Thursday, July 2, 2009

Chris Conklin's Insights are Popular on ProducersWeb.com

Chris Conklin, Principal and Actuary at Insurance Insight Group, is a regularly featured columnist on ProducersWeb.com where his life and annuity insights receive a lot of attention. One of his recent articles "Where three types of annuities fit in a client's portfolio" spent several weeks on the top of the "Most Popular" articles list and still sits high on the "Editor's Top Picks" list.

When you click on one of the links above, you can also sign up as a fan of Chris Conklin. When you register as a fan you receive notifications when he has a new article posted. His articles are targeted at providing insights to enable agents, carriers and marketing organizations to succeed.

Wednesday, July 1, 2009

Perfect Annuity Prospecting: Seven Times with the Same Method

Michael Poirot, marketing director at Game Plan Financial Marketing, talks with numerous annuity producers daily to help them determine what prospecting methods might work best for them. He indicates that he has seen financial advisors have success with newspaper advertising, direct mail, seminars and radio shows.

He says it is always important to advertise a hot topic. Right now, financial consumer concerns are related to the economy’s instability and the collapse of the stock and real estate markets. Any advertising that talks about safety, guaranteed returns and attractive places to put money in today’s tough environment will have appeal.

Poirot also says the seven-time rule is key. “If you can’t afford to repeat your message to your target audience seven times, you need to find another prospecting method.”

For more, read Hit the Jackpot with the Power of Seven or Why Seven Times?

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Wednesday, April 22, 2009

Perfect Annuity Prospecting: Why Seven Times?

Many financial advisors try a prospecting method once or twice, determine that the results did not meet expectations and stop using it. That seems to make good business sense. After all, why would you want to spend good money after bad? But insurance marketing experts say repetition is key, even if the initial results seem disheartening.

Brian D. Mann is the Executive Vice President and Chief Marketing Officer at Partners Advantage Insurance Services and a multimillion-dollar producer. He finds that repeat mailings usually yield good results for his organization and for his personal practice.

“You have to stay in front of your annuity prospects in order to build credibility and to position yourself as having the expertise they need,” Mann says. “When a need arises or when something finally captures their attention, they will call you. You have to be committed and consistent in your marketing practices.”

If you think about it, driving just a few miles on a major commercial street presents you with hundreds of commercial messages from the businesses you pass. Plus, reading a magazine, listening to the radio, watching television and surfing the Web present you with hundreds more every day. The reality is that you are constantly bombarded with such commercial messages, so you are accustomed to mentally blocking out most of them.

That is why repetition is so important. Each time your message is repeated to the customer, whether it is in the same form or a slightly different form, it moves your target audience a little closer to responding to you, because they see a reason to become more familiar with you.

For more, read our first blog post: Hit the Jackpot with the Power of Seven. Our next post will discuss prospecting Seven Times with the Same Method.

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Monday, April 20, 2009

Perfect Annuity Prospecting: Hit the Jackpot with the Power of Seven

Many a financial advisor has tried a wide variety of annuity prospecting methods without success. Open any industry publication and you will see advertisements touting the benefits of using direct mail, holding seminars, running newspaper advertisements or creating a Web site. Recently, more elaborate business strategies such as starting an income tax preparation service have become popular.

But many exasperated insurance professionals exclaim, “I’ve tried a bunch of those things, and none of them work!” And even many annuity marketing organizations seem to struggle to find an annuity lead generation system that works reliably for their agents.

So, what is the answer? Why do some agents have incredible success with annuity prospecting while others have none? Are all these vendors that claim to have effective annuity lead generation methods lying to us?

The answer, according to industry marketing experts, is that they all have the potential to work well.

For a prospecting method to work for you, it needs to fit your strengths and be properly executed. For example, there is no point holding annuity seminars if you are not a dynamic public speaker or you have difficulty befriending people quickly. It is fruitless running newspaper advertisements if you are often unavailable to answer the phone when clients respond. You will be frustrated by direct mail if your mailer is not compelling or your mailing list is not up-to-date and properly segmented.

But what if you feel you have been doing everything right yet still see poor results? Successful insurance marketing relies on several factors being aligned, including targeting the right market, having the right message and getting your audience’s attention. But if you ask industry marketing experts, many of them will tell you that a lack of repetition is a common reason why otherwise well-planned annuity prospecting campaigns fail.

Too many insurance professionals simply give up on a prospecting method too soon. They disobey one of the most basic rules of marketing: Your target audience needs to see your message three to seven times before they will take any action to respond. Our next four blog posts will explain this further.

