NAIFA Blog

Survey: Women's Interest in Financial Planning Has Grown

Women make more financial planning and savings decisions than ever before, with some 90 percent of women aged 25-75 in a recent Allianz survey saying they need to be more involved in financial matters than in the past.

Nearly two-thirds of the women surveyed said they want to learn more about investing, financial planning and retirement planning, up from about one-third in the original Allianz survey in 2006.

In spite of this, women are not necessarily looking to financial professionals for help. Only 38 percent of the women surveyed said they have used a financial professional.

“The Allianz survey shows that women are an under-served market,” said Rob Smith, president of the National Association of Insurance and Financial Advisors. “The products and services NAIFA members provide help guarantee the financial security of 75 million American families, and now more than ever women are making long-term financial decisions on behalf of their families. It is crucial for insurance and financial advisors to develop messages and communication styles that appeal to women.”

The Allianz survey shows that women who do work with financial professionals find value in the guidance they receive. Seventy-seven percent of this group said they feel confident and prepared financially for the future, while 75 percent have recommended a financial professional to other women.

The women surveyed by Allianz were more interested in saving for retirement or ensuring a guaranteed income for life than in receiving stock market advice.

“NAIFA members pride themselves on providing high-quality services and products to the middle-market,” Smith continued. “We help people reach long-term financial goals, such as ensuring their comfortable retirements or the financial well-being of their families. It’s really not surprising that as women are more involved in financial and retirement planning these are the goals they find most important.”

Dire Projections for Retiring Americans Highlight Need for Insurance and Financial Products and Services

A recent Washington Post article offers a grim assessment of future U.S. retirees' financial prospects. Drawing on a variety of economic data and reports, the article contends, “For the first time since the New Deal, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents…”

Some points from the article:

• The recent economic downturn destroyed 40 percent of Americans’ personal wealth
• Americans’ retirement savings are approximately $6.6 trillion below where they should be (that’s about $57,000 per household)
• 53 percent of employed Americans 30 and older will not be financially prepared to maintain their standard of living in retirement if they continue on their current paths, according to the Center for Retirement Research. This is up from 38 percent in 2001 and 30 percent in 1989.
• Americans from age 55 to 64 have a median retirement account balance of $120,000, which would fund an annuity paying only $575 per month in retirement
• Medicare premiums are likely to increase from 12.2 percent to 14.9 percent by 2030

What the Post Article Didn't Say

These figures demonstrate the importance of ensuring that financial planning services and products remain available and affordable for middle-market Americans. They highlight the role insurance and financial advisors can play in helping their clients secure their financial futures.  

At a time when personal retirement saving is falling well short of the mark, lawmakers face increasing pressure to reduce benefits paid by government programs like Social Security and Medicare. Life insurance, annuities and employer-sponsored retirement programs will have to fill the void for many Americans.

It is not a time for Congress to make these insurance and retirement products, which 75 million American families look to for financial security, less attractive or beneficial. Changing the tax status of life insurance or retirement savings products would do much more harm than good. It would damage the very products that often help keep Americans self-sufficient in their later years while reducing their reliance on government programs.

LIMRA: Americans Flunk a Basic Life Insurance Quiz

A recent LIMRA survey found that 70 percent of American consumers cannot pass a basic, 10-question quiz about life insurance. In fact, 55 percent of 4,000 people LIMRA quizzed answered more than half of the questions wrong.

Less than one percent answered all 10 questions correctly.

Separate research shows that an important reason given by consumers for not owning life insurance is that they do not understand the products. This fact, along with the LIMRA survey results, shows that educating clients is a vital task for agents.

According to the survey:

• 82 percent of consumers wrongly believe life insurance companies collect medical information primarily to document pre-existing conditions that can be used to avoid paying claims.
• 75 percent mistakenly think policies are canceled and policyholders lose their benefits if an insurance company files for bankruptcy.
• Only 31 percent know that beneficiaries do not pay taxes on life insurance death benefits.

Take the quiz yourself on the LIMRA website.

 

If You Don't Trust Health Insurance Agents, Read This (Or Keep Making Bad Decisions)

The following is an excerpt from a great blog post by NAIFA member Joey Giangola:

"I may be naive, growing up in an insurance family, there was never any questions about insurance or who you would go talk to if you needed help. 15 minutes at “the office,” as my family cleverly calls it, and you would be able to get questions answers about your auto, home, life or health insurance policy.

