InsuranceNewsNet Magazine - April 2020

April 2020

Four stories of financial services professionals who learned hard lessons early in their careers

PAGE 16

Eszylfie Taylor: Countering Generate More Premium-Financed Business In 4 Steps IUL Assumptions PAGE 8 PAGE 30

Annuities And The COVID-19 Market Panic PAGE 12

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APRIL 2020 » VOLUME 13, NUMBER 04

HEALTH/BENEFITS

FEATURE

16

38 Will Direct Primary Care Be 2020’s Health Care Darling?

We Won’t Get Fooled Again

By Susan Rupe

Advisors share lessons they learned in the early days of their careers.

INFRONT

8H ealth Care Reform Hinges On Congress As Well As President

By Susan Rupe No matter who is elected president in November, his ability to enact health care reform will be influenced by the makeup of Congress, an analyst said.

8 INTERVIEW

8 The Taylor Made Method For Success

Eszylfie Taylor wanted to be a millionaire by the time he reached age 25. His process became The Taylor Method, a four-step guide for generating more insurance business. In this interview with Publisher Paul Feldman, Taylor shares how he learned sales success the hard way.

online

www.insurancenewsnetmagazine.com

IN THE FIELD

24 J ust Getting Started

By Susan Rupe Rick Hu wants to see every community set up for financial success. His wealth management practice is growing by leaps and bounds, and he has plans to take it even further.

LIFE

30 Challenging The Assumptions Around Premium-Financed IUL

By Julian Movesian No single product is right for everyone and the same is true of premium financing.

ANNUITY

34 A nnuities: A Prescription Against COVID-19 Market Panic?

By Susan Rupe Allocating a portion of a client’s portfolio to annuities can keep clients from making bad decisions and give them peace of mind when the market goes on a wild ride.

By Andy Bonner Why direct primary care will become the go-to strategy to offset expenses in health care.

ADVISORNEWS

42 When Consumers Hear Scary Financial News, They Turn To Advisors

By R. Andrew Flores As financial uncertainty continues to prevail in the news, there are increased opportunities for clients to engage advisors for help.

INBALANCE

46 There’s Still Life In Them Yet: What To Do With Antiques

By Bryce Sanders There are many ways to incorporate vintage furnishings or accessories into your everyday life.

BUSINESS

48 The Four Pillars Of Client Retention

By Chip VonBerg A systematic strategic approach to keeping loyal clients.

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WELCOME LETTER FROM THE EDITOR

You Again

S

uch a rare bird the black swan is, appearing every 10 years or so.

We forget what it looks like.

We lose the appreciation for just how dark a creature it is. But when it reappears, we recognize the feeling in the pit of our stomach and the sight of its vast daily destruction.

In 2008 and ’09, equities markets dropped to one historic low after another, venerable firms such as Lehman Brothers collapsed, money markets broke the buck and the federal government spent more than $400 billion bailing out large corporations. Those are just some highlights.

Most of us remember how disorienting those days were.

We also remember how predictable the whole thing was — in hindsight. Looking back, it was a no-brainer. Of course we were heading for a crash.

But that is one of the features of a black swan event. It makes perfect sense, but only in retrospect.

Observers can never see a black swan event coming, because it is implausible.

Nassim Taleb popularized the concept with his 2007 book The Black Swan: The Impact Of The Highly Improbable.

The title refers to the certainty that Europeans once had that all swans were white. Pretty much anybody would have bet big money that swans were always white. Then explorers found black swans in Australia, changing what Europeans knew about swans.

Bringing that analogy to modern times, 9/11 was a black swan event because it was such a shock. People might have expected a terrorist attack in the United States at some point but didn’t anticipate the scale of that event.

That Stealthy Bird

This is being written on the day the Dow Jones average plunged more than 2,000 points, the worst drop since the dark days of 2008. By the time you read this, you will know how this episode ends, or perhaps how this is the beginning of a much longer arc.

It is fitting that this is the April edition of the magazine. The main feature 4

InsuranceNewsNet Magazine » April 2020

focuses on lessons that agents and advisors learned after suffering a foolish fate.

“Never Get Fooled Again,” we called it.

Didn’t we also say that after the 2008 crash? Never again shall we be lulled into complacency. Just 10 years before that collapse, we had a recession when the tech bubble burst. That was also all so clear. How could we not see that the tech stock bubble was due to pop?

We didn’t see it because As the recession began, we learned the we told ourselves a different definition of a black swan event, and featured story. Before each of these it in the January 2010 edition. events was a sense that things had changed, that the economy was different and we were sought RIA assistance likely have more living in a post-bust era in which levers faith in their long-terms plan despite the could be pulled to ensure endless upside. daily plummet of market indexes.

But that’s the pundits talking. Average What is the opportunity this time?

Americans scurried away from the terri- What will arise out of this rubble? Last fying Wall Street money-eating machine time, the phrase “new normal” was for years. Then, lured back after several applied to everything until it was just boom years, they put their money and regular old normal. What is the newest faith back into the markets, until they normal going to be? popped all over again. It’s as predictable These are the days we all train for. It and poignant as cicadas arising for a is relatively easy to do business when short burst in the sun. business is easy, when we slump into an everyday sameness.

The Newest Normal These are the times to stand up when This boom-bust cycle makes agents and other people are scanning the crowd advisors all the more valuable. After the for help. The agents and advisors who 2008 crash, all seemed dismal, but a rush thought of their clients first after the 2008 to safety and quality meant a spike in crash ensured that those clients were in a sales of dependable annuities. Business position to survive this one well. boomed so much for fixed indexed annuChaos always brings opportunity ities that companies had to reduce supply within its maelstrom. It also always rebecause their reserves could not sustain veals who we actually are. the growth.

So, we have something that sounds like The recession also pushed the financial the trumpet of The Black Swan. Maybe world further into the registered invest- this time it is. We never know what shape ment advisor segment, where holistic the swan will take. We just know it will advising was prized over product-selling. appear. And it will test us all.

That shift has been accelerating ever since.

Clients who bought annuities after Steven A. Morelli the crash are probably not as worried as Editor-in-Chief others are now, assured of receiving their checks every month. And those who

SPONSORED CONTENT

The Holistic Tie Between AUM and Annuities

I

n recent years, there has been a steady increase in the number of financial professionals who are seeking a more holistic approach for their practice. Today’s advisor realizes the need to move away from a one-dimensional mindset not only to gain new clients but also to retain those who have more complex needs. While this isn’t new to everyone, some advisors have hesitated to embrace assets under management (AUM) due to the fears of insurance organizations that viewed registered investment advisors (RIAs) as competitors.

Early adopters of this blended business model have proven that insurance product sales will actually increase. With the ability to manage 100% of a client’s assets, there will be even more opportunities to sell insurance products. In this very competitive industry, consumers are subjected to advertising and solicitation more than ever before.

With an insurance-only approach, advisors are vulnerable as clients will seek out a relationship with advisors’ competitors to handle the remainder of their investable assets. Those competitors are looking to capture all of a client’s assets and will scrutinize any prior recommendations — as well as position themselves as a better solution due to their comprehensive licensure. This realization has led to an explosion in AUM growth as more insurance agents are embracing the need for an RIA partnership.

Brookstone Capital Management founder and CEO Dean Zayed was a pioneer and early adopter of the insurance and securities ecosystem.

“From the very beginning as an insurance producer, I knew that my advisory practice was not as robust as it should be. I had to change my mindset and embrace the logical marriage of insurance products with fee-based money management.”

Zayed continues, “It was that lightbulb moment that changed my personal practice forever and helped lay the groundwork for what Brookstone is today!”

Today, Brookstone Capital Management is a nationally recognized TAMP (turnkey asset management platform) that provides all-inclusive solutions to over 450 of its affiliated advisors and firms. Now more than ever, advisors want to partner with a firm that can handle everything — including investment models, technology, marketing and compliance — and provide the highest level of service possible.

Advisors want to focus on their clients, while having the confidence that a full-service firm is handling everything else behind the scenes. A one-stop-shop approach is becoming a key factor for advisors in choosing an RIA partner, and Brookstone has always been ahead of the game. “We are always anticipating the needs of our advisors,” says Zayed. “The key is understanding them and providing the tools they want instead of what

we as a firm think is best.”

As an insurance-friendly RIA firm, Brookstone has always embraced fixed indexed annuities as a valuable part of a client portfolio.

Knowing that almost 100% of their advisors sell insurance products, Brookstone has been supportive of their needs. With so many choices in the FMO/IMO space, Brookstone advisors are free to utilize anyone they wish. However, knowing that many more advisors want consolidation, Zayed created Brookstone Insurance Group in 2018. Knowing that Brookstone has always been at the intersection of insurance and feebased money management, it made sense to provide this solution to support their all-inclusive approach.

Zayed explains, “We essentially created a new business model that fully integrates the world of advisory services with fixed indexed annuities and insurance. The idea is to provide a solution for the advisor who wants to conduct all of their business in one place, and with a firm that has paved the way for innovation!”

This is a difficult industry to forecast, but one solid prediction is that advisors will continue to experience growth and become busier than ever. Advisors are going to want to simplify their business and work-life balance — and will choose a firm that can help make that happen. Brookstone has led the way in being the only partner you need to grow and maintain a successful advisory practice.

INFRONT HEALTH CARE REFORM HINGES ON CONGRESS

Health Care Reform Hinges On Congress As Well As President No matter who is elected president in November, his ability to enact health care reform will be influenced by the makeup of Congress, an analyst said.

By Susan Rupe

S

uper Tuesday is in the rearview mirror and the once-crowded field of Democratic presidential candidates has narrowed to a twoman race for the nomination.

So what does that mean for health care?

Manatt, Phelps & Phillips, a consulting firm, conducted a recent webinar to break it down.

The race for the Democratic nomination pits Medicare for All supporter Sen. Bernie Sanders, I-Vt., against former Vice President Joe Biden, who favors a more moderate approach to health care reform. Sanders is now the only Democratic presidential candidate favoring the government-run single-payer health care system after Sen. Elizabeth Warren of Massachusetts dropped out of the race following a disappointing Super Tuesday showing.

Sanders’ single-payer plan proposal calls for a government-run system to take the place of private insurance and other public coverage programs. Biden, who was vice president when the Affordable Care Act took effect, wants to expand on the ACA, creating a federally backed health plan from which individuals can buy subsidized coverage, also known as a public option.

More Americans support a public option than support Medicare for All, according to a Kaiser Family Foundation survey. More than two-thirds (67%) of respondents of all political affiliations said they approve of a public option, while 55% of respondents of all political affiliations said they want to see Medicare for All become reality. But there is a wide gap between Democrats and Republicans on health care reform. The public option was 6

InsuranceNewsNet Magazine » April 2020

Republican And Democratic Health Care Policy Proposals Gaining Traction Source: Manatt

Republicans

Democrats

Prescription drug importation

Drug Pricing

Formulary and “drug cap” models Value-based purchasing arrangements with manufacturers

Cost Containment

Cost containment commissions Reinsurance waivers

Individual Market

1332 waivers of ACA rules

Transition to state-based Marketplace Public option

Medicaid

Block grant/per capita cap

Medicaid buy-in

Work requirements

Coverage expansions

supported by 85% of Democrats versus 42% of Republicans. Medicare for All was favored by 77% of Democrats but only 24% of Republicans.

But no matter who is elected president in November, their ability to achieve their campaign promises on health care will be influenced by the makeup of Congress, said Allison Orris, counsel for Manatt. All 435 members of the House of Representatives and 35 of the 100 Senate seats are up for election in November.

“In most cases, 60 votes would be needed for the Senate to pass major policy changes,” Orris explained.

“The budget reconciliation process does provide a path to passing legislation with only 50 votes. But reconciliation bills are subject to strict criteria that limit provisions that may be included in that type of legislation to only changes that impact spending or revenues. As a result, some policy ideas might not fit into a reconciliation bill and thus would require 60 votes, which will really raise the stakes and influence the shape of policy going forward, depending on what the Senate margins look like.”

If Congress remains split, she continued, a new administration could set

health care policy through regulations, much as the Trump administration has been doing with a Democratic-controlled House and a GOP-controlled Senate. Or the federal courts could support or stall administrative actions.

“We’ve seen the current administration become particularly active on rulemaking lately,” Orris said. “That’s at least in part due to anticipation of a new administration or Congress or both, and a desire by the current administration to complete its regulatory agenda and ensure that a new Congress or administration can’t undo regulatory activity next year.”

If a new president is elected, and Democrats achieve a simple majority in both chambers of Congress, Congress could use the Congressional Rule Act to rescind rules issued less than 60 legislative days before the end of session, which this year is expected to be around May 19.

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.

FEE-BASED ANNUITIES GAIN FOOTHOLD INFRONT

Fee-Based Annuities Gain Foothold

By John Hilton

F

ee-based variable annuities gained interest after the Department of Labor proposed a rigorous fiduciary rule that many viewed as a fatal blow for commissions.

That seems like eons ago. Donald Trump was elected president in a surprise outcome, and the DOL rule went out the door. The industry moved in sync with regulators toward a best-interest standard that caused far less disruption to traditional annuity sales.

Annuity sellers celebrated a presumptive return to business as usual.

But several fee-based variable annuities were already on the market, and many more were in various stages of roll out.

And the latest sales figures show feebased products holding their own.

So how do we explain the continued market for fee-based annuities? For that answer, we must look at the investment advisor space, where the ice-cold disdain for insurance products is thawing.

“We are excited about the prospects for fee-based annuities,” said Malcolm Ethridge, executive vice president and financial advisor with CIC Wealth of Rockville, Md. So far, the 20-year-old wealth management firm has only been doing 1035 exchanges from traditional b-share annuities on behalf of current clients. But the company sees a much greater use of annuities in the future, Ethridge said.

“I do see a world in the near future where the living benefits become attractive enough that we begin to offer them as a part of the client’s overall financial plan and retirement income strategy,” he explained.

Strong Sales Overall

To be sure, annuities overall sold very well in 2019. According to the Secure Retirement Institute, annuity sales of $241.7 billion in 2019 represented the best sales since 2008.

Fee-based products represent less than 1% of the total fixed indexed annuity market. But fee-based variable annuity

sales of $850 million in the fourth quarter were 5% higher than the prior year and matched the record sales from the second quarter of 2018. Fee-based VAs represent 3% of the total VA market.

Although the market remains small, Nationwide is finding success there, said Craig Hawley, head of annuity distribution for the company. About 10% of Nationwide’s annuity sales are fee-based, which leads the industry.

“We’ve had a lot of success in selling products in the RIA channel,” Hawley said.

“When you look at the outlets where more traditional variable annuities have been sold — a lot of big broker-dealer firms — there’s been this change within their four walls with their advisors moving from commission-based to more fee-based.”

Nationwide and Lincoln Financial received a boost from a private letter ruling

Commissioners adopted an amended Suitability in Annuity Transactions model law in February. It establishes a best-interest standard based on principles of care, disclosure, conflict of interest and documentation.

By early March, Iowa and Arizona had already moved to adopt the principles through regulation and legislation, respectively. The NAIC model also harmonizes with Securities and Exchange Commission best-interest rules for brokers, which take effect in June.

What it all means is a standardizing of annuity sales rules, which the industry likes very much. Now all insurers need is to wait for the systems to catch up.

“A lot of those firms are still in the early stages of trying to morph their systems and processes to take advantage of more of the fee-based or advisory annuity prod-

“We feel that the fee-based market has a lot of potential as we move forward, and the regulatory changes that we see in 2020 could be a catalyst for this to continue to grow.”

Todd Giesing, director of annuity research for LIMRA’s Secure Retirement Institute

by the Internal Revenue Service in August allowing them to treat the payment of an advisory fee from a variable, fixed indexed or hybrid nonqualified annuity to qualify as a nontaxable distribution.

