Level-headed Leadership
Dennis Martin
August 2017

Five ways to build trust with clients, keep cool through regulatory chaos—and win by embracing change

Change happens. It’s ubiquitous. And it can be tumultuous—especially in the case of the Department of Labor Conflicts of Interest Rule, aka the Fiduciary Rule. 

After a series of fits and starts, on June 9 the Fiduciary Rule officially kicked into effect. While full enforcement is on hold until at least January 1, the rule has already had an effect on our industry and is certain to shape the future, regardless of how it may change. 

Now more than ever, those of us in the financial services industry best serve our customers by handling this uncertainty thoughtfully and strategically. It’s an ideal time to reflect on how and why we do what we do. With that reflective perspective in mind, I offer five ways to apply a level-headed approach to developing and marketing your business and your products.

1. Give change a warm welcome.
One thing I’ve learned from my boss and mentor, Pat Foley (president of OneAmerica Individual Insurance and Retirement Services), is to embrace change. Pat’s philosophy—look for the positive in change—has transferred to our entire organization. It’s all about lowering your resistance. Instead of fighting change, look for the good things that can come about as a result of it. That may sound glib, but I’ve found the approach offers a healthy framework for moving forward. Pat’s advice is to look for three positives in any change. What’s the bright side? What are the opportunities? Most people resist change and end up losing time and energy as a result. When you keep a positive attitude you expend less negative energy.

The Fiduciary Rule really is another opportunity to prepare for and capitalize on change. Compliance with the rule has had an impact on our business, yet we must keep moving forward and looking for ways to grow within the framework of the regulations.

How? Here’s one example: As millennials enter the marketplace, we’ll all need to develop new ways to market our products. Millennials expect both authenticity and multi-channel marketing. We’ll have to learn how to communicate authentically and in ways that resonate with younger consumers. In today’s world, that requires a greater degree of transparency than we’ve had traditionally. The Fiduciary Rule’s focus on transparency offers an opportunity to communicate with younger consumers in the way they expect. 

Here’s another example: We’ve approached the Fiduciary Rule as an opportunity to fine-tune and streamline our products. Although the Fiduciary Rule focuses a lot on fees and expenses, we know that the cheapest products won’t necessarily be the best products in the long run. 

This effort led us to discontinue new sales of our proprietary variable annuity products and to make some changes to our fixed indexed annuity products. We also introduced improvements and adjustments to commission structures, bonuses and renewals as part of a compensation modernization project that happened to coincide with the Fiduciary Rule. 

In the end, the rule gave us an imperative to adjust our product offerings, and we worked hard to improve both our customer and distribution value propositions at the same time. 

2. Innovate inside the box.
Outside-the-box thinking isn’t easy to do when you’re part of a heavily regulated industry. In our business, we manage for long term financial strength. The products we develop need to be viable 20, 30 or more years down the line. You can’t get too far outside the box and still maintain prudence and the best long term view, which centers on meeting the customer’s needs and maintaining financial strength. 

The insurance industry may not have a reputation for innovation like the tech field does, but that doesn’t mean we can’t be forward-looking. For us, innovation is about creativity within a framework.

When you’re targeting a new audience for example, everything old is new. Building relationships through transparency and trust are more important than ever. So we’re going to have to leverage technology and be more creative to really communicate and reach people.  

We focus on collaborating with our distribution, and providing them with more than products to sell. We provide education, materials and systems to help build relationships with clients and help them make the emotional connections to the need for our solutions. Rather than focusing on bad things that happen (such as death, disability or a long term care event), we focus on helping people understand consequences and improve outcomes so they know if bad things do happen they’re prepared and their loved ones will be protected--which provides the peace of mind they’re seeking.

3. Try new combinations.
Another way to innovate inside the box is to take things you know work well and put them together in a new way. For example, one of our products combines asset-based long term care and whole life insurance. It’s like combining chocolate and peanut butter to create something new. The result is a product that’s stable, predictable and guaranteed. And while it’s not new (it’s been around 28 years), it’s still viewed as innovative. Building something that can stand the test of time and maintain its relevance is its own kind of innovation, especially in today’s rapidly changing world.

Indexing is another example of a popular, robust product feature in the marketplace. We combine it with participating whole life insurance to create an indexed dividend option. This provides the best of both worlds by offering the strength of whole life guarantees along with upside potential based on changes in a market index.