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Thursday, March 26, 2009

President Obama’s auto-enrollment retirement savings plan

President Obama recently proposed that employers without retirement plans should be required to establish an automatic retirement savings account (similar to an IRA) for all of their workers. The accounts would be funded by payroll deduction from workers’ paychecks.

Insurance Insight Group thinks this proposal makes a lot of sense. Workers have traditionally had a number of incentives available to them to encourage saving for retirement, such as the tax-deferral available in IRA’s and the employer-match available in many 401(k) plans. But it seems that the best way to encourage workers to save for retirement is the simplicity and automatic savings associated with payroll deduction. If it weren’t for payroll deduction, can you imagine how hard it would be for the average American family to pay their Social Security, Medicare, and income taxes?

President Obama’s proposal will also create opportunities for insurance agents. Up to now, insurance professionals have approached employers without retirement plans, trying to get these employers to offer 401(k) plans, SEP-IRA plans, or a variety of other plans to their employees. The insurance agents have been at a disadvantage because no such retirement plans are mandated by government, and also each of these plans costs the employer money both in plan contributions and administrative expenses. Under Obama’s proposal, employers without retirement plans would be forced to take action, and there is the additional incentive that these retirement savings accounts would be funded solely with employee contributions. So, the employer’s expense is limited to administrative expenses. To the extent that insurance professionals can offer these employers efficient solutions to this new mandate, they have an opportunity to earn ongoing commissions as these accounts are funded by employee payroll deductions.

For more on this, Insurance Insight Group's Principal and Actuary, Chris Conklin, answers a series of questions on this in an Q&A format posted on the ProducersWeb.com Editor's Blog.

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Wednesday, March 25, 2009

Unusual industry conditions create challenges, avenues for growth

2009 is shaping up to be one of the most unusual years in the fixed annuity industry, ever. In most years, insurance companies welcome increases in sales of their insurance products. In fact, insurance companies employ and incent sales personnel and independent insurance agencies in order to increase sales. But a combination of unprecedented financial constraints and soaring sales volume has forced many carriers to take unusual actions to limit incoming sales volume.

It is not unusual to see insurance companies cut compensation or interest rates. But so far this year, we have seen some of these carriers eliminate popular products, terminate productive agent forces, eliminate the contracting of new agents, or even stop all new sales altogether. Why is this?

One constraint is the soaring popularity of fixed annuity products, particularly multi-year guaranteed annuities. Some carriers have seen monthly sales volumes in excess of their typical yearly annuity sales volume. The desire of financial consumers and retirees to find a safe place to put their money while still realizing a respectable return has led them to beat a path to fixed annuities.

At the same time, declining interest rates, high bond defaults, high stock market volatility, and the lack of availability of new capital has severely constrained the ability of these insurance companies to profitably write new business.

To respond, insurance professionals are going to need to be more flexible than usual, moving their new business volume from carrier to carrier as the availability of products dries up. These insurance agents are also going to need to work harder to service their business. Some insurance carriers are so swamped with service business that they cannot effectively process rollover business. Thus, insurance agents would be wise to work with their clients to obtain rollover checks rather than relying on carriers to do the work.

Savvy financial advisors will be able to take advantage of these conditions to grow their businesses dramatically. There never has been a better time to advertise fixed annuities to potential clients and the general public as now.

Wednesday, March 4, 2009

151A Lurking Danger to Consumers

Many concerns are circling the outcome of Rule 151A. But perhaps the most dangerous aspect of it all is that it will scare producers away from addressing retirement risks and offering index annuities to retirees and pre-retirees at a time when they are desperately needed.

The Key Role of Insurance Agents in Society
“Insurance is sold, not bought” is a well-known industry saying. Sometimes missed is the underlying meaning of this saying: that insurance agents play a key role in prodding American families to take the key steps necessary to secure their financial futures.

It is no different with retirement security. With the decreasing prevalence of company-provided defined benefit pension plans, individuals and families retiring in the future must rely more on their own savings. Unfortunately, study after study has shown that consumers are not saving enough for their retirement, nor are they making wise choices for how to save or invest their money.

As a result, it is crucially important to our society for insurance agents to be collectively pursuing families and reminding them to take the necessary steps to increase their financial security. One of the most powerful financial tools in an insurance agent’s arsenal is to help accomplish this mission is an index annuity. An index annuity provides a financially safe place for retirees to put their money, and it provides growth that is tax-deferred, that is linked to increases in a market index, and that is protected from decreases in the market index.

