InsuranceNewsNet Magazine - June 2019 by InsuranceNewsNet

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Month 2019

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2018 helping by the numbers

$1.89 million1 in Foresters Competitive Scholarships awarded

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members supported through Foresters Emergency Assistance

$1.34 million1

in Emergency Assistance went to Foresters members

6,536

hours of leadership training for member leaders

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$3.84 million1

in Grants creating 1,954 fun family and volunteer activities attended by 76,991 members and guests

Helping our members make a difference â&#x20AC;&#x153;In my small way, utilizing the benefits that Foresters provides, Iâ&#x20AC;&#x2122;m able to combat homelessness in my new community here in Fresno, California.â&#x20AC;? RODNEY HORTON Foresters member, California

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Amounts based on consolidated financial results prepared in Canadian dollars as at December 31, 2018 and converted into USD using the Bank of Canada annual average exchange rate of 1.2957.

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NA T IO N A L

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All Stars!

IN THIS ISSUE

View and share the articles from this month’s issue

» read it

JUNE 2019 » VOLUME 12, NUMBER 6

FEATURE

How Am I Going To Get Paid? By John Hilton

Agents will have to prove their worth as commissions continue to be under attack.

INFRONT

14 States Taking The Lead On Financial Regs, LTCi By John Hilton and Susan Rupe Nevada is one state moving forward on financial advice rules while Washington state approved a long-term care benefit for its residents.

INTERVIEWS

IN THE FIELD

40 Speaking Their Language

By Susan Rupe Kathryn Söderberg dreamed of becoming a linguist and traveling the world. Instead, she joined her parents’ insurance practice and used her language skills to serve the Hispanic market.

48 A Revised AG 49 Could Help Clients Better Understand IUL

Advisors who are skilled in grief support will set themselves apart from the rest of the pack in terms of serving clients’ families. That’s the word from Amy Florian, who has made a career out of studying grief. In this interview with Publisher Paul Feldman, Florian spells out what to do and what to say when a client dies.

HEALTH/BENEFITS

62 Mental Illness Sidelining Workers, Challenging Employers To Act By Susan Rupe Mental health issues have a significant impact on the workforce. How benefits providers are addressing this trend.

ADVISORNEWS

66 Why Stable Asset Funds May Be The Safest Investment Choice

LIFE

16 What To Do When Clients Die

online

www.insurancenewsnetmagazine.com

By John “Hutch” Hutchinson The future of indexed universal life hangs in the balance as Actuarial Guideline 49 is reexamined.

ANNUITY

54 More Consumers Say Yes To Guaranteed Income By Susan Rupe When presented with a hypothetical choice at retirement between guaranteed income and a lump-sum amount, more consumers are choosing guaranteed income.

By Kent Bartell Stable asset funds are designed for investors who are looking for a retirement plan with a guaranteed return of principal and interest.

INBALANCE

70 Get Outside: Recharge Your Body And Mind By Cassie Miller Outdoor activities such as hiking and kayaking relieve stress and reduce your blood pressure and cholesterol.

BUSINESS

72 7 Tips To Focus On Feelings And Effectively Engage Prospects By Lloyd Lofton Stop focusing on closing the sale and focus instead on building your business.

FEATURED INTERVIEW 12 Social Media Secrets

Gary Vaynerchuck spins marketing gold on the Bill Levinson Experience podcast.

INSURANCENEWSNET.COM, INC.

275 Grandview Ave., Suite 100, Camp Hill, PA 17011 717.441.9357 www.InsuranceNewsNet.com PUBLISHER EDITOR-IN-CHIEF MANAGING EDITOR SENIOR EDITOR ADVISORNEWS MANAGING EDITOR VP MARKETING

Paul Feldman Steven A. Morelli Susan Rupe John Hilton Cassie Miller Katie Frazier

SENIOR CONTENT STRATEGIST AD COPYWRITER AD COPYWRITER CREATIVE DIRECTOR SENIOR MULTIMEDIA DESIGNER GRAPHIC DESIGNER QUALITY MANAGER

Kristi Raynor John Muscarello James McAndrew Jacob Haas Bernard Uhden Shawn McMillion Sharon Brtalik

MEDIA OPERATIONS MANAGER NATIONAL ACCOUNT MANAGER NATIONAL ACCOUNT MANAGER NATIONAL ACCOUNT MANAGER BUSINESS DEVELOPMENT CORPORATE ACCOUNTANT

Ashley McHugh Tim Mader Samantha Winters David Shanks Steven Haines Elizabeth Nady

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

InsuranceNewsNet Magazine » June 2019

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WELCOME LETTER FROM THE PUBLISHER

InsuranceNewsNet — The Adventure At 20 How to still feel like a start-up two decades later. By Paul Feldman

ost insurance agents and marketers I know did not start in that career. But for me, it was my childhood dream. Kids in my kindergarten class laughed when I said I wanted to be an insurance agent when I grew up. But I knew being an insurance agent was the key to the candy store — a candy warehouse, in fact. That was one of the things I learned from my dad, who was an insurance agent just like his father. I loved tagging along with my dad as he visited clients. I would watch him as he drew out their concerns and then offered solutions. How many other kids got to see their father help solve the most difficult problems families and businesses face? But sometimes tagging along meant I had to wait outside in the car with nothing to do but listen to the radio. (How many parents would dare do that today?) One time after what seemed like forever, my dad stepped out of the huge building he was visiting and waved me inside. Once in, his client led us into what turned out to be a warehouse of candy. He turned and invited me to pick out whatever I wanted. Other kids might have seen the movie Willy Wonka and the Chocolate Factory, but I got to live it. And I have a confession to make: I feel like I have never left.

Publisher Paul Feldman speaks to a staff member about the magazine in 2009, soon after it started.

website: InsuranceNewsNet.com. I saw that insurance companies and agents were fumbling around online, and I thought I could come up with something better. It was 1999, when the World Wide Web was still just a place for fun that the business world did not take seriously. Insurance online? Nobody thought that was going to happen. I was working for my dad at the time at his insurance agency. I had built a website

When The Web Was Young

Don’t get me wrong. Life and business haven’t all been candy canes and lollipops. I have lost my company and gained it back two times. And I have weathered all the economic storms everyone else has in the past couple of decades. Twenty years ago, I logged on to my computer in my bedroom and started a 8

InsuranceNewsNet Magazine » June 2019

A 2000 snap of InsuranceNewsNet.com, which started in 1999.

by designing a structure and filling it with items such as press releases and contributed material to create a place just for insurance. It was an opportunity for our agency to advertise. So I designed those ads, which brought us business and attention. I went on my own soon after. I won’t lie — it was a rough start. All I had was this little website — and a wife wondering how I was going to provide for her and the kids we were planning to have. As I said, it was not all sweetness and light along the way. I built up the website and its ads, but I also learned a lot about another new world, email marketing. Insurance executives and marketers thought my ambition was ridiculous — just like the kids in my kindergarten class. But, once again, I had the candy warehouse to myself. Well-established, esteemed insurance news organizations paid scant attention to delivering information digitally. The serious, staid people of the insurance industry saw the internet as a dark alley where no responsible corporate citizen would do business.

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WELCOME INSURANCENEWSNET — THE ADVENTURE AT 20 That is how disruptors become successful. While the powerful ignore them, usurpers grow stronger and smarter. It takes a while for those established and comfortable folks to look down and realize somebody has taken their lunch — and candy.

It was the worst time to World War II. have started a dot.com. It was the worst time to I was within weeks of havhave started a magazine. ing to close my business when I got a call as I was driving on The Start-Up That a highway. It was from a rare Doesn’t Stop insurance marketer who saw Obviously, it worked out the promise of the internet — well. Legacy publications and It Was The Worst Time … and wanted to invest in my news organizations (that used Because I believed in the possibilities of company. to laugh at me) have since the internet, I went where the action and After the call, I had to pull folded or were absorbed into The first edition of opportunities were. Insurance execs said over and just sit. I hadn’t resomething else. Meanwhile, InsuranceNewsNet online business was just a glorified bro- alized how tense I was until I this magazine and business Magazine in March chure. The only adequate answer I had was unclenched the steering wheel. boomed. 2008. just to show them how it could be done. That call saved my comTwo decades after starting But it was a long road to get to that point. pany, but it was difficult to be a nimble a website everybody thought was a waste First, I had learned the power of advertis- start-up with partners. I ended up selling of time, new challenges emerge. Back then, ing because we were attracting new agents and buying back the company twice. email marketing was the new thing. Now, to our brokerage through ads we ran in an InsuranceNewsNet grew while legacy who reads email? Of course, people still do, insurance magazine at my urging. insurance news companies eased onto but not the same way they always have. I was already immersed in content. the internet, far too late to make up for No business can be complacent for a moBesides doing our ad copy, I also wrote their print losses. ment. And, really, who would want to be? the agency’s monthly newsletter — an Then, in 2008, I started thinking about a We are discovering new opportunities actual, pre-email newsletter that I labori- bigger step — a print magazine. Reactions coming from many directions, such as ously assembled, stuffed and mailed. were as expected. Why would somebody data and content marketing. These are not just the latest things, but the newest tools. The exciting part is inventing ways they work together. New ways of reaching people are constantly arising. But what do you do when you reach your audience? Do you just say what everybody else has already said — dozens of times that day? Besides exploring new methods in marketing, we are also looking at new venues for news — and in a new space. As the insurance industry grows into the greater financial world, so are we. We have started the title AdvisorNews, which is venturing into the vast financial space. But we are also bringing along InsuranceNewsNet. Insurance will always be relevant, no matter how much politicians and pundits try to demean the industry. Paul Feldman, right, points out something in an article to staffers, from left, Once again, we are a smaller fish in a Jake Haas, Devon Stank, Rob Billingham and Steve Morelli in 2009. big pond — and loving it. Around that time, I would visit news start a magazine as others are folding? Although it is true that I did not sites such as MSN (my favorite at the Well, why not? I had a hard time read- get the career I had dreamed of, I’ve time!) which I wished had a version for ing trade journals when I was starting out had far more adventure than I possiinsurance. So, I dreamt it, drew it and had because, frankly, they were boring and bly could have hoped for since starting a web developer make it. uninteresting. InsuranceNewsNet 20 years ago. Sounds easy, right? Don’t tell that to Those magazines were written and deBuckle up — we’re blasting to 2039. the guy sitting in his car on the side of a signed like academic journals. Sure, they highway, having just dodged disaster. The taught me the mechanics of insurance, Paul Feldman is danger was not from traffic, but from the but what about the soul of selling? We founder and publisher of InsuranceNewsNet. recession of early 2000s. I had just got- clearly needed a magazine featuring that. Paul can be reached ten InsuranceNewsNet.com established We launched in early 2008, just in time at pfeldman@insurwhen the dot.com boom went bust. for the most devastating recession since ancenewsnet.com. 10

InsuranceNewsNet Magazine » June 2019

FEATURED CONTENT

And if you’re a new agent, talk about what you learned in school or from your grandfather who was in the business and how you see the world differently because of it. LEVINSON: It’s great advice to tell stories about your experiences or viewpoints. But how should agents communicate that message? Should they use video, audio or something else? VAYNERCHUCK: Everybody has to figure out how they communicate best. And that takes being self-aware. Like for me, I’m not a writer. I can’t write. I’ve written five bestselling books thanks to my ghostwriter. I talk it all out. It’s all me. But I can’t put sentences together. That’s just not how I communicate.

your recorder, spit [out] your truth for nine minutes, post it and away you go. Once you figure out your medium, you have a strategy to market yourself on social media, your website or both!

“I’m telling you right now, do not underestimate technology. If you don’t adopt technology, you will go out of business.” LEVINSON: I always preach to my agents that, these days, your website is your brick and mortar. There’s no more great location on University Drive. Your website is your office. And thanks to the internet, everybody has a chance to be on Main Street for free, if they market themselves right. Would you agree? VAYNERCHUCK: Yes! If you don’t have a personal website as an insurance agent in 2019, you’re driving a horse around town. Do you know how big Blockbuster, Toys “R” Us, Sears, Woolworth’s or J.C. Penney was? Everybody knew who they were. Everybody knew. I’m telling you right now, do not underestimate technology. If you don’t adopt technology, you will go out of business.

So you have to decide whether you have the gift of gab or whether you’re a writer. If you have the gift of gab, but you’re insecure about the video camera, maybe you just do audio. And, by the way, audio is amazing. I think all the platforms are headed toward audio. You’re in the car and you have a thought, you just have to pull over, open

VAYNERCHUCK: What if young Jimmy is now working with his mother, Susan, who was a C player in your market. But now Jimmy is bringing content online that takes them from

LEVINSON: It’s only a matter of time before little Jimmy graduates high school, gets licensed and — growing up with technology — is able to send mass emails to your clients. And it’s a matter of time before your clients reach out to young Jimmy and, just like that, you lost your book of business.

the third best agents in your market to the first because, I don’t know if you heard, 50-to-80-year-olds live on Facebook. They live there. LEVINSON: My grandma’s on Facebook. She loves it! My agents have been listening to me talk about this for years. But now you’re getting it straight from the horse’s mouth. Remember, Gary is a guy who has built businesses in virtually every industry. He knows how to stay relevant in the market. VAYNERCHUCK: More important, I know what the end consumer is doing. People often ask me why I am so successful in helping other businesses. It’s because I focus only on the consumer. I care only about what 53-yearold Karen in Naples, FL, does with her life. How she consumes content. How she makes buying decisions. What dictates her behavior. And if you know that, it doesn’t matter whether you’re selling an expensive ring or a cheap ring; if you sell life insurance or car insurance. It’s all the same, my friends. •

This has been an excerpt from The Bill Levinson Experience Podcast. Visit www.ModernWordOfMouth.com today for the full 36-minute episode, to access the eye-popping report How to Tell a Story on Social Media and to get your hands on the all new “Sell While You Sleep” platform — with over 10 insurance products from 3 carriers all 100% consumer driven (just think Amazon for insurance products) — that makes Levinson & Associates agents the best equipped in the industry!

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INFRONT

States Taking The Lead On Financial Regs, LTCi Nevada is one state moving forward on financial advice rules while Washington state approved a long-term care benefit for its residents. By John Hilton and Susan Rupe

hile other rulemaking eﬀorts garnered most of the attention and opposition, Nevada lawmakers plugged along on financial advice rules that attracted scant attention. That is no longer the case. After the specifics were released earlier this year, industry insiders quickly realized that the broad scope of the Nevada rules make it a very tough hurdle. Some are comparing it to the late Department of Labor fiduciary rule and claim it would contribute to the death of the commission-based model. Like the DOL rule, which was tossed out by a federal appeals court last year,

if accompanied by investment advice, by Republican Gov. Brian Sandoval on however, the rule definitions are wide in June 2 of that year. scope, analysts say. As written, costs of compliance are go- » Lack of details: Nevada essentially ing to skyrocket, wrote Gary A. Sanders, passed the law, then filled in the details vice president of government relations later. An eight-page draft of the actual for the National Association rules was released in January. of Insurance and Financial Advisors, and Donna » Sandoval: Republicans Tatro Saarem, president of have consistently opposed NAIFA-Nevada. extending fiduciary stan“The likely result of the dards to insurance and anadoption of the strict finuity sales. That Sandoval duciary duty found in the signed the Nevada bill was a draft regulations — along mild surprise. with the responsibilities and increased operating Casting A Wide Net costs that would accompany Under the Nevada proposBrian Sandoval, former Nevada governor such a duty — would be that al, broker-dealers and sales many financial professionals representatives are subject would no longer serve clients with mod- to a fiduciary duty when providing inest or moderate means,” they wrote in a vestment advice. But there’s an Episodic comment letter. Fiduciary Duty Exemption for B-Ds and The primary concern opponents have reps that qualify. is the potential for a “patchwork” of regBut reps cannot qualify for the exulations from state to state. In that sce- emption if they hold themselves out nario, insurers are likely to as any of the following: “advisor,” “adconform to the toughest viser,” “financial planner,” “financial standards in order to do consultant,” “retirement consultant,” seamless business. “retirement planner,” “wealth manager,” “To comply with vari- “counselor” or any other title the state ous and potentially con- deems appropriate. flicting state and federal More specifics are needed throughout standards, firms will have the proposal, write lawyers for Stradleysubstantial operational Ronon, a Philadelphia law firm. costs (legal, personnel, “The definition of ‘investment adtechnology/systems) in vice’ appears to go well beyond existing order to ensure compliance with multi- definitions and interpretations under ple standards,” wrote Anthony Chereso, federal law,” they state. “For example, president of the Institute for Portfolio the definition refers to both ‘advice’ and Alternatives. “These costs will have a ‘recommendations’ without explaining direct impact on the availability and how the terms differ and how a reccost of financial advice for investors in ommendation can amount to advice. Nevada.” Moreover, seemingly any information The Nevada rules flew under the radar about a specific security provided to a for three reasons: specific client could be deemed to constitute investment advice, even such » Quick passage: The law was in- general information as price and histortroduced on March 20, 2017, and signed ical performance.”

These costs will have a direct impact on the availability and cost of financial advice for investors in Nevada. the Nevada rules provide for a private right of action. The law places fiduciary responsibilities on broker-dealers, registered investment advisors and some financial services sales representatives. Those professionals have been excluded from the existing state law covering the fiduciary duties of “financial planners.” The Nevada Secretary of State’s office has yet to release the final rules. The law only applies to sales of insurance 14

InsuranceNewsNet Magazine » June 2019

STATES TAKING THE LEAD ON FINANCIAL REGS, LTCI INFRONT

Will Other States Follow Washington’s Lead On LTCi?

residents to convert a term life insurance policy into a long-term care insurance policy at age 65, Gleckman said. Illinois and Michigan are in the early stages of considering a public LTC benefit. California is looking at a ballot While Medicare For All is grabbing all initiative on a public LTC program at the attention nationwide, one state quiet- some point. ly became the first in the nation to offer “I think it is certainly true that many a long-term care benefit to its residents. states have recognized the need for some Washington state passed the program, sort of public program,” Gleckman said. which would provide residents with up “But there is no consensus on what that to $36,500 over a lifetime to pay for costs public program should look like. And such as caregiving, wheelchair ramps, there is certainly no consensus on how to meal deliveries and nursing home fees. pay for it.” More states are looking at offering What makes the Washington state some sort of public LTC benefit. And program unique, he said, is that lawmakany government program ers devised a way to fund it. to address the growing need “The most significant thing for long-term care in the about the Washington state U.S. is likely to come from program is not the design of individual states instead of this; I think the most signifthe federal government, one icant thing is they were able researcher said. to get a majority of the legisDespite the Sen. Bernie lature to agree to raise taxes Sanders, I-Vt., proposed to fund the program,” he Medicare For All legislation said. “That has always been Jesse Slome that would include longthe sticking point at both the term care coverage under federal and state levels.” a comprehensive federal health plan, The Washington state program is “there’s not going to be a federal program funded through a monthly payroll tax on anytime soon,” Howard Gleckman, se- workers. Beginning in 2022, workers will nior researcher at the Urban Institute, pay a monthly tax of 58 cents for every told InsuranceNewsNet. $100 they earn in income. “But I do think it is a growing concern. Looking at it on the state level, what’s But What Will It Mean For LTCi? interesting to me is that states are try- Jesse Slome, executive director of the ing lots of different solutions. And that’s American Association for Long-Term

A $36,500 benefit is good for home care. It’s better than nothing and most people will only need home care. But for many people who will need care for a longer period of time, it’s not an enormous benefit. good because we don’t know what the best solution to this problem is.” Hawaii enacted a Kapuna Caregivers program in 2018, giving up to $70 per day for up to 364 days for family members who serve as unpaid caregivers. Minnesota lawmakers are looking at making LTC benefits more accessible through private insurance, enabling

Care Insurance, said that public programs such as Washington state’s are negative to the industry in the short term, but could be a positive in the long term. “In the short term, it’s negative because a government program like this will get a lot of visibility and awareness, and it will lead consumers to believe their long-term-care planning is being

taken care of,” he said. “And the reality is, for many people, that $36,500 benefit will be adequate, but it is not really sufficient for people who have more serious needs and more costly claims. A $36,500 benefit is good for home care. It’s better than nothing and most people will only need home care. But for many people who will need care for a longer period of time, it’s not an enormous benefit.” In the longer term, state programs “are a prescription for needed change,” Slome said. “Basically, what will happen is that at some point, if a plan like this is adopted in more states — or you see an expansion of Medicare or inclusion in Medicare For All or wherever we go — long-term care insurance will inevitably evolve into a product similar to Medicare Supplement.” Slome predicted that if state programs continue to spread, LTCi will evolve either into something within Medicare Supplement plans or as a standalone supplement to state plans. Meanwhile, he said, the LTCi industry will have an opportunity to redesign a product that will be attractive to consumers while supplementing government programs. “Sometimes changes are needed in order to create the environment where change happens.” I n s u r a n c e N ew s N e t Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback. com. Follow him on Twitter @INNJohnH. Susan Rupe is managing editor for Insurance N ewsN et . She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback. com. Follow her on Twitter @INNsusan.

