InsuranceNewsNet Magazine | July 2021 by InsuranceNewsNet

Meet pro athletes who became financial success stories in their post-playing days — as well as a few who didn’t.

PAGE 20

Life in a digital world How Legal & General America is harnessing technology to help advisors and agents close the life insurance coverage gap — a need that extends to more than 100 million in the US.

Enhancements and new digital tools to get families covered faster. PAGE 14

Closing the coverage gap one family at a time So Maria reached out to the family’s financial professional, who validated much of what they had learned online, including the latest news around exam-free life insurance approvals.

“ She had an instant decision and her policy digitally delivered the same day. All without the need for an exam or bloodwork — and all from her smartphone.”

A typical day during the pandemic might see 32-year-old Maria Perez working from her makeshift home office on the day’s third video meeting, while her husband and five-month-old daughter are upstairs working through a fussy moment. As remarkable as today’s technology is, with video calls, texts, IMs, and computerized customer service chats, it can seem a little impersonal. “After a while, you start to feel like a bunch of pixels yourself,” Maria says with a snicker. With busy lives, Maria and her husband shop almost exclusively online — from diapers to dinners, just about anything they want can be delivered to their doorstep. But when it came to buying life insurance coverage for herself, Maria wasn’t quite sure. “We did all our homework — even got a couple quotes online — but this wasn’t something we were comfortable doing without talking to someone first.”

Maria’s agent set her up with a 35-year term policy for $1 million of coverage from Legal & General America (LGA) that matched her current needs. He says he’s glad they reached out. “Maria had a couple questions once she started the digital application that I helped answer. She had an instant decision and her policy digitally delivered the same day. All without the need for an exam or bloodwork — and all from her smart phone.” “We’re just looking forward to our lives getting somewhat back to normal. And when we do, it’s nice to know that our family is protected with life insurance,” Maria finishes. Do you have prospective clients who may be in a situation like Maria’s? Learn more about how LGA is offering advisors a better way to give clients the affordable insurance protection they need and the simple, fast and personalized journey they want. Turn to page 14 to discover what Legal & General America is doing to help advisors and agents give clients the best experience possible.

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IN THIS ISSUE

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JULY 2021 » VOLUME 14, NUMBER 7

HEALTH/BENEFITS

FEATURE

Hall Of Fame, Fall Of Shame

By John Hilton Why are so many professional athletes going broke? Stories of those who made it big, those who crashed and burned, and those who devoted their careers to providing the right kind of financial advice.

online

www.insurancenewsnetmagazine.com

38 The High Cost Of Health Care Burnout By Jeff Brunken America’s health care workers are struggling with high stress levels. Is their disability insurance adequate for their needs?

ADVISORNEWS INFRONT

42 Advisors Are Helping Clients Grow Greener

IN THE FIELD

6 Accelerated Underwriting Data Reporting Pushed To 2024

16 Engineering The Future

By John Hilton A National Association of Insurance Commissioners’ working group delayed defining accelerated underwriting and related data elements for another year.

By Susan Rupe Christopher Stroup uses his engineering skills to help his clients plan for their unique needs.

LIFE

30 Responding To Client Needs Amid Changing Market Forces By Stafford Thompson Jr. The need for coverage continues to grow despite significant disruption in the industry.

ANNUITY

INTERVIEW

34 G reen Thumb Index Strategies For All Seasons

8 From Door To Door To Top Producer

Shane Westhoelter started out selling small insurance policies door to door until a child’s death made him realize his “why.” In this interview with Publisher Paul Feldman, Westhoelter describes how endurance, persistence and focus led him to become a top producer.

By Jeff Barnes Different index crediting strategies thrive in different environments.

By Steven A. Morelli Sustainable investing is attracting more investor interest as more advisors expose clients to the option.

INBALANCE

46 The Five W’s Of Creating A Memorable Family Reunion By Susan Rupe Family members have been separated long enough, and it’s time to plan an event to bring everyone back together.

BUSINESS

48 Separating The Wheat From Chaff

By John Pojeta How to filter through your prospect list to find those most likely to buy.

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InsuranceNewsNet Magazine » July 2021

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WELCOME LETTER FROM THE EDITOR

Football, Money And Family Folklore Windber Stadium in Somerset County, Pa., was built on the site of the prior stadium which was home to the Ramblers from the 1950’s.

s you’re driving west on Pennsylvania Route 56 toward my hometown, one of the first things you see as you approach the edge of town is the huge football stadium on your left. That stadium has been a fixture in that small town since 1949. Over the years, thousands of spectators have turned out on frosty autumn nights to watch their sons, brothers and neighbors battle it out on the field in that spectacle called high school football. To the young men of my generation and the one before it, football was a ticket out of the coal mines and into college. A football scholarship would lead to an education. If you were one of the fortunate few, an outstanding college gridiron career might even lead to a chance to play in the NFL. And if you were lucky enough to go 4

InsuranceNewsNet Magazine » July 2021

that far, the sky would be the limit. You would make insane amounts of money, own a beautiful home (or two or three) and a fleet of expensive cars. You would be set for life. But maybe not. As we see in this month’s installment of InsuranceNewsNet’s annual feature, “Hall Of Fame, Fall Of Shame,” a professional athlete’s life frequently is one in which a few years of massive paychecks are followed by a lifetime of significantly reduced earnings. The problem is that many of these athletes prepared so hard for their brief professional sports careers that they failed to prepare for the long and often lean years that follow. Some athletes, however, bucked that trend. They made successful investments or they transitioned into second-act careers. We tell the stories of some of these

athletes as well. The difference between those who are members of the financial hall of fame and those whose faces grace the wall of shame often boils down to education. Somewhere along the line, the financially unsuccessful athletes never received life lessons about money. Either they had poor money management role models at home, they received no financial education in school or they failed to seek out professional advice. Suddenly, they were awarded that multimillion-dollar contract and had no idea what to do with all the money — so they spent it. Reading the stories of those who became financial “haves” and those who ended up as financial “have nots” reminded me of the ways money is so ingrained in our family folklore. Now that the pandemic restrictions have lifted and our family can plan its annual reunion, I’ve been thinking a lot about those stories and worn-out jokes that family members tell over and over. Most of our family tales relate to one of two topics: food and money. It made me realize how much of my attitude toward saving, spending and money in general is shaped by my family background. I am the granddaughter of immigrants who struggled to raise their children in the midst of the Great Depression. And my parents took that “depression mentality” with them when they left home and started their own family. Hearing stories about someone who was left permanently disabled in a mining accident or about someone who was widowed at a young age and left to raise several children on her own drove home the fact that life can turn on a dime. Sometimes that proverbial rainy day turns out to be a deluge, and you need to plan for it. You might never get the opportunity to advise a professional athlete, but you can make sure your client doesn’t end up with a massive “fall of shame.” You are your clients’ financial coach and the guidance you provide will ensure they have a winning season. Susan Rupe Managing Editor

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INFRONT

Accelerated Underwriting Data Reporting Pushed To 2024 A National Association of Insurance Commissioners’ working group delayed defining accelerated underwriting and related data elements for another year. By John Hilton

eporting data on accelerated underwriting to regulators would seem to be a noncontroversial idea. Alas, all is not as it seems. All parties must agree to define “accelerated underwriting” before any data can be collected. A National Association of Insurance Commissioners’ working group was unable to do that after weeks of meetings and discussion. Instead, the group delayed defining accelerated underwriting and related data elements for another year. And that means accelerated underwriting data collection will be pushed back one year to 2024. Regulators claimed they were being rushed to meet a June 1 deadline to complete the work. “We need to be really clear and have a better idea of what exactly we’re looking at,” said Paul Hanson, chief examiner, market conduct exams, Minnesota Department of Commerce. “And while it may take another year, that’s regrettable. But on the other hand, it’s better to have a good handle on it rather than 6

InsuranceNewsNet Magazine » July 2021

just a race forward.” Consumer advocates were disappointed by the delay and fought it until the final meeting. “Many months and hundreds of hours of work went for naught,” said Birny Birnbaum, director of the Center for Economic Justice. “With this non-action by the regulators, insurers remain unaccountable and consumers remain vulnerable to insurers’ use of big data, artificial intelligence and black box algorithms in auto and home insurance claims settlement and life insurance underwriting.” The Market Conduct Annual Statement working group set a June 1 deadline to finalize its definitions and data elements in order to complete the entire process in time for 2022 data collection on accelerated underwriting for reporting in 2023.

A Uniform System

Created in 2002, the MCAS provides regulators with a uniform system of collecting market-related information to help states monitor the market conduct of companies. New areas of information collection are periodically added to the MCAS. The problems with the accelerated underwriting effort arose in May when the NAIC announced that the working group would not be able to complete its work by June 1. After consumer reps criticized the delay, the MCAS subject matter experts reversed course and agreed on a definition, briefly putting

the process back on track. The subject matter expert group sent this definition to the MCAS Blanks Working Group: Accelerated Underwriting: For purposes of MCAS reporting, accelerated underwriting means applying predictive modeling in the underwriting or pricing of life insurance using (in whole or in part) non-medical data obtained other than consciously provided by the applicant or policyholder. But Rebecca Rebholz, chair of the MCAS Blanks group, noted that the subject matter expert group was far from a consensus on the language. “Our subject matter expert group did not contain enough regulators to really have a full discussion from the regulator perspective,” she said. “I brought it forward simply because we were at an impasse in the subject matter expert group. And we had reached the end of our time.” Accelerated underwriting, also called “express underwriting,” is making it faster and easier for people with good health and good credit to obtain life insurance. With it, consumers can get a fully underwritten, regularly priced term life insurance policy of up to several million dollars without a medical exam. Insurers are excited about the speedy underwriting capabilities, which were boosted by the pandemic, since many

ACCELERATED UNDERWRITING DATA REPORTING PUSHED TO 2024 INFRONT consumers view the doctor’s exam as a major barrier to purchasing life insurance. However, the data usage is coming under scrutiny by consumer groups and

credit data, social media, facial analytics and more, Birnbaum said. Some regulators on a late May call questioned why the accelerated underwriting

If you open it up to accelerated underwriting means any type of data used, then everything would be recorded as accelerated underwriting.” — Birny Birnbaum state regulators. States such as Colorado are considering proposals to limit the use of big data.

Questionable Data Use

Consumer representatives are most concerned about questionable data sources that fall outside “the disclosure and consumer protection provisions of the Fair Credit Reporting Act,” as the Center for Economic Justice wrote in a letter to the NAIC. These data sources include consumer

definition was not more specific on data sets that can be misused. Birnbaum, who was a member of the SME group, said the definition is intentionally narrow. “If you open it up to accelerated underwriting means any type of data used, then everything would be recorded as accelerated underwriting,” he explained. “And there would be virtually nothing that can be recorded other than accelerated underwriting.” The American Council of Life Insurers opposed the definition and endorsed

allowing another working group, the Accelerated Underwriting Working Group, to do the work. A spokesman for the trade association said the delay is the best course of action. “The purpose of MCAS is for regulators to gather data that will help protect consumers. Gathering data based on a definition that is incomplete will not help the regulatory community fulfill this mission,” said Whit Cornman, director of media relations for ACLI. “It’s important that the working group allows time for sufficient stakeholder input on the definition of accelerated underwriting and meaningful coordination among the various NAIC workstreams examining this important issue.” InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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INTERVIEW

Shane Westhoelter focuses on quality life planning to ensure his clients have dignity when it matters most. An interview with Paul Feldman, Publisher 8

InsuranceNewsNet Magazine » July 2021

FROM DOOR TO DOOR TO TOP PRODUCER INTERVIEW

hane Westhoelter started his insurance career selling small policies door to door until the death of a young boy in a drive-by shooting made him realize his “why.” And it inspired him to start a practice that has grown nationwide. Today, he is president and CEO of Gateway Financial Advisors, with 180 offices around the country. Endurance, persistence and focus are the qualities of a good advisor. And they also are the qualities of a top athlete. Before Westhoelter found his calling in the insurance business, he was an elite athlete who qualified for the 1980 Olympics. He took the lessons he learned from his athletic career and applied them to his work in helping his clients prepare for the “ifs” in life. In this interview with Publisher Paul Feldman, Westhoelter describes his focus on quality life planning and how he took his practice to Olympic levels. FELDMAN: Tell us about your practice. WESTHOELTER: We started Gateway Financial Advisors in 1990 and did doorto-door, individual sales. We have grown to 180 offices nationally, and we have about $2 billion in assets under management on the financial services side. We do full, comprehensive planning. Our focus is quality life planning, taking the “if ” out of life so you can live. We focus on: What if I live? What if I linger? What if I leave? What is my legacy? Feldman: What does quality life planning mean, and how does that work for your clients?

check allows me not to have to ask my family, my friends, my church for the money to get my son the send-off he deserves. So thank you for allowing me to keep my dignity.” With that, it resonated with me that we’re in a business that provides people with dignity when it matters most. That kind of built its way into quality life planning. It’s making sure that, as I like to say, we plan for the expected and ensure against the unexpected and make sure that we have money to pay for the things that we need when it matters most. We focus on what if I am sick or disabled? Do I have the means — either insurance or wealth — to provide for the quality of care that I desire? If something were to happen to me unexpectedly, will my family have proper coverage in order to maintain the quality of life that they’re accustomed to? FELDMAN: I understand that you trained and qualified for the Olympics. How has that impacted and influenced your career and work? WESTHOELTER: I was all around sports growing up, and I was very competitive — basketball, football, track, soccer, baseball, swimming. In high school, I was a wide receiver in football and was good in track and cross-country. When I was a sophomore in high school, my football coach

Junior Olympics, kept focusing on running track in college and eventually made it into the U.S. Olympic qualifying team. But that was the year the U.S. decided to boycott the Olympics. So it was a slap in the face for my teammates and me. It changed my life, and I had to make a decision: I’m either going to continue on for another four years to see if I can make it to the Olympics, or I’m going to give it up. I gave up at that point because other things were happening in my life, and I decided to move on and focus on those things. From sports, I learned discipline and determination, the agony of defeat, and some degree of success. But my takeaway from all this was not to worry when something doesn’t work out. When one door closes, another one will open, and that mindset is probably why I am successful today. I don’t worry about rejection. If something doesn’t work out, I’ll find another way to make it happen. FELDMAN: You work with some professional athletes. What are their needs? WESTHOELTER: Financial literacy. They’re not taught on the front end how to manage their money, what to expect. I’ll use the NFL as an example; even on the practice squad, people are making $600,000, maybe even $800,000 a year. So they’re right out of college and making

It resonated with me that we’re in a business that provides people with dignity when it matters most. That kind of built its way into quality life planning.

