resource. Public relations improves your confidence and validity with prospective clients. Instead of consumers asking why they should do business with you, wouldn’t it be nice for a change for them to be programmed to ask, “What do you recommend?” •

For more information on how to get started with M&O’s powerful internal PR team, go to www.MandOpr.com.

the Fıeld

A Visit With Agents of Change

Teaching, Planning And The Pursuit Of

How one advisor is using her interest in teaching to help clients find their happiness. • By Susan Rupe 26

InsuranceNewsNet Magazine » March 2019

TEACHING, PLANNING, PURSUIT OF HAPPINESS IN THE FIELD

C

hristy Aleckson discovered the hard knocks of the entrepreneurial life at an early age, by selling lemonade — in Alaska.

“It was a challenge to get the only three families who lived on my street to buy from me,” she said of her hometown, Soldotna. “After that experience, I started baking cookies and selling them in my mom’s office, and I was a lot more successful with that.”

Her interest in business was equaled only by her love for teaching. She originally planned to become a teacher after graduating from college. But that plan was extinguished by the teacher she knew best — her father.

Aleckson didn’t spend her career standing in front of a blackboard. But she serves as a teacher every day to her clients. Aleckson, 43, is CEO of Single Point Financial Advisors in Beaverton, Ore., in the technology hub nicknamed the “Silicon Forest.”

She was named 2018 Woman of the Year by Women in Insurance and Financial Services in recognition of her work on behalf of her profession and her

Aleckson’s father taught U.S. history at the high school she attended. She said she was walking in the hall on her way to class one day when her father put his hand on her shoulder and said, “Don’t do it, kid.”

“I said, ‘Don’t do what?’ He said, ‘Don’t become a teacher.’”

Aleckson said she heard a similar discouraging remark from her art teacher.

“I thought, ‘What the heck? Why is everyone being so negative about this?’

Looking back, they were going through a bad contract negotiation or something and everyone was regretting being a teacher that week.”

BUSINESS

Helping Teachers

A leck son g raduated f rom Paci f ic University in Forest Grove, Ore., where she earned degrees in business administration and political science. Her first post-college job put her back in the world of teachers. She took a marketing job with a small investment firm that enrolled public school employees in 403(b) plans.

“I ended up learning a lot from helping the other agents with their licensing, continuing education, other things they were

“The money wasn’t what I was focused on. It was the aspect of sitting down and teaching someone about money and planning that really appealed to me.” association. The award is given to a WIFS member based on her organizational activities, which include mentorship, participation in webinars, focus groups and study groups, and leadership roles on the local and national levels.

Many financial advisors started out in professions such as teaching before making a career switch. When Aleckson was in high school, she planned to take an opposite route.

“I come from a family of teachers,” she said. “My Dad was a teacher and so was his mother — that whole side of the family tended to be in the teaching profession.

My plan was to go off and make a ton of money from some fabulous business and, then when I was 35 and rich and famous, I would go back to school and become a teacher. That was my vision.”

GROW YOUR

working on,” she said. “The money wasn’t what I was focused on. It was the aspect of sitting down and teaching someone about money and planning that really appealed to me.”

Eventually, Aleckson convinced the firm’s owners to pay to get her licensed.

She started out working with some existing clients until she became comfortable enough in the business to begin acquiring clients of her own.

Aleckson found that her family’s background in education served her well as she started out helping teachers enroll in 403(b)s.

“My dad’s mother — my grandmother — is 100 and she still gets a $96 monthly annuity payment from her 403(b),” Aleckson said. “Her colleagues all had these plans, too. It was very much a

March 2019 » InsuranceNewsNet Magazine

27

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IN THE FIELD TEACHING, PLANNING AND THE PURSUIT OF HAPPINESS

Christy Aleckson accepts the 2018 Woman of the Year Award from Women in Insurance and Financial Services.

thing that I was aware of when it came to retirement planning and knowing what that demographic needed because I know how much they make.”

continued to grow that way. This shifted my focus at that point to something that was a little bit different and things started to grow from there.”

Out On Her Own

Happiness Is At The Core

After 11 years, Aleckson established her own practice. She formed Single Point Financial Advisors in 2007, with a focus on serving public school employees as well as women business owners. She has another advisor and an assistant working with her.

Her affinity for the public education sector worked well for her as she continued serving that group’s retirement saving needs. But trying to provide advice for business owners while the Great Recession threw the economy into turmoil was a challenge, Aleckson recalled.

“It was a challenge getting people to schedule an appointment with me because everyone was working all hours trying to keep their own business going,” she said. “Plus, because we were in a recession, people didn’t have flexible income to spend on certain things. So while you could get a rollover or a transfer for financial planning, it was hard to get true planning done. No one’s paying for disability insurance because they’re trying to pay their lease or their mortgage.”

Aleckson said she worked on relationship-building, attending business networking events and “not trying to market, but trying to be a resource to people.”

After two or three years of struggling to reach business owners who were having their own struggles, Aleckson went back to her 403(b) clients. “I worked on getting referrals from those existing clients and 28

Many advisors start out serving anyone who is willing to do business with them and then they eventually develop a niche market. Aleckson said she did the opposite.

“I started out in a niche and now I work with people I like,” she said. “I don’t require a minimum level of assets to work with me. My judgment call is if what you need is what I do, then we go to Step 2. If I think of you calling and I roll my eyes knowing you’re on the other end of the phone, you’re not my client. And vice versa, if you’re irritated that I’m calling you, it’s not a good match. And when that does happen, I try to match them with someone who is a good fit.”

She continues to work with public school employees and has branched out to serve single women, whether they are divorced, widowed or never-married. “I work with women in all age ranges,” she said. “We talk about more than just their money, so it seems to be a good fit.”

Aleckson also works with couples who are business owners. Nike and Intel have their headquarters in Beaverton, and Aleckson’s firm works with some of their employees.

In addition, she works with a number of millennial clients. “They are my favorite because they want to know and understand everything,” she said. “They don’t want the biggest, brightest, fastest

InsuranceNewsNet Magazine » March 2019

— they want what’s best for them.”

Seeing her millennial clients succeeding and reaching their financial goals is “the kind of stuff that makes you feel you’re really impacting people because you are seeing results.”

Aleckson’s teaching instincts kick in when she works with younger clients, said Emily McDonald, a registered representative in her firm.

“Christy has the heart of a teacher,” McDonald said. “She is interested in learning from people as well as helping them get what they want.”

McDonald recalled one young prospect who called Aleckson after calling at least 10 other firms, seeking advice on his finances.

“He said, ‘I want to learn something,’ and Christy was laser-focused on getting him started on his financial journey. Now he has reached his goals because she sat down and taught him. She believes when she sends this energy out, it elevates everyone — the client, our practice, the entire community.”

The firm’s website lists a number of the company’s core value. Along with items such as education and integrity, happiness is included on that list of values.

“Happiness is at the core of all this,” Aleckson said. “People come into my office and they’re stressed, they don’t know if they’ll be able to retire, and they don’t know what’s going on and everything’s confusing. And when they leave, they’re giving hugs and excited and looking forward to the rest of their day. I think that’s really important.”

Susan Rupe is managing editor for Insurance N ewsN et .

She formerly served as communications director for an insurance agents’ association and was an awardwinning newspaper reporter and editor.

Contact her at Susan.Rupe@innfeedback.com.

Follow her on Twitter @INNsusan.

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.

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IN THE FIELD

833.477.4762

OBJECTIVES AND REFLECTIVES

LIFEWIRES

QUOTABLE

LIMRA Forecasts Life Sales To Rise 3% In 2019 LIMRA researchers looked into the crys-

tal ball for 2019 and foresee a 3 percent gain in individual life sales for the year. This increase would bring individual life sales to $15 billion for 2019.

The growth in sales will be primarily driven by gains in disposable income and bond rates, coupled with low unemployment, LIMRA said. While LIMRA predicts continued growth in indexed universal life in 2019, the driving forces of that growth will change. LIMRA expects equity markets to slow, but interest rates will continue to rise.

LIMRA also predicts artificial intelligence to grow both in the number of carriers using it and in its range of applications.

GALLAGHER ACQUIRES PARTNERS ADVANTAGE

$785

Missing Annual Life Premium Per Person

Arthur J. Gallagher & Co. is acquiring Partners Advantage Insurance Services in a significant deal that gives the Chicago-based insurance giant a toehold in the insurance marketing organization space.

UNDER-INSURANCE COSTS LIFE CARRIERS $70B ANNUALLY

Only 26 percent of the total coverage needed for life insurance is met, resulting in $70 billion in lost premiums for the industry.

A report found that insurance companies are missing out on an average of $785 in annual life insurance premium payments per person who requires insurance coverage in the U.S. The report came from Atidot, a technology company providing AI, big data and predictive analytics tools to life insurers.

West Virginia recorded the highest level of under-insurance with an average of 85 percent, while Oklahoma, the least under-insured state, still recorded a staggering 51 percent.

DID YOU

KNOW

?

30

Founded in 1993, Partners Advantage is a big IMO providing insurance products, marketing, underwriting, agent development, and recruiting support for the producers and managing general agents.

Arthur Gallagher is a global insurance brokerage and risk management services firm established in 1927 and is the third-largest insurance broker in the world. The company acquired about 400 companies in various insurance and consulting company deals since 2010.

The advisor who serves their local community and interacts with their customers regularly will always know more than the computer will.

— Troy Korsgaden, president of Korsgaden International in Visalia, Calif., and author of six books on the insurance industry.

PARENTS PRIORITIZE DEBT OVER PROTECTION

A New York Life survey found that 72 percent of parents identify debt reduction as a top financial priority for 2019. That number is even higher for millennial parents (ages 18-34), with 80 percent planning to focus on debt reduction this year.

But the survey also showed only 28 percent of parents believe it is important to have a financial plan in place to care for their children in case something happens to them.

Although debt reduction is a worthwhile financial goal, without the proper financial protection in place, “nothing else really matters,” said Brian Madgett, vice president, New York Life.