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June 2019 » InsuranceNewsNet Magazine

INTERVIEW

AMY FLORIAN

tells how to keep the next generation as clients An interview with Paul Feldman 16

InsuranceNewsNet Magazine Â» June 2019

he quickest way to lose a family’s business when a client dies is to disappear when they need you most. It makes sense that if you or your company is not there when the family needs you, they are likely to realize they don’t need you very much. This is an essential element of Amy Florian’s message to insurance agents and financial advisors. Florian became a grief expert after plunging into widowhood when her husband died. Florian was a 25-year-old mother of a 7-month-old boy when a car accident changed her life. Of course, events and grief of that magnitude change anyone. But in Florian’s case, grief became her life’s mission. She has since studied the subject and has become a resource for advisors and companies to understand grief and their role in responding to it. In last month’s interview, Florian spoke about things to say and not to say. This month, Florian discusses how ad-

WHAT TO DO WHEN CLIENTS DIE INTERVIEW FLORIAN: Yes. I hear so many things from all the people I’ve worked with — about how companies treated them. LIMRA did a study that found that of family members who felt they were treated humanely, compassionately and eﬀectively after the death of a family member, over three-fourths of them were more likely to do business with that company even if they never worked with that company before. This applies to insurance agents. It applies to financial advisors. Agents and advisors know what to do with the money, know what to do with the policy. Those are the table stakes. Clients are looking for more than that, especially now in our society where everybody tends to be more disconnected. In our society where so few people know what to do or what to say, if an insurance agent or a financial advisor is skilled in grief support, they set themselves apart so fast. And their clients know it. Their prospects know it. The family members know it.

it is before anything ever happens. If you’re meeting the adult kids at the funeral, it’s too late. There must be things ahead of time. Contacts that you make ahead of time. One example: You get life insurance in place for the parents. And you have these conversations. Not by positioning it as something about death. People don’t want to talk about life insurance. They don’t want to talk about all these things because they think it’s about them dying. You position it as this is about your family living. This is about, “If, God forbid, something happened to you last night, what would your family be worried about today? Would they be worried about whether the kids could go to college? Would they be worried whether they could keep the house that you just bought? In this society, would they be worried whether they could pay oﬀ the medical bills that you just racked up in the last two weeks? Let’s help you be the protector you’ve always said you wanted to be. Let’s make sure that your family

In our society where so few people know what to do or what to say, if an insurance agent or a financial advisor is skilled in grief support, they set themselves apart so fast. visors and companies can help families through diﬃcult times. And, as Florian said last month, grief is not restricted to death. It arises out of most of life’s changes, particularly life-altering ones. Platitudes won’t work in those cases, either. You have to show up and keep showing up in authentic ways. The things Florian suggests are not diﬃcult, but they are not exactly easy. In this interview with InsuranceNewsNet Publisher Paul Feldman, Florian tells how advisors can meaningfully show up for clients and family. FELDMAN: I imagine that insurance companies don’t always handle calls from grieving loved ones as well as they could.

Imagine if an agent or an advisor noted the birthday of the father who died. And on that father’s birthday, they sent a card to everybody in the family. Not just the spouse who is their client, but sent a card to everybody in the family: “I’m thinking about you today on your dad’s birthday. He was an incredible man and we’ll never forget him.” Wow! These things are not that hard to do. FELDMAN: No, it is not hard to do. But it is a spectacular thing to do. You alluded to the fact that often when the client dies, the agent doesn’t have any relationship with the family and loses them as clients. How would you approach that? FLORIAN: The best way to approach

can go on and live. Let’s make sure that your family doesn’t have to be burdened with things that you could take oﬀ their shoulders. That they’re free to simply grieve your loss without having to worry about these other things. Let’s get that in place. Let’s take care of your family.” This really resonates both with men and women. You talk to parents about protecting their family. You talk to spouses about protecting each other, taking the burden oﬀ each other. And then you say, “I noticed you have an adult child and you have two grandkids. That’s wonderful. Do you know if your grandkids are protected? I mean things happen at all ages. There could be a car accident. There could be a disability. There could be so many things. If something happened to your son, are June 2019 » InsuranceNewsNet Magazine

INTERVIEW WHAT TO DO WHEN CLIENTS DIE

What to Say 23 Options That Comfort

We looked at what not to say in last month’s article — now what should you say? Here are some options that offer comfort, understanding and compassion. 1. 2.

3. 4.

5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.

“How is it different?” or “But what is it like for you?” “I’ll bet you’ve had a lot of people tell you they can’t imagine what this is like for you. If you could get into their imaginations, what would you tell them? Or “I’m trying to imagine what this is like, but I’ve never been in your shoes. What can you tell me that will help me better understand?” “I know your grief won’t be over in a week, a month or even a year. Keep putting one foot in front of the other. Keep breathing. This will take a long time, and I’ll be here for you.” “Healing doesn’t mean ‘getting over it’ or forgetting. You heal by letting go and adjusting your life to the loss while creating memories of what can no longer be and taking them with you into the future. In fact, the greatest testimony you can give to those you love is to live as fully as possible now, enriched by their memory. You carry the life, love, lessons, stories and memories with you. You will never forget, and you wouldn’t want to. [Name] will forever be part of you.” “Grief is not linear or predictable. Expect a roller coaster.” “I’ll call you.” “I’d like to help. Would you rather I run some errands for you, babysit so you can get out by yourself for a while, take you out to lunch, help write or address thank-you notes, or do something else you need?” “You don’t have to talk if you don’t want to. I’m here for you anyway. I’ll hold your hand if you want, sing to you, pray with you, hug you or just sit together. I’m here for you all the time, not just when you feel like talking.” “We don’t understand why things like this happen.” “Death is not fair or logical, and it’s always too soon when it’s someone you love.” Break the tension and invite dialogue when grievers tell you they are “fine.” “I will do whatever I can to make this difficult process easier for you.” “It’s normal to be relieved or grateful about some things and at the same time very sad about others. Most people bounce back and forth between the two. It’s all normal; just allow whatever comes.” “Tell me more,” or “What I hear you saying is … Is that accurate, or how would you explain it.” “This wouldn’t be so hard if you didn’t really love him. Life can go on as usual when you lose something unimportant, but never when you lose a treasure. Your grief is a testament to your love, and there’s no reason to be ashamed or apologize for that.” “It’s hard when people say hurtful things, isn’t it? They mean well, and are doing their best to be comforting. They just don’t know any better. They haven’t been taught, and they’ve never been in your shoes.” “Don’t let anyone ‘should’ all over you.” Say the name. Say “died,” “death,” “cancer,” “terminal illness,” “died by suicide,” murder,” etc. “You’re not crazy; you’re just grieving. What you’re saying/thinking/doing is normal for a grieving person.” “You are unlearning the expected presence of [name].” “It’s hard to let go. You want to go back to normal. But you can’t; that normal is gone. Wherever this process leads you, I am here to help you remember the old and build something new.” “You still have a future. It will just be a very different future than the one you planned.”

Amy Florian, A Friend Indeed: Help Those You Love When They Grieve. 2017, Corgenius.

InsuranceNewsNet Magazine » June 2019

your grandkids covered? Why don’t you bring your kids in? Let’s have the same conversation with them, so that all of you can sleep at night. So that all of you know that the entire family is covered even if the worst things happen.” There are all kinds of ways that you can position yourself as a truly comprehensive resource who cares about the entire family and not just your clients — who knows and cares about more than just the money, more than just the business. That you’re in this business to help the family, not just to line your own pockets. FELDMAN: How should you approach the family after a client dies? FLORIAN: If you talk to people a month after the services, they will not remember the people who came through and said, “I’m so sorry. You have my sympathy. She’s in a better place. Time heals all wounds.” “She’s in a better place,” is a lousy thing to say, especially in the initial instance. That grieving client cannot imagine a better place than right here beside me, please. It’s one of those things that truly is not helpful to say to people. But that’s what everybody is saying. You tell them something that you remember about the one that they loved who died — if you have any memory, anything that you can say. Even to say, “One thing that always impressed me about your dad was that he really loved his family. He may or may not have always been good at showing it. But you should have heard him talk about his family. And his goal was to protect all of you to give you a leg up in life, to leave you better oﬀ because he was your dad. And I always admired that about him so much. So, tell me what’s something you’re going to remember about your dad? What’s something you’re going to teach your kids that your dad taught you?” Those kinds of thing make a human connection, and the human connection is what’s going to keep the assets there. Sometimes people say, “Oh, OK, so you’re teaching us to take advantage of grieving people for our own bottom line.” No, I’m not. I’m teaching you to do the right thing. It’s really the human thing to do. It’s what we all ought to be doing. We’ve just never been taught.

WHAT TO DO WHEN CLIENTS DIE INTERVIEW And when you do the right thing for your client, yes, it’s going to be good for your business. Making those human connections, talking about the stories and the memories, being there in ways that other people simply don’t know how to be. That’s what’s going to set you apart. That’s what’s going to keep the assets with you. That’s what’s going to make a difference in their lives and in yours. It ends up being very gratifying. Death and these difficult transitions, they stop being depressing. Difficult, yes. Emotional, yes. But if you can talk to somebody who is grieving and you know for absolute certainty that you can make a difference, that you can help them heal, that you can help them process, that you can help them talk about the person they love,

There are going to be people - family and non-family - giving them all kinds of advice. If you’re not there, forget it. They’ll go with somebody else. The key is when the death occurs, you set up the fact that you’re going to walk them through the whole process. You tell them the first time you’re going to call. You don’t say, “Call me when you’re ready.” You’re not going to get a call. In fact, if you say, “Call me anytime you need something. Call me anytime you have a question,” you’re not going to get the call. Grieving people are really reluctant to call others. It’s like I’m the grieving client, my life is a shambles, your life is normal. How big does my question have to be to justify interrupting your normal life to ask you for something I need? Especially if I’m not sure, if I think it might be a stupid question or it might be too little a thing. I’m not going to call you. So, you have to be proactive. You have to say, “I’m going to check in with you next Tuesday. You may not be ready to talk about any other business. I’m just going to check in to see if people have gone home, what’s going on, how you’re doing and whether you have any questions. In the meantime, if you have some questions, feel free to write them down, so you don’t forget them. But I’m going to call you Tuesday morning at 10 o’clock just to check in. And we’ll see where we go from there.” And then you keep checking. And every time you talk to them, you set up another time when you’re going to check in. Initially, you might even want to set something up by saying, “I’m going to call you every Tuesday at 10 o’clock. So, if you have questions, you just write them down. There are going to be a lot of people who are going to give you ideas about what you should do, how you should invest. So, when you get those ideas, bring them to me. I’m your independent advocate. Write it all down. I’m calling you Tuesday at 10 o’clock. If you want to talk sooner, certainly, call me. My job is to keep you safe. My job is to walk you through this entire process. My job is to do the right thing for you.”

The key is when the death occurs, you set up the fact that you’re going to walk them through the whole process. then it becomes life-giving to do it. It becomes life-giving to go to services. It becomes life-giving to talk with the family. And then, as I said, follow up afterwards. Send a card on the father’s birthday – and don’t stick a business card in it. Oh, for heaven’s sake, don’t take business cards to services. Don’t talk about business at the services. Don’t talk about delivering the check at the services. Don’t focus on the business stuﬀ. Focus on the human stuﬀ and the business will follow. Not 100 percent all the time, but, wow, do you increase your chances. FELDMAN: Is there an appropriate time to contact the surviving spouse or family? Should you wait or should you call as soon as you hear? FLORIAN: If you wait, you may as well say bye-bye to the assets. There is nothing like a tragedy to make people come out of the woodwork, telling your clients who else they should talk to, where else they should go, what they should do with their money, where they should invest it.

June 2019 » InsuranceNewsNet Magazine

r r r r r r

NEWSWIRES

U.S. Plummets In Life Expectancy Rankings Americans born in 2040 won’t live much longer

than those born in 2016, according to a study that finds the U.S. dropping from 43rd to 64th place in the global life expectancy rankings. A study published in The Lancet predicts the U.S. will linger far behind other high-income nations, reaching an average lifespan of just 79.8 years by 2040. This compares with frontrunner Spain, with an average lifespan of 85.8 years, and Japan at a close second with an expected lifespan of 85.7 years. This marked the third consecutive year in which U.S. life expectancy dropped. The study blamed the rising suicide rate and the increased number of opioid overdoses for the decline in life expectancy.

THERE’S TOO MUCH DEBT, SAYS WORLD BANK CHIEF

World Bank President David Malpass said there is too much debt in the world, and pointed a finger at China as one reason why. “China moved so fast that in some parts of the world there is just too much debt,” Malpass told CNBC. China has lent trillions of dollars to other countries,

including the U.S. As of the beginning of 2019, China owns $1.12 trillion in U.S. Treasury bonds, according to data from the Treasury Department. Malpass also criticized China for taking low-cost loans from the World Bank despite being world’s second-largest economy, and for surpassing the bank’s income threshold for low-cost loans in 2016.

IS COLLEGE WORTH IT? MANY SAY NO

An overwhelming majority of college graduates said they don’t regret going to

college, but more than four in 10 said the cost of that degree wasn’t worth the debt they incurred. GOBankingRates asked college grads whether college was worth going into debt, and 42% replied it was not. Nearly 10% of those polled carry more than $50,000 in student loan debt, and 37% have more than $15,000. Perhaps they would have felt differently if they had looked at college through a different lens. Many of those surveyed wish they had taken their college experience more seriously. If they could do it all over again, one in four graduates said they would choose a different major while 19% said they would have studied harder.

HIRING SURGE CONTINUES

Hiring is up and unemployment is down — might be a broken record, but it is a tune most people don’t mind hearing.

in 4 Americans say they won’t take a KNOW 1summer vacation this year because they can’t afford it. Source: Bankrate.com DID YOU

InsuranceNewsNet Magazine » June 2019

QUOTABLE I think the U.S. economy is chugging along pretty well. — David Solomon, Goldman Sachs CEO

As the economic expansion approaches its 10th year, it does not look like it is going to die of old age or exhaustion. Employers added 263,000 jobs in April and the unemployment rate dropped to a 50-year low of 3.6%, according to the Department of Labor. Although the hiring is good news, the unemployment rate does have a darker side — more than 500,000 people dropped out of the labor market in April. But another bright spot was wages, up 3.2% per hour over the same time last year.

FED LOOKS AT CLIMATE CHANGE

Add the Federal Reserve to the list of entities addressing the consequences of climate change. Fed Chairman Jerome Powell said the nation’s central bank is taking steps to prepare the American financial system for the effects of climate change. In a letter to Sen. Brian Schatz, D-Hawaii, Powell said Jerome Powell “the Federal Reserve does use its authorities and tools to prepare financial institutions for severe weather events.” Powell wrote the Fed is taking steps to ensure that the nation’s financial infrastructure will withstand severe weather events. A group of more than 30 central banks from around the Sen. Brian Schatz world have joined the Network for Greening the Financial System, which launched in 2017 during the One Planet Summit in Paris.

LTC Solutions for Nearly Every Client Traditional LTCi, Life Policy with LTC Rider, Chronic Illness Rider

As the need for long-term care services increases, having multiple LTC solutions ready is good for you, and good for your clients. Mutual of Omaha’s full suite of long-term care planning solutions, including traditional LTCi, plus LTC and Chronic Illness riders offers an option for nearly every client. Mutual of Omaha is the only carrier who can say that. Your Mutual of Omaha Solutions Traditional LTCi For people who end up needing long-term care services, a traditional long-term care policy provides the most comprehensive benefits plus valuable built-in services like care coordination. Mutual of Omaha offers two LTC products, MutualCare Secure Solution and MutualCare Custom Solution.

Life Policy with LTC Rider On the flip side, a life insurance policy with an LTC rider may appeal to people who are looking to cover long-term care funding needs and provide a legacy for the ones they leave behind. Mutual of Omaha offers an LTC rider on Income AdvantageSM and Life Protection AdvantageSM indexed universal life policies.

Chronic Illness Rider As a back-up to the LTC rider for IUL products, we offer a Chronic Illness rider for clients who are ineligible for (or choose not to purchase) the long-term care rider. Mutual of Omaha offers a Chronic Illness rider automatically and without any additional upfront cost on IUL policies.

A+

AA-

(Superior)

(Good)

(Very Strong)

This rating is the second highest of 16.*

This rating is the 5th highest of 21.*

This rating is the 4th highest of 21.*

A.M. BEST

MOODY’S INVESTORS SERVICE

STANDARD & POOR’S

To learn more about our long-term care solutions, contact your marketer.

INSURANCE

Life Medicare Supplement Critical Illness *as of 4/1/19

453964

For producer use only. Not for use with the general public.

COVER STORY

Agent commissions have been squeezed for the past decade as regulatory pressures bear down on the industry. We look at where things stand and assess the outlook for the commissionbased compensation system going forward. by john hilton 22

InsuranceNewsNet Magazine » June 2019

rail commissions are shaping up to be the compromise between large upfront commissions and asset-management fees that seem to be an awkward fit for annuities, according to two marketing organization executives. Trails could provide the firmer direction that the industry has been seeking. The large upfront commissions are under attack from critics and regulators, while the advisory world claims that agents charging management fees for assets they don’t manage doesn’t work either. “I think trails probably become the preferred option,” said Jason Jenkins, chief marketing officer with Simplicity Group Holdings, a financial marketing organization with nearly $4 billion in 2018 annuity sales. “If an advisor can (utilize trails), it’s a smart way to build a book of business.” Not everybody in the business loves trail commissions. Ohio National rattled the industry with its September decision to cut off trail commission payments on specific variable annuity contracts. The insurer was sued several times and, to date, no other companies have cut off trail commissions. The shocking Ohio National decision shows how much turmoil and uncertainty the industry faces, Jenkins said. “What happens over the next 10 years will be the biggest change and impact in this industry — ever,” he said. “That’s because it’s a collision of regulation, fee compression, artificial intelligence, all of that, and you’re starting to see it in the last 12 months.” As it unfolds, Jenkins said agents will have to prove their worth. “The challenge that advisors have to face is, what is the value add that you’re bringing to substantiate how you’re being compensated?” he said. “So if that’s commissions, fee-based, whatever, that’s the conversation we need to be having.” The three basic compensation models for annuity sales are: » Upfront commissions. Also known as “heaped commissions,” this is paid up front in a large lump sum. Common with fixed and indexed annuities. » Trail commissions. A commission structure where regular commissions are paid, based on the annuity’s account

HOW AM I GOING TO GET PAID? COVER STORY

value and made payable to the producer after the annuity contract is issued. Trail commissions are usually oﬀered in addition to some form of upfront commission. Common with variable annuity contracts. » Fee-based. The producer collects a fee similar to an advisory model. This model is in its infancy and sales are small.