In short, it gave fee-only advisors a clear lane to get compensated for their advice.

“That was something that really is helpful for fee-based products,” Hawley said.

Systems Upgrade Needed

LIMRA’s Secure Retirement Institute is watching the fee-based annuity market closely, said Todd Giesing, director of annuity research for SRI. “We feel that the fee-based market has a lot of potential as we move forward and the regulatory changes that we see in 2020 could be a catalyst for this to continue to grow,” he said of new regulations.

The National Association of Insurance

ucts,” Hawley said. “Until they get there, that makes it harder for those products to penetrate those shops.”

When that happens, a new breed of advisor stands ready to embrace annuities — CFPs like Linda P. Erickson of Erickson Advisors in Greensboro, N.C. “We believe there is a place for feebased annuities in taxable accounts,” she said. “The tax deferral offered by annuities is attractive for some clients, and to have the ability to hold these investments in an advisory account is an attractive option for a tax-diversified portfolio.”

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.

April 2020 » InsuranceNewsNet Magazine

7

INTERVIEW

THE

Taylor Made

Method For Success How Eszylfie Taylor took his never-quit attitude to the Top of the Table and beyond

8

InsuranceNewsNet Magazine » April 2020

FELDMAN: You have an interesting story about how you got into the business. What got you interested in life insurance at a young age?

TAYLOR: So I’m at a job fair at my school. And I’m graduating from college and 22 years old, and I have one simple, modest goal at that time, and that was to become a millionaire by the time I was 25. I thought three years was ample time to get there.

The challenge is, I didn’t know how I was going to do it. My father is a doctor.

My mom works for the government. So my parents were employees. So there was no business for me to take over. There was no entrepreneurial path laid out for me. I had to figure it out on my own.

I just remember going from booth to booth, and it’s the same kind of narrative. “Oh, fifty thousand, fifty-two thousand, forty-eight thousand.” And I’m not a mathematician, but I thought to myself, “It’s going to be pretty difficult to make a million dollars if I’m making fifty grand a year.”

Photo credit: ALYSSA STEFEK PHOTOGRAPHY

A

t 22 years old and soon to graduate from Concordia College in Oregon, Eszylfie Taylor did not know what he wanted to do for a living.

He had not even considered a broader career category such as finance.

He knew just one thing as he roamed a job fair in his senior year — he was going to make $1 million by the time he was 25.

Twenty years later, Taylor can say he has been a success by that 22-year-old’s measure — and it started happening almost as quickly as he had hoped. After a few years of ramping up his career at New York Life, his success grew exponentially by the year. He has qualified for Million Dollar Round Table’s Top of the Table each year since 2011.

Now Taylor is a well-known advisor, agency owner and influencer based in Los Angeles. After his career of selling and training, Taylor documented his process in The Taylor Method, a four-step guide for generating more insurance business.

In this interview with Publisher Paul Feldman, Taylor shares how he learned sales success the hard way and reveals some of his hard-earned wisdom.

THE ‘TAYLOR MADE’ METHOD FOR SUCCESS INTERVIEW FELDMAN: I understand your economics professor introduced you to an advisor, which led you to New York Life.

You found tremendous success there, but you started with a couple of slow years. Can you tell us about that?

TAYLOR: I started at New York Life, bright-eyed, bushy-tailed, and I did OK in my first year. I think I did around $52,000 total income. Did a little bit better my second year, like $58,000. Then I had a big jump in my third year. I tripled my income and then was off to the races.

By my seventh year at New York Life, I was No. 1 in L.A. By my 10th year, I was top 50 in the country. And I left New York Life at age 35, the top African American producer in the history of the company.

I opened my own independent firm after that — Taylor Insurance and Financial Services. And now, about six and a half years later, here we are.

FELDMAN: What type of clients are you currently serving, and what products are you selling?

TAYLOR: My practice is pretty blended.

I’d say about half insurance and half investments. We’ll do seven figures of commissions in both realms.

It’s pretty even in terms of product mix.

On the life insurance side — term insurance, index, whole life. On the investment side — mutual funds, stocks, bonds, annuities, alternatives, managed money. But I also do a fair amount of planning. I do a lot of tax planning and a lot of estate planning in the practice.

In my practice, I like to take what I call a “macro perspective.” I want to look at everything, see where the vulnerabilities are and plan accordingly.

In my experience, the guys who came from life insurance — their solution to everything was life insurance and annuities. If the only tool in your tool belt is a hammer, then everything looks like a nail.

That’s versus the wirehouse guys — stocks, bonds and mutual funds are the answer to everything. So for me, I always tell people, “I don’t believe in perfect products.” I can make any product sound good, and I can poke holes through the same offering. I do, however, believe in perfect planning through balance and diversification. And so that’s what I preach.

FELDMAN: How did you ramp up your production so quickly, especially at such a young age?

industry. So even though I write a lot of life insurance, my securities practice is also very robust as well.

TAYLOR: At 22, I was a kid. My friends didn’t have money. My lower market didn’t have money. So it was a lot of life insurance in the beginning. I think in my first two years, all I sold was life insurance, and that’s primarily whole life and term insurance.

I remember when I was having some early success, one of the partners asked me, “Tell me about your business. What do you sell?” And I said, “I sell life insurance.” And he [asked], “OK, but what else?” And I said, “I said I sell life insurance.” So I was a one-trick pony, right?

I remember running into a senior advisor at the time and he said, “Man, you’re in a gun battle with one pistol. You got to get some more weapons.”

So over the years, I’ve obtained a few securities licenses: Series 6, 63, 65 and 7.

So it’s interesting — with every securities license I got, I ended up selling more life insurance.

And it’s partly because I understood the alternative. I could call B.S. When I was new and I’d be trying to sell a whole

FELDMAN: How important is it for agents to become full service? Or for a financial advisor to offer insurance?

TAYLOR: I think that macro perspective is key. Think about it. I’m an investment advisor. I can’t sell a college savings plan or a retirement plan that doesn’t have life insurance in it.

That’s because the thing people lose sight of is that if there’s a debt, we have to replace that human capital, that value of future earnings. So if you want your child to go to Stanford and you’re putting 10 grand, 20 grand a year into their college plan, and you die three years from now, who’s funding that plan?

So you have to have life insurance at its core. “Hey, I want to retire at age 65, and I want my wife and me to live on $100,000 a year.” If your wife’s a stay-at-home mom or makes less income than you, or even if she makes comparable income — if one or both of you are removed, what happens? So that’s why the life insurance has to be a part of that plan somewhere.

“It’s interesting — with every securities license I got, I ended up selling more life insurance.” life insurance policy, someone would say, “Well, I could do that with bonds.” And I’d say, “OK.” I didn’t understand how bonds work.

As I got these licenses, I would say, “No, you can’t.” There is no compounding interest. So, there’s no leverage. I’ve got $500,000 in my bond portfolio, and if I die with debt, I’ve lost, right? With $500,000 in cash value in my policy, that could be $1 million, $2 million.

So, not only did my securities business grow and thrive, but my insurance business did as well. With my independent broker-dealer, I think I finished in the top 10 in the entire country at one of the largest independent broker-dealers in the

On the other side of it, life insurance, if you reference it as an asset class — it’s a tremendous tool: the ability to draw money out tax-free. But it leaves you vulnerable in the short term. So if an emergency or opportunity comes up in the first one, two, five years of that policy, you’re typically in the red. So what do you do there?

I’ve created this liquidity chart and language that I share, and I say, “Look, the best plans for short-term liquidity and access to cash usually are the worst plans for long-term growth and income. And the best plans for long-term growth and income are typically the worst plans for short-term liquidity and access to cash.”

So, again, it’s balance and diversification.

April 2020 » InsuranceNewsNet Magazine

9

INTERVIEW THE ‘TAYLOR MADE’ METHOD FOR SUCCESS

If someone’s ability to set aside money on a monthly basis is $3,000 a month, I’m not putting $3,000 in life insurance — just like I’m not putting $3,000 in a brokerage account. It’s about balance and diversification. Maybe it’s $500 a month in insurance. Maybe it’s $1,000 a month in brokerage. But it’s balanced.

I’ve developed language that I use to dictate the course of action and how plans should be sold and what products should be purchased.

You typically find zealots on either side of the coin. You’ve got the whole life guys, and whole life is the answer to everything.

You have a baby? Buy whole life. You want to retire? Buy whole life. You just lost your job? Buy whole life. It’s the answer to everything, right?

And on the other side, you’ve got the index people, the “Oh, look at the upside” people.

For me, my role isn’t to tell people what to do. My role — and our role as advisors — is to educate people. “This is how this works. How would you like to proceed?”

FELDMAN: Can you take us through the process?

TAYLOR: On the insurance side, No. 1, how much coverage do they need?

10

InsuranceNewsNet Magazine » April 2020

Photo credit: ALYSSA STEFEK PHOTOGRAPHY

For me, my role isn’t to tell people what to do. My role — and our role as advisors — is to educate people.

“This is how this works. How would you like to proceed?”

What’s that human capital number?

Forget the policy type. If I die tomorrow, my wife’s not going to ask, “Hey, was that whole life or index?” She’s going to say, “Where’s the check?”

Then, No. 2, policy type. The face amount and then your premium commitment are going to dictate the plan. How do you then decide whether you want whole life or term or index?

Simple question. “Mr. Client, Mrs. Client, do you want a predictable outcome or a probable one? Because if somebody wants predictability, there’s your whole life. Set it and forget it.

Someone who’s OK with probability?

There’s your index sale. I’m not a zealot on either side.

For example, what if I said, “Hey, let me manage your money”? Then you said, “Here’s my retirement money. Here’s $500,000.” How would you feel if I said, “OK, I’m going to put all your money in an S&P 500 fund”?

You’d say, “Wait, all of it? All my money in one fund?” It’d be kind of silly, right?

Why, then, do we think that is OK on the life insurance side? Why does it have to be term? Why does it have to be all whole life? Why does it have to be index? Why can’t I diversify your insurance portfolio like I would an investment portfolio?

If you look at my own plans, I’ve got term, whole life, index, variable life. So I have different types of coverage that I purchase at different points in my life for different purposes.

FELDMAN: That’s an interesting strategy that I don’t think enough people do in this industry, because there are literally all of types of things in people’s lives that can be insured.

TAYLOR: And then the same language applies on in the investing side: “Do you want a predictable outcome or a probable one?” Someone who wants probability — there’s your managed portfolio. There are your mutual funds. And then someone wants predictability? Well, here are your index annuities.

So, again, not a right or wrong. Once you get me those answers, ultimately you’re going to do what I tell you to do or you’re going to contradict yourself.

Because I don’t lead with product. I don’t lead with “Thanks for meeting me today, Ms. Stanley. Here’s why you should buy this annuity.” I don’t do that. I lead with fact-gathering. If my average meeting takes an hour and a half, I typically spend an hour and 10 minutes asking questions and then 20 minutes discussing solutions.

FELDMAN: What types of objections do you commonly see? What are some things that everybody in the field should know?

TAYLOR: I think opening up with clients, getting the client to open up, are superimportant.

A lot of times, your client will say something like, “Oh, why do you need all this information?” It’s like this: Imagine walking into your doctor’s office, and your doctor says, “Let’s do surgery at three o’clock and start taking this prescription.” You’d say, “Wait. What? You’re telling me to schedule surgery and start taking these pills? Why? How do you know that’s right for me?”

Is that not the same thing as when a client walks into your office? Like, “Here’s whole life and why you should buy it.

Here, let me tell you about this annuity.”

It’s like we’re leading with product. When you try to smash a square peg into a round hole, it’s never a clean fit.

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INTERVIEW THE ‘TAYLOR MADE’ METHOD FOR SUCCESS Photo credit: ALYSSA STEFEK PHOTOGRAPHY

And this is language that That’s the challenge that I give advisors to use: “My most people would have recommendations will be — getting enough qualas good as the information ified at-bats — or that’s that I have. Your needs, your what they would tell you. risk tolerance, your investBut it’s kind of an engine. ment objectives will dictate In The Taylor Method, I the plan. So I need this indescribe these four pillars: formation to formulate the approach, fact-find, opbest plan.” portunity and close.

Not only does it give your Here’s why it matters. clients what they need, but If a client goes through it’s also going to make the an enjoyable sales process advisor’s job a heck of a lot with me, it makes me more easier. referable because they’re I used to not do that. I’m like, “Wow, I had a lot of not here with the success trepidation going through I’ve had because I’m betthis. I thought it was conter than everybody else or fusing. This person made smarter than everybody it easy, broke it down. I’m else. I’m a huge failure. I just covered.” They’re going to was too stubborn to stay be more inclined to tell down. friends, family, business I always say I don’t believe associates about me. in winning and losing. I believe in winning and learnFELDMAN: How are you ing. So I figured out all the growing your business Eszylfie Taylor is a yoga enthusiast who works ways not to do it. I’ve tested and marketing these on the connection between physical and all the ways that don’t work. days? financial wellness. He developed a program I’ve got all those out of the called Mind Body Money that unites yoga way, right?

TAYLOR: It’s really all training and financial fitness.

If you told me right now, organic. It’s all referrals, “Hey, I need two million centers of influence. And, dollars in coverage,” do you knock on wood, I have know how many iterations and plan types just makes my job a heck of a lot easier, more business to write than I physically with $2 million of coverage I could cre- and we’re not wasting time and I’m not have time. But every day of my life, every ate for you? I’d rack my brain. And that’s confusing the client. moment, I’m shaking hands, kissing bawhere agents are coming to people with Using another doctor reference, imag- bies — and I’m looking to connect. four, five, six illustrations. It’s a waste. ine going to your doctor’s office and havThe turning point for me was when I But if I know you’re telling me you need ing him say, “I’ve identified some issues in stopped worrying only about me and $2 million in coverage, let me ask you this your lab work. There are eight solutions about what I get out of deals. I live by this question: What’s your premium commit- that can save your life. Which one do you adage: “Givers get.” ment? You answer, “Well, I can pay $500 want?” I want a new doctor is what I want, So I want to give. I want to share. I want a month.” right? It’s too much. to connect. I want to refer. I want to plug So, right away I know you can’t buy $2 other people together at every opportumillion in permanent with $500, right? FELDMAN: In working with advisors, nity that I have. And I don’t care about But I can get you some permanent insur- what are you seeing people struggling kickbacks. I don’t care about referral fees. ance in here. Let me ask you another ques- with the most? Is it prospecting?

Keep your money. tion: With the permanent portion, do you I only genuinely want to help and serve want a predictable outcome or a probable TAYLOR: The average person would tell and connect other people. And that spirit one? You answer, “Well, I’m all about pre- you they don’t have enough at-bats. At the and that mindset are then returned fivedictability. I want guarantees here.” You end of the day, that is a challenge. fold, tenfold, to me. see how I got the face amount; I got your I like to say that a broken clock is right premium commitment; you told me pre- twice a day. I don’t care what company you Access bonus insights from dictability. So, solution: whole life, term. work for. I don’t care how horrible your Eszylfie Taylor in our extended Your answers dictate the plan. So when fact-finding is or how ineffectively you creI present the solution, it will be a singular ate solutions. If you talk to enough people interview, now available at one, not eight different solutions. That in a day, you’re going to have some success. https://innmb.com/et2020.

12

InsuranceNewsNet Magazine » April 2020

Photo credit: ALYSSA STEFEK PHOTOGRAPHY

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• ADVISOR TO THE STARS: How to do business with celebrities — (HINT: It’s not about the celebrity.)

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• MIND BODY MONEY: Why pumping iron just leads to pain — not gain.