If insurance agents shy away from offering index annuities because of Rule 151A, our society will be left more vulnerable because consumers will not have insurance agents urging them as diligently to help make sure their financial futures are bright.

Still, various anti-annuity groups have perpetuated a false belief that insurance agents offering index annuities are predators, especially when their sales practices include free dinner seminars.

Rule 151A has created a toxic atmosphere for insurance agents who wish to offer free dinner seminars to reach out to potential consumers. Again, financial consumers who would otherwise have been helped by the services offered by insurance agents, are hurt by the Rule.

The Way Forward
“The only thing we have to fear is fear itself,” as said by President Roosevelt during his 1933 inaugural address, and he was referring to how the public should respond to the economic conditions of the Great Depression. The same is true for an insurance producer today regarding Rule 151A. Rule 151A has created uncertainty and financial fear even as the insurance industry is attacking Rule 151A in court leaving a possibility that Rule 151A will go away.

But, in the meantime, consumers still need insurance agents working diligently to help them realize their financial needs. Let’s not allow the fear and uncertainty created by rule 151A to distract us from our mission, because that would be a tragedy.

For more on this see the Chris Conklin’s article in Senior Market Advisor.

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Thursday, February 12, 2009

The Unfortunate Demise of the Free Dinner Seminar

Various groups have perpetuated a false belief that insurance agents offering index annuities are predators, especially when their sales practices include free dinner seminars.

On June 25, 2008, the SEC proposed Rule 151A, saying that the growth of index annuity sales “has, unfortunately, been accompanied by growth in complaints of abusive sales practices.” At the SEC meeting where the rule was proposed, the Commission played a segment of a Dateline NBC news segment alleging rampant abuses by annuity salespeople, such as in free dinner seminars. Now, even the AARP has launched a program against free dinner seminars, starting a program where people are encouraged to become volunteer “Free Lunch Monitors” and share stories of abusive sales practices with regulators and each other.

The fact, however, is that relative to the number of retirees helped by index annuities (and reached through free dinner seminars) there are not a lot of complaints. The SEC admitted as much in its final release of Rule 151A on January 8, 2009. It responded to assertions by the annuity industry that there is no evidence of widespread annuity sales abuse by answering that “the presence or absence of sales practice abuses is irrelevant in determining whether an annuity contract is entitled to the exemption from federal securities regulation.”

So, one of the most dangerous aspects of Rule 151A is that it has created a toxic atmosphere for insurance agents who wish to offer free dinner seminars to reach out to potential consumers. The demise of the free dinner seminar, a demise which is based on false rumors and false beliefs, will hurt consumers who would otherwise have been helped by the services offered by insurance agents.

Share your thoughts by clicking on the “Add Comment” link below.

Tuesday, February 10, 2009

Having Customers versus Clients for Life

We all know that selling an annuity or life insurance product should be based entirely on a client’s needs, not the insurance agent’s available product portfolio or desire for commission. Yet, so many insurance agents paint themselves into a corner by focusing on a limited product portfolio or insurance product type.

How many more clients could they help by broadening what they have to offer?

There is an array of insurance products that meet many needs for many people and many situations. Still, we encounter many agents that focus on one product type. The product they offer could be fixed index annuities, fixed annuities, or indexed universal life insurance to name a few. Why does this happen?

Most of the time we can say this narrow focus is due to a lack of product training made available to the agent, or even a dismal understanding of the benefits of cross-selling. As insurance marketers we should take the time to develop programs for our agent base to help them grow their business by expanding their horizons. Why? Because if their business grows so will yours.

As an example, in the presentation “Surviving a 151A World” Insurance Insight Group created with Insurance News Net we highlight how index universal life insurance can create a tax-free cash flow in retirement. The death benefit is key to providing that benefit. Now, if neither the death benefit nor the tax-free cash flow in retirement is desired, the indexed universal life product is probably unsuitable.

Keep in mind that the use of life insurance as a cash accumulation vehicle is not new. Even prior to the somewhat recent introduction of index universal life insurance, traditional fixed universal life insurance has always been used in sales where tax-advantaged growth and use of the cash value is an important objective. In fact, to limit sales of universal life insurance where there seemed to be little regard for the death benefit at all, Congress added section 7702 to the Internal Revenue Code back in 1984.

Here’s the point. A client always has more than one need. Help them meet one need and they are a customer but if you help them meet more than one, then they could be a client for life. What about you? Do you have customers or clients for life?

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Thursday, February 5, 2009

Failed Financial Beliefs and Time Tested Truths: Post 4

This is the fourth and last post in a series that reviews retirement planning beliefs that have been shattered by a failing economy. Check out Post 1, Post 2 or Post 3 in the series, What to Do When the Financial Experts Don’t Know Anything, which discusses financial risk and guarantees.