WESTHOELTER: Quality life planning actually started when I got into the business in 1988. I was going door to door, selling $5,000, $10,000 life policies. I delivered my first death claim check to a mother who had lost her 7-year-old son in a drive-by shooting. As I delivered that check, we reminisced and laughed and cried, and she shared stories about her son. Then she said something to me that really changed my life: “Thank you for delivering this $10,000 check to me. It may not be a lot of money to you, but for me, this

said he wanted me to start on the varsity team, but he wanted me to cut my hair. I also played drums, was in a band and loved my music. And I said I wasn’t cutting my hair. So the coach told me, when you cut your hair, you can come back. But the track coach said as long as I wore a bandana, he didn’t have problems with my long hair. So cross-country and track became my focus. When I was a junior in high school, I qualified for the

that kind of money, and they think life is great. What we find is by the second or third year, they’re playing to pay off the debt they incurred in their first year. I found that a lot of athletes realized that when they stopped playing, they stopped getting a paycheck. They have to file for bankruptcy because they’re broke. How do you take someone who might be making millions of dollars a year and then, say, five to seven years later, your July 2021 » InsuranceNewsNet Magazine

INTERVIEW FROM DOOR TO DOOR TO TOP PRODUCER job’s over now and you have the rest of your life to live? We work with them to help them plan what they will do for the second half of their lives. I think the other side of that is we have a perfect opportunity for them to come into the industry, and they’re great role models. And so if we can help them transition into a post-career, whether that’s in our industry or something that they have a passion for, that’s a great service that we can all provide to them. And we have those contacts in our industry to help them find that second career.

friend of mine. At the end of the presentation, the pastor said, “Mr. Schulman, I like what you’re telling me. But I really need to pray about it to make a decision.” Mr. Schulman was sitting at the kitchen table with us and he asked, “Well, pastor, where do you pray about things?” And the pastor said, “Normally, I pray in my study over there.” Al said, “Why don’t you take a moment and go in your study over there and pray about it?” The pastor got up, went to his study, and came back about five minutes later. He said, “The Lord has told me that I need to put this off until Tuesday of next week. If you guys Feldman: You started come back Tuesday, we out selling life insurance can pick up this conversadoor to door. How did tion again.” you get involved with Mr. Schulman said, that? “Pastor, do you mind if I use your study for a minWESTHOELTER: I was ute?” Mr. Schulman went in college, planning to go into the study and two into corporate law, and minutes later, he came I was in sports as well. back and said, “Pastor, I But after two years, I left have good news and bad school, started a family news. The good news is “I had great mentors. What really and became a cable lineyou definitely got some resonated with me was the passion man. My brother had been directions, but the Son in and out of the insurgave you the wrong inforthey had — the belief that what we do ance business, and he told mation. The Father would can change people’s lives forever. We me he thought I would be like to speak to you.” And bring money when it matters.” good in the business. the pastor just kind of I started out selling laughed and said, “OK, $5,000, $10,000 face value policies door After I started in the business, I began to where do I sign?” to door in inner-city St. Louis. I had to believe that the No. 1 course everyone We don’t have that kind of mentorgo back every month and collect the learns in college should be why insurance ship anymore because the industry has premiums. After four months in the is relevant, but we’re still not there 30 changed a lot. And we don’t have the guts business, my manager said he wanted years later. or the fortitude or the conviction to sit me to study for my LUTCF designation there and say, look, I’m not leaving unand said it would get me on track to be- FELDMAN: What did you find most in- til you make a decision. And if you make come a professional in this industry. So I fluential in your early years in the in- a decision that you don’t want to do it, started down that path. dustry? that’s fine. Then please sign here to reWhile I was working on my LUTCF, lease me from all liability going forward. one of my classmates asked whether I WESTHOELTER: One of the mentors wanted to work nights and weekends to who was instrumental in my life was FELDMAN: When did you make the pick up some extra money selling ordi- Norm Levine. He was an amazing guy transition from focusing on life insurnary insurance. And I joined Franklin and was always there to tell us great ance to becoming a financial advisor? Life. I worked the debit business during stories. Also, people like Al Schulman the day and worked with Franklin Life with Franklin Life back in St. Louis. He WESTHOELTER: When I was doing on nights and weekends. Eventually I would go with me to prospects’ homes what we would call ordinary business, reached the point where I could get out on nights and weekends and help me by the industry began to change. I was lucky of the debit business and go full time in telling great stories. in the sense that as new products such the ordinary business, which is what they Al was a devout Jewish man. I took him as variable life came out, we had to get called it back then. to the home of a Baptist pastor who was a our Series 6 license. Then we had to learn 10

InsuranceNewsNet Magazine » July 2021

I had great mentors. NAIFA and some other industry organizations were instrumental in my career. I would go to meetings and listen to all the greats in the industry tell their stories. What really resonated with me was the passion they had — the belief that what we do can change people’s lives forever. We bring money when it matters. This industry is totally misunderstood.

FROM DOOR TO DOOR TO TOP PRODUCER INTERVIEW about mutual funds, and 401(k)s were becoming popular. It was the time when the industry was developing new products, and the equity and security side of the business began to cross over into the life insurance side of the business. I got my Series 6 and my Series 7. I got my principal license for some fee-based business, and nobody thought we would do fee-based business. We thought it was just a fad. But we started to grow in that direction, and we are probably doing more of that than we are the commission-based business. It was never by design, but it was more by default in that the industry required it and my clients want it. We started picking up business on the 401(k) side and doing some life insurance for executive business owners. They said, “Can you take a look at my 401(k)? Can you take a look at my health insurance?” So we did that. Then clients asked, “Can you take a look at my workers’ compensation insurance and what about my commercial insurance?” So we got into the property/casualty business. Gateway now is property/casualty, life insurance and securities. That’s the holistic approach we take. FELDMAN: How did you build your practice to the level it is today? What are some things you learned along the way? WESTHOELTER: I was very strong in marketing. I always liked being out there in front of the public doing workshops and seminars. In the insurance side of the business, I was doing client seminars, and I also had a radio show called “Healthy, Wealthy and Wise” that ran every Saturday morning. That was the way to stay in front of people. And that led to my having more clients than I could keep up with. So I started recruiting people to come work with me. I did a few things that really took off. I would do seminars and have 30, 40 people show up, and 10, 20 of them would become clients. And I did that every Wednesday at 3 p.m. and 6 p.m. three weeks out of every month, 10 months out of every year for seven years. At the end of that period, I had so many clients that it led to me being invited to do seminars

in other states. Then we had people on the West Coast asking to merge with us. Over time, we ended up with 180 to 200 offices, and people are still gravitating to us. They say, “Shane, I like what you do. I like your concepts. How can I join your organization?” At one point in my career, I said, “I’m going to do what I know works very well.” And I guess the law of attraction kicked in, and people were attracted to it. FELDMAN: Do you recruit new agents or look for people who already have experience? WESTHOELTER: Probably 80% are people who have five years or more of experience but maybe are not happy where they are. The other 20% or so are new agents coming into the business. We work those new agents in with more senior advisors who might be looking to retire in the next three to five years or maybe are looking to expand their business and they need a kind of junior partner. We’re not necessarily looking at college students, and we don’t have a program where we can put someone in and finance them. But we do look at bringing somebody in and putting them into a senior office. We’ve found that to be a lot more successful because it’s kind of oldschool, where they’re getting that oneon-one mentoring from someone who’s already a success. FELDMAN: What is your advice to agents who are looking to bring somebody new into the business? WESTHOELTER: Does the new person need a financial runway? Can you provide some type of a salary with commission or bonus programs? Or do you have a book of business that maybe you can spin off a couple of hundred households or $10 million, $20 million of AUM and help get them started? I really think the way I started in business going door to door doesn’t work anymore. I think we must be more creative. Can we find that same type of opportunity by using LinkedIn, doing Facebook posts, doing a podcast? Absolutely. I don’t think anything has changed in our business and how people will do business. I think what has

changed are how we market and how we find those who need our services. FELDMAN: I know a lot of people don’t like thinking about scripts. How do you develop scripts, and how do they change over time? WESTHOELTER: I was brought up on scripts. Everything in my training was scripted — here’s what you do, here’s how you act, here’s how you do it, here’s what you say. And we’ve trained that way in our office. We have a form for everything. This is the way we meet clients, this is how we close the office — everything is standard operating procedure. With sales scripts, it’s the same way. I don’t want to sound like a robot. You have to personalize the script, but you have to have a track. So before the client comes in, I know exactly what it is I want to accomplish. I want to ask the client what they want accomplish, and then I make sure we stick to those points in the time frame that we have. And if we need more time, I simply say, “Our time has run out for today. I’m going to have to reach you for a second interview. Can we set another time when we can continue with the next things we need to discuss?” I don’t want them to feel rushed. FELDMAN: You often tell clients the hundred-person story. What is it? WESTHOELTER: The hundred-person story came from the Social Security Administration taking a look at 100 average Americans from the start of their careers until they retire 40 years later. One will be wealthy, four will be financially secure, five will have to continue working, 36 will be dead and 54 will be dead broke. So the question to ask someone is, in which of these categories would they like to end up. And that leads into the next phase of your presentation, which is I have some solutions for how we can talk about that. I think it’s a very powerful tool.

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July 2021 » InsuranceNewsNet Magazine

NEWSWIRES

QUOTABLE

Post-Pandemic Growth Could Last ‘For Years’

A lthough some economic indicators could be peaking or about to peak, the stage is set for a post-pandemic growth cycle to continue for many years, according to Ryan Detrick, chief market strategist for LPL Financial. As a result of strides toward a full reopening, rapid vaccine distribution, massive stimulus efforts and support from the Fed, LPL recently upgraded its 2021 forecast for U.S. gross domestic product growth to 6.25%-6.75%. Just because economic data is peaking doesn’t mean the new expansion is over, Detrick said. In fact, he said it’s perfectly normal to see the year-over-year levels of growth peak about a year after a recession ends and be followed by many more years of growth. The average expansion has lasted more than five years, with the past four cycles all lasting longer. The last expansion was the longest ever, topping off at 11 years before COVID-19 struck, and otherwise might have gone on even longer. However, this cycle may not last as long as the last one, as this wasn’t your average recession, he said. backed up the view that the Fed has no intention to change course on interest rates.

WHO WOULD PAY THE TOP TAXES?

OUTLOOK BRIGHT BUT UNEVEN, FED OFFICIAL SAYS

The outlook for the U.S. economy is bright, but the path of the recovery is likely to be uneven and difficult to predict. That was the word from Lael Brainard, a member of the Federal Reserve board. The Fed has said it will not start raising interest rates until it has achieved maximum employment and annual price gains that have not only hit the Fed’s 2% target but exceeded that target for a period of time. The Fed has kept its key interest rate at 0 percent to 0.25% for more than a year and signaled that it will keep rates at this level at least through 2023. Brainard’s comments

President Joe Biden proposed a 39.6% top marginal income tax rate, up from the current 37%, to help fund the American Families Plan. That rate would affect single individuals with taxa ble income of more than $452,700 and m a rri e d co u ples filing jointly with income over $509,300, according to a budget proposal. The 39.6% top rate would kick in during the 2022 tax year, according to the proposal. That means it would apply to tax returns filed in 2023. Congress would still need

A lot of pent-up demand is getting satisfied here both in goods and services. — Ed Yardeni, president of Yardeni Research

to pass legislation enacting the policy, which isn’t assured. But the top rate is slated to increase even if Congress doesn’t pass Biden’s proposal. The 2017 Tax Cuts and Jobs Act’s individual tax reductions will lapse after 2025 because of the way Congress structured the law.

ECONOMIST ON INFLATION: EVERYTHING WILL SETTLE DOWN The U.S. Consumer Price Index for April rose 4.2% from the same period last year, its sharpest rise since 2008, causing investors to fear inf lation is rearing its ugly head as the nation moves past the COVID-19 pandemic. But one economist says, “Not so fast.” Carl Weinberg, chief economist at High Frequency Economics, told CNBC that the sudden shift from total shutdowns of the services sector to a more balanced distribution of price pressures across the economy would eventually stabilize inflation. Weinberg suggested that inflation is “the least bad outcome” for the Fed. He said he believes the central bank’s priority is getting the nation’s employment level back up to a substantial and sustainable level.

DID YOU

KNOW The Federal Reserve will release a research paper this summer

that exploresSource: a move to a central bank digital currency. Source: CNBC National Association for Business Economics

InsuranceNewsNet Magazine » July 2021

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July 2021 2021 »» InsuranceNewsNet InsuranceNewsNet Magazine Magazine July

15 15

the Fıeld

A Visit With Agents of Change

It took a career change and a cross-country move for CHRISTOPHER STROUP to find happiness helping others plan their financial futures. BY SUSAN RUPE 16

InsuranceNewsNet Magazine » July 2021

hen Christopher Stroup looks out the window of his office at Abacus Wealth Partners, he can see the Pacific Ocean off the coast of Santa Monica, Calif., on one side. And he can see the Malibu mountains on the other. The setting is a big change from the small town in Pennsylvania’s Northern Tier where he grew up, and from the oil fields of Bakersfield, Calif., where he landed after college. Stroup’s search for happiness and his quest to live an authentic life led him to a career change and a move to the Greater Los Angeles area, where he advises young professionals and startup founders, with a focus on the LGBTQ community. The 30-year-old advisor has been at Abacus for two years and is a Financial Planning Association NexGen ambassador. A love of mathematics and an interest in geology inspired Stroup to study petroleum and natural gas engineering at Penn State University. After he graduated with honors, Chevron hired him to work as a reservoir engineer in the Cymric/ McKittrick Oil Field near Bakersfield. “When we were out in the field, we had to wear a fire-retardant jumpsuit, steeltoed boots, a hard hat and snake chaps — depending on the season,” he said. “My days were spent waking up at 5 a.m., catching the 5:45 a.m. van pool, riding 45 minutes to the Cymric Oil Field to catch a 6:30 a.m. operations meeting, working until 4 p.m., and then catching another 45-minute ride back to Bakersfield.” Despite the long days and harsh working conditions, Stroup was making good money. But after three and a half years in the oil industry, he realized he wasn’t happy. “The industry was going through downturns, the commodity price of oil was plummeting, people lost their jobs — although I was fortunate enough to keep mine. I realized I pigeonholed myself as a petroleum engineer and I couldn’t easily fit into another industry as I would if I were a mechanical or chemical engineer. So I felt a little bit trapped from a professional standpoint.” Stroup also came out as a gay man during that time and decided to switch careers as he worked to live a more authentic life. He went back to Pennsylvania,

ENGINEERING THE FUTURE — WITH CHRISTOPHER STROUP

where he earned an MBA from Drexel University in Philadelphia. But his heart was in California.

Seeing His Best Self

“After six months of living in Philadelphia, I realized that Los Angeles was actually my home … it’s where I saw my best self in the long run,” said Stroup, who grew up in Troy, Pa. While studying for his MBA, Stroup considered the type of career that would make him happy. A career counselor steered him toward an internship at Goldman Sachs, and his interest in financial planning and wealth management took off from there. “One of the core values that drew me to financial planning was having an entrepreneurial spirit,” he said. “Because even though I work for Abacus and I am part of the firm, I ultimately think of myself as being my own little business. I like the philosophy and mindset of owning my future. And I want to have the responsibility of taking ownership of someone’s financial life and helping them navigate that journey. I want to help people live the life they love, and I believe as an advisor, you can do that.” As the son of educators, Stroup said he values the emphasis the industry places on lifelong learning. “I like the fact that our industry requires you to be a lifelong learner,” he said. “Because tax laws change, estate laws change, how we think about the market changes. All of this requires you to keep up to date to ultimately add value for your clients.” A fellow member of the Penn State Alumni Association in Los Angeles worked for Abacus and suggested Stroup consider joining the firm. One look at the company’s website convinced him it was the right place. “There was a dropdown on the website that said ‘LGBTQ,’ and when I clicked on it, there was a page with all the smiling faces of their advisors who identified as members of the LGBTQ community. I thought to myself, ‘This is my tribe. I see myself on this page.’” Stroup said he was sure that Abacus “would embrace my authenticity. I knew I could be myself and that my uniqueness as an individual would be celebrated at Abacus.”

