InsuranceNewsNet Magazine - June 2012

Life

Annuities

Health

June 2012

If Your Clients Don’t Learn from These Mistakes, They’re Doomed to Repeat Them PAGE 20 ALSO INSIDE: Be a Sales Superspy with Social Media PAGE 12 Could Life Settlements Solve the LTC Crisis? PAGE 46 Variable Annuity Advisors Face More Scrutiny PAGE 50

N

O OUT-OF-POCKET COSTS*

FREE LEADS*

Free qualified leads* Each lead is from the ZIP codes of your choice and has: at least $300,000 in assets at least $50,000 in annual income at least 50 years of age

You write a case... you get another mailing.

A true source of endless qualified leads.

SUCCESS “I‛VETHEHADCONTINUED WITH LEADZILLA IS

AMAZING. I RECENTLY WAS ABLE TO WRITE A $300,000 ANNUITY WITH ONE OF THE LEADS FROM LEADZILLA. —R. MARTIN, SOUTH DAKOTA

“ON MY FIRST MAILER, I

RECEIVED A 4.8% RESPONSE RATE AND WENT ON SOME GREAT APPOINTMENTS. I UNCOVERED A $30,000 ROLLOVER, A $500,000 ROTH IRA AND A $1.6 MILLION TRADITIONAL IRA. —ROBERT S.

(Individual results may vary)

“

We don’t make a penny off our leads, only on the premium you write when using them.

“

(Individual results may vary)

*There is no out-of-pocket expense to agents; leads are based on qualified production.

Please note that in order to provide a recommendation to a client about the liquidation of a securities product, including those within an IRA, 401(k) or other retirement plan, to purchase a fixed or variable annuity or for other similar purposes, you must hold the proper securities registration and be currently affiliated with a broker/dealer or registered investment adviser. If you are unsure whether or not the information you are providing to a client represents general guidance or a specific recommendation to liquidate a security, please contact the individual state securities department in the states in which you conduct business.

Life Sales, LLC is not affiliated with Kramer Direct nor do we guaranty the accuracy or quality of their services. Although we may promote and/or recommend the services offered by this company, agents are ultimately responsible for the use of any materials or services and agree to comply with the compliance requirements of their broker/dealer, or registered investment adviser, (if applicable), and the insurance carriers they represent.

LS_FL_LZIL_1211-0237

Only One BGA/FMO OFFers TRUE FUll HEalTH InsURancE FOr Independent AGents & BrOkers

now IndEpEndEnT agEnTs can HavE THE BEsT oF all woRlds Full Health insurance for you and your family, guaranteed issue

Group Life, guaranteed issue

Short- and long-term disability, guaranteed issue

Already have insurance? Discover how maximum compensation and bonuses could grow your bottom line.

Watch a video and get all the details at

FullBenefitsAndGreatComp.com or call 1-800-290-7226, ext. 147.

read it

online

insurancenewsnetmagazine.com/June12

JUNE 2012 • VOLUME 5, NUMBER 6

Scan this QR code with any QR code reader on your smart phone

CONTENTS

View and share articles from this month’s issue

42

42 P roducing Producers

20 INFRONT

20 H istorically Bad Estate

8A nnuity Carrier Exits: Tsunamis or Small Waves?

By Linda Koco A review of annuity sales since 2008 suggests that when major industry players depart, it’s not necessarily a call to abandon ship.

Planning

By Steven A. Morelli From Abe Lincoln to Amy Winehouse, it is not just pop stars but even historic figures planned to fail, by failing to plan.

By John Alves It’s clear the annuity industry needs new young talent, and the process of mentoring young advisors can lead to an empowered and motivated team.

HEALTH 46 S tates Eye Life Settlements as a Solution for LTC Crisis

By Chris Orestis Converting life insurance policies to pay for long term care makes sense, and it’s a legal alternative. Educating seniors about this option is the key.

12 34 50

LIFE 34 Out of Balance

By Delia deLisser Women hold fifty-one percent of the private wealth in the U.S., so why do so many feel underserved by the financial services industry? Find out how to connect with, and engage, this valuable group.

FEATURES 12 S ocial Intelligence Agency An interview with Kevin Knebl Social media master Kevin “Obi-Wan” Knebl talks about how to spend 15 minutes a day and get immediate value and profit from social networking.

2

InsuranceNewsNet Magazine

June 2012

ANNUITY 40 Q uoting High, Selling Low...

By Linda Koco Financial advisors search for much higher SPIA premiums than they sell. Industry experts offer a few explanations as to why.

FINANCIAL 50 A dvisors Face More Scrutiny in the VA ‘Alternative’ Zone

By Linda Koco The Financial Industry Regulatory Authority has issued compliance requirements for financial firms and their representatives for “complex” products, but does not specify alternative investments.

Advisors need to be cautious when recommending these investments.

Receive direct access to a turn-key marketing system that compels clients to call you.

Unveil the industry’s hottest INDEX UNIVERSAL LIFE product with highest pt-to-pt caps and lowest guaranteed loan rate.

Gain rights to exclusive territories; all provided for you at NO-COST.

Territories are filling up!

Call us today to register for a live webinar.

LIMITED AVAILABILITY!

Call us at 866-871-0964

or visit FundCollege.net to lock in your territory!

CONTENTS 52 JUNE 2012 • VOLUME 5, NUMBER 6

BUSINESS

52 T ell Your Story, Not Your Answer

By Bryce Sanders Relate to — and win over — your prospects through personal anecdotes that portray your knowledge and experience.

INSIGHTS 54 M DRT: Give Financial Personalities Center Stage

By Diane McCurdy Spender? Builder? Giver? Saver? Learn how to use the four types of client personalities to build exceptional financial plans.

56 L IMRA: Life and DI Sales Grow At the Workplace

By Kimberly Landry Seventy-five percent of insurance sales happen through a workplace enroller, however many buyers report dissatisfaction with rep knowledge and follow-up.

58 N AILBA: Life Insurance – the Greatest Gift of Love

Adding warm internet leads to your marketing plans can help you find more consumers, write more policies, and make more commission.

DISCOVER:

By Dexter Umekubo A brokerage general agent relates an early experience with a client that forever shaped his understanding of the ‘Life’ part of Life Insurance.

EVERY ISSUE 6 Editor’s Letter 18 NewsWires 32 LifeWires

38 AnnuityWires 44 HealthWires 59 Advertiser Index

60 Ask the Sales Doctor

Bankrate Insurance Verified for quality Targeted lead filters and zones INSURANCENEWSNET.COM, INC. 355 North 21st Street, Suite 211, Camp Hill, PA 17011 tel: 866-707-6786 fax: 866-381-8630 www.InsuranceNewsNet.com

Free tools, training, and resources

PUBLISHER Paul Feldman

EDITOR-IN-CHIEF Steven A. Morelli

ASSISTANT EDITOR Kathryn Rolston

CHIEF OPERATIONS OFFICER Jim Barton

CREATIVE DIRECTOR Jake Haas

VICE PRESIDENT OF MARKETING Peter A. Winer

TECHNOLOGY DIRECTOR Joaquin Tuazon

VICE PRESIDENT OF BUSINESS Mark E. Waters DEVELOPMENT

REGIONAL ACCOUNT MANAGER Jesse Barden (NORTH CENTRAL)

PRODUCTION EDITOR Natasha Clague SENIOR GRAPHIC DESIGNER Carlos Centeno

REGIONAL ACCOUNT MANAGER Brian Henderson

MARKETING COORDINATOR Brenda Salyer

REGIONAL ACCOUNT MANAGER Ken Landis

(SOUTHEAST)

Copyright 2012 InsuranceNewsNet.com. All rights reserved. Reproduction or use, without permission, of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 355 North 21st Street, Suite 211, Camp Hill, PA 17011, Fax at 866-381-8630, or call 866-707-6786. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 866-707-6786, Ext. 115 or reprints@insurancenewsnet.com.

Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 866-707-6786 ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.insurancenewsnetmagazine.com, or call 866-707-6786, Ext. 115 for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 355 N. 21st Street, Suite 211, Camp Hill, PA 17011. Please allow four weeks for completion of changes.

(WEST)

Legal disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information “as is,” without warranties of any kind, either expressed or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration, for any errors, inaccuracies, omissions or other defects in, or untimeliness or unauthenticity of, the information published herein.

With

SLEEP INSURANCE from American Equity you’ll never have to worry about clients waking up on the wrong side of their retirement!

Sleep Insurance from American Equity means: • Retirement dollars stay with an American Owned & Operated Company!

• Proven renewal rate integrity you can count on!

• Guaranteed income payments from industry leading lifetime income benefit riders!

• Questions? Call in and speak to a live person in seconds!

We answer the phone!

• NO MORE SLEEPLESS NIGHTS WORRYING ABOUT RETIREMENT

Call American Equity today at 888-647-1371 and ask how our fixed annuities can provide Sleep Insurance for you and your clients!

WE ANSWER THE PHONES!

888-647-1371

www.american-equity.com

FOR AGENT USE ONLY. NOT FOR USE IN SOLICITATION OR ADVERTISING TO THE PUBLIC.

12 INN 06.12

WELCOME | LETTER FROM THE EDITOR

INN on the Air

BY STEVEN A. MORELLI, EDITOR-IN-CHIEF When we published the story behind the theft conviction of a California insurance agent for selling an annuity, we knew it was an unusual circumstance that would get people talking. Little did we know that they would still be talking about it many months later.

The attention makes sense — after all, producers who see this as an injustice worry about their own vulnerability. Although some people argue that the indexed annuity sale to an 83-year-old woman with dementia was unsuitable, even many of those who look askance at the transaction have a hard time with its rising to the level of a felony. That is particularly true because the agent, Glenn Neasham, and two of his assistants said they did not know of the dementia and the prosecutor admitted she did not prove otherwise. (For more background in the case, visit www.insurancenewsnet.com/ Glenn-Neasham.)

The case has so many intriguing aspects that it has become a learning tool.

The Society of Financial Service Professionals invited me to describe the case during a webinar, hosted quite ably by President-Elect Richard M. Weber. Even though it was nearly two hours with many experts taking turns talking about the case, we just scratched the surface. I know my attempts to provide background had to be superficial even with several minutes to talk about it. The webinar is well worth hearing — I learned new things

about the case and its issues, even after months of writing about it. You can listen to the webinar in its entirety on our Glenn Neasham page, mentioned earlier.

Another thing I learned was how difficult it was to encapsulate the case in sound bites. I proved that in the SFSP webinar and in an interview on The Wealth Channel, produced by American College. I started out by saying there was a short answer and a long answer to the question, “what happened?” I said the short answer was something like “an agent was convicted of selling an annuity.” Then I neglected to mention that I was moving onto the long answer as I expounded on the case for several minutes. I am thankful that the very capable interviewer, Katy O’Leary awoke from the trance and asked insightful questions.

Kidding aside, I was honored to be asked to do the interview. As anybody in the industry knows, The American College is a class act, especially President

»

Larry Barton. He interviewed InsuranceNewsNet Publisher Paul Feldman for an in-depth discussion on media and the insurance business. Barton was an engaging, generous and intelligent interviewer — he was as good, if not better, than any TV news anchor or talk show host out there.

Paul did a fine job, too. And I’m not saying that because his name is on my paycheck. See for yourself at www.insurancenewsnet.com/ WealthChannel.

Yes, part of why I’m telling you all this is shameless selfpromotion. But I also believe t he s e re cord i n g s c a n help readers understand the case a little better and might assist in what to do next.

And that’s the big question left to answer in this case.

Steven A. Morelli Editor-in-Chief

P.S. Are you looking to get unstuck and learn to love selling again? Then don’t miss our June 14 webinar with Jon Goldman, a marketing master we featured in April. Learn more at www.insurancenewsnet.com/goldman

Mobile Magazine

Got an internet-enabled mobile device? Take INN Magazine with you on the go! Simply scan this QR code with any downloadable QR reader and view the mobile version of this month’s issue.

»

Follow Us Online

There are more ways than ever to stay connected with us: @insnewsnet

insnewsnet

InsuranceNewsNet

in Front

Timely issues that matter to you.

BY

Linda Koco

Annuity Carrier Exits: Tsunamis or Small Waves?

T

Variable Annuities

Fixed Annuities

Oh, and then there’s the Genworth Financial news on May 1. The announcement was that Michael D. Fraizer had resigned as chairman of the board and CEO. That’s not a market exit or curtailment, of course, but because it’s another sudden exit of a top executive from a company that ranks among the top 20 on LIMRA’s list of individual fixed annuity carriers for 2011, people notice.

On a smaller scale, other annuity players have trimmed marketing, re-priced products, or otherwise reined in sales.

What worries some annuity professionals, especially independent advisors, is that their markets might shrink to the point that it compromises their ability to serve clients. Most understand that carriers are responding to deep market forces stemming from the recession of 2008-2009, the prolonged low-interest rate environment, and the regulatory uncertainties and related issues. But they are nervous all the same.

Some hope for the best but still worry that the worst is yet to come. Few say, “Oh, good.”

2011

$195

$81

Check the Statistics

2010

$141

$82

2009

$128

$111

2008

$156

$109

2007

$184

$73

Do those worries have legs? A review of some annuity sales statistics suggests that the ball game is not over for the industry.

At the recent Retirement Industry Conference in Orlando, LIMRA Assistant Vice President Joseph Montminy presented a chart of individual annuity sales over the past 11 years. In 2011, the sales total came to $240 billion. That’s still off from the 11-year market high of $265 billion in 2008 but it’s above results for both 2009 ($239 billion) and 2010 ($222 billion). That signals the market is coming back.

From 2008 to 2011 — the difficult years of the Great Recession and its

he news that Andrew Moss is resigning as chief executive of Aviva, Britain’s largest insurer, set off another round of annuity industry jitters.

Those jitters get stirred up every time a major annuity carrier makes a market exit or announces a surprise departure from the top. But are changes of that magnitude cause to worry about the future of the industry?

It helps to review the environment. In the case of Aviva, media reports indicate that the Moss resignation came in the wake of a “shareholder revolt over executive pay.”

Industr y professionals t ypically view news of resignations as corporate stuff, worthy of gossip but not particularly earthshaking where day-to-day work is concerned.

But when this particular story broke, annuity professionals in the United

annuity players in 2011 has it in fifth place, based on individual market sales.

So developments at the U.S. wing of the British company do make a difference to advisors who sell its products. Hence, the Moss departure has raised some eyebrows.

More Eyebrows Up Those eyebrows are joining a lot of others that have shot up over exits and moratoriums made by other high profile annuity carriers in recent years.

Just about every annuity professional can recount those exits and changes by heart.

Here a few highlights: ING U.S. stopped selling variable annuities in 2009 and closed that book in 2011 (though it still sells fixed, indexed and immediate annuities); John Hancock scaled back its annuity distribution in November 2011; Sun Life Financial

Annuity Sales Totals During and After the Crash (in billions)

Source: LIMRA

States were still digesting the news that Moss told investors the company would consider selling its U.S. business. The U.S. headquarters for the insurer has not confirmed that the business is for sale, but no matter — people are now buzzing about the prospect.

Aviva is a big player in the fixed market. LIMRA’s list of top 20 fixed 8

InsuranceNewsNet Magazine

June 2012

announced in December 2011 that it will exit the U.S. annuity and life insurance market; The Hartford announced in March that it would put its individual annuity book into runoff and look for a buyer of its life insurance business; and, in April, The Hartford announced that Forethought would buy its “individual annuity business capabilities.”

ANNUITY CARRIER EXITS | INFRONT

aftershocks — variable annuity sales swooned at first but then bounced back.

Meanwhile, fixed annuity sales rose at first but then swooned later on.

Worth noting is that variable annuity sales in 2011 surpassed where they were at the start of the recession in 2008 (even though they had not reached or surpassed their 11-year market high of $184 billion in 2007). Not shabby.

As for fixed annuity sales, they reached their 11-year high of $111 billion in 2009 but, just two years later, in 2011, they fell to their lowest level since the crash. Even so, 2011 sales of fixed annuities came in higher than their 11-year low of $73 billion in 2007 — as expected given the slowly rising stock market and a prolonged low interest rate environment.

The Annuity Future Individual annuity sales results might give some clues as to what the next comeback market might look like.

In the past five years, indexed annuities, which credit interest based on movements of specified indices subject to a minimum guarantee and a cap, set sales records one year after the other.

According to LIMRA statistics, the products produced a record $32 billion in sales in each of years 2011 and 2010.

They also sold a then-record $30 billion in 2009. And they set records of $27 billion in 2008, and $25 billion in 2007.

In addition, sales for immediate annuities, which pay fixed monthly benefits to annuitants typically in their retirement years, hit a 12-year record high of $8.1 billion in 2011. That’s up from the 12-year-low of $3 billion in 2000, according to LIMRA.

“What worries some annuity professionals is their markets might shrink to the point that it compromises their ability to serve clients.”

Industr y w ide a nnu it y sa les do dwarf those figures, of course. However, annuity company executives are watching the upward trajectories of both product lines as well as the actual sales numbers. Some find it meaningful to see that both indexed and income annuity sales grew throughout the last decade, including the two recessions starting in 2001 and 2008.

It is no surprise, then, to learn that several new indexed annuities have debuted in the first four months of this year alone, and at least one new income annuity. That’s not a stampede, but it’s a clear sign that carriers are still investing in annuity products where they see opportunity.

Not incidentally, several new guaranteed living benefit products for variable annuities have also debuted, plus some multi-year guaranteed annuities and a few innovations for use with retirement plans.

At the recent Retirement Industry Conference, some attendees made the point that carrier exits, moratoriums,

and such are not necessarily a sign of annuity industry collapse.

Carriers are always entering and leaving markets, one pointed out. Carriers do that for unique reasons, said another, so it pays to evaluate the reasons before deciding whether to throw in the towel on the industry. And although exits do create temporary voids in the market, other carriers will likely step in to fill the void, said another.

Major carriers are big fish and they do make waves. The question is, are those waves of tsunami proportion or are they just four-footers that splash and vanish?

And could some of them even be good for surfing?

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at Linda.Koco@innfeedback.com.

June 2012

InsuranceNewsNet Magazine

9

FEATURE | FEATURE TITLE

LIFE INSURANCE

ADVANTAGE: AN IUL YOU CAN FEEL GOOD ABOUT SELLING.

Advantage UL earns interest based on the S&P 500®, yet it is not an investment in the S&P 500® itself.