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NEWSWIRES DAVID DEE DELGADO/GETTY IMAGES

The Virus That Sickened Wall Street

Coronavirus brought Wall Street to its knees as the globe-trotting disease caused the Dow to plummet since Feb. 19, the last high with 29,348 points. The virus gave Wall Street its worst week since 2008, pushing the Dow into correction territory. It was just the 14th time ever that the S&P 500 lost more than 10% of its value in a single week.

The virus outbreak has been shutting down industrial centers, emptying shops and severely crimping travel all over the world. More companies are warning investors that their finances will take a hit because of disruptions to supply chains and sales. Governments are taking increasingly drastic measures as they scramble to contain the virus.

The market’s losses moderated somewhat after the Federal Reserve dropped interest rates a half a point in a surprise move. But another factor leading to a market rally was a major victory by Democratic presidential candidate Joe Biden in the Super Tuesday primary elections. The health care sector liked Biden, with UnitedHealth having its best day on Wall Street in more than a decade.

History shows that markets tend to post powerful rebounds the week after such severe selling. And that scenario played out, with the S&P 500 climbing nearly 3% on hopes that global central bankers will respond to the crisis by slashing interest rates. The Dow rose more than 750 points, recovering a chunk of the previous week’s 3,583-point nosedive.

(To read more about how advisors are responding to the stock market roller coaster, see Advisor News Wires on page 40.)

AMERICANS ARE SAVING MORE. HERE’S WHY

It’s a puzzle that Goldman Sachs researchers tried to solve: Why is the U.S. personal savings rate so high?

Household wealth compared with income is near a record high.

Unemployment is near a record low. And in the fourth quarter of 2019, savings as a percent of disposable income was 7.7%, close to the percentage reported after the 2008-09 recession.

One reason is that the top 20% of Americans by income save an average of 12% of their disposable income, Goldman found. In addition, the next-highest 20% of income-earners has boosted their savings rate over the past three years. Even the bottom 60% of income-earners changed their financial behavior and are no longer a drag on the savings rates.

DID YOU

KNOW

?

14

Savings Rates On The Rise 15% 12% 9%

3% 0% 0-20

20-40

40-60

We saw a risk to the economy and chose to act.

— Federal Reserve Chair Jerome Powell

SUPREME COURT WILL HEAR ACA MANDATE CASE

The nation’s highest court will hear a challenge brought over the Affordable Care Act’s individual mandate. The justices will hear the case in the fall, with a decision by June 2021, leaving the ACA still in place before the November elections.

At issue is a December federal appeals court ruling that said the ACA’s individual mandate is unconstitutional.

But the case went back to the trial judge for another look at whether the entire law is invalid or some parts can survive.

Since the ACA was passed, opponents have attacked the individual mandate, which requires all Americans to buy insurance or pay a penalty on their income tax. The Supreme Court upheld the law in 2012, ruling that it was a legitimate exercise of Congress’ taxing authority. But in 2017, the Republican-led Congress set the tax penalty at zero, leading to the federal case that will make its way to the Supreme Court later this year.

GLOBAL ECONOMY COULD SEE WORST YEAR SINCE 2009

Average Savings Rate by Income Quintile

6%

-3%

QUOTABLE

60-80

80-100

SOURCE: Goldman Sachs Global Investment Research

The main factor behind the boost in savings rates is tightened credit standards, Goldman said. Banks making it tougher to get auto loans and take out credit cards led to less consumer borrowing.

Some doom and gloom from Bank of America: Gross domestic product growth worldwide is projected to slow to 2.8% for 2020. This would be the worst growth rate since the financial crisis and Great Recession ended in 2009.

Coronavirus is partially to blame for the dismal outlook, but political uncertainty in the U.S. and the trade war with China also contributed to the economic prediction. In addition, economic weakness in Japan and some parts of South America weighed into the Bank of America findings.

Goldman Sachs revised its earnings estimate for the year for U.S. companies to $165 per share, representing 0% growth in 2020.

Source: CNBC

InsuranceNewsNet Magazine » April 2020

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COVER STORY

Four stories of financial services professionals who learned hard lessons from their early career missteps.

by Susan Rupe 16

InsuranceNewsNet Magazine Âť April 2020

J

WE WON’T GET FOOLED AGAIN COVER STORY

uli McNeely was getting ready to do a retirement enrollment session with a client, and she wanted to make sure she dressed for success.

She wore her best dryclean-only suit to the meeting, only to find out that she was a bit overdressed for the occasion as she arrived at the client’s business — a dairy farm. Making matters worse, the enrollment was scheduled to take place in the farm’s milking parlor.

“I learned quickly that day that I needed to know my prospect and dress for the day,” she recalled. “My dry cleaner had a very tough job — to rid my suit of the barn smell so I could dress to ‘impress’ another day.”

Another time, she recalled, she had to deliver some paperwork to a client for a signature. The client also was a farmer

and told her that if no one answered the door, she could go around the back of the barn. She went to the rear of the barn to find the client in the middle of butchering a steer.

“It taught me that you never know what to expect and you just have to go with things,” she said.

McNeely is a financial representative with McNeely Financial Services in Spencer, Wis. She has been in the business since 1996. Looking back on her early days in financial services, she said she realizes some of the lessons she learned when she started out.

When visiting a prospect or a client in those early years, McNeely was concerned with more than selecting the correct outfit to wear. She recalled that she was “paralyzed by fear” to even meet with someone when she was new to the business.

“If I let fear win, I wouldn’t be able to help anyone get their financial house in order. Don’t let fear win!”

— Juli McNeely April 2020 » InsuranceNewsNet Magazine

17

COVER STORY WE WON’T GET FOOLED AGAIN “Early on in my career, I didn’t want to go out to see a client or prospect until I ‘knew it all,’” she said. “I was so afraid that they would ask me a question that I wouldn’t know the answer to.”

But she couldn’t survive in the business without client meetings. “I got hungry. I was working on commission and I knew I needed to do something,” she said. “I picked a couple of quotations to give me confidence and one was ‘Action conquers fear.’ I realized that the only way to get over my fear was to meet with people. The more people I met, the more confidence I gained.”

McNeely said she soon learned that clients and prospects didn’t expect her to know everything. They expected her

win, I wouldn’t be able to help anyone get their financial house in order. Don’t let fear win!”

No One Knows Everything

No one starts their career knowing everything about their business or profession.

And we all soon recognize that lessons learned on the job are just as powerful as knowledge gained from a book or in the classroom.

InsuranceNewsNet is sharing stories from financial services professionals who learned some tough lessons from the mistakes they made early in the business, and how those lessons kept them from making fools of themselves in their careers later on.

“Early on, perhaps half of the time, I would be stood up. And then the other half of the time, I would meet with them only to discover they were more suspect than prospect.”

— Bryon Holz to work with them to find solutions.

“I quickly realized there would always be learning in this career, and my client or prospect would respect me if I just said, ‘Great question. I will get back to you once I verify the correct answer.’”

McNeely said the other lesson she learned from overcoming her fear of not knowing it all was this: “If I let fear 18

InsuranceNewsNet Magazine » April 2020

Bryon Holz was stood up a few too many times by prospects who had no intention of buying. So he decided to change the way he did business. Holz is president of Bryon Holz and Associates, Brandon, Fla. Holz said he was recruited into the insurance business when he was still in college. Prospecting to his friends

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Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods.

Policy loans and withdrawals may create an adverse tax result in the event of lapse or policy surrender, and will reduce both the surrender value and death benefit. Withdrawals may be subject to taxation within the first fifteen years of the contract. Clients should consult their tax advisor when considering taking a policy loan or withdrawal.

This material may contain a general analysis of federal tax issues. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances.

These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances.

It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products.

Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York.

Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

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COVER STORY WE WON’T GET FOOLED AGAIN

“Because I had been an actuary, I was more focused on statistics. But that didn’t help me at all in sales.”

in it. We developed the credo ‘Specialization Spells Success.’”

He found a market where prospects were easy to identify, had a unique need and could be easily approached.

That market? Public school teachers.

“I learned all about that market, brought doughnuts to their worksites, had special planners and promotional items just for their profession, and eventually gained a strong foothold in that market, despite my relatively young age and lack of experience,” he said.

In initially working with teachers, Holz focused on the profession and then on product. “I was more concerned with learning about their needs,” he said. “I focused on two or three different products, then eventually had a whole arsenal of products — life insurance, retirement planning and disability — that I could offer to them.”

If he were starting out in the business today, Holz would focus on one or two professions where he could position himself as an expert. “We would go to the schools; we would go to where they congregate; we’d go to their meetings. We would bring refreshments or whatever to make sure that we would be able to approach them and they’d be open to hearing our message. We’d learn all we could about their benefits and about their retirement plan.”

Holz still has many educators as clients and has even hired some former teachers to work in his practice.

Another niche market he serves is musicians. Holz is an avid bass guitar player who loves to attend concerts and other live music performances. He found that his passion for music helps him relate to the needs of others who made music their career.

“It started out with the band directors and choir directors and other music teachers, but as a fellow musician and entertainer, I had a lot of friends who

— Marc Glickman

and relatives was unproductive, partly because of his friends’ youth and partly because of his own inexperience.

“Because I was a college student, most of my friends were still in school or not yet well established, and weren’t very good prospects,” he recalled.

“And my relatives weren’t as receptive as I’d hoped, given my lack of experience. They didn’t necessarily say it, but I could tell that they were thinking ‘What do you know about money and financial services?’ Even with a college degree in business, I was very wet behind my ears.”

Adding to his prospecting problems was the fact that Holz started in business in the early 1980s, when a recession left people with less disposable income to spend on things such as life insurance.

Holz found that many of his prospects were really what he called “suspects.”

In the days before “ghosting” became a common term for the practice of suddenly stopping communication with a person one is dating, Holz experienced 20

InsuranceNewsNet Magazine » April 2020

his share of ghosting from prospects.

“They would say, ‘I’ll be back in town,’ and we’d set the appointment. I’d show up and they weren’t there. And this was in the days before cellphones. So you’d have to go find a pay phone to call them if they weren’t there and find out where they were.”

Holz found it was sometimes difficult for prospects to confirm appointments.

“Early on, perhaps half of the time, I would be stood up,” he said. “And then the other half of the time, I would meet with them only to discover they were more suspect than prospect.”

After experiencing enough of this runaround, Holz learned he needed to change the way he approached the business. Instead of prospecting to anyone who showed the slightest bit of interest, he would find a niche market and develop it.

“I soon realized that I needed to find a market niche, learn all I could about that market, and become a specialist

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COVER STORY WE WON’T GET FOOLED AGAIN were in the music business,” he said. “I went to school with them. Some of them went on to be very, very successful. So I’ve always had friends in that market.

“One musician leads you to another and to another and to another.”

Fewer Numbers, More Stories

Marc Glickman spent the first half of his career as an actuary. He found the actuarial background was a hindrance when he moved into sales and marketing. Glickman was chief sales officer at LifeCare Assurance Co. and is now the CEO of BuddyIns in Los Angeles, working in long-term care planning.

“Because I had been an actuary, I was more focused on statistics,” he said. “But

But finding stories to tell wasn’t easy when he started out, he added. “I didn’t have enough experience to have stories to tell. But now that I’m older and have a family and the people around me are going through things, I am finding stories.”

Glickman recalled that a meeting with a client had to be postponed because the client’s mother was undergoing treatment for cancer. “So I talked with him about that. I’m finding it’s everywhere now. People are going through illness, going through situations where they have family members who need care.

That’s where you get stories that you can tell to others and hopefully help them.”

Although Glickman has turned to more of a storytelling approach, he hasn’t abandoned the numbers.

Financial Services in Philadelphia.

“Because my children were older at that point, it turned out to be a good time for me to enter the business,” she recalled. “I learned how to be persistent, to study as much about the business as I could and to not take no for an answer.”

She was determined to obtain as many designations as she could.

But there were few women in the industry in Blumberg’s early years, and she said she frequently found herself among only a handful of women at industry meetings.

“I used to joke that at least there was never a line to get into the ladies’ room,” she laughed.

As a result of seeing herself as an outsider because of her gender, Blumberg

“I used to joke that at least there was never a line to get into the ladies’ room.”

— Alyse Blumberg that didn’t help me at all in sales. In sales, you have to be able to connect with people. I saw that agents were more focused on stories.”

Glickman learned that his technical knowledge was important but that he needed to keep his message simple when engaging with others.

“Even though my knowledge has increased dramatically over the years, my presentations have become more simple, and more focused on case studies and stories,” he said.

Observing what he called “old-school agents” who discussed the inevitability of death or the possibility of illness with clients didn’t help Glickman relate to others in the way he needed to either.

“What made me a better marketer and a better salesperson was having mentors who told me early on to look for the stories,” he said.

22

InsuranceNewsNet Magazine » April 2020

“But I’ve integrated the story approach in the beginning a lot more,” he said.

“Because the funny thing about it is, the No. 1 reason people aren’t moving forward with insurance is because of price. So it does come down to the money at the end of the day. Incorporating that part into the story is kind of where they fit together.”

Turning No Into Yes

When Alyse Blumberg was a 21-yearold college graduate, she asked her father if she could work with him in his brokerage general agency. His answer? No. Why? Because she is a woman.

So Blumberg became an elementary school teacher instead. But 18 years later, her father changed his mind about having her enter the business. He came to her and suggested she get her insurance and securities licenses. Today, Blumberg and her husband, Peter, own Blumberg

has made a point of being welcoming to other women she encounters at industry events. She has been a member of various women’s study groups and has encouraged others in the industry to do more to encourage women in the business.

She said her experience taught her to aim for excellence.

“I’m not competitive. I don’t have to compete with anybody,” she said. “But I’m a perfectionist. I have to do my very best.”

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.

Ignite Strategically designed to be a leader in performancedriven income, the new IncomeMark Select fixed index annuity from “A” rated* Ameritas Life Insurance Corp. doesn’t require sky-high returns to produce

Your Clients’ Income Potential What projected payout could clients get with a 4% rate of return?

HYPOTHETICAL EXAMPLE**

competitive income payments.

If IncomeMark Select with the MyGrowth Income RiderSM† can achieve these projected results with a reasonable 4% rate of return, imagine the potential payouts in a bull market! And that’s on top of:

• Choice of level or increasing payouts.

• Optional income booster† for impairment in 2 of 6 activities of daily living—with care at home or in a qualified facility.

10-year deferral = $10,853 increasing payout.

5-year deferral = $6,925 increasing payout.

DARE TO COMPARE! Visit PerformanceIncomeFIA.com to instantly download The Competitive Advantage, a two-page PDF comparing payout potential of top income products.

In approved states, IncomeMark Select Index Annuities (Form 2705 with 2705-B-IMS-SCH or 2705-L-IMS-SCH) and riders are issued by Ameritas Life Insurance Corp. (Ameritas) located at 5900 O Street, Lincoln, NE 68510. Products are designed in conjunction with Ameritas and exclusively marketed by Legacy Marketing Group®. Ameritas and Legacy Marketing Group are separate, independent entities. IncomeMark Select Index Annuities are single premium deferred annuities that offer a fixed interest option and index interest options. The index options are not securities. Keep in mind, your clients are not participating in the market or investing in any stock or bond. Policies, index strategies, and riders may vary and may not be available in all states. Optional features and riders may have limitations, restrictions, and additional charges. Product guarantees are based on the claims-paying ability of Ameritas Life Insurance Corp. Refer to brochures for additional details.