He was hired at Abacus in June 2019, about nine months before the COVID-19 pandemic hit. “As an up-and-coming advisor, I think the pandemic made for some challenges, but it also brought opportunities. It makes it harder to network to a certain extent. But it also changes how you ultimately reach your target audience,” he said. Stroup said being tech-savvy helped during that time “because instead of meeting people in person, now you’re going to the airwaves, you’re going to webinars, you’re creating social media posts. You’re connecting people via

IN THE FIELD

“It was an opportunity to get out there from a marketing standpoint and show your worth to potential clients that might have not been available had there not been a remote environment,” he said.

Working With The C-Suite

Many of Stroup’s clients are senior leaders or C-suite executives in their companies. He also enjoys working with entrepreneurs in the startup space. “I resonate with their mindset. They are changemakers, people willing to challenge the status quo. And I also want to overlay it with the LGBTQ lens

The Cymric/McKittrick Oil Field near Bakersfield, Calif., was where Stroup began his post-college career as a petroleum engineer for Chevron.

those media that I think a younger advisor is more tuned into, and more senior advisors didn’t feel as comfortable in that environment.” As an example of how pandemic restrictions helped him reach more prospects, Stroup pointed to his work with StartOut, a nonprofit organization that provides access to capital, mentorship and education to LGBTQ startup founders. A webinar series he conducted on financial planning for startup founders reached StartOut members across the country as opposed to his being able to make an in-person presentation to only one chapter.

because I find purpose in working with my community. That’s an area I want to build my practice around because I believe that narrowing your focus is ultimately broadening your appeal. And that’s where I want to hang my hat as an advisor and what I want to be known for.” Stroup’s executive-level clients have a unique set of financial concerns. “You have to get them thinking about their varying forms of compensation. Not just your normal income, but — do they have stock options? Are they nonqualified? Are they incentive stock options? Are they restricted stock? How are we planning for that? How are we planning July 2021 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

around the taxes for that? I think there’s a lot that goes into understanding different forms of compensation for those kinds of individuals.” Stroup also works with LGBTQ clients on their specific personal financial needs, with planning for a family one of those needs. “More members of the LGBTQ community want to start families, and there are significant costs for them to make

sometimes are paralyzed by an external sense of how we focus on the details, but I think when that translates to someone’s financial life, it can be super helpful in ensuring that no stone is left unturned and that you can find elements or planning or recommendations that maybe someone else didn’t see because they’re not looking into the finer details. “I also believe an engineer is inherently a problem solver. If you can solve a pain

From my training as an engineer, I think about the process, about the end-to-end client journey. And I think about bringing the efficiencies back around. I also think it comes out in attention to detail.” that happen. Adoption, surrogacy, artificial insemination — those things all cost money. So we help clients plan on how they want to start a family or whether they want to save money to buy a home.” Brian Theis formerly worked in technology for a financial services firm and has been friends with Stroup for several years. Theis praised Stroup’s attention to detail as well as his commitment to serving his clients. “Christopher has always impressed me with his focus on working toward the benefit of others,” Theis said. “He is very disciplined and studious and sets high goals for himself that he follows through on with hard work and commitment. He is absorbed in the details of his business, while at the same time seeing the bigger picture.” Stroup may have hung up his oil field gear, but he considers himself an engineer of his clients’ financial futures. “From my training as an engineer, I think about the process, about the endto-end client journey,” he said. “And I think about bringing the efficiencies back around. I also think it comes out in attention to detail. I think, as an engineer, we 18

InsuranceNewsNet Magazine » July 2021

point in a client’s life, you could have that client for life. And if you can solve a pain point in their child’s life, you might have them for a second generation.” When Stroup isn’t working with clients, he enjoys beach volleyball and being outdoors. He said he strives to lead a minimalist lifestyle, living in a small apartment and forgoing a car. As Stroup seeks to understand his clients’ needs, he said having a better understanding of himself has led to success and happiness. “What I do now has aligned with who I am as a human, and I can lead my life authentically. And that is the ultimate freedom. There’s so much happiness derived from that. And I think as a result, I work harder because I’m happier.” 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.

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

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July 2021 » InsuranceNewsNet Magazine

COVER STORY

Professional athletes encounter a lot of the financial risks and rewards that come with big-money careers. Meet pro athletes who became financial success stories in their post-playing days — as well as a few who didn’t.

InsuranceNewsNet Magazine » July 2021

HALL OF FAME • FALL OF SHAME COVER STORY

Why Athletes Are Going Broke

Pro athletes face many tough choices upon signing that first big contract. Some find out quickly that a million dollars doesn’t go very far. • By John Hilton

I Charles Mostoller/MCT/Newscom

t is a regular feature of being a rookie in the National Football League that at some point during training camp, the veterans will gather at an upscale establishment to eat a mountain of food — with the rookie getting the bill. In one famous example, Dallas Cowboys rookie wide receiver Dez Bryant was stuck with a $54,000 bill for a team dinner in 2010. It might fall short of hazing. It might be great for team bonding. And for some, it might be the start of a professional career filled with big paychecks and bigger bills. “There’s absolutely this peer pressure part of it,” said Matt J. Goren, assistant

professor of financial planning at The American College. “I have my family. I have my friends. I’ve got teammates. And everybody is telling me to spend a ton of money. “If you have no frame of reference, how much is $50,000 for one dinner? That seems like a ton of money, but when all these other guys are doing it, maybe it’s not that much money. Maybe I can afford it.” Professional team sports are filled with tales of reckless spending and absent financial planning. Lack of role models is a big part of the problem, Goren said, along with many athletes coming from low-income, low-financial literacy backgrounds.

“You get these circumstances where these guys, even as high schoolers, such as Lebron James, are signing multimillion-dollar contracts,” he explained. “And you have no frame of reference for what you’re getting yourself into.” Things are slowly changing, and progress is being made. Most pro sports leagues include financial literacy as part of rookie orientation. Likewise, major colleges that turn out a lot of athletes are offering financial literacy programs. Meanwhile, athletes continue to make headlines for financial choices good and bad. Here are three such stories from each category.

Dwyane Wade

Age: 39 Career Earnings: $170 million Claim to Fame: A 13-time NBA All-Star who won three NBA championships with the Miami Heat Financial Fame: A reformed big spender who preaches financial planning

July 2021 » InsuranceNewsNet Magazine

COVER STORY HALL OF FAME • FALL OF SHAME

Hall of Fame Dwyane Wade

trusted financial advisor to map out his money goals. “A failure to plan is a plan to fail,” he has said.

Brent Celek

Young athletes are a prime target for financial schemes, and Brent Celek fell victim. In his case, a Ponzi scheme cost him money but gained him a lifelong education. Celek, who played 11 years for the Philadelphia Eagles, would turn the experience into a positive, including a post-playing career as an executive with Patricof Co., a Manhattan financial investment firm. Celek leads the firm’s real estate vertical, counting a roster of former professional athletes such as Dwyane Wade and Ryan Tannehill as investors. According to a March ESPN report, Celek sought out advice from a fellow player and connected with a money guy who seemed legitimate at first. The experience was costly for many players, with Celek losing $50,000. “I think you learn really quickly, OK, I Robin Alam/Icon Sportswire/Newscom

Born in Chicago in the winter of 1982, NBA superstar Dwyane Wade did not have a happy childhood, and his early education was largely provided on the streets. Dwyane Wade Sr. and Jolinda Wade separated when Wade was four months old and later divorced. Wade lived on the South Side of Chicago with his mother and two sisters until he was 8. At that point, he moved to live with his father. During interviews, Wade has described the difficulties of this period. His mother was on drugs, and he was surrounded by gang influences. The police raided their home when he was 6. His mother did time in prison, but today she is the pastor of a church in Chicago. Two things saved Dwyane Jr.: his father and basketball. In his book, A Father First: How My Life Became Bigger Than

Basketball, Wade credits his dad with stepping up to be a committed parent. Once he sprouted to 6 feet, 4 inches, Wade’s basketball skills blossomed at Marquette University and during a long NBA career with the Miami Heat. But his early professional spending habits were not good. Wade has said his first big paycheck went to an electric blue Cadillac Escalade decked out with 26inch rims and spinners. Wade continued to collect cars until he received what he called the best money advice of his career, he told Men’s Health in a 2020 interview. A financial advisor told Wade to get rid of the flashy vehicles, including a Maybach he never drove, but cost him $6,000 per month. Wade listened and cut his fleet to “a modest Audi Q8,” he told Men’s Health. Although he made and wasted a lot of money, Wade said he learned his lessons along the way. It helped that he had strong earnings, topping out with a six-year, $107 million contract signed in 2010. Today, Wade meets quarterly with a

Brent Celek

Age: 36 Career Earnings: $29.5 million Claim to Fame: Played 11 seasons in the NFL, retiring after winning the 2018 Super Bowl Financial Fame: Co-head of Patricof Co.’s real estate investment practice

InsuranceNewsNet Magazine » July 2021

HALL OF FAME • FALL OF SHAME COVER STORY

Michele Eve Sandberg/Newscom

need to figure out how to do this the right way,” Celek told ESPN. While not a star on the field, Celek achieved the pinnacle of professional football in February 2018 when the Eagles won their first Super Bowl. The tight end retired a few weeks later. Being able to spend his entire career in one city afforded Celek the opportunity to establish business connections and develop opportunities off the field. Those business ventures include his own brokerage, mortgage and title company. A move to investing and real estate seemed like a perfect fit for the Ohio native. Celek’s grandfather built custom million-dollar homes, and his parents are entrepreneurs. “This is a great way for me to give back to some of my teammates — guys I played with and against — and just help these athletes preserve their wealth,” Celek said in an NFL Alumni story. “Helping these guys preserve the NFL money they earned does mean a lot to me.”

Venus Williams

The Williams sisters have proven as shrewd and tenacious in the business world as they are on the tennis court. And Venus has led the way. The older sister was the first to make her mark on the court, turning pro at age 14 in 1994. Nearly 1,300 matches and 26 years later, the five-time Wimbledon champion continues to grind away. Off the court, Venus parlayed her enormous winnings into a business empire. She is chief executive officer of her interior design firm, V Starr Interiors, located in Jupiter, Fla., a company that designs residences and offices in the Palm Beach, Fla., area. Venus also has her own fashion line, EleVen. Together with sister Serena, she owns a piece of the Miami Dolphins football team. Like many young athletes, Venus is investing in creative and socially conscious businesses. She backed a robo-investing application called ElleVest in 2017, a company with a mission centered on serving female

investors. The Williams sisters are also invested in the UFC, the MMA league that has a $1.5 billion commitment from Disney and is still growing, financially and culturally. Running her businesses during the COVID-19 pandemic proved to be “scary at times,” Venus acknowledged in a blog post. “The effort would have been impossible without my amazing team,” she wrote. “They make me great, they make me better, they refine me. It wasn’t easy, there wasn’t a lot of sleep and it was scary at times, but thankfully it was mostly exciting.”

Fall of Shame Evander Holyfield

First, the good news: Former heavyweight champ Evander Holyfield reportedly earns a decent income, as much as $100,000 a month, from personal appearances and

Venus Williams

Age: 41 Career Earnings: $42 million Claim to Fame: Seven Grand Slam singles titles; No. 1 ranked women’s player in 2002 Financial Fame: A variety of successful business ventures; a limited partner in the Miami Dolphins; co-authored the book Come to Win ... on How Sports Can Help You Top Your Profession

Check out our Financial MVPs on page 26.

July 2021 » InsuranceNewsNet Magazine

COVER STORY HALL OF FAME • FALL OF SHAME $500,000 in child support. According to court documents, his then-18-year-old daughter sued him for $300,000. Holyfield’s business savvy was just as bad. He lost money on bad real estate deal and a failed restaurant chain, and he bet on a record label, Real Deal Records, that ate up cash. Holyfield claims he has learned his lesson and has a handle on whatever income he earns today. However, the aging fighter seems to be still chasing a big payday and has teased a potential rematch with Mike Tyson in recent months. “I think it will be a lot of money and a lot of millions,” he said on a podcast. “I think a hundred million. The fight would be big because so many people want the fight.”

Evander Kane

Evander Kane was named after boxing legend Evander Holyfield, and the young Canadian NHL player would go on to mimic Holyfield’s life with years of unfortunate financial decisions.

In January, Kane finally stopped outrunning his debts and declared Chapter 7 bankruptcy. Despite being in his 12th season as a highly paid professional hockey player, Kane listed $27 million in debts. On the downside of his career, the clock is ticking on his ability to earn his way out of that debt load. During recent interviews, Kane said declaring bankruptcy brought some relief. “Yes, it’s been stressful to deal with a lot of the bankruptcy,” Kane told The Athletic. “It’s definitely been stressful. But it was a relief because I didn’t have to try and hide it anymore.” A left winger, Kane is one of the few Black players in pro hockey. He was drafted fourth overall in the 2009 draft and doesn’t turn 30 until Aug. 2. He was well into a successful NHL career before his money problems surfaced. On Nov. 4, 2019, Kane was sued by The Cosmopolitan casino in Las Vegas after he allegedly walked out on a half-milliondollar gambling debt. The suit alleged that

Evander Holyfield

Age: 58 Career Earnings: $500+ million Claim to Fame: A fight career that spanned 1984-2011; the only boxer to win the heavyweight title four times Financial Shame: Lost a fortune through frivolous spending, multiple failed business ventures, constant child support payments and three divorces

Mike Tyson (Also lost a bunch of money)

InsuranceNewsNet Magazine » July 2021

Gary Hershorn/Reuters/Newscom

other promotional activities. The bad news is that the rest of his earnings — by some estimates, as much as $500 million — is gone. It takes a lot of work to spend that much money, and Holyfield lost his fortune via four bad habits: gambling, bad investments, poor family planning and old-fashioned big spending. He bought a mansion with 109 rooms, with a 135-seat home theater, a bowling alley and a dining room that can seat more than 100 people. The home cost Holyfield $1 million per year, according to the Daily Mail, in just taxes and upkeep. Holyfield sold the mansion to a bank during a public auction for more than $7 million, but that reportedly didn’t cover what he owed on it. The boxer was a notorious gambler — and loser — in casinos from Las Vegas to Atlantic City. But child support obligations to his 11 children by five different mothers are really where Holyfield’s debt ballooned. When he went broke in 2012, Holyfield reportedly owed about

HALL OF FAME • FALL OF SHAME COVER STORY Kane had received $500,000 in gambling markers from the casino the previous April and left the casino without making arrangements to settle the debt. The bankruptcy filing included $10.2 million in assets for Kane, who is in the third season of a seven-year, $49 million contract extension signed with the San Jose Sharks in 2018.