PruLife Index Advantage UL is issued by Pruco Life Insurance Company in all states except in New York where, if available, it is issued by Pruco Life Insurance Company of New Jersey.

Both are Prudential Financial companies located in Newark, NJ and are solely responsible for their own financial condition and contractual obligations.

“Standard & Poor’s®”, “S&P®”, “S&P 500®”, and “Standard & Poor’s 500™” are trademarks of Standard & Poor’s Financial Services LLC (“Standard & Poor’s”) and have been licensed for use by The Prudential Insurance Company of America for itself and affiliates. This indexed product is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representations regarding the advisability of purchasing an indexed policy. S&P 500® index values are exclusive of dividends.

0222522-00001-00 10

InsuranceNewsNet Magazine

June 2012

FEATURE TITLE | FEATURE

PruLife® Index Advantage UL (Advantage UL) is a new permanent policy that doesn’t just look good on paper. It’s one you can feel good recommending. Here’s why:

STRAIGHTFORWARD, TRANSPARENT DESIGN Clients have the opportunity to build potential cash value that could be used to help keep their out-of-pocket payments down in later years—while managing against potential volatility—by choosing between two interest-bearing accounts: • The Indexed Account earns interest based on the performance of the S&P 500®, which excludes dividends, with a current 10.75% cap, 0% floor, and 100% participation rate.

• The Basic Interest Account earns fixed interest guaranteed to be at least 2%.

And, there’s premium flexibility: Clients can choose one of two No-Lapse Guarantee premiums to guarantee their death benefits for up to 20 or 30 years.

RESPONSIBLE ILLUSTRATED RATES Our illustrated rate is based on a 25-year look-back.* So you can give your clients more realistic expectations of potential performance and premiums.

STRONG UNDERWRITING AND SERVICE Superior underwriting for tough cases. Age Last Birthday pricing. 22-day average from application receipt to case approval.** Just a few ways we help you deliver for your clients.

See how PruLife Index Advantage UL is a smart way into permanent coverage.

Contact your Brokerage General Agency or visit prudential.com/AdvantageUL

*Past performance does not guarantee future results. **22-day average based on our current portfolio and does not take Advantage UL into account. The Index Growth Cap is generally stated as a percentage, which is the maximum rate of interest the policy will earn, regardless of changes to the designated index. The Index Growth Cap is declared for each Index Segment in advance of each Index Segment Duration. The Index Growth Cap is subject to change at our discretion, both up and down, but is guaranteed to never be less than 3.00%. Changes to the Index Growth Cap could result in different values than shown here. Changes are not tied to the performance of the underlying index and may be based on interest rates, market volatility, and other factors. Index Growth Caps and Floors may be different in selected states.

Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities. © 2012 Prudential Financial, Inc. and its related entities.

FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR CONSUMER USE. June 2012

InsuranceNewsNet Magazine

11

HOW SOCIAL MEDIA CAN MAKE YOU A

NETWORKING

SPYMASTER

12

InsuranceNewsNet Magazine

June 2012

SOCIAL INTELLIGENCE AGENCY | FEATURE

I

MAGINE HAVING THE ULTIMATE PHONE BOOK that provides you with everything you need to know about a company, its employees and any other prospect you want to do business with. Imagine having access to investigative intelligence surpassing even J. Edgar Hoover’s wildest dreams.

That is the power of social media, or what Kevin Knebl (pronounced “kanebel”) commonly refers to as, “social networking,” which can help you close deals and generate new prospects today.

Kevin “Obi-Wan” Knebl is a mix of dichotomies. He’s a native of rural New Jersey, which in itself seems to be a contradiction, and it helped shape him into a fast-talking showman with a core of humble common sense. He was a lounge piano player with a dislike for technology who grew into a sales superstar and then a globe-trotting ambassador of the Internet. He proudly proclaims that he is a hippie in a 44L suit.

In truth, he still harbors a disdain for computers but he says that’s the point: Social media is not about the media, it’s about the social. People who know how to network excel once they understand the real power in LinkedIn, Facebook and Twitter. People who don’t, won’t have much use for those tools. It’s as simple as that. If you’re awesome at one-on-one, you’ll be in your element in social media.

If not, start with the basics and learn to win friends and influence people.

In this interview with InsuranceNewsNet Publisher Paul Feldman, Knebl reveals a glimpse at how to mine intelligence and get immediate value from social media.

FELDMAN: In your book, The Social Media Sales Revolution, you say that the landscape is changing for all sales people.

How do you see it evolving and to have already changed?

KNEBL: Some things, such as technology and its effect on daily activities, will be quite different. But other things will be exactly the same, because it really comes down to human nature.

Kevin Knebl says salespeople have more access to market intelligence than even spy agencies could have dreamed of a few decades ago.

There have always been good salespeople and not-so-good salespeople. There will always be amateurs and professionals. So, in the future, will there still be people smiling and dialing, trying to get past the gatekeeper and build rapport, asking how-did-you-catch-that-fish-onthe-wall, and just saying and spraying and throwing their business cards at people? Yes, because that’s just who they are.

But the sales professionals on top of their game will find an even better environment to sell in. That’s because people who do very well in sales understand that long-term success is about building and enhancing relationships, not just with your clients and your prospects but with referral sources who want to do business with you.

God only knows where all these technologies are going, but right now it’s easier than ever for people to figure out how to add value using the social media tools available today. But value doesn’t always come down to products, services, features and benefits. It comes down to positioning yourself as a value generator.

FELDMAN: It’s absolutely amazing how much information you can find on potential customers. If you’re looking to do business with any company in your area, you could find out who all their employees are, and who their managers are, and you could start from the bottom and work your way up, if you needed to.

KNEBL: A professional sales person today is a mosquito in a nudist colony of opportunity. They are surrounded. This is why I say that if you’re bad at sales, social media is not a silver bullet. But if you’re good at sales, social media is better than a silver bullet. It’s the whole gun.

It’s a cannon.

Because now, as a sales professional, if I’m thinking about selling into a particular company or a vertical, I can learn a great deal about that organization and the people who work there before I ever engage with anybody. The paradox, the irony, is that sales professionals have always done that. Sales professionals have always done their homework. Only now, we have tools that we couldn’t even have dreamt of years ago.

Think about it, the more I can learn about someone, the easier it is for me to add value — because I know what his hot buttons are. I know what his triggers are. This is just common sense, but common sense is uncommon. So the more you can learn about your prospects, the easier it becomes for you to become a massive value generator, because you’re giving them what they want. You’re not trying to talk them into something they don’t want.

FELDMAN: Other than reading your book (which is fantastic), what else does one really need to know and understand about social media?

June 2012

InsuranceNewsNet Magazine

13

FEATURE | SOCIAL INTELLIGENCE AGENCY

KNEBL: I think that somebody trying to figure out social media really should be figuring out networking. I’m not a fan of the term “social media,” because “media” tends to be a one-way monologue. Billboards are media. Radio is media. TV is media. Networking is a two-way dialogue. It’s an interaction.

So, I prefer the term social “networking,” not social “media.”

Social networking is combining great interpersonal networking skills with modern communication technology — and modern communication technology is LinkedIn, Facebook and Twitter.

That’s all it is. There are a lot of people out there with tape on their glasses and pocket protectors who know all the bells and whistles on social media but they have the interpersonal skills of Hannibal Lecter.

I encourage my audiences to spend some time learning the proper netiquette, or Internet etiquette. I think it actually goes beyond that, because most people never study networking. I regularly speak to audiences and ask them if they have read How to Win Friends and Influence People.

Salespeople are notoriously guilty of winging it, and I can say this because I was a corporate salesperson for years and was the top-producing salesperson in the world for an international consulting company with 320 sales people in 11 countries. It wasn’t because I was a closing ninja. It was because I had some great mentors who taught me it was all about networking and building relationships.

FELDMAN: Social media tends to be thought of on a mass scale: How many followers do I have or who am I connected to. You see it as the opposite. You place more value on the individual relationships. How can social media help you with your “offline” relationships?

KNEBL: I’ve been teaching social media for nine years, but I’ve been speaking about networking for 17 years. Until they started inventing social media, one of the first things I would teach my audiences would be from Harvey Mackay’s book, Swim with the Sharks without Getting 14

InsuranceNewsNet Magazine

June 2012

InsuranceNewsNet Publisher Paul Feldman, left, and Kevin Knebl stop for a photo after a meeting at InsuranceNewsNet Magazine’s office. Feldman invites readers to connect with him on LinkedIn at www.linkedin.com/in/thepaulfeldman Eaten Alive. That’s the Mackay 66, which is a list of 66 things you need to learn about your prospects or your clients.

It’s everything from what college they attended to their favorite booze, to their kids’ names and if they like football.

But you’re not going to sit down with somebody and go through this list because that would be an interrogation.

You would gather this information over time. Mackay taught his salespeople to do that for years, and still does. I would tell people to go to Mackay66.com, download his 66 questions and gather data on the people you want to do business with.

So, when I first started looking at LinkedIn and Facebook, I said, oh my God, all the information that it would have taken us years to figure out I can now find in about three minutes.

I can go to their LinkedIn profile, see where they went to school, see if they like golf, see if they belong to the country club, do they belong to Kiwanis. I can type their name into Facebook. Now I’m seeing pictures of their wife and kids.

I’m seeing pictures of little Johnny, who just got a home run at Little League last week. I’m seeing a picture that Bill just got back from his vacation in Hawaii.

As a sales professional, this is the Holy Grail. All this information I now have at my fingertips to build a know-like-trust

relationship. In the old days, you had to be a part-time detective to gather as much information as you could.

FELDMAN: For people working in the business market, what social media channel would you recommend?

KNEBL: Well, I think there’s validity in all the social media platforms, but I would absolutely say to start with LinkedIn. If my territory is 100 miles from my desk, I could log into LinkedIn and go to the advanced search screen to do a 100-mile search of anyone on LinkedIn that has CEO, CFO, business owner, or sole proprietor in their job title.

Now I can pull up that entire list and then save it because you can create lists inside LinkedIn folders. Now that becomes a customer or client relationship management tool, and now I can just start looking through it. Not only can I see who these people are, as we already covered, I can see where they went to school, whether they golf, whether they fish.

But more importantly, because LinkedIn works in three degrees of separation and it shows you who you know and who they know, now I can actually see, oh, here are three people in Camp Hill or Harrisburg that I want to get to know,

SOCIAL INTELLIGENCE AGENCY | FEATURE

and I happen to know four other people that know these guys. If you get good at networking, people are going to want to introduce you to their friends, because they know you’re going to add value and not kiss them on the first date.

All roads come back to networking.

They always have and they always will.

They will even more so now. I could also go onto LinkedIn and type in “Central Pennsylvania business groups” and see all the people that belong to those business groups, and I could just start mining through all that data.

FELDMAN: Where do most people go wrong with social media?

KNEBL: They just get on social media and they jump in with, “buy my product, buy my product, buy my product, buy my product,” and then they ask, “How come nobody is buying my product?”

And I say, “Well, it’s because you’re about as stimulating as a root canal.”

Just like if you went to a networking

They just get on social media and they jump in with, “buy my product, buy my product,” and then they ask, “How come nobody is buying my product?” And I say, “Well, it’s because you’re about as stimulating as a root canal.” meeting and you walked in the room and said, “Hey, here are five of my business cards. Let me tell you what a good lead is for me.”

I call that kissing on the first date, and not only is it kissing on the first date, it’s using tongue. You don’t want to be kissing on the first date. You want to learn how to network effectively.

FELDMAN: You have a unique way of responding and communicating on an individual basis whenever you connect or are connecting to someone. Can you explain?

KNEBL: Whenever somebody connects with me on LinkedIn, or accepts an

invitation request from me on LinkedIn, or if I accept someone’s invitation, I never, ever just pass that person by. I immediately send a reply that basically says, “Hi, Paul. Thanks for connecting with me on LinkedIn. I’m glad we can begin a mutually beneficial relationship.

Here are a couple of resources that might be able to help you in some way, and add some value to you. I’m all about paying it forward and adding more value to the business community, and I want you to make me prove it. Enough about me. I’d love to learn more about what you do, and if I ever have the opportunity to direct business your way, I’d be happy to help you. How may I help you in some way to your success? Kev.”

It’s only hard until someone SHOWS YOU how to do it:

Once you understand why businesses and wealthy individuals purchase large annual premium life insurance policies, you can make huge sales. Imagine writing just one $100,000/year ANNUAL PREMIUM life policy a month.

Would that change your standard of living? Now imagine showing wealthy families or business owners how to own the large policies they need without having to pay the actual premium.

Premium financed life is your ticket to helping clients: • High Net Worth and ULTRA High Net Worth families need and want jumbo life policies for estate planning but often DON’T want to use their own assets or cash flow to fund it.

• Business owners need large life policies for many reasons.

• Premium financing provides the cash—and you show them how.

Give us a call today at (888) 533-6257 or visit www.EasyPremiumFinancing.com for more details.

June 2012

InsuranceNewsNet Magazine

15

FEATURE | SOCIAL INTELLIGENCE AGENCY

By the way, the resources that I send, usually just two links to two videos that I’ve created on YouTube, are in no way designed to sell. It’s information that people can use to advance themselves personally or professionally. I could tell you stories for hours, with huge dollar signs, about how that response has led to tremendous revenue.

So, if somebody is saying, “Hey, man, nice to meet you. Buy my product. Buy my product. Buy my product,” the relationship is over.

Also, just like if you walked up to me at a networking event, face-to-face, with a glass of merlot in your hand, I’m not going to just ignore you when you start talking to me, turn around and walk away.

But people do it on social media all the time. I call it drive-by friendings, drive-by likes, drive-by follows. Why in the world, if you’re sending me an invitation to connect on LinkedIn, would I not extend my hand and say, “Hey, nice to meet you. Here’s a little bit about what I do, but I’d like to learn more about what you do.”

FELDMAN: You have a pretty big social media following, how do you respond individually to everyone and keep up?

KNEBL: I have templates that I keep in LinkedIn, Twitter and Facebook related folders on my desktop. The first thing I do when I get up in the morning is I get my cup of coffee, I sit in front of my computer, and I see who sent me an invitation to connect on LinkedIn last night. Then I accept the invitation and I send them my simple template back, with the first name changed to their name. Then that triggers a process of networking that keeps me top-of-mind in front of them without me ever being a stalker, a spammer or a pest.

It’s a gold mine when we actually do it right.

People know who you are. They know you, they like you, they trust you, and then opportunities start to show up. But most people would never do

that. They’d rather just do a little ego jig. “Oh, somebody else connected with me on LinkedIn. I’m the man.” No, you’re not. You just have another name in your phonebook, but that doesn’t mean you’re the man. You’re the man when people start interacting with you and go, “Hey, thanks for the reply back.”

I don’t teach anything that complicated because I’m not that bright. I’m a couple fries short of a Happy Meal. So, it shocks me how few people actually take the time to say to another human being, “Hey, enough about me. I’d like to learn more about you.”

By the way, here’s the million dollar question I learned from author and speaker Bob Burg: “How would I know if somebody I’m speaking to would be a good prospect or referral for you?” And then I shut up.

Now you’ll think I’m the coolest guy on earth, because nobody in your entire life has ever asked you that. What they’ve always said to you is, “Here’s what a good lead for me is. Blah-blah-blah. Enough about you. Let’s talk more about me.”

I have never, in my entire 47 years on Earth, had a human being say to me, “How dare you offer to help me! How dare you offer to go out of your way to try to refer me business! Who are you

to ask me what a good referral or a good prospect is for me?” No. They say, “Well, let me tell you. A good lead for me is a company that has between 10 and 500 employees, got an annual renewal in October…” and they go on. Now they’re telling you everything you need to know to sell them.

FELDMAN: How much time should people be devoting to keep up with their social media?

KNEBL: When you get up in the morning, spend 15 to 30 minutes just building your relationships on social media, then turn your computer off and go do what you should be doing with your sales day. But people don’t do that. People treat social media the way they treat a gym membership on Jan. 1 — it took me 30 years to get out of shape and I’m going to get back in shape in 30 minutes. No, you’re not. You’re going to pull a muscle. You’re going to have an aneurysm.

If all you did was spend 15 to 20 minutes every day for the next 60, 90, to 120 days, you would rekindle or kindle so many relationships. But people won’t do it. People are lazy. This is why people who are good at sales will take the time to do the things that make them superstars that the average person will never do.

What do you get when you give phenomenal tools to crappy salespeople? You get crappy salespeople with phenomenal tools. What do you get when you give phenomenal tools to better-than-average salespeople? You get superstars.

»

Connect with Kevin Find out more about Kevin Knebl on his website, www.kevinknebl.com or connect with him through all of the services listed below...

Twitter: @kevinknebl Facebook: kevinknebl LinkedIn: kevinknebl YouTube: KevinKnebl

SagicorLifeUSA.com

[ NEWS WIRES]

DID YOU

KNOW

?

Boomer Money Goes To Kids, Not Retirement

ONLY ABOUT HALF OF GEN-Y WORKERS say they have any income protected with disability insurance. Source: Research collected for MetLife’s 10th Annual Study of Employee Benefits Trends

Boomers say they have provided support to their adult children

95% 60%

A key reason why boomers tell their advisors that they can’t afford to save for retirement or achieve a recommended Boomers say they are assisting their aging parents financial goal has nothing to do with low salary or unemployment. Rather, they are doling out cash to family members.

Nearly 95 percent of boomers whom Ameriprise Financial, Inc. polled recently say they have provided support to their adult children, and nearly 60 percent say they are assisting their aging parents in some way. The support to adult kids includes paying off college tuition or loans (71 percent) and helping to buy a car (53 percent). Many boomers also help pay for their adult children’s car and health insurance, rent, utility and car payments. As for helping their parents, many boomers chip in by buying groceries (22 percent), paying medical bills (15 percent) and utility bills (14 percent). The researchers say many boomers admit that these payments are slowing down their retirement savings.

But advisors who want to redirect these boomers toward focusing on their retirement savings goals can expect some pushback. After all, the survey found that, where the kids are concerned, 86 percent of boomers say that if they had to do it again, they would still financially support their adult children.

DOES MOM HAVE LIFE INSURANCE?

InsuranceQuotes.com put that question to more than 2,200 U.S. adults and ran smack into uncertainty. The San Francisco online quote service of Bankrate Insurance says 42 percent of adults whose mothers are living aren’t sure whether their moms have life insurance. Of those who say their mothers do have life insurance, 37 percent aren’t sure whether they are listed as beneficiaries. Even those who know they are a named beneficiary are still in the dark about how to file a claim for death benefits.