IncomeMark Select and MyGrowth Income Rider are service marks of Legacy Marketing Group. Unless otherwise specified, any person or entity referenced herein is not an affiliate of Ameritas or any of its affiliates. Withdrawals may be taxable and, if taken prior to age 59½, a 10% penalty tax may also apply. The information presented here is not intended as tax or other legal advice. For application of this information to your client’s specific situation, your client should consult an attorney. * A (Excellent) for insurer financial strength. This is the third highest of A.M. Best’s 13 ratings. Rating as of 3/28/2019. Ameritas Mutual Holding Company’s ratings include Ameritas Life Insurance Corp. and Ameritas Life Insurance Corp. of New York. ** Hypothetical example assumes 55-year-old male, $100,000 starting value, 100% allocated to multiple index options, 4% average annual growth, no withdrawals, no step-up, a current 2% compound Premium Accumulation Rate for 10 years, a current 250% interest credit multiplier for 10 years, Single Life option, Increasing Payout Option, and 0.95% annual rider charge.

Hypothetical examples are not reflective of actual annuity performance. Past performance, whether actual or hypothetical, does not guarantee future results. † Included for a current annual charge of 0.95% for the MyGrowth Income Rider and 1.05% for the MyGrowth Income Rider With Booster (not available in all states).

AL1198v0220_INN

FOR AGENT USE ONLY. NOT FOR USE WITH CONSUMERS.

the Fıeld

A Visit With Agents of Change

Just Getting

Started

Rick Hu said no to cold calling and moved his practice to new heights.

By Susan Rupe

Rick Hu, third from left, and his team have built a thriving practice from their office in the heart of New York’s financial district.

24

InsuranceNewsNet Magazine » April 2020

JUST GETTING STARTED IN THE FIELD

R

ick Hu’s office is in the heart of the nation’s financial hub, a block and a half from the New York Stock Exchange.

Despite his prestigious location, Hu wants to provide protection and financial security to clients from all communities.

Hu, 35, is the founder of Midas Wealth. Before founding his company, Hu was the managing director of Northwestern Mutual’s office in New York’s Chinatown. He built the office when he was only 25, and under his leadership, it eventually became the No. 1 district office in its category.

But he almost didn’t survive his first year in the insurance business.

After graduating from the State University of New York at Buffalo at 22, Hu started working for Northwestern Mutual. He said he acquired only five clients in his first six months and was put on probation. If his production didn’t improve in 30 days, he would be terminated.

Most people in that situation would panic or bail out, but Hu reflected on what wasn’t working for him and how he could turn his circumstances around.

His instincts told him to give up cold calling and internet leads, and instead turn to people who trusted him and would give him referrals. He started with his parents.

“I said, ‘Hey, Dad, Mom, do you guys have any insurance or investment planning?’ They trusted me, and they loved what I had to say,” Hu said. “They introduced me to their friends, their business partners, people they knew. In that 30day time frame, I actually acquired more clients than I did in my first six months.”

Hu said cold calling and internet leads are easy in that they don’t require much effort. But it’s hard to see results from those leads.

“Getting referrals or building centers of influence or networking and building a brand or reputation all are hard work — much harder than cold calling,” Hu said. “But it’s easier to get results.”

And Hu did see results. He finished his first year among the top 10 in his training class.

In the following year, Hu built on what

starting a new chapter in his life, all was not well with him. He experienced some health issues and decided he needed to find balance in his life after working so hard to achieve success.

“It was an easy decision for me — I chose work-life balance and my family,” he said. “In 2018, I retired from my role as managing director with Northwestern Mutual and created Midas Wealth Management, named for my son.”

He still is under contract with Northwestern Mutual Wealth Management but was freed from recruiting and developing advisors, although he does coach some advisors. He built a team of young professionals focused on serving clients and the community.

Hu is the son of Chinese immiRick Hu found success by teaching grants, and four of his team memclients financial literacy. bers are Asian Americans. But the Chinese community makes up only he had accomplished in his first year and part of his clientele. focused on solving clients’ problems. He “About half of our clients are minoriended that second year as one of the top ties, including Chinese, and the other advisors in his agency’s five-years-and- half are nonminority,” he said. “We work under category. By the third year, he was with more than 1,000 families. We work the top advisor in that same category. with a lot of young professionals — phyHis company took notice. sicians, attorneys, business owners. We In 2011, when Hu was 25, Northwestern work with affluent and emerging affluMutual appointed him a managing direc- ent clients. tor. He was given the opportunity to start “So many of our clients are great savan office from scratch. He moved out of ers and great income earners, but they his office in Long Island and started an just want to be taught. They want to be office in Chinatown. educated on where they can invest and “My ethnic background is Chinese,” put money away in the most efficient he said, “and my goal is to help every manner.” community, but minority communities Hu said that no matter the client’s ethin America are really underserved when nic background, he and his team are foit comes to financial literacy.” cused on the same goals. “We just want Hu started his Chinatown office with to help educate people and empower a team of five and built his team to 40 their financial literacy.” people over seven years. Even though He said he realizes his background the office was located in Chinatown, gives him a unique perspective on unHu said he and his team served people derstanding the needs of other Chinese from many ethnic groups. Beginning in Americans and those from other immi2012, he qualified for the Million Dollar grant groups.

Round Table and eventually qualified for “I think every community needs help. the Top of the Table. In 2016, his office Minority communities want help but was the top agency in its category for don’t know where to find it,” he said. “So Northwestern Mutual. Coincidentally, you want to work with someone who that was the year in which he and his looks like you, thinks like you and unwife married. derstands you.”

But even though Hu was at the top Trust is the common denominator in of his game in the business world and client relationships, he said. “The No. 1 April 2020 » InsuranceNewsNet Magazine

25

the Fıeld

A Visit With Agents of Change

Rick Hu and his team were celebrated at Northwestern Mutual’s Night of Honors, an event to recognize top advisors and their teams. factor in whether a client will work with you is trust. Do I trust you? Do I believe in you? Can I see myself having a long-lasting relationship with you?”

All clients, no matter their ethnic background, want and need one thing, Hu said. “Everyone wants to be financially comfortable. No one wants to struggle and not be able to pay their bills or put food on the table.”

The Chinese American community has been built on the foundation of education and hard work, Hu said. But they don’t always know what to do with the fruits of that education and hard work.

“We work really hard. We save a lot of money. But we don’t know what to do with that money,” he said. “We don’t know how to invest. We don’t know how to save efficiently to beat inflation. I tell people, ‘Putting money into checking and savings accounts is not investing.’”

Looking to his own parents, Hu said, they had no knowledge about stocks, mutual funds or brokerage accounts until he educated them about those investing tools.

“My job and my mission are to empower the community to understand these concepts. Those in my parents’ generation and in my generation, I want to teach them this. And they’re 26

InsuranceNewsNet Magazine » April 2020

actually very excited to learn.”

Hu said a misconception about ethnic communities is that their members are traditional and not open to learning new concepts. “No, they want to learn. That’s what they teach their children: Learning and self-education are empowering. The problem is they don’t know who to learn this from; they don’t know where to look for this education.”

Even though the Midas Wealth Management team is young, they have many clients who are in retirement or approaching retirement, Hu said. “We work with some of our clients’ children; we work with their grandchildren. We teach our clients about intergenerational wealth.”

Hu and his wife have three children under the age of 3 — a son and twin daughters. “So you can imagine all my chaos!” he laughed. “But my full-time job is being a husband and father. My son, Midas, is my inspiration.”

Now that Hu has found success, he is giving back by coaching other advisors.

“Many of them are at that point in their career where they are looking to build their insurance practice or they’re looking to build a comprehensive investment wealth management practice.

Maybe they don’t understand how to

hire staff or build a team, or they need to understand how to balance serving their clients and serving their community.”

Looking to the future, Hu said he predicts his practice will double the amount of business it is doing in the next three years and triple it in the next five years.

“There are so many people we need to help,” he said. “We are just getting started.”

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.

Got a Story?

Tell Us!

Do you know someone who would make a compelling profile story?

Shoot us a quick email telling us who it is and why you think so. Send it to editor@insurancenewsnet.com, and put PROFILE in the subject line.

WHEN THE DREAM IS BACK WHERE YOU LEFT IT IN THE FIELD

April 2020 » InsuranceNewsNet Magazine

27

LIFEWIRES

QUOTABLE

NAIC Ends Insure U Site The National Association of Insurance Commissioners

is terminating its Insure U consumer education website.

Since its 2006 launch, Insure U has featured public service announcements, consumer alerts, news releases, mobile apps and games, along with integrated social media campaigns, in order to help consumers understand difficult topics.

Regulators are working to duplicate some of the life insurance buyer's guide consumer information online. So that will cover much of the same consumer-focused material included on Insure U, NAIC officials said.

Forever

How Many Life Insurance Companies Can You Name?

44%

37%

2014

31%

2019

WHAT WOULD YOU DO FOR A LOWER PREMIUM?

26% 17%

No Companies

14%

1 Company

15% 16%

2 Companies

3 Companies

Source: LIMRA

CONSUMERS STRUGGLE TO ID LIFE INSURANCE BRANDS

Life insurers can’t compete with a talking gecko and an emu turned cop when it comes to getting attention from consumers. One in four consumers cannot name a single life insurance company and most can’t name three, according to LIMRA research.

When consumers mention the name of an insurance company, the company that comes to mind is one that is associated with a long-time advertising campaign (such as Geico or Allstate) or one that is associated with a TV show (Mutual of Omaha’s “Wild Kingdom” is an example).

Although more consumers recall seeing life insurance ads, the message is not always sticking.

“In 2019, 57% of consumers said they recalled seeing an ad for life insurance in the prior three months, up from 35% in 2014,” LIMRA said. “In 2019, nearly half of those who remember seeing an ad don’t recall the name of the company sponsoring the ad.”

The top brand that consumers DID YOU

KNOW

?

28

mentioned when asked the name of an insurance company? Allstate, followed by Geico and Liberty Mutual.

Would you share your wellness data with a life insurance carrier in return for a lower premium? More than four in 10 Americans are saying yes.

A survey conducted by The Harris Poll found 43% of Americans said they would be likely to buy a life insurance policy if the carrier offered an interactive program with ongoing wellness benefits (such as wellness coaching and education).

They would be willing to share wellness data, such as steps walked daily (79%), blood pressure daily (76%), heart rates daily (74%), calories burned daily (73%) and sleep patterns each night (71%) for ongoing financial or health rewards.

Eighty-six percent of U.S. adults say they’d be “much” or “somewhat” more likely to live a healthier lifestyle if a life insurance company offered cash back as an incentive in exchange for their real-time wellness information. Almost all (94%) of millennials say this would be the case for them.

We believe our industry is stronger when we work together to protect our customers.

— Russ Anderson, head of the fraud prevention program at LL Global

INSURERS WANT TO MAKE UNDERWRITING EASIER

Consumers think underwriting takes too long, and carriers are responding. According to a recent LIMRA study, three out of four life insurance companies in the U.S. and Canada have some type of automated and/or accelerated underwriting program. One in two companies has both.

Carriers that use automated and accelerated underwriting have broadened the products that can be underwritten this way. All but one of the companies with automated/accelerated underwriting programs offer term life within these programs. Most also offer whole life (82%) and universal life products (80%). Almost all companies (82%) believe that their automated/accelerated underwriting programs have reduced policy issue time.

Within their automated/accelerated programs, companies report that, on average, it takes three days (from receipt of an application in good order) to reach the medical questionnaire/ interview — compared to eight days in their traditional underwriting programs. To reach a final decision, it takes nine days, on average, with automated/ accelerated programs versus 27 days for traditional underwriting. Therefore, overall, time to reach the medical questionnaire/interview has been reduced by more than half, and time to reach the final decision has been reduced by two-thirds.

85% say a lower life insurance premium would incentivize them to live a healthier lifestyle.

InsuranceNewsNet Magazine » April 2020

Source: The Harris Poll

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www.TalkLTC123.com OneAmerica® is the marketing name for the companies of OneAmerica.

20-00852

LIFE

Challenging The Assumptions Around Premium-Financed IUL Premium financing is a way for an affluent client to purchase life insurance. But there are many misconceptions about the risks associated with financing life insurance premiums.

No single product is right for everyone, and the same goes for premium financing.

By Julian Movesian

I

s premium-financed indexed universal life insurance a risky bet with odds that favor the insurance companies and banks rather than the policyholders? As a provider of premium-financed life insurance solutions for more than 23 years, I would like to provide my perspective on the subject.

Any financial instrument that promises to provide potential upside (think financed IUL) as opposed to a relatively safe instrument (think non-financed whole life) obviously involves an increase in risk. I can categorically say that none of my clients who ultimately choose a financed solution for life insurance are under the impression that by using financed IUL, they are simultaneously reducing their risk and increasing their upside.

On the contrary, we make it clear to our clients that there is nothing “free” about premium-financed IUL. They know the safest way to purchase life insurance is to pay the full premium out of pocket into a conservative product (such as whole life or guaranteed UL). Many clients choose this option. But sophisticated, high-networth clients want to see a full range of designs across the risk and cost spectrum — including premium-financed IUL. I have been in the insurance business for more than 30 years. In that time, I have sold all product types, including term life, whole life, universal life and IUL. Every client I meet has a different need, and every need has its suitable product. No single product is right for everyone, and the same goes for premium financing.

Premium financing is a tool, a way for the affluent client to buy the insurance 30

InsuranceNewsNet Magazine » April 2020

policy. It is not a way for a policy to be sold to someone who can’t afford the premiums. Premium financing is suitable only for those clients who can write a check to pay the premium.

No doubt there are individuals in our industry who use these products and financing programs to mask the potential volatility in the plans and the results that could ensue if the projections do not work out as planned. But blaming the life insurance carriers that design the products, the banks that provide the financing and the agents who make the recommendations does not provide a full or fair picture, where the answers or solutions are not as simple and one-dimensional as some would suggest. Critics draw their conclusions based on several assumptions that I believe are flawed.

Here are some of these assumptions, along with data that I believe provides a counterbalance to these assertions.

Assumption No. 1: The majority of IUL sales are premium-financed.

I have seen some estimates that as much as 60% of all IUL is premium-financed. But when we ask the top carriers themselves,

their own estimates range between 5% and 16% (by premium). These carriers represent approximately 50% of the IUL marketplace.

Assumption No. 2: Most clients who buy premium-financed IUL are naïve as to the risks inherent in the transaction.

Those same life carriers will also tell you that clients who choose premium financing represent the very high end of the consumer market. Our average client is between the ages of 47 and 63, has a net worth of $25 million and purchases $18 million to $20 million of death benefit.

These clients all have financial and legal advisors watching over their affairs, and trustees for due diligence.

Assumption No. 3: Premiumfinanced IUL plans will never work out in the long run.

We can certainly agree that no cash-value life insurance policy performs exactly as planned. This is true of whole life, variable universal life, guaranteed universal life and IUL. Not only will interest rates, equity returns, cap rates and borrowing rates

CHALLENGING THE ASSUMPTIONS AROUND PREMIUM-FINANCED IUL LIFE change, but also clients will skip premiums, pay premiums late, pay less than they originally planned, and make unplanned changes or distributions.

Assumption No. 4: Life insurance carriers, lender banks and insurance agents bear little to no risk in these transactions; all the risk is borne by the client.

When financing is involved, the clients are expected to pay loan interest and post collateral; the lender is expected to fund the premiums and renew the loans in good faith; the insurance company is expected to provide a strong and reliable product to last a lifetime, and be there to provide the benefits under that contract; and the advisor is expected to service their client year after year. If a transaction ultimately fails, every party pays a price. The carriers don’t

Pacific Life can be an attractive alternative for clients — as long as the client understands the risks. These products carry significant asset-based charges — as high as 5%-7% of the policy’s accumulated value — in exchange for a multiplier on the indexed credit. The multipliers produce higher gross illustrated rates in some durations. But the plans we design — even those with the multipliers employed — generally show cash-on-cash returns in the later durations of between 6% and 8%.