‘I Would Be Terrified’

Sheryl Moore remembers opening an industry magazine 20 years ago to see an advertisement for an annuity product with an enticing 16% commission. Attend any industry conference on the topic and you will hear similar tales of a past filled with high commissions and good times for agents. Sales were easier, clients were happy, and insurers, agents and middlemen made plenty of money. Those days are gone. “They [companies] eventually quit selling the product because the surrender charges would be so long to accommodate that big commission,” Moore said of the product advertisement in question. “And from a regulatory standpoint, people began staying away from the long

today, I would be terrified,” Moore said. “You have to work twice as hard to make the same amount of money” as a decade ago. The bad news isn’t about commission rates, which appear to have bottomed out and are actually creeping up on some products. The bad news is whether commissions will even exist in five or 10 years. And new LIMRA research shows that paying agents a salary during those lean early years does not work. An agent starting out today might end up selling under a fiduciary-like standard within a few years’ time. That’s if regulators get their way. “It’s probably scary because you don’t know if ultimately this is going to be product that you’re going to be able to oﬀer because you may be forced to become a fiduciary,” Moore explained. “Are you prepared to do that? Do you even understand what’s associated with that decision?”

‘Same Across The Board’

While the halcyon days of double-digit commissions are probably gone for good, there is a glimmer of good news from those who track agent comp trends. After years of steady declines, commission rates

do not endorse any product based on the commission, so we want the commissions to be the same across the board,’” Moore explained. While insurers were never going to pay precisely the same commissions across product lines, broker-dealers were sufficiently spooked by the Department of Labor fiduciary rule to ask anyway. “Coincidentally, your variable annuities pay the highest commissions of any product you oﬀer. So just make your commissions on your indexed annuities and your fixed annuities and your MYGAs the same as your VAs,’” Moore said, recalling the ask. “That’s crazy talk.” Tossed out by a federal appeals court in June 2018, the DOL rule included, among a laundry list of regulations, language banning “unreasonable” compensation. The word was never defined, however. With commissions ranging from 5% on an indexed annuity to 7.5% on a variable annuity, the broker-dealers’ requests were not realized. But the gap closed significantly. “But a lot of companies tried to find ways to levelize those commissions,” Moore said. “Even in the agent market we

“If I was an insurance agent starting out today, I would be terrified. You have to work twice as hard to make the same amount of money.” — Sheryl Moore, Wink Inc. surrender charges as they tend to be associated with taking advantage of seniors and unsuitable sales.” The genuine worry today is whether the pendulum has swung too far in the other direction. Ambitious regulators, low interest rates and cautious distributors often leave agents with slimmer product lines and declining commissions. Starting out in the insurance business was always hardest on new agents trying to learn selling skills while building a book at the same time. Earning a successful income was always hard, but now it is even more stressful. “If I was an insurance agent starting out

bottomed out in recent years and even ticked up in the most recent quarter. For example, the indexed annuity commission averaged 6.23% of premium for the fourth quarter of 2018, Moore Market Intelligence reported in March. That is up from 4.95% in the third quarter of 2017, Moore reported. Regulation can be credited for that, as broker-dealers sought to close the gap in traditional commission rates for indexed and variable annuities. “The broker-dealers were going back to the product manufacturers and saying ‘Listen, this fiduciary rule thing is coming and we need to be able to say that we

saw indexed annuity commission rate increases, which were directly the result of the proposed fiduciary rule.”

Product Lines Trimmed

Agents working with C2P Advisory Group, an insurance marketing organization in Westlake, Ohio, have felt the change in business practices, said Jason L. Smith, president and CEO of Clarity 2 Prosperity, its parent company. C2P trimmed its annuity line to eliminate any products that do not screen well for a best interest standard, Smith explained. For example, the IMO has cleared its shelves of all annuities that exceed a June 2019 » InsuranceNewsNet Magazine

COVER STORY HOW AM I GOING TO GET PAID?

10-year surrender charge, except those that come with a long-term care rider. “It’s being purposely positioned there for the rest of their life,” Smith said by way of explanation. The IMO stayed with the tougher documentation and selling standards despite the DOL rule being eliminated. Through it all, the commission models

variable annuity sales data, it’s between $220 billion and $240 billion every year, Alexander said, even though the mix changes due to factors such as interest rates. “I do not think VAs are going away,” he added. “I think, to a large extent, carriers have control over where some of this premium goes. Some years, it’s a lot better on the fixed side, and it moves around.”

"They're more likely to leave and they're more likely to produce less premium." Kamath's research sought to identify what makes a good agent. He found the most successful agents are older, between 50 and 64 years old. Otherwise, those who cannot make it wash out pretty quickly. “If you can't make a living,” Kamath said,

Estimated Commissions in Source: Wink’s Sales & Market Report, 2017-2018. Recent Quarters Indexed Annuity

Fixed Annuity

MYGA

7% 6% 5% 4% 3% 2% 1% 0% 3Q 2017

4Q 2017

have remained steady. Insurers are not likely to part with traditional commissions without fighting back, Smith predicted. “The insurance companies have a lot of money and a lot of lobbying power and I just don’t see them allowing themselves to be put in the position where their distribution force is that massively disrupted,” he said. A lot of that eager distribution force grew and prospered during the 1990s and 2000s selling variable annuities. The Tax Reform Act of 1986 reduced the tax advantages of qualified retirement plans and individual variable annuities became particularly popular. Between 1996 and 2004, nominal sales of variable annuities in the U.S. more than doubled, from $51 billion to $130 billion. Many of those VAs paid double-digit commissions and sales would remain strong until the financial collapse of 2008-09, when interest rates fell precipitously. Commission rates fell as well, and regulators began snooping around suspicious sales. The double dose of disruption led many industry analysts to question whether VAs are dying a slow death. Jeremy Alexander of Beacon Research isn’t buying it. If you combined the fixed indexed and 24

InsuranceNewsNet Magazine » June 2019

1Q 2018

2Q 2018

3Q 2018

4Q 2018

In the meantime, a new annuity product is seeing immense growth very quickly: indexed-linked, or buﬀered, annuities. These products split the diﬀerence between growth and risk, giving consumers a little more growth potential for assuming a little risk. The products opened up a debate in the industry on whether they should be classified as variable or indexed annuities. See Sheryl Moore’s colum on page 27 for more information on Structured Annuities. Sales of these registered indexed-linked annuity products nearly tripled in a threeyear period ending with 2018 sales figures, LIMRA reported.

“you're going to find something else to do pretty quickly.” Once agents get over those initial challenges, they tend to remain in the business and begin to thrive, he said. The top agents tend to have about 12 years of experience on average, he explained. On a positive note, Kamath found that agents who "license up" turn out to be very productive. That includes Series 6, 7, 63, 65 and 66. "Agents who get these licenses early are more productive throughout their career," Kamath said, adding that insurers and agencies should encourage and even subsidize agent education/licensing.

Data: Agent Subsidies Don’t Work

Although the DOL fiduciary rule is gone, more rules are coming. The Labor Department reportedly will release a new rule in September is conjunction with the Securities and Exchange Commission’s Regulation Best Interest, which applies to brokers. In the hands of the pro-business Trump administration, these two rules are expected to harmonize and be favorable regulations. However, state insurance departments are alert to annuity sales rules. Many of them are supporting or considering

While studying what makes a good agent, Vikram Kamath, director of the LIMRA Center of Excellence for Analytics, also turned up a number of nuggets on compensation. For starters, young agents who receive a salary floor, or compensation apart from commissions, produce at a lower rate. Acknowledging that it is a sensitive topic, Kamath said his team redid the data a few diﬀerent times. "It's not eﬀective," Kamath said during the LIMRA Life Insurance Conference in April.

Compensation Threats Remain

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COVER STORY HOW AM I GOING TO GET PAID?

regulations that vary greatly, which could yield a patchwork of rules affecting agent compensation in direct and indirect ways. For example, a recommendation to purchase an annuity in New York satisfies the state’s Regulation 187 only after the producer discloses their compensation, and that the compensation “does not influence” their advice. Regulation 187 takes effect in August for annuity sales, and six month later for life insurance. Regulations like this requiring a vague “best interest” recommendation are potential land mines for agents, Moore said. There are 507 different indexed annuities for sale today offered by 65 different insurance companies, she pointed out. While not all of those companies distribute through independent agents, most of them do. “How do you determine out of all of those products, which one is the best one

“The rule should make clear an agent does not violate this nebulous duty by attempting to sell products within the agent’s portfolio when there are less costly or differently configured products available in the marketplace that are arguably ‘in the interest of the client’ but not oﬀered by the agent,” Carter wrote in a comment letter. Annuity sales rebounded in a big way throughout 2018 and into this year. Total non-variable deferred annuities sales for 2018 were $113.6 billion, an increase of 29.1 percent over 2017, according to Wink, Inc. That rebound was attributed to the DOL fiduciary rule being vacated. But Alexander isn’t sure much has changed, or should change. Industry activists remain deeply concerned about other rules being pushed at the state level, with some calling New York’s version as tough as the DOL rule. “I personally don’t understand because

might think that because of all the press releases that come out … but there aren’t that many,” Moore explained. “The bottom line is companies are not going to be willing to invest in more fee-based annuities until they see the sales justifying the development of those products.” The one variable that is likely to keep fee-based annuities in the mix is the advisor market. If insurers can get registered investment advisors to warm up to annuities, then sales could take off. "We need to provide guaranteed-income products to clients who prefer advisory solutions," Greg Jaeck, senior product leader at Edward Jones, said during the LIMRA Retirement Conference in April. If efforts are successful, annuity sales could double, or even triple, he added. The difficulty, in addition to overcoming an advisory bias against annuities, is figuring out fair compensation schemes. “When I manage someone’s money, I have to make decisions and I’m constantly looking at it,” Alexander said. “Do I have to do that for an annuity? What am I charging on an annual basis for? It becomes a real issue to discuss. Can you even charge on an asset basis for something that you’re not managing? I’m not sure where — Jeremy Alexander, Beacon Research that ends up.” All of these issues around regulation and compensation for your client if you have identified that I think at the end of the day, you’re going for annuities are seemingly interconnectan indexed annuity is definitely the best to have to start moving to these things ed, Alexander said. It represents a shift for thing for them?” Moore asked. “It’s over- any way because someone is going to pick the entire industry. whelming. I’m the expert and I would be these (rules) up,” he said. “I guess we have “The real question is — is this a permaterrified of that decision.” to see what happens, but I’m a little con- nent shift?” he asked. “If you look back, Meanwhile, the National Association fused why it seems like such a different even forgetting the DOL, and look at adof Insurance Commissioners is working environment to these people than before.” vice in general, 20 years ago people sold on an annuity sales model law it hopes to stuff. Now people give advice. It’s kind of finalize this year. It, too, has sections that Fee The Future? a shift in the entire environment. The regs threaten the producer’s bottom line. One major product development — fee- are sort of lagging behind this change. But In particular, industry leaders are con- based annuities — ushered in by the DOL because advice is really the thing that adcerned about vague standards that could fiduciary rule is now in limbo. Insurers visors have to sell, it’s like now we need see agents held up as fiduciaries in a court continue to crank out new fee-based prod- the regs to support this new paradigm.” of law. Many trade association leaders are ucts, but industry experts are skeptical I n s u r a n c e N ew s N e t pleading with the NAIC to tighten language about their chances of success. to make it clear that “best interest” does not In reality, there are just 39 fee-based an- Senior Editor John Hilton has covered mean lowest price, nor does it mean agents/ nuities on the market, Moore said. Many of business and other brokers are acting as fiduciaries. those made it to market because insurers beats in more than Dwight Carter runs a small annuity had already done most of the work by the 20 years of daily journalism. John may be marketing organization in Raleigh, N.C. time the DOL rule was erased, she added. reached at john.hilton@innfeedback.com. and said he has a difficult time as it is com“People are now saying, ‘Oh, there are Follow him on Twitter @INNJohnH. peting with bigger IMOs. a lot of fee-based annuities.’ Well, you

“It becomes a real issue to discuss. Can you even charge on an asset basis for something that you’re not managing? I’m not sure where that ends up.”

InsuranceNewsNet Magazine » June 2019

BONUS FEATURE

Structured Annuities Take Hold By Sheryl Moore

t was almost a decade ago when I heard the news that a company that cannot stand indexed annuities had launched an “indexed annuity.” No better way to confirm the information than to go straight to the horse’s mouth: I gave the product management division of the company a call. “Did you guys launch an indexed annuity?” I asked with disbelief. “Oh yes, we are about to submit sales to your competitor in the market research space. Would you like us to send our sales to you as well?” they asked. “Wait! [XYZ Insurance Company], whose wholesalers have bad mouthed indexed annuities for years has launched an indexed annuity? What does your product look like?” I was dying to know. They explained the fairly simply design of the product, and the uber-competitive cap rates caught my attention. “And that has a zero percent floor?” I asked doubtingly. “No, the client absorbs all losses beyond the first [10%].” “That isn’t an indexed annuity. That is a security; a type of variable annuity, but not an indexed annuity.” The insurance company proceeded to insist that I must list their product sales under the indexed annuity portion of Wink’s Sales & Market Report. I forcefully declined- I would not be the laughing stock of the indexed annuity market, reporting sales of a product with a negative floor, under grids of products that promised principal protection. I immediately dismissed the product as an imposter. Little did I know then that structured annuities would become the fastest-growing segment of the annuity industry. These infants of the annuity industry have been known by many names: » Hybrid annuities » Buffered annuities » Indexed variable annuities » Index-linked variable annuities » Registered indexed linked annuities » Structured annuities The term “hybrid” annuity is not appropriate, as true hybrid annuities use a combination of annuity and long-term care insurance, to provide benefits in the event the annuitant

needs benefits under the Pension Protection Act. The “buffered annuity” moniker isn’t always a proper descriptor, as not all of the premium allocation options in these annuities are buffered. The “indexed variable annuity” isn’t really appropriate either because not all of the products offer variable subaccounts. Don’t even get me going with the “ILVA” or “RILA” names…it is NOT an indexed annuity, and using the indexed terminology in the name gives me flashbacks of the whole “EQUITY” indexed debacle (we don’t need folks confusing securities with fixed insurance products again!). Because these annuities are similar to structured notes, this seems a satisfying nombre. So now that we have beat a dead horsewhat ARE these products? I don’t feel comfortable saying that they are a mix of indexed and variable annuity, as they are definitely a securities product, and indexed annuities are not. However, many used to describe indexed annuities as a product offering that was a nice “middle ground” between fixed annuities and variable annuities. In the spirit of that message, I will say that structured annuities are a nice “middle ground” between indexed annuities and variable annuities. Structured annuities limit their potential upside performance, based on the performance of an outside index- just like indexed annuities do. However, the caps on structured annuities are relatively aggressive, compared to indexed annuities. For example, the average structured annuity annual point-topoint cap today is 11.67%, while the average indexed annuity annual point-to-point cap today is 5.16%. In turn, structured annuities generally do not have offer principal protection for the purchaser (although some premium allocation options do offer this); the annuitant is subject to losses. However, those losses also limited on the downside. For example, the typical structured annuity may offer for the insurance company to absorb the first 10% of losses, but the annuitant would be responsible for all losses in excess of 10%. By comparison, every indexed annuity available for sale today has a minimum guaranteed floor of no less than 0.00%; the purchaser is not subject to market losses at all. These products have experienced a lot of innovation in a short decade-long period.

Initially, the products all credited interest based upon a term end point (or long-term point-to-point) crediting method. Today, these products offer numerous methods for calculating the interest (still not as many as indexed annuities, but if I were a betting woman, I’d say they’ll get there!). In the beginning, the products only used cap rates to limit the indexed interest; today spread rates are also used to limit the indexed interest. No doubt, someone will offer a product with participation rates as the “moving part” before we know it. The freshman products had no living benefits, but there are definitely offerings today. Initially, I was quick to dismiss structured annuities as a product offering. “Who needs a middle ground between indexed and variable annuities?” I asked. Consumers have spoken: they do. In just the four quarters that my company has been tracking these products, sales have gone from $2.2 billion a quarter, to $3.5 billion a quarter. Further supporting the interest in the product line is that at the beginning-of-the-year, there were only five companies offering this unique type of annuity; today there are 11. And everyone seems to be doing R&D on these. That’s right- structured annuities are the new “It Girl” of the insurance business. And why? With interest rates are at historical lows, caps on indexed annuities are so low that many one-time loyalists are now saying, “I can’t sell that!” These same salespeople find the opportunity to offer their clients a potential 11.67% index credit much more appealing than a potential 5.16%. In light of this, if low interest rates continue- structured annuities’ growth could give indexed annuities a run for their money. But ultimately, this is NOT a good solution for the prospect who is not comfortable with risk. Period. Sheryl Moore is President and CEO of Moore Market Intelligence, a product resource in Des Moines, Iowa, as well as the life and annuity market research firm of Wink, Inc. Her companies provide competitive intelligence, market research, product development, consulting services and insight to select financial services companies. She may be reached at sjm@intelrockstar.com.

June 2019 » InsuranceNewsNet Magazine

NEVER SAY

“Would’ve, Could’ve, Should’ve” AGAIN! Introducing the Only Annuity that Already has a Stake in Tomorrow’s Big Boom There’s a giant industry boom on the horizon. It’s so powerful that it could dwarf the gains made by the greatest stock stories of the past decade. Only this time, we know it’s coming and where the gains will be made. Introducing Retirement Plus MultiplierSM from Atlantic Coast Life Insurance Company, THE fixed indexed annuity that’s designed to support a skyrocketing Baby Boomer population — with gains made by their own growing needs! Help your clients fuel their retirement with the annuity that offers:

• 5-Year Product • 6.15% Street Compensation • Up to 200% Participation Rate • Up to 8.5% cap rate, S&P 500® For a very limited time, Atlantic Coast Life is offering a playbook that details the full story on this unique fixed indexed annuity (FIA) that could very soon outperform all others — and position policyholders to directly benefit from this next market wave.

Visit www.TomorrowsBoom.com TO GET YOUR PLAYBOOK NOW OR CALL 833.233.3901 TO LEARN MORE. The “S&P 500®” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Atlantic Coast Life Insurance Company. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Atlantic Coast Life Insurance Company. Retirement Plus MultiplierSM is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500®. ANNUITY GUARANTEES RELY ON THE CREDIT RATING, FINANCIAL STRENGTH AND CLAIMS-PAYING ABILITY OF THE ISSUING INSURANCE COMPANY. The Retirement Plus Multiplier Annuity is issued by Atlantic Coast Life Insurance Company. Product approval numbers: ICC18-ACLSFIANPOL-ICC, ICC18-ACLSFIANGLWB18, ICC18-ACLSFIANBU18, ICC18-ACLSFIANPREN-OT, ICC18-ACLSFIANAP Rev 092018. ACLSFIANPOL XX, ACLSFIANGLWB18 XX, ACLSFIANBU18 XX, ACLSFIANPREN XX, ACLSFIANAP18-XX. For more information about the Retirement Plus Multiplier™ Fixed Index Annuity offered by Atlantic Coast Life Insurance Company please visit: https://www.aclico.com/runtime/uploads/Files/ACL-RPM-WEB.pdf For Agent Use Only. Not to be distributed to consumers.

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Special Sponsored Section

In this year’s Annuity Awareness Month Thought Leadership Series, great minds from four elite companies offer their perspective on products, process, and the future of an ever-changing annuity marketplace.

