navigating YOUR AGENTS NEEDS BEST PRACTICES IN TODAY'S ECONOMIC CLIMATE

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1 perspectivesnovember/ DECEMBER 2009 IN THIS ISSUE: Agent Retention Two Agencies Approaches to Policy Reviews A Challenging Economy Means Getting Back to Basics A Redefining Moment Brokerage Agencies Prepare for the Future Conflict of Interests navigating YOUR AGENTS NEEDS BEST PRACTICES IN TODAY'S ECONOMIC CLIMATE

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5 perspectives BROKERAGE INDUSTRY INSIGHTS NOVEMBER/DECEMBER 2009 contents 12 Lifestyles Holiday Gifts to Indulge the Senses PAULA L. WEIS The holiday season can be anything but relaxing. From family gatherings and office parties, to trimming the tree and end-of-the-year work projects, the festivities are more often stress -tivities. Gift buying shouldn t be an additional source of anxiety. With a little creativity, your inner Santa can bring a smile to the faces of everyone on your list. Features 12 Agent Retention: A Key Challenge for BGAs in 2010 What can you do to retain the agents you have in the coming year? JAMES GREEN 22 Two Agencies Approaches to Policy Reviews DOUGLAS MISHKIN AND LUKE RAMSEY 24 A Challenging Economy Means Getting Back to Basics Tough economic times can be a great opportunity for BGAs to focus on improving some of the fundamental elements of their businesss. KATHY DEREN AND JON FORBES 30 A Redefining Moment Ten ways to redefine your agency in these challenging times By redefining their business, brokerage agencies can endure and even thrive in this tumultuous environment. AMY BELL Departments 7 Chairman s Corner GARY S. DWORKIN, CLU, RHU 9 Executive Report JACK CHIASSON, CMP, CAE 10 The View THOMAS D. CURREY, CLU, CHFC 38 Brokerage Agencies Prepare for the Future: Agents Keen on Technology Agents are clear about their wants: technology solutions that simplify the onboarding process, workflow solutions that ensure they remain compliant, and insight and control over their information. KRIS COPE 44 Conflict of Interests How to handle brokers who make bad choices Learn how to recognize and handle unscrupulous broker actions. DEXTER S. UMEKUBO, CLU, CHFC 50 SPECIAL NAILBA 28 SPEAKER ARTICLE SECTION In this special section you ll receive insight into the minds of the economic, marketing, and legal experts who will be presenting workshops at this year s event. JACK MARRION, DONALD RATAJCZAK, RON ROSENBERG, JOE SCHMIEDER 68 NAILBA University 70 NAILBA Charitable Foundation 72 Legislative Update Agency Resources 74 Underwriting The Elderly HANK GEORGE, FALU, CLU, FLMI 78 Turning Employees Into Entrepreneurs LINDA FINKLE 82 Index of Advertisers

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7 Perspectives is published for the National Association of Independent Life Brokerage Agencies Random Hills Road, Suite 110 Fairfax, VA (703) NAILBA BOARD OF DIRECTORS Gary S. Dworkin, CLU, RHU Chairman Mark D. Rosen, CLU Chair-Elect/Chief of Staff Christi M. Daughenbaugh Treasurer Dexter S. Umekubo CLU, ChFC Secretary Douglas A. Mishkin Immediate Past Chairman Michael Cohen, CLU Barbara Crowley Paul C. Doyle, Jr., LUTCF Steven J. Finkle Thomas A. Kirke, CLU Robert Lombardo Raymond S. Phillips, Jr. NAILBA EDITORIAL ADVISORY PANEL Michael Cohen, CLU David Johnston Sheri Leaders John McWilliams Jeffrey D. Mooers Lori Payne Laurie B. Prevette Michael Tessler NAILBA STAFF Christy Antil Special Projects Coordinator Jack Chiasson, CMP, CAE Executive Director Susan D. Haning, CEM, CMP Director, Business Development Michele Liston, CMP Director, Meetings and Education Meredith Maslich Administrative Coordinator Sarah O Hanley Marketing & Advertising Coordinator Pamela Pasch Director, Administration and Operations Janay Rickwalder Director, Communications and Public Affairs Naomi Romanchok, CMP Director, Foundation Events and Member Services Mark Valentini, MPP Manager, Government Affairs Editor: Janay Rickwalder jrickwalder@nailba.org Advertising: Susan D. Haning, CEM, CMP shaning@nailba.org Design and Production: Blue House Creative Director: Elinor Van Dyck elinor@bluehouse.us Designer: Alice Ashe alice@bluehouse.us chairman s corner Reflections GARY S. DWORKIN, CLU, RHU NAILBA CHAIRMAN OF THE BOARD It seems like only a short time ago that I had the pleasure of meeting with a small group of BGAs in a Holiday Inn at the airport in Kansas City to discuss the creation of a new trade association that would address the specific needs and concerns of those of us in the life brokerage community. Yes, I was there with many of you, twenty-nine years ago and the results have been absolutely terrific! The years have certainly been good for NAILBA and I have had the tremendous joy of being honored as your 2009 Chair. NAILBA is a very special organization because of the unique individuals that form its core. Those that have been successful in achieving higher levels of accomplishment understand the responsibility to commit themselves to helping NAILBA continue to develop and maintain relevance in a quickly changing world. As Churchill, once said, We make a living by what we get. We make a life by what we give. That slogan sums up the philosophy that I have attempted to follow during my career. With NAILBA, there is certainly an unprecedented opportunity for you to seize the opportunity to become involved and have an impact on OUR industry. I am very proud to have been given a very special opportunity this year, as your Chairman, to give back to those who have meant so much to me over the years. During my year as your Chair, I have enjoyed this tremendous pride in participating in NAILBA s growth in terms of membership, recognition among our peers and stature as a our involvement has earned us an increasingly dynamic role for the financial services community on Capitol Hill. The many thousands of miles that I have traveled as your ambassador have allowed me to enjoy a front row seat from which I have seen very clearly the growth and development of our organization and the miles that NAILBA has traveled in its respect as your organization. During this year, I have had the privilege to represent you at a time when every element of our economy has seen great strain and caused great concern to the consumer. I hope that you have shared the pride that I have felt in the unique way our products, services and markets have helped us meet the challenges as we are viewed as the most stable base of strength and stability for the benefit of both the families and businesses that form our economy. We all have a great deal to be proud of in the manner in which we have survived a time of greater stress than we have not experienced in more than seventy years! NAILBA has been a most important part of my life as I look back on the friendships I have made and the memories I share with many of you. The rewards and benefits that I have received by being part of your lives has been more than I can ever repay. However, through my continued involvement in your organization, I look forward to continuing to try. As I complete this year of great responsibilities and honor, I invite each of you to look forward to becoming involved in NAILBA s future. Among you are the future leaders that we will take us to a new level of recognition and responsibility as the leadership for the distribution and development of a new generation of products, benefits and services as all of us continue to make a life by what we give. NAILBA has a great deal to give us all and help us in giving others. I am honored to be one of you. As I look back on this year, all I can say is thanks for the memories! 7