With more women in the work force than ever, and with more carriers urging advisors to sell life insurance to women, one might think that fewer people would be so clueless about mom’s life insurance.

Then again, it might turn out that similar percentages are clueless about dad’s life insurance. After all, if mom — or dad — has coverage, who’s to say that either one will discuss it with their children? That 18

InsuranceNewsNet Magazine

June 2012

might make for some interesting conversation with clients. Do you/should you tell the kids or not?

DISABILITY NUMBERS TO REMEMBER

Nearly one in four working Americans say they would have trouble supporting themselves financially “immediately” following a disability that keeps them out of work, according to a survey from the LIFE Foundation. Half of them say they would find themselves in financial trouble in one month or less. In addition, 75 percent voice concern about being able to support themselves financially if disabled and unable to work. In fact, they are more concerned with having to face this reality than about paying their mortgage or rent, paying off credit card debt or losing money on investments. What is amazing is that, despite these self-reported assessments and concerns, only 31 percent of

workers say they own disability insurance.

That’s a what-to-do, if there ever was one.

401(K) BELLWETHER

Just how much money do American workers have in their 401(k) plans? Advisors get a glimmer when working with clients one-on-one, but how about a benchmark or average of some kind for comparison?

Fidelity Investments says the average 401(k) balance, based on its huge participant base of 11.8 million accounts, was $74,600 at the end of first quarter 2012. That’s up 8 percent from the end of fourth quarter 2011, and up 62 percent since the end of first quarter 2009, when the last market downturn was at its bottom. Does that mean American workers have been squirreling away every red cent ever since the low part of the recession? Well, not every single penny. But, Fidelity’s numbers suggest that 20 percent of the growth is attributable to contributions by both plan participants and employers. What about the other 80 percent? Fidelity gives the credit to strong first quarter stock market performance.

It’s been a long time since we’ve heard anyone talk about “strong” market performance; could this be a harbinger of things to come?

OH SO CASUAL

When asked what type of financial planner they are, 38 percent of surveyed Americans described themselves as “informal.”

That means they have a general sense of their financial goals and how to meet them, but no specific plan in place, says Northwestern Mutual, which

QUOTABLE Saving shouldn’t be regarded as something that suddenly stops once you retire, and the current generation of retirees seems to be more aware of this than ever before.

—Vince Smith-Hughes, retirement income expert, Prudential Assurance Company Limited, London

QUOTABLE

As a trend in the marketplace, responsibility for retirement planning is shifting to employees.

[ NEWS WIRES]

—Sean Jordan, assistant vice president, MassMutual Retirement Services Division

commissioned the survey. An additional 7 percent said they have no specific goals or plans in place at all. That suggests that “most Americans see the value in setting financial goals, but a large number don’t know how they’ll get there,” comments Executive Vice President Greg Oberland.

Point taken. But since nearly 50 percent appear to be playing it pretty loose on the financial planning front, doesn’t that create opportunity for advisors to light the way?

EVER HEARD OF ENTITLEMENT RISK?

Entitlement risk is yet another risk that future retirees might confront, according to the Insured Retirement Institute (IRI). That is the risk that the entitlement programs — such as Social Security and Medicare — may not pan out as people had expected.

“The only thing that is certain is that these programs require changes to keep them financially viable and that these changes may potentially reduce the cumulative amount of benefits that future retirees will receive from them,” says IRI President and CEO Cathy Weatherford.

One example from IRI is the risk that older boomers may be subject to a change in the measure of inflation that would affect cost of living adjustments in their Social Security (entitlement) benefits. Weather- Cathy Weatherford ford’s assessment: “All consumers must develop a plan today that identifies alternative sources of lifetime income.” Sounds like a plan — for advisors, too.

EYEBALLING THE MIDDLE MARKET— OF BUSINESSES

The National Center for the Middle Market has been sampling growth prospects for middle market businesses — those with revenues of $10 million to $1 billion.

The findings might be an eye-opener for advisors.

According to the center, middle market companies in the U.S. grew revenues by a rate of 8.4 percent in 2011. In addition, in first quarter 2012, more than 70

Retirement advisors who plan to grow business this year

75% 40%

Retirement Income Business Goes Competitive

Competition may be heating up among advisors in the retirement income services market. Consider: A LIMRA survey found that 75 percent Retirement advisors who say retirement of financial advisors in this market had adjusted planning is half their business their businesses to do more retirement income services over the past year. In addition, 40 percent said that retirement planning constitutes half or more of their business activities. And the more seasoned the advisor, the more clients they tended to advise on retirement planning.

Those numbers take on even greater competitive significance when considering the makeup of the survey group. The financial advisors surveyed included registered investment advisors, registered representatives of broker-dealers, dually-registered representatives, bank professionals, and other advisors who had been in their field for more than one year and spent at least 10 percent of their business activities providing financial planning for retirees or pre-retirees. Excluded from the survey were institutional investors and life insurance agents who receive at least 85 percent of product sales through one company.

Now, if some of those “excluded” agents are also in the retirement income services market, as is likely, turf wars for retirement income business are likely to be on the horizon. percent of the polled middle market companies reported higher gross revenues than for the same year-earlier period.

The Center did find that middle market firms are expecting revenue growth to slow to 7 percent in the next 12 months.

But compared to the 4.7 percent gains that large S&P businesses are projecting for the same period, the middle market companies are weighing in as “cautiously optimistic.”

By the way, if businesses in the middle market were a country, that “country” would rank as the fourth-largest economy in the world, behind Japan and ahead of Germany, says the center, which is a partnership between The Ohio State University Fisher College of Business and GE Capital. Sounds like a land of opportunity.

DID YOU

KNOW

?

FINANCIAL LITERACY SCORECARD

What demographic groups rank the lowest in financial literacy? Young adults, the elderly and women, said Annamaria Lusardi, as cited by an Insured Retirement Institute report. A professor at the George Washington University School of Business, Lusardi spoke at a financial literacy seminar hosted by the university and the Board of Governors of the Federal Reserve System. Which groups fare better in financial literacy? Those with higher levels of financial literacy are more likely to meet with a financial pro- $? fessional and receive support to plan for a secure retirement, she said.

NEARLY 80 PERCENT OF ADVISORS feel it is not important at all to meet separately with individual members of a couple; 13 percent consider it somewhat important, and 8 percent, extremely important.

Source: The Independent Advisors Outlook Study from Charles Schwab Advisor Services

June 2012

InsuranceNewsNet Magazine

19

20

InsuranceNewsNet Magazine

June 2012

HISTORICALLY BAD ESTATE PLANNING | FEATURE

W

hen people look back at their early- to mid-20s selves, they might not see the responsible, sensible people that they are now. In fact, many might wince at some of the “highlights” from a period known for experimentation and excess.

Say you could go back and give your barely post-pubescent self several million dollars. What does the scenario look like now? Although some might have used the money to fulfill entrepreneurial or philanthropic dreams, many of us would have descended down a drain of self-indulgence and destruction.

That would pretty much describe the average celebrity.

There’s the partying, the grandstanding, the erratic behavior, the poor co-dependent choices and of course there’s the tweeting about it all because if we missed a nanosecond in the slow-motion disaster what would we talk about?

Hey, if you were that busy, would you have time to do your estate planning?

No, of course not, that would be like checking the glove compartment for your license and registration while your car was still mid-trajectory from a cliff.

Here’s the thing — your clients know that, too. They might shake their heads, but they’re still not terribly surprised that Amy Winehouse didn’t take time to make out a will while she was selfdestructing or that Barry White was too busy for estate planning because he had all that love to give.

Although celebrity foibles make a fun point of reference (and we won’t stop using them), some clients might better relate to people they revere for their intellect. “If those people are getting it wrong, what kind of mess am I leaving for my family?”

For those folks, we have Historically Bad Estate Planning. For instance, who would have guessed that Abraham Lincoln did not have a will?

A will was a curious omission by Lincoln for a number of reasons. For one, he was an accomplished attorney, practicing law up until he was elected president.

Some might think it wasn’t the custom to draw up a will at that time. But not only was Lincoln the first president to have died intestate (without a will), he was reportedly the only president to have done so.

When Lincoln died, he hadn’t managed his finances very closely for several years. After all, he had other things going on, such as The Civil War. His family had to turn to a friend for help.

Lincoln’s son, Robert, asked Illinois Judge David Davis to be the executor for the estate. It wouldn’t be the first time that the judge played a significant role for Lincoln. Not only was Davis an important judge in Lincoln’s home district, Davis’ work is credited for securing the Republican nomination for Lincoln.

It would take Davis two years to settle the estate but he left it in far better shape than he found it. Initially, the estate was valued at a little more than $83,000 in cash and bonds. After Davis settled debts and invested, the estate grew to more than $110,000, even while supporting the family from the estate’s assets during the period. Davis also refused his lawful 6 percent fee, saving the family another $6,600.

The Lincolns were lucky to have found such an executor. Often, estates lose considerable value when someone dies without a will.

About 100 years later, yet another giant of history would be assassinated and leave his family without a will — Martin Luther King Jr. His lack of estate planning left his family struggling

Abraham Lincoln

NAME: Abraham Lincoln AGE: 56 DIED: April 15, 1865; Washington, D.C. CAUSE: Assassination ESTATE MISTAKE: Abe Lincoln was the first president to do many things, including winning re-election in time of war. But did you know he was also the first one to have died without a will?

June 2012

InsuranceNewsNet Magazine

21

FEATURE | HISTORICALLY BAD ESTATE PLANNING

“Now a stranger will be left to make decisions about how to protect and uphold the allimpor ta nt legac y of Ma r tin AGE: 39 Luther King Jr.,” Mayoras said.

DIED: April 4, 1968; “If he had created a basic will Memphis, Tenn. before he died (or better yet, a revocable living trust), King CAUSE: Assassination could have hand-picked the perESTATE MISTAKE: son or people to manage his King left a mark on affairs and specified what role history and civil rights his children would play.” before he was cut down T he epi s o de a l s o showe d at the early age of 39, but how executors can undermine he didn’t leave a will or themselves by not including estate plan. That overother beneficiaries in decisions. sight left his family grap“It happens to people everypling for control of his where, but in a situation like this image and financial legacy where there was a lot at stake with even now, 45 years after movie deals and other things, his death. it’s even more important to have good communication,” said Mayoras, who reports on estate news in financial and copyright decisions. A on www.TrialAndHeirs.com. “That’s judge removed Dexter King as executor an important lesson for any executor — and appointed a third party. keep the other beneficiaries in the loop Danielle Mayoras, estate planning or expect problems.” attorney and co-author of Trial & Heirs: Another intriguing aspect of the Famous Fortune Fights!, said it didn’t King estate has to do with King’s most have to happen this way. famous speech, “I Have a Dream.” The

NAME: Martin Luther King Jr.

Martin Luther King Jr.

for control over his financial and historical legacy — a fight that continues today.

King’s estate value at the time of his death might have been modest, but it is unlikely he had any idea how valuable his intellectual legacy would become.

The corporation overseeing the estate has not only guarded King’s image and words, it has also generated significant revenue — about $2 million annually according to some estimates. That number is likely to grow as the estate negotiates deals such as movie rights and other sales.

But think about how many movies have been produced about King.

None, at least no film that tells the story of Martin Luther King Jr. as other major movies have, such as Malcolm X. Part of the reason is the King estate’s tight control.

DreamWorks bought the rights to King’s life story and secured the family’s cooperation in 2009, but that deal quickly set off yet another fight among King’s children, who are shareholders in the estate. Two of the siblings sued the third, Dexter Scott King, who was chairman of the corporation controlling the estate. They claimed their brother was not including the rest of the family 22

InsuranceNewsNet Magazine

June 2012

Jacqueline Kennedy Onassis

NAME: Jacqueline Kennedy Onassis AGE: 64 DIED: May 19, 1994, New York City CAUSE: Non-Hodgkin’s lymphoma ESTATE MISTAKE: Jackie O’s estate-planning was much admired soon after she died, especially a clever trust that was supposed to have generated funds for a charity and then give her grandchildren an inheritance.

But although her estate was initially valued at $200 million, the actual value dropped to about $18 million, too little to fund the trust.

BROOKSTONE

RANKED th 6 Fastest ADVISOR ROULETTE | FEATURE

C a p i t a l M a n a g e m e n t®

We Provide Our Advisors: Case Support

A team dedicated to providing case design including Morningstar reports for prospective clients that is proven to: • Catapult your closing ratio!

• Allow you to capture 100% of a client’s portfolio!

Growing RIA

Financial Advisor Magazine

2 011

Personal Attention

Advisors are assigned a dedicated staff member as your point of contact to help you with all aspects of your advisory business.

Training

In our Money Masters and Money Masters II programs, you’ll gain the most cutting edge training in the industry.

AN ESSENTIAL INVESTMENT

STRATEGY

Brookstone advisors receive full access to our SMARToption Investment Strategy that has an incredible 14 year GIPS® verified track record. The GIPS® certification means that the returns are REAL and NOT back-tested or hypothetical.

350 300 250

SMARToption vs. S&P 500 Cumulative returns since inception* 1997-2010

200 150 100 50 0

S&P 500

298% 79%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Investment Advisor Representatives with Brookstone will:

• Have complete access to the ACAT System • Have access to all 16 of our model portfolios, including unique and specialty models such as MARKET-LINKED CDs (we have access to hundreds of MarketLinked CDs offered monthly!)

Important Notes: Important Notes: All investments involve the risk of potential investment losses as well as the potential for investment gains. Prior performance is no guarantee of future results and there can be no assurance, and clients should not assume, that future performance will be comparable to past performance. SMARToption claims compliance with the Global Investment Performance Standards (GIPS®) through 2010. The verification and performance exam reports are available upon request. Historical numbers are based on an all accounts composite and includes all discretionary accounts which were invested in Swan Wealth Advisors, Inc.’s Defined Risk Strategy (DRS) since inception, July 1997. This composite is a combination of accounts utilizing margin and accounts not utilizing margin. SMARTOption follows the non-margin methodology of the DRS. SMARToption is sub-advised by Swan Wealth Advisors, Inc., a SEC registered Investment Advisor. Awards and industry recognition are based on the performance of Swan Wealth Advisors, Inc.’s DRS select composite which includes all discretionary accounts which utilize margin. *Since inception gross-of-fees (July, 1997 - December 31, 2010).

Contact us today and learn more about how to become a Brookstone Advisor:

866-425-3003 | info@BrookstoneCM.com | www.BrookstoneCM.com June 2012 InsuranceNewsNet Magazine

23

FEATURE | HISTORICALLY BAD ESTATE PLANNING

NAME: Philip and Helen Wrigley AGE: Philip, 82; Helen, 75 DIED: Philip, April 12, 1977; Helen, June 27, 1977 CAUSE: Philip, gastrointestinal bleeding; Helen, heart attack

The Wrigleys

estate sued CBS because the network aired its own archival film of King giving the speech in front of the Lincoln Memorial. The estate won the copyright fight and today, it is not legal to watch the speech in its entirety without paying for it. The estate also no longer has complete access to the speech because it sold copyright control a few years back to the British company EMI, but the estate retained ownership.

It would be difficult to imagine that King, known for spreading the message of peace and justice, would have wanted his words sold to the highest bidder or for his children to be fighting each other in court over his legacy. But we will never know what King really wanted.

We know what Jacqueline Kennedy Onassis wanted but we are also aware at least part of it didn’t happen.

Jackie O had the unfortunate benefit of having some time to refine her estate plans because she had several months after she was diagnosed with non-Hodgkin’s lymphoma in early 1994.

She did what many might expect people of significant means to do — she had a creative, complicated estate plan 24

InsuranceNewsNet Magazine

June 2012

that Rube Goldberg would have loved.

In fact, many estate planners did love it at first.

Within the 36 pages of descriptions and details was a clever device known as a charitable lead annuity trust. It was designed to fund a charity for 24 years and then pass the principal to her grandchildren, not only giving money to a cause but also bypassing estate taxes.

But it might have been too clever for its own good. The biggest problem for the trust was that Kennedy’s children, Caroline and John Jr., were not required to pass anything to the trust.

The other issue was that the estate was worth far less than the $200 million or even the $100 million figures that were bandied about in the press.

It was closer to $43 million, according to the New York attorney general’s office.

Of course, that is not exactly chump change, but once the children kept what they wanted and other bequests and administrative expenses were paid, $18 million was left against $23 million in estate taxes, according to a 1996 New York Times report.

ESTATE MISTAKE: The Wrigleys left a huge estate tax obligation on their assets, including the Chicago Cubs and Wrigley Field. The $40 million tax bill forced heirs to sell stock, Cubs and Wrigley Field.

Another way to give money to charity and pass money to future generations is, of course, life insurance, which would have been an estate-saver for the Wrigleys.

Philip K. Wrigley died in 1977, followed by his wife, Helen, a few months later. Their son, William, was left with a huge, far-flung estate to deal with, including the Wrigley Co., Chicago Cubs and Wrigley Field. Estate taxes came to about $40 million and, as with many large family businesses, the Wrigleys were asset-rich and cash-poor.

William started with selling blue-chip stocks, which yielded about $13 million. Then he sold Wrigley stock, but still wasn’t close to covering the bill.

Finally, he sold the Cubs for $20.5 million in 1981, ending more than 50 years of his family’s ownership.

After the sale, a Wrigley family attorney lamented that estate taxes forced the liquidation. That statement drove Michael D. White crazy. As head of E.F. Hutton’s insurance division, knew there was a better answer and wrote articles about the case, taking the attorney to task.

Do MEDICAL “T hat w a s a st upid st atement because it didn’t recognize the fact that taxes didn’t have to break it up,” White said. “Life insurance could provide the necessary liquidity to cover those obligations if it had been put in place properly.”

White had helped his brokers market universal life insurance to wealthy clients as protection against estate taxes, which had higher rates back then with a lower exemption allowance. Agents and brokers should help clients who own businesses to know about the risk, White said.

“Many of these are not public companies and don’t have liquid assets if they’ve got a chain of restaurants and that’s what they’ve thrown their life into,” White said. “But at least they’re in a position where they’ve got sufficient cash flow to pay a premium.”

If agents have a good relationship with their business clients, White says, they’ll know when they should have “the talk.”