INSIDE Creating Retirements as Unique as Their Clients By James Lake, National Sales Manager, at The Guardian Life Insurance Company of America® PAGE 30

The Un-System: A $200 Million Annuity Consultant Tells All With Tom Vick, National Director, Annuities at Life & Annuity Masters PAGE 34

Facing Retirement with Confidence – And a Lifetime Check By Alison Reed, Executive Vice President, Operations, at Jackson National Life Distributors LLC PAGE 32

My Father’s Gift By Dennis Martin, President, Individual Life and Financial Services (ILFS) at OneAmerica® PAGE 35

The Annuity Issue • Special Sponsored Section

Creating Retirements as Unique as Their Clients Guardian Offers Tools to Help Clients Discover Their Retirement Vision By James Lake, National Sales Manager, The Guardian Life Insurance Company of America® (Guardian)

confident retirement is about more than just existing after your working years. A well-planned retirement focuses on thriving in that next stage of life. However, clients often don’t put the time into considering what their fuJames Lake ture reality might actually be. National Sales Manager, To help them make the most of reGuardian tirement, financial professionals are tasked with encouraging clients to create a vision for their future — and then helping them discover how to get there. While financial professionals have the skills and experience to make the financial plan, sparking the client’s imagination can prove to be more difficult. But the right tool can help the financial professional do both successfully, as well as identify goals that go far beyond the numbers.

A Tool for Vision and Planning

Understanding what matters most to your clients is everything. Asking the right questions, pausing to listen and taking into consideration their full financial picture are all key to identifying what gaps exist and how clients

can make their retirement visions come to life. That’s why Guardian has developed a tool that prompts clients with thought-provoking questions that can lead them to the heart of their retirement and unveil some things that can help you and them along the retirement-planning journey. Guardian’s web-based Retirement Planner tool uses six multiple-choice questions to quickly help clients think about their lifestyle and financial priorities. The Retirement Planner tool: 1. Is an easy-to-use digital tool that helps clients identify key lifestyle and income priorities. 2. Helps clients quickly learn what some of the bigger financial responsibilities are that can impact their retirement. 3. Provides examples of the kinds of income they might count on today, as well as in the future. 4. Creates a summary and action steps that can be used as the basis for further planning discussions with their financial professional.

Guaranteed Income Helps Clients Realize Their Dreams

Depending on when a client stops working, the retirement years can last for decades. Yet some clients have difficulty understanding how guaranteed income could make a retirement filled with worry into one that satisfies a retirement vision, confidently. A client’s steady paycheck may be ending and needs to be replaced. Pre-retirees and retirees need to have a plan to distribute their assets over time — so that the assets can be a lasting source of predictable retirement income.

» Financial Professional Tip: Frame the idea of guaranteed income in terms of the client’s current paycheck. Ask: • How many years have you worked? • How does it feel to know you can count on that paycheck? • How will you replace your paycheck when you retire? Discuss what a client is relying on for income in retirement. According to Robert Merton, author of “The Big Idea: The Crisis in Retirement Planning,” 1 people should focus their retirement planning on monthly income, not net worth.

The Annuity Issue • Special Sponsored Section

» Financial Professional Tip: Ask clients if they have ideas about how they can create guaranteed monthly income in retirement. • Social Security and pensions are examples of the income people will count on in retirement. But what if it’s not enough? Or what if a pension is not offered? • Income from Social Security, pensions, bank accounts and other sources alone might not be enough to sustain a client’s retirement lifestyle. To bring a client’s retirement income need into focus, Guardian’s income gap worksheet is a helpful tool. Clients can use the results to see whether all their sources of income — guaranteed and non-guaranteed alike — will potentially support the retirement lifestyle they want. Clients and financial professionals can work together to determine strategies to close any income gaps.

Annuities — Creating a Source of Guaranteed Income

People at retirement age often have financial assets they don’t know how to manage in such a way as to make income last during retirement. They might have an individual

Planning for Retirement: More Than Just Managing Finances Guardian’s Retirement Planner tool is a great place to start. Guardian helps financial professionals aid their clients by taking a 360° view of the client, including: » Relationships. » Living arrangements. » Hobbies.

» Health.

» Finances.

By addressing all aspects of a client’s life, you can help clients discover their “Retirement Reality” and find a way to get them there. are financially confident have a plan and stick to it.2 Having a well-rounded plan that includes various sources of guaranteed income can safeguard against running out of money in retirement. Therefore, a plan that includes one or more sources of guaranteed income is a sound approach to retirement, which can boost financial confidence. In fact, research shows that retirees who have guaranteed income tend to be more confident in retirement than those who don’t — and they are likely to retain a high level of contentment throughout retirement.3 At Guardian, we have a strong commitment to providing each financial professional with tools and resources to create engaging conversations to help clients make solid financial decisions. Discover how partnering with a local agency that’s part of The Guardian Network®, each supported with a nationwide team of retirement income specialists, can help you grow your retirement business while helping your clients live more protected lives in retirement.

Research shows that retirees who have guaranteed income tend to be more confident in retirement than those who don’t … retirement account rollover or an inheritance. They may have sold their home and downsized to a smaller one or sold their business. How can they take a portion of these assets and convert them into guaranteed income? Think about annuities as a possible option. Annuities are designed to provide guaranteed income and can be an important aspect of your client’s overall retirement plan. Together, financial professionals and clients can plan and know how much money is reserved for basic living needs (essentials) versus leisure events (extracurricular activities). Clients can choose to receive a guaranteed stream of income for life or for a specific period of time they choose, if that’s what their needs are. Clients who know what they want in retirement can build a solid, personalized plan. The 20 percent of Americans who

Visit www.Retirement-Conversations.com to discover the planning tools to help your clients address their retirement reality.

1. Harvard Business Review, July-August 2014 2. The Guardian Study of Financial and Emotional Confidence, November 2016 3. “Is Guaranteed Income for Life the Right Option for You?” Money, Sept. 28, 2017 The Guardian Network® is a network of preferred providers authorized to offer products of The Guardian Life Insurance Company of America (Guardian), New York, NY and its subsidiaries. Guardian® is a registered trademark of The Guardian Life Insurance Company of America. www.guardianlife.com Annuity guarantees are backed exclusively by the issuing insurance company. 2019-78754

The Annuity Issue • Special Sponsored Section

Facing Retirement with Confidence – And a Lifetime Check By Alison Reed, Executive Vice President, Operations, Jackson National Life Distributors LLC

any people understand the value annuities and protected lifetime income* can add to a retirement planning toolbox. However, when consumers and financial advisors have misconceptions, it becomes Alison Reed Executive Vice President, challenging to explain annuities Operations and why they can be important — even though these products and their benefits might be a good fit for a financial plan. That’s one reason Jackson National Life Insurance Company® (Jackson®) is working to help uncomplicate the conversation. When preparing to retire, many people brace themselves for years without a paycheck. But with an annuity that has an optional living benefit, consumers can count on a different kind of reliable income — a Lifetime Check. As Jackson continues to simplify the language used in retirement planning

Investment Freedom Can Fuel Asset Growth

Understanding the role of a reliable income stream in retirement — other than Social Security — is a critical part of the financial planning conversation. But today’s discussions need to focus on both accumulation and income, and Jackson’s commitment to investment freedom also helps address the accumulation side of the conversation by fueling asset growth. At Jackson, we understand investment options are only as good as the freedom to use them. Rather than restricting investment freedom through managed volatility strategies — which can hinder performance and result in lower rates of return while also limiting how much can be lost — Jackson has variable annuities that are designed to protect income and grow assets, allowing advisors to custom-build portfolios based on clients’ unique priorities, timelines and sensitivity to market risk.

Need for Education Underscores New Resources

Navigating information on annuities and financial planning concepts can be complicated for both consumers and financial advisors. Jackson offers a wealth of resources that support advisors in guiding conversations with clients, including its Financial Freedom Studio (www.jackson.com/ financialfreedomstudio) and Digital Advisor Success Hub (DASH) (www.jackson.com/dash). Through the Studio, Jackson makes practical financial knowledge accessible and engaging for all. The Studio brings together scholars, thought leaders and visionaries to present ideas and information that inspire people to pursue financial freedom and personal fulfillment for life. Geared toward financial professionals, DASH enables advisors to leverage a wide variety of interactive tools and creative, consumer-friendly content to help clearly illustrate the value of protected lifetime income to their clients. Furthermore, the newly launched Purpose Meets Planning Tool on the site allows planning-focused advisors to visualize what their clients’ retirement looks like, with or without a variable annuity.

“Investment options are only as good as the freedom to use them …” conversations, a Lifetime Check provides a different way to describe how consumers can receive protected income for the rest of their lives. This can support concepts your clients already understand, such as: » A Lifetime Check picks up where a paycheck leaves off, and it has the potential to grow. » A Lifetime Check is something you can count on for the rest of your life. The concept of a Lifetime Check is designed to provide clarity to clients who may not understand the need for a protected lifetime income stream in retirement.

What Does Financial Freedom for Life Mean to You (and Your Clients)?

This is clearly an important time for the financial

The Annuity Issue • Special Sponsored Section

services industry. New products are increasingly designed to be customizable to meet consumer preferences (and advisor business models), language is becoming more transparent and easier to understand, and companies are highlighting the importance of understanding retirement risks and potential ways to mitigate them. Jackson is driving an enhanced national conversation about more holistic retirement planning, and more tools are becoming available for consumers to recognize potential income gaps and how they may impact their lives in retirement. At the end of the day, Jackson is committed to helping Americans achieve financial freedom for life. To us, financial freedom means freedom from worry. Several of our products are designed to help consumers receive a reliable source of income they can count on, so they can confidently enjoy their years in retirement. The concept of financial freedom encompasses a personal and distinct meaning for everyone. What does financial freedom mean to you? How would your clients answer that? Let’s work together to find out how you can help your clients pursue financial freedom for life.

Visit www.jackson.com/dash/ lifetime-check.html to learn more about the Lifetime Check and how it can be used to help build financial freedom for life.

AN INDUSTRY LEADER » No. 1 in variable annuity sales in the U.S. during 20181 » Ranked No. 1 by financial advisors looking to invest client assets in variable annuities 2 » For advisor satisfaction, ranked first in brand equity, market penetration, purchase intent and advisor loyalty2 » Received five awards for excellence in customer service,3 including: • Contact Center of the Year finalist • Contact Center World Class CX certification » Highest-possible customer service rating3 from 94 percent of advisors who called the contact center » Financial strength rating from independent rating agencies:4 • A+ (Superior) — A.M. Best financial strength rating, the second-highest of 13 rating categories • AA- (Very Strong) — Fitch Ratings insurer financial strength rating, the fourth-highest of 19 rating categories • AA- (Very Strong) — Standard & Poor’s insurer financial strength rating, the fourth-highest of 20 rating categories • A1 (Good) — Moody’s Investors Service Inc. insurance financial strength rating, the fifth-highest of 21 rating categories 1. LIMRA/Secure Retirement Institute, US Individual Annuity Participants Report 4Q YTD 2018. Jackson ranks #1 for total variable annuity sales out of 40 companies that reported sales to the LIMRA/Secure Retirement Institute in 4Q YTD 2018. 2. Source: Market Strategies International. Cogent Reports™. Advisor Brandscape®, December 2018. 3. SQM, Contact Center of the Year finalist, 2018; Contact Center World Class CX certification, 2018; Highest Customer Service for Financial Industry, 2018; World Class Employee Satisfaction, 2018; Highest Work From Home Employee Satisfaction, 2018. 4. Ratings are accurate as of 3/31/2019. Financial strength ratings do not apply to the principal amount or investment performance of the separate account or underlying investments of variable products.

An annuity is a long-term, tax-deferred vehicle designed for retirement. Variable annuities involve investment risks and may lose value. Earnings, such as the Lifetime Check, are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. *Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity. Guarantees are backed by the claims paying ability of the issuing insurance company.

Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your representative or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money. Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, annuities are issued by Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York). Variable products are distributed by Jackson National Life Distributors LLC. May not be available in all states and state variations may apply. These products have limitations and restrictions. Contact the Company for more information. Jackson is the marketing name for Jackson National Life Insurance Company and Jackson National Life Insurance Company of New York. PR3236 04/19

The Annuity Issue • Special Sponsored Section

The Un-System: A $200 Million Annuity Consultant Tells All

You won’t believe how successful NOT following a turnkey program can be!

om Vick is barely over 30 years old, but that hasn’t stopped the Chicago native from producing many of the nation’s most successful advisors. A second-generation retirement specialist, Vick spent much of his childhood at seminars and on appointments, watching his parents dazzle rooms filled with prospects. So it’s no surprise that, over the years, he’s learned what works in this industry and, more important, what doesn’t. Using the tech savviness of his generation, Vick created a unique approach to retirement and annuities that has agents and advisors taking note. In fact, last year, he led a small team responsible for writing more than $200 million. Tom Vick Recently, he joined Life & National Director, Annuities Annuity Masters, a national, holistic IMO that’s built its reputation around taking great care of their partnering advisors, as well as the clients they serve. As their annuity training consultant, Vick is introducing a unique process that’s flipping cookie-cutter systems on their heads.

around that brand, which guarantees they’ll be set apart from their competition. It’s very genuine. It builds trust with prospects faster and helps advisors feel comfortable and fulfilled in their day-to-day lives. And that’s something that can never be taken away or copied.

Q: As a new leader at Life & Annuity Masters, what do you bring to the team?

A: I can say that I’ve grown advisors from nothing to having a reputation where the best FMOs in the country are chasing them. I don’t like giving exact numbers, so I won’t. But what I think I’ve done is helped those advisors realize the definition of success is not just the amount of assets they’ve gathered, but their satisfaction and quality of life they get from my process of coaching.

A: I know where agents and advisors are coming from, their struggles. I know it can’t just be a daily grind, where you are always anxious about your paycheck. I help advisors find a genuine way to stand out to prospects that builds a meaningful and fulfilling practice AND puts food on the table.

Q: What is unique about your process that sets Life & Annuity Masters apart from other IMOs? A: We build reputations first and capture revenues second. I know a lot of IMOs offer so-called systems. They have marketing gimmicks and recruit agents with trips. I don’t. I don’t have a system. You might even call it an un-system. What I have is a process that develops an advisor into a very attractive personal brand — one that comes straight from the heart of the advisor. We build a unique practice

Q: Could you briefly describe the steps in your process? A: First, advisors need to realize what can be automated in their practice and what can’t, so they can manage their time better. After that, we focus on making the advisor uniquely gifted to serve people, and we build their personal brand from there. Next, we figure out the most powerful way to position their unique selling proposition so clients can identify with it and say, “Hey, that’s a guy who’s trustworthy, cares and knows what he’s doing.” After all, this business isn’t just about getting an annuity product in the door. It’s about building relationships and trust. So, if you’re just doing stuff that’s used by the guy next door, how does that bring value to someone who has saved their entire life? I give advisors their own unique platform to stand on and be recognized.

Q: How much success has this approach had for your advisors?

To watch a video on how Vick’s unique coaching process works, visit www.BrandedInsurance.com today.

LIFE M&ANNUITY A S T E R S

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

The Annuity Issue • Special Sponsored Section

MyFather’s Gift

How a survivorship income annuity eased my family’s grief and offered peace of mind. By Dennis Martin, President, Individual Life and Financial Services (ILFS) at OneAmerica ®

hen you work in insurance and financial services, death is a big part of your professional life. We calculate mortality rates, help people plan for a future in which they won’t be present, and deliver checks to beneficiaries. Our jobs boil down to helping other people secure their financial futures and being there in their times of loss. Then the loss becomes personal. My mom passed away in 1995. She was 50 when she had a stroke. I was just 25. Because of her health history, her only coverage was a group life policy for approximately 10 times her earnings. The death benefit was a comfort. It helped us work through our grief with some sense of confidence and peace as demands were placed on us to plan — and pay for — her funeral. My dad used most of the remaining proceeds to invest and to purchase life insurance policies for himself, with my brother and me as beneficiaries. Fast-forward to the early 2000s. My dad retired for the first time in Dennis Martin October 2000 — perhaps the worst President, Individual Life scenario, as a student of market hisand Financial Services tory knows. He lost 25 percent of his retirement savings in the first six months. Fortunately for him, he was able to return to work and did very well for the next nine years before retiring for the second time in 2009. At that time, we had just been through the financial crisis, and he had a very acute memory of his first retirement scenario. He knew I was an actuary, but as is the case with most families, we rarely discussed money, so I was a little surprised when he asked, “How do annuities work?” We had a lengthy discussion about annuities and guaranteed income. He listened, asked questions and worked to understand all his options. He had experience with several people at different levels of the advisory firm he was working with trying to talk him out of purchasing an income annuity. Loss of control of the funds and lost opportunity of upside, along with the potential downside and loss of principal associated with early death, are some of the arguments he heard. After listening to all the options, he ultimately concluded that the annuity was the right purchase for him. He was “planning to live” and wanted to be sure that as long as he lived, he would have guaranteed income and not become a burden on his family. An annuity was the only tool that could guarantee he’d have his wishes. He did keep some assets in reserve for liquidity, and he still had the life insurance he’d purchased in the late ’90s to provide the legacy he desired. The combined power of guaranteed lifetime income and

permanent life insurance for legacy was a powerful “plan to live” for my dad, and he was able to enjoy retirement life with confidence and without any market worry. But he wasn’t concerned just about himself. He also wanted to Dennis Martin and his father, John Martin ensure that his family was well cared for. That’s why he selected a survivorship income annuity so that my stepmom — whom he married in 1997 — would also have guaranteed income. Sadly, my dad passed away in 2014. In some respects, one could argue the annuity was a bad decision because he received income from the annuity for a relatively short time. Let me explain why I think otherwise. My dad lived on Vancouver Island, and when I found out he’d had a stroke, it took me 14 hours to get there. It was an emotional journey, but during that time, I never once had to consider the financial implications of my father’s death. I didn’t need to wonder whether my stepmom would have enough money and be financially safe or whether I would have to help her with day-to-day expenses. I knew, without a shadow of a doubt, that everything was under control. When people think about investments, they focus on optimizing returns. But at the end of the day, peace of mind doesn’t have a monetary value; it’s priceless. While my dad didn’t have as many years after his retirement as we would have liked, he was able to enjoy himself freely without financial worry because he selected an annuity. And, because of the annuity and his life insurance, he was able to leave us with some final gifts — peace of mind and a reminder of what’s really important in life.

To read more real-life stories from OneAmerica financial professionals in The Art of Story Selling ... for Annuities, visit www.AnnuityStories.com.

Ameritas leaders are industry leaders

Robelynn H. Abadie, RFC, CAP, LUTCF

Abadie Financial Services Baton Rouge, LA

Kim G. Allen, LUTCF

Zachary H. Blume

Peter C. Browne, LUTCF

Stephen L. Bruneau, CLU, CFP

United Wealth Advisors Group Watertown, NY

Price/Raffel LA Los Angeles, CA

DFG - PRB New York, NY

Boston 128 Companies Weston, MA

Jarrod F. Hirschfeld

Josh A. Jalinski

S. Patrick Kelley, ChFC, LUTCF

Wilcox Financial/ Wilcox Sports Management Toledo, OH

Jalinski Advisory Group Toms River, NJ

Peak360 Wealth Management Danville, CA

Brian P. Walsh, CLU, ChFC, RFC

Frank G. Heitker, CLU, FLMI Frank S. Hennessey, ChFC, LUTCF Premier Planning Group Cincinnati, OH

Premier Planning Group Phoenixville, PA

Mitchell W. Ostrove, CLU, ChFC

Ronald G. Pray, CLU, ChFC

Arnold J. Price

Stuart J. Raffel, CLU, CPC, RFC

The Ostrove Group White Plains, NY

Cenco Altmann Affiliates Gilroy, CA

Price/Raffel LA Los Angeles, CA

Walsh & Nicholson Financial Group Wayne, PA

Any agency referenced is not an affiliate of Ameritas or of any of its affiliates. Ameritas® and the bison design are registered service marks of Ameritas Life Insurance Corp. Fulfilling life® is a registered service mark of affiliate Ameritas Holding Company. © 2019 Ameritas Mutual Holding Company

2019 MDRT Top of the Table Ameritas salutes our valued field associates who have attained the highest levels of MDRT membership.