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9 executive report Looking Back JACK CHIASSON, CMP, CAE NAILBA EXECUTIVE DIRECTOR Ican t believe that another year is almost over. NAILBA 28 our premiere event takes place in less than 2 weeks even though it seems like just yesterday that NAILBA 27 wrapped up in San Diego. I m going to make this a two part-column this time. The first part will be a reminder of some ways to make the most of your time at NAILBA 28; the second part will be a look back at some of the big changes at NAILBA. Those of you who are regular readers of Perspectives and of this column (thank you!) will recall that I outlined a plan for working the Exhibit Hall at the Annual Meeting (or any exhibit hall, for that matter). I won t recount that entire plan here, but I ll offer some quick suggestions: Make a plan for yourself for each day. Trying to see all of the NAILBA Exhibitors and have meaningful dialogues with that many folks won t be productive, so review the Exhibitor List before you get to Florida and decide who you MUST see. Spend the first hour or two that the hall is open just cruising the aisles to see where everyone is located, and who may have added a new feature to their exhibit that may bear further investigation. For those exhibitors that you absolutely, positively must see, consider making an appointment BEFORE you leave your office. This can minimize any waiting around, and maximize the time you have to check out something new. I d also highly recommend a careful review of the NAILBA 28 educational program. The Professional Development Committee has really stepped up the offerings this year, and there is sure be something for everyone, regardless of your position in your agency. For example, NAILBA 28 s Opening General Session is a can t miss session. You will leave with a new way of looking at how you work, and may find that something that you have always done a certain way may be better accomplished by looking at it in a new way. The word networking regularly appears in this column, and this edition will be no different. I would encourage you to take full advantage of the many networking opportunities that NAILBA 28 will offer. Whether it s the Opening Reception, the Mooers Award Dinner, or just the time in the halls between workshops, don t pass up the opportunity to introduce yourself to someone new, Start a conversation about how your agency works, and you might just find out that someone has a similar challenge; better still, you may just find a solution to your challenge. We re all in this together, and though there may be a bit of friendly competition between member agencies, remember that a rising tide lifts all boats, and think about sharing those solutions and ideas that may be good for the whole industry. We ll all benefit from that kind of cooperation. And finally on the topic of NAILBA 28, don t forget to have some fun! Now for the look back While 2009 has been challenging (to say the least!), it has also been a pretty good year for NAILBA saw some significant changes at NAILBA changes that YOU wanted, and changes that have made your NAILBA membership even more valuable. Let me offer you a quick overview of just a few of those changes: NAILBA s FOCUS Meeting was re-purposed and split into two separate events The Executive Forum (for member agency principals, committee chairs and leadership), and the Agency Management Institute (for agency staff). Both of these programs were introduced in the first half of 2009, and both show great promise for future growth of our educational offerings. You our members asked for high-level, quality education, so we hope that you are taking advantage of these opportunities. Watch for information on both programs while you are at NAILBA 28 we have some amazing things in the works Our Government Affairs efforts have been significantly stepped up. You told us that you needed us to be even more involved in the legislative and regulatory arena in order to better assist with the protection of your business (in particular) and of the industry (in general). To that end, we have increased the size of our Government Affairs staff, we ve improved our visibility on Capitol Hill, and we ve broadened the scope of issues that we monitor in order to keep up with the rapidly changing list of issues that affect you nationally. These efforts continue to evolve, and we continue to ask for your assistance. We ve significantly modified the agenda for the Annual Meeting for the first time in nearly 20 years. In order to provide the best value, and the best return on your investment of time and money, we shifted some of the components around, shortened some, and expanded some others. You told us that you needed to get more bang for your buck, so we ve done just that. Let us know how you think we re doing! I ll close by encouraging you to talk to us to the Board of Directors or to NAILBA s incredible professional staff and tell us what s on your mind, good or bad (we really like to hear about the good stuff!) As always, please feel free to stop me in the hall at NAILBA 28, or call me at your convenience I d love to hear from you! See you in Hollywood! 9