Madgett urged insurance professionals to help parents take a “protection first” mentality in helping them to prioritize spending some of the family budget on life insurance.

Michel A. Khalaf was named president and CEO of MetLife, effective May 1.

InsuranceNewsNet Magazine » March 2019

Source: MetLife

Shouldn’t whole life be for your client’s whole life?

Advantage Plus Whole Life is a life insurance solution designed to help meet your clients’ financial needs and take care of their loved ones. It can provide financial options during their working years and may be a means of supplementing income in retirement. With Advantage Plus your clients can focus on the things in life that truly matter. Visit Advantage.Foresters.com to learn more.

Foresters Financial and Foresters are trade names and trademarks of The Independent Order of Foresters (a fraternal benefit society, 789 Don Mills Road, Toronto, Canada M3C 1T9) and its subsidiaries. N363 This advertisement is provided for information purposes only; it does not form part of the Foresters Advantage Plus Whole Life Insurance contract and is not intended to amend, alter or change any of the terms and conditions of the contract. Life insurance contracts are underwritten and issued by The Independent Order of Foresters, a fraternal benefit society. Foresters Advantage Plus and its riders may not be available or approved in all states and are subject to underwriting approval, limitations, contract terms and conditions, and state variations. Refer to the Foresters Advantage Plus Whole Life Insurance contract for your state for these terms and conditions. Foresters Advantage Plus is filed under the form Foresters Advantage Plus: ICC17-WL-US01 or WL-XX01-2017 (“XX” represents either “US” or your state’s postal abbreviation, as applicable).

417172 US (03/19)

LIFE

How To Tell Owners That Perm Is Not A Black Hole Why permanent life insurance is the solution for many issues entrepreneurs face.

Y

By John “Hutch” Hutchinson

our business-owner clients have many financial needs, and permanent life insurance may be the solution. But they may be resistant to buying it.

Most entrepreneurs feel like the premiums they pay get sucked down a black hole never to return. They perceive that any policy equity is off-limits during their lifetime. Help them understand the truth.

Owners can tap into the policy’s cash value at any time for any reason via loan or withdrawal. Whereas many of your W-2 employee clients may head for the hills when they hear the words “loan” or “borrow,” most entrepreneurs already embrace the concept of using OPM (other people’s money).

A life insurance loan may be the safest and most flexible way to use OPM. Their full cash value balance continues growing safely as if it never left their policy because — it never leaves their policy!

All life insurance companies contractually agree to provide a private loan against policy equity on a no-questionsasked basis since they’ll be holding the cash value as collateral.

Yes, the policyholder will owe interest, but they get to choose if and when they pay it. A life insurance loan is against the policy’s death benefit, so the loan isn’t due until death. That’s why there’s no rigid payment structure as long as the cash value exceeds the loan amount.

They should responsibly schedule some periodic loan maintenance, but the cash value growth may keep pace with any accruing loan interest or possibly even outrun it.

Certain indexed universal life policies 32

even offer contractually locked loan rates in the 5-6 percent range for the life of the policy. Business owners really love this concept of locking in their ability to access capital at 5-6 percent while still being able to earn double-digit returns on their cash value.

Although it may seem simpler to have the operating company itself own the life insurance policies backing the buy-sell agreement, it may be more tax efficient to have the individual owners take out policies on each other.

this structure as an “entity redemption” because limited liability corporations are made up of units instead of stock.

On the other hand, in a cross-purchase agreement, the owners personally take out policies on each other.

Because the surviving owners would receive the death benefits personally and then use the proceeds to buy the deceased owner’s stock or units, their new basis in the company increases by the amount they paid. Down the road, if the company is sold for a capital gain,

If the company itself receives the death benefit and uses the proceeds to buy out the deceased owner’s heirs, the company gets no increase in basis for the ownership it paid for. This type of buysell agreement is commonly referred to as a stock redemption plan or agreement.

However, it’s more appropriate to refer to

the amount deemed as basis in their partner’s stock or LLC units would not be taxable.

I’ve found that business owners deem this huge possible tax benefit worth the extra complication unless there are more than three owners. With three owners, six policies are needed (since each owner

Who Should Own The Policies?

InsuranceNewsNet Magazine » March 2019

HOW TO TELL OWNERS THAT PERM IS NOT A BLACK HOLE LIFE owns one policy on each owner. The LLC language needs to be structured so that only the surviving owners’ capital accounts receive their proportionate share of any death benefit. Then they will have manufactured the necessary separation to get the benefits of a cross-purchase agreement within the centralized simplicity of an entity redemption plan.

Taking the LLC concept a step further, it can also act as the LLC’s own private lending or leasing company.

Having the separate LLC stockpile cash value and/or purchase expensive equipment using policy loans can turbocharge what would otherwise be stagnant assets.

This separate structure for the assets may also better insulate the owners from lawsuit. In many states, a “charging order” is the only way a creditor can attach any LLC interests owned by the defendants. This means that someone who has won a lawsuit against our business owner clients would be entitled to any distributions made from their buysell LLC lending company. However, the creditors can’t force the owners to give up assets from within the LLC when a charging order is all they have.

Show your entrepreneurs how this helps protect their most prized asset — their business. Show them how the multifaceted hedged benefits are easily worth the cost. Better yet, show them how they can protect themselves while building a tax-favored asset they can use leading up to retirement and beyond.

needs a policy on each other). With four owners, 12 separate life insurance policies are needed. With five owners, 20 policies, and so on.

I usually prefer that any permanent policies be moved off the operating business balance sheet anyway. That’s where most of the risk resides, and the owners

are much less likely to be sued personally. Also, in many states, life insurance may be an exempt asset protected from creditors when held personally.

One way to get the best features of both an entity redemption and a cross-purchase plan is to have the owners set up a separate buy-sell LLC that

John “Hutch” Hutchinson is an independent insurance agent in San Clemente, Calif.

He is founder of BankingTruths.com, an educational site for both consumers and advisors to learn how to structure life insurance to act as their own private bank. Hutch may be contacted at john.hutchinson@innfeedback.com.

WANT MORE LIFE NEWS?

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March 2019 » InsuranceNewsNet Magazine

33

ANNUITYWIRES

Annuities Get The Cold Shoulder From DC Plans

The international investing consulting firm Callan looked at defined contribution plans to see what sort of retirement income solutions they offered to workers in 2018. The firm found half of the DC plans surveyed offered that option to employees.

The most common solutions were providing access to a defined benefit plan (27 percent) and offering a managed account service (14 percent).

But annuities got the cold shoulder. Only 12 percent of respondents indicated they provide an annuity as a form of distribution, 3 percent said they use an annuity placement service and another 3 percent offer an in-plan guaranteed incomefor-life product. Qualified longevity annuity contracts were way down the priority list, with slightly less than 2 percent of respondents saying they offer QLACs. Asked why they do not offer an annuity-type product in their DC plans, plan sponsors reported being uncomfortable or unclear about the fiduciary implications. Plan sponsors also report that an annuity-type product is unnecessary or not a priority and that there is a lack of participant need or demand. Other reasons for not offering an annuity-type product in their DC plans cited by respondents include the difficulties in communicating to participants and concern over insurer risk.

PROTECTIVE LIFE ACQUIRES GREAT-WEST ANNUITY BOOK

Protective Life will acquire through reinsurance Great-West’s life and annuity business.

The $1.2 billion transaction represents Protective’s largest acquisition and gives the company an entry into the executive benefits market.

tend have different levels of concern over different financial products.

LIMRA SRI found consumers were more concerned about fraud with credit cards and bank accounts and less concerned about fraud in retirement plans and annuities.

However, LIMRA researchers warned that the incidence of fraud is increasing among individual annuities and DC retirement plans. LIMRA said two factors are driving the increase of fraud

The Great-West acquisition will be Protective’s 57th acquisition and its 50th life and annuity acquisition. It will be the fourth transaction completed since Protective became part of Dai-ichi in 2015.

FRAUD INCREASING IN ANNUITY PLANS

Nearly eight in 10 American consumers are concerned about financial fraud, a LIMRA Secure Retirement Institute study found. But consumers DID YOU

KNOW

?

34

QUOTABLE After 20 years on Wall Street, [annuities] were the single best investments I’ve ever made.

— Colin Devine, the Alliance for Lifetime Income

in retirement plans. One factor is that annuity and retirement accounts hold larger pools of money. The other is that credit card issuers have ramped up their security features.

NEW PRODUCTS

New annuity products continue to spring forward. Here are a few of them. » DPL Financial Partners and Security Benefit created a commission-free fixed index annuity — ClearLine — that has a simplified product structure and provides a rising income feature that increases income payouts each year. The FIA has an optional Rising Income Rider that pays rising income for life. It also has an elective withdrawal feature for non-qualified contracts that may reduce the tax burden for some retirees by spreading the taxable gain portion of the income payments over a longer time period. » Securian Financial created SecureOption Choice, a fixed deferred annuity. Features include 3-, 5-, 7and 9-year guarantee periods, and 10 percent free annual withdrawals after the first year.

Charles J. “Chuck” DiVencenzo was named president and CEO of the National Association for Fixed Annuities.

InsuranceNewsNet Magazine » March 2019

Source: NAFA

THE

t s e g Lar

e m i Cr CE N A R U S N I F O Y IN THE HISTOR

Hello, My name is Gabe Myers. I’m the founder and CEO of Peak Pro Financial.

And after 18 years as a top producer in the insurance industry — I need to expose a lie you’ve all been told.

There’s a bona fide conspiracy spanning the entire whole life industry — one that their CEOs don’t want you to know about. Hiding in plain sight, what they’ve cooked up is so devastating that from a fiduciary standpoint — it could be the largest crime in the history of insurance.

It could also be forcing your production numbers to remain much lower than they should be.

I don’t say any of this lightly. That’s why I’m prepared to share the research to back it up — along with a mathematically proven strategy that I have personally used to remain a top IUL producer for nearly two decades.