Mark A. Cecil, CFP

Angelo E. Cilia, CLU, ChFC

David J. Fazzini, LUTCF

Mark E. Friese, CMFC

Keith M. Gillies, CLU, CFP, ChFC

United Wealth Advisors Group Bethesda, MD

CF Advisors Group Pittsburgh, PA

Premier Planning Group Phoenixville, PA

Friese Financial Advocates Libertyville, IL

United Wealth Advisors Group La Place, LA

Richard C. Moldenhauer,

William C. Moore, CFP

Kevin P. Nicholson

W.C. Moore Financial Services Centreville, VA

Walsh & Nicholson Financial Group Wayne, PA

John C. Kenan

Patrick J. Kenney, CPA

Southeast Financial Services Greensboro, NC

Wilcox Financial/ Wilcox Sports Management Toledo, OH

Moldenhauer & Associates Orchard Park, NY

David B. Wentz, J.D., LUTCF

R. David Wentz, J.D, CLU, ChFC

Michael R. Wilcox

Peter J. Winovich III

Tax Favored Benefits Overland Park, KS

Wilcox Financial/ Wilcox Sports Management Toledo, OH

Tax Favored Benefits Overland Park, KS

CLU, ChFC, RFC, CEP

DST 1364 5-19

2019 MDRT Court of the Table

C. Robert Brown, CLU, LUTCF

Samson Chan

James R. Christensen Jr.

Kate Cihon

UCL Financial/ United Wealth Advisors Group Memphis, TN

David White & Associates San Ramon, CA

inSource Benefits Group Omaha, NE

UCL Financial/ United Wealth Advisors Group Colorado Springs, CO

David E. McClure

Merle D. Miller, RFC

Tony J. Ojeda

Christopher M. Pirtle, LUTCF

Koehler Financial Group Las Vegas, NV

Midwest Financial Solutions Iowa City, IA

Ameritas Financial Center Lincoln, NE

Peake Financial Silver Spring, MD

This information is provided by AmeritasÂŽ, which is a marketing name for subsidiaries of Ameritas Mutual Holding Company, including, but not limited to: Ameritas Life Insurance Corp., 5900 O Street, Lincoln, Nebraska 68510 and Ameritas Life Insurance Corp. of New York, (licensed in New York) 1350 Broadway, Suite 2201, New York, New York 10018. Each company is solely responsible for its own financial condition and contractual obligations. For more information about AmeritasÂŽ, visit ameritas.com. Any agency referenced is not an affiliate of Ameritas or of any of its affiliates. DST 1423 5-19

Raneshwar K. Gupta

David R. Guttery, RFC, CAM, RFS

Dominick F. Impastato Jr., LUTCF

Total Asset Planning Cincinnati, OH

Nowlin and Associates Trussville, AL

United Wealth Advisors Group Metairie, LA

Michael C. Polin

Daniel J. Scholz, CLU, ChFC

Mark D. Scholz

Premier Planning Group Phoenixville, PA

Ameritas Financial Center Omaha, NE

David A. McBride Sovereign Financial Group Midvale, UT

Ameritas® and the bison design are registered service marks of Ameritas Life Insurance Corp. Fulfilling life® is a registered service mark of affiliate Ameritas Holding Company. © 2019 Ameritas Mutual Holding Company

the Fıeld

A Visit With Agents of Change

Speaking their Language How one advisor blended her love for the Spanish language with her desire to help an underserved market.  B Y SU S A N RU P E

InsuranceNewsNet Magazine » June 2019

SPEAKING THEIR LANGUAGE IN THE FIELD

athryn Söderberg was in eighth grade when she fell in love — with the Spanish language. Spanish was an easy subject for her in school, and she would practice speaking the language with her friends at home as a secret language that her parents did not understand. She even would follow Spanish speakers into a store, just to listen to them talk. She majored in Spanish in college, studying in Mexico and Spain. She dreamed of being a linguist, traveling the world and ultimately ending up as a translator at the United Nations. But her parents had a thriving insurance practice in Lynnfield, Mass. She knew she could have a rewarding career by taking the foundation her parents had created and building on it. “I realized if I could somehow marry my love for Spanish with my love for business, I would have a formula for success,” she said. Söderberg is president of Söderberg

began when she made friends with a Hispanic woman while they both served as election volunteers. They bonded over speaking Spanish. Later, the woman told Söderberg she was a real estate agent and needed someone who understood Spanish to help her clients with their insurance needs. Söderberg was happy to serve them, and a niche was born out of those referrals. “The Hispanic client is a very loyal client and more likely to refer others than a non-Hispanic client,” Söderberg said. “I thought, ‘Wow! This is where we should be spending our time and eﬀorts.’ We ended up hiring more people who spoke Spanish and it really blossomed from there.” Söderberg said that she did all the traditional networking activities 20 years ago. But now that her practice has become known within the Hispanic community and the community at large, those activities are not as important. “Now, it’s mostly spending time with people who are good clients or good

He also praised her for taking the time to get to know her clients both professionally and personally. “She devotes time to visit with them without any agenda, just to acknowledge their loyalty and longevity as a client,” he said. “That personal touch goes a long way to keep them coming back.” Having people in the oﬃce who speak the language and understand the culture is a definite plus, Söderberg said. Her practice serves Spanish-speaking clients who came to the area from places such Puerto Rico, Dominican Republic, El Salvador and Colombia, and she is now serving the second generation of clients. “Our clients value the fact that we can explain technical insurance and financial issues to them in their own language,” she said. “I am blessed that I learned the language at a relatively young age and have been able to use it so successfully in our agency to create growth that I never dreamed of.” For someone who wants to develop their practice to serve a particular eth-

The Hispanic client is a very loyal client and more likely to refer others than a non-Hispanic client. I thought, ‘Wow! This is where we should be spending our time and efforts.’ Insurance Services, the company her parents founded 54 years ago. She used her love of Spanish to guide her practice toward its niche of providing life and property/casualty insurance and mutual funds to Hispanics who live and work in the urban communities north of Boston — cities such as Lawrence and Lowell. When Söderberg began working in her family’s practice in 1986, they had no Spanish-speaking clients. Today, about 40% of their clients are Hispanic. Five out of the nine people who work in her practice speak Spanish. “When you speak another language fluently, doors open for you,” she said.

A Niche Is Born

Söderberg, 56, said her company’s journey to serving the Hispanic community

sources of business,” she said. “We also help their causes. If any of our centers of influence has a charity that’s important to them, we support it.” Her agency assists a number of community programs, most notably a homeless shelter in Boston, as well as a scholarship benefiting students pursuing special needs education. Mapfre Insurance awarded her agency its Outstanding Community Service Award in 2017. She attributes much of her success to “being present, being responsive, getting back to people promptly.” Bahar Uttam is chief of staﬀ at Söderberg Insurance Services. He praised Söderberg for her “very engaging personality” and her commitment to community service, which he said is what he admires most about her.

nic population, Söderberg advised “get your foot in the door and go above and beyond.” “Spend time with that population, be responsive to their needs and prove your credibility.” The Hispanic market has been a somewhat untapped market in terms of all their insurance needs, Söderberg said. “It’s rewarding that we’re able to help this market and it comes back to us many, many times over.” Söderberg said her clients — particularly her Hispanic clients — have become like family. “They share very personal stories with us,” she said. “They are appreciative and even bring us gifts over the holidays. They invite me to very personal events like weddings, christenings, birthday parties. June 2019 » InsuranceNewsNet Magazine

IN THE FIELD SPEAKING THEIR LANGUAGE

special needs community. “Karen was the star of the agency,” Söderberg said. “Everyone loved her. She worked at McDonald’s for 18 years and she came here and helped us with photocopying, handling the mail.” Söderberg also has a brother, Craig, who works for a nonprofit organization in Indonesia.

Where She Should Be

Kathryn Söderberg and her father, Douglas Söderberg, are shown with the 2017 Outstanding Community Service Award from Satellite Agency Network Group for the work they have done with the special needs community and with the homeless community.

I have become part of their families, as they have become part of our family.”

A Father’s Wisdom

Douglas and Frances Söderberg founded the insurance agency in 1968. When he was 24, Douglas was the youngest general agent appointed by Aetna Life and Casualty.

She said her father taught her to always put that extra bit of eﬀort into whatever she does. “He would say it doesn’t cost that much more to do things first class. Spend a little extra to do something the right way, put more eﬀort into what you’re doing and the payback comes back many times over.”

Spend a little extra to do something the right way, put more effort into what you’re doing and the payback comes back many times over. Frances died two years ago, and 84-year-old Douglas still visits the agency’s long-time clients. He also participates in agency meetings, serving as a sounding board for various issues that arise. When Söderberg takes her father to visit with long-time clients, she usually takes a photo of him with the client. The photo gets placed into a collage on the wall of her agency. 42

InsuranceNewsNet Magazine » June 2019

Frances was an avid tennis player. Söderberg also loves the sport, and has been a competitively ranked tennis player for many years. Douglas and Frances were the parents of a daughter, Karen, who was born with Down syndrome. Karen worked in the agency until she died. She inspired the family to devote much of their efforts to fundraising in support of the

Söderberg may not have ended up at the United Nations, but she is convinced she is where she was destined to be. “I think it’s almost like it was preordained,” she said. “Back when I was college and dreaming of being a linguist, I didn’t realize the best situation for me was using the language and helping the community and growing this business as a tribute to my parents.” She continues to appreciate the contributions that her Hispanic clients weave into the fabric of the community. “Whether they are from Central America, Mexico or South America, there are diﬀerent cultures even though they speak the same language,” she said. “There is such a richness of culture that they bring to their community. Once we gain their trust, they bring us referrals.” Looking ahead to the future, Söderberg sees only good things for her agency. “I want to make good opportunities for the people who work here. And I want to serve the next generation of clients.” Susan Rupe is managing editor for Insurance N ewsN et . She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

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children under age 18 don’t have life insurance, and the majority of them say the reason they don’t have coverage is because they believe it’s too expensive. That was one of the findings of a recent survey conducted by PacWealth Solutions. The survey showed that the lack of life insurance is particularly acute among single parents who have three or more children under age 18, with 70 percent of this group saying they have no coverage. Fifty-eight percent of those who do not have coverage said they believe it’s too expensive. However, those who do have life insurance were much more likely to choose permanent life over term life. The study showed 77% of single parents who owned life insurance bought permanent coverage.

LIFE INSURERS MUST GET TRENDY

One trend the life insurance industry is falling short on is customer engagement, Lauren Cross of John Hancock told attendees at the 2019 Life Insurance Conference. Insurers have a vested interest in keeping clients healthy, happy and alive for as long as possible, she said. So it makes sense to take better advantage of engagement opportunities. That might m e a n providing incentives for healthy behaviors, or leveraging technology to boost engagement. Cross suggested insurers can make owning life insurance “fun.” “We want to be more than the people who send you a bill once a year,” she said.

AMERICANS LIKE SIMPLIFIED UNDERWRITING

When it comes to buying life insurance, Americans want to keep it simple. Almost half of Americans (47%) said they would be likely to buy life insurance if they could get coverage quickly DID YOU

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and without a medical exam. That’s the word from LIMRA’s 2019 Insurance Barometer Study. The study also found the majority of Americans (53%) are at least somewhat likely to purchase a combination life insurance product. One in five (roughly 42 million Americans) say they are “very” or “extremely” likely to buy a combination product. The top reason people say they would buy a combination life product is to lower the possibility that long-term care expenses would deplete their savings (36%). One in three consumers are attracted to the flexibility and value of the product, allowing them to address multiple financial risks simultaneously and saving the expenses associated with separate policies.

JUDGE ORDERS BALLPLAYER TO BUY LIFE INSURANCE

Detroit Tigers first baseman Miguel Cabrera has the world’s ninth-largest sports contract at $247 million.

46% of Americans said they are knowledgeable about life insurance.

InsuranceNewsNet Magazine » June 2019

Source: LIMRA

If you can’t make a living selling life insurance, you’re going to find something else to do pretty quickly. — Vikram Kamath, director of the LIMRA Center of Excellence for Analytics

But he’s in a legal dispute over financial support of the two children he had with his mistress. Now a Florida judge has ruled that, among other things, Cabrera must maintain a $5 million life insurance policy to benefit both children until the younger child turns 18. Cabrera and the children’s mother have been fighting in court for more than a year and a half over sharing some of his $30 million annual salary with them. She argued that the children from that relationship should have the same lifestyle and opportunities as the three children Cabrera has with his wife.

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LIFE

A Revised AG 49 Could Help Clients Better Understand IUL The renewed focus on AG 49 should be less about policing indexed universal life, and more about furthering client understanding of how the product really works and the different set of outcomes that are possible. By John “Hutch” Hutchinson

ince the National Association of Insurance Commissioners adopted Actuarial Guideline 49 in 2015, the way indexed universal life is sold has changed drastically, but not necessarily for the better. The original regulations are being reexamined, so the future of IUL hangs in the balance once again. Don’t get me wrong, I do believe that setting uniform illustration standards to curtail misleading sales practices is necessary. However, AG 49 was really born from dueling opinions between insurance companies that believed in IUL and those that were staunchly against it. The original regulations were merely an exhausted compromise after rounds of saber-rattling and laborious deliberations. Although AG 49 clearly states that its purpose is to “aid in client understanding,” I believe that the first wave of regulations actually hurt client understanding more it than helped. As a practicing agent who takes an educational approach with clients, I can tell you first hand that explaining the true essence of how IUL works is much more difficult now than it was before. You see, during the heat of the AG 49 battle, some of the key educational reports inside older IUL illustrations ended up as casualties on the cutting-room floor. Here are the three main mandates that AG 49 originally put forth to “provide uniform guidance for policies with index-based interest,” as well as a discussion on how they can now be modified to better “aid in client understanding” 48

InsuranceNewsNet Magazine » June 2019

(quotes taken directly from AG 49).

1. Determining the maximum crediting rate for the illustrated scale.

This was obviously done so that clients would no longer be bamboozled by outlandish projections on IUL illustrations. For example, one carrier offered the ability to illustrate an average annual crediting rate of 11.44% by cherry-picking one particular historical period using an obscure index strategy. Being fair to the majority

of advisors, most of us were setting proper expectations with clients by backing way off from the maximum possible crediting rate allowed by our illustration software. Regardless, to curtail any future abusive illustration practices, AG 49 mandated the maximum illustrated rate be derived only from that carrier’s 1-year S&P 500 annual point-to-point strategy regardless of any better performing strategies offered. Moreover, the maximum illustration rate must be no more

AG 49 COULD HELP CLIENTS BETTER UNDERSTAND IUL LIFE than the average of every possible 25-year period that can be found within the S&P 500’s last 65 years using that carrier’s current cap and floor. Given there are more than 10,000 unique 25-year daily slices within the last 65 years, all involved agreed that this was a fair enough average crediting rate to be used on illustrations. Although this solution may seem clean and easy, there’s one big problem with it. The AG 49 average may now be reined in, but it’s still just a smooth and steady average uncharacteristic of how the market really moves. Did you know that of the last 65 calendar years dating back from Dec. 31, 2018, the S&P 500 Index: » Had 37 years greater than 8%. » Had 23 years less than 3%. » Had only five years between 3 and 8%. So why in the world are we showing clients illustrations with steady averages between 3% and 8% for 65 straight years? Clients can’t possibly anticipate the seemingly binary effect that S&P 500 volatility can have on their IUL policy using this methodology. I’m not saying we use options pricing models to determine what caps could have been during these higher interest rate environments. I’m simply saying that the client should see the effect of the fluctuating index through history using that carrier’s current day cap and floor.

2. Limiting the policy loan leverage shown in an illustration.

Again, this was so clients wouldn’t be misled by obscene amounts of ongoing positive arbitrage when using IUL’s participating loans. Before AG 49, if a carrier had a loan rate of 5% and a crediting rate of 8%, the illustration would paint the picture that they would always get 3% of positive arbitrage despite taking massive loans against their policy for retirement. Although AG 49 now limits this effect to a more reasonable 1% of positive arbitrage on loaned money, the client still sees nothing but a steady average throughout decades of retirement. We used to be able to compliantly show IUL’s expected ups and down by using supplemental reports showing historically

back-tested illustrations. Several carriers would offer 20, 30, 40, 50 and even 60-year lookback illustrations where the client could clearly see the eroding effect of policy loans and charges on their cash value through choppy decades and even the speed bumps of multiple consecutive zero-percent years. I used to love featuring the worst in the bunch, the 50-year lookback. Essentially five of the first 10 years have zeroes or just a few basis points higher. Then four of the following 10 years had two zeroes and two years had 1.4% or less. So nine of the first 20 years showed 1.4% or less, with mostly zeroes. After licking its wounds from this slow start, the retirement scenario on the same report featured “the lost decade” with three consecutive zeroes during the tech crash followed by another in 2008. If the client deserves to see the effect of negative arbitrage from loans during consecutive zero-percent years, shouldn’t they also witness the bounce-back years that up the average and either confirm or deny that their policy can survive? Highlighting this horrible period truly helped clients understand how IUL can operate during different market conditions. Not only that, but these supplemental reports better prepared client expectations for the zero-percent goose eggs laid in 2011, 2015 and 2018.

3. Requiring additional consumer information (side-by-side illustration and additional disclosures) that will aid in consumer understanding.

Again, I believe that additional reports to aid in client understanding are exactly what are needed. However, the original AG 49 version of these missed the mark. The “increased transparency” mandated by AG 49 that found its way into illustrations is really just more of the same. These “alternate scenario” illustrations simply show a lower version of another smooth ongoing average. None of the new additional side-by-side illustrations make IUL easier to understand, nor do they even hint at the variation of returns that a client should expect.

Bring Back Compliant Historical IUL Illustrations

Since IUL carriers already possess software programmed to extract 65 years of S&P 500 returns into 25-year slices, why June 2019 » InsuranceNewsNet Magazine

r r r r r r

LIFE

not just spit out the worst 25-year period, the best 25-year period and one historical period that most closely matches the AG 49 average? Similar to how whole life illustration software offers the ability to back down the current dividend rate, there could also be a feature that allows you to override a lower S&P 500 cap rate for an alternate scenario. Even fixed indexed annuities that were anticipating stringent Department of Labor oversight allowed compliant historical lookbacks so clients could grasp the broad range of likely possibilities to contrast against one another. If an IUL carrier offered a 9.25% cap today and looked back 65 years, then the client would see the worst possible 25year sequence averaging 3.81%, the best 25-year sequence averaging 7.26%, and one that averages 5.76%. More important, the client would see the volatile index movements each year that made up those distinct averages. Couldn’t it be mandated that the clients sign off on seeing the worst 25-year period to ensure expectations have been properly set forth upon delivery of the policy? This type of report may even spark a conversation between client and advisor about what types of adjustments could be made to the policy if a horrible 25-year run were to happen again. At the very least, it will make clear that an IUL policy should be monitored and revisited regularly, unlike illustrations projecting a complacent average. 50

InsuranceNewsNet Magazine » June 2019

Don’t we want clients to understand the wide variation of swings involved with IUL before they make what should be a lifetime commitment to an insurance company? Perhaps some clients will choose a more conservative IUL policy with streamlined costs or stronger guarantees. Perhaps some clients will simply back away from IUL altogether and choose whole life. Perhaps some clients will be truly OK with the aggressive risk/reward tradeoffs offered by some of the most exotic IUL policies on the market today. Unfortunately for my younger clients, 25-year lookbacks won’t be enough. They need to see how their policy operates in good and bad years once retirement loans commence. If I could show a historical illustration today looking back 50 years from Dec. 31, 2018, it just so happens that the average of this period is right in line with the AG 49 maximum (some slightly higher but mostly lower depending on the exact cap offered). Unlike a smooth average, the 50-year lookback illustration would show a rocky start plus a very bumpy road right in the heart of retirement. For safe measure, you could even invert or randomize the sequence of returns of the worst 50-year lookback. What a great way for agents to test their concoctions. A properly designed policy would hold up under this kind of duress, whereas an underfunded or poorly

designed policy would not. Seeing these prolonged negative periods would allow the client to witness the year-by-year risk/reward tradeoff within any type of IUL growth and income strategy. Clients could better understand if what was being proposed was the right product for them through the different phases of their financial life. I always tell my clients that my job is to educate them about their options, and their job is to sell themselves on what is best for their family. IUL’s increasing sales numbers make it clear that the product is here to stay. I hope the focus with AG 49 this time around will be less about policing IUL, and more about furthering client understanding of how the product really works and the different set of outcomes that are possible. Bringing back a fair and balanced set of historical illustrations would allow advisors to have these next-level conversations with clients and keep egg off the face of our industry as these policies mature well into the future. John “Hutch” Hutchinson is an independent insurance agent in San Clemente, Calif. He is founder of BankingTruths.com, an educational site for both consumers and advisors to learn how to structure life insurance to act as their own private bank. Hutch may be contacted at john.hutchinson@ innfeedback.com.