10 the view Facing the Storm Together THOMAS D. CURREY, CLU, CHFC, NAIFA PRESIDENT Storm chasers and forecasters have finally gotten it right, and the Perfect Storm our industry has been bracing for is upon us. The skies have darkened. And these storms have the real potential to wreak havoc and threaten the entire industry like never before. Right now, lawmakers are considering legislative and regulatory initiatives that are threats to agents business and our industry. Political involvement and action is vital to survival for everyone, and we must all stand shoulder-to-shoulder and face the challenge. As in previous economic downturns, consumers today seek safety in the products we use to construct firm financial foundations. A key strength of the life insurance industry s products derives from the favorable tax benefits and incentives Congress grants the users of those products. To protect the industry, we simply must guard the unique tax benefits of life insurance, annuities, disability income insurance, long-term care insurance and retirement plans. But hard times mean budget woes for Congress and state governments. Budget challenges and the push to expand health-insurance coverage this year present fundamental threats to the tax treatment of life insurance. 10 perspectives NOVEMBER/DECEMBER 2009

11 Examples of challenges that have arisen so far this year: Health-care coverage expansion: In May, the Obama administration proposed four lifeinsurance-related tax law changes that raise $12.5 billion over 10 years earmarked to help pay for the universal health insurance they are proposing. General budget reduction: With huge federal budget deficits looming, one way to raise new revenue is to scale back or eliminate current tax benefits. Life insurance and annuity cash values will produce $150 billion in tax benefits for families over the next five years. Other life insurance products receive similar treatment and make tempting targets from which to generate new tax revenue. General tax reform: A panel appointed by President Obama will report its recommendations for overhauling the federal tax system December 4, Every tax benefit afforded life insurance products will be up for review. State governments: Most state budgets are just as challenged for revenue as federal budgets. You d have to have been out to lunch all year to not know about the controversy that is raging over how health care is delivered and paid for in America. For our industry to survive, ensuring that choice, quality, competition and professional service are included in comprehensive health-care reform legislation becomes job #1. Why should we all continue opposing a government-run plan? Because a strong private health-insurance system is best equipped to provide options for families and businesses. A government-run plan that eliminates the role of professional agents has been falsely defined as one that would lower administrative costs. But administrative costs are not reduced simply by switching administrators; and a government-run plan will not be less expensive unless services are reduced. Moreover, the hands-on experience of agents indicates that most consumers benefit from access to professional assistance. Licensed, fairly compensated insurance agents offer them a cost-effective means of getting assistance when selecting insurance coverage. While opposing a new government-run option, it is important to support the goal of universal access to health care for all Americans and express our commitment to making healthcare coverage more affordable. The most controversial issue is funding. Of greatest concern is whether the tax advantages of employer-provided health insurance will be limited in order to fund reform. The industry must remain vigilant in protecting both healthinsurance advisors and the clients they serve. The impact of the current market crisis is that Congress is now considering how to restructure regulation affecting not only life insurance, but all financial-services. While there is little consensus on a comprehensive plan, there is general agreement in Washington that a new systemic risk regulator should be created to identify and address any significant threats to the economy, including the activities of insurers. Agents and brokers should continue working with Congress to ensure that any efforts to create a systemic risk regulator should not result in a new federal layer of regulation on top of current state regulations. Insurance agents and independent brokers have always been in the people power business. Now is the time for all in the industry, and even consumers, to inform their representatives of their concerns and hopes for healthcare reform (and tax reform and insurance regulatory reform, for that matter). Don t let them underestimate the power of a few. We like to say that members of the insurance industry are voters, tax payers and job creators and they live, work, and vote in every Congressional district in this country. If you haven t developed a relationship with your congresspersons or senators, it s never too late to join your colleagues in fighting for the right to stay in business. Thomas D. Currey, CLU, ChFC, LUTCF is president of NAIFA. He owns TDC Financial Services in Grand Prairie, TX and is a Producing General Agent for Ohio National Financial Services. Tom is a 30 year member of NAIFA. NEW RATES & NEW POLICY FORM 11