“You just simply say, ‘Are you aware of the cost of your success?’ ” White says.

“And he’s going to say, ‘You bet your butt I am. I worked for 30 years to build this thing, 18 hours a day, seven days a week.

Blah, blah, blah, blah, blah.’ To which I would respond, ‘Well that was the investment in your business. I’m talking about the cost of your business.’ ” Then come the facts of post-life. And if the owner has partners, that discussion also can lead to buy-sell agreements funded by life insurance.

“Say there are three owners of that business. What happens if one of them dies? The other two partners get stuck with a spouse or whoever the heirs are,” White says. “And then you get a demanding spouse who starts saying, ’You need to pay me some dividends here’ on shares of stock that no dividends were ever paid on.”

Yet another cautionary tale with a happy ending provided by life insurance.

Life insurance liquidity also helps in cases where estate taxes aren’t the issue but complicated families are.

In Billy Martin’s case, the long-time on and off again Yankees manager was

IMPAIRMENTS

for Life Insurance Make Your Head Spin?

Breast Cancer with Negative Receptors Regurgitation of the Tricuspid Valve

Lacunar Strokes

EBCT Score in the 95th Percentile

NT-proBNP of 400 Hypertrophic Cardiomyopathy

Sleep Apnea with Bi-Pap

Stress Imaging Study with Apical Defects

Bicuspid Aortic Valve Positive CDT Remitting Relapsing MS

Hepatitis C with Bridging Fibrosis Enlarged Aortic Root

Elevated GGT, SGOT and SGPT

Lowered Ejection Fraction

Episodes of DVT

You’ve heard the health impairments above from your clients and underwriters. Don’t know what they mean?

That’s okay, we do!

From impaired risk clients, to low-cost term, to jumbo sized cases, we have the experience to help you find the right company for your client.

Helpin Broker g s Sin

1981

ce

EUGENE COHEN INSURANCE AGENCY, INC.

Life - Disability - Long Term Care - Annuities

9933 N. Lawler Ave., Suite 140 Skokie, IL 60077

Call Today 800-333-4340

Please ask for an Impaired Risk Life Marketer

www.CohenAgency.com

NOTE: All conditions, scenarios, and medical impairments may not be considered insurable by the insurance companies.

Only the insurance company can accept or deny an application after a formal underwriting process. Informal inquiries and trial applications do not guarantee coverage or rate classes. FOR AGENT USE ONLY • NOT FOR CONSUMER DISTRIBUTION

FEATURE | HISTORICALLY BAD ESTATE PLANNING

NAME: Billy Martin AGE: 61 DIED: Dec. 25, 1989; Fenton, N.Y. CAUSE: Pickup truck crash ESTATE MISTAKE: The brawling, on-and-off Yankees manager made good money but also spent good money, leading to more debts than assets when he died. His widow said she had to auction off his personal effects, including his driver’s license. But Martin’s children said they weren’t so sure stepmom was telling the whole truth, particularly in light of a $2.5 million insurance settlement.

known for his brawling and his family carried on the tradition. When he died in a pickup truck crash at the end of his upstate New York driveway after a night of drinking, Martin was on wife No. 4, with whom he had been cheating on wife No. 3. So, it can’t be an enormous surprise that it would not go smoothly

Billy Martin

with his last wife, Jill, as executor.

Martin’s 29-page will provided for a trust for his son, daughter and granddaughter. But, despite a $725,000 annual consultant salary, Jill claimed that the estate was swamped by debts, leaving $8.82 in the trust, according to New York Observer coverage of a lawsuit

NAME: Tony Curtis AGE: 85 DIED: Sept. 29, 2010; Henderson, Nevada CAUSE: Heart attack

Tony Curtis

26

InsuranceNewsNet Magazine

June 2012

ESTATE MISTAKE: Tony Curtis usually played the happy-golucky guy on the screen, but his children were anything but happy or lucky when they found out what he left them in his will – nothing.

Because he disinherited them, he guaranteed a long court fight from at least some of the six children he had from six marriages.

filed by the Martin children. The estate also benefited from life insurance and a settlement with Ford worth reportedly $2.5 million, which she didn’t tell the other beneficiaries about.

Jill planned to auction off many of Martin’s personal effects and did not allow the children to keep any sentimental favorites, including a photo of Martin and his son at Yankee Stadium.

A judge had to step in, divide the estate and allow other beneficiaries to have personal items.

Mayoras said it might have been a mistake to have named wife No.4 as executor.

“If I were the estate planning attorney, I would absolutely advise against it,” Mayoras said. “And actually, you saw that in the Ted Kennedy case. Instead of appointing his wife or one of his children, he appointed a dear friend. I think that’s smart planning because you know that there is going to be conflict and if you don’t, shame on you. Part of estate planning is taking precautions, and naming your fourth wife as executor probably isn’t the best decision.”

Although Martin was not known to be a nice guy, it’s apparent he wanted to be good to his children and leave them something. In Tony Curtis’ case, people might have thought of him as a

FEATURE TITLE | FEATURE

GFD provides your clients with access to the funding necessary to meet their life insurance (and annuity) based estate planning needs today! Using a Leveraged Planning® program as a premium financing source enables them to retain the liquidity of their existing investments while putting in place a significant financial asset for future business or estate planning needs.

Additionally, this strategy allows the client to potentially mitigate both current and future tax liabilities.

Here are just a few of the benefits of working with GFD: • No personal guarantees • Interest rate flexibility • Streamlined annual review process • No recurring trust or legal fees

• Longer term loans available • Reliable, stable source of funding • Ideally suited for business owners, physicians and medium-to-high net worth clients If you have clients in need of a financing source for their life insurance premiums, contact a GFD representative today at 800-204-1182.

Join us for an informative webinar Join GFD President, Al Harrington, and Premium Financing expert, Vinnie Pellegrino, for the Financing Estate Planning webinar on June 26th at 2pm ET. Agents may register by visiting www.gfdwebinars.com or calling GFD at 800-204-1182.

June 2012

InsuranceNewsNet Magazine

27

FEATURE | HISTORICALLY BAD ESTATE PLANNING

Barry White

NAME: Barry White AGE: 58 DIED: July 4, 2003; Los Angeles CAUSE: Kidney failure ESTATE MISTAKE: Everyone knows the smooth, baritone Barry White was all about the love, but maybe not so much about the details. One of them was getting divorced, which he didn’t do from his wife even though he was living with someone else. But of course the biggest detail was a will, which he overlooked, leading to years of squabbling between his ex-wife, wife and girlfriend.

sweetheart, but it was clear he did not want to be very nice to his kids.

When the screen legend died, many said we all lost the last of the classic movie stars, but his children lost even more, everything. He left it all to wife No.5 and disinherited his five children by name in his will, which was drawn up just months before he died of a heart attack at 85.

His children were shocked and are suing the estate, saying wife No.5 exerted undue inf luence over their father. Like in the Martin case, they were denied personal effects, and valuable assets, that went to auction.

Because they were disinherited, they had little standing except to claim undue influence.

28

InsuranceNewsNet Magazine

June 2012

It is a responsibility of estate planners to watch out for undue influence, Mayoras said. And when an 85-yearold changes his will to cut out his children, it makes sense to be certain of competency.

Gary Altman, an estate planning attorney and financia l planner in Rockville, Md., said he has clients who a lso disinherited fami ly and he ma kes cer ta in the decision is beyond reproach.

“I have some clients who come to me every six month to a year just to sign a piece of paper saying they are firm that they’re leaving nothing to Child A or Child B,” Altman said. “If you told someone every year for 15 years, ‘I don’t want to leave anything to my child, Joe,’

that would become almost impossible to argue against.”

Altman also suggested an irrevocable trust. “It’s the same thing as a will – it’s just that your assets are held privately, so there’s not an easy way to challenge it.

It still can be done, but it’s harder to find out what the assets are because there’s no public record.”

Another way to avoid a fight is a nocontest clause, made famous by Sinatra in his will. Basically, he said anybody contesting the will wouldn’t get anything — hit the bricks, pally!

In Curtis’ case, he could have left his children something and included the no-contest clause. But in those cases, it would have to be enough money that a beneficiary wouldn’t want to lose it.

Of course, our annual estate-planning disaster feature would not be complete without pointing out some celebrities who died without a will or any estate plan.

Barry White was known as a smooth soul singer who couldn’t get enough love. Apparently, he tried, leaving behind eight, maybe nine, children. He also had an ex-wife, a current wife and a girlfriend he lived with.

When he died of kidney failure at 58 without a will, he guaranteed a fight. He didn’t get around to divorcing his second wife, so she claimed a bigger slice of the estate. His girlfriend claimed her child, Barriana, was fathered by White, but the other children and wives deny it.

White might have wanted to provide for his girlfriend but she had little legal standing, particularly because he did not divorce his second wife. Mayoras said White also apparently made promises that the court can’t keep.

“He made verbal promises to his girlfriend that he was going to take care of her and he referred to her as his fiancé, but it’s really an act of love to do your estate planning,” Mayoras said. “If you care about that fiancé, if you care about the child you had together, you need to put it in writing and don’t just assume that everything’s going to work out OK.” Amy Winehouse’s case had a similar circumstance when she joined the Forever 27 Club — entertainers, starting from blues singer Robert Johnson

HISTORICALLY BAD ESTATE PLANNING | FEATURE

NAME: Amy Winehouse AGE: 27 DIED: July 23, 2011; London CAUSE: Alcohol overdose

Amy Winehouse and including Jim Morrison, Janis Joplin and Kurt Cobain, who died at 27.

Like most of her fellow club members, Winehouse didn’t leave a will. At this point, it might be considered due diligence for any advisor to a 26-yearold hard-living pop star to urge some estate planning.

A judge gave Winehouse’s $4.7 million estate to her parents, even though many of her friends said she would have wanted to have left something for her ex-husband.

Winehouse knew she had a sizeable estate and even said she suspected she would die young. But that was the opposite of the curious case of Stieg Larsson.

Larsson wrote what became known as the Millennium series of books, starting with The Girl with the Dragon Tattoo. He delivered the three books to a publisher and died soon after of a heart attack at 50, never knowing the mammoth success that his books would achieve.

His books have racked up sales that some say might rival J.K. Rowling’s with the Harry Potter series. His estate has been valued at $40 million, considered to be a low estimate because of movie deals that have generated not only their residuals but also a spike in book sales.

ESTATE MISTAKE: Like many pop stars who live fast and die young, Winehouse did not leave a will or any planning. She was divorced at the time of her death, but still reportedly professed a deep love for her co-dependent and friends said she would have wanted to have left something for her soulmate. But that wish went with her to the great gig beyond.

He did not have a valid will, so a court gave the estate to Larsson’s father and brother, cutting out Larsson’s girlfriend of 30 years, Eva Gabrielsson. The case has another wrinkle because of a laptop computer the two co-owned. On it, Larsson supposedly had a fourth Girl novel that might have been 75 percent finished. Larsson’s relatives argue that

the entire manuscript is part of the estate, while Gabrielsson says it is hers.

Perhaps that one could be called, The Girl with the Hidden Gold Mine.

Although the Larsson case is an unusual example of a legacy far surpassing an artist’s expectations, it happens, as in the case of Elvis Presley, whose death was just the start of his earning potential.

That’s not to say every client is a blockbuster waiting to happen, but it is always instructive to incite the imagination with, “but what if?...”

What is not iffy is that everybody is going to die — and will likely leave an estate of some value for a grieving family to deal with. Now, clients can see the legacies of Abraham Lincoln, Martin Luther King Jr. and other historical figures they respect and come away understanding that even great people do dumb things with their estates.

Then they can take the time to rewrite the final chapter of their own history.

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@ insurancenewsnet.com.

NAME: Stieg Larsson AGE: 50 DIED: Nov. 9, 2004; Stockholm CAUSE: Heart attack ESTATE MISTAKE: Because he left no will or estate plan, his longtime partner was not entitled to the fortune from his Millennium series of books, which will only grow with movie based on his books. The second one, Girl Who Played with Fire, is set to come out this year. Although he lived with Eva Gabrielsson for 30 of his 50 years, she has had to fight in court with Larsson’s father and brother for a share of the estate or any say over his legacy.

Stieg Larsson

June 2012

InsuranceNewsNet Magazine

29

History’s Greatest estate Planning sales tool Each full-size print measures 36” x 24” standard poster size.

Instantly open estate planning conversations without resistance.

Estate Planning is a subject that no one wants to talk about. Now there is a simple tool you can use to magically open these conversations like a Swiss Army knife, without ever saying a word. Simply frame and hang in your office and watch the magic happen.

Death, taxes, life insurance, and estate planning are not something that clients wake up thinking about.

Having this artwork on your wall is like a train wreck; it can’t be ignored.

Images viscerally motivate clients to address these issues and take action like nothing you have ever experienced in your career.

You can’t afford not to have this on your wall. We guArAntee It. Hang this full-size, 36” x 24” print on your wall for a full year with no risk. If you don’t think it was worth it, send it back and we will cheerfully issue a refund with no questions asked.

“This artwork got a new prospect for me in two days. Thanks!!!”

– Pam S., WV

Call 866-707-6786 ext. 115 (8:30am–6:00pm ET) or visit www.ArtworkThatSells.com

DID YOU

KNOW

[ LIFEWIRES]

?

NEARLY 20 PERCENT WHO SHOPPED FOR LIFE INSURANCE went through their place of work, and 75 percent of workplace shoppers actually bought life insurance.

Source: LIMRA, Windsor, Conn.

Life Insurance ‘Experience’ Counts Consumers who have seen how life insurance has made a positive difference in the life of another are more likely to have confidence in life insurers than those who have had no such experience, according to LIMRA. The numbers are pretty conclusive. In fact, 80 percent of Americans who have had a positive experience with life insurance told the researchers that the life insurance industry plays a critical role following the death of a loved one.

In addition, nearly two-thirds of the surveyed Americans said that life insurance gives people peace of mind — and the number jumped to 76 percent among those reporting a positive experience with life insurance.

Those findings are good news for the industry, according to LIMRA CEO Robert Kerzner. However, since LIMRA has also found that 58 million American households are uninsured or underinsured for life insurance, Kerzner also says the industry must find a way to reach these American families “and help them understand the value of life insurance.”

MATURITY-MINDED LIFE UNDERWRITING The fact that more and more mature individuals are applying for life insurance—as noted month after month in MIB reports on application activity — is affecting other parts of the life insurance business.

For instance, the updated life underwriting manual from Munich American Reassurance Company now includes a “mature age calculator.” In this case, “mature” means ages 70 and up. The reinsurer says the calculator provides evidence-based mortality determinations resulting from various functional testing results for this age group. The update also includes publications focused on underwriting the mature of age and also assessing physical functioning in this age group.

It’s one more sign of the times — i.e., mature people are applying for life insurance, and the industry is adjusting its processes accordingly.

TAX UNCERTAINTY CONTINUES At year-end 2012, several tax cuts will expire unless changes are made, and that could cause clients to rein in spending.

The expiring breaks include Bush-era tax rates on personal income, capital 32

InsuranceNewsNet Magazine

June 2012

gains, dividends, and a payroll-tax reduction. That’s in addition to tax changes related to the Affordable Care Act, and the lowering of the estate and gift tax exemption amounts, also slated to take effect at year end.

Since it remains unknown whether and how Congress will intervene in these changes, life insurance advisors and financial planners find themselves, at mid-year, continuing to provide advice but with uncomfortable uncertainty. They have plent y of company in their discomfort.

Even Federal Reserve Chairman Ben Bernanke has reservations. For instance, a Ben Bernanke recent Christian Science Monitor article quoted him as saying that, if all the tax increases and spending cuts associated with the current law were to occur on Jan. 1, he has “concern” that it would be “a significant risk to the recovery.”

HELPING ONLINE SEARCHES FOR INSURANCE Life insurance firms are keeping track of how customers “search” for life insurance online. One such firm is AIG Direct.

The San Diego company says it has started testing the use of live chat to help visitors to the company website as they search for affordable term life insurance.

The compa ny inv ites ra ndom ly selected website visitors to join a live chat session with a company representative who answers questions and assists with requesting a term life quote from a licensed agent. The approach should make it “easier, faster and less intimidating” to research and buy affordable term life insurance, the company predicts.

Meanwhile, Online Insurance Marketplace reports that it saw a 25 percent jump in Internet searches in first quarter for the keyword phrase, “no exam life insurance quotes.”

THE OTHER BABY BOOM Advisors who serve young families might do well to prepare for another baby boom. That’s because the number of U.S. births is rising — this after the 7 percent decline in births that occurred from 2007 to 2010, according to a Demographic Intelligence report.

The total fertility rate is expected to rise from 1.93 children per woman in 2010 to 1.98 children per woman in 2012, according to a Penton Business Media review of the January report. The article also points out that an estimated 4 million children were born in 2011, and that U.S. birth numbers are projected to continue rising in 2012 and 2013. Reasons for the boom range from more women in prime childbearing years to a tendency for families to have children earlier. Whatever the reason, advisors now have another reason to talk to young couples about securing life insurance to meet the needs of their, um, booming families.

QUOTABLE

Eighty-five percent of families who have failed to maintain their wealth did so due to lack of communication and trust, or due to unprepared heirs.

— Rodney Zeeb, CEO of The Heritage Institute

Maximized annual income withdrawals in ten years The power of daily benefit base crediting combined with income withdrawal factors means SecureLiving Index 10 Plus with the optional Income Protection rider is designed to maximize annual income to your client.

e h s whenneeds it

Maximized Annual Income Withdrawals

Genworth1

$6,510

$7,718

$9,041

Competitor A

$6350

$7050

$8100

Competitor B

$5871

$7398

$8392

Competitor C

$5794

$7330

$8904

YEAR 3

YEAR 5

YEAR 8

AT THE END OF

SecureLiving® Index Annuities — Prepare for the unpredictable Contact your general agency or visit us at genworth.com/indexannuities * Hypothetical Examples for Illustrative Purposes Only: 60 year old client, $100,000 initial purchase, SecureLiving Index 10 Plus with optional Income Protection Rider; 8% simple roll up on the benefit base, for a period of ten years or until income withdrawals begin, whichever comes first; 5% annual income withdrawal. These numbers include a 5% premium enhancement (Premium enhancement is 1% in AK, MO, MN, OR, PA, WA and would result in lower numbers in these states). 5% income withdrawal factor at age 63; 5.25% income withdrawal factor at ages 65 and 68. All rates and factors as of April 4, 2012.