Mark Brunell

Like many investors, Brunell focused on real estate as a seemingly safe place to bet his money. It turned out not to be safe at all. A longtime NFL quarterback during the 1990s and 2000s, Brunell suffered his biggest losses on investments with friends. He partnered with a pair of former teammates in a company called Champion LLC in order to get into the real estate game. Unfortunately, their timing was terrible. When the housing market crashed in 2008-09, Brunell lost all $11 million that he put into the deal and defaulted on a number of loans, the

Daily Mail reported. One of Brunell’s partners in the business, former teammate Joel Smeenge, declared bankruptcy. Brunell was heavily invested in Whataburger, the popular fast-food burger chain. He invested $9 million and took ownership interest in 11 franchises, but ended up losing it all. In 2010, Brunell and his wife, Stacy, filed their own bankruptcy petition. It listed $24.7 million in liabilities, with Brunell’s only income $5,000 monthly as president of Mark Brunell Enterprises, which operates football camps. Stacy Brunell also claimed a $5,000 income. “The timing of the group’s real estate acquisitions at the height of the real estate market, in hindsight, clearly was not good, particularly given the subsequent collapse of the economy,” Brunell said in a statement following the bankruptcy filing. Generally acknowledged as one of the good guys in pro football, Brunell played in the NFL for 19 years and made three

Pro Bowls. He consistently gave his Southpoint Community Church a 10% tithe, which added up to significant contributions. Brunell retired from the game the year he filed for bankruptcy. He reportedly went to work as a $60,000-a-year medical sales representative. He later coached high school football in Jacksonville, Fla., for seven years and was hired this year as the quarterbacks coach for the Detroit Lions. InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@ innfeedback.com. Follow him on Twitter @INNJohnH.

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Mark Brunell Evander Kane

Age: 29 Career Earnings: $55 million Claim to Fame: Selected fourth overall in the 2009 NHL draft; active 13-year career as one of professional hockey’s few Black players Financial Shame: Filed Chapter 7 bankruptcy in January 2021, listing $26.7 million in debts

Age: 50 Career Earnings: $70.6 million Claim to Fame: Three-time NFL Pro Bowler; played quarterback for 17 years on five different teams Financial Shame: Squandered most of his earnings on a series of bad real estate investments and poor business decisions

July 2021 » InsuranceNewsNet Magazine

COVER STORY

The Marshall Plan Hall of Fame running back Marshall Faulk is heading up a successful World Financial Group satellite agency in San Diego, part of his growing financial empire. • By John Hilton

InsuranceNewsNet Magazine » July 2021

part of San Diego-based Dirty Birds Bar and Grill restaurants; MAD Energy, a sustainable energy company he founded; and Midwest Elevators. Then Faulk had a life insurance policy lapse, and he had questions. “I was trying to get it reinstated, and I lost the cash value in it because it lapsed,” he recalled. “I started asking questions, and there weren’t a lot of people available to answer the questions. Then I started to seek out and get the information on why this happens and found out that it happens a lot. So I really started to dive into the financial industry to try to get a better understanding of it.” Through his sports agency, Faulk frequently reaches out to young players

to preach financial literacy and advises them on opportunities to protect and grow their money off the field. Yet he understands why players continue to suffer financial woes. Faulk favors more education on things such as how credit works and what compound interest is, to teach and motivate young people to better manage financial issues. “If you don’t understand the inner workings of money, then you have to hire people and depend on them,” he said. “If you don’t come from a family that can help you with that, you’re most likely going to be in a position where you’re trusting someone who wouldn’t trust you with their money — but you’re going to trust them with yours.” DARRYL WEBB/KRT/Newscom

s a professional football player, Hall of Famer Marshall Faulk provided security for quarterback Kurt Warner. Whenever the defense harassed Warner and the pocket collapsed, he would look to dump the football off to his St. Louis Rams teammate. Faulk caught 80 or more passes for five straight seasons and remains second in all-time career catches by a running back, with 767. Now in his second career, Faulk provides financial security these days. Faulk has a long association with World Financial Group in San Diego and runs his own agency, offering a full array of financial and insurance products. And Faulk is not just attaching his name to the door either. He quickly warms to the topic of financial literacy and the need to have the right kind of insurance, as well as the correct amount of coverage. “It provided me the opportunity to get into the business, learn the business, and I realized how many people didn’t have insurance or didn’t have the proper insurance,” Faulk said. “I just wanted to change the way things were being done and reach out into the community that I grew up in. “And be a little different than the regular insurance guy and provide some financial literacy with their insurance and then explain to them how their money is working for them.” By the time Faulk, 48, retired from football following the 2005 season, he was accustomed to success. He was NFL Rookie of the Year in 1994, won a Super Bowl ring in 1999 and was the Associated Press Most Valuable Player in 2000. He was inducted into the NFL Hall of Fame in 2011. By then, Faulk was on his way to achieving similar success as a businessman with a diverse portfolio. Faulk expanded his holdings to include a Popeye’s Louisiana Kitchen franchise; part of Alliance Management Group, a full-service sports agency;

COVER STORY

Going For The Green A decade-long stint as a professional golfer gave Lee Williams great training to move into wealth management planning. • By John Hilton John Korduner/Icon SMI/Newscom

ong before he became a financial advisor, Lee Williams lived a life filled with money tests. That life as a professional golfer forced Williams and his wife to adopt austerity measures, as his earnings were completely unpredictable. Golfers compete on a merit basis — just making the field at a professional tournament does not guarantee a paycheck. The player must make the “cut,” which is usually established after the first two days of play. Even then, the paycheck fluctuates wildly with every made — or missed — putt. Williams’ weekly tournament compensation ranged from a lot of zero paydays to $112,500. “For most people, it’s more stressful. The typical golf career is year to year,” Williams said. “In terms of finances, you really have to plan further ahead. You’ve got to be more conservative in terms of what you do with your money. If you think in terms of locking up money, you probably sit on more cash than what would typically be recommended.” A pro golfer’s experience is unique in sports, where most athletes are high net worth clients before they even play a game. The minimum salary in the National Basketball Association is $925,000. In the National Football League, it is $660,000. While there is huge money in pro golf as well, it is usually earned after at least a few years struggling to compete. That does not mean pro golf lacks examples of the big financial failures found in other sports. Golfer John Daly lost an estimated $50 million to gambling. For Williams, the experience of life as a pro athlete provided great training for the financial planning he does for his roster of high-net-worth clients today. “We make sure that their assets are protected if something were to happen to them,” Williams said, “and their wishes are carried out, regardless of whether they’re here or not. I’m not a family office, but I’m set up similar to a family office, to

where I can bring multiple components of finances under one roof, which is hard.”

A Decade On Tour

Williams, 39, bounced between the then-Nationwide Tour and the PGA Tour from 2005 to 2014. His lone win came in the 2012 Mexico Open, a Nationwide Tour event. Now known as the Korn Ferry Tour, the mini tour serves as a minor league of sorts for pro golfers. In total, Williams made about $559,000 in prize money from both tours. His playing career came to a premature end in 2014, when nagging back injuries forced Williams to the clubhouse for good. When Williams wasn’t golfing, or when he wanted a break, he escaped by reading about finance. The parallels between the sport and high finance might not be obvious, but Williams recognizes them. “It’s a lot about strategy and thinking things through in depth and being very detail oriented,” Williams said. “All of that aligns with golf. When you play at a high level, it’s all about the details. It’s all about dissecting the golf course each and every week, and strategizing and figuring out what’s the most efficient way to get around this golf course.” A two-time Academic All-American at Auburn, Williams graduated with a degree in economics. When his back problems flared up, Williams was in his early 30s with a family to support. A transition to a financial services career was an easy choice. Today, Williams is a certified wealth management professional with Nowlin and Associates in Alexander City, Ala.

Williams partners with an estate planner and an accountant in order to provide the full range of planning services. It’s another approach that mimics his golf career. As an amateur, Williams competed for the Walker Cup in a team competition between the United States and Great Britain and Ireland. Williams played on two teams alongside current PGA Tour players Bill Haas, Ryan Moore, J.B. Holmes and Bryan Harman.

‘Far Bigger Than You’

Williams described his client-first mindset in an interview with The American College earlier this year. “Golf is an individual sport, except in these team events, where it’s about something far bigger than you,” he noted. “In financial services, it’s the same way. It’s not about you. It’s about your clients, their family, their business, their legacy. It’s an immense and humbling responsibility.” Looking ahead, Williams hopes to break into his former arena. He has no pro golfers on his client roster and is working to establish himself with agents so he can get those referrals. Having lived the life, Williams is uniquely positioned to provide financial advice and management. Regardless of who the client is, Williams sees his role as that of an educator. “What I try to do is give people a high-level education,” he explained. “I’m not getting down into the weeds, but trying to give them a very broad overview of what we’re doing and why we’re doing it. I try to give them the information that I would want to have if I were on the other side of the table.” July 2021 » InsuranceNewsNet Magazine

LIFEWIRES

Interest In Life Combo Products On The Rise The COVID-19 pandemic appears to have sparked

Consumers that would consider a life combination product

a greater interest in life insurance with a long-term care component, LIMRA researchers said. In January 2021, more than a quarter of Americans (26%) said it was very likely they would consider a life combination product if they were shopping for life insurance. This is 50% higher than in 2019. Overall, 6 in 10 consumers said it is at least somewhat likely they would consider a life combination product if shopping for life insurance. When it comes to the demographic most interested in this type of coverage, millennials seem to be far more enthusiastic about it than baby boomers are. More than one-third (35%) of millennials said it was extremely likely they would consider life combination products. Only 17% of boomers said it was extremely likely they would consider these products, and nearly a third said not likely at all. “Baby boomers, who are approaching or are in retirement, may not feel the need for life insurance or may mistakenly believe Medicare will cover LTC expenses,” said Karen Terry, senior research director. “Younger individuals, however, may find life combination products appealing because they mitigate the financial risk of dying unexpectedly and the costs of long-term care.” Source: Consumer Perspectives on Long-Term Care and Insurance LIMRA

COVID-19 Motivated Americans to Acquire or Increase Life Insurance Coverage MIB life application activity in the United States, 2020 14.1% 9.1% 5.6%

5.2%

2.5%

Jan

7.6% 3.7%

4.4%

1.6%

1.2% Feb

-2.2% -3% Mar Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: MIB Life Index

LIFE INSURANCE MOTIVATION ON THE WANE

If life insurance companies and producers were hoping that the sense of mortality that COVID-19 inspired would stick around and propel consumers to buy coverage, a Deloitte study is likely unwelcome news. Deloitte pointed out that 2020 had the largest increase in life application activity with 4% over the year, according to the MIB Life Index, peaking in the summer as COVID19 anxiety heated up. However, the inspiration to get coverage dwindled as the pandemic eased up, according to Deloitte’s examination of why consumers bought insurance. More than one-third of those who considered purchasing life insurance due to the pandemic — but ultimately didn’t — said they decided against it because COVID-19 cases in their area started to drop. “These behaviors make it clear that to DID YOU

KNOW

achieve sustained growth, insurers cannot rely on global disasters to boost uptake of life insurance,” according to the report, which also pointed out the technological advances that carriers made during the pandemic. “We believe insurers can use this momentum to accelerate innovation and substantially narrow the coverage gap for the long term.”

DEATH BENEFITS HIT 1Q HIGH

Death benefits paid by U.S. life insurers hit a new high on an absolute basis in the first quarter as COVID-19 resurged, S&P Global Market Intelligence reported. However, from February onward, a dramatic decline in case counts and high vaccination rates among the age groups most at risk of hospitalization suggest mortality rates may be declining as well. S&P data put total death benefits at $25.92 billion, an increase of 29.1% from the year-earlier period and $2.67 billion above the previous record high tally in the fourth quarter of 2020. Death benefits amounted to 15.3% of net premiums and considerations in the first quarter. It marked the third time in

QUOTABLE We are hearing the need for empathy coming loud and clear from producers as well as customers. — Andrea Clark, assistant vice president of experience strategy with Western & Southern.

the past four quarters that the ratio topped 15%, a feat that the industry had achieved only three times in a 77-quarter stretch — from the first quarter of 2001 through the first quarter of 2020. The average quarterly ratio of death benefits to net premiums and considerations was 11.2% during a 10year stretch ended in 2019.

LIMRA PANEL: DIGITAL ACCELERATION IS A MUST

Although the pandemic is waning and life is returning to normal, some aspects of the life insurance selling experience should remain changed for good, experts said during a recent LIMRA panel discussion. In particular, technology must remain a priority as well as keeping empathy and a human touch throughout the life insurance purchase process. LIMRA studies show that insurers are preparing to do even more digital integration and accelerated underwriting in the future. Rob Sims is managing director and partner at Boston Consulting Group. He said the company is doing more work on the customer experience in life insurance than ever before. “This is a moment in time when people are more open to fundamental change than before,” he said. “Products are easily copied, and there are not wide gaps in pricing. But if you get the elements of the experience right and make them relevant to advisors and customers, you can go a long way.”

Protective Life and the University of Alabama at Birmingham partnered to advance the science of healthy aging. Source: The Wall Street Journal

InsuranceNewsNet Magazine » July 2021

Source: Protective Life

Kansas City Life Insurance Company’s winning IUL sales strategy can help you extol the virtues of including IUL in your client’s retirement planning. Has AG 49-A put a dent in your IUL sales when attempting to create attractive tax-free retirement income scenarios for your clients? Kansas City Life offers two competitive IUL products that include: • Simple design • Five different Indexed Account options to provide maximum upside potential while providing downside protection • Numerous policy riders designed to meet individual needs, situation, and budget • Competitive target premium

Kansas City Life’s winning sales strategy includes: • State-of-the-art illustration system designed to calculate maximum income with a click of the mouse • Historical Indexed Account performance • Excellent IUL marketing collateral that promotes client understanding which helps improve your closing ratio

For information about a vested independent contract with Kansas City Life Insurance Company, call Tom Morgan, Vice President, Agencies, 855-277-2090, or visit www.CompassEliteIUL.com July 2021 » InsuranceNewsNet Magazine

LIFE

Responding To Client Needs Amid Changing Market Forces The life insurance industry navigates significant change and disruption while the need for coverage continues to grow. By Stafford Thompson Jr.

n interesting dynamic is taking place in the life insurance industry. On the one hand, the need for life insurance coverage continues to grow among consumers. On the other, over the past 18 months, the industry has been navigating significant change and disruption, experiencing a pandemic, volatile equity markets, historically low interest rates and significant regulatory changes. To be successful in closing the life insurance coverage gap that LIMRA and Life Happens say exists for 102 million uninsured and underinsured Americans, financial professionals need timely access to a broad portfolio of innovative solutions that help clients reach their goals and objectives amid changing market forces. 30

InsuranceNewsNet Magazine » July 2021

The Life Insurance Need

According to the 2021 Insurance Barometer Study conducted by LIMRA and Life Happens, only 52% of American adults own some form of life insurance coverage. That marks the lowest level of ownership to date since the two organizations began conducting the study 11 years ago. Taking that a step further, the study finds there are roughly 73 million adults who need coverage and an additional 29 million who need more coverage, representing roughly 40% of the population with an unmet need. The good news is that more and more consumers are recognizing the importance of life insurance, and many indicate they’re ready to take action. According to the Insurance Barometer Study, 36% of consumers said they plan to purchase life insurance within the next 12 months, representing the highest purchase intent in the survey’s history. When examining consumer financial concerns across four categories — health expenses, living expenses, life insurance and saving goals — in 2020, life

insurance surpassed living expenses to move into the third position in the financial concern hierarchy after occupying the lowest tier from 2011 to 2019. Life insurance remains in the third position in 2021, indicating that consumers are increasingly prioritizing life insurance in their financial plans. There’s no doubt the industry is up to meeting this need with products that reflect the times we’re in, just as we’ve always adapted to ensure we continue to provide financial security to clients. If we look back over the years, we see that our industry has responded to different needs with different value propositions at different points in time. If we go back just a decade, we can see how the industry pivoted following the sharp decline in interest rates in 20112012. According to LIMRA data, in 2010, the number of universal life policies sold grew 21% over 2009. Other than whole life, which grew only 2% in 2010, all other product categories had declining sales that year. Fast-forward three years to 2013, and UL sales declined 16% from 2012. Meanwhile variable universal life

RESPONDING TO CLIENT NEEDS AMID CHANGING MARKET FORCES LIFE sales surged 12% in 2013 following declining sales in each of those prior three years. So how will our industry respond today?