"I know that is not the case for most families and that finding a trusted source to handle their insurance needs is a big concern/problem. I also know that, like every profession, there are good and bad options.

"However, I was stunned, shocked and a little appalled at what I’m about to tell you."

Read the rest on the Giangola Insurance blog.

In the Wake of Sandy, Agents Make a Difference

Superstorm Sandy, which made landfall on the coast of New Jersey October 29, resulted in 131 fatalities and up to $22 billion in insured losses in the United States. Many NAIFA members, along with their families, friends, neighbors and clients, felt and continue to feel the impact of the storm.

Across the region, people looked to their insurance agents for guidance and assistance. Stories by two NAIFA members illustrate the important role agents played in helping their clients along the road to recovery from Sandy’s devastation.

 

By John McGovern, a NAIFA member from Middletown, New Jersey

Needless to say, it was a very challenging time.

Communication was the biggest problem. We had no power in the office, and everyone on my staff had no power in their homes for almost two weeks.

Fortunately, I was able to call in for messages. In the 72 hours immediately after the storm hit, I received more than 250 messages from clients needing assistance. Part of the problem was that everyone calling into voice mail was calling from a cell phone. Many of the messages were not complete. I was missing many names, and the phone numbers many people left were missing digits.

When I learned that my sister had her power restored in North Jersey, I spent several days at her home where I could charge my phone and access my database of client contact information.

I literally was on the phone from 8:30 am to 11 pm for several days. After I returned calls for all the messages I could decipher, I randomly called every client who lived in the zip codes of impacted areas. Many of these people lost everything and had no contact information for their insurance policies.

It gave me some peace of mind to make sure everyone who needed help was at least going in the right direction and had the claims process started. Many people had heart-wrenching stories and I think they were glad to have someone to talk to.

It was a very big challenge but not only did we help people when they needed it the most, we also created a great deal of good will with our client base.

 

By Vincent J. O’Brien, a NAIFA Member from Spring Lake, New Jersey

I am a life insurance agent, not a licensed P&C agent, but I have a story on how my agent was able to help me.

My car was crushed by an 80-foot tree.  My insurance company told me to file a claim and then put me in touch with the claims department. After a while, I was growing impatient with the company’s initial response.

Then my agent got involved!

She offered emotional support and listened to my complaints, and then went to work. Within three days, the claim was settled for an amount equal to the book value of the vehicle and more than $4,000 above what an out-of-state adjuster was trying to offer.

This is the value of an "Agent"!

I can only wonder how people who purchased their insurance on-line are doing with their claims.

 

We heard similar stories from other NAIFA members. Along with the usual damage assessment, policy information and claims assistance, agents helped their clients with a variety of needs, such as making arrangements with contractors and tree-removal companies, finding temporary transportation or lodging, and contacting the power company on behalf of clients.

Further reading:

• Dr. Susan Waters on Hurricane Sandy
• Spring 2011: 'Unforgettable" Storms in America's Heartland

HHS Issues NAIFA-Backed Proposal on Broker Compensation

The Department of Health and Human Services released a proposed rule on Friday that includes a NAIFA-backed measure to include fair agent compensation in the federally facilitated health care exchanges. According to the notice, HHS will only certify qualified health plans (QHP) to be offered through the federal exchanges if the plans offer broker compensation that is comparable to what similar plans outside of the exchanges would pay.

“NAIFA is pleased the proposed rule recognizes the important role agents and brokers play,” said NAIFA President Rob Smith. “Brokers provide myriad services, from analyzing clients’ coverage needs to helping individuals get claims approved to providing wellness programs for small businesses.”

“Agents and brokers are the de facto human resources departments for many small companies,” Smith added. “These are services that no one else provides and that brokers cannot continue to provide if they are not fairly compensated.”

While encouraged by the proposed inclusion of broker compensation in QHP certification, NAIFA remains concerned about the negative impact of the health care law’s medical loss ratio provision on agent compensation and the overall cost of health coverage. NAIFA looks forward to a continued dialog with regulators and lawmakers to improve the new health law.

Dr. Susan Waters on Hurricane Sandy

Dr. Susan Waters

Our thoughts are with NAIFA members and their clients in the Mid-Atlantic region, as well as everyone else affected by the devastation of Hurricane Sandy.

Here in the Washington, D.C., area we escaped much of the storm’s impact. Yet, we know many of our friends and colleagues along the coast and in New York and New Jersey are not so lucky.

Images in the media from New York City and the Jersey Shore are heart-rending.