Assumption No. 6: Level-rate IUL illustrations do a poor job of projecting the actual risks of a financed IUL.

Level-rate illustrations don’t show the client how IUL policies perform in the real world. Until regulators modify the illustration model rules, we are stuck with these

Who’s The Ideal Candidate For Premium Financing?

The ideal prospect for premium financing:

• Has a net worth of $5 million or more, with significant collateral to obtain loans.

• Has a need for life insurance protection.

• Wishes to pass on assets to beneficiaries.

• Has illiquid or appreciating assets. recover their acquisition costs, lenders don’t recover their full loan principal and producers get hit with commission chargebacks.

In 2008, during the financial crisis, client portfolio values dropped, and some lenders did leave the premium financing market.

Assumption No. 5: The cashon-cash returns for IUL products used in these plans are wildly optimistic, and are often projected to be in the double digits.

Any sophisticated client or lender would immediately call into question the credibility of such projections. The critics may be confusing the gross illustrated rates with the actual net rates of return.

The newer “multiplier” products sold

by John Hancock, Lincoln Financial and

level-rate illustrations. This situation is not the agent’s fault.

Some IUL critics will try to show the riskiness of the IUL product by showing severe reductions in the level illustrated rate. This certainly highlights the downside of the plan. But if the client wants to see the upside, there is no way to do that under current guidelines. Regulations allow the clients to see only rates that are equal to or lower than the Actuarial Guideline 49 maximum rate. Remember, the AG 49 max rate represents a historical average. This means that over the same era used to generate the AG 49 rate, half of the historical samples would have returned a rate greater than the AG 49 maximum illustrated rate.

I think we should be able to show clients illustrations that reflect varying

rates of interest over time, where at least one illustration uses a series of rates where the average rate is historically low, and at least one where the average rate is historically high. In this way, a client could make an informed, balanced decision as to whether the full risks at the product level and their interaction with the financed elements make sense for their overall risk tolerance.

Assumption No. 7: Financed IUL illustrations are the most abusive and aggressive in the history of the industry.

There’s a right way and a wrong way to sell financed IUL. Agents certainly bear much of the responsibility as to how responsible they are in the design of the case. There are certainly products and product features that can be structured in such a way as to give the client the impression of a frictionless transaction.

But most buyers in this market are extremely sophisticated clients who understand the full range of risk and reward with leveraged transactions. Most advisors do a thorough job of answering the questions and showing a range of options that give the client sufficient information to make a purchasing decision. A few may indeed be structuring illustrations that use multipliers, variable rate loans, low-level projected bank borrowing costs, rolling up of loan interest and AG 49 maximum rates forever. All these elements are optional, and agents should use these with care. They should not (in my opinion) be demonized simply because of the potential for abuse by a relatively small number of agents.

Generalizing and demonizing premium-financed IUL doesn’t address the issues surrounding it. Removing client choices doesn’t serve the public or the industry. Complex problems require complex solutions as well as disciplined, deliberate hard work by the carrier, bank, agent and client.

Julian Movesian is the president and CEO of Succession Capital Alliance.

Julian may be contacted at julian. movesian@innfeedback.com.

April 2020 » InsuranceNewsNet Magazine

31

ANNUITYWIRES

Annuity Sales Hit 12-Year High In 2019

Annuity sales totaled $241.7 billion in 2019, which represented the best number in 11 years as the industry continued to rebound from regulation and other pressures.

Sales increased 3% over 2018 results, according to the Secure Retirement Institute Fourth Quarter U.S. Annuity Sales Survey. Fixed annuity sales led the way, said Todd Giesing, director, annuity research, SRI.

Secure Retirement Institute Annuity Sales Estimates 2010-2019 Total

$222 $141

$238 $158

$220 $147

Fixed Annuity

$230

$134

$82

$80

$72

$84

2010

2011

2012

2013

$237

$141

$236

$134

Variable Annuity

$222

$116

$96

$102

$106

2014

2015

2016

$234

$242

$204

$105

A pair of states advanced best-interest annuity rules recently, one by legislation and one by regulation.

The Iowa Insurance Division announced a proposal to require annuity agents and securities agents to act in the best interest of their clients.

The regulation requires annuity sellers to put the consumer’s interest first via the following four obligations: care, disclosure, conflict of interest and documentation.

A similar set of rules Sen. Livingston is moving through the Arizona Legislature and is sponsored by state Sen. David Livingston, R-22, a financial advisor and life member of the Million Dollar Round Table.

DID YOU

KNOW

?

32

Falling interest rates in the third quarter dampened fixed product sales in the second half of the year.

— Todd Giesing, director, annuity research, SRI

$133

$140

$98

$100

$102

2017

2018

2019

In 2019, fixed annuities represented 58% of the total annuity market. Although fixed annuity sales dropped in the fourth quarter (down 18% to $30.8 billion), robust sales in the first half of 2019 boosted annual fixed annuity sales to exceed its previous sales record of $133.5 billion.

In 2019, total fixed sales were $139.8 billion, up 5% from the prior year.

While overall sales were the best since 2008, fourth-quarter annuity sales dipped to $57.6 billion, down 8% compared with fourth quarter 2018.

STATES INTRODUCE BESTINTEREST ANNUITY RULES

QUOTABLE

These rules adhere closely to the annuity sales model update passed on to states by the National Association of Insurance Commissioners. The rules increase the training and documentation for agents, but do not preclude them from recommending an annuity with a higher commission.

FIDELITY NATIONAL ACQUIRES FGL IN $2.7B DEAL

Fidelity National Financial, the leading provider of title insurance and closing and settlement services to the real estate and mortgage industries, acquired FGL Holdings in a $2.7 billion deal.

FGL Holdings is a leading provider of fixed indexed annuities and life insurance.

The transaction is expected to close in the second or third quarter of 2020,

subject to the satisfaction of customary closing conditions, including the receipt of regulatory clearances and approval by shareholders.

PENSION BUYOUT CONTRACTS SET RECORD IN 2019

A record-breaking 501 U.S. single-premium pension buyout contracts were sold in 2019, totaling $28 billion, according to the Secure Retirement Institute U.S. Group Annuity Risk Transfer Sales Survey.

The number of contracts sold in 2019 increased 2%, compared with 2018 results.

Total 2019 sales were 5% higher than in the prior year and represent the highest annual buyout sales total recorded since 2012.

Total group annuity risk transfer sales in the fourth quarter 2019 were $12.4 billion, 7% higher than fourth quarter 2018 sales. For the year, total group annuity risk transfer sales were $30.5 billion, up 8% from 2018 results.

WHAT THE BUYOUT? A group annuity risk transfer product, such as a pension buyout product, allows an employer to transfer all or a portion of its pension liability to an insurer. In doing so, an employer can remove the liability from its balance sheet and reduce the volatility of the funded status.

Fixed indexed annuity surrender rates continued to climb in 2019, particularly among contracts past the surrender charge period. Source: Ruark Consulting

InsuranceNewsNet Magazine » April 2020

37%

allocation to stocks

the stock market and lack of trust in the stock market

by investors with low

for money they are counting on in retirement are the

tolerance for risk

most often cited reasons for allocating less of their portfolios to stocks.* Unfortunately, under-allocating

ANNUITY

to stocks can hamper progress toward financial and retirement goals, resulting in lower retirement income

Annuities: A Prescription Against COVID-19 Market Panic? and financial resources that are inadequate for managing

83%*

of truly conservative

financial risks, such as health care shocks and inflation,

consumers (low exposure

during retirement. The fear of investment loss and the

to equities and low

risk of being under-saved for retirement can be partially

risk tolerance) say not

addressed, however, using financial products that

losing principal is very/

provide growth and/or income, while protecting against

extremely important

a level of investment loss.

FEAR OF LOSS, RISK OF FALLING SHORT

How annuities can help investors quell their fears of a virus-led market plunge.

Figure 1 –

By Susan Rupe

S

Don’t Want to Lose Principal

Fear of Investment

Concerned Income Won’t Last Throughout Retirement

Loss versus

ometimes it’s difficult Fear of to tell which is scarier: theUnsuccessful coronavirus outbreak or the resulting stock Retirement market plunge.

Advisors can tell clients to wash their hands and stay out of crowds if they want to avoid the virus. But the prescription for surviving the plunge is a little more complicated, and could include an annuity.

That’s the word from Graham Day, Equitable’s managing director, individual retirement.

Market dips that have grabbed headlines since the coronavirus outbreak earlier this year have frightened investors, particularly retirees and preretirees who have funds in the market. Sometimes bad news from Wall Street leads consumers to make panic-driven decisions about their investments, Day said.

“If you look at the roller coaster of emotions that take place with investors as markets go through high times and low times, it's not a surprise that a lot of people tend to sell out when the markets start going down. And they do anything to get in the market when it’s at all-time highs,” Day said. “So I think from a psychological and a behavioral standpoint, having peace of mind and having protection will enable investors to not make bad decisions at bad times. So they will not miss out on the best-performing years in the market or move out of the market during periods of volatility.”

Day said that even though the market had been on an unprecedented bull run prior to the coronavirus scare, volatility still has occurred. “So even though we’ve had 30 positive years out of the past 40, the average intrayear drop has been around 13.8%.”

34

FEAR OF LOSS, RISK OF FALLING SHORT

InsuranceNewsNet Magazine » April 2020

Prefer Lower Certain Returns to Higher Uncertain Returns Not Comfortable With Current Stock Allocation Investment Risk Necessary for Financial Success

INVESTMENT LOSS

Desire for Principal Protection + Investment Growth

RETIREMENT GOALS

SOURCE: Insured Retirement Institute and Equitable

2

Allocating a portion of a client’s portfolio to annuities can keep clients from making bad decisions and give them peace of mind when the market goes on a wild ride, he said. And clients may have been complacent about market downturns over the past few years because the markets had been strong.

“We’ve been on a nearly 12-year bull market run,” he continued. “With these unprecedented returns, people aren’t really thinking about downside protection; they’re not thinking about outliving their assets because they’re looking at their account balances and their wealth continues to accumulate and grow consistently year after year.”

How can advisors present an annuity to a client who is freaking out over the market?

It starts with a plan, Day said.

“Look at the client’s assets, look at their risk tolerance, get an understanding of what their journey is going to look like,” Day said. “Where do they want to go? What do they want those assets to do? Are they saving to provide for their own retirement?

Are they saving and investing to leave a

legacy or inheritance to somebody else? It just depends. So the best advisors out there are the ones who are developing a plan.”

The annuity market continues to evolve, with new products being developed to solve a variety of client needs.

Day said he believes the annuity industry will keep developing products as volatility becomes more of a client concern.

Caught Between Two Fears

Equitable and the Insured Retirement Institute conducted a study in 2018 in which they examined consumer fears about investment stability and protection. Researchers found that consumers are struggling between their fear of investment and their fear of an unsuccessful retirement.

Consumers who responded to the survey held less than half of their assets in stocks, stock mutual funds and exchangetraded funds.

Those who said they have a low tolerance for investment risk have an average of 37% of their assets allocated to stocks.

For truly conservative investors (those with low risk tolerance and 25% or less of

of 25%

59%

percent being concerned that they will not have enough income to last throughout retirement.

Fortunately for retirement savers, products are available ANNUITIES: A PRESCRIPTION AGAINST MARKET PANIC? ANNUITY

oncerned that income won’t

that provide stock-market-based returns while also

protecting against loss of principal. The consumer and st throughout theirretirement investable assets allocated to stocks), 10 consumers believe they are only somefinancial professional studies conducted this report the fear of losing money in the stock marwhat prepared, or not well for prepared, to

manydeal consumers to strategies ket and lack of trust in the show stock that market financiallyare withopen a major health event. for money they are countingthat on in retireA common thread running use such products to help address their through fear of ment were the most-often-cited reasons these risks and concerns is the fear of investment loss with their retirement savings and income earning for allocating less of their portfolios to not having enough savings to create sus– in fact 79 percent are interested stocks. More than eight in 10goals of these truly tainable, lifetime income, andintolearning weather tection about product that offers principal protection and the conservative investors said that not alosing financial storms.

Annuities can help conprincipal is extremely important to them. sumers manage these risks. potential for growth.

Further, 59% of conservative investors The study found that consumers are are not comfortable with their current open to investing in lifetime income prodstock allocation of 25% or less of their ucts to help achieve a successful retireportfolios, despite 73% being concerned ment. More than nine out of 10 said they that they will not have enough income to believe it’s important to invest in a product last throughout retirement. that would minimize their risk of losing sks: Understanding and Expectations principal, while 80% found lifetime income annuities easy to understand and 67% found lifetime income products to be appealing.

This brings up the role of the advisor in helping consumers make the annuityexpect deof consumers with low of consumers with low of consumers cision.inflation to have exposure to stocks exposure to stocks The study found that y are concerned about are concerned about impact on said their 56% an of consumers running out of money a stock market drop retirement expenses, they are extremely confident or 26% very confident before they die right before they retire with extremely in their advisors if guaror very concerned anteed lifetime income is discussed, while 34% SOURCE: Insured Retirement Institute and Equitable feel the same degree of Despite these consumer 3conflicts be- confidence in their advisors if they don’t tween investing their funds and running discuss guaranteed lifetime income. out of them, the study found that 79% are More than half of consumers (59%) said interested in learning about products that they work with an advisor, but only half of offer principal protection and the poten- that group said they have discussed guartial for growth. anteed lifetime income with their advisor, The market is fueling many consumer and 78% said their advisor discusses risk fears about running out of money in re- tolerance. tirement, the study showed.

More than seven out of 10 consumers Susan Rupe is manwith low exposure to stocks said they are aging editor for InsuranceNewsNet. concerned about running out of money She formerly served before they die. Eighty percent of con- as communications sumers with low exposure to stocks are director for an inagents' concerned that the market will drop right surance association and was an award-winning before they retire. newspaper reporter and editor. Contact Market fear is not the only thing wor- her at Susan.Rupe@innfeedback.com. rying consumers about retirement. The Follow her on Twitter @INNsusan. study found that consumers are concerned about inflation, with 92% recognizing Like this article or any other? that inflation is likely to have an impact Take advantage of our award-winning on their expenses during retirement. But journalism, licensure and reprint options. only 26% said they are extremely or very Find out more at innreprints.com. concerned about inflation. Finally, six in

79%

NT RISKS

73%

80%

92%

April 2020 » InsuranceNewsNet Magazine

35

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HEALTH/BENEFITSWIRES

1Nearly In one-third 3 Fear Health Care Costs of Americans say they are afraid they won’t

28% of Am be able to pay for health care in the coming year, according they will g ericans fear surprise met a to an NBC News/Commonwealth Fund survey. b ill this yeaedical Thirty-one percent said they were concerned about r.

SOURCE: NBC News/Commonwealth Fund survey being able to afford their health insurance in the next year, while 29% feared they wouldn’t have enough money to pay for out-ofpocket costs for prescription drugs, and 32% worried about being able to afford other out-of-pocket costs.

One in five respondents (22%) said they or a family member postponed getting health care or medications because of the cost, resulting in their health problem worsening.

Among those who had trouble paying medical bills, 46% dipped into savings or retirement funds, or borrowed money from family or friends. Thirty-four percent said they charged their bills to their credit cards and 26% said they sold their jewelry or furniture to come up with the needed funds.

MORE EMPLOYERS EYE FINANCIAL WELLNESS BENEFITS

Employers are look ing to help their workers with their financial wellness in addition to their physical wellness, a study from the Employee Benefit Research Institute revealed. The study found that 43.6% of employers expressed at least some interest in offering financial wellness programs. In addition, 28.2% said they offer an emergency fund or employee hardship assistance and 15.3% said they plan to offer one as a financial wellness initiative.