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13 Agent Retention: A Key Challenge for BGAs in 2010 BY JAMES GREEN It will hardly come as a shock that this was a tough year to be an independent life agent. In the four years since NAILBA and Agent Media have been jointly conducting the Independent Brokerage Study, 1 this past year marks the lowest level in general producer optimism. Further, three out of five agents who completed this year s survey said their commissions either decreased or stayed the same this year relative to what they earned last year. One agent from Texas says that he has had to work significantly harder just to maintain the same level of commission earnings as last year. Although he has successfully added new business this year, he has had to contend with business headaches caused by insurance companies pulling out of markets, raising premiums, or reducing benefits. Another agent who specializes in working with mid-size businesses complained that he has lost several accounts due to companies scaling back their group and voluntary benefits in response to the recessionary economy. David Nagelberg of Executive Life Associates has been encouraging his life agents to be proactive by using policy review as a means to stay in front of their clients in order to weather the current economic climate. Those agents who traditionally rely upon referrals and leads are not having such good years, and those who have been in the business for less than seven years are really struggling, says Nagelberg. 1 In August 2009, Agent Media, in partnership with NAILBA, surveyed more than 1,000 life and health licensed agents across the country. The names were randomly selected from Agent Media s Target Agent Lists, a proprietary database of 1.2 million licensed agents. Unless otherwise stated, the facts in this article are based upon the results of this year s study. 13

14 AGENT RETENTION: A KEY CHALLENGE FOR BGAS IN 2010 The fact is, when your agents are struggling, they re more likely to seek new opportunities in an attempt to turn their business around. However, Nagelberg, like many of the BGAs I spoke to, has noticed somewhat of an uptick in business over the past 60 days and is generally optimistic about Matthew Rettick, of Covenant Reliant Producers, notes that those agents who have successfully kept their clients money safe and sound are likely to be seen as heroes. But if their clients lost their job and can t afford long term care or life payments and had to cancel policies, that could be a problem, says Rettick. Nagelberg notes that nothing seems to be helping his agents who specialize in group sales. Within the last two days, I have had one group health agent tell me his business is down 80 percent and another reported that business is off by more than half of where he was last year, says Nagelberg. Five reasons your customers do business through you The fact is, when your agents are struggling, they re more likely to seek new opportunities in an attempt to turn their business around. Oftentimes, new opportunities can include working with one of your competitors. In fact, according to the 2009 Independent Brokerage Study, 75 percent of agents will contact a new BGA at least once in the next year to inquire about their 14 perspectives NOVEMBER/DECEMBER 2009

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16 AGENT RETENTION: A KEY CHALLENGE FOR BGAS IN Tools That (Actually) Add Value When it comes to agent support, Gary Dworkin of Dworkin Associates, stresses that it is essential to push the envelope for the benefit of the producer. Still, novelty doesn t always translate to quality. Here are a few tools that have inspired praise from some BGAs. Souped-up illustration software BGAs are reporting positive feedback from the field on illustration software that packages state-specific forms accessible within the illustration at click of a button. Such software allows agents the convenience of having all of the forms they need at the point of sale as soon as the client makes a purchase decision. Online multi-media presentations Using a combination of audio and visual components, this communication tool allows BGAs to upload a presentation onto the web and then create a link that can be easily ed to their field force. BGAs are using this tool as a means of putting multi-media product or sales training sessions together that agents can view online at their convenience. Products that address clients unique needs OK, so there s nothing novel about consumer-friendly products, but there are products out there that BGAs are recommending to help their agents meet the needs of cash-strapped clients. One example is income replacement term, which is more affordable because it substitutes installments made over a period of years in place of an immediate death benefit. Some BGAs have added individual dental to their offerings and are training agents on how to use it as a door-opener for prospects who may have lost their employer coverage. Online application process Although the technology has been around in other markets for awhile, an online insurance application process is relatively new for the life industry. It can be much less cumbersome than paper applications. Plus, it streamlines processing time and reduces the amount of application errors. e-newsletters Many BGAs use regular electronic newsletters as a way to communicate with their field forces. Cindy Gentry, of Brown & Brown Associates, publishes a regular electronic newsletter that offers carrier and product updates, and another that gives sales ideas and concepts to her agents. She ll often follow up the sales concept newsletter with a webcast that allows her to go into a little more detail on a particular sales concept. product and service offerings. What can you do to retain the agents you have in the coming year? The first thing is to understand why agents do business with you now, and then build on that strength. When asked what the top services their current brokerage agency provides them, agents have been fairly consistent in their reasons for working with a BGA: Access to multiple product lines. One of the fundamental reasons independent agents broker their business through a BGA is that the BGA becomes a single touch point through which an agent is able to access multiple companies. Gary Dworkin, of Dworkin Associates, emphasizes this as the basic value proposition that BGAs offer their agents. Any BGA with experience and expertise will monitor their portfolio of companies on an ongoing basis, says Dworkin. Although Dworkin acknowledges the importance of maintaining a stable portfolio of companies for agents, he says that his company will not represent the same company today only for the comfort of policyholder experience. Dworkin says that if a BGA determines to change up their offerings, the best thing they can do is to make sure they communicate the reasons behind the change to their field force in order to smooth the transition. Live telephone support. When agents have a question they need answered or a problem they need addressed, they want to be able to pick up the phone and speak to a live human being at your company. This is still a relationship business, and most agents don t want to have to surf the web when they need information or wait for an reply when they need an answer quickly. Dworkin emphasizes that the core values he built his business around when it was founded in 1976 have not changed all that much. The fact is, one of the most unique things we can offer agents in the 21st century is the personal touch, says Dworkin. We still feel very strongly in one-on-one relationships, and it is those relationships that we ve formed over the years that have made us successful. Online administrative tools. Whereas at one time, Internet access to forms, licensing, case status, and commission information may have been seen as a luxury, it s now viewed as a necessary way of doing business for most agents. Nancy Skelton, of KAFL Insurance Resources, says that her company has invested a great deal of resources in making sure their agents have access to the latest technology, particularly when it comes to the application and licensing processes. When asked whether the industry s collective move toward online business processes is posing a challenge to older agents, none of the BGAs I spoke to perceived this to 16 perspectives NOVEMBER/DECEMBER 2009