Every detail is spelled out in the bombshell report, "Exposing the Whole Life Lie: How one calculation could double or even triple your production." And as a fellow producer, I want you to have a copy for free when you visit:

www.WholeLifeLie.com

ANNUITY

N.Y. Advisors Face Tough Standard Regulation 187 will change the way annuities are sold in New York.

By John Hilton

P

roducers selling annuities in New York face two significant changes after the state’s best-interest standard takes effect in August: training and documentation.

The industry’s key goals should be complying with the new standards and eliminating conflicts of interest, said Issa J. Hanna, counsel with Eversheds Sutherland.

“It’s going to be more paper,” said Hanna, who specializes in compliance with state and federal financial regulations. “I don’t think producers like to hear that, but there’s going to be more forms, more paper.”

“reasonable basis to believe that the consumer can meet the financial obligations under the policy.” » Prohibit an agent or broker from telling a consumer that a recommendation is part of financial planning, investment advice or related services (unless the agent or broker is a certified professional in that area).

A National Association of Insurance Commissioners’ subgroup is working on an annuity sales model law for states. But New York bypassed those efforts in favor of a much tougher regulation.

Some insurers, such as Allianz, are simply refusing to sell annuities in New York.

Those who remain are staring at a regulation that looks very similar to the controversial Department of Labor fiduciary rule, Hanna said.

“It uses a lot of the same terminology and phrases,” he added.

Regulation 187 sets a tough standard for anyone selling annuities in New York. The regulation lays out a series of rules, from the broad to the specific.

Here are three things agents and brokers can count on: 1. Training. The rule requires insurers to provide training to all their producers. Experts expect that training to become standardized across the industry relatively quickly.

2. Thorough suitable analysis. The regulation spells out a demanding suitability analysis taking into account the client’s financial needs and objectives from every angle.

3. Documentation. Producers should be prepared to document their interaction with clients at each step to limit their future liability exposure.

— John Hilton Regulation 187 was finalized last summer and takes effect Aug. 1 for annuities and six months later for life insurance.

Simply stated, it requires producers to put the customer’s “best interest” ahead of their own.

To help accomplish that, the New York rules would: » Require disclosure of all suitability considerations and product information that form the basis of any recommendation. » Permit agents or brokers to make a recommendation only if they have a 36

The DOL rule was bitterly opposed by the financial services industry, and lawsuits led to a federal appeals court decision killing the rule last summer.

As this issue went to press, New York’s best-interest rule was also being challenged in court. Two lawsuits — one

by Big I New York and the Professional Insurance Agents of New York, and one by the National Association of Insurance and Financial Advisors-New York — are working their way through the New York court system.

InsuranceNewsNet Magazine » March 2019

Get Your Training

The regulation states that “an insurer shall be responsible for ensuring that every producer recommending any transaction with respect to the insurer’s policies is adequately trained to make the recommendation.”

Although the New York Department of Financial Services will not be approving or otherwise overseeing any training efforts, insurers have ample reason to take this requirement seriously, Hanna said.

It is likely that any training administered to producers would form the basis of a defense should the insurer be taken to court at a later date.

“That’s one significant additional impact from a practical perspective that producers may not be focused on right now,” Hanna explained. “At this time, it looks like training is going to end up being pretty standardized.

“Discussions within the industry seem to be focused on the insurance carriers working with popular training vendors to develop a kind of standardized training that’s going to be used across the industry.”

Regulation 187 is treating violations as “unfair methods of competition or unfair and deceptive acts or practices prohibited” under state insurance law. That law allows the DFS superintendent to levy fines of $500 per day up to $5,000.

But it’s the threat of civil lawsuits that is getting the attention of insurers and producers. In the courtroom, a jury can levy a wide range of judgments for a guilty finding.

Will training be enough to avert lawsuits? Unlikely, legal analysts say. Alston & Bird, a law firm based in Atlanta, predicts that the New York rule will lead to increased civil complaints. The firm also called the best-interest language “ambiguous, highly individual and subjective.”

Under the best interest standard, the producer is required to act in a manner that reflects the care, skill, prudence and diligence that a prudent person acting in a like capacity would use.

Keep A Paper Trail

The one thing everyone seems to agree on is that the more documentation associated with an annuity sale, the better protected

N.Y. ADVISORS FACE TOUGH STANDARD ANNUITY the liable party is in the event of a challenge.

Financial Industry Regulatory Authority rules require extensive documentation for the sale of variable annuities, Hanna noted. VAs are regulated as a security.

“Producers are going to be facing the situation now where they’re going to have to adopt those FINRA-style documentation requirements with respect to recommendations to hold on any annuity,” Hanna explained.

“If they don’t have any existing processes to document and supervise recommendations to hold, that’s something that they’re going to have to get up to speed with.”

Insurers are likely going to demand substantial documentation, if for no other reason than to keep the New York Department of Financial Services satisfied, Hanna said. The potential is high for the industry to coalesce around a standardized format. Discussions on this are ongoing.

The amended regulation has a fast-approaching compliance effective date of August 2018 for annuities. If they haven’t already, distributors selling those products

should begin the process of revisiting their consumer-facing forms and disclosures, Hanna said.

“The amended regulation requires the producer to deliver to the consumer a reasonable summary format disclosure explaining to the consumer the ‘why’ behind the recommended sales transaction,” he said. “Distributors have never been asked to deliver anything like this before to consumers, so many of them are having to draft something from scratch.”

Various insurtech and software companies are pushing out products designed to make client meetings easier to document for the agent on the go. These products will surely find an audience in New York.

Comp Concerns

The question on many minds is what happens with compensation. Unfortunately, with DFS being sued, the department has declined to issue further guidance for fear it will hamper its lawsuit defense, Hanna said.

That does not mean the questions have gone away.

“There’s a bit of uncertainty now over what’s going to happen to compensation,”

Hanna said. “It’s going to have to play out.

But I think there’s a fear out there that the compensation on annuity is going to have to get leveled in some way, or they’re going to have to establish the ability to make a neutral recommendation. I think there’s a fear out there that that’s what DFS is expecting.”

While compensation might decline, costs are surely going up. An analysis by A.M. Best confirmed that insurers will spend more money to sell annuities in New York.

According to a Best’s Briefing, titled “Regulation 187 May Impact Sales Practices and Products Sold in N.Y.,” insurers will most likely incur higher costs, as training will be needed for both producers and insurers’ sales support functions.

I n s u r a n c e N ew s N e t 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.

March 2019 » InsuranceNewsNet Magazine

37

HEALTH/BENEFITSWIRES

Uninsured Rate Hits 4-Year High The percentage of U.S. adults without health

insurance reached a four-year high at the end of 2018. But the uninsured rate was still well below the peak level seen before Medicaid expansion under the Affordable Care Act in 2014, a Gallup survey found.

The national uninsured rate climbed to 13.7 percent at the end 2018, its highest level since the first quarter of 2014 when the rate reached 13.4 percent.

Women of all age groups and adults under the age of 35 reported among the highest rates without insurance at 12.8 percent and 21.6 percent, respectively.

The number of people lacking insurance reached its highest point in the third quarter of 2013 at 18 percent and steadily improved over the next three years, according to Gallup. But the uninsured rate has been on the increase every quarter since the last two quarters of 2016 when Donald Trump was elected president.

CANCER DEATH RATES FALL FOR 25TH STRAIGHT YEAR

It was almost a h a l f- c e ntury ago when President Richard Nixon declared war on cancer as he signed the National Cancer Act of 1971 into law.

Cancer still is the No. 2 cause of death in the U.S., but there’s encouraging news – the cancer death rate fell for the 25th consecutive year, the American Cancer Society reported.

Fewer people smoking, as well as advances in early detection and treatment, are driving the drop in cancer death rates. But obesity-related cancer deaths are on the rise. The ACS predicts there will be more than 1.7 million new cancer cases, and more than 600,000 cancer deaths, in the U.S. this year.

The lung cancer death rate dropped by about half since 1991. The death rate from prostate cancer also saw a significant drop from 1993 to 2013 and then flattened between 2013 and 2016. But death rates from liver, uterine and pancreatic cancer have been slowly rising, in part because of increasing obesity rates in the U.S. DID YOU

KNOW

?

38

QUOTABLE To replace the entire private system where companies provide health care for their employees would bankrupt us for a very long time.

— Former New York City Mayor Michael Bloomberg

ASK YOUR DOCTOR IF …

If it seems as if you are seeing more advertising than ever for medications, tests and treatments, you are right. Spending on health care marketing nearly doubled from 1997 to 2016, hitting at least $30 billion a year, according to the Journal of the American Medical Association.

Advertising isn’t just a matter of convincing people to choose one brand instead of another, said Steven Woloshin, co-director of the Center for Medicine and Media at The Dartmouth Institute for Health Policy and Clinical Practice.

Marketing campaigns make people worry about diseases they don’t have and ask for drugs or tests they may not need, he contended.

The biggest medical marketing increase over the past 20 years was in “direct-to-consumer” advertising, including the TV commercials that tell viewers to “ask your doctor” about a particular drug. Spending on such ads jumped from $2.1 billion in 1997 to nearly $10 billion in 2016, according to JAMA.

HEALTH CARE DEALS KEEP ROLLING ALONG

Another month brings another news item about a deal in the health care world.

This time, it’s Microsoft getting into the health care business. The technology giant announced a massive 7-year deal with Walgreens Boots Alliance in an effort to transform “health care delivery.”

What does that mean? Microsoft will become Walgreen’s main cloud provider, and Walgreens said it will also roll out Microsoft 365 to its more than 380,000 global employees. Walgreens also will create up to 12 in-store “digital health corners” aimed at the merchandising and sale of select health care-related hardware and devices.

In another recent health care megadeal, Bristol-Myers Squibb announced that it is buying biotech company Celgene, which develops treatments for cancer and inflammatory diseases, in a deal valued at $74 billion.