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Fixed Annuity Sales Will Keep Rising, LIMRA Says LIMRA Secure Retirement Institute looked

into its crystal ball and predicted that fixed annuities will continue to be in the spotlight over the next four years. LIMRA SRI analysis of sales and market trends suggests indexed annuities are positioned for significant growth, while the market share for variable annuities will continue to decline. LIMRA SRI forecasts overall annuity sales will rise by 5% in 2019. The increase will be primarily driven by indexed and fixed-rate annuity sales. These gains will oﬀset declines in the VA market. Looking ahead to 2023, LIMRA SRI predicts overall annuity sales could exceed $280 billion. However, significant uncertainty around the regulatory and political environments could undercut that prediction. Overall fixed annuity sales are forecast to rise 11% in 2019, with indexed and fixed-rate deferred annuities driving that growth. Looking ahead to 2023, LIMRA says fixed annuity sales will benefit from a favorable equity market and level interest rates. Total fixed annuity sales could reach as much as $174 billion by 2023.

MORE ANNUITY SALES COULD COME FROM ADVISORS

While the Department of Labor fiduciary rule is gone, tossed out by a federal appeals court one year ago, the compliance spotlight it shone on commission annuity sales remains. At the 2019 Retirement Industry Conference, a panel agreed that advisory compensation systems will someday win out. Advisor-based sales are growing, but slowly. The advisory side accounts for about 15 percent of sales, with variable annuities leading the way, Scott Stolz, president of Raymond James Insurance Group, said about his company’s business. Scott Stolz If the industry doesn’t figure out how to eﬀectively provide distribution of annuities via advisory channels, “sales are just going to fall off a cliff,” Stolz said.

DID YOU

KNOW

— Greg Jaeck, senior product leader at Edward Jones

about annuities, researchers said. “Workers show strong interest in guaranteed income, but one-third of individuals report lower interest in the same guaranteed lifetime income product when it is labeled as an annuity,” said Sri Reddy, senior vice president of retirement and income solutions at Principal.

SECURIAN TAKES ANNUITIES TO BANKS

You can take that to the bank. Securian Financial has entered the $41.5 billion bank distribution channel for individual annuities. Securian will oﬀer its complete portfolio of individual annuities to banks. This includes fixed, indexed, variable and immediate income annuities, as well as annuities oﬀering accelerated death benefit features. Securian is also developing specific annuity products for banks. Banks are a growing source of distribution for annuities. According to LIMRA, bank channel individual annuity sales in the U.S. were $41.5 billion in 2018, an 18% increase over 2017 sales.

ANNUITIES IMPROVE RETIREMENT OUTCOMES

Annuities help improve retirement outcomes compared to investments alone, according to research commissioned by Principal Financial. Despite that, however, some people are skeptical

$30 billion was paid out in guaranteed income last year through annuities.

InsuranceNewsNet Magazine » June 2019

We need to provide guaranteed-income products to clients who prefer advisory solutions.

Source: LIMRA

“It’s time to demystify the value of annuities and acknowledge their role as part of a balanced retirement plan.” The research showed retirees who had guaranteed income through an annuity were more likely to feel confident and accept more market volatility with their other assets.

MIDLAND RELEASES NEW GUARANTEED INCOME ANNUITY

Midland National Life, a member of Sammons Financial Group, unveiled their MNL Income Planning Annuity, a new 10-year fixed index annuity.

“Guaranteed lifetime income can be vital for a stable retirement, and the MNL Income Planning Annuity clarifies what the lifetime payment amount will be without complex calculations,” says Rob TeKolste, president of Sammons Independent Annuity Group. “This product supports reliable and confident retirement planning so that our customers can focus on enjoying their retirement years.”

start a conversation that will help her plan a lifetime of perfect sunday mornings. Lifetime CheckSM by Jackson® can help explain income planning using terms your clients already understand. Lifetime Check can come monthly, so your clients can have consistent income for the rest of their lives. It’s a straightforward way to show your clients how their accumulated assets can translate into steady income. Lifetime Check is just one of the ways Jackson is making retirement simpler to understand. Learn more about Lifetime Check at Jackson.com

Annuities are long-term, tax-deferred investments designed for retirement. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company® or Jackson National Life Insurance Company of New York® and do not apply to the investment performance of the separate account or its underlying investments. Annuities are issued by Jackson National Life Insurance Company (Home office: Lansing, Michigan) and in New York by Jackson Life Insurance Company of New York (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC. These products have limitations and restrictions. Contact the Company for more information. Jackson is the marketing name for Jackson National Life Insurance Company and Jackson National Life Insurance Company of New York.

Not FDIC/NCUA insured • May lose value • Not bank/CU guaranteed • Not a deposit • Not insured by any federal agency CNC21435 02/19

ANNUITY

More Consumers Say Yes To Guaranteed Income Research shows that when consumers are given a choice between receiving a lump sum and having guaranteed lifetime income, more of them have a favorable view of guarantees. By Susan Rupe

t’s a choice many people face when they hit retirement age: Keep their funds in a lump sum “nest egg” or put some of that money into a vehicle that provides them with guaranteed income for life. LIMRA research indicates more people are receptive to the guaranteed income option, but certain consumer segments are more receptive than others. Having enough money to last a lifetime was the major goal across all financial segments in a recent LIMRA Secure Retirement Institute survey of pre-retirees and retirees. In addition, as many as one-third of pre-retirees said they fear running out of money in retirement. Yet, despite these concerns, less than half (47%) of Americans said they would be willing to convert at least part of their assets into a guaranteed lifetime income stream. Thirty percent of pre-retirees and retirees said they would be interested in this option. But these somewhat low percentages mask the fact that a strong majority of consumers across all income groups agree that having guaranteed lifetime income gives people peace of mind in retirement. In addition, when presented with a hypothetical choice at retirement between guaranteed income and a lumpsum amount, more than half (52%) of pre-retiree and retiree investors selected guaranteed income, LIMRA SRI researchers found. If consumers are saying they value having guaranteed income in retirement, why are so few of them buying annuities? And are consumers becoming more 54

InsuranceNewsNet Magazine » June 2019

receptive to putting some of their funds into an annuity? Consumers have become more receptive to annuities over the years, and guarantees are part of the reason, according to Matt Drinkwater, LIMRA SRI corporate vice president. “If you go back to 2008, because of the financial crisis, people were seeking guarantees but they also were skeptical of guarantees because, at that point, everything seemed to be crashing down,” he said. “If you asked people the value of guarantees, it was low at that point. But it actually has gone up since then, and now

a post-employment life much diﬀerent than that of their parents and grandparents, Drinkwater said. “Today’s pre-retirees will probably live longer. They might also have a longer health span, so they’ll be healthier and more active. That requires more money, more income to maintain their living standards. And, for a variety of reasons, they can expect to receive less income replacement from Social Security and certainly less from pensions. So when we compare pre-retirees with retirees, we do tend to see that pre-retirees express more of a concern about outliving income.”

Confidence in Ability to Live Desired Retirement Lifestyle by Annuity Ownership and Asset Segment 51%

Own an annuity

Do not own an annuity

30% 18%

16%

44%

31%

28%

25%

15%

10%

$100K to $249K

$250K to $499K

$500K to $999K

$1M+

$100K+

Source: 2018 Consumer Survey, LIMRA Secure Retirement Institute. Based on 1,295 Americans aged 50 to 79 with $100,000 or more in household assets.

we see regularly in our research about 40 percent of people who are in that appropriate age range for annuity purchases expressed interest in the concept.” Pre-retirees are afraid of outliving their income, LIMRA research showed, and the greatest fear shows up among those with between $100,000 and $499,000 in household financial assets. Much of that fear stems from the realization that today’s pre-retirees will have

But, Drinkwater cautioned, the concern about outliving income in retirement doesn’t necessarily mean people are concerned about living to age 100 or beyond. “It’s not that people are thinking, ‘I’m going to live 45 years in retirement,’” he said. “It means, ‘However long I do live in retirement, I’m worried about spending down my assets. I don’t know how much I can spend. I don’t know what a

MORE CONSUMERS SAY YES TO GUARANTEED INCOME ANNUITY safe withdrawal rate is. I’m concerned about health care costs.’ So I think that’s playing into that concern about outliving income.”

The Sweet Spot

Although the LIMRA study showed consumers had a certain amount of annuity reluctance, those consumers who do own annuities showed confidence in their ability to live their desired lifestyle in retirement. Annuity owners had greater confidence than non-owners across all income segments, but that confidence was most pronounced among those with $1 million or more in household assets. So does that confidence come from the wealth or from the annuity? Drinkwater has a theory. “The first effect is wealth. Richer people express more confidence,” he said. “So it’s interesting to see if these two effects interact in some way. “But, controlling for wealth, we still see this positive effect of annuity ownership on retirement confidence. There’s something about annuity ownership that has appeal across these wealth segments.”

An “interesting curved pattern” exists when it comes to interest in annuities, Drinkwater said. “If you ask people who have very little money — $50,000 to $100,000 — they’re not interested in lifetime income. And the reason is that this group is replacing a lot of their income with Social Security and they don’t have much money to apply to anything anyway. And those who have $3 million-$5 million, they’re not interested.

$1 million in household assets — the “sweet spot” for annuities, Drinkwater said. “They have the need, they have the money, they’re interested. Outliving their assets is a real risk for them. And we have seen that in our research,” he said.

Having The Conversation

Advisors can steer the retirement-planning discussion into a conversation about annuities in a number of ways, Drinkwater said.

Consumers in the mass affluent segment — those with $100,000 to $1 million in household assets — are the “sweet spot” for annuities... Those with $3 million, you can still make an argument for annuities, but once you get to $5 million, you’re probably not going to live long enough to spend down all your assets anyway.” That makes consumers in the mass affluent segment — those with $100,000 to

“If you have a client and it’s already been established that this client is concerned about outliving their assets, if you know it’s an overriding priority with them, then it’s actually in the client’s best interest to hear about solutions that include annuity products,” he said. “The advisor could

June 2019 » InsuranceNewsNet Magazine

ANNUITY MORE CONSUMERS SAY YES TO GUARANTEED INCOME

Four In 10 Non-Buyers Would Consider Buying an Annuity in the Future Three Types of Annuity Non-Buyers

Top Reason for Not Buying an Annuity

1. “May buy an annuity someday” (warm): representing 42 percent of non-buyers. They like annuities, and are warm, enthusastic and open about buying deferred annuities in the future.

It’s not the right time (44 percent)

2. “Annuity is good, but not for me” (tepid): representing 40 percent of non-buyers. They show little enthusiasm about annuities are are ambivalent about their value.

Other investments of products were a better fit (38 percent)

3. “Would not buy an annuity” (cold): representing 18 percent of non-buyers. They are strongly opposed to annuities and are likely to never buy one.

I do not like annuities (49 percent)

Source: The Difference They Make: An Advisor, an Annuity or a Formal Plan in a Retiree’s Life (2018) LIMRA Secure Retirement Institute

start out by discussing familiar concepts such as Social Security and pensions. People understand that those provide lifetime income to retirees. “And an annuity is like a personal pension. The catch, of course, is that you’re applying your own savings to pay for it. People say, ‘I saved up that money and you’re asking me to hand over a portion of it and I don’t know how I feel about that.’” But more people will reach retirement age with their wealth tied up in defined contribution plans and individual retirement accounts, Drinkwater added. “I would say, what is the purpose of those funds? Aren’t those savings there that you built up for retirement income, not to sit watching the stock market and you do nothing with that money, you’re not using that to improve or at least maintain your living standard? I would say that money is there to generate income.” The annuity buying decision “is not an all-or-none decision,” he said. “People have multiple goals and objectives in retirement. It doesn’t make sense 56

InsuranceNewsNet Magazine » June 2019

to deploy all the assets toward one goal,” he said. “So advisors would start by saying, ‘Look, how do we deploy the assets you’ve built up over the years, and some portion of those should probably go toward topping oﬀ your lifetime income from Social Security and the rest can go toward emergencies, special expenses, legacies, gifting and all of that.” It might take some convincing to get a client to give up control over part of their nest egg to convert it to guaranteed income. Keep in mind that the LIMRA study showed only 30% of retirees and pre-retirees were interested in putting part of their savings into a retirement income product. Drinkwater had some suggestions for advisors. Advisors will never be able to convince everyone to purchase guaranteed lifetime income products, he said. Annuities may not be suitable for everyone, and there will always be some consumers who have such a negative opinion of the product that an advisor won’t be able to change their minds.

“You have to let some of these people go if you can never convince them,” he said. “I think the more achievable goal is to identify those clients who have both the need and at least some acceptance of the concept.” LIMRA SRI research showed consumers have varying degrees of annuity acceptance. Instead of trying to convert the annuity haters into annuity buyers, Drinkwater said, there is more sales opportunity in the segment that says annuities are not the right product for them right now. “I would also say that there are diﬀerent flavors, diﬀerent types of guaranteed lifetime income,” he said. “Those more financially sophisticated clients — the ones with more experience managing money — they’re the ones who don’t want to relinquish control. So a pure annuitization product isn’t going to resonate with them. “That’s where guaranteed lifetime withdrawal benefits on deferred annuity products are probably the better match. It allows some degree of asset control. These clients could appreciate more detailed proofs establishing how the lifetime withdrawal benefit works.” Generation X clients are skeptical about Social Security’s future, Drinkwater said, making this group a good market for annuities. “Advisors can tell them, ‘Social Security will be there but it will only support so much of a working income. There is a way to get a reliable paycheck for life in retirement, maybe we can talk about it in a few years.’” But for most consumers, Drinkwater said, the key to getting them to accept annuities is for an advisor to “boil down annuities to their core value — what do they do for me?” “Why should I care about this product? Because this product provides you peace of mind. You don’t have to worry about this aspect of your retirement.” Susan Rupe is managing editor for Insurance N ewsN et . She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

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2019/04/17

HEALTH/BENEFITSWIRES

Tax Credit Cuts Could Hurt ACA Policyholders Nearly 9 million Americans who buy health insurance

through the Affordable Care Act marketplace receive an income-based tax credit to offset the cost of the premium. But some of those policyholders will be hurt by a rule set to take effect in 2020. A new rule for the ACA marketplace will reduce tax credits for 7.3 million people and lead to higher premiums, analysts estimate. In addition, 70,000 more people are expected to be pushed out of the marketplace when they are unable to afford the higher premiums, by the government’s own estimate. This change will also increase the amount that insurers can require members to spend on their own care before the plan takes over paying in full. In 2020, the outof-pocket maximum for most insurance plans — including employer-based plans — will increase by $200 to $8,150 for an individual. The limit for a family will rise by $400, to $16,300.

SENATORS HIT PBMS ON DRUG COSTS

The Senate Finance Committee took executives of five of the top pharmacy benefit management companies to task for their supposed role in the rising costs of prescription drugs in the U.S.

PBMs help insurance companies negotiate lower drug costs. Manufacturers arrange discounts, otherwise known as rebates, with the benefits managers so they can secure a spot for their products on a PBM’s list of preferred drugs. That discount is intended to be passed down to the consumer, but lawmakers suspect that the PBMs keep the money instead. The benefits managers claimed they do not take the rebates for themselves and that the discounts benefit consumers as intended.

WASHINGTON COULD BE 1ST STATE WITH AUTO-ENROLL LTC BENEFIT

Sen. Bill Cassidy, R-La., shows the high cost of prescription drugs during an April 9 hearing with pharmacy benefit managers.

But the execs pointed the finger at another group in the prescription drug channel, the drugmakers who set the list prices for their products. Leaders of PBMs CVS Health, Cigna, Prime Therapeutics, Humana and UnitedHealthcare subsidiary OptumRx told the committee they do not contribute to rising drug costs. DID YOU

KNOW

Washington could become the first state to establish an employee-paid program creating an insurance benefit to help offset the costs of long-term care. The proposed bill creates a benefit for those who pay into the program, with a lifetime maximum of $36,500 per person, indexed to inflation, paid for by an employee payroll premium. It has cleared both the state House and the Senate. But because the Senate made several changes before passing it, and Gov. Jay Inslee was expected to sign the bill. Under the plan, 0.58% of wages would be collected from employees, starting on

QUOTABLE Vaccine-preventable diseases belong in the history books, not our emergency rooms. — U.S. Health and Human Services Secretary Alex Azar

Jan. 1, 2022. This means that an employee who makes $50,000 a year would pay about $24 a month. Employers would not be required to pay into the program. Starting Jan. 1, 2025, people who need assistance with at least three activities of daily living could tap into the fund to pay for things like in-home care, home modifications like a wheelchair ramp and rides to the doctor. The benefit also covers home-delivered meals and reimbursement to unpaid family caregivers.

OPIOIDS COST U.S. $26B IN LOST TAX REVENUE

The opioid crisis has taken a heavy toll in lives and in money. A study published in the journal Medical Care said the federal government lost $26 billion in tax revenue between 2000 and 2016, and state governments lost $11.8 billion during that same time period. Opioids led to the deaths of 70,000 Americans in 2017, the Centers for Disease Control and Prevention reported. But the drug crisis also had an indirect economic impact, a result of lost productivity due to premature mortality, underemployment, unemployment and incarceration, according to the study. Adding to the financial impact was that labor force participation among prime-age adults fell by 1.55 percentage points between 2000 and 2015 because of the opioid crisis, the study said.