Failed Belief No. 4: Buying a home is always a good idea.
The belief that it is always a good idea to buy a home led millions of American families to buy homes using whatever mortgage they could afford. Now, in the face of a recession and dropping real estate values, these families are at best, stuck in their homes due to having less equity than the market value, and at worst facing foreclosure. No matter how you look at it, their decision to buy a more expensive home than they could really afford was a big financial mistake.

Time-Tested Truth No. 4: Control the risks that you can control.
Financial advisors can really help a client by performing a risk audit. Take a look at the risks your client faces, help him to examine those risks, and help him to purchase affordable insurance to mitigate those risks. Every family should have homeowners, automobile, health, and life insurance. Many families should also have disability, personal umbrella liability, and long term care insurance. Too many families are inadequately protected.

This ends our four post series on failed beliefs of the experts and time tested truths are coming back in fashion. It’s a risky world. Financial professionals who value guarantees and insurance products can help their clients live comfortably. That puts everyone on solid ground.

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Thursday, January 29, 2009

Failed Financial Beliefs and Time Tested Truths: Post 3

This is the third of a four post series that reviews retirement planning beliefs that have been shattered by a failing economy and then revisits a time-tested financial planning truth we can expect to be championed again.

Failed Belief No. 3: Invest regularly in your 401(k), and it will take care of your retirement.
This is another unquestioned idea. Over the couple decades financial advisors have come to believe that if we invest regularly in our 401(k) and maintain a well-balanced retirement portfolio with choices of mostly stock mutual funds, we will certainly achieve a financially comfortable retirement. But the stock market losses of the past year have scuttled a lot of retirement plans.

Even worse, a report from Boston College’s retirement research center examined scenarios where workers had done everything right: Contributed 6 percent of pay to a retirement plan for 40 years, invested in a target date fund, and never touched their retirement savings until it was time to retire, the portion of their pre-retirement income that these savers could replace in retirement still varied dramatically depending on when they retired. Those retiring in 1948 could replace 19 percent, 1999 retirees could replace 51 percent, and 2008 retirees could replace 28 percent. Notice that none of these percentages is anywhere near replacing 100 percent of their pre-retirement income.

Time-Tested Truth No. 3: Make paying off debt and building your savings a priority.
Make eliminating your debt and building your savings a central goal of your monetary life. For example, encourage any client who has a debt other than a mortgage to set a goal to have it all paid off within a year. If your client makes that a priority, chances are he can do it. If your client has a mortgage, he should set a goal to have it paid off within 10 years.

Once your client is totally debt free, he should set a goal to add a particular dollar amount to his retirement savings every year. Whatever the financial goal is, if it is a high enough priority for him, he is very likely to achieve it. After he meets the first financial goal, you will have instilled in him a very good habit, so it will get easier.

Check out Post 1 and Post 2 in the series, What to Do When the Financial Experts Don’t Know Anything, which discusses financial risk and guarantees.

Our next post will put buying a home and controlling risk in perspective when considering financial security.

Share your thoughts by clicking on the “Add Comment” link below.

Thursday, January 22, 2009

Failed Financial Beliefs and Time Tested Truths: Post 2

This is the second of a four post series that reviews retirement planning beliefs that have been shattered by a failing economy. Each point will also revisit a time-tested financial planning truth we can expect to be championed again.

Failed Belief No. 2: Smart money management can achieve consistently excellent returns.
The grand financial institution, Bernard L. Madoff Investment Securities LLC, rose to prominence because it was able to consistently deliver above-average returns to its customers, no matter what the economic environment. Its founder and CEO was a very respected figure on Wall Street. Over the last several months we’ve learned that it was all a Ponzi scheme that lost perhaps $50 billion of investor funds.

And note this: The Madoff firm had 147 employees and 54 registered representatives. Didn’t any of them know that the firm’s financial statements were a complete fraud?

Time-Tested Truth No. 2: Always spend less than you make.
Investing regularly in your 401(k) is good retirement planning, but it is even better to consistently put money away year after year not only in your 401(k), but also in your general savings or retirement products. No matter how big an income you produce, if you outspend it, you will retire a pauper. How many times have we seen a once-famous athlete or entertainer filing bankruptcy?

Following this financial truth may mean you drive an older, less impressive car than your neighbor. It may mean that you eat out less. It may mean you live in a more modest home than your co-workers. But it will certainly increase your financial security and ability to retire comfortably.