Filling The Need

The Barometer Study finds that the top two reasons consumers purchase life insurance are to cover burial or final expenses and to replace lost income of a wage earner. These reasons should come as no surprise, since death benefit protection has always been at the core of the life insurance value proposition. Term insurance continues to provide that important protection for those more basic, shorter-term needs. Since the pandemic, as consumers have been faced with their own mortality, term demand has grown significantly, particularly among younger people. That growth can largely be attributed to the lower cost and simplicity of term insurance but also to the ease of the term purchase experience. Term is often at the forefront of digital innovation, and that combination of cost, process and customer experience will be what differentiates term offerings in the market. Conversely, longer-duration guaranteed protection products — especially fixed products such as guaranteed universal life — have faced pricing pressures as a result of the low interest rate environment. In recent years, protection-focused variable universal life policies have emerged as a strong alternative to traditional lifetime guarantee products such as GUL by combining the potential for market driven returns with the safety and security of a lifetime guaranteed death benefit. This trend remains true today and is expected to continue. However, even VUL products were not immune to the low interest rate environment in 2020 when also factoring in the new reserving requirements of Principle Based Reserving. As a result, carriers are now beginning to introduce greater optionality into the VUL market. In addition to offering 100% lifetime guarantees, VUL policies with multiple guarantee options, including shorterduration choices for lower premiums, are emerging. This new optionality allows clients to work with their financial professional to design the policy that works best for them, whether they need

protection for life or a balance of protection and cost. While death benefit protection will always be critical to the life insurance conversation, the flexibility of life insurance to meet multiple client needs is increasing in importance as clients seek solutions that allow for holistic financial planning. When considering the four categories of financial concerns measured by the Barometer Study mentioned previously, life insurance is one of the only, if not the only, financial planning tools that can address all of them. And consumers are taking notice. The Barometer Study shows a significant increase since 2018 in those who cite supplemental retirement income as a reason for owning life insurance, potentially creating demand for accumulation-focused VUL and indexed universal life products. Recent regulatory changes are poised to add to the appeal of accumulation VUL and IUL products as tax-advantaged solutions that can help clients grow their retirement savings and complement traditional qualified retirement vehicles. Both products stand to benefit from changes that were announced to sections 7702 and 7702A of the Internal Revenue Code, which determine whether a contract is treated as life insurance for income tax purposes. The 7702 and 7702A changes allow policyholders to put more cash into their policy on a tax-advantaged basis, favoring life insurance as an investment for tax-deferred accumulation. While it will be up to each carrier how they implement these changes, the changes create new opportunities to pass additional value on to the consumer. More premium can now be paid for a given death benefit or less death benefit for a known premium under a max funded scenario. Today, in addition to offering market-driven variable investment options, many accumulation VUL products are available with indexed accounts that provide a level of protection during market downturns. As many investors are faced with the dilemma of staying invested in the market during a time of elevated volatility like was seen in 2020, these enhancements provide clients with even greater investment flexibility to align their investment strategy with their financial objectives and risk tolerance levels.

There is a heightened awareness of the need for life insurance • 59% who don’t own life insurance say they need it. • 31% say they’re more likely to buy life insurance because of the pandemic. • 48% of millennials say they plan to buy coverage in the next year. • 42% of Americans would face financial hardship within six months if the primary wage earner were to die unexpectedly. SOURCE: 2021 Life Insurance Barometer Study, LIMRA and Life Happens

Indexed accounts will also be key differentiators among IUL products in the market following regulatory changes that went into effect at the end of 2020 with the implementation of AG-49A, which impacts how IUL products can be illustrated. The growing life insurance coverage gap in the U.S. impacts the financial stability of families and our society. While the events of the past 12-18 months have presented challenges, they’ve also presented opportunities. We’ve seen tried-andtrue product categories reinvented, new customer value propositions created and different product concepts introduced to ensure financial professionals continue to have access to life insurance solutions that meet the broad array of financial planning and security needs of clients. Stafford Thompson Jr. is senior vice president, life product management, Lincoln Financial Group. He may be contacted at stafford.thompson@innfeedback.com.

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July 2021 » InsuranceNewsNet Magazine

ANNUITYWIRES

Sales Contests Could Be Gone Under DOL Rule

Whether it’s a cash bonus, an amazing vacation or other prize, incentives are part of what makes selling annuities a rewarding career. But those rewards might be less apparent in the future under the Department of Labor investment advice rule. Panelist Fred Reish, an ERISA expert with Drinker Biddle, said sales contests will be tough to sustain under the DOL’s prohibited transaction exemption 2020-02. “You can bet that it’ll be pretty closely scrutinized,” Reish said of sales contests. “You really want to make sure that you have all your ducks in a row in terms of compliance and supervision. … How can we manage this to make sure the recommendations are in the best interest of the participant, as opposed to the investment professional achieving something, compensation, within the context of the sales contest?” The rule went into effect Feb. 16, but compliance is being delayed until Dec. 20. In the case of sales contests, distributors will have to show they are mitigating conflicts of interest, which is more prominent in the DOL rule. “I worry about that, because Reg BI doesn’t have a definition of mitigation,” Reish said. “But the DOL rule basically says you have to dampen the incentive effect, and in a way that makes you think they’re expecting considerable, serious, dampening of the incentive effect.”

NEW ANNUITIES HIT THE SHELVES

EQUITABLE REINSURES ANNUITY BLOCK

Following a recent trend in the industry, Equitable Holdings became the latest insurer to back up its legacy block of variable annuities. Equitable struck a deal to reinsure legacy variable annuity policies sold between 2006 and 2008 with Venerable Holdings. AllianceBernstein will serve as the preferred investment manager for the transferred general account assets. As part of the transaction, Equitable also announced that its in-force variable annuity reinsurance entity, Corporate Solutions Life Re, has been acquired by Venerable. The deal “marks a pivotal milestone for Equitable as we further de-risk our balance sheet and enhance our focus on value-accretive and capital-resilient businesses to drive long-term shareholder value,” said Robin Raju, chief financial officer, Equitable. DID YOU

KNOW

Delaware Life launched the Accelerator Prime Variable Annuity, with riders that allow clients to prioritize income or investment protection during the first seven into 10 years of the contract, based on changing market conditions or personal circumstances. The product combines the benefits of a traditional variable annuity including direct investments through investment fund options, tax-deferral, and the ability to convert savings into retirement income for life. Bankers Life’s Guaranteed Lifetime Income Annuity Plus with Enhanced Benefit is a single-premium fixed indexed annuity with an enhanced benefit that helps consumers access their money for health care expenses. GLIA Plus also allows tax-deferred savings for retirement and creates a flexible retirement income solution for life through lifetime income withdrawals.

QUOTABLE I think most folks looking at the bill are pretty optimistic that some form of the SECURE Act … will pass this year. — Brad Campbell, Faegre Drinker partner

AMERICAN FINANCIAL GROUP SHIFTS ANNUITY BUSINESS TO MASSMUTUAL

American Financial Group recently sent its annuity businesses to MassMutual. The company had inked the $3.5 billion divestiture deal in the first quarter. This move will help American Financial focus on its profitable property/ casualty businesses, executives said. AFG’s annuity businesses comprised Great American Life and two of its subsidiaries, Annuity Investors Life and Manhattan National Life. Also, it consisted of a broker-dealer affiliate, Great American Advisors, Inc., as well as an insurance distributor, AAG Insurance Agency. American Financial saw poor performance with its annuity business in recent quarters. In 2020, total revenues decreased 4% year over year. Gross statutory premiums declined 18% in 2020 due to the low interest rate environment.

11% of today’s workers plan to retire before age 60.

InsuranceNewsNet Magazine » July 2021

Source: Employee Benefit Research Institute

July 2021 » InsuranceNewsNet Magazine

ANNUITY

Green-Thumb Index Strategies For All Seasons A three-step approach to better understand the environment in which various strategies thrive the best.

I am not suggesting that one type of an index is better than another, but it is important to understand where the differences lie between the two types.

By Jeff Barnes

Step Two — Index-Tracking Model

have two healthy houseplants in my office. But they weren’t always so healthy — it took some time for me to understand that one plant thrives in direct sunlight, while the other does best in indirect light. That doesn’t mean that one plant is “better” than the other — they simply thrive in different environments. Regarding indexed annuities, I’m often asked, “Which index crediting strategy is best?” Like with plants, there is no best strategy. Different index crediting strategies thrive in different environments. Rather than try to project the best index strategy — because you really can’t — a better approach is to allocate among index crediting strategies based on the anticipated environment. Here is a threestep approach to better understand the environment in which various strategies thrive the best.

Step One — Index Type

Since fixed indexed annuities were introduced, stock market indices — such as the S&P 500 and others — have been the standard. More recently, volatility-control and hybrid indices have gained popularity. A big difference between volatility-control and stock market indices is the cost of the call options. Reduced volatility lowers the cost of call options for the insurance carrier, allowing higher participation rates to be offered on volatility-control strategies. While a volatility-control index’s raw growth may be lower than that of the stock market index, the client may be able to capture more of the growth in a volatility-control index due to the higher participation rates. 34

InsuranceNewsNet Magazine » July 2021

How does the index strategy measure growth for crediting purposes? Point to point? Daily or monthly averaging? Monthly sum cap? The environment impacts each strategy differently.

Monthly Sum Cap » Advantage: When an index is growing month over month over month, this strategy can provide a very strong return. » Disadvantage: Most indices don’t grow at a 45-degree angle. One bad month can wipe away several months of growth.

Step Three — Crediting Mechanism

What calculation is applied to the index growth to determine a crediting rate? Cap

Diversify With Your Client’s Outlook In Mind Bullish Outlook = Point to point, participation rate and spread Bearish Outlook = Averaging and cap rate Ambivalent Outlook = Point-to-point participation with an averaging cap Point To Point » Advantage: When an index has strong and steady growth for the year, point to point may do very well. » Disadvantage: An index could see strong growth throughout the year but then taper toward the end, or worse, have the ending point (client’s anniversary) fall on a day like March 20, 2020. Averaging » Advantage: When an index has been volatile throughout the year and ends lower than where it started, averaging sometimes can help prop up some growth for the year. Because there is a little bit of volatility control going on in averaging, a carrier generally can provide slightly higher crediting rates compared to point to point. » Disadvantage: Averaging can water down the growth of an index that is having a strong and less-volatile year.

rate? Participation rate? Spread? And, of course, what rates are offered with the various strategies? The environment impacts the crediting strategy as well. Cap Rate vs. Participation Rate In a lower-growth year, a cap may do better by capturing all the growth up to the cap. Otherwise, with a participation rate, you are getting only a portion of that growth. In a stronger-growth year, the participation rate might do better than a cap because, at a certain point, the index return caps out. Cap Rate vs. Spread Again, in a lower-growth year, a cap might do better because you are getting all the growth up to the cap, where in that same situation, a spread might eat up all or a good portion of the growth. In a stronggrowth year, a spread might do better, since any growth beyond the spread is captured.

GREEN-THUMB INDEX STRATEGIES FOR ALL SEASONS ANNUITY Participation Rate vs. Spread In a lower-growth year, participation rate is going to capture some growth, where the spread may absorb most or all of that growth. Both are poised to perform better in a stronger-growth year; however, the spread must be at a level where the growth beyond the spread is better than the participation.

Diversify, Diversify, Diversify

Someone once said diversification is the closest thing to getting a free lunch. The beauty of indexed annuities is the broad choice of accounts — and various combinations of indices, tracking strategies and crediting mechanisms. Rather than pick just one index account, consider allocating among several accounts. But don’t diversify just for diversification’s sake — diversify with your client’s outlook in mind. Bullish outlook. For a client who believes the markets are poised for a very strong year, point to point, participation rate and spread may be better positioned. Bearish outlook. For a client who believes the markets are not poised for a stellar year, averaging and cap rate may

be better positioned. Ambivalent outlook. For a client who might like to hedge, perhaps combining point-to-point participation with an averaging cap can cover them for either type of market. And don’t count out the fixed interest rate option; sometimes having a little in there can at least provide a little bit of guaranteed return — or cover the costs of an income rider fee. In addition, when you look at a stock market index versus a volatility-control index, both can thrive in bullish and bearish times. Both will probably thrive best in less-volatile markets. Because no one has a crystal ball, diversifying among multiple strategies and indices can provide the best chance to produce steady accumulation. Diversifying upfront reduces the temptation to chase past results by reallocating each year.

Index Annuity Downside Protection

Indexed annuities offer rates linked to the results of various indices without actually investing in those indices. Index credits are never less than zero, which means clients are protected when indices decline. Upside potential and downside protection. When that foundation is laid down first, you will manage your client’s expectations more effectively and make annual reviews go much more smoothly. The other day, my wife caught me talking to my plants. I’ve heard talking to plants helps them grow. I wonder if talking to your index crediting strategy could have the same effect? “Who’s a good point-to-point participation strategy? You are ... yes, you are ... YES YOU ARE!” Jeff Barnes is national accounts senior manager with EquiTrust. He may be contacted at jeff.barnes@innfeedback.com.

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The IncomeShield fixed index annuity provides clients with the tools that may boost, generate and protect income for life. More details available at: american-equity.com/incomeshield-annuity *For IncomeShield 10 product, each year after the 1st contract year, clients become vested in a percentage of the bonus, until 100% vested at the end of the 10th contract year. Vested amounts of the bonus are the amounts not forfeited as a result of an early withdrawal or surrender. Bonus, surrender charges, and vesting schedules may vary by state. See brochure and disclosure for details. **Available for issue ages 50+. Contract owner may be subject to a 10% federal penalty if distributions are taken before age 59 1/2. American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Each client has specific needs which should be discussed with a qualified legal or tax advisor. Annuity and Riders issued under form series ICC17 BASE-IDX, ICC17 IDX-10-7, ICC17 BASE-IDX-B, ICC17 IDX-11-10, ICC16 R-MVA, ICC20 R-LIBR-FCP, ICC20 R-LIBR-FSP, ICC20 R-LIBR-W-FCP, ICC20 R-LIBR-W-FSP and state variations thereof. Availability may vary INVESTMENT LIFE INSURANCE COMPANY by product and state Guarantees are based on the financial strength and claims paying ability of American Equity and are not guaranteed by any bank 6000 Westown Pkwy, West Des Moines, IA 50266 or insured by the FDIC. 01AD-INN-0721 05.21.21 © 2021 American Equity. All Rights Reserved. www.american-equity.com ● Call us at 888-221-1234 July 2021 » InsuranceNewsNet Magazine 35 TM

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HEALTH/BENEFITSWIRES

Connecticut Drops State Health Insurance Expansion The Connecticut General Assembly will not

take up a proposal that would have created a public option plan for small businesses and nonprofits following opposition from Gov. Ned Lamont. The legislation proposed to extend the state insurance pool that’s accessible to municipalities to be available to small businesses, nonprofits and individuals. Officials said the government plan has operated with a shortfall and that this undermines arguments to expand the state’s presence in health insurance. The legislation faced stiff opposition from the business community, including five executives from Hartford-area insurance companies. In a letter to Lamont last month, they warned that companies might move workers out of Connecticut if the cost of insuring employees is viewed as too costly. Lamont’s spokesman said the governor favors expanding access to health coverage under the Affordable Care Act instead of subsidizing a new program.