CVS and Walgreens are adding in-store dental services to the menu of health care options offered in some of their retail locations

InsuranceNewsNet Magazine » March 2019

Insurance options for everybody Everyone deserves a Guardian That’s why we’ve offered benefits designed to help your clients plan more secure futures for their employees for over 150 years.

Guardian® is a registered trademark of The Guardian Life Insurance Company of America.

HEALTH/BENEFITS

More Than Pushing Product: Delivering Benefit Solutions Focusing solely on selling benefit products misses the bigger picture of offering the client a solution.

By Dan Johnson

I

n the world of voluntary benefits, we get paid for the products we sell.

But the true value we provide often comes through the solutions we offer to clients.

Some choose to see voluntary products as merely a quick fix to fill gaps and supplement high-deductible medical coverage. What I have found is that focusing solely on voluntary benefit products misses the bigger picture of offering a solution for the client, which in turn helps establish you as a consultant, not a salesperson.

There are no easy answers to the challenges faced by brokers and their clients.

products. That may be a lot more to bite off in the sales process, but it’s ultimately more rewarding.

Here are some easy changes you can make in your approach to start building a more consultative relationship with clients.

Ask A Lot Of Questions, Then Ask Some More

A consultative relationship always begins with asking clients a lot of questions and seeking clarity on their wants and needs. You basically have to be a curious 2-year-old again: “Tell me more; tell me more!”

As an example, I recently was involved with a case where the employer’s big issue was that 70 percent of employees didn’t have a beneficiary listed on their group life insurance coverage. The employer had experienced situations where an employee died without a beneficiary

The products may be the primary place where money exchanges hands, but the solutions are really where business is won or lost.

Success in voluntary benefits relies on a well-rounded solution that has the ability to address product needs as well as enrollment, benefit administration, and challenges with employee communication and engagement. The products may be the primary place where money exchanges hands, but the solutions are really where business is won or lost.

At the end of the day, you can’t just push product. To deliver solutions, you must act as a consultant to your clients.

Not only is this a more effective way to sell; it breeds deeper relationships with employer clients when they know you have their best interest at heart and are trying to solve their problems, not just sell 40

listed. The employer then had to deal with the headaches associated with the lack of a clear beneficiary.

Obviously, this was an issue that didn’t have to do with selling new voluntary benefits. Nonetheless, it was through the enrollment of voluntary benefits that we were able to create a communication strategy to address the issue at hand. We conducted an active call center enrollment to update 100 percent of the beneficiary information while at the same time offering our new voluntary benefits.

The need for updated information was an issue which the broker learned about by politely (but relentlessly) asking questions. If we had come in focused only

InsuranceNewsNet Magazine » March 2019

on selling products, we likely wouldn’t have solved the employer’s problem and in turn, wouldn’t have won the business.

The communication strategy is what carried the day, not the voluntary benefits alone. Again, the strategy began with asking questions and, just as important, really listening closely to the answers.

The Power Of Communication

That last case serves as a nice segue into what I feel is one of the most important parts of taking a consultative approach with your clients: communication.

A fun question I like to pose to employers is, “What would you say or ask if you had 15 minutes to talk to every one of your employees one-on-one?” It’s interesting to see the reaction when employers pause to consider the possibilities. The answers range from your typical value of benefits discussion to the need to engage employees on the corporate strategy or even corporate restructuring. So many of the challenges employers face today are issues of communication as well as employee understanding and engagement.

So, when meeting with employers, try to ask questions about their strategy and challenges. Think of ways that communication during a one-on-one meeting or a call center voluntary benefits enrollment session can be tailored in a way that addresses those challenges. Use this insight to your advantage and improve the solution you provide by making communication one of the key tools in your voluntary benefits toolbox.

Further, doubling down on the communication aspect of enrollment has added benefits for brokers. It serves as a way to reinforce the value of the benefits you and the employer are offering, promotes enrollment, and improves employee satisfaction and retention metrics.

Know The Employer’s Market

Remember that your clients’ industries are just like our own; each has their own

MORE THAN PUSHING PRODUCT: DELIVERING BENEFIT SOLUTIONS HEALTH/BENEFITS specific language and phrasing, seasonality and nuances to consider. And while you can’t expect to become an expert in your clients’ industries, doing your homework will help you become a more effective, prepared consultant.

In my own career, I’ve had a series of clients from the world of education.

Given the way a school year typically works, these clients often will have challenges with voluntary benefit payroll deduction billing given the non-year-round work schedule.

Take the grocery industry, as another example. I’ve found my clients in this sector tend to have highly-dispersed workforces. This makes enrollment particularly challenging.

These examples highlight how you can make yourself a stronger resource to your clients if you can understand the needs of a specific industry and you have solutions that address these needs. It takes a little extra time, effort and research, but if you want a consultative relationship you must have some understanding of your clients and the way their industries work.

It’s All About Flexibility

I wish there were some magic formula or checklist that could set you up for a successful, long-lasting, consultative relationship with your clients but there isn’t.

Much of what you can do to maintain a consultative approach with clients boils down to being flexible and adaptable.

If you strive for flexibility, my advice is to never let yourself become a rubber stamp that recommends one-size-fits-all solutions for your employers. Continue to learn and educate yourself. Voluntary benefits is a complex and nuanced industry and, even after more than 30 years in the industry, I’m still learning things every day.

It’s also critical to be fully invested in your clients’ success. Caring matters.

Your clients can tell when you genuinely care about them. Being invested in your clients’ success will inspire you to more thoughtful, innovative counsel that will benefit everyone involved. It will also steer you away from relying on tried-and-true techniques and help generate the kind of creativity and flexibility you need to find

the right voluntary benefit solutions.

Today’s employers are looking for more simplicity in a complex world. Pushing products may be a simple way to approach the voluntary market, but it’s not an effective way. That’s why it’s up to us to maintain a consultative approach by asking questions, communicating, understanding our clients and having the flexibility to develop solutions to our clients’ needs. This is the way you build long-lasting, trusted relationships and deliver the simple, effective solutions that your clients need.

Dan Johnson is vice president of sales and marketing for Trustmark Voluntary Benefits. Dan was elected into the Workplace Benefits Hall of Fame in 2013. He can be reached at dan.johnson@innfeedback.com.

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March 2019 » InsuranceNewsNet Magazine

41

NEWSWIRES

Powered by InsuranceNewsNet.com

High-Yield Savings Accounts Outperform The Market

It used to be that keeping money in a savings account was considered almost as bad as burying cash in a box in the backyard. No more. In 2018, high-yield savings accounts outperformed the stock market for the first time in a decade.

You can thank rising interest rates for that. The annual percentage yield banks pay consumers on their money has jumped to as high as 2.4 percent – up from an average of 0.1 percent before the Federal Reserve started increasing its benchmark rate in 2015.

Meanwhile, the S&P 500 and the Dow Jones Industrial Average finished 2018 in the red, experiencing their biggest annual losses since 2008.

WE CAN’T GET NO SATISFACTION

AICPA said, followed by the pain from personal taxes.

Market vola- 4 IN 10 SMALL BUSINESSES OFFER tility has tak- RETIREMENT PLANS en a bite out of Only 42 percent of small businesses — Americans’ person- those with fewer than 100 employees — al financial satisfac- offer retirement benefits to their workers, tion. The American a LIMRA study found. Despite that relaInstitute of Certified Public Accountants’ tively small percentage, LIMRA found 40 quarterly Personal Financial Satisfaction percent of small-business employers Index dropped in the fourth quarter of believe retirement benefits are more 2018, marking the first such decrease important now than three years ago in seven quarters. But even with the and 57 percent said retirement benefits drop in satisfaction, the are equally as important. index remains relatively LIMRA research also And that's why there's no 40 1k ... close to recent high levels, shows there is a trend in you understand, AICPA reported. the number of employright?

The index is calculated ees within the small busias the Personal Financial ness and the importance Pleasure Index minus of retirement benefits. the Personal Financial While only 37 percent of Pain Index, with positive companies with less than readings signaling that 10 employees say they are Americans are feeling more important now than more financial pleasure three years ago, that numthan pain. ber goes up to 64 percent The wild stock market for companies with 50-99 ride in December was employees. the biggest contributor Although 36 percent to the Personal Financial of small businesses don’t Satisfaction Index’s drop, offer retirement benefits to their employees, 4 percent DID YOU

KNOW The number of retirees in the U.S. is expected to grow 40% by 2035. Source: Source: LIMRA LIMRA Secure Retirement Institute

?

42

InsuranceNewsNet Magazine » March 2019

QUOTABLE Don’t forget the little guy you serve.

— Vanguard Group founder John “Jack” Bogle, who died in January at age 89

plan to in the next two years, and 19 percent of them report they might.

ONE-QUARTER OF AMERICANS FEAR GOING BROKE

About one in four Americans fears spending more money than they earn in 2019, according to a survey conducted for Lexington Law. This fear of going broke is more pronounced among those ages 35 to 65 than any other age group. Men and women are equally worried about outspending their income.

Health care costs, housing costs and increasing levels of household debt are fueling those fears of going broke, the survey found.

Despite the anxiety over outspending, a bright spot is that the survey showed nearly half of Americans spent more than or equal to their income in 2018. This implies that 21 percent of survey respondents expect their financial situation to improve over the next year.

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C-32618 02/01/19

Go To The Head Of The Class By Serving Millennial Educators Even though many public school employees will have access to defined-benefit pensions, they still need help planning for retirement. • Doug Wolff

W

ith more than 6 million employees working in K-12 school districts across the country, educators and their families represent a material subset of the U.S. economy. Engaging with this vast market — especially with millennial educators who are beginning to establish long-term relationships with trusted advisors — represents a significant business-building opportunity for financial professionals.

Security Benefit has a longstanding history of connecting financial professionals with educators in the 403(b) marketplace.

With this in mind, the Security Benefit Research Institute — the research arm of Security Benefit dedicated to exploring the effects of economic, behavioral and environmental influences on retirement security — commissioned research released in August 2018 to learn how millennial educators view retirement savings.