Issued by Genworth Life and Annuity Insurance Company, Richmond, VA SecureLiving® Index 10 Plus Individual Single Premium Fixed Deferred Annuity with Market Value Adjustment and Optional Indexed Interest Crediting, subject to policy form series GA30040711, GA300R-0511, et. al. In AK,MN,MO,OR,PA, and WA called Individual Single Premium Deferred Annuity Contract with Premium Enhancement and Optional Indexed Interest Crediting, policy form series ICC11GA3002, and ICC11GA300R et. al. In Illinois called Individual Modified Guaranteed Single Premium Deferred Annuity Contract with Market Value Adjustment, policy form series GA3004-0711 IL and GA300R-0511. Features and benefits may vary by state or market and may not be available in all states. Genworth Life and Annuity Insurance Company is licensed in all states except New York. All guarantees are based on the claims-paying ability of the Genworth Life & Annuity. Withdrawals may be taxable and a 10% federal penalty may apply to withdrawals taken before age 59½.

The optional Income Protection rider benefit base equals the initial premium (and premium enhancement if applicable). During the roll-up period it will be increased by the roll-up credit and may be stepped up if your contract value is higher than the benefit base at any time prior to beginning income withdrawals. The benefit base is used only to calculate the rider income withdrawals and is not a representation of the contract value or surrender value. Prior to taking income withdrawals, any withdrawal will reduce the benefit base and roll-up base proportionally by the percentage that the withdrawal decreases the contract value. After starting income withdrawals, any excess income withdrawal will decrease the benefit base by the same proportion that the excess amount reduces the contract value. A new withdrawal limit will be calculated on the next contract anniversary. An annual rider cost of 0.80% of the benefit base is deducted annually in arrears from the contract value.

131444 04/19/12 FOR PRODUCER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

© 2012 Genworth Financial, Inc. All rights reserved.

OUT OF BALAN WOMEN NEED ADVISORS—AND LIFE INSURANCE— TO OFFSET THE EARNING AND LONGEVITY IMBALANCE

BY DELIA deLISSER

no surprise that women play an important role in our economy. During the past few decades, women have made significant strides in the workplace while also serving as the key financial decision-makers at home.

Women hold 51 percent of all management and professional jobs, own 41 percent of all privately-held firms and now control 51 percent of the private wealth in the United States, according to the U.S. Bureau of Labor Statistics. Their median incomes have risen 63 percent from 1970 through 2002. The Center for Women’s Business Research reports that women make or influence 85 percent of all consumer purchases, and handle 75 percent of household finances.

Despite these compelling statistics, gender disparities exist that can affect a woman’s retirement preparedness and financial security.

Case in point — while female Gen-X and Gen-Y workers have steadily helped to narrow the income gap in recent years, women as a group still earn an average of 20 cents less per dollar than their male counterparts, according to the U.S. Bureau of Labor Statistics. This alone can result in women contributing less into savings, such as their 401(k) or IRA, every year.

Many will agree that women have also been underserved by the financial services industry. Research from the Boston Consulting Group identified that women were more dissatisfied with financial services than any other industry, both on a product and service level. This study underscored 34

InsuranceNewsNet Magazine

June 2012

a hard truth—practitioners and financial providers alike must find better ways to connect with, and actively engage, women in retirement planning.

Comparing the Numbers One area of opportunity is to help more women address their retirement savings shortfalls by understanding the financial realities they face. Research shows that working women continue to save significantly less for retirement than their male counterparts.

Woman’s total retirement assets, both in and out of the workplace, averaged less than 70 percent compared to men, a recent study by the ING Retirement Research Institute found.

A much higher percentage of women (47 percent) than men (31 percent) reported having less than $25,000 in their employer retirement plan. Meanwhile, fewer women (67 percent) than men (76 percent) confirmed they were receiving the full employer-matching contributions. These factors suggest that more female workers are not maximizing crucial savings and compounding opportunities during their careers.

Part of the problem is that women are earning less, therefore having fewer dollars to contribute toward their savings plans. The Center for American Progress found that the average female worker loses approximately $434,000 in wages over a 40-year period as a direct result of pay inequities. Women also tend to spend

LESS THAN $25,000 IN EMPLOYERSPONSORED RETIREMENT SAVINGS

47 % women 31% men MORE THAN 4X SALARY IN LIFE INSURANCE

39 % mothers 54 % fathers

ANCE

OUT OF BALANCE | LIFE

more time than men out of the work force insurance coverage for each partner is an because of caregiver responsibilities. This essential way that women can help protect not only reduces their earning and savings their families and preserve valuable retirepotential, but it also lowers their Social ment assets.

Security benefits.

The need for women to prepare them- Guidance and Support selves for retirement is magnified by lon- Many studies indicate that women claim gevity trends and health care concerns. to have less knowledge and confidence The good news is that the average lifes- when it comes to retirement planning. pan for both men and women has been ING’s research found that a much smaller expanding due to advances in health care percentage of women (36 percent), comand medicine, and experts predict it will pared to men (49 percent), calculated how continue to increase. The downside for much money they would need to maintain women is that they are also exposed to their current lifestyle in retirement. Simigreater financial risk. Data shows that larly, fewer women (25 percent) than men women, on average, can expect to live PREFERRED SOURCE OF HELP five years longer than % Face-to-face men. That means communication with a more women face financial professional % a greater number % of their retirement years alone. AccordWebsite ingly, they are more % likely to need greater % financial resources to Hard copy (e.g., brochures) provide for the rising MEN % costs associated with health care needs as WOMEN % they age. A January Phone support % 2012 study from the Insured Retirement Institute reported that a healthy 65-year- (33 percent) also reported having a formal old woman can expect cumulative health investment plan for retirement. Not taking care expenses, including premiums, to top these important planning steps may be the $417,000, nearly 13 percent higher than reason why ING’s study also found more those for men. women (42 percent) than men (31 percent) Life insurance coverage, a critical said that they did not know how to achieve component of long-term financial and their retirement goals. retirement security, is another area Women are looking for ways to become where women fall behind their male more educated about planning for retirecounterparts. ING’s study found ment and are seeking support from family, that women purchased an average friends and trusted sources such as finanof only about three times their sal- cial advisors. In a 2011 study by the Insured ary in life insurance, compared to Retirement Institute, 50 percent of women men who had average policy cov- reported the need for some level of help in erage of approximately four times managing their finances — up 33 percent their salary. Plus, only 39 percent from a similar study completed in 2004. of mothers have life insurance equal In this same study, a slightly higher perto four or more times their salary, com- centage of women confirmed they had conpared to 54 percent of fathers. While every sulted a financial planner for retirement couple’s insurance needs are different, the than men. The good news is that women unfortunate death of a spouse can quickly are inclined to ask for professional guiddrain a family’s hard-earned savings. Eval- ance, which can lead to greater confidence uating lifestyle needs and securing enough in being prepared for their retirement.

48

33

14

55

25

15 5 5

June 2012

InsuranceNewsNet Magazine

35

LIFE | OUT OF BALANCE

RETIREMENT PLANNING

31 %

I don’t know how to achieve my retirement goals MEN WOMEN

I have a formal investment plan for retirement

I have calculated how much I need to maintain my lifestyle after I retire

Making a Difference According to the Center for Women’s Business Research, women are the primary decision-makers in 77 percent of life insurance policies and 69 percent of retirement plans. These statistics are telling — and should serve as a wake-up call for financial professionals who want to refine their approach with female clients. The following suggestions could go a long way in meeting women’s financial needs and purchasing preferences, ultimately improving advisors’ business relationships:

1: UNDERSTAND WHAT SHE VALUES MOST.

Most insurance companies see policies.

For most women, financial success is not about accumulating money and power or beating the market — it’s about caring for loved ones and securing their future.

Women are eager to minimize anxiety and want to feel confident about facing a future crisis should one arise. Women tend to be more risk-averse and trade less actively than men. They approach finances from a realistic perspective — and want their advisor to do so as well.

2: TAKE TIME TO LISTEN—AND ANSWER HER QUESTIONS THOROUGHLY. Generally, women put in much time and effort researching investment decisions and selecting a financial advisor. They will ask a lot of questions — and will look for specific and thorough answers to those questions before feeling confident to make a decision or finalize a plan.

33 %

42 %

25 %

49 %

36 % 3: OFFER PLAN OPTIONS THAT ADDRESS HER PERSONAL NEEDS AND CONCERNS. Some industry studies indicate that widows and divorced women will change financial advisors after the death of or divorce from their spouse — perhaps because those women feel that their husband’s financial advisors have not taken the time to listen and build a relationship with her. Women are looking to financial advisors for knowledge and guidance. Offering plans that respond to her concerns will demonstrate that you have listened to and respect what she has to say, and are committed to finding the right solutions to serve her needs.

4: APPRECIATE HER INFLUENCE. Here’s another reason to pay attention to women: future customer referrals. Life insurance industry research indicates that, over their lifetime, women provide an average of 28 referrals compared with 15 for men. Helping women become more educated and actively involved in making decisions about life insurance and retirement might just translate into future business growth. That’s something every financial services professional could really use right now.

Delia deLisser is director of women’s marketing at ING U.S. She has managed award-winning brand and product marketing campaigns for a number of Fortune 500 companies in financial services and consumer packaged goods. She can be contacted at Delia.deLisser@innfeedback.com.

SOURCE FOR ALL CHARTS: ING Retirement Research Institute, 2011 Retirement Revealed Study ING study findings are from an online survey conducted by ORC International during the period of Oct. 5-13, 2011.

Respondents were 4,050 adults between the ages of 25 and 69 who are employed full-time with an annual household income of $40,000 or greater. Data was weighted to make the results representative of the U.S. population.

We see people who need a solution backed by experience.

Help protect your clients with our industry-leading Indexed Universal Life.

Aviva introduced one of the first Indexed Universal Life products over 13 years ago.

We’ve been perfecting them ever since. While other companies were struggling to understand the value of IUL, Aviva IUL products were protecting our clients against losses throughout a string of economic downturns. Build a plan for your clients with the benefit of our proven track record; visit avivausa.com/joinaviva.

We are building insurance around you.

®

Search the App Store for ‘Aviva USA’ to download the new Aviva Difference iPad app.

For agents only. Not for use with the general public. Aviva’s life insurance and annuity products are issued by and all policy benefits are the responsibility of Aviva Life and Annuity Company and Aviva Life and Annuity Company of New York.

Product availability varies by state.

Brought to you by:

[ ANNUITY WIRES] Top VA Sellers Tap into Wealthy Market Fifty-seven percent of financial advisors say they have started recommending variable annuities (VAs) more than before the 2008 financial crisis because the “designs have become more attractive,” and 50 percent because clients are demanding “guaranteed investments.” That’s according to a survey of 500 advisors by AllianceBernstein and the Insured Retirement Institute. Eighty percent of the advisors use VAs in their practice.

Not surprisingly, 60 percent of VA “sellers” — the advisors who sell more than 10 contracts a year — say they’ve increased their VA recommendations since the crisis. These big sellers are nearly one-third of the advisors who use VAs. That’s not the only distinguishing characteristic of sellers. Approximately 25 percent have assets under management in excess of $100 million, and nearly one-third report revenues (fees plus gross commission) in excess of $500,000, the researchers say. These sellers have double the number of high-net-worth clients — those who have $1 million-$29 million in investable assets—than “dabblers” (who sell one to 10 contracts a year). Sellers and dabblers do share some common history: More than 70 percent say that a colleague or wholesaler influenced them to begin recommending VAs. There’s nothing like a nudge, eh?

FORETHOUGHT BUYS HARTFORD ANNUITY BUSINESS

The Hartford has sold its “individual annuity business capabilities” to Houston-based Forethought Financial Group.

That move follows the company’s decision to refocus its business on property and casualty insurance, group benefits and mutual funds.

The Hartford says the transaction includes sale of the company’s annuity product management, distribution and marketing units, as well as the suite of annuity products currently being sold.

The bulk of the carrier’s annuity business has been in variable annuities, but in 2011, it did report a small amount of fixed annuity sales as well. And last December, it debuted two new fixed index annuities.

DID YOU

KNOW

?

38

The Hartford says it is keeping its inforce book of annuities. As for its group annuity business, that remains with the carrier’s retirement business which is also up for sale, as is Hartford’s life business.

In commenting on the annuity deal, Forethought CEO John A. Graf said his company is excited to be expanding further into the annuity business. That ought to get some buzz going in advisor circles. Where might that expansion lead?

SPIA MARKETING HEAD-TURNER

Direct mail marketing of single premium immediate annuities (SPIAs) was 75 percent of all annuity direct mail to consumers in 2011 compared to 62

ROUGHLY 45 PERCENT OF TOP VARIABLE ANNUITY SELLERS use a combined fee- and commission-based compensation structure, but most of their business is commission-based. Source: AllianceBernstein and Insured Retirement Institute Survey

InsuranceNewsNet Magazine

June 2012

percent in 2007, according to Mintel Comperemedia.

In addition, SPIA direct mail volume in 2011 was up 18 percent compared to 2010, the Chicago business intelligence firm says. Where do advisors fit into that picture? According to Mintel, the vast majority of annuities are sold through agents, making the products the target of a significant amount of marketing efforts. “Only a small number of companies are marketing SPIAs directly to consumers,” points out Gary Wooley, director of insurance consulting for the firm. However, Mintel notes that some carriers are pushing beyond the agency model and are increasingly using direct mail to generate interest in SPIAs.

ANNUITY ‘NET FLOWS’ ALMOST UNCHANGED

March was an up-and-down month for annuity transactions processed by the Depository Trust & Clearing Corporation. The New York firm reports that the annuity inflows it processed for distributors rose by almost 10 percent, to $7.7 billion in March — up from $7 billion in February. But, then, outflows processed in March also increased — by almost 12 percent, to $6.4 billion from $5.7 billion in February. That means net flows for March were almost unchanged, increasing by 0.5 percent from slightly under $1.3 billion to just over $1.3 billion, the firm says. The majority of annuity transactions that the firm processes are variable annuities, but the firm also processes some fixed annuity transactions.

Go to AnnuityNews.com for exclusive sales ideas and more!

See Sales Growth with Lens of Success

Picture this lens like a giant magnifying glass that instead of enlarging the subject matter, it instantly exposes any illegitimate offer, program, business model or come-on…http://bit.ly/lensofsuccess

@Annuity_News

ROCK-SOLID RATE.

NEW! Multi-Year Fixed Annuity .

3.15% GUARANTEED for 5 years! *

. 5 Yr Surrender (waived at death) . 2.50% Commission 0-80 . Issues to Age 90! . Max Premium is $1 Million Call Fairlane Financial for your sales kit today 1.800.327.1460 FOR AGENT USE ONLY. NOT TO BE USED FOR CONSUMER SOLICITATION PURPOSES. PRODUCT MAY NOT BE AVAILABLE IN ALL STATES. RATES SUBJECT TO CHANGE WITHOUT NOTICE. * 250K premium minimum or higher to qualify.

M-2440

B Y L I N D A KO C O

T

he average value of single premium income annuities that financial advisors ran searches on last year was $231,000, according to a 2011 report from an income annuity database.

“That’s a surprising average premium, compared to the $100,000 premium that often shows up on single premium income annuity (SPIA) applications that advisors actually submit to annuity carriers,” says Gary Baker, president of CANNEX (U.S.), which runs the database.

The firm tracks searches for SPIA premiums, products and companies that financial advisors submit throughout the year on the behalf of clients. The advisors include reps of independent broker/dealers, banks, wirehouses, independent life marketing organizations and brokerage general agencies. CANNEX supports the carriers and distributors, which account for more than 70 percent of all income annuity sales activity in the U.S. market.

The $231,000 average premium for 2011 was in keeping with the averages 40

InsuranceNewsNet Magazine

May June 2012 2012

for searches in each quarter of 2011.

For instance, in first-quarter 2011, the average SPIA premium that advisors plugged into the firm’s search engine was $259,530. In the second quarter, the average was $243,062; in the third quarter, $215,796; and in the fourth, $220,485.

Why so High?

Since actual policies submitted tend to be well below those 2011 numbers, the natural question is why are the premiums in the CANNEX study so much higher?

It’s possible that financial advisors are researching the actual amounts that clients are considering for allocation to a SPIA, Baker says. “The advisor may be trying to get an idea of cash flow possibilities for the client.”

The average age of the SPIA customer is 70, according to the study. “By that age, many people are consolidating accounts,” Baker says. “The advisor may recommend that the client set aside $200,000 or more to fill the gap in living

expenses that occurs between costs covered by Social Security benefits and those not yet covered.” The advisor may then turn to the search engine to find out how much monthly income the person could get from that amount, he says.

Then, when it comes time to place the business, the advisors may decide to split the case between two insurers, Baker says. That would result in Carrier A and Carrier B each receiving an application from the agent that is written for a little more than $100,000 — well within the premium range that the industry has come to expect.

Case-splitting is not an uncommon practice among advisors, Baker points out. Advisors will do this for risk management purposes and also to keep the policy values within the limits of state guaranty funds.

The SPIA amount actually written also depends on the intended use of the money coming from the SPIA, he says. In many instances, the money is for living expenses, as noted above. But in other cases, some of the money will be for a specific use, such as to fund a life contract over a period of 10 years or so. And that specific use will govern the size of the contract submitted to the carrier.

Money for Living Expenses Baker believes data in the report suggests that advisors are seeking SPIA information mostly for older consumers who are at the higher end of the mid-market.

For instance, the study shows that the average age for male buyers is 69 and for females, 71. “People in their late 60s and early 70s have often received inheritances and they also have substantial assets in non-qualified accounts,” says Baker. “They would be going to advisors at this time in life for guidance on what to do with that money.”

In fact, a figure in the report supports that this may be what happened in 2011.

It shows that 77 percent of the SPIA searches during the year involved money coming from non-qualified accounts.

These accounts would include investment and bank accounts, Baker says. The remaining searches involved money in tax-qualified products such as IRAs. The advisor would be looking to

QUOTING HIGH, SELLING LOW... | ANNUITY

• Deferred income annuities (DIAs) represented about 5 percent of the activity, but CANNEX says this percentage will likely increase in 2012.

• Only 3 percent of searches involved products that include a cost of living adjustment provision.

All-Annuity Comparison Account balances of all types of annuities combined — fixed and variable, deferred and immediate — tend to run lower than the $231,000 average SPIA premium that advisors searched for in

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.