The top 5 fastest-growing benefits are: Voluntary benefit

Currently offered

Offered by 2022 or beyond

Identity theft

53%

78%

Hospital indemnity 42%

65%

Pet insurance

47%

69%

Critical illness

57%

76%

Group legal

58%

75%

VOLUNTARY BENEFIT OFFERINGS ON THE UPTICK

The pandemic prompted employers to take a closer look at voluntary benefits, with nearly all employers (94%) expecting benefits to play an important role in their organizations during the next three years, according to a survey by Willis Towers Watson. That’s a big jump from 2018, when 36% of employers said voluntary benefits were important. The survey found employers also are expanding their voluntary benefits to address new trends and better meet the needs of a diverse workforce, especially those affected by the pandemic. Employers said they either offer, or plan to offer within the next two years, a number of voluntary offerings, including financial counseling, tuition reimbursement and elder care. DID YOU

KNOW

MEDICARE AT 60 NOT NECESSARILY A BETTER DEAL

A new study finds that lowering the Medicare eligibility age to 60 might not be as great as its supporters think. An Avalere Health analysis found Medicare can be more expensive than other options, particularly for many people of modest means. Two factors back this up: Traditional Medicare has gaps in coverage that most people fill by purchasing supplemental plans, which means they pay added premiums. And premiums for ACA policies have dropped recently due to the most recent COVID-19 relief bill. That made ACA coverage more attractive for older adults who haven’t reached Medicare eligibility age.

QUOTABLE Simply expanding Medicare as it is to younger people does not always mean those patients are getting a better deal. — Chris Sloan, industry analyst at Avalere

The study found that many older adults with low-to-modest incomes can already find cheaper premiums in the ACA marketplace, while those in the solid middle class would be more likely to benefit if they could get into Medicare.

HEALTH CARE KEEPING WORKERS ON THE JOB

Employer-based health insurance is what’s keeping one out of every six U.S. workers in a job they might otherwise leave. That was the word from a West Health-Gallup survey. The survey finds the fear is even more pronounced among Black workers, who are 50% more likely to remain in an unwanted job than their white and Hispanic counterparts (21% to 14% and 16%, respectively). Workers in lower-income households are nearly three times more likely to stay in an unwanted job than are workers living in households earning at least $120,000 per year.

46 million people — or 18% of the U.S. population — said they could not afford health care if they needed it today. Source: West Health-Gallup survey

InsuranceNewsNet Magazine » July 2021

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Visit www.AdvanceWithNWL.com for your free starter kit and see how NWL’s groundbreaking products and platform could help you join the new face of financial advisors. For Agent Use Only — This document has not been approved under the advertising laws of your state for dissemination to individual purchasers. The NWL® ChoiceOptimizer (form ICC20 01-1190-20, 01-1191-20, and state variations) is issued by National Western Life Insurance Company®, Austin, Texas. Subject to certain conditions. Products and product features not approved in all states. Certain limitations and exclusions may apply. See policy for complete details.

July 2021 » InsuranceNewsNet Magazine

HEALTH/BENEFITS

The High Cost Of Health Care Burnout Physicians and other health care professionals have been dealing with residual trauma that could lead to burnout. Is their disability insurance adequate for their needs? By Jeff Brunken

erhaps no one has felt more pandemic-related pressure than health care professionals. After a year of widespread sickness and suffering as well as struggling to find enough personal protective equipment and lifesaving gear to do their jobs, medical workers are dealing with residual trauma that could lead to a significant risk of burnout. Studies from 2020 support this outcome. A September 2020 study from a group of U.S. and Swedish researchers indicated a higher-than-normal level of burnout for health care professionals during the COVID-19 pandemic, as compared with other years. The study included 2,707 professionals from more than 60 countries and found that 51.4% of providers from 33 countries were experiencing burnout. Here in the U.S., a 2020 report by the Society of Critical Care Medicine surveyed 9,492 intensive care unit clinicians and found that median levels of self-reported stress increased from 3 to 8 (on a 0 to 10 scale) as the pandemic unfolded. According to The American Journal of Medicine, research regarding physician burnout is variable due to a lack of agreed-upon terminology. However, it is generally thought to hover between 40% and 50% of physicians during an average year. It is also thought to be most prevalent among physicians ages 45 to 54 — an age of peak income and productivity — and to regularly transition into major depression, substance abuse and even suicide. In fact, burnout-related depression appears to be more common for physicians than for other types of profession38

InsuranceNewsNet Magazine » July 2021

als. This statistic has only gotten worse with the pandemic. Burnout can lead to a mental health disorder or a substance abuse problem that can impact a physician’s ability to work. As a result, it is important for benefits brokers and advisors to discuss disability insurance with their physician clients. If pandemic-related stress were to lead to severe emotional anguish that disabled the health care professional on a short- or long-term basis, would the health care professional’s existing disability insurance policy provide sufficient income replacement during recovery? Would it provide a benefit payout at all? The critical role for benefits brokers and advisors is to become a trusted counselor, helping their clients secure benefits that work in our new world.

medicine that is razor-thin in its definition. Examples include broader specialties such as anesthesiology, neurology, emergency medicine and radiation oncology, and more specific sub-specialties such as neuroradiology, medical toxicology, congenital cardiac surgery and hematology. Health care professionals need disability insurance that uses a narrow and specific definition of disability. Under this type of definition, a claimant’s CPT/ CDT-coded procedures determine disability. If the claimant’s disability prevents the claimant from performing even one of their regularly performed CPT-coded procedures, they are considered totally disabled. Individual disability insurance policies and certain IDI-like group long-term disability policies provide this specificity level.

If the claimant’s disability prevents the claimant from performing even one of their regularly performed CPT-coded procedures, they are considered totally disabled. Many disability insurance policies are not good enough for health care professionals. Health care professionals have high income levels, usually comprising multiple income sources, and some own practices or manage heavy debt from student loans. Like many other professionals, their financial solvency relies on their ability to work. Unlike many other professionals, losing the ability to work affects more than just their capacity to support themselves and their family; it sometimes affects the solvency of a medical practice or the physician’s ability to meet their loan repayment obligations. Physicians are also unique in that they regularly specialize in a particular area of

Beyond this important policy definition, mental and nervous and drug and alcohol (MNDA) coverage must be part of the disability insurance conversation — even in non-pandemic years, when burnout is already high. Health care professionals benefit most from disability policies that offer: 1] Solid MNDA benefits. Some longterm disability policies will not cover preexisting conditions, such as major depression or anxiety disorders, and many MNDA disabilities can be recurring in nature. 2] No lifetime max on benefits. Many long-term disability policies cap MNDA

THE HIGH COST OF HEALTH CARE BURNOUT HEALTH/BENEFITS

America’s Health Care Workers Struggle With Burnout

WHEN ACA IS NOT THE ANSWER

• 93% of health care workers said they were experiencing stress. • 86% reported experiencing anxiety. • 77% reported frustration. • 76% reported exhaustion. • 75% said they were overwhelmed. SOURCE: Mental Health America

benefits at 24 months, which is insufficient for the field of medicine and its higher levels of stress. 3] “Per occurrence” coverage. Policies with this specific language can pay benefits if the physician suffers a relapse or if the disability caused by burnout manifests differently. Some long-term disability policies may also require stringent proof of a disability in order to start paying out on the claim. If an insurer requires examinations or rigorous interviews to pay on an MNDArelated incident, health care professionals can face an undesired compounding of additional stress and pressure. Make sure your health care clients are financially prepared for burnout. COVID-19 has opened many people’s eyes to the importance of coverage for all types of disabilities, both physical and mental. However, overworked health care professionals may have neglected to review their plans to make sure their expectations for policy payouts align with their contracts’ reality. Questions brokers and advisors should ask clients during the pandemic and beyond to ensure adequate coverage for burnout-related disabilities include: » Do all of their disability insurance policies offer MNDA coverage? » Are the coverage amounts high enough to replace all income and cover any business expenses or student loans? » Will the policies pay benefits on a relapse under the MNDA provisions? In what time frame? » Will the policies cover all possible mental and physical conditions that could be attributed to burnout and

extreme work stress? » Are there any preexisting condition exclusions that may affect their ability to collect benefits if they become disabled due to burnout? Benefits advisors can earn their clients’ trust by working on grasping the realities of health care professionals’ day-to-day lives, their unique risks, and how much coverage they need. Consider this: The American Journal of Medicine cites specific concerns about burnout rates for a number of health care professionals in certain fields. Their list includes family physicians, emergency room physicians, psychiatrists, anesthesiologists, cardiologists, radiologists, general internists, dermatologists, oncologists, general surgeons, gastroenterologists, trauma surgeons, obstetrician-gynecologists, and physiatrists. Until health care professionals become more comfortable seeking early treatment without the fear of stigmas or professional repercussions, and until their workloads decrease to the point where they can take time to care for themselves, burnout will continue to be a risk factor for disability in the health care industry. Make sure your clients are covered through comprehensive disability plans you know are tailored to their specific needs. Jeff Brunken is president of MGIS, a national insurance program manager that builds and manages specialized disability insurance programs for health care professionals. He may be contacted at jeff.brunken@innfeedback.com.

July 2021 » InsuranceNewsNet Magazine

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Risk Management More Effective riskImportant Than Returns management is more

important to financial advisors than Fears of Retirees generating the highest returns in client And Near-Retirees portfolios. That’s a key takeaway from • Spending too much and running the inaugural RIA Retirement Risk out of money in retirement (56%). Review Study from Allianz Life. • Outliving their money (54%). Nine out of 10 advisors surveyed believe it is important to manage risk in • The stock market dropping and losing a lot of money in their client portfolios. Moreover, 88% beretirement accounts (53%). lieve it is more important to effectively SOURCE: Allianz Life manage risk in their clients’ portfolios than to have the highest gains. In addition, advisors are increasingly concerned about their clients’ retirement income. Nearly 60% of advisors note clients need to accumulate more money in order to have a financially secure retirement, but most are too close to retirement to risk investing in high-risk/high-reward financial products. With risk management at the forefront of financial planning, four in 10 advisors are considering new risk-management solutions for 2021. Of those advisors, low-volatility exchange-traded funds (52%), buffered outcome ETFs (44%) and annuities (37%) are under consideration. Despite the growing interest in new tools, significant barriers remain for advisors to implement new risk-management solutions. At 28%, fear of sacrificing returns was the biggest barrier for advisors, followed by cost and lack of familiarity, both at 22%.

ch? We owe H OW mu

Taxes A Top Concern Of Advisors, Clients

Tax policy remains a top concern for advisors, financial professionals and the clients they serve, according to Nationwide’s latest survey about the impact of the Biden administration’s proposed policies.

Nearly three-fourths (72%) of advisors and financial professionals are very concerned about tax increases over the next four years, while

17% are somewhat concerned. Nearly three-fourths (74%) of advisors and financial professionals said tax policy is their clients’ No. 1 concern about the new administration’s proposed policies. They rated clients’ concerns about all other policies in the single digits, including pandemic relief (9%) and health care (4%).

Net Worth Drops After Age 75

According to the Federal Reserve, household median net worth peaks between ages 65 and 74 and then falls when retirees enter their late 70s and beyond. Americans ages 75 and up show a median net worth of $254,800. The average, 40

InsuranceNewsNet Magazine » July 2021

Paging Dr. Advisor

Might a financial professional be part of the team treating cancer patients? That would make sense considering the positive outcomes when patients are treated for “financial toxicity.” In the U.S., even patients with health insurance struggle with expenses associated with cancer care.

Filed under ‘U’ for ‘unsurprising News’ Cancer patients are 2.65 times more likely to go bankrupt than are people without cancer. Cancer patients in bankruptcy are 80% more likely to die than are others with cancer. Source: Foundation for Financial Planning

When leukemia and blood disease patients were assisted with costs related to medical expenses and daily living, they had a significant improvement in health outcomes, according to a study conducted at the Malignant Hematology Clinic at the Levine Cancer Institute in Charlotte, N.C. The Foundation for Financial Planning, which sponsored the research, said that fi-

nancial difficulty had a high correlation with mortality — cancer patients going

into bankruptcy are 80% more likely than others with cancer to die.

which is higher thanks to high net worth households, is $977,600. The most recent Survey of Consumer Finances shows the median U.S. household net worth is $121,700. Most people’s net worth begins to drop in their nonworking years. But earning potential reaches its peak long before workers are awarded the gold watch. Data from Payscale shows that women reach their peak earnings at the age of 44, earning on average $66,700, and men reach their peak earnings at the age of 55, earning on average $101,200.

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Advisors Are Helping Clients Grow Greener

ustainable investing is showing more green shoots this year as advisors help grow the segment by exposing clients to the option. Although advisors say clients and prospects do not ordinarily ask about socially responsible investing, more advisors are telling clients they can put their money where their values are. A recent Morningstar report showed another record spike in environmental, social and governance fund inflows in the first quarter. “In the first three months of 2021, the U.S. sustainable fund landscape saw nearly $21.5 billion in net inflows,” according to Morningstar’s Alyssa Stankiewicz. “That’s more than the previous record for a quarter, $20.5 billion, set in the fourth quarter of 2020, and more than double the $10.4 billion seen one year ago in the first quarter of 2020. It was also about five times greater than first-quarter flows in 2019.” Asset managers added 11 funds with sustainability mandates in the first quarter, Morningstar reported. Of those, 10 were equity funds and eight were exchange-traded funds. Most of the new sustainable funds available in the U.S. are actively managed offerings. Besides the rising inflows, ESG is making news because in May, the Biden administration issued a wide-ranging executive order for multiple departments to focus on the “intensifying impacts of climate change that present physical risk to assets, publicly traded securities, private investments and companies.” Part of that vast order is for the Department of Labor to consider issuing a new rule by September that would 42

InsuranceNewsNet Magazine » July 2021

suspend, revise or rescind Trump-era rules requiring ERISA advisors to put fund performance above sustainability issues in client recommendations.