17 be a problem because of how userfriendly the technology has become. It s far easier than trying to input data into a Blackberry or download files onto an ipod, says Rettick. Sales and product training. Training is an area where BGAs can give themselves a competitive advantage. Although agents cite the need for quality training, only 22 percent of agents listed their BGA as the most valuable source of training. In addition to concept training in areas such as premium financing and employee stock ownership plans (ESOP), Dorothy Conway says that her company, The Conway Group, also offers one-one-one training on field underwriting in an effort to improve her agents closing ratios. The fact is, one of the most unique things we can offer agents in the 21st century is the personal touch. Gary Dworkin One of the most important steps in the sale of a contract to a client is to quote a class that clients can reasonably expect to attain as the application goes through underwriting, says Conway. Rettick notes that one thing that has worked well for his firm s training programs is that they are led by real-life producers and cover all areas of the sales process. We train on how to handle objections, properly review policies, make a recommendation, discuss services, advertise, integrate specialties into a practice, and more, he says. Rettick s brokerage also offers training in areas that can fall outside of some agents comfort zone, such as IRAs, Roth con- 17

18 AGENT RETENTION: A KEY CHALLENGE FOR BGAS IN 2010 Although agents cite the need for quality training, only 22 percent of agents list their BGA as the most valuable source of training. versions, tax planning, and money management. Underwriting assistance. One of the most important services that agents expect from their BGA is assistance getting a case through the underwriting process. Many agents are happy to close the sale and then hand the case off to their BGA to get the case issued. Conway points out the importance of her staff s familiarity with each company s products, underwriting philosophies, guidelines, and rules pertaining to certain risks so that they can transfer that knowledge and experience in order to make agents comfortable with doing business with her brokerage. In order to ease the underwriting burden from her agents, Skelton s brokerage maintains an inhouse underwriter as well as a dedicated staff member who specializes in impaired risk cases. Three reasons why agents will drop you like a bad habit According to the Independent Brokerage Survey, less than half of re- Web conferencing what works what doesn t? By Doug Harmelink, CLU, ChFC Web conferencing and collaboration tools have been used by the BGA community for nearly ten years and many agencies will tell you these products have become an important part of their business and are regularly used to communicate with brokers and agents. Simply stated, Web conferencing is a solution that brings people together from multiple locations to share information in an interactive environment with other users over the Internet. There are four companies that dominate most of the conferencing space: Microsoft (LiveMeeting), Citrix (GoToMeeting and GoToWebinar), Cisco- WebEx (Meeting Center) and Adobe (Connect Pro). There is a lot of similarity in the functionality between all of the platforms and there are a few common applications with respect to how they are used. The two most frequent ways BGAs use one of these products are for presentations and support. Let s take a look at what works and what doesn t. Most presentations have less than 20 participants and subsequently are easier to schedule and manage than large web seminars. In fact, once an anticipated audience reaches more than 150 to 200 participants there is an argument for using streaming delivery and for having staff resources available to support the session. Some of the aforementioned products have the capacity to accommodate larger groups, but as the numbers go up, so does the need for support So, what works? Here are some key best practices that you may want to consider when you plan your next Web conference. Devote significant time in advance of the event to send out s to the intended participants about the event along with clear instructions on how to join the meeting. Provide adequate preparation time for the presenters. There may be a carrier subject matter expert that is involved in the meeting and it is critical that all of the speakers discuss the mechanics of the live meeting beforehand. A dry run can be very helpful. Offer technical support. The more participants, the greater the chance that some people may not be able to join the meeting. This can happen for a variety of reasons. Network settings, connection speed, end user error all can contribute to a bad start if there are no safeguards in place to minimize this potential problem. The benefits of web conferencing are far-reaching and can have a significantly positive impact on your agency by helping you place crucial information at the fingertips of your agents. Doug Harmelink is the CEO of AdvancedMeetings. 18 perspectives NOVEMBER/DECEMBER 2009