Employers who are focused on providing emergency funds said they are more likely than other employers to have taken steps to understand their workers’ financial wellness needs. These same corporations rate company concern about employee financial well-being as an eight on a 10-point scale.

Employers who provide emergency funds also were more likely than other employers to favor education-based financial well-being or debt assistance benefits DID YOU

KNOW

?

36

to employees. These might include print or online education and resources for goal setting and saving.

WHY DO PEOPLE CHANGE MEDICARE ADVANTAGE PLANS?

When it comes to Medicare Advantage plans, it’s not “set it and forget it” for a sizeable percentage of enrollees. An eHealth survey found 40% of women and 33% of men had changed from one Medicare Advantage plan to another in the most recent enrollment period. eHealth's survey also found that 40% of those with incomes below $25,000 had changed plans, compared with 29% of those with incomes over $100,000.

Among those who had changed plans, the top two reasons cited were lower premiums (35%) and better prescription drug coverage (28%). Those in their 70s also were more likely than other enrollees to change plans, with 49% of those ages 71-79 Are you likely to make any changes to your Medicare Advantage coverage during open enrollment?

80% 70%

69%

60% 50% 40% 30%

27%

20% 10% 0%

5% Yes

No

I don't know

QUOTABLE Health care looks like a big opportunity.

— Walmart CEO Doug McMillon

changing plans at least once, as opposed to 28% of those ages 65-70.

Despite the percentages of those who change plans, 84% said they are satisfied with their plan while 5% said they would change plans during the next open enrollment.

THE DOCTOR IS IN … WALMART

The nation’s largest retailer is taking baby steps into the world of health care, opening its first two health centers in Georgia.

Walmart debuted “Walmart Health,” where patients can see doctors for routine checkups and ongoing treatment of chronic illnesses, such as diabetes and heart disease, even if they lack health insurance. They can also get lab work, X-rays, dental care, behavioral health counseling, and eye and hearing exams. The bill for an annual checkup for an adult without insurance is $30, an eye exam is $45 and dental exams cost $25. Therapy sessions are $60.

The retail giant wants to fill the gap for its customers without health insurance, as well as those who have insurance plans with high deductibles and out-of-pocket costs.

Walmart’s goal is to have its doctors to replace patients' current primary care providers, which will bring them into the clinics more routinely. Walmart is taking a different approach from CVS' Minute Clinics and many urgent care facilities, which offer basic treatment for the occasional strep throat or ear infection.

In 2016, Americans and their insurance companies spent an estimated Journal of the American Medical Association $134.5 billion on lower back and neck pain. Source: Source: Associated Press

InsuranceNewsNet Magazine » April 2020

HEALTH/BENEFITS

Will Direct Primary Care Be 2020’s Health Care Darling?

How benefits brokers can optimize this emerging alternative to their advantage.

T

By Andy Bonner

he portrait of the American health care system isn’t pretty. The Commonwealth Fund reported in November that health insurance costs and deductibles have been growing faster than median income in all states over the past decade, meaning that many working families are spending more of their income on health care.

Employers and their workers are struggling to keep up with a system that was never created with their best interests in mind. Workers are desperate for affordable alternatives, and employers are looking to their benefits advisors for creative solutions to keep their workforce content.

In 2020, direct primary care will become the go-to strategy to offset expenses in health care, for three reasons.

Employers can’t afford to pass more costs on to their employees, benefits brokers have a better understanding of how to leverage DPC, and the Primary Care Enhancement Act offers a glimpse of hope to families who must choose between daily survival and health care.

Unsustainable Costs For Employers And Employees

Traditionally, employers have turned to companies including Blue Cross, United, Cigna and Aetna (whose initials make up the name BUCAs) to provide coverage for their workers. But as the BUCAs’ costs continue to rise, employers have been forced to pass the financial burden of these plans on to workers. Employees are staggering under the weight of higher premiums, deductibles and out-of-pocket costs whenever they seek care.

38

InsuranceNewsNet Magazine » April 2020

Because it’s like a casino where the house holds all the cards, don’t expect the system to change anytime soon. The BUCAs have no incentive to bring costs down for employers or employees. Since the advent of the Affordable Care Act, their stock prices have skyrocketed, and they want to keep their shareholders satisfied. They’ve built hugely profitable

fee per member instead of paying escalating insurance premiums and claims.

DPC Has Gone Mainstream

Some benefits agencies have been slow to adopt DPC because of fear or lack of understanding, but that’s rapidly changing.

More regional DPC providers are entering the marketplace and finding ways to

Employees Continue To Pay More For Health Care 10.3% 9.1% 7.8%

•

2.7%

•

2008

•

11.3%

11.5%

•

•

Premium contribution + deductible

6.7%

6.8%

•

•

Premium contribution

4.5%

4.7%

•

•

2016

2018

•

•

5.1%

•

10.7%

5.8%

•

3.3%

•

2010

6.5%

6.6%

•

•

3.8%

4.1%

•

•

2012

2014

Deductible

For middle-income people with employer insurance, the combined cost of premium contributions and deductibles amounted to 11.5% of income in 2018, up from 7.8% in 2008.

SOURCE: The Commonwealth Fund

businesses, and the last thing they want to do is create ways for employers to pay them less money. Less money would cut into their margins, which shareholders won’t allow.

To attract and retain talent, employers must find new ways to offer robust benefits packages catering to employees’ needs. Workers who enroll in DPC appreciate the flexibility to see and establish a relationship with a dedicated primary care physician for minimal visit fees.

And because DPC doesn’t require filing claims, employers manage costs by paying an affordable monthly membership

scale, making DPC more affordable and attainable for the mainstream. And because the numbers don’t lie, brokers know they must offer DPC to stay relevant.

According to the 2020 Large Employers’ Health Care Strategy and Plan Design Survey by the nonprofit National Business Group on Health, 49% of large employers are looking for an advanced primary care strategy in 2020, and another 26% are considering implementing one by 2022.

That’s a golden opportunity for brokers to help more people and gain more business.

Benefits brokers are learning they can optimize this alternative to their

WILL DIRECT PRIMARY CARE BE 2020’S HEALTH CARE DARLING? HEALTH/BENEFITS

Employers Are Paying More For Health Care Too Large companies estimate that their total cost of health care, including premiums and out-of-pocket costs for employees and dependents, will rise to $15,375 per employee in 2020, up from $14,642 per employee in 2019.

SOURCE: National Business Group on Health

advantage by redesigning health plans to incorporate DPC as a plan’s base and then layering additional products on it.

Because DPC eliminates copays for acute primary care concerns and certain manageable chronic diseases, you can lower premiums and reduce the possibility of future shock from claims. Additionally, when workers use DPC services, the employer’s plan is protected from day-to-day primary care claims. In short, DPC makes health plans perform better.

The Primary Care Enhancement Act

The wild card in 2020 will be whether the Primary Care Enhancement Act passes Congress. This bipartisan legislation, introduced in late 2019, seeks to make DPC compatible with health savings accounts paired with high-deductible health plans.

If the act passes, employees could use pretax HSA funds to pay for their DPC fees. These funds would be a game changer for a lot of people, especially those in service industries and schools. School

What Is The Primary Care Enhancement Act? The Primary Care Enhancement Act is aimed at lowering the cost of health care and expanding patients’ access to their primary care providers.

The bill’s sponsors are Sen. Bill Cassidy, R-La.; Sen. Doug Jones, D-Ala.; Sen. Jerry Moran, R-Kan.; and Sen. Jeanne Shaheen, D-N.H.

Cassidy

Jones

Moran

Shaheen

The Direct Primary Care model encourages patients to develop personal relationships with their primary care physician and includes extending access to care beyond office visits and business hours and through telemedicine. It focuses on prevention and primary care, relying less on specialist and hospital referrals.

DPC models replace copays and deductibles with flat, affordable monthly fees. Current law makes DPC incompatible with health savings accounts paired with high-deductible health plans.

The Primary Care Enhancement Act clarifies federal law to state that DPC is eligible for HSA contributions and that pretax HSA funds may be used to pay DPC fees.

SOURCE: National Business Group on Health

districts have already been quick to adopt DPC because it’s a great benefit to offer part-time workers, substitute teachers and others who typically don’t have access to health care benefits. In addition, on their salaries, most teachers can’t afford to cover dependents, so people are excited to learn they can use DPC as a cost-effective option for their families.

Having an HDHP you can’t afford to use for primary care means you don’t have accessible and affordable health care.

The passage of this bill could mean some families will have real health care for the first time in their lives. As affordability and access improve nationwide, the floodgates will open for DPC.

Employers Are Open To New Solutions

As if the financial stress of having to pay for medical care out of pocket weren’t enough, people are often saddled with astronomical prices for prescription drugs.

Unlike hospitals and pharmacies, DPC practices aren’t in the business of selling drugs. They can contract with suppliers for much lower rates. Thus, employer groups that enroll in DPC enjoy savings on prescriptions in addition to reduced claims exposure.

Now that restaurants, hair salons, schools and other underserved workplaces are being educated about DPC, their employers and workers are open to implementing these strategies. In the years ahead, employers will be looking for ways to save tens of thousands, if not hundreds of thousands, of dollars in claims annually.

When we think of health care disruption, we often think about technology — like the way Netflix shook up the movie rental marketplace or Airbnb shook up the hotel industry. But the truth is that both affordability and accessibility are disrupting the modern-day health care ecosystem. Although the extinction of the BUCAs is unlikely, health care alternatives are certainly evolving at a rapid pace, with DPC emerging as a strong front-runner.

Andy Bonner is the CEO/cofounder of Healthcare2U, a hybrid direct primary care organization based in Austin, Texas. Andy may be contacted at andy.bonner@innfeedback.com.

April 2020 » InsuranceNewsNet Magazine

39

SEL

Financial facts and figures powered by AdvisorNews.com

L!

When Your Clients Freak Out Bond Market Advisors who preemptively emailed clients early in the stock market crash were able to calm clients, but that did not always keep Bombs

clients from jumping out of equity positions.

Whether they were told in early email messages or in response to clients’ questions, Financial Planning Association members said they reminded investors of S&P 500 Performance their long-range plans.

During Epidemics Some examples: John Carbonara, NXT During Outbreak 6 Months After Outbreak Phase Financial Services SARS -12.8% in Jericho, N.Y., focused on 17.4% (’03) answering questions cli-7.3% MERS ents might have about the (’12) 15.1% coronavirus’s relationship to the markets’ volatility.

Ebola -5.8% (’13-’14) “After weeks of head7.8% lines about the coronaZika -12.9% virus outbreak, markets (’15-’16) 12.1% have been caught in a volatile pattern of surges and retreats. Here’s what you should know,” starts the email, which included this chart showing market performance before and after previous outbreaks.

“I get calls regardless,” Carbonara said. “I may have a conversation today and feel good about my conversation with the client, and just a few days later I will have to repeat the whole conversation. We try to provide rational advice, but in the moment they might not be thinking rationally. It’s the old ‘this time is different.’”

Adam D. Van Wie, Van Wie Americans Have Over Financial, Jacksonville Beach, $50 Trillion In Investable Fla., sent a message early Feb. 24, Assets … But Only A Third the Monday of the first full week the crash, but it couldn’t keep Of It Is In Retirement Funds of everybody from jumping.

“In general,” Van Wie said, SOURCE: Tiburon Advisors “we are advising them to stay the course and not panic, although we have had several clients reduce their stock holdings this week.”

Although the Federal Reserve’s surprise halfpoint cut in its short-term rate did not soothe equities investors, it did lead to the lowest yield on the 10-year Treasury in history.

The yield dipped below 1% on March 3, moments after the Fed announced the cut.

Investors were already fleeing equities and rushing to bonds before the rate cut. The benchmark 10-year rate has plunged 90 basis points this year alone. The 10-year Treasury is the bedrock investment for insurance companies and other institutions requiring safe money.

The 30-year Treasury was hand-in-hand with the 10-year, dropping to a historically low yield of 1.6%.

Robinhood Steps On Its Cloak

If advisors were worried that robo-platforms were going to take all the investment money, Robinhood swooped in to show that robos aren’t the perfect heroes.

As markets struggled to bounce back from plummeting prices, the Robinhood platform was inaccessible to its 10 million users for most of March 2. Then it crashed again for hours the next day.

Twitter was not kind, with many who gave the app a second chance on March 3 saying they had had enough.

Seagal Under Siege

OOF!

Another hero that lost a little more luster lately was actor Steven Seagal, known for his tough guy movies.

In those movies, Seagal is frequently “Under Siege,” “Hard to Kill” and, sometimes, “Above the Law.” But the Securities and Exchange Commission was “Out for Justice” and found it in February, settling charges against the actor for failing to disclose payments he received for promoting an investment in an initial coin offering (ICO) conducted by Bitcoiin2Gen (B2G).

The SEC’s order found that Seagal failed to disclose he was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his promotions. Seagal agreed to pay $157,000 in disgorgement and a $157,000 penalty.

40

InsuranceNewsNet Magazine » April 2020

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When Consumers Hear Scary Financial News, They Turn To Advisors Americans are concerned that they will be impacted by a recession in the next year or so. But those who work with an advisor say having access to professional advice eases their fears. • R. Andrew Flores

T

he past few years have been rocked by market volatility, tariffs, geopolitical tensions and more. With 24-hour news cycles reporting intensified financial uncertainty, it’s no wonder consumer concern is on the rise.

In fact, a study released by the Million Dollar Round Table in November shows the majority of Americans (82%) are at least somewhat nervous they will personally be impacted by a recession in the next year or so. Many of our clients recall the devastation of the 2008 stock market crash and fear history may repeat itself. More than ever, consumers need good advice and a tour guide to lead them on their financial journey.

Proactive Approach

Knowing a potential recession is looming, we should reevaluate whether we are meeting these expectations and proactively increase the number of touchpoints with clients...

In today’s changing financial environment, being a proactive communicator is critical. Twenty or 30 years ago, people depended on their advisor as the source of all their financial news and guidance. Now information is abundant and immediately accessible online. However, those who do not have financial expertise may find it difficult to determine what is accurate among those resources. It’s similar to when people look up health symptoms they are experiencing and become convinced they have a serious medical condition without seeking a professional opinion.

We need to keep abreast of the headlines our clients are seeing and understand what influences their financial decisions, while also staying proactive to 42

anticipate and get ahead of their fears.

When my clients express concerns provoked by financial news, first I acknowledge their fears. I play an integral role in managing my clients’ emotions, making sure they never invest because of greed or fail to invest because of fear. After listening to my clients’ concerns, I then help them refocus on the fundamentals of financial planning.

I encourage my clients to ignore the outside noise and proceed with the already charted course of their financial plans, always approaching it in a funda-

reach out by phone or email or use a virtual meeting platform to share updates and answer questions. Additionally, we send a quarterly economic update via email with snippets of current events and commentary on how they affect the financial landscape. This combination of communication methods that align with individual preferences is an effective way to stay in front of your clients.

You can also leverage insights gained from the same MDRT study to influence your communications tactics based on how consumers said they prefer to be contacted by advisors during times of economic uncertainty. More than half of Americans with an advisor would like them to reach out by phone or email with

InsuranceNewsNet Magazine » April 2020

mentally sound way. We need to be the professional resource clients trust most to inform their decisions — always, and especially during economic turmoil. Your proactive and increased communications will lead clients along the right path.

Communication Methods

In my practice, a clearly defined client service model helps us stay top of mind with each client and ensures clients receive accurate guidance that outweighs any misleading information they may see online.

In their client profiles, we track our clients’ preferred methods of interaction and what is most convenient for them.

In addition to annual meetings, I may

advice tailored to their plan and proactively meet with them in person to discuss the implications of a recession. More than one in five (21%) said they want an advisor to share news articles and resources.