David N. Bizé, Certified Financial Planner with First Allied in Dallas, said the wall between financial advice and ESG is a good idea. Advisors are putting

Quarterly Flows (U.S.) 25

15 Billions

Planners and advisors say not many clients are asking about ESG investing, but clients are becoming interested the more they learn about them. • By Steven A. Morelli

0 Q2 18

Q3 18

Q4 18

Q1 19

Q2 19

Q3 19

Active

The DOL said in March that it would not enforce the ESG rule, but at least one law firm is warning fiduciaries to be cautious. Patrick S. Menasco and Bibek Pandey of Goodwin Law said that the DOL’s light touch does not extend to litigation. “While the nonenforcement policy offers real, welcome relief for investment fiduciaries (and, by extension, fund sponsors and others that provide those fiduciaries with investment products incorporating ESG strategies or considerations), it does not extend to private litigation risk,” the pair wrote. “Until the DOL formally changes the amended rule, it will remain the law and will govern fiduciary investment decisions under ERISA. As a practical matter, private litigation risk involving the amended rule will likely fall mostly on fiduciaries responsible for selecting investment options under participant-directed individual account plans.”

Q4 19 Passive

Q1 20

Q2 20 Q3 20 Q4 20 Q1 21 SOURCE: Morningstar

their own ideals first when they bring up ESG investing, he said. “For the baby boomer generation, ESG is a concept that is sold by the financial advisor, not bought by the customer,” Bizé said. “In 20-plus years, only one person out of more than 200 has ever asked me about ESG [or similar predecessors].” Bizé went on to distinguish advising from what he said were essentially consumer preferences. “ESG supports a moral/ethical/philosophical ‘cause’ similar to not purchasing products from a specific company because you don’t agree with the company’s processes, practices or policies,” he said. Other advisors did say clients and prospects don’t necessarily bring up ESG, although more are, but have no problem with making clients aware of these options. (Please note that in discussing clients and funds, the advisors in this article were not necessarily speaking specifically about ERISA-qualified funds.)

ADVISORS ARE HELPING CLIENTS GROW GREENER

Clients Welcome The Ideas

Mackenzie “Mac” Richards, Certified Financial Planner with SK Wealth in Providence, R.I., said his firm has significant interest in ESG investing, and he finds clients welcome the ideas. “If clients aren’t specifically asking for it, when we explain what it is and that it’s an option, they almost always select this,” Richards said, adding that performance is becoming less of an issue. “We have begun to see ESG-focused investments doing so well on our screens that we are incorporating them into non-ESG portfolios. This is an exciting time for investors because you don’t have to choose between feeling good about where your money is and great investment performance. We only expect this trend to continue and will continue to make ESG/socially responsible investing a priority at our firm.”

boards. It can also include religious filters for those who want to include or exclude particular industries or companies based on their faith. The client gets to decide what and by how much of any of these filters to include in their portfolio, including doing nothing.” Speaking of filters, Arthur J.W. Ebersole, Certified Financial Planner with Ebersole Financial, Wellesley Hills, Mass., also said clients can add “screens” to their portfolios to ensure their funds align with their values. “With advances in technology, investors are now able to customize portfolios in line with their goals and values in ways that were not possible in the past,” Ebersole said. “ESG information still remains difficult to interpret and many data providers and businesses have quite different definitions of ESG, but these

“This is an exciting time for investors because you don’t have to choose between feeling good about where your money is and great investment performance.” Amber Miller, Certified Financial Planner with The Planning Center in Minneapolis, said not many of her current clients are asking about ESG, but her prospects certainly are. “About 10% of my clients are asking about values-based investing, and about 75% of new prospects are asking about it,” Miller said, adding that her clients are becoming intrigued. “As a fiduciary, I also ask my clients if they are interested in values-based investing and about 95% of them want to learn more and eventually switch investments into the ESG/values-based investing strategies.” Miller added that she believes she would be failing her fiduciary duty if she did not bring up ESG investing. “It is a strategy with its own pros and cons. It is not my role to decide for a client if they want to employ such a strategy,” Miller said. “Additionally, values-based investing can mean so many things — to some it can be lowering carbon emissions, to others it’s increasing the number of women or people of color on executive

will hopefully be resolved through greater transparency as the market for ESG products continues to grow in the coming years and decades.” Mitchell Kraus, Certified Financial Planner with Capital Intelligence Associates, Santa Monica, Calif., said clients are warming up to ESG investing as they become more concerned about their own impact. “I have my CSRIC designation, so maybe that attracts clients who are interested in ESG,” Kraus said. “I make it a point to ask every new client about ESG investing and many are not interested, but I have found many are coming back to me now to find out more. While they did not want ESG funds in their initial portfolio, they are now curious about how they could increase returns, reduce risk or help make the world a better place.”

The Effect On Returns

Christopher Lyman, Certified Financial Planner with Allied Financial Advisors, Newtown, Pa., makes a point of talking

about ESG to help clients recognize their impact. “While it is still somewhat rare for clients to proactively ask us about it, I usually bring this option up with clients and I would say about 40% are all for it, 20% are not quite sure and 40% don’t rate it as important enough to act,” Lyman said. “I will also admit that I am a very big environmentalist, so I am making the effort to proactively bring this up with clients. I doubt many other advisors do the same.” Although Lyman was not speaking about the current DOL specifically, he said in discussing clients’ array of options, he makes it clear that ESG investing can affect their returns. “I do explain that you need to be OK with these funds having a return of 2% less a year than regular funds, which can easily amount to a difference in wealth of hundreds of thousands of dollars later in life,” Lyman said. “I also would discourage anyone who has a low probability of a successful retirement from investing in these funds because of the possibility to underperform.” Lyman did add that ESG funds are not lagging so much anymore, with his financial analyst showing that the difference in returns is “very, very close at this point.” Lyman sees his role as more than the dollars-and-cents guy as consumers consider their impact and how they can be the change they want to see. “Nothing speaks louder to companies than the almighty dollar, and if 40% of the public made it clear that none of their money would go to a company that does not at least make an effort to live up to these higher standards, things would change very quickly,” Lyman said. “While capitalism is the best system we have for innovation, it does place innovation and profit above all else. So, it is up to us as investors and customers to make it known what we want and since profit will follow, so will these corporations’ actions.” Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at stevenamorelli@gmail.com.

July 2021 » InsuranceNewsNet Magazine

INBALANCEWIRES

This One Thing Will Help You Live Longer

What one simple thing can you incorporate into your daily routine to live a longer life? Harvard University scientists and the American Heart Association said the answer is in your own two feet. Walking every day will lead to a longer and healthier life. You’ve probably heard that you need to walk 10,000 steps every day, but scientists said at least 4,500 will yield benefits. They found that each initial increase of 1,000 daily steps was linked to a 28% decrease in death over a six-year period. Women who walked more in short spurts tended to live longer, regardless of how often they went for long uninterrupted walks. Among women taking 2,000 uninterrupted steps daily, a 32% decrease in death was recorded.

TAKE A PICTURE!

Does this ever happen to you? You’re away from the house — maybe at work or even on vacation — and you wonder whether the stove is still on, or the garage door is closed, or if the thermostat is off. You can obsess about this and imagine a dire situation like the house burning down. Or you can take a simple step to put your mind at ease — take out your phone and snap a photo before you leave the house. Having a photo of the stove dials, or the curling iron unplugged, or the garage door down can ease your mind. This life hack also works when your car is parked in the airport parking lot and you’ll need to remember where it is when it’s time for the trip home.

TOP 3 HERBS FOR HEART HEALTH

Herbs can play an important supporting role in a heart-healthy diet. Certified nutritionist Anne Louise Gittleman listed her top three choices for cardiac health. Garlic tops the list. The pungent herb garlic has been shown to help prevent blood clots and is linked to lowering cholesterol. Next up is cayenne, which is high in vitamin E and capsicum, a substance that boosts circulation. Also on the list is an herb that isn’t usually found in the pantry – hawthorn. Hawthorn was first used in the first century for treating cardiac diseases and for strengthening the heart muscle. The herb is most easily consumed as a tea.

QUOTABLE More research is indicating that any type of movement is better than remaining sedentary. — Christopher Moore, University of North Carolina

is sometimes referred to as a silent danger. High cholesterol can be caused by a diet high in saturated fats, but there is one reason for high cholesterol that you might not have considered. Hypothyroidism — or an underactive thyroid gland — means the body is not making sufficient thyroid hormones, and that can have a significant effect on cholesterol levels. Thyroid hormones help regulate LDL or "bad" cholesterol clearance from your blood. Too few thyroid hormones mean not enough cholesterol clearance, which can lead to an increase in your “bad” cholesterol levels. Also, too few thyroid hormones might cause greater intestinal cholesterol absorption, which can also lead to elevated cholesterol levels. Data suggests that 1 in 300 people in the United States is living with hypothyroidism, and as many as 13 million Americans have undiagnosed hypothyroidism, according to the American Family Physician Foundation. Prevalence increases with age, and the condition is more common among females. To add to this, many doctors are not on the lookout for subclinical hypothyroidism.

THE SURPRISING CAUSE OF HIGH CHOLESTEROL

A person with high cholesterol levels often has no signs or symptoms, which is why it DID YOU

KNOW

High blood pressure is the world’s leading killer. Source: European Heart Journal

InsuranceNewsNet Magazine » July 2021

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INBALANCE

The Five W’s Of Creating A Memorable Family Reunion Getting family members together for a special event takes planning and delegation. By Susan Rupe

fter many long months of COVID-19 restrictions keeping people apart, it’s time to think about reuniting with farflung family members. Planning a reunion may seem like a daunting task, but you can break it down into manageable pieces by following the five W’s: who, what, when, where and why. My father was one of seven children, and for the past 30 years, the descendants of those seven siblings have gathered for a weekendlong event. When we planned the first reunion back in 1991, we weren’t sure whether anyone would even want to show up for it. But they did, and they kept showing up year after year. As time went on, we added some things to the reunion and got rid of some things that no longer work for us. Here are some of the things we learned along the way as our event enters its next decade. Who: Who will you invite to the reunion?Will it be limited to a particular branch of the family? Will you extend an invitation to anyone who shares your last name? Will you reach out to in-laws? We started out inviting only the seven siblings and their descendants. But over time, other people wanted to join in. Two or three of my relatives invite their parents-in-law, a cousin asked her husband’s 46

InsuranceNewsNet Magazine » July 2021

cousins to join us, and another cousin wanted to include longtime family friends who live near our reunion venue. We also reached out to some distant relatives who share our last name and live close by. You may subscribe to the philosophy of “the more, the merrier,” or you may want to have a more pared-down group. Of course, the number of people you invite may be limited by the venue you select and how far it may for people to travel. The “who” also includes asking yourself who can help you with the various tasks involved in planning and carrying out a reunion. Can someone help with the food? Is someone good at decorating? Who can keep the children entertained? Can you recruit volunteers to help set up beforehand and clean up afterward? What: What do you want to do at the reunion? Do you simply want to spend time eating and visiting? Will your attendees want to participate in some activities? Will your family members expect to do all their activities together, or would they like to combine organized activities with some free time to spend how they wish? At our reunion, we schedule “together time,” but we also include nonscheduled time. Our attendees have dinner on their own on Friday night, followed by a “welcome party” at our hotel. Saturday includes breakfast and lunch in an amusement park pavilion and an afternoon spent doing whatever we want to do in the park. Saturday night is dinner followed by some kind of activity. Post-dinner events have

included everything from karaoke singing to square dancing to board games to sharing old photos to a costume contest. Ask your attendees what they want to do, but be prepared to offer suggestions if people are shy about speaking up. For some, a jam-packed schedule is exhausting and takes away from “visiting time.” Others may want to have something planned for them. If your reunion is outdoors in a place where the weather can be unpredictable, have an alternative in mind if rain or cold forces a change in plan. Focus on keeping the older family members comfortable and the youngest family members occupied. We found that if the children are having fun splashing in the pool or playing with their “new” cousins, they are more likely to want to return next year. And if the elders aren’t subjected to anything too strenuous, they will feel the same way. The “what” also includes determining what you are going to eat. Will people bring their own food? Will you hire a caterer and split the costs among your attendees? Will some family members volunteer to cook for the rest of the group? When: When will you hold this reunion? For most families, summer is a logical time. Our family settled on the first weekend of August. There was no special reason for this – it happened to be the only weekend that a picnic pavilion was available at the venue where we wanted to hold our first reunion. Other families may want to schedule a reunion around a landmark birthday or

THE FIVE W’S OF CREATING A MEMORABLE FAMILY REUNION INBALANCE anniversary celebration. And one family I know schedules a big reunion the day after Thanksgiving because it’s the only time everyone is back in their hometown. You may want to select two dates and give your family members the option of voting for the date that suits them better. Everyone’s schedule is busy, and it’s difficult to select a date that works for everyone. We found over time that the first weekend in August has become so ingrained in our family members’ consciousness that most of them make an effort to keep that weekend open. Please be sure to communicate your reunion date early and often. Before we leave our reunion, we announce the date of the next year’s event. I send reminders out in January, and we also have a Facebook group, where we share news and updates. The “when” also includes deciding how long your reunion will be. For some families, an afternoon together is enough. Because most of our family members travel a distance to get to our reunion, it’s hardly worth the trip unless we are together for a couple of days.

Where: Much of what you will do at your reunion centers on where you have it. Do you want to return to your old hometown, or do you want to visit a tourist destination? How far will people have to travel? If your reunion doesn’t require much travel, then you only have to find a venue for people to share a meal, sit and visit. If the venue includes a place for swimming or something for the kids to do, that’s a definite plus. If most of your attendees will have to travel more than a few hours to get there, then you also need to find a hotel or motel for everyone to stay overnight. Depending on the popularity of your venue, you may need to reserve it up to a year in advance, so that will affect your planning timeline. After you have determined the “where,” you will be able to determine the “how,” as in how much will this cost? Will you charge your attendees by the family or by the individual? Do you want to put a limit on how much you are willing to ask your attendees to spend? Do you have some family members who might

be willing to help underwrite some of the expenses (meeting room or pavilion rental, or swimming pool or amusement park passes) to keep the costs down for the rest of the group? Why: Why do you want to do this? Do you want to celebrate a milestone such as a birthday, anniversary or graduation? Do you simply want to get together “once and done,” or do you want to make this an annual event? As in so many other things, determining your “why” will help make the rest of the event planning fall into place. Enjoy the time you have together creating new memories. Susan Rupe is managing editor for Insurance NewsNet. 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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July 2021 » InsuranceNewsNet Magazine

BUSINESS

Separating The Wheat From Chaff When it comes to marketing efforts, too many advisors expend either too much effort or not enough. By John Pojeta

onfession time — this article should have been completed two hours ago. Instead, I saw a story on Facebook that mildly interested me; that story led me to an ad that took me to a website and had me in a shopping rabbit hole looking for a new computer. Rinse and repeat! I don’t even have to ask if you can relate because I’m positive that you can. It’s universal. Whatever your interests are, the volume of information and the number of platforms grow every day. Consider these statistics: Email – 306.4 billion emails sent every day. Snapchat – 4 billion snaps posted each day. TikTok – 1 billion videos viewed daily Facebook – 350 million posts a day. Instagram – 95 million photos shared each day. LinkedIn – 2 million posts daily. 48

InsuranceNewsNet Magazine » July 2021

Given the continually growing number say they have potential. of users of each social media platform, Consider this example: The business is it’s an easy leap to suggest that most of producing $5.2 million in annual revenue. you engage in many if not all of these There are three owners, two of whom are platforms. Information overload is real, family. The owners have no succession and it’s frustrating. So, like a farmer who plan, but they have an established client separates the good wheat from the useless base. On paper, it looks like a viable lead. chaff, how do you filter what information In reality, they may not be profitable or matters the most and what content is valuable? Separating the wheat from When it comes to growing your business, how do the chaff is a heavy lift. It you handle the reverse of takes time, hard work, consistency this scenario? When you have a prospect list of 5,000, and more hard work. how do you filter through that list to find the wheat, the viable leads? even in business in the next 12 months. When you’ve landed a face-to-face with Plenty of other factors can make a this prospect, how do you differentiate prospect a bad prospect. Maybe they yourself from the competition to ulti- just changed providers and are still getmately land the deal? ting used to the new product, company and service. They aren’t prepared to act. Find The Wheat Again, not a prospect today, but maybe in Taking your prospect list from an the future. unwieldy number to a productive three When it comes to marketing efforts, or four substantial conversations a month too many advisors expend either too with the correct decision-maker would be much effort or not enough. Too much considered very successful for most insur- effort not only takes away from serving ance and financial professionals in the existing clients, but it also interferes with business-to-business space. your ability to expand your expertise. How do you narrow a large pool of Too little effort does not provide you with prospects to those who are willing to opportunities to grow your business and engage with you, who need and would use your knowledge to provide advice that benefit from your services, and who are genuinely helps clients. qualified to act? Many prospects look Separating the wheat from the chaff great on paper; in the sports world, we is a heavy lift. It takes time, hard work,

SEPARATING THE WHEAT FROM CHAFF BUSINESS consistency and more hard work. But getting to the valuable clients is worth it. Are you prepared to take this on in a meaningful way that moves the needle with your sales? I’ve heard from many advisors that they made this choice and found themselves frustrated. The work is too time-consuming and not the reason the vast majority of advisors get into the business.