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20 sponding agents find the support they receive from their BGA to be very useful and only two out of every five of the agents consider themselves to be loyal to their primary BGA. The harsh reality is that even if you do a stellar job of providing the aforementioned services, there are some pitfalls to be aware of that can cause an agent to stop writing business through your brokerage. First, agents are likely to walk if you no longer work with the carriers their clients need. When making any changes to the portfolio of companies you make available to agents, be very deliberate and communicate any changes to agents in a way that clearly explains your reasons behind those changes. Second, agents are likely to leave your company if they experience customer service challenges when working with you or your staff. Communication and follow-through are two keys for keeping your agents satisfied with your brokerage. A third pitfall that is likely to result in agent attrition is if your agents perceive better financial opportunities with your competitors. This one is a more difficult area to address because you can t stop your competitors from promoting themselves to your agents. And although you can t control your agents perceptions about the advantages of working with you versus your competitors, you can heavily influence them by focusing on customer service and constantly reinforcing the value proposition of working with your company. And for many BGA s that will be a critical component of their success in 2010 building off of your strengths and avoiding the pitfalls that could damage your relationship with your agents. Although the economic downturn has posed some serious challenges to agents and has forced many BGAs to tighten their belts, it is also a time of opportunity for BGAs equipped to help agents deal with those challenges. James Green is Group Editor-in- Chief of Summit Business Media s Life/Health Network of magazines, which includes Agent s Sales Journal, Benefits Selling, Life Insurance Selling, National Underwriter, and Senior Market Advisor. He can be reached at jegreen@sbmedia.com. 20 perspectives NOVEMBER/DECEMBER 2009

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22 Two Agencies Approaches to Policy Reviews BY DOUGLAS MISHKIN AND LUKE RAMSEY The success of the financial and real estate markets coupled with loose credit markets has caused many consumers to lose sight of their goals and take on more risk that they were actually willing. The recession now has caused many consumers to be more critical of the advice that they get from their financial advisors. With many people losing well in excess of 30 percent of their savings, many Americans are becoming more financially conservative. Now, more than ever, good solid planning advice is needed. Based on a recent study by the National Association of Insurance Commissioners, over 60 percent of people that own life insurance have no idea what they own and how it works. In addition 29 percent said that they need more insurance but no one has asked them about it. In addition, there have been several changes in the market and the industry that directly impact your customers life insurance. They include: Changes in interest rates Changes in mortality costs or costs of insurance Changes in the stock market Changes in policy design Changes in tax law These facts point to a tremendous opportunity for those advisors that get back to basics and provide a well organized policy review process. The policy review is the foundation of good solid insurance planning. Many BGAs and carriers have recognized this opportunity and are marketing such programs. Following are tactics that two BGAs are taking to boost their business through policy review programs. Agents need someone to hold their hands Algren Associates, Inc. has made the policy review process a cornerstone of our service offerings to producers. New BGAs seem to be popping up daily, many of whom try to compete solely based on compensation and offer very little to help the advisor s practice. It is more important than ever to differentiate what we offer producers from what they can get from other agencies. Over the last 5-10 years, we have found that many agents have forgotten how to provide good sound advice. Some agents became order takers and made their practice on selling, and replacing, low cost term while others have hung their hats on premium financing. Premium rates on term are now going up, making it more difficult to replace recently sold term policies. Tightening of the credit markets coupled with life insurance underwriting changes in response to the IOLI problem has caused a tremendous shrinking in the ability to write premium financed cases. Agents need to rebuild their practices and we find that offering a well structured policy review program is the answer. Upon designing the program, we analyzed what was being offered by other BGAs, marketing groups, and carriers. We took what we felt were the best components of numerous offerings and designed our own simple policy review program to market to our producers. Our program provides the following: Policy summary Review of the policy s structure, ownership, beneficiaries, payment methods and performance Re-evaluation of the underwriting class Assessment of possible rate class improvements Possible alternatives to the existing policy or policies It s nice to have an organized, agency branded policy review program, but the key is getting producers to use it. Our experience shows that most agents tend not to have a regular procedure for following up with existing clients. They review existing policies when a client calls, sometimes when an annual statement comes in, or when business is slow and they have time to peruse their existing client list. Agents have forgotten one of the basic principle of insurance sales, the annual review. If they get back into this habit, their practices will soar. One way we hold our producers hands is by meeting with them one-on-one and go over our program step by step. We then challenge them to provide in-force ledgers and prior files on 10 cases that we had not previously seen for which we can generate policy review reports. At the end of the meeting, we try and schedule a follow up appointment to review the cases that they will be identifying. We ve found that this process forces the agent to go back and look at his/her current clients, many of whom they ve never even gone back to with a formal review. Once they see the tremendous amount of business that can be generated through the policy review program, we help them develop a process to regularly offer reviews to all existing clients. Relationships can make a policy review program successful The ASA Group has had success marketing their policy review program through new relationships and renewed relationships from the past. Those of you that currently have a review program in place 22 perspectives NOVEMBER/DECEMBER 2009