Knowing a potential recession is looming, we should reevaluate whether we are meeting these expectations and proactively increase the number of touchpoints with clients to defuse any concerns.

Increased Dependency

As financial uncertainty continues to prevail in the news, there are increased opportunities for clients to engage us for advice.

In fact, the same MDRT study found that nearly a third (32%) of survey respondents

WHEN CONSUMERS HEAR SCARY FINANCIAL NEWS, THEY TURN TO ADVISORS

AMERICANS FEAR RECESSION, But Advisors Inspire Confidence

82%

of Americans say they fear they will be impacted by a recession in the next year or so.

32%

of consumers who have an advisor say they need more financial guidance in uncertain times.

84%

of consumers who have an advisor say they feel more confident after meeting with their advisor.

with an advisor said their dependence on that advisor’s financial guidance would increase in a time of uncertainty.

Clients can rely on us as well-versed experts able to sort through the potential misinformation that’s so readily available in today’s digital age. The more we help our clients decipher complex subject matter, the more their confidence will increase, even if the economy takes a hit.

By evaluating and quantifying their progress, we keep them on a positive trajectory benchmarked to their financial plan as opposed to an arbitrary index. In this way, we inherently provide unmatched value.

Make The Complex Simple

More than three-quarters (84%) of Americans with advisors surveyed in the MDRT study reported they feel more confident in their financial future after meeting with their advisor. Instead of allowing an index to dictate where your clients stand financially, set up individual benchmarks based on their financial plans.

For example, if your client’s long-term financial goal revolves around having savings built up for a comfortable retirement lifestyle, track their progress against that goal. In 2019, this unique benchmark

51%

want their advisor to meet with them in person to discuss the implications of a recession.

53%

want their advisor to communicate with them by phone or email to discuss the implications of a recession.

actually showed my clients that they were ahead of schedule, so to speak, and that made them more confident in their financial future.

Prospecting Opportunities

Since a possible recession is top of mind with many clients, you may consider shifting more resources within your practice to protection products and devote additional time to finding related underlying needs when prospecting for new clients. The guaranteed income benefits of annuities or insurance-based products with certain riders and added protection can be appealing during times of uncertainty. If you can showcase your capabilities in these areas, you may have higher conversion rates.

On the other hand, I find prospects are more attracted to investment planning when the markets are up. Advisors who are flexible and can effectively showcase their capabilities will function well within the cyclical nature of our economy.

Be A Student Of The Business

The value of having a financial advisor has never been greater than it is today.

To ensure you are implementing the best strategies during an economic downturn,

consider the industry resources available to you. It isn’t the first time the economy has been unstable, SOURCE: Million andDollar it won’t Round Table be the last. Successful producers who have been through similar situations in the past often share their best practices — such as how to develop a client service matrix, create a marketing plan or set client communication expectations — that can help in your own business.

By joining and engaging with peers via industry associations, you can learn even more to stay at the top of your game. No matter the stage of your career, if you surround yourself with others who are passionate about the business, you’ll always have the opportunity to learn and provide a greater impact on clients’ financial lives.

R. Andrew Flores is a retirement planning specialist and financial consultant with Equitable Advisors, Corpus Christi, Texas. He is an eightyear member of Million Dollar Round Table and Court of the Table.

He may be contacted at r.andrew.flores@ innfeedback.com.

April 2020 » InsuranceNewsNet Magazine

43

INBALANCEWIRES

Beware Of The ‘Sunday Scaries’

5 WAYS TO FIGHT THE 1 Take time for myself during the weekend 44% 2 Make sure to get a full night's rest on Friday and Saturday 42% 3 Use the end of the day Friday to get

Forget the Monday blues. That time of sadorganized for Monday 35% ness and even panic is hitting Americans ear4 Use the weekend to get ahead of what I need to do during the week 34% lier in the week, giving rise to the term “Sunday Scaries.” To many people, Sunday evenings are a 5 Take a "digital detox" for part of the weekend 21% time when it feels as though the freedom of the Source: Charisma weekend is rapidly coming to a close, a time of transition from the weekend to the workweek.

A 2018 survey commissioned by LinkedIn found that 80% of working American adults worry about the upcoming workweek on Sundays. Another survey by the luxury home-goods brand Charisma found that the Sunday Scaries’ average time of arrival is 3:58 p.m., although they seem to set in later than that for many people.

The Charisma survey also showed that weekends aren’t as leisurely as many of us imagine they are. Respondents said they spent at least nine hours on the weekend doing work and chores.

THE EYE ISSUE NO ONE TALKS ABOUT

When you log extra hours on your computer s c re en or smartphone, your eyes work overtime too. That leads to blurry vision, headaches and neck strain.

They all add up to computer vision syndrome. In fact, CVS (also called digital eye strain) affects an estimated 60 million people around the world, according to a report in BMC Research Notes.

But a few daily habits can ease the strain of CVS and improve your vision.

Researchers urge CVS sufferers to eat more vitamin A-rich leafy greens such as spinach and kale. Taking a supplement of 20 to 25 mg per day of both lutein and zeaxanthin also will help strengthen your eyes.

And then there’s the American Academy of Optometry’s 20/20 rule — for every 20 minutes that you spend concentrating on a screen, take a break to look out into the distance for about 20 seconds. Wearing reading glasses can block some of the screen’s blue light and bring the computer screen sharply in focus, easing eye strain.

DID YOU

QUOTABLE About half of depressed people have elevated levels of the stress hormone cortisol.

— Dr. Sara Gottfried, author of The Hormone Cure

regulate the body’s stress response and is considered to be a mood stabilizer.

NUTRITION HELPS YOUR MENTAL HEALTH

We all know that getting the right amounts of vitamins and minerals is good for our physical health. But what about our mental health? Can better mental health come from a capsule?

Researchers don’t have all the answers to this, but they have determined that certain nutrients can play a role in improving our mental health. Here are a few.

Vitamin D regulates the genes that make the feel-good brain chemicals serotonin and oxytocin. Symptoms of a vitamin D deficiency can include depression, anxiety, irritability and fatigue. Vitamin B12 plays a role in regulating mood-boosting brain chemicals such as serotonin and dopamine, as well as stress hormones like norepinephrine.

Symptoms of a vitamin B12 deficiency can include fatigue and brain fog.

Vitamin B6 helps the body keep homocysteine levels in check, which helps with mood issues. Magnesium helps

DRY FASTING — JUST SAY NO

Intermittent fasting — going without food for periods of eight hours or more — has attracted a lot of attention from those wanting to lose weight or control their blood glucose levels. But there’s another type of fasting that’s becoming the latest health fad, and experts warn it could damage your kidneys.

Dry fasting is the term given to restricting liquids, including water, as well as food for hours or even days.

Dietitians warn that dry fasting, or any diet that restricts hydration, can have harmful side effects.

Proponents of dry fasting claim that going for long periods without water can detoxify the body and cleanse the kidneys. But experts say the opposite is true.

“The body has to be hydrated every day,” said nutritionist and registered dietitian Leslie Bonci. Without enough water, “it’s going to get extremely resourceful in a not-so-wonderful way, like breaking down muscle or putting more stress on the kidneys and the liver.”

KNOW The best room temperature for a good night’s sleep is between 60 and 67 degrees. Source: University of Southern California

?

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ADVANCE YOUR CAREER WITH LIMRA LIFE INSURANCE CONFERENCE (PRESENTED BY LIMRA/LOMA/SOA/ACLI) April 20 – 22, 2020 The Grand America Hotel, Salt Lake City, UT

Learn about the latest trends in individual life insurance that will shape the industry’s future. More than 30 workshops and multiple general sessions will focus on proven strategies in operations, marketing, sales, underwriting, and distribution.

RETIREMENT INDUSTRY CONFERENCE (PRESENTED BY LIMRA LOMA SRI/SOA) April 22 – 24, 2020 The Grand America Hotel, Salt Lake City, UT

SUPPLEMENTAL HEALTH, DI & LTC CONFERENCE (PRESENTED BY LIMRA/LOMA/SOA) August 5 – 7, 2020 Hyatt Regency on Capitol Hill, Washington, DC

With over 30 workshops and multiple general sessions, the Supplemental Health, DI & LTC Conference will cover the important issues and identify strategies that will shape the industry’s future.

GROUP & WORKSITE BENEFITS CONFERENCE

September 15 – 17, 2020 Renaissance Boston Waterfront Hotel, Boston, MA

This conference covers the latest strategic, sales, product, operations and administration, marketing and distribution trends, as well as regulatory issues that impact the retirement industry.

Gain new insights for increased success in the benefits marketplace. Attendees will hear from peers, customers, and leading experts in group insurance, voluntary/ worksite benefits, and healthcare.

THE MARKETING CONFERENCE

LIMRA ANNUAL CONFERENCE

This event focuses on areas critical to today’s marketers, including digital initiatives, consumer insights, customer experience, and overall marketing strategy. Attendees will discover how to communicate the importance of our industry to the modern consumer using the latest marketing trends.

As the industry’s premier event, The Annual Conference offers an unparalleled forum where top leaders and executives gather to discuss the latest issues and trends facing the financial services industry today.

May 27 – 29, 2020 Caesars Palace, Las Vegas, NV

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ADVANCED SALES FORUM

August 3 – 5, 2020 Coronado Island Marriott Resort & Spa, Coronado, CA The Forum provides advice from industry leaders with unique expertise in the advanced sales market, offering unparalleled insights from peers and implementable ideas from experts.

For more information about LIMRA’s exciting 2020 event schedule and to download our annual conference guide, visit

www.LIMRA.com/Conferences 800-235-4672

INBALANCE

There’s Still Life In Them Yet: What To Do With Antiques Lifestyles have changed over the years, but there are many ways to make historical or sentimental objects a part of your home.

By Bryce Sanders

H

ave you inherited stuff from your relatives? Times have changed. As you unpack those boxes of china and crystal, you think, “People don’t entertain like that anymore.” Your lifestyle is casual.

You don’t have a formal dining room. Yet these pieces may have historical or sentimental value. How can you incorporate them into your everyday life?

Let’s look at some ways antiques can fit into today’s homes.

Barcelona, Spain, in 1929. It looks familiar because it shows up in plenty of design magazines today. Although the design is almost 100 years old, it’s timeless.

2.

The accent piece. You inherited a rolltop desk or an ornate chest of drawers. But your house is entirely modern, thanks to your home’s proximity to an IKEA store. Every piece of furniture in your home is white or gray. A highly polished piece of wood furniture makes a statement. It becomes the focal point of the room. The piece needs to be in great condition. You’ll get lots of compliments.

3.

The steamer trunk. You lucky person! You inherited one of those huge trunks. Maybe you

LVs on it, it’s a Louis Vuitton trunk. Since it could be worth upwards of $8,000, you might just send that piece to auction.

4.

Paper documents. They are history you can hold in your hands. Another photo shows an old French document, circa 1733, which we believe is an old annuity. We found it in a London weekly outdoor antique market, but it’s not that hard to find old deeds and documents on parchment, especially if you live on the East Coast.

Framed under glass, they make quite a statement, especially in your home office. Old stock certificates are another decorating idea.

5.

Old maps. It’s not hard to find old city or state maps. They can be another attention-getting decoration, especially in a large room.

World maps are interesting because many countries have changed names or boundaries over the decades. We have some hand-drawn French vineyard maps from the early 1800s.

6.

Old photos and tickets. Maybe your great-grandparents weren’t born here. They emigrated. You inherited a box of old photos and their certificates of naturalization as U.S. citizens. Maybe they saved the plane or ship tickets! Framing these items showcases your heritage and shows your respect for your family.

The Barcelona Chair is compatible with almost any setting.

Although it still looks modern, it was designed in 1929 by Mies van der Rohe and Lilly Reich for the German Pavilion at the International Exposition in Barcelona.

1.

The timeless antique. Does the chair in the photo look familiar? It’s a classic called the Barcelona Chair, originally designed by Mies van der Rohe and Lilly Reich for the German Pavilion at the International Exposition held in 46

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inherited someone’s military footlocker.

This can be a great accent piece of a different type — it becomes a low table or cocktail table for the seating area in your living room. An added benefit is the storage space inside. If it’s brown with lots of

7.

Family jewelry. You’ve heard of the Art Nouveau (1890-1910) and Art Deco (1925-1940) periods. Artists made some attractive jewelry during those times, although jewelry styles have changed over 100 years. You might have inherited a pin, a bracelet or a brooch. It can make a great addition to a solid black dress. It’s a conversation starter. People at a party might say to you, “Beautiful pin. Is it a family piece?”

THERE’S STILL LIFE IN THEM YET: WHAT TO DO WITH ANTIQUES INBALANCE Framing family documents takes advantage of old-world printing aesthetics while honoring your heritage.

10.

Carpets. You might not inherit jewelry or furniture. Instead, someone might have left you an ornate carpet.

Assuming the condition is perfect, an antique carpet makes a great accent piece, adding color to a monochromatic modern room. In some cases, carpets can be transformed into wall hangings, although you will need high ceilings and lots of wall space.

8.

Man’s watch. Imagine inheriting a watch from your father, who inherited it from his father.

Wristwatches became popular around World War I and have stayed popular ever since. Today people wear Apple watches. Wouldn’t it be cool to wear a watch that has been in your family for generations?

9.

Engagement rings. You’ve heard “Diamonds are forever.” It can be a wonderful tradition to pass engagement rings or wedding rings down through the family. Although the setting on the engagement ring might change or the ring may get resized, it starts a family tradition.

Arts and crafts stores sell plate hangers that allow you to group them on the wall.

Not into china plates? Fine. Think about using old record album covers as wall decorations instead.

13.

Old radios.

You’ve seen those huge wooden floor models.

You’ve seen the brightly colored Bakelite table models. While some still work, others might need an update to modernize them. The radio stations are still the same, meaning you turn it on and hear today’s news from yesterday’s radio. It can be an accent piece for another room.

14.

11.

Crystal and glassware.

Ornate crystal might not fit your lifestyle. But now, you have boxes of it. Try using it as barware instead. If you have a drinks cart or a home bar, pull out those short and tall glasses, which you now learn are rocks and highball glasses. The TV series “Mad Men” was one of many influences that got people back into cocktails.

The period bedroom. You live in a large, suburban home people uncharitably call a “McMansion.” You have more bedrooms than you need. Consider decorating one bedroom in a period theme.

You’ll buy the wallpaper and lighting fixtures, but the furniture, rugs, pictures and bedspread all come from the same period. People pay good money to stay in a country inn to get the same feeling.

There are many ways inherited objects or antiques you collect can become part of your everyday life. They bring back memories. They were held and used by someone many years ago. There’s still life in them!

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

12.

Old maps such as this hand-drawn one depicting a French vineyard can be framed and used to dress up a wall.

Fine china dinner plates.

How many times have you been in a restaurant or flipped through a glossy magazine to see a dozen dinner plates in different patterns repurposed as wall decorations?

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47

BUSINESS You may think you’re providing customers with great new onboarding processes or easier ways to file a claim, but in reality, if they aren’t using these tools, then the tools are worthless. It’s important to align both your customers and your goals before introducing a new way of working. I’ve seen many companies install new systems that are not adopted by the user.

For example, many companies think they know how a process works, but that can be far from reality. A proper analysis of a process can be done only with true analytics. The solution and the goals must meet for it to be a success. The reason we care about adoption is that it is linked directly to our next important pillar for customer success.

The Four Pillars Of Client Retention Why it’s important to have a customer success program to ensure your new clients remain lifelong clients.