Make Sure You Aren’t The Chaff

You’ve found your wheat and have an appointment scheduled at their office. You sit down in the owner’s office, and before either of you says anything, you notice three of your closest competitors’ sales proposals on the shelf behind them. How do you close this deal? Now the roles are reversed. You don’t want them viewing you like chaff, just like the other three on the desk. So how do you stand out just like they did as a prospect to you? The first piece of advice we all have heard is “Tell them what makes your product different.” We’re talking about financial tools and insurance products — and the reality is that we all sell the same stuff. The differences sometimes are not even discernible. The next logical strategy is “Focus on the service we provide.” This doesn’t wash out anymore either. If we aren’t good at servicing our clients, we likely aren’t a successful business, and it’s even more likely we won’t be in business for long. Now is when the human element can make all of the difference. There are several core approaches people appreciate: » Be honest and have integrity. Everyone will say they engage with and lead with honesty and integrity. The differentiator is how you go about showing prospects and clients you are genuine about it. » Be your client’s advocate. Sure, you could lose a sale over a slight difference in premium. But when you can articulate the benefit to your client in a way that doesn’t seem like a sales pitch but expresses genuine interest in protecting their assets, it helps frame the conversation in a very different way. If your clients view you as being “in the trenches” with them, it changes the relationship’s dynamics for everyone. It’s no longer just

Wheat Or Chaff? You Decide Wheat

- The correct decision-maker. - Willing to meet with you. - Needs what you offer. - Qualified to take action.

Chaff

- Business not stable. - Not prepared to take action. - Unable to see the value you offer. - Not qualified to take action. transactional; you are a valuable aspect of their success. Your clients will never forget how you made them feel. » Be different. All too often we get in the door, engage in some pleasant chitchat and then fall into “presentation mode.” If you don’t make a concerted effort to be different during your first engagement, you will be the fourth proposal on that stack. While you can’t alter someone’s willingness to change, if they are open-minded, this is a skill that a talented sales coach can teach. » Be a good listener. Ask helpful, open-ended, insightful questions. Do not ask a question and spend the next few minutes prepping your follow-up question. Be insightful and curious, not manipulative.

Harvest The Wheat

There is nothing more annoying than going to a website and being bombarded

with pop-ups. We rush to get those clickbait ads out of the way. It’s time to do the same with your prospect list. That contact you’ve been holding on to, hoping “Well, maybe one day” — let that security blanket go and jettison that chaff! There’s a proverb that says, “Don’t say it’s wheat until you harvest it.” Once the chaff is clear and you’ve done the hard work, you can go after the wheat that is your prime prospects, and you can be their valued solution. John Pojeta is vice president, business development, with The PT Services Group. He may be contacted at john.pojeta@innfeedback.com.

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July 2021 » InsuranceNewsNet Magazine

INSIGHTS

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

‘Interruptions’ Can Bring Opportunities Positioning yourself to move with life’s challenges will help you focus more on what matters most. By Bryon Holz

any people, with the best of intentions, try to build their lives to be impervious to challenges or emergencies in every way. As advisors, we certainly understand why this approach has merit from a financial perspective. But beyond finances, attempting to construct a life that never has to change in reaction to the world usually does not work out. In fact, this approach is not only often infeasible but also undesirable. Whether personal, professional or societal in nature, life’s challenges provide opportunities for all of us to grow. When we forsake these opportunities, we limit ourselves and our futures. Positioning yourself to move with, not against, the changes that come in your personal and professional life will help you focus more on what matters most and how to hold onto it.

Accepting The Inevitable

“Accepting the inevitable” has an almost exclusively negative connotation in American society. It sounds like surrender instead of putting up a fight. But none of us can win the fight against change. Instead, when we frame it in terms of accepting the inevitable and then adapting to explore new options, the connotation changes to one that is not negative at all. Like most other people, my employees and I were unprepared to specifically handle a pandemic in March 2020. However, after 9/11 and the 2008 financial crisis, we knew we had to have processes in place to contact all our clients in the event of another emergency. In 2018, we faced another challenge, albeit a positive one: Our client base became too big to schedule in-person meetings with everyone (which can happen to advisors with a wide range of client ob50

InsuranceNewsNet Magazine » July 2021

ligations). Rather than trying to make the unworkable work anyway, we transitioned to virtual client service that same year. That shift and our existing emergency plan paid massive dividends when the pandemic started. Not only were we able to reach our clients quickly and easily, but 2020 became one of the best years for referral business in my career. Our readiness to handle whatever came our way let us grab hold of a positive in a very negative time to grow our client base and reinvigorate existing client loyalty. But not all shifts happen at a grand societal level. My father was recently diagnosed with early dementia from Alzheimer’s disease and moved into a senior living center. Accepting something like this is, of course, extremely difficult. But it also gave me an opportunity to refocus on the essentials in my life: my faith and my family. It also has led me to become even more invested in finding the right solutions for my clients’ lives, through the security and resources granted by our professional services and products.

Seizing Initiative

Accepting change is not just a mindset. Perhaps ironically, you must make proactive changes both professionally and personally to best prepare yourself for the changes that will be outside your control. Actively managing what you can will help you grapple with what you cannot. One of the most consequential choices I made 20 years ago was to split my time between “focus days” and “buffer days.” All of my client meetings happen on focus days, which helps me stay in the mindset of helping clients solve their problems. But at least two days a week, I have a buffer day without any client meetings at all. This lets me spend an appropriate amount of time on the other parts of my business: managing my employees, taking care of office tasks or preparing for business travel. These days, as you might have expected, became even more important last year

These “interruptions” bring some of the greatest opportunities we ever come across when we all needed to transition to working remotely. Another key step I took was hiring a dedicated scheduler. Before I hired her, we would often schedule client meetings reactively, when clients reached out. This led to an unpredictable overall schedule, which made it harder to set aside time for other aspects of my work. My scheduler now proactively reaches out to clients to schedule meetings, which gives me and my other employees more control over our schedules. These tools also give me more time for personal matters. This includes spending time with my father, which has taken on even more importance since his Alzheimer’s diagnosis. It also includes new, pandemic-generated hobbies like birdwatching. I picked this up soon after the onset of COVID-19, and it has done wonders for my physical and emotional well-being during the past year. Life is often defined by the events we see as “interruptions” when they happen. These interruptions, though, bring some of the greatest opportunities we ever come across. Being ready to accept these course changes will let us take those opportunities and grow into better professionals and people. Bryon Holz is a 25-year MDRT member. He and his team of associates in Tampa Bay, Fla., have been helping build brighter tomorrows for their clients since 1983, specializing in asset protection, income planning and wealth conservation strategies. He may be contacted at bryon. holz@innfeedback.com.

INSIGHTS

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

Why Advisors Should Consider Single-Pay LTCi For Their Clients A “once and done” approach to paying for LTCi has many advantages for clients, but advisors also must make them aware of potential tax disadvantages. By Thomas H. Riekse

he recent stock market run (especially in technology stocks) has been amazing. Despite the high unemployment rate, many investors are enjoying that feeling of increased net worth in both their qualified and nonqualified money. At the same time, many may feel concerns about the market valuations, not to mention the recent craziness around retail investor trading. Are we set for a repeat of the big market corrections of 1999 or 2008? Is it time to take some chips off the table and reallocate assets? Americans have seen the impact the pandemic has had on long-term care facilities and want a flexible plan for care. One great option may be a single-premium long-term care insurance plan. Single-premium LTCi plans are just that — an applicant pays a single premium, and they are done paying premiums on that policy. Single-premium LTCi policies are available for both traditional LTCi policies and LTC + life hybrid plans. Carriers for single-premium LTC + life products include New York Life, OneAmerica, Nationwide, Lincoln Financial, Securian, Pacific Life and Brighthouse Financial. The carrier that offers single-premium in the traditional market is National Guardian Life. Let’s look at how a typical policy works. Consider a 55-year-old married woman who makes a one-time premium payment of $105,000. The policy she is buying pays a cash benefit for LTC at home in assisted living or in a nursing home, and the benefit increases 3% each year. In this example, by the time the policyholder reaches the age of 80, she will have

a policy that will pay a benefit of almost $10,000 per month with total benefit available of $752,000. And that benefit is certain, not dependent on market performance, unlike “self-insuring” for long-term care. Consider the advantages of buying a single-premium LTCi policy: » No possibility of future rate increases. » No lapse of coverage because of not paying premium, whether due to a change in economic circumstances or forgetting to pay. » The ability to include inflation protection so that benefits will automatically increase with certainty. » The addition of a death benefit, either through a stated death benefit with hybrid policies or a return of premium upon death for traditional LTCi. » The ability to get money back due to the product surrender value or premiums paid. And some of the disadvantages of single-premium LTCi coverage: » Your client needs to have the money available. » Opportunity cost! That money can’t be placed in other investments like stocks (or bitcoin). » Cash surrender value — many plans offer a 100% return of entire premium option, but electing this reduces the LTC benefit. » No potential annual tax deductions as a business owner or health savings account holder. How does a single-premium policy compare with an annual pay plan in terms

of premium savings? Let’s look at our 55-year-old female client, who is in excellent health and interested in an initial monthly long-term care benefit of $4,500 per month, an initial benefit of $216,000 (which represents about four years of care) growing at 3% compounded based on an included inflation rider. At age 90, this would result in an approximate monthly benefit of $12,293 per month and a total benefit pool of $590,000. Again, that benefit is defined and specific — not subject to market fluctuations. Once a single-premium plan has been purchased, it should give a client more confidence to invest their money, knowing that the LTC benefit will be there. There are many methods to fund a single-premium LTCi policy. Here are some of them: » Cash. » Nonqualified investments. This may trigger short- or long-term tax implications, and this needs to be considered. » Retiring certificates of deposit. » A 1035 tax-free exchange of an existing life insurance policy that has cash value but not LTCi benefits. » Qualified money, such as from a 401(k). It’s important to note that withdrawing qualified money to pay the premium will result in ordinary income tax treatment. That’s why carriers have designed solutions that allow the qualified funds to purchase an annuity that will in turn fund a 10-pay LTCi policy — spreading the tax hit over several years. Single-premium LTCi plans can help fund a plan for care and provide peace of mind for a family — something well worth considering. Tom Riekse, CLU, ChFC, is the managing director of LTCI Partners, an NFP company. Tom may be contacted at tom.riekse@innfeedback.com.

July 2021 » 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.

Could COVID-19 Lead To Higher Life Insurance Sales? The Insurance Barometer study gave some insights into the way consumers perceive life insurance as well as how they want to buy it in the post-pandemic world.

More Likely To Buy Due To COVID-19 By Generation And Gender

By Stephen Wood

he effect of the COVID-19 pandemic on Americans is immeasurable. Our health and well-being concerns became all-consuming over the course of the last 18 or more months. As vaccines are now widely available and many people have begun to venture out in public, financial advisors and life insurance agents have begun face-to-face meetings with their clients again. But what about gaining new business? What has the pandemic done in terms of life insurance awareness and purchase intent? LIMRA and Life Happens fielded their 11th annual Insurance Barometer study in January during the height of the “second wave” of the pandemic in much of the U.S. Historically, the majority of Americans have preferred to purchase life insurance in person with an agent or advisor. As use of technology has become nearly ubiquitous and people have grown accustomed to conducting meetings and transactions online, this trend has shifted. In 2011, 64% of consumers said they preferred to buy in person; by 2020, just 41% felt this way. It is not surprising that the preference for online purchasing nearly doubled from 17% in 2011 to 29% in 2020. During the pandemic, more Americans of all ages became accustomed to transacting online. Life insurance and other similar products can be confusing for prospective clients, and face-to-face is still the most preferred method of finalizing such purchases. It is clear, however, that the industry must adapt to the changing channel and distribution landscape. Life events such as births, marriages, job 52

InsuranceNewsNet Magazine » July 2021

changes and deaths of family and friends prompt people to consider purchasing life insurance. The COVID-19 pandemic is a life event that all of us have experienced at the same time, over an extended period. The pandemic lifted the likelihood of buying life insurance for many consumers; almost one in three (31%) said they were more likely to buy because of the pandemic. Two-thirds of those surveyed said they personally knew someone who had tested positive for COVID-19. Of those individuals, the likelihood of obtaining life insurance in 2021, at 33%, was nearly the same as it was for the entire respondent pool. For those who tested positive themselves, that number rose to 42%. This shows that it is often personal experience — whether starting a family or battling a dangerous virus — that drives life insurance sales. Of course, purchase intent does not equate to sales. Even the most well-intentioned consumer may have some perceptions about life insurance and the industry that put roadblocks in their way. More than half of the survey’s respondents (53%) admit they are unsure what product they would need or how much coverage to purchase. Nearly half (45%) stated that they have simply put

off purchasing, and more than a third (36%) believe they would not qualify for coverage. These are significant obstacles for the industry and indicate the need for compelling communications to help consumers build appreciation for the broad value proposition that life insurance offers. According to the 2021 Insurance Barometer, slightly more than half (52%) of American adults own some form of life insurance coverage (e.g., individual, employer sponsored), which is a decline of two points from 2020. This marks the lowest level of self-reported ownership to date in the 11 years of this study. Perhaps with online purchasing increasing before the pandemic and so many more people now comfortable conducting business and transactions online, the life insurance industry could be looking at higher sales as it navigates this post-pandemic world. As part of LIMRA’s Markets Research team, Steve Wood is responsible for providing analyses and insights for some of the industry’s most compelling reporting. You can contact him at stephen. wood@innfeedback.com

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InsuranceNewsNet Magazine | July 2021

Articles inside

Engineering The Future

Responding To Client Needs Amid Changing Market Forces

Advisors Are Helping Clients Grow Greener

From Door To Door To Top Producer