My "Bersonal" View

Advisors will have to consider what licenses they hold and what licenses they may want to get under the DOL fiduciary rule.

Source: The $65 Million Question: What License is Needed to Sell under DOL Rule?

A gem of a guest article- supplied by American National- author unknown.

What is the best way to make a point or get a message across to a reader? Well, using a past experience to tell a story and use that to convey your message is one of the best ways to drive home an idea to ponder. Humor is also a great way to deliver your message even if you are using someone else as the subject of your story, in this case my brother.

 Stick with me for a bit here because there is a point to my childhood story. My brother and I had a great childhood back in the late 60’s and early 70’s. No television or video games especially no cell phones. We had to make our own fun. Our childhood home was located at the end of a long street with a very long driveway. We had a game or contest if you will where each one of us would ride our bicycle from the end of the street as fast as we could and down the driveway and slam the brakes to see who could stop the closest to the garage door without hitting it. We thought it was pretty much the same thing as landing a jet fighter on an aircraft carrier without going over the end of the ship. By the way, who needed a helmet? We were daredevils. One afternoon, I was really on my game and had posted some pretty good results. I was consistently beating my older brother skid after skid closer and closer to a pending emergency room visit. In those days bicycles had a foot brake that allowed you to jam the pedal backwards for an incredible skid with black tread marks screeching down the pavement. My brother grew angry that I was simply dominating him run after run.

 Here is where it gets really good. Recently my oldest brother had his bicycle converted to hand brakes. My brother decided to go get the oldest brother’s bike and use it because it was much faster than anything we had. So, there he is, at the end of the street fixed with determination to win and a machine well equipped to do the job. As he made the slight turn from the street to the driveway, I could see the joy in his face that he knew I was done. He pushed the outside of the envelope to its extreme and was past the critical point of hitting the brakes. Then it happened, time to execute emergency braking procedures. He violently stomped his foot backwards , forgetting this was now a hand brake machine, and only got the spin and clicking you get with a hand brake bike. In a moment of sheer terror that seemed to last a lifetime, the horrid look on his face when he realized his absolute error in forgetting the hand brake has stuck in my mind forever. The crash was indeed impressive. By the time I gathered myself from uncontrollable laughter, he was just coming too, the bike was halfway through the garage door and the front wheel was missing. Wow, I thought, you win.

 So what does this have to do with insurance? Well not much. What it does do is point out the importance of knowing all the small details of your instruments, tools, products. When you reach a critical pinnacle with your clients as in claim time, retirement, benefit rider acceleration, you do not want that look of sheer terror my brother had in his face when he realized no foot brakes. Clients are expecting you to be the expert. You need to know every detail of the products or you may wind up stuck in the garage door missing a front wheel.

AIG is making availalble to our producers-

Signatures for September is Life Insurance Month- Feel free to add these to your emails to make your clients aware of Life Insurance Month

Outlook Users	Gmail Users
In the Outlook ribbon, choose File → Options. In Outlook Options choose Mail and then select Signatures. Select a Signature to edit. Add the image by selecting the Image ( ) button. Choose the Image and click Insert. Highlight the Image, then select the Link ( ) button. Paste in this link: (http://LIAM.ins-vip.com/go/dywgbtipc) Click OK twice.	Log into Gmail and select Settings ( ). Choose Signature. Under Signature, select the Image ( ) button. Choose Upload then drag and drop the image in. Highlight the Image and select the Link ( ) button. Next to Link: select Change then add in this link: (http://LIAM.ins-vip.com/go/dywgbtipc) Go to bottom of page and select Save Changes.

For Life Insurance Awareness Month this September, we are pleased to provide our valued distribution partners with email signature tags! Reinforce the message that Life Insurance is less expensive than most Americans think1 while providing a fast, convenient place for recipients to click for more information by dropping these tags into your email signatures.

It amazes me how many years go by before the average client gets an annual review.  Sometimes, it’s many years, and that’s not good for anyone. Policy Analysis and Review (PAR) is perhaps the #1 tool that top advisors use to provide a valuable resource for their clients.

