A Challenging Year
Brought New Appreciation
After a year that included a major new tax act, new minimum distribution rules for IRAs and qualified plans, a new notice on split dollar plans, the end of a record bull market, the beginning of a recession and the terrorist attacks of Sept. 11, this is what Bob Nelson observes at the end of 2001: “The incredible sense of appreciation for the value-added role of the trusted agent advisor.”
Omaha-based Nelson, who is president of the National Association of Insurance and Financial Advisors, feels that the public perception of the industry has really changed as a result of the industry’s response to the events of Sept. 11.
“The industry did a wonderful job of reassuring the American people that the promises would be kept, and the policies and contractual obligations would be delivered,” says Nelson.
Looking ahead to next year, Nelson feels that people will have a new found respect for professionals in the life insurance business. “They’re still looking for value,” he explains, “but they’re looking for that relationship with the trusted advisor and they’re looking to address issues that they now know could happen at any time.”
The change in the public’s perception is evidenced by a number of reports of increased unsolicited inquiries for life insurance. A recent study done by Fidelity and Guarantee Life, Baltimore, Md., showed that 40% of their agents and brokers have seen an increase in direct inquiries for life insurance since the attacks.
Ann Hartmann, who is based in Toledo, Ohio, and is president of The Society of Financial Service Professionals, cites two of the more significant events of the past year as the bad economy and estate tax repeal.
“I think they brought a lot of people’s practices to a standstill,” she says.
Estate tax repeal “made agents stop cold and say, ‘I can’t sell insurance based on estate taxes,’” she says.
Hartmann feels that while many agents feared estate tax repeal, they failed to recognize the opportunities brought about by the new act.
“We’re going to have an income tax issue with capital gains, people are going to need to deal with expenses, and certainly the need for estate planning hasn’t changed,” she says.
Jim Meaders agrees, “From an estate planning standpoint, the law is so convoluted, you need a planner now more than ever.”
Meaders, who is president of National Insurance Brokerage, Atlanta, Ga., feels there will be ample opportunities over the next year as a result of the tax act, especially with the changes to qualified plans.
“There’s just more money that can be contributed on a tax favored basis to every kind of plan,” he says.
“Even though we get a lot of press about unemployment and layoffs, you’ve still got a lot of people working, and there’s some kind of deferral plan that people are going to contribute to,” says Meaders.
Between the changes in consumer attitudes and the new opportunities in qualified plans, Meaders feels the biggest problem agents will have is deciding which direction to go.
“In the middle income brackets, there’s more consciousness than ever about providing for your family, retiring debt and having liquidity in the event of your death,” he continues. “And I think the baby boom generation is an ideal target market for the retirement planning business.
“There are so many things you can do now,” he says.