The qualitative component of the research consisted of eight focus groups across four cities (Washington, Miami, San Francisco and Dallas). Millennial participants included those ages 21-37 who have at least shared financial decision-making responsibility in their household and who make at least $50,000 per year in income. In addition, Greenwald & Associates collected responses to a 57-question quantitative survey from 1,000 millennials, including 500 educators, from around the country.

Here are some key findings from the research as well as ideas for financial professionals to engage millennials in retirement saving.

Many Millennials Need Retirement Planning Help

It turns out that millennial educators are not that different than the rest of us, and 44

they want many of the same things previous generations wanted from retirement. They imagine a long-term future that includes having a family with adult children, retiring from their primary career, traveling, volunteering and pursuing philanthropic endeavors. They hope to be financially secure, to move to a different area and engage in hobbies they enjoy.

But many millennial educators are failing to take necessary steps today to reach

living, monthly bills and child care expenses. And 47 percent of millennial educators are paying a mortgage in addition to their other debts, while only 28 percent of non-teacher millennials are paying a mortgage.

Taking The Reins

The positive news is that most millennial educators are proactive about retirement savings. Only a third of them expect to fund their retirement with their pensions alone, with 68 percent of millennial educators planning to work at least part-time in retirement.

Millennial Educators’ Top 5 Sources of Financial Advice 31% Do their own online research.

23% Ask a parent.

21% Speak with a financial professional.

10% Find a website or app that specializes in this type of advice.

8% Ask their employer or HR department.

Source: Security Benefit and Greenwald & Associates

that future, even though they rank saving for retirement among their top goals which include: » Building savings (56 percent) » Saving for retirement (54 percent) » Paying off credit card debt (47 percent) » Paying off student loans (40 percent) » Buying a home (38 percent) Other obstacles to achieving long-term financial goals include the high cost of

InsuranceNewsNet Magazine » March 2019

To bridge the savings gap, many millennial educators are saving through their employer-offered retirement plans.

Seventy-six percent of all the millennials surveyed have access to employer retirement savings plans, and 80 percent contribute to them. Millennial educators significantly lead their non-educator peers in regard to pensions. Two-thirds (66 percent) of millennial teachers work for an employer that offers a pension plan (defined-benefit plan) and 82 percent participate in them. However, only

ADD RECURRING

SERVING MILLENNIAL EDUCATORS

36 percent of non-teacher millennials have access to a pension and 54 percent participate, according to the Greenwald research.

This relatively high adoption rate by millennial educators may be closely correlated with greater access to various retirement options. According to the National Institute on Retirement Security, educators have greater access to employer-sponsored retirement plans than most of their non-educator peers.

Millennials working in the public safety, finance, health care and education sectors have the best access to plans in the country, according to a 2018 NIRS report, “Millennials and Retirement: Already Falling Short.”

Prioritizing Passion Throughout Life

Millennials are known for seeking professional paths based on passion, a theme that carries into their retirement. Many who plan to work part-time are planning to do so not because of financial need but to combat boredom. Many millennials prioritize experiences over possessions, so they emphasize activities and adventures as part of a compelling vision for retirement.

Millennial educators recognize their need for retirement planning help, especially when it comes to determining an appropriate asset allocation or the best investment vehicle. They tend to first research budgeting and investing strategies online. Although 73 percent said they are likely to work with a financial advisor in the future, only 41 percent currently work with one.

How To Earn Their Trust

Millennial educators may be a great client segment for you to consider because of their motivation to save and their need for advice. However, they have unique preferences advisors should understand.

Financial professionals who meet millennials on their own terms are likely to see greater success. Here are some guidelines for engaging millennial educators.

Build a personal relationship and connection. Avoid stereotypes in marketing materials. Instead, use relevant information that features more diverse types of people.

Although 80 percent of millennials

would prefer to work with an advisor in person, 74 percent are at least somewhat interested in using an app for help with retirement savings. Even so, 77 percent of millennial educators would place most of their trust for financial advice with an advisor.

Be simple, realistic and honest. Offer consultations and low-cost trial periods so they can “dip” their toe in the financial planning waters. Be open and transparent about fees and your compensation.

Provide information they can read at their leisure — ideally through apps.

As noted, 74 percent of millennials are interested in using an app for help with retirement savings, but you can insert yourself into the process. Offer to help with goal-setting, more money management tips and debt repayment strategies.

Meet them on their terms and understand their needs. Explore options to visit educators at school during “in-service” week before students start school. Be aware that pensions vary from one school district to another — be sure to help your educator clients clearly understand their pension benefits.

Longer life expectancies, higher retiree-to-worker ratios, and lower interest rates have forced pension benefits lower for newer participants in many states.

Keep in mind that supplemental savings programs are more important than ever in filling the gap and helping provide a secure retirement for teachers and other public employees.

Many of today’s public state pension plans have lowered benefits for newer participants, meaning financial professionals need to work closely with clients to map out creative strategies for achieving lifetime income. Financial professionals may want to bring annuities — and/or other investments and insurance solutions — to the table to help fill the gap.

Doug Wolff is president of Security Benefit Life. Doug may be contacted at doug. wolff@innfeedback.com.

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March 2019 » InsuranceNewsNet Magazine

45

REVENUE

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INBALANCEWIRES

Nearly Half Of U.S. Adults Have Cardiovascular Disease Nearly one in two adults in the U.S. – about 121 million people – have some form of heart or blood vessel disease, the American Heart Association reported. This number represents a significant jump over the past three years, the association said.

One reason for the increase is a change in the association’s definition of high blood pressure. The 2017 American Heart Association/American College of Cardiology hypertension guidelines updated the definition of high blood pressure as a reading of 130/80 from the previous definition of 140/90.

Research shows about 80 percent of all cardiovascular disease can be prevented by controlling high blood pressure, diabetes and high cholesterol, along with adopting healthy lifestyle behaviors such as eating a healthy diet, engaging in physical activity, maintaining a healthy weight and not smoking.

Despite the increase in cardiovascular disease, the report had some bright spots. In the past 50 years, the number of adults who smoke has dropped from 51 percent of males smoking in 1965 to 16.7 percent in 2015 and from 34 percent of females in 1965 to 13.6 percent in 2015. In addition, 74 percent of Americans in 2016 reported being physically active at least three times a week, compared with nearly 60 percent in 2005.

AEROBIC EXERCISE IMPROVES BRAIN HEALTH

Aerobic exercise such as jogging or cycling not only reduces the risk of heart disease, but can lessen the risk of dementia and improve mental health. And research shows you’re never too young to reap the benefits of aerobic exercise.

Much of the research surrounding the effects of aerobic exercise focused on those ages 55 and older. But recent research revealed that daily aerobic exercise significantly improves cognition and brain health in people as young as 20 years old.

A Columbia University study showed that a group of people ages 20-67 years old who did aerobic exercise for one hour, four days a week, for six months performed better on problem solving than a similar group that only did stretching and toning exercises for the same time period. In addition, those who did aerobic exercise were able to reverse a common effect of aging, the thinning of the frontal cortex, which signals improved brain health.

It seems as though Marie Kondo is almost everywhere these days. The author of the best-selling book The Life-Changing Magic Of Tidying Up has her own Netflix series where she shows off her method of decluttering people’s homes and urging them to get rid of any object that does not “spark joy.”

Can that life-changing magic extend to your work space as well? Jenessa Connor writes in the Office Ninja blog that the work desk could benefit from Kondo’s method of purging what doesn’t pass the joy test and reorganizing what’s left. Here are some examples:

KNOW Indoor plants can reduce carbon dioxide levels in the 46

How you treat working parents is an indicator of how you treat talent in general.

— Daisy Wademan Dowling, founder and CEO of Workparent

» Get rid of cheap pens and hang on to the one pen that writes the best. Ditto for cheap or flimsy note pads. » Convention swag and any promotional items should be tossed. » Keep the one coffee mug that looks the best, or maintains your beverage at just the right temperature, and purge any other mugs in your office collection.

TIDYING UP CAN SPARK JOY AT WORK

DID YOU

?

QUOTABLE

air by as much as 10% in an air-conditioned office.

Source: University of Sydney

InsuranceNewsNet Magazine » March 2019

VACATION BENEFITS SOON FADE AWAY

Conventional wisdom says that taking time off from work benefits employees both physically and mentally. But those benefits are fleeting, researchers found.

Forty percent of U.S. workers said the positive aspects of taking vacation time dissipate just a few days after they return, and another 24 percent said their feelings of being more energized and less stressed disappear “immediately” upon returning to work. That was the word from the American Psychological Association, which looked at the effects of vacation on workers.

Those who were surveyed said the main benefits of vacation time included a more positive mood (68 percent), more energy (66 percent), more motivation (57 percent) and feeling less stressed (57 percent). More than half said they were more productive after a holiday, while 55 percent said taking time off improved their quality of work.

But, on the down side, 21 percent said they felt tense or stressed on vacation because of work, while 42 percent said they dreaded returning to work.

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INBALANCE

How to Make A Smooth Flight Through Airport Security Nobody likes going through airport security. But there are a few things you can do to take some of the stress out of the process.

T

By Bryce Sanders

ransportation and Safety Administration — the dreaded TSA. Business travelers and retirees working through their bucket lists have been through it multiple times. Can you take steps to expedite the process?

Here’s the ideal result. I’m in the TSA Precheck program. I’ve walked up to the counter, shown my ID, put my bag on the belt, walked through the scanner and picked up my bag, all without breaking stride. It was at about 4:30 a.m. at JFK before boarding a 6 a.m. flight to Los Angeles. That’s the best-case outcome.

What’s The Drill?

Before you board an airplane, your ticket is checked three times. You check in online or at the ticket counter when traveling internationally. Your ticket is checked against your photo ID before entering security and it is checked electronically when boarding.

This article addresses the center 48

portion, the gateway between the ticketing area and the restricted access area with the airport lounges, shops and gate agents.