2

• The guarantee types for lifetime contracts were split between life-only (32 percent of searches), life with period certain (45 percent) and life with refund (23 percent).

Standard & Poor’s 500 Index as a benchmark for the U.S. stock market.

• Annuity types were roughly split between single life (61 percent of searches), joint life (19 percent) and certain-only (20 percent).

the CANNEX study. The average balances are also lower than the approximate $100,000 SPIA premium that carriers and advisors often discuss as an average for SPIA cases that are actually placed.

In its 2011 IRI Fact Book, for example, the Insured Retirement Institute indicates that roughly one-third of fixed and variable annuity balances are less than $20,000 and that three-quarters of both fixed and variable annuity balances are less than the $100,000.

These figures are from a 2010 study by Cerulli Associates and Phoenix Marketing International, IRI says.

So apparently, on an all-industry level, annuity buyers tend to have a relatively modest amount in their annuities. But when it comes time to set up a guaranteed income stream, they will go higher — to $100,000 or even more.

1

Some other findings from the 2011 report include:

19100 143312

address the client’s income need by using the client’s non-qualified money because that money is relatively liquid.

By comparison, Baker says, “The qualified money would likely already be locked up by that stage in life.”

Monthly income calculations from the 2011 numbers suggest the monthly payouts, based on those numbers, could make a noticeable difference in a client’s ability to meet living expenses.

For example, the $231,000 average premium would produce a monthly income of $1,200 a year for a 65-year-old male, Baker says. For a man who is 69 (the average age of male buyers), the monthly income would be more — nearly $1,500 at one carrier, for instance. For a 71-yearold woman, it would be slightly lower than the 69-year-old man.

Ninety percent of the 2011 searches were for income start dates that begin within 15 to 31 days of policy purchase, Baker points out. “That indicates that people are generally looking to buy SPIAs to generate income right now,” not sometime in the distant future.

2012 Dalbar QAIB report .

Get your free copy of both reports NOW at www.UpsideDownStudy.com or call M&O Marketing at 1-800-228-5964.

The complete study2 costs $750 but you can receive your copy FREE plus INSTANTLY receive a FREE copy of index annuity expert Jack Marrion’s synopsis and analysis commissioned by and EXCLUSIVELY AVAILABLE FROM M&O MARKETING. » Investor Returns Bottom Line – How did investor returns compare to the broad market indices last year and since 1977? » Investor Market Timing – A look at how the average investor incorrectly times the market

A study of investors shows the buy high, sell low behavior continues, potentially resulting in lower investment returns.1 This unbiased statistical report is an invaluable sales tool every advisor and insurance professional must have to better understand your clients and prospects decision making, including: June 2012

InsuranceNewsNet Magazine

41

Producing Producers Develop a process for mentoring and build your own winning team

BY JOHN ALVES 42

InsuranceNewsNet Magazine

May June 2012 2012

no secret that we do not have enough successful young annuity advisors in the business. But instead of complaining about the lack of new talent, we can step up and develop our own.

Helping others succeed in this business has been a passion of mine and I’d like to share what I’ve learned about the mentoring process.

This process is as good for the mentor as it is for the mentored. For example, I was able to help an advisor who knew very little about the annuity world to make nearly $25,000 in his first three months. Not only did this success help motivate the advisor, it also gave me a boost. You can’t help but become enthusiastic when assisting others achieve their dreams.

Orientation Means Re-Orienting New Advisors First, I believe you must enjoy and at least like the advisor you work with or little success will come out of the relationship. Training a new advisor takes precious time and I like to use mine wisely.

As I mentioned, we don’t find many people ready to sell from day one, but initial success is paramount. Most new advisors walk in with depowering beliefs and poor work

PRODUCING PRODUCERS | ANNUITY

habits. Help them feel empowered, strong and establish new work rituals for success to come quickly. The longer a new advisor lacks any success, the greater the pressure to move onto a different endeavor.

Start out with establishing expectations and dispel misconceptions about the industry. Most people need structure to accomplish objectives. If there is no structure, advisors tend to wander in day after day and accomplish little. Set work, training and meeting schedules with every advisor. Take time to sit down with each advisor, to get to know them and establish business and personal goals. These goals should be a must to accomplish. Hold each other accountable.

Once new advisors are familiar with expectations, they must clearly understand and continuously work on their psychology. The way they think, speak and act at all times plays a huge role in their overall success. You may have the best leads or referrals but if you’re telling yourself that you’re not going to get an appointment, that’s not the state of mind of top producers.

Teaching How to Sell Once the advisor has committed, it’s time to teach them the sales process — the in-thefield training. This sales process was taught to me by extremely successful advisors who developed it through years of experience.

The sales process consists of three steps: 1. Starting the conversation.

2. The first and second appointments.

3. Handling objections.

Starting the Conversation For most advisors, this is the toughest part of the process. It can be intimidating and awkward. There are several ways to break the ice and start the conversation with annuity prospects. Of course, starting with people they know is a classic way to break them into the process. They can start with sending personal letters, emails or a phone call to their family and friends to introduce their new services. That’s a warm lead rather than a cold call.

This is a conversation, so advisors should start with a mutual interest and build rapport. Without this, it is difficult

to build trust and move onto personal finances. This is a relationship, not a quick sale.

Now is the time to ask personal finance questions, which gets the ball rolling and creates credibility.

• Did you lose any retirement money last year?

• Do you own annuities?

• How much research have you done on annuities?

• Do you have a pension or will you have a pension income in the future?

• What is your biggest financial concern?

• In order to maintain your current day-to-day living requirements in retirement, what is your total required annual after-tax dollar income in today’s dollar?

• Do you have a 401(k) with your current employer?

• Are you working or retired?

At this moment the advisor must also stand out. This prospect might also be in conversation with another advisor. The advisor should come from place of power, and know exactly what the prospect is looking for.

Most of my clients are looking for security more than growth. They would rather play it safe than gamble their retirement away.

This is how I was able to define what type of advisor I wanted to be. My identity and philosophy is “gain and retain.” But whatever it is, advisors should have an identity to separate them from other advisors to their prospects. This is where advisors should ask for the opportunity to share their philosophy and secure the first appointment.

The First and Second Appointments I tell my advisors that 90 percent of the time, they will have two appointments with each client. Seldom is the sales process accomplished in one meeting. Clients who considered not buying an annuity were the clients that I met with only once.

In the first appointment, advisors can review any fact-finding information they might have gathered in the meantime.

After that, move onto retirement goals and dreams and find out if this money will be for retirement income or an inheritance. This is very important to know, because most people do not buy with logic but with their emotions. Review the goals and go over any possible concerns. If advisors do a great job of connecting with prospects and their goals, they can move to the next step.

I like to ask the prospect that if I were able to put together a plan that would accomplish their goals and eliminate any concerns, would that be of any interest to them? This is where I ask for my second appointment.

The second appointment should be easier than the first. My mentor once told me, “You never have a hard time closing on your second appointment if your first appointment was done correctly.” I keep my advisors very aware of this principle.

Handling Objections Objections are inevitable and welcome because that means prospects are seriously considering the options. First, make an objection into a question.

1. Listen carefully and politely.

2. Return the objection back in a form of a question (nicely).

3. Ask permission to ask them the reason for their concern.

4. Find out their real concern.

5. Ask if you we’re able to eliminate that concern if that would make them comfortable with the annuity.

This way, most concerns turn into questions that need answering. Concerns usually come from advisors not fully disclosing the product properly and clients not being fully committed. Answer any and all questions, and I believe your clients will have no problem buying an annuity from you.

Once advisors have been oriented and then led through the sales process with proven methods, success is more likely. And success builds on success.

John Alves is president of Freedom Annuity & Life Insurance Solutions in San Diego, Calif., which serves the safe money market . He can be reached at John.Alves@innfeedback.com.

June 2012

InsuranceNewsNet Magazine

43

[ HEALTHWIRES] 1 in 4 Had Insurance Gap Last Year

One-quarter of adults ages 19-64 had a gap in MIND THE GAP their health insurance coverage in 2011 because they lost or changed jobs, according to a survey.

Of these, 57 percent were uninsured for two or more years, and 69 percent for a year or longer, according to the Commonwealth Fund Health Insurance Tracking Survey.

Of those who tried to buy a policy in the past three years, 62 percent said it was very difficult or impossible to find affordable coverage.

These numbers probably come as no surprise to advisors. Still, the data serve as a reminder of a point to bring up with clients what might happen if and when they leave their current job.

PREDICTING THE FUTURE

It’s difficult to predict the future, but that isn’t stopping health insurance watchers from giving it a shot.

Commonwealth Fund is predicting that come August, some consumers will start receiving health insurance premium rebates. That’s due to rules already in effect under the Affordable Care Act that require health insurers to meet minimum loss ratio requirements or issue rebates if they do not, according to a United Press International report.

Another prediction comes from Brad Pricer, human resources process leader for CUNA Mutual Group. He recently told an industry group that the health care insurance purchasing exchanges established under ACA will continue moving forward regardless of how the Supreme Court rules on the Act’s constitutionality. Pricer also predicted that employers will likely follow their peers in this area in order to stay competitive in their ability to attract and retain talent.

Then, there are survey-based predictions, such as those from National Business Coalition on Health, Workforce Management and Business Insurance.

DID YOU

KNOW

?

44

Just 2 percent of 437 employers told the researchers that it was “very likely” they would terminate coverage in 2014 and only 4 percent said termination is “likely,” according to a Crain Communications article. By contrast, 71 percent said it is “not very likely” or “unlikely” they would fold their plans.

HYPERTENSION TOPS PRE-EXISTING CONDITIONS

Hypertension was the most commonly reported medical condition among adults ages 18-64 that could result in a health insurer denying coverage, requiring higher-than-average premiums, or restricting coverage.

Second place went to mental health disorders, and third to diabetes, according to a Government Accountability Office analysis of 2009 data. The other conditions on the list, in descending order, are: asthma, arthritis, chronic obstructive pulmonary disease, cancer, rheumatoid arthritis, heart attack and stroke. The GAO estimates that 20 percent to 66 percent of adults reported medical conditions that could result in a health insurer restricting coverage, with the midpoint at about 32 percent and the

IN 2009, 67 PERCENT OF AMERICAN ADULTS relied on private health insurance, most through employer-sponsored group coverage; another 16 percent had coverage through public programs such as Medicare and Medicaid; and about 22 percent were uninsured.

Source: Government Accountability Office March 2012 report on Private Health Insurance

InsuranceNewsNet Magazine

June 2012

differences reflecting variances in lists of pre-existing conditions. Vagaries aside, the list can still be helpful to advisors when counseling clients about likely underwriting outcomes.

JUST IN CASE ACA LOSES CASE

There are no shortages of health care proposals for Congress to consider if the U.S. Supreme Court ends up quashing the Affordable Care Act (ACA).

One example is the National Federation of Independent Business’ fivepoint program. This program includes a proposal to allow the self-employed to deduct the cost of health insurance they purchase in the individual market, NFIB says. The group would also like to see creation of a newly defined contribution option to which business owners could contribute pre-tax dollars for use by employees in paying for their own health coverage. What is noteworthy is not that these and similar ideas exist, but rather that this group, and many others, are continuously promoting health reform solutions right up to the wire, when the high court hands down its decision on ACA. Advisors who have clients that are fretting about where health care will go might want to hear that this is happening. For some, it may be of slim comfort.

But others might appreciate knowing that someone else is on the case — just in case.

QUOTABLE One reason people may underestimate the amount of money needed to cover their health care costs in retirement is that many workers do not think they will ever need long-term care.

— Kevin McGarry, director of the Nationwide Institute for Retirement Income

@InsNewsNet

Got a rainmaker?

Yes. We cover that.

When business depends on a Key Person, a death or disability could mean financial ruin. High-Limit coverage is necessary.

For more than 30 years, we have been creating insurance products for hard-to-place cases. We will, when others won’t.

Petersen International Underwriters Disability • Life • Medical • Contingency 800.345.8816 • piu@piu.org • www.piu.org

States Eye Life Settlements as a Solution for LTC Crisis BY

CHRIS

ORESTIS

S

tates are under tremendous budget pressure to keep pace with exploding demand to cover longterm-care needs. But rather than funneling taxpayer dollars into that abyss, states are realizing they can save public money by keeping seniors off of Medicaid through the use of life insurance policy conversions into LTC benefit plans.

Legislative leaders across the country are taking action with consumer protection disclosure laws and legislation to encourage consumers to convert their life insurance to pay for long term care as an alternative to abandoning their policies. Policy owners are being encouraged to use their legal right to convert an in-force life insurance policy into an LTC benefit plan and direct payments to cover their senior housing and LTC costs.

The Medicaid Problem Grows When Medicaid was created in 1965, the entire GDP of the United States was $791.1 billion, and no one could have predicted that by 2009 the United States would spend more than $2 trillion on health care in a single year. Today, Social Security, Medicare and Medicaid are all in trouble and creating havoc for government budgets at the federal and state levels. According to Federal Reserve Chairman Ben Bernanke, this has become the Fed’s No.1 concern about the economy.

State budgets have been hit particularly hard by shrinking tax dollars and growing Medicaid enrollment brought on by the economic crisis and an aging population.

46

InsuranceNewsNet Magazine June 2012

More than 10 million Americans now require LTC annually and Medicaid is the primary source of coverage. According to the Kaiser Family Foundation, Medicaid spent $427 billion in 2011, significantly more than the $240 billion in 2009.

A $30 Trillion Funding Source According to the NAIC, $27.2 trillion of inforce life insurance is in the hands of 152 million Americans. Few of these policy owners understand their legal rights of ownership and do not possess the knowledge of how insurance works. When their original need for a policy has run its course, the vast majority of owners simply walk away from what may be one of the most valuable assets they own — for nothing in return.

Life insurance is legally recognized as personal property and the owner has the right to use their asset in a number of ways including converting the policy to an LTC benefit plan.

In 2009, Conning and Company analyzed the emerging use of life insurance policies to pay for long term care as part of their Strategic Research Series. In the paper they surmised, “Both state governments and the long term care industry are working to find a solution to the budgetary threat to Medicaid created as aging Baby Boomers impoverish themselves in order to have the state pay for long term care. What is new is the concerted effort to integrate life insurance policies and long term care providers. This new source of funds represents a potential alignment of long-term care providers and state governments.”

Legislative and market activities across the country point to the growing

realization that life insurance policies can be converted to help pay for LTC. A major challenge is that too few seniors realize their policy could be used for purposes other than a death benefit — but as Conning predicted, word is spreading among policy owners, the long term care industry and law makers.

Consumer Rights: Converting Life Insurance to Pay Long Term Care The Supreme Court case of Grigbsy v.

Russell (1911) established a life insurance policy owner’s right to transfer or convert the use of an insurance policy. This ruling placed the ownership rights in a life insurance policy on the same legal footing as more traditional investment property such as real estate, stocks and bonds. As with these other types of personal property, a life insurance policy is an asset and can be converted to another use or transferred at the discretion of the policy owner.

A policy owner’s legal right to convert an existing life insurance policy into an LTC benefit plan is not to be confused with a LTCi policy, accelerated death benefit (ADB) rider, annuity or a hybrid life/LTCi product. This conversion option allows for the private, secondary market exchange of a life insurance policy for a LTC benefit plan at the time that care is needed.

For families with the need to pay for LTC, but are unable or unwilling to keep their life insurance policy in-force by maintaining premium payments, the life policy conversion option is a much better choice than abandoning a policy.

Medicaid Eligibility: Life Insurance is a Disqualifying Asset Because a life insurance policy is legally recognized as an asset of the policy owner, it is an unqualified asset and counts against them when applying for Medicaid. For Medicaid applicants, it has been standard practice to abandon a life insurance policy if it is within the legally required five-year look-back spend-down period. Billions worth of in-force life policies are regularly abandoned by uninformed seniors as they enter their “long-term-care years.”

Instead of abandoning the policy and

The mosT CoNTRoVERsIAL REPoRT exposes the tactics you’re being taught to use in today’s sales systems are costing you millions in premium and thousands in commissions.

The mosT UNCoNVENTIoNAL sALEs sYsTEm EVER DEsIGNED enables one advisor to average $16 million in annuities every year.

Have YOU Been Left HIGH AND DRY

by Sales Systems in the Past?

Get your very own, made-JUST-FOR-YOU coaching program that will catapult you to an ultimate level of personal production, regardless of your current level of business, budget or personality!

“By following the systems and coaching I received to the tee, I grew my production from $3 million to $16 million in just 2 years, and even more importantly I found peace, confidence and joy in what I do every day.”

- Tami Simpson NOW A TOP female advisor in the country!

To receive your FREE copy of “Why 99% of ALL Sales and Marketing Systems FAIL and WHAT EVERY ADVISOR NEEDS TO KNOW” and the FREE DVD “Getting Your Financial House in Order” that’s helping advisors like Tami skyrocket production visit

www.RealWealthBuilderSystems.com or call our 24-hour hotline at

1.888.339.1488 June 2012

InsuranceNewsNet Magazine

47

HEALTH | STATES EYE LIFE SETTLEMENTS AS A SOLUTION FOR LTC CRISIS

going immediately onto Medicaid, the time a person remains private pay is extended while the present day value of the life insurance asset is spent down in a Medicaid compliant fashion — all while preserving a portion of the death benefit for the family during the extended time period.

LTC providers prefer private pay patients over Medicaid recipients. A new report released by the American Health Care Association (AHCA) indicates that due to major state budget deficits and adjustments to Medicare and Medicaid reimbursements, LTC facilities will see historically low Medicaid reimbursements. It is estimated that unreimbursed Medicaid funds to nursing homes exceeded $6.3 billion in 2011 — a $19.55 shortfall per patient, per day on average.

implications of billions of dollars of life insurance policies in the hands of seniors being discarded when NCOIL unanimously passed the Life Insurance Consumer Disclosure Model Act in November 2010. This consumer protection law requires that life insurance companies inform policy holders over 60 or with a terminal or chronic condition of alternatives to the lapse or surrender of a life insurance policy including “conversion to a long-term-care benefit plan.” California, Connecticut, Kentucky, Maine, New Hampshire, Oregon, Washington, Virginia and Wisconsin already have passed or are now considering life insurance consumer disclosure laws for their states.