While you may think that clients don’t want to see you for a full review every year, you may be wrong.  They at least need the option to say no. And, with the ISN PAR program, a review can be done easily over the phone after emailing the client a detailed insurance portfolio review. This can be looked at together over any geographical distance and within almost anyone’s limited schedules. They want to know that you are on the job and available to help, so make that effort.

This is a big part of building loyalty and trust.  It is also a big part of making financial planning practical; every plan needs adjustment regardless of the talent of the planner.  The only way to make those adjustments practical and valuable is to do a review regularly and according to life needs. Coverage could go up – but it could also need to go down. Both options will improve your persistency and build rapport.

To keep this short, there are three necessary goals in an annual review:

1. First, you must review the changes in the life of your client and the people around them.  What has happened that might make a plan change necessary?  To make sure you don’t miss any of these questions, check the Annual Review Questionnaire available from ISN.
2. Second, advise the client of the changes that have happened in the industry in the past year that may cause them to make some changes to their plan.  That might mean that interest rates have changed which require adjustments to UL assumptions, or pricing reductions which make early term renewal more valuable than waiting. Most important is the fact that mortality tables have changed. People are living longer and this means costs are coming down.
3. Finally, review their existing insurance portfolio.  Discover if there are any benefits they are missing.  Are their options they are not exercising?  What about LTC riders? What about child riders? Term switch options? Early term renewal or conversion? Underfunding of UL? Dividend option switches? Remember, products evolve over time – and in our industry the changes can be dramatic.

To be most effective, make this meeting more formal.  Inject importance to their ongoing plan and use an agenda to stay on track.  It’s that last key to making your clients’ financial plans more practical. You can also use our handy “STAMP TOOL” to make it a part of your process.

When you make financial planning practical you have become essential to your clients.  You are relevant to their ongoing lives and become someone they need.  This is a potent combination for them and for you. Plus, relevance in their lives produces referability, which drives your business.  It’s time to make financial planning practical.

As a member and shareholder of Insurance Designers of America, I have the privilege of working with and networking with some of the best minds in the business. Ron Sussman is one of  my partners in IDA. He has his pulse on the growing concern that many of us have- the concern over the raising of COI’s within the UL contract. Here is his latest update after Lincoln Financial announced that they too are raising COI’s on an old block of business.

THE HITS JUST KEEP COMING  by Ron Sussman

Once again a major insurance carrier, this time Lincoln Financial, has announced an increase in monthly deductions for the cost of mortality on an older block of business. The affected policies were issued by Jefferson Pilot Life between the years 1999 and 2007 and include policies with secondary guarantees (a first, I think). COI rates for these policies will be increasing by 100%! This rate increase, not the first for Lincoln, will affect an additional 25,000 policyholders and 5,000 agents.

The impact on policyholders with non-guaranteed universal life policies will be a large increase in the premiums necessary to maintain coverage. The impact to those who purchased secondary guarantee products will be a large decrease in their cash value.

A common theme among the carriers that have, so far, announced these COI increases is that the insureds most affected are 70 and over, and most will be unable to replace their coverage due to age, medical conditions, and the cost of suitable replacement policies. If Lincoln’s clients react similarly to Transamerica, Voya and Banner, expect to see a large number of lapses and very unhappy (and litigious) clients.

Lincoln’s stated reason for the COI increase is the prevailing low interest rate environment which is wreaking havoc on insurer portfolios. The actual, and possibly intended, consequence of these COI increases will be a high percentage of lapsed policies, which will surely benefit the carrier. One cannot help but wonder if these rate increases were really designed to cull a significant portion of insureds from the portfolios of the carriers. There is no question that a policy that lapses or is surrendered with diminished value is the insurers best path towards renewed profitability. Unfortunately for the insureds and their families, they will lose everything they saved for over the last 17 or so years.

With no indication that interest rates will rise in the near term, there is a high probability that this COI cancer will spread to many more carriers. As an agent whose income is predicated on people purchasing life insurance you should be concerned. This is a clear and present danger to your practice.

While the carriers may be operating within their rights as dictated by the contract(s), the decision to crank up COI rates by 100% or more seems like an arrogant and irresponsible decision by those in charge. This public show of disregard for policy owners will likely rebound on the industry in ways that we cannot yet fathom.