The American Cancer Society Cancer Action Network is launching a $4.5 million campaign that aims to break GOP resistance to Medicaid expansion in several states debating whether to join the program. Source: Politico

InsuranceNewsNet Magazine » June 2019

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HEALTH/BENEFITS

Mental Illness Sidelining Workers, Challenging Employers To Act Mental health issues are a leading cause of workFor employees with mental health issues er absence and providers requiring andisability. extendedHow timebenefits away from the andworkplace disability carriers are addressing this in which they use shortortrend. long-

term disability insurance, a return-to-work strategy is very important. A return-towork for aental physical oritsillness often illnessinjury is taking toll on the American involves ramping up the employee’s hours workforce. Benefits providers and disability and easing into a return workplace. insurance carriers to arethe paying attention. However, accommodations for of mental One of the top causes workerhealth disability in the is mental illness, withmay 62% of return to work areU.S. often different. This missed work days attributed to mental health In involve limiting responsibilities likeconditions. major addition, 42% of employees who have which a mentalcould healthtrigger issue say presentations or projects they have comehealth to workissues. with suicidal feelings. mental By Susan Rupe

Unum released these findings as part of their report, “Strong Minds At Work,” which shows the prevalence of mental illness in theCommunication workplace, and the factors triggering mental health isBest Practices sues. Among the key findings: for Employers » Of workers diagnosed with a mental health disorder, 67% the employee’s privacy since they are not with suﬀerRespect from anxiety disorder and 66% have been diagnosed required to disclose their condition. Focus on helping depression. the employee rebuild sense of worth andemployer identity » More than half (55%) of their working adults said their rather than addressing the clinical diagnosis. did not have, or they were unsure whether their employer had, a specific program, initiative or policy in place to address mental While the employee is on leave, set aside time to health.check in with them periodically to offer social support » 62% a period where and of letemployees them knowsaid theythey are experienced missed and supported. they felt mentally unwell. Maintain open lines of communication for the Despite theseofpercentages, duration their leave. workers are often afraid to seek help, the Unum study showed. More than 60% of employees believeplan there’s social stigma Talk through the return-to-work witha the advance of the return andmental listen to in theemployee workplaceintoward colleagues who have health isany 81% accommodations they need, sourcedemployees from sues, and said they believe thatmay stigma is keeping the employee from seeking help. or suggested by the disability provider, to helpone-third during the acclimation process. Nearly (32%) of workers with mental health issues have not told anyone at work, 28% have told their manager, 25% Address any nonclinical triggers the employee may have disclosed to coworkers other than their manager, 20% have, like problems with coworkers or a heavy disclosed on their employment application and 19% told their workload, to increase chances of success. human resource department. Nearly 40% of who did disclose their Be open tothose and willing tonot accommodate a mental part- health issue time said ramp they feared harassment by colup plandiscrimination for employeesorreturning to work, leagues. Morecan than one-quarter they were ashamed Which help employeessaid overcome a sense of to disclose their mental health detachment they’veissue. likely been feeling. Offer a couple What is triggering mental issues at work? of practice sessions to health help them prepare for their “What wereturn. found in the research is that the key issues for mental health issues are bucketed into health, finances and work,” Reduce work-related stress upon returning by said Michelle Jackson, assistant vice president of regional marallowing for flexible deadlines on assignments or taking ket development at Unum. “Somebody’s own health condition some aresponsibilities their plate for can trigger mental health off issue. Finances area aset bigperiod. bucket — 67% said finances have triggered a mental health issue. And 62

Conduct regular check-ins as the employee is ramping back up to their original workload and directly address any stigma the employee be 2019 experiencing. Tailor InsuranceNewsNet Magazine may » June the employee’s workload or transitional plan as needed.

Mental Health Issues Can Significantly Impact Job Performance. Those with a mental health issue say their job performance has been impacted in the following ways:

57%

46%

lack of focus

45%

irritability

22%

tension with coworkers

41%

lower productivity

12%

poor performance reviews

missed work

11%

slower career advancement

Mental Health Issues Also Have an Impact on Employees’ Personal Lives.

Those with a mental health issue say their issue has resulted in the following:

65%

58%

irritability

lack of engagement with friends and family members

38%

35%

strain on marriage/ relationship

poor physical health

56%

tension with friends and family members

21%

strain on relationship with children Graphic courtesy of Unum

MENTAL ILLNESS SIDELINING WORKERS HEALTH/BENEFITS then we also see the health of a loved one, job satisfaction and personal relationships factoring in to mental health.”

Mental Health Keeping Workers Off The Job

Nearly one-third of the year — 112 days. That’s the average length of time employees are out of work on disability because of a mental health condition, according to research from The Standard. The disability insurance provider released the results of a study that showed employee absence and disability are challenging employers in a tight job market. Mental illness is a major reason why employees are off the job, the study found. Nearly two-thirds (64%) of employers with more than 2,500 workers and 38% of employers overall reported they receive requests to accommodate mental health conditions at least once a year. In addition, The Standard’s study showed that the two biggest challenges in dealing with mental health issues in the workplace are that workers hide their conditions and managers don’t know how to recognize them. Meanwhile, Unum’s study found workers with mental health issues displayed a high rate of presenteeism — lost productivity and performance due to employees showing up at work when they’re sick, exhausted or too distracted by their personal issues to focus on their tasks. More than two-thirds of those workers said they have been at work while feeling stressed, depressed or upset and have been less productive because of their feelings. Among workers with mental health issues, 63% have taken time off for their issue, and nearly a third (28%) of these gave a reason other than their mental health issue for their absence. The majority of those (54%) who stepped away from the workplace for a while used paid time off or vacation days. Others used Family and Medical Leave Act or unpaid leave (27%), floating holidays (6%) or they did not log the time (12%). Seventy percent did not inform their manager that a mental health issue was the reason they were out. Of those with mental health issues, 46% have taken an extended amount of time off work (more than a week) for reasons directly related to their condition. Of these, 11% did not want to return to work

and 36% said they knew they needed to go back but were hesitant to return. The Unum study said this illustrates an opportunity to make these employees feel supported in their return to work.

What Can Brokers Do?

Brokers can help employers and their workers navigate health issues and financial stressors through the right benefits package, and by educating HR professionals and employees about the mental health resources that are available, Jackson said. “There are multiple factors that are going to result in stress and somebody being absent from work,” she said. “So if a benefits consultant is approaching an employer, they need to understand that the employer is trying to meet the needs of the employee in a number of ways — typically, medical, dental, vision, ancillary benefits and then you get into the scope of disability, illness and life insurance.” So understanding that financial stress and health issues are two of the biggest triggers for mental health issues, if we can start that conversation that benefits can help to solve those stressors, benefits can be a solution to those stressors that are triggering mental health issues at work.” Employers have resources available to help workers with mental health issues. More than 90% said they have an employee assistance program in the workplace. But only 38% of workers said they are aware of such a program. The benefits consultant who can connect the mental health discussion with the benefits discussion will be seen as a solution partner to their employer clients, Jackson said. “If we know that mental illness and mental stress are prevalent, and we know workers are coming to work feeling that way, we think we’ve done a great job of developing resources for them,” she added, “but clearly there’s a disconnect with the understanding of what those benefits are.” 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.

June 2019 » InsuranceNewsNet Magazine

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NEWSWIRES Debt-free At The Expense Of Retirement

401K

Americans understandably want to become debt-free in 2019. However, according to a Merrill Lynch and Age Wave report, young adults are putting their retirement in jeopardy to get out of debt. The report, which surveyed 2,700 people between the ages of 18-34, found that 25% of those with a 401(k) have already made an early withdrawal. Thirty-one percent of those who withdrew from their 401(k)s said they did it to pay oﬀ their credit card balance. Another 16% said they put their 401(k) funds toward their student loans. “It may seem like a really good idea to pull that money out and bring down your debt, but it likely has real, significant, long-term implications,” said Lisa Margeson, head of retirement client experience and communications at Bank of America. beyond their ability to pay back. Under the proposed plan, $50,000 in student loan debt would be cancelled for people whose annual household income is less than $100,000. However, a person with $130,000 in annual household income would see the cancellation of $40,000 of their student debt. The plan oﬀers no debt cancellation for those whose household income is more than $250,000 a year.

ELIZABETH WARREN PROPOSES CANCELLING STUDENT DEBT

Got student loans? Sen. Elizabeth Warren may be able to help. The 2020 Presidential hopeful has rolled out a plan to cancel student loan debt and move forward with oﬀering tuition-free public college. The proposal includes sweeping reforms that would address the barriers that keep low-income families and people of color from obtaining an education. Collectively, 45 million Americans owe $1.5 trillion in student loan debt and 16.8 million of those debtors are under age 30. Warren’s proposal does not simply wipe the slate clean of all student debt for all borrowers. It does, however, set up a system to alleviate debt that is beyond a person’s household income and therefore DID YOU

KNOW

SOCIAL SECURITY EXPECTED TO SEE RED NEXT YEAR

The Social Security Administration’s trustee report doesn’t paint a pretty picture of the social program’s cost–revenue analysis. The report shows that, in 2018, the SSA’s income of $1.003 trillion only barely exceeded the costs of $1 trillion. This is the first time since 1982 that costs have exceeded expenses, but they are projected to exceed them again in 2020. The SSA received $885 million from payroll taxes, $83 million in interest and $35 million from tax benefits in 2018. It spent $988.6 million on benefit

QUOTABLE “[I] think the Earned Income Tax Credit is the best way to put money in the pockets of people who don’t fit well under the market system, but who are perfectly decent citizens. — Warren Buffet, CEO Berkshire Hathaway

payments, $6.7 million on administrative expenses and $4.9 million on railroad retirement expenses. The report did provide a (very) small piece of good news. The depletion of funds that was expected to happen in 2034 will now hit in 2035. At which point, Congress will have to decide to either increase payroll taxes, raise the age of benefits or risk running up a deficit.

HOUSING COULD BE OUT OF REACH FOR SENIORS

Assisted living facilities seem to be sprouting up everywhere, but who can aﬀord to live there? A recent study projected that half of the nation’s middle-income senior population won’t be able to afford housing in the next 10 years. Researchers estimated that the number of elders in the U.S. with annual incomes between $25,000 and $75,000 will nearly double, growing from 7.9 million to 14.4 million by 2029. They will make up the biggest share of seniors, at 43%. And the study projected the average annual cost of assisted living will top $62,000, meaning those middle-income seniors will be shut out of many facilities.

52% of Americans have not made a will. Source: BMO Wealth Management

InsuranceNewsNet Magazine » June 2019

INSURANCE INVESTMENTS RETIREMENT

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An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. There are charges and expenses associated with annuities, such as deferred sales charges for early withdrawals. Guarantees are subject to the financial strength and claimspaying ability of the issuing insurance company. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of its products.

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.

Why Stable Asset Funds May Be The Safest Investment Choice Customers seeking a safer investment might prefer stable asset funds vs. the volatility of money market funds. • Kent Bartell

hen it comes to making educated choices about their retirement plans, many employees don’t know where to start. Since there are many different investment options to choose from, they often decide on investments that appear safe and familiar — but is familiarity really the best investment strategy?

Retirement plan participants often want to invest more conservatively as they grow older. For investors seeking safety, liquidity and yield, many plans recommend investing in a money market fund. Traditionally, this makes sense: Money market funds are familiar, and they oﬀer low volatility and slow, dependable gains. However, despite their popularity, Source: Stable Value Investment Association

money market funds aren’t necessarily the best fit. They do not always guarantee safety of principal or interest, as their rate of return fluctuates daily. In addition, they do not always ensure a stable rate of return — in fact, even negative returns are possible during harsh economic periods and financial crises. This was the case in the last economic recession, where the government had to step in to protect money market fund shareholders under the Treasury Temporary Guarantee Program. The occasional volatility of money market funds means they are not always the best investment choice for customers looking to retire in the near future. Instead, you may want to suggest a diﬀerent solution for customers seeking a safer way to invest their retirement money: stable asset funds.

The Principles Of A Stable Asset Fund

Source: Stable Value Investment Association

InsuranceNewsNet Magazine » June 2019

Stable asset funds, also known as stable value funds, are designed for investors who are looking for a retirement plan with a guaranteed return of principal and interest, along with competitive crediting rates and liquidity. Although stable asset funds and money market accounts enjoy some similarities, several key aspects separate them; namely, many stable asset funds have locked in quarterly interest rates and are less risky, as the investment is not reliant on an individual business or stock. For plan participants who aren’t familiar with them, stable asset funds oﬀer a number of benefits. By combining the safety and low volatility of money market funds with the higher returns of intermediate bond funds, stable asset funds are one of the few investment options that produce positive returns during sharp economic downturns. In the most recent financial crisis, stable asset funds consistently produced higher returns than most other asset classes. Another benefit of stable asset funds is that some contracts oﬀer a guaranteed crediting

WHY STABLE ASSET FUNDS MAY BE THE SAFEST INVESTMENT CHOICE

Benefits vs. Disadvantages of Stable Asset Funds

Stable asset funds offer a number of benefits: • Guaranteed crediting rate. • Minimum guaranteed interest rate. • Conservative investments. • Safety. • Liquidity. • Economic stability. • Portfolio balance. • Portfolio protection. • No withdrawal restrictions. • Higher earning objectives. Disadvantages of investing in stable asset funds: • Funds charge annual fees that cover the costs of the insurance wrappers. • Most funds prevent investors from moving their money directly into a money market or bond fund. • Limited availability: available only to 401(k) plan participants whose employers offer these funds within their plans. • Funds are stable but not guaranteed.

rate that is declared in advance (usually one week before each quarter) and is reset periodically. This means rates are often higher and are less volatile than money market funds, which can fluctuate daily. Stable asset funds oﬀer a minimum guaranteed interest rate. Some contracts oﬀer a guaranteed crediting rate that the stable asset fund will never drop below (such as 1%). For those who are attracted to conservative investments, stable asset funds are consistently backed by a diversified, high-quality portfolio of fixed-income securities plus commercial mortgages and/or mortgage-backed securities. Daily liquidity is available for participant benefits and withdrawals at book value (principal and accrued interest) regardless of market conditions. Note, however, that this same liquidity does not always apply on the plan level, and plans may be subject to lock-up periods and/or market-value adjustments upon termination of the stable asset contract. As previously mentioned, stable asset funds can be one of the most valuable investments during economic recessions or periods of stock market volatility. Unlike other investment returns, investment owners enjoy the agreed-upon interest rate regardless of economic conditions. Stable asset funds can bolster a portfolio by providing balance and stability to offset more volatile investment decisions, such as investing in stocks and bonds. Portfolio protection is another feature of stable asset funds. Stable asset funds can be underwritten by insurance companies and often enter into contracts with financial institutions to protect portfolios from unsustainable gains or losses that unpredictable interest rates often cause. Unlike most money market accounts and some money market funds, many stable asset funds allow withdrawals and transfers

daily with no penalties, fees or surrender charges. Although the initial objective of a stable asset fund is to protect the value of its investments, its secondary objective is to return higher rates of earning than a money market fund might, provided funds are left alone. For example, while there have been brief periods of money market outperformance over the last 20 years, on average, stable asset funds have significantly outperformed money markets over that period of time. This makes a stable asset fund an appealing investment option for those looking to retire within the next decade.

Stable Asset Fund Education: The Key To Smarter Plans

Familiarity should not be the primary tactic in choosing an investment fund. Despite this rationale, a lack of awareness about stable asset funds is often the deciding factor in a retiree’s choice not to invest in one. It is up to financial advisors to fill that educational gap. In doing so, you will help your clients make meaningful choices about their retirement while simultaneously bolstering your own status as a reputable source of counsel. While money market funds have previously worked as quality retirement investment options, the increased returns, liquidity and stability that stable asset funds provide are most likely a better choice for those nearing the end of their careers. The result is a solution that can help bolster plan participants’ retirement balance and prepare them for whatever the future may bring. Kent Bartell, CFA, is the director of investment research at The Standard. He has more than 25 years of experience in portfolio management and financial services. Kent may be contacted at kent.bartell@innfeedback.com.

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June 2019 » InsuranceNewsNet Magazine

INBALANCEWIRES

QUOTABLE

Weight Loss: It’s All In Your Head You’ve tried counting calories, giving up

entire food groups and exercising until you drop. So why can’t you lose weight? The biggest obstacle to weight loss is mental, not physical, a registered dietitian said. “The biggest obstacle for a lot of people is thinking that weight loss is going to happen really fast,” said Audra Wilson, bariatric dietitian at the Northwestern Medicine Metabolic Health and Surgical Weight Loss Center in Chicago. That quick-loss mindset goes hand in hand with another unrealistic expectation, and that is the belief that you don’t have to change your current habits to see results. Expecting to lose weight quickly leads to temporary fixes that don’t last over the long term, Wilson said. For example, cutting calories for a month and then reverting to your old ways won’t work. Quick-fix approaches also set you up for failure because you are likely to give up your healthy habits before they have a chance to get established. What does work, she said, is acknowledging that permanent weight loss comes from lifestyle changes you can stick with over the long-term.

WORKPLACE WELLNESS PROGRAMS DON’T WORK

Workplace wellness programs, once touted as the “next new thing” in employee benefits, have become an $8 billion industry. But are employers getting their money’s worth? A recent study says no. The Journal of the American Medical Association published the results of a study that says wellness programs don’t cut costs for employers, improve workers’ health or reduce absenteeism. The study looked at employees of a big-box retailer, comparing those who participated in a wellness program with those who did not. The workers who participated in the wellness program reported healthier behaviors such as exercising more or controlling their weight. But there was no difference in other outcomes, such as improving blood glucose

levels. There also was no diﬀerence in absenteeism rates or how much employers spent on worker health care, the study said. However, the study also found that wellness-program participants were likely already healthier than the non-participants to begin with.

HOW MUCH WATER IS ENOUGH?

Drink eight glasses of water a day, Mom used to say. But is it really necessary to drink that much water? A panel of medical and sports science experts said no. As reported in Inverse. com, the experts said the traditional advice on drinking eight glasses of water daily doesn’t hold water. The human body needs water, of course, but water also can be obtained through eating high-moisture foods such as fruits and vegetables, as well as from drinking other beverages. In addition, as the body metabolizes food into energy, water is produced as a by-product.

DID YOU

KNOW 60 is the age at which people report having

the highest levels of self-esteem. Source: Psychological Bulletin

InsuranceNewsNet Magazine » June 2019

Any time you cut out an entire food group, you will be missing out on important nutrients that your body needs. — Despina Hyde Gandhi, registered dietitian at New York University’s Langone Weight Management Program

The experts said the eight-glass rule is relevant to people who live in a dry climate, are extremely physically active or have a health condition that puts them in danger of dehydration. For the rest of us, we can rely on our thirst or the color of our urine (anything darker than pale yellow means it’s time to rehydrate) as a gauge of how much water to drink.

SLEEP DEPRIVATION DAMAGING OUR BRAINS

Chronic sleep deprivation aﬀects one in three Americans, according to the Centers for Disease Control and Prevention. And that lack of shut-eye is damaging our brains. Researchers found that lack of sleep impairs the brain’s decision-making ability as well as the ability to focus on specific tasks. In addition, disturbed sleep was shown to be a precursor to memory loss in those with Alzheimer’s disease. Researchers found after 17 hours of being awake, motor skills and attention were equal to having a blood alcohol level of more than 0.05%. The National Sleep Foundation’s sleep recommendations call for seven to nine hours in adults, eight to 10 in older teens, nine to 11 in school aged children and up to 14 in toddlers.

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INBALANCE

Get Outside: Recharge Your Body And Mind The Great Outdoors boasts physical, emotional and cognitive benefits. By Cassie Miller

he lush green all around you, the birds chirping, crisp air and the familiar crunch of sticks under your feet. Is there anything more tranquil than a walk in the woods? How about a longer, more demanding and cathartic hike to detox from the monotony and hassles of everyday life? Not only is hiking aesthetically pleasing and a great outlet for stress, hiking can make you happier and healthier. Blazing the trail is a great way to log some serious cardio, while lowering your blood pressure and cholesterol. Additionally, regular physical activity substantially reduces the risk of dying from heart disease and decreases the risk for colon cancer and diabetes. Hiking also helps to control weight; contributes to healthy bones, muscles and joints; helps to relieve the pain of arthritis; reduces symptoms of anxiety and depression, and is associated with fewer hospitalizations and physician visits — not bad for a walk in the woods! If you’re looking for a hobby that also boosts your brainpower, look no further. Hiking has been shown to increase attention span and creative problem-solving skills by as much as 50 percent, according to a University of London study. This is a

Kayaking offers many of the same benefits as hiking, but with a great view of the waterways. result of not only activities in nature, but of unplugging from technology, as well. Another great outdoor pastime that is perfect for those looking to de-stress or think through a problem is kayaking. Kayaking oﬀers many of the same

“In every walk with nature, one receives far more than he seeks.” - John Muir, Father of the National Parks, naturalist and author. 70

InsuranceNewsNet Magazine » June 2019

benefits as hiking, but with a great view of the waterways. Paddling around your local river, creek or lake is a great way to increase your strength and flexibility. This is a lowimpact activity that is also a great option for individuals who need to minimize the impact to joints and muscles. Much like hiking, kayaking can be tailored to the experience you are looking for. If you want a peaceful and reflective float downstream, a slower waterway is ideal. If you’re looking for a challenge, a flowing river with obstacles like rapids can be a great way to push yourself.