How TSA Security Works

There are parts of airport security you don’t see. There is psychological training you can’t outsmart.

As you approach security, you go through one of three channels: TSA Precheck is the federal program for frequent or known travelers. It’s slightly relaxed. You can keep your shoes, wear a light jacket and leave your tablet or laptop inside your carryon. The scanner is a metal detector.

Standard security is the general line.

You must remove any items that include metal, including shoes, belt, cellphone and keys. Your computer goes into a separate bin. Toiletries, packed in a clear plastic bag, with no liquids over 100 ml (3-4 ounces), must be visible. The scanner used is often the full body version.

You stand in a clear plastic cylinder with a doorway on each side. Pockets empty, hands overhead. Sometimes they pat you down afterward.

Priority security is the same as standard security, except you stand in a shorter line. Your airline’s frequent flier status or a premium class ticket gets you in that line.

InsuranceNewsNet Magazine » March 2019

Some airports have tried three lines for general passengers: frequent, occasional and family travelers. You can expect people to ignore those designations and get in whatever line is the shortest.

Approaching Security

The TSA screener checks your ticket against your photo ID. The screener makes a handwritten notation on your ticket, confirming inspection.

1: If you travel frequently, apply for TSA Precheck status. It speeds up the process. If you travel internationally, get Global Entry. It speeds up your return.

2: Remove your hat and sunglasses before approaching the podium.

3: Have your photo ID in hand, along with your ticket. Don’t get to the front of the line and be surprised when they ask for it.

4: Put items such as your watch, wallet, keys and cellphone into your carryon.

Ditto with large metallic jewelry.

5: Wear slip-on shoes, not shoes with laces.

You approach the conveyor belt leading to the scanner. Expect to use at least two bins, one for your laptop or tablet and another for your jacket, hat, etc. Your carryon goes directly onto the belt.

6: You may be concerned your wallet is in an open bin. That’s why you put it into your carryon. If you didn’t put your

HOW TO MAKE A SMOOTH FLIGHT THROUGH AIRPORT SECURITY INBALANCE wallet in your carryon, stop worrying.

There are cameras everywhere.

7: You and the belt rarely move at the same speed. That’s not the TSA staff’s concern. They need to check every bag thoroughly. Getting upset only draws attention to yourself.

Your bag might be flagged for additional screening. You might be flagged. Years ago, you could tell if you were selected because most passengers had the flight destination code printed in black on a white background. Some were reversed, with white lettering on a black background. A continuous line of “SSSS’s” was another clue. It’s usually random.

Even TSA Precheck passengers might get selected for additional screening.

8: If your bag is selected and shunted over to the side, stand by the belt quietly. Bags are inspected in order. Don’t attempt to touch your bag or be helpful, offering to unpack it.

9: The TSA folks will swipe an item or two, inserting the fabric swatch into a machine that tests for explosive residue.

If you have been near fireworks or fertilizer, let them know. These can cause a positive test result.

10: You brought gifts for friends. If your box of chocolates is wrapped in metallic paper, it will set off the equipment.

Tell the TSA agent at the front end of the conveyor belt. Show them the box. We’ve skipped this step and watched them unwrap the package to confirm there really were chocolates inside.

11: TSA screeners can be slow. Smile at them and say, “Thank you for keeping us safe.”

12: The scanning process can vary.

On one trip, your bag goes through unopened. On another trip, they check every bottle and bag. The TSA is always training new people on the job. Be polite.

After Clearing Security

There’s usually a pileup at the end of the conveyer belt. People haven’t cleared security yet or they dress right in front of the belt, causing a bottleneck.

13: Carry your shoes and clothing to the benches just beyond the conveyer belts.

What About Food And Drink?

You can bring food and beverages onboard. Getting food and beverages

TSA Precheck And Global Entry

Applying for TSA Precheck is easy. There's an $85 fee for this five-year program and it takes five minutes to submit an online application at tsa.gov/precheck.

You also need to schedule an appointment at one of more than 350 enrollment centers. During the 10-minute, in-person appointment, officials will conduct a background check and fingerprinting.

Global Entry (Trusted Traveler Program) is a U.S. Customs and Border Protection program that allows expedited clearance for pre-approved, low-risk travelers upon arrival in the United States. Members enter the U.S. through automatic kiosks at select airports.

At airports, program members proceed to Global Entry kiosks, present their machine-readable passport or U.S. permanent resident card, place their fingerprints on the scanner for fingerprint verification and complete a customs declaration. The kiosk issues the traveler a transaction receipt and directs the traveler to baggage claim and the exit.

Applying for Global Entry involves a longer interview. Like a doctor's appointment, you schedule it and show up. This program has a $100 fee. Click on the link on their website, ttp.cbp.dhs.gov, to learn more and get started. through security is a different story. You run into at least two problems: liquids and plastic utensils.

14: You won’t get a bottle of water or can of soda through security if it’s more than 100 ml (more than 3 ounces). Buy those beverages on the other side of security. Airlines also serve beverages inflight.

15: Your carefully designed carry-on lunch includes soup or cocktail sauce for shrimp. Unless these are under 100 ml, you can’t take them through security.

16: You need plastic cutlery for your meal, but the TSA agent holds up your serrated plastic knife and summons other agents. Get utensils from a fast food counter beyond security or from your airline club. Offer to pay. They will probably give them to you free.

17: Do not attempt to bring rectangular blocks of cheese through airport security. The scanner operator will think this looks remarkably like plastic explosives. It’s happened to me. Tell people what you have ahead of time.

18: Food aboard the plane is less of a problem on departure, compared to arrival. Many countries restrict foodstuffs entering the country. In general, you

should be safe with sealed, packaged food bought at a supermarket. Most countries prohibit people from bringing fresh fruit through their borders.

19: The TSA can choose to inspect your checked luggage. On a recent trip to Asia, I unpacked at the hotel and found the pouches containing bottles of wine resealed with TSA tape along with a printed note.

20: Arrive at least two to three hours early, especially for international flights.

This is very important if you plan to check luggage. You must wait in line, then clear security. Time flies.

Enhanced airport security is a fact of life. It takes time. It’s out of your hands.

Follow these simple tips to make getting through security as painless as possible.

Bryce Sanders is president of Perceptive Business Solutions. He provides high-net-worth client acquisition training for the financial services industry. He is the author of the book, Captivating The Wealthy Investor. Bryce may be contacted at bryce.sanders@innfeedback.com.

March 2019 » InsuranceNewsNet Magazine

49

INBALANCE

Take A Hike! The Benefits Of A Lunchtime Walk A daily walk is like a grownup version of recess.

By Susan Rupe

I

t’s noon and I have a date.

It’s with my sneakers. As soon as the clock strikes 12, I push myself away from the computer, lace up the sneakers I keep in my tote bag and head outside. It’s time to take a walk.

I have spent nearly every lunch hour for the past five years hitting the pavement.

These daily lunchtime walks have improved my life in small but recognizable ways, and I think they will do the same for you if you make daily walking a habit.

It’s easy for me to make walking part of my workday routine. The InsuranceNewsNet office is at the edge of a residential area with plenty of sidewalks, and two parks with walking paths are close to our building. Our office building also has a fitness center, so if it’s raining or icy outside, I can walk on a treadmill instead of dealing with inclement weather. If I need to run an errand or two over the lunch hour — no problem!

I’m a five-minute drive from a shopping area, so I can park the car, walk to the store or the bank or the post office, and 50

then get in a 10- or 12-block walk before I head back to work.

My lunchtime walking goal is a mile and a half, but I don’t worry too much about how far I walk. I’m more concerned about working up to a brisk pace and maintaining it for as long as I can. The fact that here in Pennsylvania, we have

from my chair and moving around for an hour gets the circulation going and provides a shot of energy that lasts most of the afternoon. » Weight management. An hour of walking burns between 175 and 200 calories. So we’re not talking about a major calorie burn here. But the cumulative

Reap The Benefits Researchers have found that regular walking yields a number of benefits, including: » 30% lower risk of cardiovascular disease1 » 81% greater creativity2 » 6 times greater improvement in glucose tolerance3 1. New England Journal of Medicine, 2. Stanford University, 3. Duke University

a lot of hills wherever we go, adds even more of a workout to the walk.

So what benefits did all this walking bring me? Here are a few. » No more afternoon slump. Sitting at a desk and looking at a computer screen all day may not be physically taxing, but it still can bring on fatigue. Getting up

InsuranceNewsNet Magazine » March 2019

effect of burning that many calories day after day can yield significant results, especially if the walking is combined with a decreased food intake.

In my case, walking contributed to a weight loss of more than 30 pounds over the course of two years. But it wasn’t only the walking that made me lose weight.

TAKE A HIKE! THE BENEFITS OF A LUNCHTIME WALK INBALANCE I ate a smaller, less-caloric lunch after I started walking. I didn’t have as much time to eat because I wanted to spend more time moving outside. And I started bringing my own food for lunch (usually fresh fruit and a few slices of turkey breast that I could eat quickly at my desk) instead of driving down the road to gorge myself at a fast-food restaurant.

Knowing how much time I had to spend walking to burn off the number of

mind. I became more productive as well as more creative as a result. » Enhanced mood. The combination of sunshine exposure, fresh air and physical activity did wonders for my overall mood. I felt less anxious and irritable as the afternoon wore on. Sometimes I used my walking time as an opportunity to untangle a problem I faced. As I walked outside, I had an opportunity to observe little things — birds and other suburban

percent and cut the risk of dying by 32 percent. Another Harvard study found that those who walked at least 20 minutes a day for at least five days a week had 43 percent fewer sick days than those who exercised once a week or less.

An American Cancer Society study found that women who walked seven or more hours a week had a 14 percent lower risk of breast cancer than those who walked three hours or fewer per week.