My own family home outside Ocean City, Maryland, remains under water, and we’ve not yet been able to get close enough to assess the damage. Similar reports have come in from NAIFA members in the New York area and elsewhere.

As NAIFA members begin the hard work of aiding in the region’s recovery, we will bring you some of their stories.

Because, it’s times like this when insurance agents and advisors truly show their value. Whether it’s by helping clients assess damages, file claims or determine how they can best move forward, agents are on the ground in their communities working with those affected by Sandy. Many are doing this while they deal with their own losses.

We sincerely thank them for their service.

Yours truly,

Dr. Susan Waters,
NAIFA CEO

NAIFA Applauds Movement of House Bill to Remove Broker Compensation from the MLR

The House Energy and Commerce Committee today approved H.R. 1206, a bill introduced by Reps. Mike Rogers (R-Mich.) and John Barrow (D-Ga.) that would remove insurance broker fees from the medical loss ratio (MLR) calculation in the Patient Protection and Affordable Care Act.

Convincing evidence shows that including broker compensation in the MLR has seriously harmed brokers who provide health insurance, as well as the individuals and small businesses they serve.

NAIFA has been a strong advocate for fixing the MLR provision in the health care law.

“Including insurance brokers’ compensation in the MLR is a bad idea, so we welcome progress toward getting their commissions removed from the calculation,” said NAIFA President Rob Smith. “Since the MLR went into effect, our members who provide health coverage have seen their compensation decrease dramatically. This doesn’t just hurt the brokers, but also their employees and, most importantly, the consumers who rely on them to obtain coverage and assistance in understanding the complex health care law.”

“Brokers provide myriad services, from analyzing clients’ coverage needs to helping individuals get claims approved to providing wellness programs for small businesses,” Smith added. “They are the de facto human resources departments for many small companies. These are services that no one else provides and that brokers cannot continue to provide if they are not fairly compensated.”

Survey: Lack of Professional Financial Advice Costly to Middle-Income Americans

More than half of middle-income Americans, those earning $30,000 - $100,000 a year, do not seek the help of a financial professional when managing their assets, according to a new survey by Primerica and the Consumer Federation of America.

As reported by Investment News, this lack of professional guidance often leads to costly mistakes. Two-thirds of those surveyed admitted that they have made at least one “really bad financial decision.”

The average assets of middle-income Americans decreased to $27,300 in 2010, from $37,000 in 2007. 

Of those in the survey who have not consulted a financial advisor, 15 percent said they do their own financial research using the internet and television. Another 17 percent make decisions without doing any research.

At a time when the middle market needs sound financial advice more than ever, federal regulations – if they are not written carefully – could limit the access of these investors to professional advisors.

As Investment News notes, the Department of Labor and the Securities and Exchange Commission are considering rules that would require all financial advisors to operate under a universal fiduciary duty, potentially increasing the regulatory and liability costs for advisors.

NAIFA and other groups have raised concerns that poorly drafted rules could drive advisors out of business, or force them to raise fees or shift their business to wealthier clients.

Facing the Fiscal Cliff, NAIFA Members Look for Certainty

Approximately $600 billion in tax increases and government spending cuts are scheduled to automatically take effect at the beginning of 2013. Many analysts have said this could bring serious consequences for the American public and could push the U.S. economy over the edge of what they have labeled a “fiscal cliff.”

NAIFA’s primarily concern is that the inability of lawmakers to resolve the situation will create chaos and make it hard for advisors to help their clients plan for the future.

"NAIFA urges Congress to resolve the tax issues before the end of the year,” said NAIFA President Robert Miller. “Retroactive changes to tax laws put American families and businesses in a costly and paralyzing situation."

While advisors certainly care about tax rates, estate tax rules, and the other issues included in the fiscal cliff debate, NAIFA is most concerned about having a firmly established set of rules rather than advocating for a specific rates or exemptions.

Knowing how clients will be taxed obviously makes it much easier for advisors to help these families and businesses plan for the future so that they can meet their obligations and thrive financially.

“The uncertainties over rates, capital gains and dividends, the alternative minimum tax, estate tax rules, and other issues make effective financial planning difficult for everyone from individual families to large corporations,” Mr. Miller added. “Still, NAIFA members are prepared for the worst and are advising their clients on how to cope with the impact of potential tax hikes.”

As always, NAIFA members are doing their best to prepare their clients for all financial eventualities. A little help from Congress could make their jobs a bit easier.