GET OUTSIDE: RECHARGE YOUR BODY AND MIND INBALANCE

Get Outdoors … With Man’s Best Friend

If you’re an animal lover like me, you won’t want to leave your four-legged adventurer at home. In fact, I find that one of the perks of having a dog is that it’s a great excuse to hit the trails more often. Research from Michigan State University found that dog owners walked 22 more minutes per day compared to non-owners on average. Even if your dog is a couch potato or their breed isn’t “known” for being outdoorsy, I guarantee your dog will enjoy a walk in the woods with their favorite person. My dog, a French bulldog or Frenchie, is about 30 pounds of sheer joy and anticipation when I ask him if he “wants to go for a hike” despite being short, stocky and having to leave his favorite napping spot. According to a PetBacker.com survey, 70% of dog owners believe their dogs are happier when being walked. Walking and hiking are mutually beneficial for both dogs and humans, boasting a ton of mental health benefits. These proven benefits mainly include: » Lowering a stress hormone called oxytocin within us, thus reducing our stress levels. » Boosting the moods of both the dog and its owner as the dopamine and serotonin levels within our bodies will be raised. As summer arrives, be sure to get outside and rejoice in the comfort and beauty that is the great outdoors! AdvisorNews Managing Editor Cassie Miller may be reached at cassie. miller@adnewsfeedback. com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.

WANT MORE INSURANCE AND FINANCIAL NEWS? Take advantage of our awardwinning journalism in our suite of INN and AdvisorNews Newsletters. Sign up today at bitly.com/INNNL

Here are some tips for safely enjoying the great outdoors with your dog: 1. Mind the leash laws – Most outdoor spaces will have notices of leash laws at their entrances. Many state parks require your dogs to be on a leash at all times, and some have length limits, but state forests and other wild areas do not mind your dog being off leash as long as you can recall them. If you’re not sure about the place where you plan to hike with your dog, call ahead or look online and always bring a leash just in case. 2. Visibility – Hunting seasons vary from state to state and by season. If you know or suspect that it is open season, attach a brightly colored (I recommend neon orange) bandana or tracking jacket to your dog so they are not mistaken for the animals being pursued. This is also a good rule for human hikers who plan to hit the trail during hunting season. 3. Water woes – Outdoor pursuits with water require more preparation, but yield great satisfaction. I’ve received many hoots and hollers from shore-side observers when they see my dog, Anakin, perched atop the front of my kayak in his yellow lifejacket taking in the views. While Anakin is strong, he’s little and could easily be overpowered by fast-moving water or get stuck on unseen objects under the surface like tree branches when swimming. For this reason, I always make sure Anakin is wearing his lifejacket when we are on the water. Even if your dog is a “water dog” and a strong swimmer, I urge pet parents to put a lifejacket on their dogs. I have seen larger, stronger dogs get sucked under logs and debris. Those dogs would not have made it had it not been for the lifejacket keeping their head above water until their owner could reach them and pull them to safety. 4. Flea and tick prevention – Prescription-strength flea and tick prevention is a must if you’re going to share the great outdoors with your pet. Staying on maintained trails helps avoid bugs, but it’s not guaranteed to keep pests away. Think about it, if you can get bitten by a mosquito on a well-managed trail, why would your dog that is lower to the ground be any less susceptible to insects? — Cassie Miller

June 2019 » InsuranceNewsNet Magazine

BUSINESS

7 Tips To Focus On Feelings And Effectively Engage Prospects The right sales script is worthless if it does not connect with your prospect.

By Lloyd Lofton

o grow your business, you will want to make more presentations to make more sales. You notice I didn’t say you have to “close” more business to make more money. Why? When we focus on our closes, we are chasing the commission, not building our business. We are trying to close “I want to think about it,” “I don’t have the money right now,” “I need to talk to … .” We focus on the close because we are hungry for the commission, we have already spent our time with the prospect, we believe our solution is what’s right for them and, well — if they would only trust us, we would be able to help them! So how will doing more presentations help us build our book of business? To make a presentation, we need a prospect to present to. To get that prospect, we need enough leads to get an appointment. To get the appointment with the lead, we need a script that will get us the appointment.

InsuranceNewsNet Magazine » June 2019

not what you say, it’s how 1 It’s you say it.

Many salespeople spend a lot of time and energy on what to say — the words, the script, the bullet points. But is how you say it more important? Prospects who merely observed a sales presentation rated the salesperson no differently than did prospects who actually participated in the sales presentation. This means prospects rate someone’s charisma, credibility and intelligence based on nonverbal signals. We want prospects to focus on our words. Studies have found that 60-93% of our communication is nonverbal. How we say something is more important than what we say.

as much on your 2on your Focus nonverbal communication as verbal communication.

Scripts can kill your charisma and credibility. Nonverbal communication isn’t only about body language, it’s also about vocal cues. Prospects rate us on our vocal variety, or the amount of fluctuation in our voice tone, volume and pitch. The more vocal variety a salesperson has, the more engagement they get from prospects. Specifically, vocal variety increases our charisma and credibility. Salespeople who tell stories captivate the prospect’s imagination and attention. When you practice your presentation, try saying your words at least

five different ways. Practice putting emphasis on different words, slowing and speeding up your pace, and varying your volume on important points. Memorized lines and scripts kill your influence.

the patterns of 3 Learn effective sales presentations.

Some nonverbal gestures are more important than others. Credibility: Salespeople who are perceived as having high credibility had higher vocal variety and smiled for longer periods of time. Charisma: The most important characteristics of charisma are hand gestures and vocal variety. Intelligence: Smiling is the most important factor for being viewed as intelligent.

your presentation off 4 Start strong.

How you begin your presentation sets the stage for the way it ends. You can use things such as questions, surprising statistics and anecdotes to construct a dynamic beginning that draws in your prospect from the start.

in your prospect in with 5 Draw an emotional connection.

Effective presentations take the prospect on a journey. As you share your transition from not knowing some important truth to eventually understanding it, the

7 TIPS TO FOCUS ON FEELINGS BUSINESS prospect follows along. Although many salespeople focus on a product or features, effective presentations are also about the process of getting there. We must start by making our prospect care, using relatable examples, an intriguing idea or concept, or some lifestyle issue that matters to them. Pull in your prospect with something they care about. If it’s a future issue they never thought about, start off by invoking something they do think about a lot and relate that concept to your idea. Stories can help build a connection with the prospect and are a valuable component of effective presentations,

presentations deliver facts, while stories offer an idea with supporting facts.

7 Issue or idea?

Many salespeople are oriented toward a product they believe prospects “should” buy. They’ve identified situations where they believe “their” product is the only solution, and they set out to convince their prospects they should buy it. However, the way they approach the topic, whether as an “issue” or an “idea,” determines how their presentation feels. Idea-based presentations are energizing and captivating. But product-based presentations can be exhausting and create compassion fatigue.

We want prospects to focus on our words. Studies have found that 6093% of our communication is nonverbal. How we say something is more important than what we say. but an effective presentation is more than just a personal story. An effective presentation is idea-centered, and the idea must tie the narrative together. Ask yourself, “How do I want my audience to feel?” When you understand the answer to this question, your presentation takes on a diﬀerent form. If you want your prospect to feel compassionate, then you will tell stories that evoke compassion. If you want your prospect to feel a sense of urgency, then you will deliver concepts and solutions that keep them on the edge of their seat.

on one core idea and 6 Focus message.

To have a successful presentation, it is imperative that you have a core idea - the central message that you want the prospect to take away with them at the end of their meeting with you. Another common challenge is that some salespeople deliver a rather fascinating fact-filled presentation, but the presentation lacks a central idea. It can be a bit confusing to define the difference between facts and feelings. Remember one of my first questions in this article: How do you want your prospect to feel? Fact-based

So how do you avoid this? Reframe the presentation. Look at it this way: » An issue reveals a problem, while an idea offers a solution. » While an issue says, “Isn’t this horrible?” an idea says, “Isn’t this fascinating?” » Issue-based presentations lead with morality, whereas idea-based presentations lead with curiosity. Everything I know has come from learning from the best of others. I try to replicate what others have shown to be successful. I remember one of my first sales managers said repeatedly “Perfect practice makes perfect presentations!” I think that is still true today. Lloyd Lofton is the founder of Power Behind the Sales. He has hired and trained thousands of salespeople in his 30year career, helps sales teams capture lost sales and speaks across multiple verticals. Lloyd may be contacted at lloyd.lofton@innfeedback.com.

June 2019 » InsuranceNewsNet Magazine

r r r r r r

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

INSIGHTS

The Little Things That Lead To Business Success Everything a client sees tells a story about your business. By Barjes Angulo

e know what we must do to achieve great success in this business: acquire a lot of expertise, work hard and always put the client’s interest above our own. But sometimes, it’s the little things we do that make a big diﬀerence and help guarantee our success. For example, the other day, I heard this from one of my clients, an advertising executive: “Barjes, next time you come to my oﬃce, please do not wear a suit. You look like someone from the IRS and it weirds people out.” But I still remember the days when wearing a suit every day to see a client was considered “professional.” The thinking was that not wearing a tie or a jacket, or maybe wearing a pair of chinos,

the person I will be seeing during that meeting. I also try to schedule my “fun” clients for one day, my “professional” clients for another, and my retiree clients for a day that I can dust oﬀ my wingtips. But I do not always follow this rule. For example, I recently showed up again in a suit at the oﬃce of the advertising executive I mentioned earlier because I had a corporate meeting right after his meeting

I also try to schedule my “fun” clients for one day, my “professional” clients for another, and my retiree clients for a day that I can dust off my wingtips. was too casual for a meeting. However, as most of us know, wearing a high-end suit doesn’t denote professionalism. What does show professionalism is being presentable in the eyes of your client, and understanding their goals and objectives. Discussing insurance and other financial issues can be an uncomfortable experience for many consumers. When they feel comfortable with you, it will be easier for them to discuss these topics. Because of this, I’ve made it a habit to scan my calendar a week in advance of a meeting to determine what I should wear, based on 74

InsuranceNewsNet Magazine » June 2019

and couldn’t avoid showing up in a suit. He just gave me the “side eye.”

Other Factors To Success

Looking the part will only get you so far. One thing that maintains confidence with success is limiting the number of your commitments. This is not always an easy thing to do. Sometimes we are in back-to-back meetings all week and it’s diﬃcult to prepare for each meeting. So we try to avoid being unprepared by limiting the number of commitments we have each day.

Our appointments are more successful when we are prepared for them. To help in the preparations, we set aside Mondays for meeting preparation. This allows us to not only look at what is in store that week, but to also look at what is in store two weeks out. It is also a good idea to let your clients know when you are running late for a scheduled meeting. This shows that you value the client’s time and you are running late mainly because of circumstances beyond your control. In addition to calling ahead, you should also return client calls and respond to their e-mail messages in a reasonable amount of time. I make it a point to return all e-mail messages. Being organized also will help you succeed. Keep checklists of what needs to be done and keep your papers in order. When you reach into your bag for something, make sure the bag is well organized. I once read that everything a client sees tells a story of how you run your business. Barjes Angulo, RICP, LUTCF, has owned Angulo Strategies for more than 10 years and has been in the financial industry for 20 years. Barjes may be contacted at barjes.angulo@innfeedback.com.

INSIGHTS

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

It’s OK To Step Away: Strategic Time Management A healthy work-life balance leads to enhanced productivity, higher revenue and greater personal satisfaction. By Judy Byle-Jones

here are two kinds of freedom in life: time and financial. Both are dependent on one another. Financial professionals can achieve autonomy, which is a fundamental component of success, through strategic time management. A healthy work-life balance can make all the diﬀerence when you work in a demanding industry. It can lead to enhanced productivity, higher revenue and greater personal satisfaction.

Streamline Your Time

On average, I take one to two weeks of vacation per month. The organizational skills I acquired from The Strategic Coach, Dan Sullivan, enable me to complete my responsibilities in a highly productive timeframe so that I can enjoy ample time away from the office. If you struggle to manage priorities and want to enhance your efficiency, consider organizing your days into three categories. Your focus days should be your money-making days in which you actively meet with clients and enact their financial objectives. Buffer days are those that are not directly tied to profits, but involve necessary obligations such as meetings with lawyers, bankers, accountants and other professional partners. Your free days are then yours to spend as you wish. Color code your day planner to hold yourself accountable to the division you establish for your schedule. Over time, you’ll find your identified focus days will lead to extreme productivity and allow you to maximize your free days. You can be successful and never take a day off, but I believe your potential has a cap if you do not make time for your

personal life. Many in our industry are hesitant to take oﬀ work for extended periods of time, or even a few days. If you lead a “workaholic” lifestyle, be aware that this may lead to burnout. Even if workaholic individuals take a day oﬀ, they are often accessible by phone and are not completely disconnected.

Unplug And Refocus

Allow yourself to take time away from work to refocus. The energy you gain will help you approach your focus days more efficiently. When you do step away from the office, ensure you are truly disconnected. For extended breaks, you may feel obligated to check emails periodically to make sure all is well at the office. However, it’s also ideal to set aside a few days to leave your phone behind and unplug, knowing your colleagues are prepared to operate in your absence. As I have taken more time oﬀ over the years, I have noticed an increase in profitability. Although there are many underlying factors for this, it’s important to note that you can achieve a work-life balance without sacrificing revenue.

Retirement Transition

Advisors who are early in their careers may not feel comfortable with extended time off, but I encourage advisors approaching retirement to take significant breaks to ease the transition. If you can see the benefit of time away from the office, you’ll be in a favorable position to pass your business to successors. Your free days will multiply and your focus days will be less frequent, but become even more important. Use this time to pass on your knowledge to make sure your clients and successors are comfortable with the changes. At this point in my career, the majority of my focus days entail introductions between my current clients and those who bought the investment side of my practice. We prioritize joint meetings for our top 10 clients when I am in the oﬃce.

While the full transition will take about three years, my successors can learn from me and start to implement their own unique strategies as they become the principal decision-makers.

Community Involvement

Community involvement stimulates your mind and puts your career into perspective. I pride myself on my volunteer work with organizations such as the MDRT Foundation, my local women’s shelter, Beautiful World Canada and more. These experiences keep your mind sharp, connect you to people from diﬀerent walks of life and help you recognize each person’s unique journey. Translate this to your profession to understand the intricacies of plans based on your clients’ specific needs that are unlike one another.

Whole Person

MDRT’s Whole Person initiative is a great point of reference to help you shift to a positive work-life balance. The seven pillars that define the whole person are relationships, health, education, career, service, financial and spiritual. If you find any of these areas of your life are off balance, consider how you can make time to achieve equilibrium. Evaluate the distribution of each of these areas across your free, buﬀer and focus days. Remind yourself that time away from work has direct benefits to your personal and professional life and will set you up for success as you progress in your career. Judy Byle-Jones, CLU, ChFC, is a 35-year member of MDRT with four years qualifying for Court of the Table. She specializes in working with high-net-worth individuals in the areas of retirement and estate planning. Judy is the author of A Woman’s Road to Riches and is past president of the Canadian MDRT Foundation. Judy may be contacted at judy.bylejones@innfeedback.com.

June 2019 » InsuranceNewsNet Magazine

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.

Understanding Annuity Buyers Defining the profiles of annuity buyers underscores the varied priorities of individuals who purchase annuities.

shows that they trust their advisors and their risk tolerance is low. Forty-three percent of Americans can be described as guarantee seekers.

By Todd Giesing

2. Estate Builders

any uncertainties exist when it comes to planning for retirement. LIMRA Secure Retirement Institute research finds the top goal for American pre-retirees is to have enough money to last throughout their retirement. Owning an annuity can help them achieve this. As Americans turn 65 at a rate of 10,000 a day, it is not surprising that annuity sales have increased over the past year. In 2018, total annuity sales were $233.7 billion, increasing 15% from 2017 sales results. Fixed annuity products drove this growth, totaling $133.5 billion, 27% higher than the prior year and an all-time high for fixed annuity sales. LIMRA SRI analysis shows that a majority of these trends will continue over the next few years. In our report, “A Future View of Annuity Sales — Overall Individual Annuity Market Forecast 2019-2023,” we predict the fixed annuity market will continue to thrive. We are forecasting fixed annuity sales to reach $180 billion by 2023, representing more than 60% of total individual annuity sales. Understanding the needs and financial priorities of buyers is critical when selling annuity products. LIMRA SRI published a study of recent annuity buyers, comparing the age, contract size and types of products of individual annuity owners to help advisors and companies better understand the profiles of different annuity buyers. LIMRA SRI research shows that pre-retirees and retirees can be broken down into three different groups.

1. Guarantee Seekers

These individuals show an overwhelming preference for creating a lifetime stream of guaranteed income. LIMRA SRI research 76

InsuranceNewsNet Magazine » June 2019

This particular group views portfolio growth to be the most important. They commonly want more control over how their assets are managed, and they cautiously trust advisors. Estate builders’ investment risk tolerance is considered high. Thirty-four percent of Americans have these characteristics.

3. Asset Protectors

This faction has preservation as their primary goal. They have low risk tolerance. They typically have a high ownership rate of CDs and Treasury bills. Slightly less than one-quarter (23%) of Americans have these goals. Variable annuity buyers may choose different types of VAs based on their investment objectives. In 2018, the total amount of VA retail new premium sold was $68.4 billion. More than half ($37.4 billion) of that premium was sold to clients looking for guaranteed income. They purchased products that included some form of guaranteed living benefit. Meanwhile, $31 billion of VA retail new premium was sold to clients looking for market growth, as they bought annuities that didn’t include a GLB (either they weren’t available or they were not elected). Just less than $1 billion was bought for both protection and market growth (sales include VA with a guaranteed minimum accumulation benefit rider). Defining the profiles of annuity buyers underscores the varied priorities of individuals who purchase annuities. For many, creating a guaranteed income stream drives their interest in purchasing an annuity, but others value the asset protection annuities offer, and still others prize the tax deferral advantages and opportunity for portfolio growth. Understanding these distinct goals will help advisors align the most appropriate product with their clients’ financial priorities.

Age is another factor that plays into the decision to purchase an annuity, according to our research. The average age of those who purchased all annuities, except for fixed immediate annuities, ranges from 58 to 67. VA buyers, on average, are just over 60 years old. However, there was a difference of age in buyers who elected for guaranteed living benefits. The average age of a VA buyer who had a GLB was 63 years old, while a non-GLB buyer was an average of 58 years old. GLB buyers also often had a higher average of initial premium: $165,000 for products with a GLB elected versus $123,000 for VA products without a GLB rider. Indexed annuity buyers, on average, are 63 years old and looking for protected growth, guaranteed lifetime income options or a combination of both. Twothirds of indexed annuity premium is being invested by individuals between the ages of 56-70, a clear sign that individuals nearing or entering retirement are seeking guarantees for a portion of their retirement assets. Fixed-rate deferred annuity buyers tend to be older, 67 years old on average. These products, which offer the client the comfort of principal protection with a guaranteed rate of return, also have a lower average initial premium: $103,000. These buyers likely display asset protector characteristics and are looking for a blend of principal protection and guaranteed growth. Understanding clients’ retirement and investment objectives, and taking into account their age and accumulation stage through a retirement planning process enables advisors to make informed decisions about the appropriate annuity for their clients’ portfolios. Todd Giesing is director of annuity research, LIMRA Secure Retirement Institute. Todd may be contacted at todd.giesing@ innfeedback.com.

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