Harvard University researchers found that walking 5 1/2 miles per week reduced the risk of cardiovascular events by 31 percent and cut the risk of dying by 32 percent. calories that I would consume by eating, say, a brownie, made it easier to say no to certain foods. I became more mindful of what I ate as a result. » Creativity boost. Writing is a creative profession. Sometimes it’s difficult for the words to come out when you want them to. I discovered that as I walked outside, my brain somehow “loosened up” and enabled those trapped words to flow freely. If I was working on a blog post or a feature article and was having trouble figuring out how to start, I soon would find myself “writing” it in my

wildlife, flowers growing in people’s front yards, buds emerging on trees — I might not have noticed otherwise. I scrunched through dry autumn leaves and even splashed in a rain puddle or two. Walking became a grown-up version of recess.

What The Experts Say

Don’t take my word for it — health researchers have proven that walking is good for you in numerous ways.

Harvard University researchers found that walking 5½ miles per week reduced the risk of cardiovascular events by 31

Take The First Steps 1. Map out a route for your daily walk. A route that

is close to your workplace is ideal. If there’s a walking trail or a good pedestrian route a 5-minute drive from your workplace, that’s good, too. Or if you spend a large portion of your day away from your office, be alert for potential walking locations (public parks are ideal) along your way.

2. Keep sneakers handy! Have a pair in your office or in your car so that you always have the proper footwear.

3. Make an appointment with yourself and keep it. Put it on your Outlook calendar or create an alert on your phone — anything to get your attention and prompt you to go outside.

Taking a walk instead of sitting all day may lead to more creative thinking, according to research published by the American Psychological Association. A Stanford University researcher found that those who walked instead of sat gave more creative responses on tests commonly used to measure creative thinking.

And those who walk during lunchtime make better employees, according to a study published in the Scandinavian Journal of Medicine and Science in Sports. The study found that office workers who walked three times a week during lunch were less tense and more enthusiastic and relaxed. They were also better able to cope with their workload.

A better mood, more creativity, greater enthusiasm and reduced risk of illness — do you need any more reasons why you should put on those sneakers and take a walk?

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.

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March 2019 » InsuranceNewsNet Magazine

51

BUSINESS

3 Questions To Identify Your Unique Value Proposition With all the competition for clients’ attention, you must offer them something no one else does.

By David Miller

I

n the business world, you must identify how you fit into the market — and how you stand out from the competition. What makes you unique? What do you offer that no one else does? What is your edge? Clients need to be wowed given all the competition in the market.

If you thought that clients were more do-it-yourselfers nowadays, think again: According to a poll conducted by Nationwide Advisory Solutions, 74 percent of investors surveyed said that they were more likely to work with an advisor now than they were before the 2008 economic downfall. So clients are out there — but how do you reach them? Answer: with a unique value proposition.

Defining your value proposition is 52

crucial to growing your client base, but going about it isn’t easy. In order to identify your unique value proposition, you must ask yourself three questions: Am I offering unique opportunities? How fragmented is my client’s experience? Am I embracing a modern culture?

Answering these market-specific questions will help you understand your edge, ultimately enabling you to entice clients and keep them from seeking out other solutions and cookie-cutter opportunities.

Question 1: Are You Offering Unique Opportunities?

At times, it can seem as though the market is saturated with financial advising outlets. According to the U.S. Bureau of Labor Statistics, more than 200,000 personal financial advisors were in the workforce. Moreover, the number of financial services professionals is growing. So what makes you valuable?

Consider the rise in technology.

Robo-advisors take a purely data-based

InsuranceNewsNet Magazine » March 2019

approach to investing and allow clients to have a hands-off experience. Clients have turned toward these types of impersonal investing approaches after losing trust in financial institutions after the 2008 crash. Plus, the relatively low-risk/low-fee investments offered by robo-advisors are appealing, especially to individuals who are just starting an investment plan.

However, although robo-advisors offer clients an alternative to the traditional approach, the types of investments they use are not exactly unique or interesting.

This is where you can get creative and attract clients by offering unique opportunities that can’t be found elsewhere.

Many advisors are challenged when it comes to offering these unique opportunities. If you’re part of a large firm, it could be tough to find unique opportunities because most of these alternatives don’t scale to the entire team. Or if you work with a broker-dealer, investment opportunities need to go through an approval process, which can be slow and tedious. Or maybe you’re locked into the

3 QUESTIONS TO IDENTIFY YOUR UNIQUE VALUE PROPOSITION BUSINESS investment opportunities that your B-D is pursuing, which halts the search for new, niche opportunities.

To combat this, make sure that you’re working with a B-D who has a philosophy that backs finding and offering unique investment opportunities. This will help you formulate a unique value proposition, as clients will see you as someone with enticing opportunities they haven’t seen before.

Question 2: How Fragmented Is Your Client’s Experience?

Clients typically seek out a handful of professionals to help address their financial health. They look to industry experts for property insurance, home insurance, mortgage services, taxes and more.

They’re accustomed to hiring individual firms for each part of their overall finances. This results in a limited perspective and often vague picture of how everything fits together. For something so important, clients shouldn’t be spread so thin.

Also, when a client seeks out different services from numerous firms or individuals, the revenue gets dispersed.

Question 3: Do You Have A Modern Culture?

Culture is at the forefront of doing business because today’s clients want to know whether a firm or an individual advisor shares their core values. Culture doesn’t mean an eclectic set of hobbies or a feature-rich website. Instead, culture means pursuing (and showing your passion for) the goals and ethics that matter most to you while using emotional intelligence to understand your client base. If your culture resonates with your clients, it gives you a unique value proposition because you are more human, approachable and modern. This, in turn, can help you establish trust with clients.

A survey conducted by Practical Perspectives revealed that more than half of the advisors working today won’t be working full time in 10 years. With retirement in the near term, they have an overwhelming sense that they should stick with “doing things the old way” because it works. In turn, many advisors are hesitant to work toward developing a modern culture.

One status quo rationale embraces the mentality of “if it ain’t broke” — in

In order to embrace a modern culture, you must be modern in your approach.

Start by approaching clients where they want to meet — typically, this means on various channels. Today’s client is constantly connected thanks to the prevalence of smartphones and mobile apps, and you should use this to your advantage. Whether via SMS, an app or an online portal, connecting with your clients through new channels helps you modernize.

Embracing modern culture also means exercising emotional intelligence. This involves control over your emotions while understanding the emotions of others, and it takes a careful combination of empathy, control, authenticity and awareness. Clients value emotional intelligence because it brings a more human approach to doing business — and with it, a sense of trust and assurance. By understanding your clients’ emotions and their needs, you can better support their decision-making and benefit your longterm relationship.

Using these questions as a guide will help you identify your unique value proposition. By doing so, you can

If your culture resonates with your clients, it gives you a unique value proposition because you are more human, approachable and modern. This, in turn, can help you establish trust with clients.

Sharing a client with other professionals means that you are missing out on money that could be yours if you offer more services. What today’s clients need is a more inclusive experience to help them visualize all of their investments and opportunities without having to piece together advice from their personal board of professionals.

If you offer clients a comprehensive snapshot of their financial health, it helps make their lives easier because 1) there are fewer hands in their portfolio, leading to fewer errors and less overlapping, and 2) you have more control of their assets, and can help improve their returns in multiple areas instead of just one.

other words, if the processes and methods worked before, why should they change? Another rationale that prevents change in insurance and financial services holds that millennials are not a viable market to pursue.

These advisors don’t see the need to take a more modern approach because they believe millennials aren’t investing.

But the truth is that millennials are the ones who will end up inheriting their parents’ money — parents who likely work closely with an advisor.

Both of these rationales are keeping many advisors (and even the industry as a whole) from moving forward. That stagnation opens up opportunities for you.

confidently approach clients knowing that you are a step ahead of the rest resulting from your unique opportunities, focus on integrated client services and modern culture.

David Miller, CFP, is CEO of PeachCap. David may be contacted at david. miller@innfeedback.com.

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March 2019 » InsuranceNewsNet Magazine

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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.

INSIGHTS

‘Only So Many Hours In A Day:’ Time Management Secrets Time-blocking and effective use of technology allow this advisor to make the most of his time.

By Barjes R. Angulo

W

e all have 24 hours in each day, and making the most of these hours is challenging. For example, I wrote this article three days before its due date even though I was given about five weeks to do it. But somehow, my “time management skills” failed me. I am now asking myself: “What happened?” Well, this is what happened.

On Oct. 5, 2018, my daughter Kyra was born. My wife Katherine and I are new parents (this is the second time for me).

Katherine also runs the operations for my office, and now she is on maternity leave. My client appointments have been compressed into a three-day schedule, with some scheduled for the occasional Saturday morning. In the middle of all of this, I’m closing more business and working out more — and I attended an industry meeting in Boston this past week.

So how do I make time for everything?

I do so by using the following methods: » Time-blocking. Every hour of the day is accounted for. Once you are clear about what is important, you begin to block out the time needed to perform those tasks.

Then everything else falls into place.

My time-blocking starts at 5 a.m. and, at times, can end as late as 8 p.m. The important thing is to review your calendar on a monthly, weekly and daily basis to stay ahead. Don’t get me wrong. People run late, clients cancel at the last minute and I oversleep at times, especially now that we have a newborn.

In order to stay ahead, I also time-block weekly. In general, I keep all my non-revenue-producing meetings or calls for Monday and Friday afternoons. Monday morning is my “prep” time and time for 54

my staff meeting. This is when we review the past week and make plans for the coming week.

On Friday or Saturday morning, I may have the occasional appointment, but this time is spent mostly on personal development. This entails studying technical aspects of our profession, speaking to my accountability partner or watching training videos.

Tuesdays, Wednesdays and Thursdays are devoted to hardcore “green time” activities. This is when we hold back-to-back meetings with clients. It’s not uncommon for us to hold 18-21 meetings during a 72hour period.

Weekends are dedicated to personal/ family time. Somewhere in all of this, my workouts are already scheduled. Timeblocking serves as the map of the day and of the week, with the goal of keeping everyone on course. » Technology. In today’s digital world, the resources to manage your time are at your fingertips. We use a calendar system in which I have customized the hours that I can meet with clients, the times I will have non-revenue-producing calls and the times I will conduct virtual meetings.

