Distribution Shifts Back to Insurance Advisors

Distribution Shifts Back to Insurance Advisors

Susan Waters, CEO of the National Association of Insurance and Financial Advisors

The National Association of Insurance and Financial Advisors represents a wide array of advisors and comprises more than 700 state and local associations that NAIFA says totals 200,000 members nationwide. In this interview, Waters dis-cusses the issues affecting members and the industry in general.

INN: One of NAIFA’s jobs is advocacy. What do you see as the key issues on the federal level affecting your members?

WATERS: The most pressing issue is what’s going to happen in tax reform and how it’s going to affect our products, as well as the ability of American families and businesses to plan and protect them-selves. We all know the issues of the federal deficit and the debt ceiling, and these are putting enormous pressures on Congress and on the president to find money. It’s very important that we retell the story that we’ve been telling since 1913, when the income tax was first established in theUnited States. NAIFA, which was then the National Association of Life Underwriters, went to President Woodrow Wilson and Congress and said it was important that the tax code include incentives for American families and businesses to provide for their financial future so they don’t become dependent on government. We’ve had to tell that story over and over again as we’ve faced other financial crises, and we need to tell that story again. Our debt has never been this great, so the story has got to be as strong as it possibly can be.

INN: Are you seeing a shift in sales distribution between the insurance producer and the security advisor?

WATERS: In the past 10 to 15 years we saw a big shift toward securities advisors and away from the insurance producer, and that’s even reflected in NAIFA’s name change. We changed our name from the National Association of Life Underwriters to the National Association of Insurance and Financial Advisors because so many of our members were changing their practices and their relationships with their clients, to be advising them and sometimes managing assets for them. And I think that reflected the fact that our membership was aging, as were their clients, who were becoming more affluent, had more disposable income and needed advice about what to do with that income. But I’ve heard quite a lot from our members and from company representatives that they are seeing at least some shift back to the more risk-management kinds of products, to insurance and annuities, and not so much money out there being invested, especially since 2008. So we need to refocus some on risk management and on those products that guarantee safety. There’s a little bit of a backing off, not a sea change, but I think there’s a shift in that way.

INN: We have seen a slow decline in the producer population. A few years ago LIMRA said that within 10 years, 50 percent of all producers will be out of the business. How do we deal with this issue of the declining producer population?

WATERS: I think that’s the toughest problem and it’s reflected in NAIFA’s membership, which has been in slow decline also. If you put together that trend and the aging of our members and an aging population needing our products, now is the opportunity to bring a new generation into the business. So then there is room for people to exit the business because there are replacements for them. We, as an industry, need to sell our-selves to young people, to say, “This is a good business.” And I think the key to that is, again, to tell the stories of what business we’re in. We’re in the business of risk management.

We can recast the idea that I think many members of the general public have, which is that insurance people sell product. Our members aren’t just selling product. Our members are working with their clients to plan for the future, and that means selecting from an array of products and other investments. And we send our members, particularly through our local associations, out to talk to community organizations and schools to tell people what we do. And what we do is work with real people, solving real problems, giving valuable advice that will help them in the future. That’s an exciting career, and it can be very rewarding as well. People want to be financially rewarded and this business can make that happen.

So we need, through all of the associations, to send our members out to tell the story. And companies need to recruit— they need to go to colleges and job fairs and present what we do in that manner. It’s not the notion that some have, including many of our regulators, that this is a transactional thing, like being a bank teller. That’s not what it is. The pride that our members justifiably have in what they do and who they are, and their engagement in the communities, is the story to tell, and we all need to be doing that— doing a lot more of it.

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