But what I can say for sure is that there is a growing sense of alarm among the buying public that insurance companies cannot be trusted. As these grievances begin to surface in the media and through class action litigation a very disturbing picture begins to form. And that picture is one of an industry with little regard for its clients or its future.

Yes, it’s important for insurance companies to remain solvent and make profits. I don’t think any of us would want to see more consolidation or bankruptcies.

On the other hand, when you dig into the financials of the companies that are announcing these increases it becomes readily apparent that this is not about survival at all. In most, if not all cases, these rate increases are being instituted to boost the return on investment on these older blocks of business. Of the carriers that have already instituted COI increases, two in particular (that we know of) have participated in complex captive reinsurance transactions that freed up significant capital that was then up-streamed as dividends to their European corporate parents.

We are talking about many BILLIONS of dollars that could have been used to stabilize the carrier financials and prevent them from having to raise mortality rates. Since it is hard to make the argument that mortality is the actual culprit, these carriers are claiming that they need this extra money to fund “expected shortfalls in the future”. Conveniently this is just a legal ruse, as the law allows carriers to raise COI’s in anticipation of future losses, but not to recover past losses.

It’s hard not to come away with the feeling that this isn’t about actual losses, but rather about return on investment. Returns on these blocks of business are overwhelmingly positive, but not anywhere near the corporate parent’s target returns of low double digits. So this is really about keeping up the stock price and pleasing executives with loads of stock options. Meanwhile, we as agents can expect our business to be truly disappointing in the near term as this scandal widens and becomes more public.

At this point, I think it’s incumbent upon us as agents to seriously consider our place in this storm. With the information we have it should be readily apparent that we’ve been lied to for decades by corporations that put profit and share price above all else. Can we trust that IUL, the new darling of the insurance world, won’t eventually become the next COI or options trade debacle? Now that we know carriers have no problem throwing clients under the bus at the absolutely worst possible time, can we continue to recommend products that may realistically be headed for the same fate?

Those of you who have latched on to IUL and current assumption UL because of their ability to illustrate low premiums beware, there is a lesson to be learned here. With few exceptions, carriers, most of whom are stock companies, cannot be trusted to put our client’s interests ahead of their shareholders. And while there are few indications that agents are being sued over the rosy illustrations their clients relied on, it isn’t rational to believe that this will be the case in the future. Angry clients that pay significant sums for coverage that gets yanked out from under them at the least opportune time are looking for someone to blame. Are we in some way culpable? Unfortunately, yes.

You see, a 100% increase in the monthly deduction for COI does not mean that the future cost of coverage will increase by 100%. The vast majority of policyholders will see cost increases as much as 600% because the cost of continuing their policies is dictated by how the policy was funded from the start, including any riders such as Return of Premium that may have been added at inception and may be critical to the client’s planning.

The most common reaction to hearing about the cost to maintain coverage at wildly inflated rates is disgust. Disgust with the industry, with agents, and regulators.

We continue to receive many calls from aggrieved policyholders who tell us that they will no longer recommend life insurance to their friends and family. I don’t blame them. Life insurance, an intangible investment in future liquidity, has always had its doubters. Whether it’s an aversion to dealing with the inevitability of death, or a cold calculation of return on investment, potential clients routinely eschew insurance because of its unknown “trust me” components. Now those clients can see first-hand they were right. When we lose our clients trust, our industry, and by that I mean life insurance sold by agents, is in danger of extinction.

Discussions with executives at several carriers indicate that they know this will cause a huge problem, but they believe it will be short lived and that the public will forget about it eventually. I don’t think so.

Interest rates are unlikely to rise fast enough to satisfy the carrier’s shareholders and I believe there will be more of these announcements in the very near future. Every block of business is being examined to find the “pony in the manure”. Wherever possible, industry executives are attempting to extricate themselves from underperforming assets, clients be damned.

It’s an interesting series of events for an industry whose sales have been relatively flat for decades. Are we witnessing the beginning of the end of life insurance as we know it? Will any of us ever trust another sales VP again? Maybe, and definitely not.