When someone needs to schedule time with me, or I need to schedule time with them, they will receive a link in an email that allows them access to my availability for the next 12 weeks.

This prevents us from going back and forth. Now that my wife is on maternity leave, this function of her job has been somewhat automated. » Managing email effectively.

Someone once said to me, “Emailing is on everyone else’s to-do list.” So take control of it before you find yourself checking email messages constantly. I use an “away message” during my green time. It says: “Barjes is in all day client meetings/calls from XX/XX to XX/XX. If your email requires immediate attention, please contact (here, I list my staff and their contact information).”

InsuranceNewsNet Magazine » March 2019

This lets people know that I am somewhat unreachable. Doing this gives you permission to not be on your email all the time. If the sender’s message is urgent, they will email or call your staff. Full disclosure: If a window of time becomes available, remember that clients do cancel. So I do peek at my emails from time to time. » Leveraging staff. All of us have been asked this question: Why do a task that you can pay someone $12 an hour to do when you are worth $250 an hour?

Hiring staff will create more time for you.

We have a staff of three, and their duties are clearly defined.

We invested some resources in working with a practice management consultant to be clear about this so that everyone knows what they are accountable for. We use communication tools to stay within reach but, at the same time, my staff knows that when I’m in a client meeting, I cannot be disturbed.

We also leverage partners for investment portfolio design, advanced planning presentations, and generating opportunity lists. I notice that some agents, especially the new ones, try to do it all. It’s tough when you are out there alone. A lot of institutions are happy to provide you with resources, some paid and others unpaid, to tackle these activities while you are doing the one thing you are supposed to do — see the people.

It is important that we get the sleep and the exercise we need and also eat the right foods. Taking care of your health will provide you with the energy you need to run at high speed. Remember that we are all human and life does not always go according to our predesigned calendars.

Just stay focused on helping your clients address their concerns and help them achieve their goals.

Barjes R. Angulo has owned Angulo Strategies in New York for more than 10 years and has been in the financial industry for 20 years. Barjes may be contacted at barjes.angulo@innfeedback.com.

INSIGHTS

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

Holistic Financial Planning: Seeing The Entire Picture Although many professionals describe themselves as holistic financial planners, what exactly does that mean? And how can a holistic planner provide more value to clients?

By Brad Brain

T

he distinction of holistic financial planning can help prospects and clients understand what to expect from a relationship with a financial advisor compared to a broker, life insurance specialist or other specialized professional. A holistic outlook adds significant value to a client’s financial future and can set you apart from your competitors.

Differentiate Yourself

Some professionals use “financial planning” as a sales term to boost their credibility. Instead of specifying their capabilities (e.g. “I’m a life insurance specialist”), they categorize themselves as a financial planner to attract a variety of clients. Although these professionals are a legitimate resource for people interested in specific products, they are misidentified as all-encompassing financial planners.

If you engage in holistic planning, ensure that your prospects and clients are aware of what this term means and how it sets you apart. Discuss how a holistic financial planning approach involves assessing the client’s current situation, where they want to be and what they need to do to get there. Ideally, holistic planners look at a client’s complete picture and maintain a financial planning mindset at all times. If you do not have the bandwidth or experience to serve your clients on all aspects of their finances, consider developing a relationship with additional specialists who can complement your expertise.

Product-Focused Versus Process-Focused

If you are a specialized professional looking to elevate your expertise, evaluate how you approach product recommendations.

Do you lead with products, or do you wait until later in the process? As a holistic planner, you should explore the client’s present situation, identify problems and opportunities, define objectives, provide recommendations and facilitate product purchases to accomplish the client’s goals.

Continue the relationship after the sale to encourage a holistic approach as your clients’ needs and objectives evolve over time.

Successful Outcomes With A Comprehensive Approach

As a holistic financial planner, my clients’ best interests are a priority. This is especially true when clients approach me with an idea inconsistent with their plan and their goals. From time to time, an investment opportunity will leave clients salivating. They will want to rush in before it is too late, and often their frenzied enthusiasm will overwhelm any rational decision-making process.

In this scenario, a broker would help their client buy the investment while the financial planner would take a step back and ask what they hope to accomplish with the purchase. They would look at the whole plan and consider other options based on the client’s objective.

For example, if the client wants to invest in the stock because they heard many others are doing the same and it might help them secure income for retirement, a financial planner may suggest a variable annuity instead. This option will result in income to last for a lifetime as opposed to a stock in its infancy that is currently losing money and doesn’t fit with the client’s plan. Sometimes a client does not know what they are looking for until it is presented to them by an experienced professional, and holistic planners can be this trusted resource for our clients.

Challenges Clients Face Without A Holistic Outlook

Many consumers are influenced by group mentality and end up with a collection of financial assets that don’t have a significant connection. A financial planner provides the necessary link and determines the correct path that will lead the client to their end goal. Our guidance removes distractions from the cacophony of outside influences and a segmented outlook.

A sales-focused financial professional has a limited product shelf-life and skillset. If they only have experience with one or two products, everyone they meet falls into one or two solutions. Elevate the value you can bring to your clients with an unlimited toolkit and a holistic outlook that can achieve the client’s desired financial objectives.

Through an exploration process, holistic planners uncover clients’ financial aspirations and what is important in their lives. We determine how to work in collaboration with clients in a manner consistent with the ideal outcome. This approach also encourages our clients to make smart behavioral finance decisions.

In times of uncertainty, such as with inevitable market turbulence, clients are aware that the financial plan identified in advance will go through variability as part of the journey previously discussed.

If clients stay the course and stick with the holistic plans in positive and negative times, they will have successful financial futures.

Brad Brain, B.A., CFP, R.F.P., CLU, CH.F.C, CHS, CIM, FCSI, TEP, is nationally recognized for his expertise in retirement income planning. He is an international speaker and award-winning author. For nine years he served as a member of the Insurance Council of British Columbia. He is a nine-year member of MDRT with five Court of the Table qualifications. Brad may be contacted at brad.brain@innfeedback.com.

March 2019 » InsuranceNewsNet Magazine

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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

Disruption: The Perceived Threat Is Real New market entrants are the greatest potential disruptive threat to the financial services industry.

By Scott R. Kallenbach

D

isruption has become a buzzword — one that may be starting to lose its meaning. People could use it to describe innovations regardless of their true impact, as well as anything that presents a challenge to an organization.

As you look ahead, where should you focus? We define disruption as something with significant impact, including things that may severely hinder revenue or have a crippling effect on a business or an entire industry.

We anticipate that new market entrants are the greatest potential disruptive threat to the financial services industry.

In 1995, Harvard University Professor Clayton Christensen coined the term “disruptive innovation,” which he describes as: “[A] process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”

Building on Christensen’s work, we’ve defined three types of new market entrants based on how they enter the industry: 1. Under the radar. These firms are comparatively smaller and more agile than incumbents, and target underserved markets with products that are initially inferior to those of incumbents. For example, discount retailers disrupted full-service department stores.

2. Head on. These new market entrants are direct competitors who take aim squarely at established players, as Uber did with the taxi industry. However, as Christensen notes, incumbents who find themselves under direct attack will in 56

turn accelerate their own innovation — or in some way partner with the disruptor — in order to protect their turf. Roboadvisors that burst onto the scene a few years ago were initially designed as self-directed consumer models. In response, industry incumbents designed their own platforms, acquired or partnered with these new entrants.

3. Here I come. Some firms make their intentions known far in advance of entering the market. Many start-up fintech firms describe themselves as disruptive.

One example is the strategy that property/casualty insurer Lemonade deployed — announcing that it would reinvent the insurance industry business model before it even opened for business.

Disruption is a matter of perspective.

While we frequently cite Google and Amazon as threats to financial services, do they really threaten the entire industry?

From a distribution perspective, the perceived threat is real. Imagine Google or Amazon leveraging their expertise in retail sales to create consumer-centric platforms that distribute financial services products.

This could raise overall sales, especially for product manufacturers on the platform.

The “old way” of purchasing financial services products could become obsolete.

On the other hand, these platforms could help insulate the industry from disruption, essentially raising the bar for any would-be disruptive new market entrant.

Further, consider what would happen if Google or Amazon used their vast consumer knowledge to selectively target those with the lowest potential risk. They could then offer insurance and investment products personalized to each individual.

How would this affect the business models for life and medical insurance?

What can you do about disruption?

Doing nothing is not an option, yet not everyone can be a disruptor. The answer is somewhere in the middle. What actions should be taken? Here are three ways for incumbents to fend off disruption.

InsuranceNewsNet Magazine » March 2019

1. Be vigilant. Remember Christensen’s prime tenet that disruptors are small, agile and start by offering inferior products to underserved markets. Be vigilant and make environmental awareness part of your organization’s DNA. It is conceivable that organizations can protect themselves from disruption if they are aware of a new market entrant’s perfecting an offering for the mainstream.

2. Remember that the need won’t go away. The products may change, and the ways that consumers wish to engage with companies may evolve, but people still need retirement savings and insurance. How that need is met will change. Incumbents should consider new ideas and imagine new ways to meet the needs of today’s consumers.

3. Reflect on why you’re in the business. Innovators challenge the longheld assumptions of how their business works. Ask yourself why you’re in financial services. Is your mission to generate revenues, help people protect their families and futures, or something else? Are your measures of success tied to that mission?

Amazon’s first guiding principle is “customer obsession.” As a result, 80 percent of its success metrics give feedback on how well the retailer helps customers achieve their goals, according to research published in Harvard Business Review.

In the face of disruption, organizations can remain complacent or take action.

Many are choosing complacency, as the industry’s immune system is inherently designed to attack change (even from within) rather than embrace it. As this year continues to unfold, focus on the sources of disruption that will have the greatest impact on your future success.

Scott R. Kallenbach, FLMI, is director, strategic research, at LIMRA. Scott may be contacted at scott.kallenbach@innfeedback.com.

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