23 are familiar with how effective it can be in helping the owners understand what they own. We have found that producers that understand the program use it as the cornerstone of their practice and as the key recruiting tool to acquire new clients. A simple review can confirm that the fundamentals of the contract were properly structured at time of issue, along with projections on values, length of insurance, loans, potential tax liability, etc. Now that you have it how do you use it? Past relationships Most BGAs will have a huge number of in-force contracts they have helped write over the years. Those BGAs have the ability to gather the information and assemble a review kit for an agent. A face-to-face thorough review of an actual case will usually lead to other cases the producer has written through your competitors. The review demonstrates to the agent the amount of business that he can gain within his existing block of business. We have found this to be an excellent way to re-establish relationships with producers that we have lost contact with over the years. New relationships The ASA Group has focused on providing the review program to the people that need it the most the trustee of a life insurance trust. Your producers will find this is an excellent way to have access to a tremendous number of policies from one source and help them resolve their due diligence issues at the same time. When a trustee assumes his role, he also takes on responsibility that is typically not understood. Helping the trustee navigate these responsibilities will make your producer a resource the trustee will reply on in the future. The Uniform Prudent Investors Act can be found easily online and spells out exactly what actions are required from a trustee. A review of the carrier s financial strength alone no longer serves as enough to satisfy the fiduciary responsibility. The trustee should perform an annual detailed analysis that will compare the performance of an existing product against any other products that could be offered to provide the maximum benefit to the trust. This service will start a relationship with a trust office and your producer that will be priceless. The big picture Most review programs are focused on only reviewing the single contract that was brought to you for review. It is important to realize that the entire insurance portfolio works together and a macro view is necessary before any changes are suggested. This is not only the easiest thing to ask for (could produce new opportunity), but also can help your clients get the most out of the review program. By helping producers offer life insurance reviews to their clients, BGAs provide a value added service to them that will help them solidify existing client relationships, create new sales, and get more referrals. Doug Algren is the President of Algren Associates, Inc., in New York City. He is a past NAILBA Chairman. Luke Ramsey is the Senior Marketing Director for the ASA Group in Little Rock, Arkansas. By helping producers offer life insurance reviews to their clients, BGAs provide a value added service to them that will help them solidify existing client relationships, create new sales, and get more referrals. 23

24 A CHALLENGING ECONOMY MEANS GETTING BACK BY KATHY DEREN AND JON FORBES 24 perspectives NOVEMBER/DECEMBER 2009

25 TO BASICS During the past year, the financial services industry has faced unprecedented turmoil that has affected customers, advisors and BGAs. Tough economic times can be a great opportunity for BGAs to get back to basics and focus on improving some of the fundamental elements of their business, such as enhancing the service and support they offer clients. 25

26 A CHALLENGING ECONOMY MEANS GETTING BACK TO BASICS Your carrier s accessibility or lack thereof has a direct impact on the level of service you re able to provide clients. For this strategy to work, it s critical for a BGA to partner with a carrier that understands their unique needs and can help them provide clients with an exceptional customer experience. Below are some questions you should ask yourself to determine if your carrier is as committed to customer service as you are. Are they responsive? Has this ever happened to you? It s a Friday afternoon before a holiday, your client is going out of town for the weekend and you need an approval on a formal application right away. No one at the carrier is answering the phone and the underwriters or their managers seem to have already checked out for the day. Your carrier s accessibility or lack thereof has a direct impact on the level of service you re able to provide clients. Ideally, your carrier should be able to accommodate rush requests such as the example above to ensure that your business can run smoothly. How simple is their medical interview process? Ordering medical records can be a costly and time consuming process for BGAs. If your carrier needs more medical information for a specific case, they should contact you to coordinate a phone call with the producer and client to help speed the process. These client direct interviews in lieu of medical records for certain impairments allow the carrier to quickly get the additional information they need without slowing you down. Do they help you turn business around quickly? The financial services industry has always moved at a fast pace, but the economic turmoil has made it more important than ever for BGAs to work with carriers that can get things done quickly. Some of the steps that carriers can take include: Offering personalized follow up from the case manager. Providing 24- to 48-hour review by a case manager or underwriter on new applications. Reviewing underwriting requirements as they come in and not waiting for the entire package. When was the last time they exceeded your expectations? A premier carrier will not be satisfied with simply doing the minimum amount of work necessary to keep you as a client. They should be on a constant search for new ways to improve their own processes to make it easier for you to do business with them. Some of the signs that your carrier is going the extra mile include: They are willing to take the time to review important or complicated cases with you on the phone or in person. They publish their service level agreements (SLAs) to ensure you re up to speed on the processes they adhere to. They think proactively and offer to help with case design from the start. Are they accountable? If you called your carrier to report a mistake, would they work quickly to resolve the issue or try to place blame somewhere else? Just like with people, you can learn a 26 perspectives NOVEMBER/DECEMBER 2009