Check out Post 1 in the series, What to Do When the Financial Experts Don’t Know Anything, which discusses financial risk and guarantees.

Our next post will focus on the retirement planning ideas we hold about our 401k savings and paying off debt.

Share your thoughts by clicking on the “Add Comment” link below.

Wednesday, January 21, 2009

Video: Six Rule 151A Courses of Action for Insurance Marketing Organizations

Insurance Insight Group sees six courses of action independent insurance marketing organizations can take concerning Rule 151A. We put together a presentation with Insurance News Net to explain specific tactics that can be effective in such a changing time as this.

The most important thing to keep in mind regarding Rule 151A is that change is inevitable. But, whenever there are major changes in any marketplace, there are opportunities for insurance marketing organizations to embrace the changes, respond aggressively, and grow their businesses.

We hope the presentation, Surviving a 151A World: A Six Part Action for Insurance Marketing Organizations, offers extra insight.

Share your thoughts by clicking on the “Add Comment” link below.

Tuesday, January 20, 2009

Rule 151A – Go Away!

On Friday, the SEC’s new Rule 151A was published in the Federal Register. This is the rule that will make index annuities subject to securities legislation effective January 2011.

A coalition of insurance companies and independent marketing organizations, the Coalition for Indexed Products, promptly filed suit, seeking to overturn Rule 151A in federal court. Insurance Insight Group hopes the lawsuit is successful and the court strikes down Rule 151A.

Index annuity products provide much stronger guarantees of principal than securities products. At a time when investors in securities have lost trillions of dollars of their wealth, index annuity policyholders have lost nothing.

The SEC’s initial rationale for proposing Rule 151A was that there was, in the SEC’s view, rampant abuse in the sale of index annuities. It is hard to give this assertion any credibility when you consider that gaping regulatory failures in the securities markets are plainly evident to the general public. It seems to us that the SEC has misallocated its resources, attacking a class of insurance products that pose no risk all the while ignoring other areas with rampant abuses.

Index annuities are popular with retirees and people planning for retirement because they provide safety of principal with the possibility of higher interest crediting over time than traditional fixed interest rate savings vehicles. There is little doubt that Rule 151A would dramatically decrease the number of insurance agents selling index annuities, limiting the availability of these popular retirement products to consumers building a retirement strategy.

In September, then presidential candidate John McCain said that SEC Chairman Christopher Cox had “betrayed the public’s trust,” and “If I were president today, I would fire him.” While Mr. Cox’s term of office has ended, we hope that the federal court “fires” Mr. Cox’s misguided Rule 151A. It would be in the public’s best interest for Rule 151A to go away.

Share your thoughts by clicking on the “Add Comment” link below.

Friday, January 16, 2009

What To Do When the Financial Experts Don’t Know Anything

It seems that almost all the financial ideologies we have relied upon in recent years have turned out to be houses of cards.

It’s time to start picking up the financial mess that has been strewn across both Wall Street and Main Street. What is a consumer to do to ensure that their retirement savings will be their when they need them? Who and what retirement products can be relied upon? And, what assertions can a responsible financial advisor make to a consumer and know that he is truly standing on firm ground?

Over the next four posts, I’m going to talk about the retirement planning beliefs that have been shattered by a failing economy. With each point, I will also revisit a time-tested financial planning truth we can expect to be championed again. You know – those that were too conservative – too stodgy. Not surprisingly they are suddenly seen as wise advice again.

Failed Belief No. 1: Risk can be controlled.
No. 1 Merrill Lynch sold itself in hardship to Bank of America, and No. 4 Lehman Brothers and No. 6 Bear Stearns failed and went out of business. If these firms, each employing tens of thousands of the best financial minds in the business, could not control their risk enough to stay in business, how can the average future retiree expect to do so? And why should any retiree rely upon similar firms, their strategies, or their advice?

Time-Tested Truth No. 1: Nothing is a guarantee unless it is a guarantee.
When risk cannot be reliably controlled, and when wise management cannot achieve consistently excellent returns, guarantees matter. The good news is that whether you are offering annuities (index annuities, multi-year guaranteed annuities, etc.), cash value life insurance, or any other type of insurance product, there usually is an excellent selection of products that provide long-term guarantees and that are offered by solid, strong insurance companies. During the financial boom times, current and future retirees sometimes lose their focus on guarantees. But today, consumers and financial advisors can easily see the value of strong, long-term guarantees.

Share your thoughts by clicking on the “Add Comment” link below.

Our next post will focus on whether smart money management can achieve consistently excellent returns.