In 2011, Connecticut introduced study bill SB 1153 as “an act establishing a task force to study life insurance policy and Legislative Action: annuity conversions and the provision Focus on Use of Life of certain notifications by life insurance Insurance to Pay for Longcompanies.” In 2012, the state of Florida Term Care passed HB 5001 to “establish a technical The National Conference of Insurance advisory workgroup by August 1, 2012, Legislators (NCOIL) understood the to examine methods to allow an insured under a life insurance policy or the contract holder of an annuity, to convert the policy or annuity to a long term care benefit.

The agency shall submit a report of findings and activities of the workgroup, including recommendations Most financial professionals are and proposed legtoo uncomfortable with disability islation, no later insurance to even bring it up. We can help give you than January 15, the confidence you need to protect your clients.

2013.” Hawaii also recent ly pa ssed SB-2455, a similar measure to the Connecticut and Florida study bills.

The Center for Economic ForeEUGENE COHEN INSURANCE AGENCY, INC. casting and AnalyHelping brokers & agencies market disability insurance since 1981 sis (CEFA) of Flor9933 N. Lawler Ave., Suite 140, Skokie, IL 60077 ida State Univer800-333-4340 www.cohenagency.com sity analyzed the FOR PRODUCERS ONLY. NOT FOR CONSUMER DISTRIBUTION. tax savings impact 48

InsuranceNewsNet Magazine

June 2012

of converting life insurance policies into long term care benefit plans on the Florida Medicaid budget. In their analysis, CEFA “scored” the annual savings for Florida’s taxpayers at approximately $150 million. The savings come from extending the time Medicaid applicants with a life insurance policy can remain private pay, delaying entry onto Medicaid by first converting their policy to a private, long term care benefit account.

Conclusion: Information and Choice is Consumer Protection Consumers lack preparation and awareness of how they are going to cover the costs of long term care. It is a subject typically ignored until a loved one is in immediate need of care. Families that need LTC are in a particularly difficult position if they have not planned with savings and insurance/annuities. Unfortunately, this is the position of the vast majority of people who require senior housing and LTC today. We need to do all we can to educate people on how to plan for their LTC futures. But what about the majority of unprepared people that need to access LTC today?

It all starts with education and awareness. Millions of seniors are holding a potential solution in their hands if they own a life insurance policy. Unfortunately they are unaware of their legal rights and available options such as a policy conversion to a LTC benefit plan.

States are now taking action to tackle this lack of consumer awareness. As the word spreads among LTC providers, advisors and with consumers, the growing use of policy conversions will begin to have a measurable, positive impact on the LTC funding crisis in the United States.

Chris Orestis is co-founder and president of Life Care Funding Group; a 15-year veteran of both the life insurance and long term care industries having worked with both HIAA and ACLI; a member of the Advisory Board to the 3in4 Need More Association; and a frequent speaker, featured columnist, and contributing editor to a number of industry publications. His blog on senior living issues can be found at lifecarefunding.com/blog. He can be reached at 888670-7773 or Chris.Orestis@innfeedback.com.

FEATURE TITLE | HEALTH

neW NaTioNal BRaNDiNg CaMPaigN foR iNDEPENDENT aDViSoRS

Your Clients Want to talk about safetY.

Be the safe MoneY Pro! Safe Money Places® agents receive the following benefits: national branding and exposure NEW 20 page Safe Money Places® consumer brochure Workshop/Seminar PowerPoint presentation Unlimited use of the new critically acclaimed bi-monthly ‘Safe Money News’ in print or online

The Safe Money Places® Agent Network is a national association of independent, like-minded agents who operate under the Safe Money Places® philosophy.

Agents and industry insiders are comparing this distribution model to some of the independent models in the real-estate industry, such as Century 21 and ReMax. This new, proven network revolves around the consumer website, safemoneyplaces.com, which was founded by Jack Marrion and recently purchased by The Ohlson Group, Inc.

It’s easy to get started! To learn more right

now, call us at 877.844.0900 or visit us at ohlsongroup.com.

Two ‘Safe Money Minutes’ per month — this audio is professionally done and can be placed on your website and emailed to prospects Use of the Safe Money Places® logos Consumer TV and Radio Ready spots Monthly training — online and on location

Don’t miss this opportunity. Check out the websites at safemoneyplaces.com and safemoneynews.com.

Disclaimer: Network affiliation is only available to the most ethical and likeminded agents who understand the value and importance of protecting clients’ assets. Network availability is exclusive and limited by geographic area and population. During this initial launch, all areas are open. Once an area is assigned with the appropriate number of agents, it will no longer be available.

Raymond J. ohlson, ClU, CRC

is President and CEO of The Ohlson Group, Inc. and President of Safe Money Places International, LLC. 877.844.0900 | www.ohlsongroup.com | info @ohlsongroup.com

...a different experience

June 2012

InsuranceNewsNet Magazine

49

Advisors Face More Scrutiny in the VA ‘Alternative’ Zone

BY LINDA KOCO

50

InsuranceNewsNet Magazine

June 2012

ADVISORS FACE MORE SCRUTINY IN THE VA ‘ALTERNATIVE’ ZONE | FINANCIAL

inancial advisors who recommend “alternative investment” options inside of variable annuities will be subject to greater scrutiny than if they only recommend an annuity’s traditional subaccounts, according to a securities attorney.

Examples of alternative investments could include hedge funds, commodities and derivatives.

That greater scrutiny could happen due to guidance that the Financial Industry Regulatory Authority (FINRA) laid out for securities firms in Regulatory Notice 12-03.

Issued earlier this year, the 11-page document spells out supervision and compliance requirements for financial firms and their reps regarding sale of “complex” products containing novel, complicated or intricate derivative-like features.

Advisors who work with alternative product options inside of variable annuities would be subject to certain education and supervision requirements, says James J. Eccleston of the Eccleston Law Offices, Chicago.

The development is somewhat akin to what has happened to annuity advisors on the traditional fixed annuity side of the business. If they decide to offer the more complex fixed indexed annuity products, they are subject to greater educational regimens and closer supervision.

The new FINRA Notice says that financial firms need to heighten their supervision of, and compliance procedures associated with, complex investment products, and that reps will need training and education that prepare them to work with such products.

The document does not say one word about variable annuities. However, if a variable annuity includes complex products like alternative investment subaccounts, then advisors who sell that annuity will be affected, says Eccleston.

New Rule Applies to Alternative Investments The FINRA document also does not mention the term “alternative investments.” However, because alternative products tend to be more complex than

traditional stocks, bonds and mutual funds, Eccleston believes the notice should be taken to apply to all alternative products, whether offered inside a variable annuity or as a standalone investment.

Alternative investments are a catchall term for a wide range of investments that the financial industry considers to be unique or non-traditional as compared to traditional stocks, bonds and mutual funds.

Examples can range from commodities, private equity, and derivatives to hedge funds, limited partnerships, venture capital investments and more. (Some experts also include tangibles, such as fine art, coins and antiques.)

Client and advisor demand for alternative investments have grown since the 2008 market downturn, when investors started looking for greater diversification and greater non-correlation between asset classes. Variable annuity carriers responded by adding alternative subaccounts to more of their policies.

Today, 25 active individual variable annuity carriers offer a combined total of 39 unique subaccounts in the broad category of alternative investments, according to Frank O’Connor, product manager for the Morningstar variable annuity database. These subaccounts tend to use short, long or bull market investing strategies, he says.

Those carriers offer 63 individual variable annuities combined, he adds.

And each offers one or more alternative subaccounts.

A lot of those subaccounts did not show up inside variable annuities until after the market crash of 2008, he adds.

In fact, O’Connor says, “67 percent of the alternative subaccounts available today were added to the products after yearend 2008.”

The upward trend got another push when Jackson National Life debuted a new variable annuity, Elite Access. That product has 40 subaccounts, and 12 of them are alternative options in areas such as managed futures, commodities, listed private equity, global infrastructure, convertible arbitrage and emerging markets debt.

Be Careful Access to alternative investments can be good for the customer, says Eccleston.

But advisors do need to be “very careful” with making a recommendation to use these investments, he says, alluding to the FINRA Notice.

For advisors, the notice means that “you have to be very cautious. Be sure you understand these products and that the client understands them, and be sure that you fully disclose the risks and benefits of these options,” says Eccleston.

For investment firms, FINRA focuses on training and supervision with an eye toward due diligence and suitability. “The firms need to thoroughly vet these products before ever letting a rep offer it to anyone,” he says.

The products that FINRA says could be considered “complex” include: assetbacked securities, unlisted real estate investment trusts, products that include an embedded derivative component, products with contingencies in gains or losses, structured notes, exchange-traded products, and products with principal protection that is conditional or partial, or that can be withdrawn.

How do FINRA’s due diligence, suitability and full disclosure requirements for such products differ from the same requirements for traditional investments?

They are the same, Eccleston says, “but the level of analysis, rep training, and disclosure increases when complex products are being sold.”

Do advisors really want to offer alternative investments? The idea may seem daunting to some. But in a poll of more than 500 registered investment advisers and fee-based advisors last summer, Jefferson National found strong interest. The New York carrier reported that 68 percent of the advisors had already increased their use of alternative investments, and 67 percent were expecting their allocation to alternatives to continue increasing.

Linda Koco, MBA, is a contributing editor to AnnuityNews, specializing in life insurance, annuities and income planning. Linda can be reached at linda. koco@innfeedback.com.

June 2012

InsuranceNewsNet Magazine

51

A

winning strategy to convert wealthy friends into prospects is to gradually “win them over.”

Your objective here is to remind people of what you do and why you are good at it as you gently solicit business.

We will look at three approaches to help accomplish the goal: a) Answering, “How’s business?” b) Giving indirect clues c) Requesting specific referrals

Answering the Question: “How’s Business?”

People ask questions when they see you. Ed Koch was famous for asking, “How am I doing?” when he encountered New Yorkers on the street or at events.

In the financial services business, people often ask, “How’s the market?”

The major question people ask, regardless of their line of work, is “How’s business?” When someone asks you, how do you respond?

It’s unlikely you say, “Lousy. I don’t know why I ever got into this business.”

You probably say, “Fine,” or “Great,” or “Could be better.”

Suppose you used this frequently asked question as a means to tell your story and win people over? Here’s the strategy: Ever notice when some politicians 52

InsuranceNewsNet Magazine

June 2012

debate (or a reporter asks a question) they sometimes answer a totally different question? They are talking about what they want to discuss versus the topic you asked about. Use this technique to your advantage by restating the question in your mind and then answering it.

“How’s business?” Suppose the question they were asking was, “Why should I do business with you?” You would answer that question differently.

“How’s business?” Let’s restate it one more time — How have you helped someone today? There’s a question that gives you an opportunity to explain why you are good.

How you have helped someone today can be answered in several ways: How have you helped someone solve a problem — Your strategy is to describe a problem that fits many people, perhaps even the person who asked the question and show how you helped that person. For example: “Today I helped a client who really doesn’t like their job and just learned about an early retirement offer the company was offering to employees.

Together we looked at the package, the assets she had, the type of lifestyle she wants to maintain and determined that, provided she lived within certain parameters, she could take the package, retire

and spend the rest of her life doing what made her happy. She was delighted and I felt good, too.”

That’s a great story. The listener hears several things that could trigger questions or referrals. “A client who didn’t like her job,” “company early retirement plan,” “spend life doing what makes her happy.” The message here is that you helped somebody. They may want that kind of help or know someone who needs it.

How have you helped someone avoid a problem? — You don’t have dramatic success stories everyday. However, take credit for the problems you help people avoid. For example: “Today a retired client called in to say they wanted to buy some of those tax-free Ginny Maes (Government National Mortgage Association) bonds because her friends were earning more interest than she was earning. I showed her that although treasury bonds are free of state and local taxes, Ginny Maes are not. Her friends may think they are getting a higher return because they receive payments of both interest and principal on a monthly basis. They may not realize the principal payments is their own money coming back to them.”

You stopped a retired person from making a mistake that could exhaust

TELL YOUR STORY | BUSINESS

their principal just when they needed it most. You stopped them choosing an investment based on incomplete or misinformation. You helped someone.

The message people hear is: “This person knows their stuff!” and “This person looks out for the client’s interests.”

Indirect Clues - What Does A Person Look For In a Broker?

There are many traits and characteristics people look for when they choose a broker. You can’t start a conversation with a friend by saying, “Let me tell you why I am good,” or “What do you look for in a broker?”

You can display these stories in little anecdotes you tell based on day-today experiences.

What traits does a person look for in a broker? Some examples read like a list of virtues: Honesty, integrity, confidentiality, communication, knowledge/experience and performance.

Each of these traits can be described by activities. If they can be described, you can demonstrate your competency in those areas. For example: It’s Friday afternoon. You have been in the field meeting with clients and prospects all day. You get back to the office at 4 p.m. There’s a stack of 10 messages on your desk. The local museum has an opening that night from 6 – 8 p.m. You

arrive at 7:30 p.m. and see a friend across the room. You start a conversation.

“I almost didn’t make it tonight. I was out in the field all day and when I got back at 4 p.m., I had 10 messages from clients on my desk. I make it a point to return all my client calls before I leave the office.”

What message does the friend hear?

Yes, the anecdote supports communication as a virtue, but the message is more basic: “If this guy was my broker, my calls would be returned.” What’s the major complaint of people who leave their brokers? “He never called me,” or “I could never get him on the phone.”

Consider performance. Clients primarily invest with you because they want to make money. You cannot promise a client performance. What do you do? Here’s an example: Same Friday night — same museum opening. You see a friend across the room. You start a conversation: “I’ve got a busy weekend ahead of me.

I have to prepare three written portfolio reviews for Monday. All of my clients get a face-to-face written portfolio review within the first quarter of the year.”

What message does your friend hear?

You will be “accountable” for performance. You will look them in the eye and say, “You took my advice, here’s how you did vs. the indices.” You guarantee

performance; however, there are brokers who suggest a stock to a client when the client buys them and the broker forgets about it. The stock goes from $20 to $3 and the broker never calls.

Clients want someone who will “watch their stuff.” Although you cannot do this exactly, reporting on performance is the next best thing and gives the client the feeling you are looking out for their interests.

Requesting Specific Referrals Increasing their understanding involves explaining “how you can help” and “who do you know?” This strategy works when you are “winning them over.”

You have just explained how you have helped someone. It’s an ideal opportunity to say, “If you know someone in a similar situation, I would like to talk with them.”

You explained how a person needed help. You helped them. You’ve now asked if the friend knows anyone who has a similar problem. You would like to help them too. It’s compelling.

Bryce Sanders is president of Perceptive Business Solutions.

This selection was adapted from his book “Captivating the Wealthy Investor,” which is available on Amazon.com. He can be reached at Bryce.Sanders@ innfeedback.com.

June 2012

InsuranceNewsNet Magazine

53

MDRT INSIGHTS | BY DIANE MCCURDY

Give Financial Personalities Center Stage

W

hen you meet a new client for the first time, what is the most important part of your initial assessment? If you are focusing on the inventory of assets, you’re missing some truly important information — your client’s financial personality. Your client might walk in with millions of dollars in assets, but until you determine what kind of spending or saving habits he has, you are building a financial plan in the dark.

Through my experience as a Million Dollar Round Table (MDRT) member, I’ve learned the importance of understanding the client’s personality, because that is what actually drives decision-making. Because of this, I designed a personality quiz to give me a better idea of what kind of approach to use when planning.

I’ve noticed my clients often fall into one of four categories; spender, builder, giver or saver. These personalities determine the kind of products, strategies and retirement recommendations I propose for their long-term financial needs. To protect clients’ best interests, good advisors will need to accept that they might experience resistance from those who are hesitant to change their ways. With a full understanding of the advantages and risks of each personality type, planning becomes exceptionally tailored and therefore, likely very successful.

Spenders If you have heard your client say, “You only live once,” you probably have a spender on your hands. Spenders are often creative and fun-loving, but unfortunately, their lifestyle comes with a high price tag. When creating a financial plan for this type of client, you need to have a complex system in place that makes it difficult for them to dip into their funds. A retirement plan is a good choice because the client will understand they will incur significant tax penalties if they try to use the money before retirement. Also, you should help them develop an additional emergency 54

InsuranceNewsNet Magazine

June 2012

fund in case they are unable to keep their other assets untouched. Planning for spenders can be tricky, as it requires creative ways to protect their money, but if implemented correctly, advisors can help save spenders from an unfulfilling or turbulent retirement.

order to keep their assets safe, they need their advisor to be firm in making suggestions. Take advising to another level — don’t let them forget giving doesn’t always need to be monetary.

Savers

Have you had a client who takes every precaution possibly when planning for Does your client have great ideas, but their future? That client is a saver. In this very few ever come to complete frui- scenario, your job is significantly differtion? That’s a builder! Builders likely have ent. Rather than helping them find ways less interest in the monetary aspects of to protect their assets from fiscally fliptheir ideas and, instead, are more con- pant personalities, you need to remind cerned with the undertaking at hand. savers it is OK to spend. Don’t let fear These clients need a wise partner to help prevent your client from living the retirethem allocate their finances properly, ment they’ve worked so hard to reach. whether to protect them from depleting Remind them they’ve diligently created their assets in their quest cash reserves and they to finish a project, or to are allowed to use them “Until you determine safeguard their monetary what kind of spending or within reason. Recognize success. If a business venwho your saver-clients saving habits he has, you ture fails, they will need are and make it a priorare building a financial a safety net. If their busiity to let them know how plan in the dark.” ness flourishes, they will much money they can need solid succession and should safely spend. plans and sound estate planning in place.

It goes without saying these categories Be aware that builders will likely want are not mutually exclusive. You may find little to do with the paperwork and will your client is a spender but also embodneed to be reminded of the importance ies some characteristics of a builder as of financial planning. Keep a close eye on well. Being able to recognize these traits their progress and ever-changing needs will help you tailor not only the finanto serve them to the best of your ability. cial plan, but your approach in making suggestions. Advising is not just about Givers finding the correct products and investIf your client goes out of his or her way ments, but finding a way to make the to treat friends to dinner every time right choices sound appealing to the clithey get together, you are working with ent. Shining the spotlight on your clients’ a giver. Givers have a precarious situa- personalities will illuminate the path to tion — unfortunately, they are often sur- the right financial plan. rounded by “takers.” Their financial situation needs to be monitored carefully, Diane McCurdy, CFP, EPC, is the founder of McCurdy Financial because they will be more concerned Planning in Vancouver, British Cowith taking care of children and grand- lumbia. She is the author of How kids before they’ve properly taken care of Much is Enough? Diane is a 30-year member of the Million Dollar Round their own needs. As an advisor to a giver, Table (MDRT) with four Top of the you might experience discomfort and Table and 15 Court of the Table resistance when reminding them they qualifications. She can be reached at Diane.McCurdy@ innfeedback.com need to take care of themselves first. In

Builders

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

REFFERALS. CPA ALLIANCES.