When I posted this 6 months ago I heard from so many reps in a positive way. Some challenged me to a tennis game, some decided to take up swimming- but many just liked the ideas about how to create better habits. Here is a repost for “Throwback Thursday.” Enjoy

I started swimming laps for exercise in my 20’s when I met a man named Lou Stein. At the time, Lou was in his 60’s and was one of the top rated 60+ tennis players in the United States. Lou was about 5’4″ inches tall and weighed in at a rousing 120 pounds. He was lean and strong. Fit as anyone I knew. His tennis game was built around fitness. He returned everything, and back then, with the smaller rackets and the clay courts, he was almost unbeatable. I used to hit with him once a week and he ran me ragged.

As we got to know each other better I asked him what he did to stay so fit. He said one word- swimming. At the time I knew how to swim but the idea of swimming laps was not one I ever would have considered. I was a big runner, bike rider and had just started jumping rope as exercise. But Lou convinced me that swimming as an exercise was the best and it was something I could do for the rest of my life. Looking at how his fitness level was crushing me on the tennis court every week I decided he may have a point – so I started swimming.

My first time in the pool was a nightmare. I could barely make three laps- so I rested a bit and swam three more. Rested and swam. It was grueling but I did 40 minutes of that. My arms were sore- my legs were weak and I felt completely rejuvenated by the experience. Each time out I got a bit better until now I can swim for an hour without any rest. This new “habit” has stayed with me for 30 years. It got me to thinking what an impact this has had on me and my health, but also on my work.

We have the power to change our habits- to reinvent ourselves as business people and as leaders. I did some research on this idea and talked to some experts who agreed with me. Better habits can change how we work- how we live and how we are perceived. Here are some ideas that I found- try one or two and see how it changes your practice.

1. Readjust your typical morning routine– If you are jumping out of bed, heading to the shower and racing out the door- then you are stifling your potential creativity. Set your alarm a few minutes earlier so you can take some quality time each morning to plan your day.
2. Introduce yourself to three new people every day– Don’t stress if you’re shy- it is easy to introduce yourself and start a conversation if you keep the conversation about them. Ask questions about them and their work- it works believe me.
3. Write down your goals– Enough said. Without goals we are lost so do this now.
4. Take a walk– According to a 2014 Stanford study- if you’re feeling stuck or you need inspiration, pounding the pavement for just 10-15 minutes will help increase your creativity by almost 60%. (I believe swimming works the same way!)
5. “Power Pose”- Yes. Pose. A Harvard business study in 2010 recommended that we all adopt a “power pose” for 2 minutes every day. It sounds different but according to the study, if we stand straight, shoulders back and fists on your waist for just two minutes a day- you will feel more confident as you face the challenges of the day. Try it and let me know how it works for you.

Better habits will up your game, but they take time to establish. Take the time. Start today.

The best reps learn how to relate to people in diverse settings. From boardrooms to the kitchen table, they engage others well and listen attentively, I polled some of our best communicators looking for tips on ways to improve and enliven our small talk. Most of them felt that it was a skill that you can develop and improve over time. Here are some of their best ideas, in no particular order.

• Prepare to mingle – Before you go to a public setting you need to think first about your small talk. Create a mental check list so you can fall back on ideas when you need to. One advisor uses the acronym F.O.R.D (family, occupation, recreation and dreams) to help him remember the safest subjects to ask about in almost any conversation. All of the reps also added this; stay away from politics and religion.
• Stay tuned to current events – The more you read the smarter you get. The more information and ideas you can comment on and be a part of the better. Don’t just read industry magazines. Read the newspaper. Read books.Watch a movie once in a while.
• Share with anecdotes – Stories, especially personal experiences, tend to stick with people. If you’re trying to teach someone about a concept, tell a story about how you learned about it. Keep it short and simple. Remember, lecturing people rarely engages them.
• Silence can be your friend – When asked a question, sometimes it is ok to pause, reflect, especially if you want to give a thoughtful answer. If you are searching for the right words you can do that with silence. People will listen more closely if you wait an extra few seconds to begin speaking.