27 lot about a company s character by observing how they resolve a problem. By taking responsibility and taking action to make things right, your carrier can demonstrate that they truly have your best interest in mind. Do they take ownership of the customer experience? While it s important for carriers to provide you with an exceptional customer experience themselves, they should go the extra mile to ensure that any vendors they work with offer you the same level of service. This can involve: Holding paramed companies accountable for their customer service. Setting service level agreements and keeping to them. Do they understand your unique needs? Premier carriers know that each BGA is different and take the time to get to know your business so that they can offer customized solutions. Segmentation allows carriers to divide BGAs into specific categories and design products and processes to solve the challenges that each group faces. Some carriers take things a step further and develop customized solutions for BGAs that serve niche markets, such as foreign nationals, celebrities and top-line sports athletes in major cities. Are they committed to faster underwriting? Underwriting is a key step in the process and it s important that your carrier is committed to making things as simple as possible. This means putting together an underwriting team that understands the BGA business and streamlining processes to make your job easier. Your carrier should: Have synergy between the underwriting and sales teams. Have an underwriting team that is dedicated to serving the BGA market. Underwrite individuals not impairments and see the whole picture. Be there when you call or return your call within 24 hours or, if possible, the same business day. Keep you informed with pending case updates. Accept medicals from other carriers to help speed things up. Keep preferred underwriting guidelines and requirements competitive and less intrusive. Maintain strong reinsurance relationships for jumbo or challenging cases. Conclusion In today s business climate, it s essential for BGAs and carriers to have more than a business relationship, but rather a true partnership in which each equally benefits from the other. If BGAs and carriers work together to provide an exceptional customer experience today, the payoff when the economy improves will be customers who are even more loyal because you looked out for them when times were tough. Kathy Deren is director of brokerage life underwriting and Jon Forbes is divisional vice president for Nationwide Financial Services, Inc. Both Kathy and Jon serve the brokerage general agency market. Kathy can be reached at derenk@ nationwide.com; Jon can be reached at forbesj@nationwide.com 27

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30 MOMENT 30 perspectives NOVEMBER/DECEMBER 2009

31 Ten ways to redefi ne your agency in these challenging times Businesses across the nation are struggling to survive these tough times and insurance BGAs are certainly not immune. As fi nancial giants fall, unemployment skyrockets and the U.S. faces the worst recession in a generation, the life insurance industry is feeling the heat. In the end, some BGAs are bound to get burned. However, by redefi ning their business, brokerage agencies can endure and even thrive in this tumultuous environment. BY AMY BELL 31

32 A REDEFINING MOMENT I think to redefine ourselves we need to go back to the basics of learning that we re in the people business, and we need to learn how to speak to people again and communicate. Alyse N. Blumberg We re suffering through some really rough economic times, says Alyse N. Blumberg, President of Blumberg Financial Services, LLC in Lower Gwynedd, Pennsylvania. I think that everyone including myself has to redefine themselves right now. Gary S. Dworkin, President of DAI (Dworkin Associates, Inc.) in Rochester, New Hampshire, reflects that sentiment. The biggest challenge in these challenging times is to find the most efficient way of reorienting your portfolio of companies and products to best satisfy and serve the needs of your producers, he says. Here are ten ways you can recalibrate your business and put your agency back on track to success: #1: Get back to basics According to Blumberg, BGAs need to get back to basics if they want to survive this brutal recession. Getting back to basics is understanding that people matter, she explains. Blumberg emphasizes that face to face interaction is key right now which means BGAs and their producers should stop relying on as their primary mode of communication. Whether it s those of us in distribution or our producers who are dealing with the clients, [we have to realize that] technology is a tool, she says. It makes things more efficient, but it does not replace human contact. I think to redefine ourselves we need to go back to the basics of learning that we re in the people business, and we need to learn how to speak to people again and communicate. Another way to get back to your roots? Avoid insurance gimmicks like the plague. Gimmicks ruin the best source of lifetime protection that we have in the world, and that s insurance, says Blumberg. #2: Put on your listening ears Listen! It s something we often tell our children, but it s a lesson some BGAs have yet to learn. I think the most important thing is something we should have learned early on, which is listen to your client, says Dworkin. Your client is the agent you ve got to listen to him. You can t sell him what he doesn t want or need; you have to sell him what his clients tell him they need. #3: Educate your producers The great American writer and educator Mark van Doren once said, The art of teaching is the art of assisting discovery. Many BGAs are realizing that well-educated producers are much more likely to discover success in these trying times. We re trying to add more valueadded services for our producers, says Douglas A. Mishkin, President and CEO of Algren Associates, Inc. in New York, New York. I think a lot of agencies for a long time have just relied on product and underwriting and service. We re trying to deal with more good quality quick-hit sales ideas, more educational opportunities for producers. It seems like there s not a lot of good opportunities in the marketplace to get a good education, so we re trying to do that. [NAILBA s professional development] committee has designed a lot of tools that can be used in a brokerage agency to enhance their ability to train people, says Blumberg. For example, there s the BGA training series that enables you to get somebody up to speed and speak the language of the industry, which is like learning a foreign language. There s a communication series that was de- 32 perspectives NOVEMBER/DECEMBER 2009