IT COULD BE YOU.

BUILDING CHAMPIONS BUILDING YOU Brandon Stuerke has developed a thriving system that turns CPAs into marketing and referral partners. Through Winning With CPAs, Brandon Stuerke, will teach you how to achieve new levels of success, working closely with CPAs and other trusted professionals. You will have CPAs using you as their go-to advisor for their clients Retirement and Insurance planning needs. As an independent, insurance professional, you may have heard that the secret to radical success can be found by forming strong alliances with CPAs. But, more than likely, you haven’t been told how to do this successfully. Until now!

FINANCIAL INDEPENDENCE GROUP, INC info@figmarketing.com

800.527.1155

www.figmarketing.com

LIMRA INSIGHTS | BY KIMBERLY LANDRY

Life and DI Sales Grow at the Workplace

A

s the insurance industry struggles to reach all of the uninsured consumers in need of life and disability products, the workplace channel is sparking particular interest.

In a recent study, LIMRA found that 18 percent of all individuals who actively shopped for life insurance in the past two years did so at the workplace. When it comes to disability insurance shoppers, 35 percent shopped at work, far exceeding the 19 percent who shopped the more “traditional” way, by meeting with sales reps or advisors outside of the workplace.

Even more striking than the percent of people who shop at the workplace is the percent of those shoppers who actually buy policies. Seventy-five percent of life insurance workplace shoppers ultimately decide to buy, demonstrating a similar purchasing rate to the traditional face-to-face shopping experience and a much higher purchasing rate than among those who shop online. When it comes to disability plans, 70 percent of workplace shoppers decide to purchase, exceeding the buying rates for all other shopping channels. To successfully target these customers, however, it is first important to understand who they are and what they want.

When asked what prompted them to shop for insurance, 30 percent of workplace shoppers for life products reveal that they shopped simply because the product was offered to them at work.

While this indicates that insurance companies can expect to have a reasonable amount of success simply by approaching employees, it is also clear that mere availability is not the primary reason that many people shop at the workplace.

Instead, many are motivated to shop for life insurance at work by life events such as marriage, divorce, the death of a friend or relative, or the birth or adoption of a child. Workplace disability shoppers also cite life events as motivating factors, particularly concerns about personal health issues or having a relative or friend become disabled. Some also shop because 56

InsuranceNewsNet Magazine

June 2012

they feel that their employers do not provide adequate disability benefits. Carriers marketing insurance at the workplace can use the open enrollment period to remind employees to think about recent life changes that may have increased their need for coverage.

Given the convenience of shopping at work, one would hope that the shopping experience for workplace customers would go very smoothly. However, workplace shoppers still report difficulty with various aspects of the process. In particular, they have a hard time deciding how much insurance to buy, determining whether they are getting their money’s worth, and understanding the details of the policy they might purchase. These struggles are a significant concern since prospective customers who feel confused about their options may eventually give up rather than making purchases they do not understand.

The level of difficulty that shoppers experience may be due, in part, to the quality of their interaction with the workplace sales rep or enroller. Workplace reps are viewed as having a variety of positive characteristics, such as providing good information about the policy and being very knowledgeable about the

products they are selling. However, there are still opportunities for workplace reps to improve.

1. Follow up with your customers.

Forty-six percent of workplace life insurance shoppers felt that their sales rep should have followed up with them.

2. Listen to your customers. 4 in 10 workplace life insurance shoppers said their sales reps failed to consider what they could afford.

3. O ffer additional resources for information. Given the limited time available in a voluntary/worksite open enrollment period, this additional information can assist with the decision-making process for clients.

Adopting these steps will help workplace sales reps turn these uncertain shoppers into confident buyers.

Kimberly Landry, analyst, group product research, joined LIMRA in 2008. She is responsible for conducting research on employee benefits, with a specific focus on compensation of group insurance personnel, group life insurance sales and employer trends. She can be reached at Kimberly.Landry@ innfeedback.com.

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

OMPANY TO C R U O Y E R A COMP

E F I L Y T I C S A KANS e re .

Life is better h Fixed Products:

gent New General A ing: Contract Includ

(Including • Universal Life tee a no lapse guaran universal life) • Whole Life 30 Year Term • 10, 15, 20 & n Banded Term • New $1 Millio mium Life • Return of Pre Riders • Living Benefit e Rider on • Lifetime Incom Fixed Annuities ental, Vision & • Group Life, D Disability io Annuity Portfol • Strong, Fixed

outs • High Cash Pay ierarchy • Multi-level H • General Agent Retirement Plan ncy Group • Preferred Age sing Allowance • Co-op Adverti pensation Plan • Deferred Com lan • Stock Bonus P Bonuses • Life Renewal

Strengths:

• 117 Years ility • Financial Stab ing and Field Train • Home Office pport • Technology Su keting Support • Advanced Mar erwriting • Advanced Und • Incentive Trips aui, (Monte Carlo, M Banff) Lake Louise and ail mized Direct M • Effective Custo ams Marketing Progr at Cares!

• A Company th

FO R INF OR MATI O N O N A CA REER WI TH KANSAS CITY LIFE INSURANCE COMPANY, CALL

TM

s*:

Variable Product

rsal Life • Variable Unive ties • Variable Annui

All with a ntract! o c e v i t p a c n no tributed Product Series is dis Century II Variable ay, dw oa Br *Kansas City Life’s 20 35 ancial Services, Inc., C. through Sunset Fin . Member FINRA/SIP 111, 816-753-7000 64 O Kansas City, M

800 258 4525 Exte ns io n 8120

June 2012

InsuranceNewsNet Magazine

57

NAILBA INSIGHTS | BY DEXTER UMEKUBO

Life Insurance — the Greatest Gift of Love

B

eing a brokerage general agent (BGA) has given me a great appreciation for the life insurance industry and the companies we distribute products for. More importantly, I am deeply thankful of the producers who serve their clients.

My life insurance career started in 1978 as an agent for a major eastern mutual company where I received tremendous training and gained a great appreciation for our business. Yes, we were taught product, how to “sell” life insurance with sales ideas and marketing programs, but I was very fortunate to learn the business in an agency that used “service” work to prospect and sell new business.

I came into the agency as one of the first mutliline agents who had a history of a lot of old “debit” business on the books. (Debit Life Insurance had very small face amounts and was sold in the 1930s through the early 1950s. Life insurance agents would actually stop by the home weekly or monthly to collect the premiums.)

My job as an “ordinary/multiline” agent was to service an old debit route, collect the premiums, offer to convert or exchange the old policies (for a reduced commission), prospect for home owners and auto insurance renewal dates (so I could offer a “premium/coverage analysis”) and in general, just make sure that everything was still right with the old policies (current beneficiary, owner information, etc.).

I also took incoming phone inquiries that came into the office and went on every service call that no one else wanted.

I was young and hungry and it was better than cold calling in the office on the phone as far as I was concerned.

One of these calls was an inquiry from an individual interested in converting their company-sponsored group term insurance. Again, most of the other guys didn’t want to go because it was not in the best part of town and it paid a reduced commission. I really didn’t 58

InsuranceNewsNet Magazine

June 2012

care — it was still an opportunity and up” list, but about six months after the last off I went. time I saw him, I got an intercom call from When I got to the home, it was very nice the front office that someone wanted to and I met the policy holder. He was about see me. When I came to the front to greet 50 years old (to me that was old since I was the person asking for me, it was an older 25 at the time) and he asked me how much lady and the first thing she said was, “Are it would cost to convert his term insur- you the Dexter that sold my son the life ance. After I went through everything he insurance policy?” She was upset and I said, “Fine, complete the paperwork.” He thought maybe she was mad at me because wasn’t married and named his mother as I sold her son the insurance. his beneficiary. I really didn’t think much We went back into my office and she of it and was a little surprised at how eas- sat down and started crying. She said, “I’m ily everything went. sorry, my son Robert died.” I was stunned.

After I had the application (very short After all, I was trained to sell and service, of course) completed, he told me the rea- and yes, even trained how to handle a son he was doing the conversion was that death claim — but this was my first one he was taking medical retirement from and I had not even been in the business his employer and that he had some heart a full year! issues. This was in early 1979 and at the She began to tell me that her son left a time the mortality experience of some- note with my card and thank you letter one that young having heart issues was and before he passed away, told his mother not very favorable. Again, to see me. She told me being young, rather new in “When the claim that he liked me, which the business, I really didn’t made me feel good, but is filed, no one think much of that comI felt so bad for her. She ment at the time. After questions if the then said, “Thank you for all, he “looked” fine to me. my son the insurlife insurance was selling I can still remember him ance policy. He left me his a good deal.” to this day and our afterhouse and this will pay it noon taking the applicaoff free and clear for me.” tion in his garage while he was working on She hugged me and asked how to begin one of his planes (he was a model airplane the claim process. hobbyist and had a great display of planes).

As I went to get the forms from the front After the policy was issued, I went back office, it hit me, right then and there: This to deliver it, and again, he “looked” fine is what we do. We don’t sell insurance — to me. He thanked me for the policy and we sell love and leaving the ones we love after going through the contract with him, better off, not worse off when the worst page by page (I told you I got great train- event in their lives happens. I am coning), he thanked me again and wished me vinced that until you process a death claim good luck in my career. and see how much difference the insurEven though it was a “reduced” commis- ance makes in the lives of the beneficiaries, sion, for me it was a good day’s pay and I you really have no idea of how much good really appreciated the business. I sent the agents truly do for the people we serve. usual “thank you” card and a note to please I had two more death claims that call me if there was ever anything else I year, both from the debit policies I was could do for him, including reviewing the responsible for servicing. Again, the homeowners or auto insurance rates he experiences reinforced the fact that what was paying. life insurance professionals do is noble I had the policy holder on my “follow and honorable work.

The National Association of Independent Life Brokerage Agencies (NAILBA) is a nonprofit trade association with over 350 member agencies in the U.S. and Canada.

Fast forward 33 years. I have had the opportunity and honor of being a BGA with my partner and helping hundreds of life insurance professionals serve hundreds of their clients. I have assisted them with many death claims over the past 24 years — I know we do good work!

I have had the great blessing and honor of passing my passion for our business on to many other producers, resulting in more insurance sold and in force than what I have done as an individual producer. (Oh, by the way, I still LOVE to be in the life insurance business, and, yes, I still get to have the honor of assisting in death claims frequently).

When the claim is filed, no one questions if the life insurance was a good deal. No one questions whether the premiums were competitive or the cheapest. No one says, “I wish he/she didn’t buy that life insurance.” Never. Remember that what you sold your client is not a piece of paper, it was the act of love and responsibility to leave the ones they love in a better place with some strong financial footing and stability.

As a NAILBA member agency, we also have a wonderful relationship with a great organization, the LIFE Foundation. (www.lifehappens.org). If you haven’t taken a look at the site, I strongly suggest you take some time to review it.

This is a great business. What we do is honorable. We help people make responsible financial decisions; to do what is sometimes not in their own “immediate” best interest. In our instant gratification, “what’s in it for me” world, we make a great social contribution when we can get a prospect to make the decision to buy life insurance to benefit the ones they love.

What other industry or business can make a similar claim?

So, the next time you get the honor of processing a death claim on one of your policy holders, do it with the pride of knowing you are making a difference and spread the word!

Dexter (Dex) Umekubo, CLU, ChFC is the Senior Managing Partner of Producers XL in Salina, Kansas, and the 2012 NAILBA Chairman of the Board.

The National Association of Independent Life Brokerage Agencies (NAILBA) is the premier insurance industry organization promoting financial security and consumer choice through the use of independent brokerage distribution. He can be reached at Dexter.Umekubo@innfeedback.com.

ADVERTISER INDEX

For more details on an advertiser, use the contact information below or visit www.InsuranceNewsNetMagazine.com/spotlight Advertiser

Website

Phone Page

3 Mark Financial

www.easypremiumfinancing.com

888-533-6257

15

American Equity

www.american-equity.com

888-647-1371

5

Aviva

www.avivausa.com/joinaviva

800-800-9882

36-37

Brokers Alliance

www.advisorshaveitall.com

800-290-7226 ext.147

1

Brookstone Capital Management

www.brookstonecm.com

866-425-3003

25

Eugene Cohen Insurance Agency, Inc.

www.cohenagency.com

800-333-4340

25, 48

Fairlane Financial

www.888fairlane.com

800-327-1460

39

Financial Independence Group

www.figmarketing.com

800-527-1155

55

Genworth

www.genworth.com/indexannuities

888-436-9678

33

Global Financial Distributors

www.globalfd.com

800-204-1182

29

Gradient Financial Group

www.gradientib.com

800-407-4137

BC

Imeriti

www.fundcollege.net

866-871-0964

3

Kansas City Life Insurance Company

www.kclife.com

800-258-4525 ext. 8120

57

Life Sales, LLC

www.lifesales.net

877-762-3824

IFC

M&O Marketing

www.upsidedownstudy.com

800-228-5964

41

NAIFA

www.naifa.org/itpays

877-866-2432

IBC

NetQuote

www.netquote.com/jun15

877-415-5153

4

Ohlson Group

www.ohlsongroup.com

877-844-0900

49

Pacific Life Insurance Company

www.defendretirementnow.com

855-584-0661

7

Petersen International Underwriters

www.piu.org

800-345-8816

45

Prudential

prudential.com/advantageul

800-292-0054

10-11

Sagicor Life Insurance Company

www.sagicorelifeusa.com/simplified

888-724-4267 opt. 2

17

Wealth Financial Group

www.realwealthbuildersystems.com

888-339-1488

47

If you love annuities, then you will love AnnuityNews.com, powered by InsuranceNewsNet. More Annuity News, Research, and Trends More Winning Sales Strategies More Original Articles from Industry Experts More Product Announcements

Subscribe today to our free weekly newsletter and receive our Media Misinformation Guide filled with tips to beat the media at their own game.

Visit annuitynews.com/subscribe to sign up today!

June 2012

InsuranceNewsNet Magazine

59

ASK THE

ADVANCED SALES DOCTOR Q:

I don’t feel comfortable with the approach strategy that I have been taught to use.

I am supposed to start by reassuring my prospect that I don’t necessarily expect them to buy anything and then tell them about my company and the way I do business. But I find that most of the people I meet with seem to be impatient listening to all that. Can you suggest a more effective opening?

Rx:

When you meet people for the first time they want to know why you are coming to see them and what your agenda is.

But first and foremost, they want to know what they are going to get out of their meeting with you.

Opening by telling about your company is intended to boost your credibility and presumably set you apart from your lesser competition. Yet all that means nothing to your prospects until they decide to buy your product or service. There is an appropriate time for boosting the buyer’s confidence by extolling the virtues of your company and I will come back to that later. But your lead-in should always be a word or two about your motivation and spelling out what your prospect may expect to gain from your meeting with them.

If you are using one of the traditional sales approaches, you are likely to spend your initial meeting, or at least a portion of it, by establishing rapport and laying the foundation for a relationship. Increasingly, today’s sophisticated consumer recognizes this as positioning for the sale by faking personal interest. They would rather have you proceed to your message than go through this transparent attempt to gain credibility. So you might as well dispense with the sucking up and establish your purpose at the outset.

I will give you two examples of possible ways for opening your meeting. If you are using the Advocacy strategy, you would always lead with protection products. This allows you to speak to your prospect’s values and beliefs and to position your reason for approaching them in a morally/ethically favorable manner. In this context, positioning means establishing your motivation for calling on the prospect. What you say here should establish how you wish to be seen by your prospect and what they understand your agenda to be.

An abbreviated version of how advocates would position themselves may sound something like this: “You may not realize this but less than 2 percent of all people will protect their children, employees or others that depend on them with insurance. Your children or other Csaba Sziklai*, PhD, has trained thousands of agents to sell more insurance and love their work. In his career as a sales psychologist, Csaba discovered the secrets behind why some agents are much more successful than others. He used that insight to create his breakthrough “Advocacy System” used by carriers and agents on becoming client advocates to sell more insurance for all the right reasons. *(Pronounced Chubba Sik-lie) 60

InsuranceNewsNet Magazine

June 2012 May 2012

dependents have no input in decisions regarding their future security so I speak on their behalf. Not because you don’t care, but because human nature is to delay those decisions until it may be too late. If nothing else, I believe you owe them and answer to the question ‘what should happen to them if you were not here to provide for them.’ ” You should phrase and time this in a way you find comfortable.

A way of shortcutting the initial posturing is to come directly to the point. After the initial pleasantries, you may begin your presentation by saying something like this: “Mr./Ms. Prospect, I know that your time is valuable. So is mine, so let me tell you off the bat what you may get from our meeting. There are some options available to you that you should at least be aware of. What these options are depend on your financial circumstances and interests. For you to find out what these are and how you may benefit from taking advantage of them, you will need to answer a few questions. Before I ask you about them, is there anything that you wanted to ask me or talk to me about as you came to this meeting?” If your prospects were to ask for examples of what options you are talking about, you should be prepared to provide them with some hypothetical situations.

Obviously, these two brief examples of openings are not full-fledged scripts of an approach language that you would use with your prospects. They are merely illustrations of the principle of coming directly to the point and/or positioning yourself as a first step in your initial meeting with your prospect.

I suggested earlier that there is an appropriate time for talking about your company and yourself. That time is when you have already established that your prospects need insurance and they can afford it, and the only that question remains is to establish why you recommend your company and services.

Regardless how you approach your prospects in your first meeting, make sure that you come to the point quickly. It communicates confidence and that you have a legitimate and important agenda.

Need a prescription for success?

Send your sales psychology questions to:

SalesDoctor@innfeedback.com

or visit www.advocacyselfstudy.com

“With NAIFA, I grew my business and became a better advisor.”

– NAIFA Member Since 1997

Find out more at www.NAIFA.org/ItPays

Gradient Insurance Brokerage Gradient Home Mortgage

Annuity

Life

Gradient Tax

Gradient Positioning Systems Gradient Securities

Gradient Investments Gradient Advisors REGISTRAR

GRADIENT

INSURANC E BROKERA GE, INC .