Along the same lines, we’re looking for opportunities to work with our distributors in new ways, not only to navigate the new fiduciary regulations effectively, but also to help more clients protect their lifestyle throughout retirement. 

We recently refined the structure of our marketing and distribution teams to ensure we’re best positioned to support and collaborate with each of our distribution channels. In an ever-more-demanding world forging such relationships is critical to meeting and navigating regulatory requirements, but it also ensures the best use and return on available time and marketing dollars.  

4. Start with values.
What are your values? Are you committed to helping clients prepare for the future? To recommending products that will perform regardless of economic conditions?  To doing the right thing?  

When you have a strong set of core values, it’s a lot easier to deal with change and make decisions quickly. It’s also easier to build trusting, long term relationships with your customers. We believe in discipline, stewardship and integrity. We’re more into the steak than the sizzle. These values create a foundation that guides us in our decisions. 

Values can provide stability in times of change—both for employees and for customers. If you haven’t articulated and shared core values for your company or brokerage, now’s an ideal time to do so.

5. Be one of the good guys ... and keep earning commissions.
Our industry exists to protect people and secure their financial futures. If everyone had more than enough savings when bad things happen we’d all be fine. But most people don’t, and they need the insurance industry and their products to step in when the unexpected happens. 

Most people also don’t want to think about the end game, or about the consequences when bad things happen. In fact, most of us don’t think bad things will happen to us–they only happen to other people. As a result, very few of us actually seek out and purchase life, disability or long term care insurance on our own. That’s where a qualified insurance agent makes a difference. He or she is trained to help identify potential clients and, through the discovery process, learn what’s important to them, educate them about the potential consequences, and about products that could be a good fit for their personal financial picture. 

All this education is provided at no initial cost, on the prospect and belief that once people understand the complete picture they’ll choose a solution that pays a commission to the agent. Of course, if the client doesn’t purchase there’s no cost for the education and no commission.  Commission-based products certainly have received a bad rap under the Fiduciary Rule, but these products also have a positive impact on consumers:

  • They provide an incentive for agents to meet new clients.  An agent’s incentive is to ultimately make commissions, of course, but it’s also an incentive to do the important work of educating people and helping them address the consequences of bad things that inevitably happen.  
  • Consumers receive personal attention and a review of their situation at no cost, without any obligation to purchase. They wouldn’t typically receive this from any other type of financial professional.  
  • For most life insurance and related products, the expected holding period is seven to 10+ years.  As with any “buy and hold” type of product, commissions usually provide the lowest cost option (as compared to an ongoing level fee).

The Fiduciary Rule encourages all of us to take a closer look at commissions. In many cases upfront commission sales may be the best choice for some clients—including millennials. This is especially true when the client’s individual circumstances call for a buy-and-hold strategy like life insurance and annuity products.  

Looking to the future, we’ll increasingly have more transparency and disclosure around compensation practices. However, with appropriate disclosure and understanding (which already happens in many cases), our model will stand the test of time. We’ve built our industry on individual relationships, based on trust and integrity, and with a long-term focus. 

We must continue to keep these values in mind and adapt our approach and messaging to the emerging environment. Our products remain strong and relevant, and companies that adapt most effectively will continue to have opportunities, no matter what regulatory changes come next.

Author's Bio
Dennis Martin
FSA, FCIA, MAAA, is senior vice president of Individual Life and Financial Services for the companies of OneAmerica®. He formerly worked as senior vice president of Product and Business Development, overseeing insurance operations and product development for life, annuity and asset-based long term care, as well as broker-dealer operations. In addition, he provides leadership and vision for the current and future product portfolio and identifying opportunities for expansion. Martin joined the companies of OneAmerica® in 2009. Earlier in his career, he gained actuarial and marketing experience at Great-West Life in Canada and spent eight years with the Western & Southern Financial Group and Columbus Life building out their product development capabilities. In addition to his actuarial and product knowledge, Dennis has significant experience working directly with sales and distribution across multiple distribution channels. Martin is a graduate, with honors, of the University of Manitoba, with a Bachelor of Science degree in Statistics and Actuarial Science. He is a Fellow in the Society of Actuaries (FSA) and Canadian Institute of Actuaries (FCIA), and a Member of the American Academy of Actuaries (MAAA). Martin may be reached at OneAmerica, One American Square, P.O. Box 368, Indianapolis, IN 46205-0368. Telephone: 317-285-2672. Email: dennis.martin@oneamerica.com.

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