By Chip VonBurg

I

nsurers work hard at winning new policyholders, especially knowing that consumers have done their online research and even sought opinions from family and friends within their social media groups. But when you consider that a Bain & Co. study showed more than 80% of digitally active millennials are open to switching to another insurance provider, keeping current customers happy requires just as much work as winning new clients.

Here’s the truth about getting referrals from CPAs. Are you ready? Can you handle the truth?

Keeping customers loyal requires a systematic strategic approach because consumers’ expectations have evolved significantly over the years. Customers want their needs anticipated and 48

InsuranceNewsNet Magazine » April 2020

communication made easier, yet still personal. That is why it’s important to have a customer success program to ensure your new clients remain lifelong customers. But it’s not always easy to accomplish this.

Customer success programs have existed under different names over the years; however, most companies rely on customer relationship management software. But customer success is more than purchasing software. There are many touch points and much help needed along the life of the policy.

Every customer care program consists of four pillars that will help you retain customers and expand your value with them.

1. Adoption

All sorts of elaborate technology solutions have been introduced over the years to improve customer service. Think chatbots, digital onboarding, mobile services, etc. However, many of these tech solutions have failed. Why? Staff and customers don’t like them, won’t use them, or simply don’t know how to use them.

2. Retention

If a new process is not adopted, there is no chance of it being retained. A SignalMind study shows it costs six times more to acquire a new customer than it does to retain an existing one, and the Temkin Group found a great customer experience has the potential to double business revenue in 36 months. Making current clients a top priority is important and requires keeping lines of communication open. You can achieve this by formulating a personalized retention plan.

Be sure to touch base with clients on a regular basis. But set the time frame for these contacts upfront so clients don’t feel they are spammed or neglected.

At the most basic level, it should never be a surprise to customers that their policy is up for renewal. If you reach out to your customers only three months before a policy renewal, this could mean they have started evaluating a competitor and you might have lost a renewal opportunity before you have even spoken to them.

3. Reduction Of Churn

There will be times when you lose clients, but knowing exactly why you lost them is a key metric. Keeping an eye on churn rates is also important. Are you losing more customers than normal? Have your churn rates increased? What does that mean in terms of your overall revenue?

Having a full monitoring system in place will ensure churn rates stay low.

A bad customer experience is one of the biggest reasons for losing business — and

THE FOUR PILLARS OF CLIENT RETENTION BUSINESS it might not even be your fault. Perhaps the claims process was too lengthy or complex or maybe a payment was delayed. Additionally, the power of social media cannot be underestimated because bad customer experiences will be shared and cause other customers to flee for fear of similar treatment.

You can use your churn data to produce a scorecard on a quarterly basis to measure what your customer relationships look like. From this, you can form

moving out of the parental home, or even grandparents who might be joining the household or moving closer to family. In the case of corporate clients, their milestones might be expansion, a new office or new regulations evoking new business.

By truly knowing your customers and anticipating their needs and issues, you will see more sales come your way.

Also, let’s not forget the power of wordof-mouth. A customer who tells a friend about a good experience is more likely to

exactly that — they don’t buy from a company, they buy from a person. This is why they don’t look elsewhere or do comparisons with other companies: They want to maintain that level of relationship.

To back up my theory, I did a straw poll in the office and asked who had recently changed insurance companies and why.

Only one out of the 10 colleagues I asked said they had switched. The rest said they were happy because they trusted their broker. The person who had jumped ship

THE CUSTOMER EXPERIENCE DRIVES BUSINESS GROWTH 33%

The top three reasons why businesses proactively manage and invest in customer experiences are to:

Improve customer retention

42%

Improve customer satisfaction Improve cross-selling and up-selling Addressing each of these reasons can positively impact bottom line revenue.

32%

SOURCE: Superoffice.com

an action plan to address any issues or reassess the customer relationship the next time a problem occurs.

Be proactive and remember that circumstances change, meaning that what is of value to your clients today might not be valuable to them in one to three years’ time.

4. Expansion

If you’ve followed the first three pillars of customer success, then this fourth one should be an easy extension to your business workflow.

New opportunities will arise when you ensure easy processes at adoption and onboarding, reduce turnover, and maintain good relationships with current clients. Think of children reaching a milestone such as going to college or

inspire that friend to act than if they saw a million-dollar TV ad campaign. Your excellent service will speak for itself, and you can politely ask clients to spread the word, give you a testimonial or be a reference/case study. The approach you use with gaining new business this way can sometimes be delicate; some clients may prefer that they take the lead in making connections, so go with the flow.

The adage that “people buy people” has never been more relevant. In an era of information overload, a person you like and trust is usually the one you will feel happiest doing business with. I call it the “trusted advisor” stage. If you have met clients’ needs and are putting their welfare first, you have reached that status.

I recently did a round of interviews with customers for feedback and was told

was unhappy because their agent hadn’t informed them that their policy was up for renewal. After 20 years of having their business, the broker had dropped the ball.

So the message is simple: Follow the four pillars of success to be a trusted advisor.

Chip VonBurg is head of strategic customer success at ABBY. He may be contacted at chip.vonburg@innfeedback.com.

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INSIGHTS

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

Success Is A Series Of Stepping Stones No matter how much experience you have, overcoming challenges will drive you to your next career milestone.

By Brandon Heckert

W

hen you first start in the profession, you might believe you need to know everything about every financial planning topic before establishing yourself as a reputable expert.

However, no matter how much experience you have, you’ll continue to face new challenges and learn lessons that will drive you to your next career milestone.

Age Is Just A Number

As a 26-year-old in a profession where I’m trusted to manage other people’s finances, my age could be perceived as a barrier to my clients’ success. The majority of people I work with are twice as old as I am — in their 50s or 60s and nearing retirement. The best way to avoid the negative stereotype that age is equivalent to a lack of expertise is by having personal confidence.

Because of the way I present myself, only a handful of the hundreds of people I work with question my age, and usually it’s out of simple curiosity.

Early on, one of the best learning experiences that I used to build confidence was job shadowing other experienced advisors. I now look back at the hours I spent listening in on their meetings as crucial to my success, especially being new to the industry.

I began my career as an advanced planner at a large insurance and wealth management company, helping other advisors build plans for their client presentations. Learning the industry and products in this format allowed me to gain confidence. When I became an advisor, I engaged in joint work for about six months to a year, splitting cases with the company CEO and his business partner.

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Although split commissions sometimes have a negative connotation, they present great opportunities to get started and make an impact for the firm by sitting in on conversations, learning how experienced professionals run client meetings and exploring successful business strategies. Even with my own clients, asking colleagues to join meetings reinforces that there is a team looking out for the clients’ best interests, which further builds trust. This method set me up for success in the long run, and I encourage others to find similar opportunities to build confidence and experience.

Locate A Market

Another challenge many advisors face is finding a natural market. I relocated from a small town in Illinois with 3,000 residents where everyone knows everyone to San Jose, Calif., the 10th most populous city in the U.S., where I knew no one. I had to re-create my business and start fresh with prospects, despite having no existing connections.

Strategic Partnerships

Networking with centers of influence is a viable technique to bring in new business, no matter where you reside. For example, I found other advisors through connections to affiliate groups such as our broker-dealer or industry associations. These individuals were willing to teach me how they conduct and grow their business, whether that includes local seminars or cold calls.

I also benefited from idea-sharing with others in the same profession. By establishing these relationships, I became a referral source for their prospects who didn’t necessarily match their client model. This was instrumental in building my business.

Virtual Connections

Additionally, you can extend or maintain a market by leveraging technology that

enables virtual meetings. I conduct 90% of my meetings via web conferences so I can continue to advise clients from my previous market, despite being 2,000 miles away. We can conveniently collaborate on their financial plans from any location, even if that means they sit in our Illinois or Wisconsin office and I’m virtually in the conference room via a television screen.

Because people adapt at different speeds, there was a chance that clients could be uncomfortable with our efforts to integrate technology. However, we often tell our clients, “It doesn’t matter where we are, it matters where you want to go and what your goals are.” I’ve found clients are adaptable as long as they still have access to the advice they need.

Consider how technology can extend your market by mixing it with traditional planning.

Build A Network

Although age and location have been major challenges in my career so far, I know I will continue to face new obstacles every day. I am fortunate my father — who’s also my mentor — has 35 years of experience in the profession. Our relationship and the advice he provides continues to evolve — from how I can get to the next level to provide input on complex cases and how I can refine my skills.

Whether you hire a coach and find a group of people in similar career stages or look to family and colleagues as mentors, those you surround yourself with will provide valuable perspectives and support. You can find your networks through professional associations such as Million Dollar Round Table, which will help you aspire to elevated levels of success no matter the challenges you face and lessons you learn along the way.

Brandon Heckert, AAMS, joined FSM Wealth as an advisor in 2017, leaning on past experiences as a financial advice specialist, advising representatives on advanced financial planning strategies. Brandon is a three-year MDRT member and has spoken on the main platform at the 2019 MDRT Annual Meeting in Miami and the MDRT Global Conference in Sydney, Australia. He may be contacted at brandon.heckert@ innfeedback.com.

INSIGHTS

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

Four Tips For Winning Senior Market Sales These steps will help smooth the way to more sales in the retiree market.

By Elie Harriett

Y

ou may be asking yourself: “What can a guy who sells Medicare-related insurance teach me about selling other insurance products to the retiree market?”

He can teach you a lot. Nearly 100% of my business is in the retiree market. I recently had an opportunity to watch someone sell life insurance to a younger person. I thought to myself: “That’s really different.”

I asked this agent whether he sold the same way to someone 25 years older and he said he almost never gets sales in that market and he didn’t know why. When I

do on the computer), but if you encounter someone who hates computers and you see them disengaging, be prepared to minimize your activity with technology.

2.

Turn off your alerts. I remember one prospect who instantly became a loyal client when I turned off my alerts. My phone was on the table and it began to show that I had an incoming call. My client asked me if I wanted to stop to take the call, and I said, “No. I’m here to talk with you.” He looked as if he were a beaten puppy who found a loving owner.

If you stop to answer your phone or even to look at it while you are in an appointment, you are literally saying to the prospect: “Anyone in the world could be more important to me than you.”

I know that calls come in during appointments and you run a business, but think about this: These are people who are giving you their most important asset — their time — and you slap it away to see who may be calling you. Is there anything in your life more important at that moment than making your sale? Anything that can’t wait another 45 minutes?

I have a phone and a smartwatch.

Neither goes on vibrate, because we all know that vibrations can still be heard.

My tech goes silent. For me, my phone only comes out when I need an internet connection or a calculator. Everyone else leaves a message.

Is there anything in your life more important at that moment than making your sale? asked him whether he spoke with everyone of all ages in the same way, he said yes.

You may be in the same boat as this guy: You have decent sales to younger folks, but you just can’t crack into the older market.

Here are the four suggestions I gave him.

1.

Go offline. This is an argument I keep losing, but I’m adamant and determined to tell everyone that not everyone will be comfortable with working online. Companies are dragging us to an online-only scenario for a number of good reasons.

But when you are sitting down with someone who has lived 60-plus years working with paper and pen and they have no good reason to go online, they will not go online. So be prepared with pen and paper. I’m not saying that you should not use the computer at all (because there are some things you have to

3.

Watch out for acronyms and abbreviations. In my business, we have a plethora of acronyms and abbreviations, including Supps, MA-PD, PDP, Plan G, CMS, PFFS and many more. When I talk with other financial professionals, I can use these terms.

But never do that with a client. Call these acronyms and abbreviations what they are and be clear about them. Although you deal with these products every day of your life, this could be the very first day your clients have heard about them; so treat this as brand-new information.

4.

Be ready to explain current “hot issues” as a professional. A lot of the hot button political issues are in the news, with one side of the political aisle blaming the other.

And some of these issues may have a direct connection to the subject you are there to discuss with the prospect.

Retirees may be watching more news and commentary than you are, and they are forming opinions based on that commentary. It’s your job to be informed of what is really happening and how those issues, discussed at a national level (usually), will affect them personally.

When health care debates were taking place, almost nothing in those discussions affected my clients the way they were describing it, and I spent a good 20% of my time having to explain the issues to them.

So, become part of an industry organization that can break down the issues in a nonpartisan way so that you can explain how they impact your prospect. Nothing derails an appointment like talking politics. And I assure you that when your prospects see that you are not jumping into the fiery debate but instead, you are throwing water on the fire with sound information, you can get back to the business of selling.

Elie Harriett co-owns Classic Insurance & Financial Services, an independent agency specializing in individual Medicare-related insurance. He may be contacted at elie. harriett@innfeedback.com.

April 2020 » InsuranceNewsNet Magazine

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INSIGHTS

More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.

Done Well, Financial Wellness Programs Can Do So Much Good Employers must leverage both art and science if they want to build the right financial wellness program for their unique culture and employee population.

Financial wellness programs help employers reduce employees’ stress levels and improve their quality of life.

By Alison F. Salka

I

t is no secret that many people experience stress — and that stress has negative effects that spill over into all aspects of their lives, from their relationships to their work.

LIMRA research shows that 73% of Americans report moderate to high levels of financial stress — and 42% say their financial stress level has increased over time.

Recognizing the impact of stress, many employers have started to offer financial wellness programs at the workplace. LIMRA finds that almost one in 10 employers offers a formal package of financial wellness benefits, in the group of “non-insurance” benefits intended to ease employees’ growing financial concerns and mitigate their effects on productivity and retention.

For many, debt is a tremendous burden. According to a 2019 Northwestern Mutual study, the average American was almost $30,000 in personal debt, not including their home mortgage. On average, 34% of Americans’ monthly income goes toward paying off debt. This makes it more difficult to manage day-to-day expenses, never mind “get ahead” and save for other goals.

Student loan debt also represents a specific problem. Forbes reports that student loan debt in 2019 was “the highest ever,” with 44 million borrowers in the U.S. collectively owing $1.5 trillion — making student debt the second-highest debt category behind only mortgage loans. In addition, more people carry this debt for others (such as parents making their children’s loan payments).

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Health care costs are increasing, and people often shoulder more of their own health expenses. Compounding the problem, in a recent Secure Retirement Institute study, 16% of people cite health problems as a reason they retired earlier than planned.

Ideally, to address at least some of these stressors, financial wellness programs help employees manage their dayto-day finances, save for important goals and secure protection against significant risks. By doing so, they also reduce employees’ stress levels and improve their quality of life.

For employers to build the right program for their unique culture and employee population, they must leverage both art and science. Successful initiatives share some common qualities. » They begin with committed leaders who understand that financial wellness is a long-term mindset. It may take a few years for a program’s full benefits to be apparent, since people do not just instantly become healthy — physically, emotionally or financially.

To make real changes, for example, employees would build and follow a plan for managing debt that works over time. This means that financial wellness programs should not be viewed as “net neutral” or purely as cost-saving strategies. » They operate with a clear understanding of the measures. Some metrics, such as participation and absenteeism, are easy to track. Others,

including employee stress and financial literacy, are much more difficult to attribute to any one cause. » They offer face-to-face resources from qualified, objective professionals. This helps build more genuine and trusted connections with employees.

(In the spirit of trust, they also maintain employees’ privacy, especially regarding their health data.) » They do not pressure or require employees to participate. Not everyone is ready at the same time (or at all) for this type of support.

Ultimately, although there is no single solution to the consumer debt crisis or to employers’ talent and performance challenges, financial wellness programs represent an encouraging place to start.

Financial wellness programs cultivate a situation where all parties stand to benefit. Companies build stronger connections with their employees and can focus on boosting business metrics. Workers gain the education, resources and support to live their best lives. Our society will have a stronger underpinning of financial literacy. Done well, financial wellness programs can do so much good.

Alison F. Salka, Ph.D., is senior vice president and director, LIMRA member benefits and research.

Alison may be contacted at alison.salka@innfeedback.com.

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