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NAIFA Flees Political, Financial Muscle in Baltimore

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If any of the more than 2,200 producers attending the annual conference of the National Association of Insurance and Financial Advisors had doubts about NAIFA’s renewed political and financial clout, then the highlights of this year’s meeting, held here Sept. 11-14, should have dispelled them, NAIFA executives said.

Among the happenings: an appearance by actress and author Marilu Henner, the 2005 national spokesperson of Life Insurance Awareness Month; a first-ever bus trip by 1,000-plus NAIFA members to Capitol Hill to promote the organization’s legislative agenda; and a presidential report attesting to the organization’s return to financial health.

“Two and a half years ago, we had to borrow $1 million from sister organizations to make payroll,” said NAIFA Immediate Past President C. Robert Brown. “Today, because of fiscal discipline and agreement by our members to a dues increase, we’ve turned the financial ship around. We now have a fully funded reserve.”

NAIFA’s 2004-2005 annual report records “a positive change in net assets” (before a pension liability adjustment) of $2.1 million on revenues of $16.3 million for the fiscal year ending Aug. 31, 2004. Preliminary internal consolidated financial results through June 2005 show that NAIFA will “once again exceed its budgetary goals for the 2005 fiscal year.”

Comprised of 800 state and local associations, NAIFA is leveraging those entities–including $34,200-plus raised at the conference for NAIFA’s political action committee, IFAPAC–to achieve objectives in the areas of advocacy, membership recruitment and CEO outreach, member benefits, governance, and administration.

The Life and Health Insurance Foundation for Education (LIFE), of which NAIFA is a sponsoring organization, is also funding consumer education, including a program that now reaches 25% of high school juniors and seniors nationwide. NAIFA CEO David Woods said the initiative has been well received, resulting in a $400,000 federal grant to produce a similar program for students at community colleges.

LIFE also is investing more than $400,000 annually in a public relations campaign focusing on the top 50 markets. That program is generating from 2 to 3 television and radio “exposures” per week in these markets.

Capping the media blitz is Life Insurance Awareness Month. LIFE is addressing the public’s need for information and education about life, health, disability and long term care insurance through Marilu Henner, LIAM’s national spokesperson. The actress and author is appearing in radio and televisions ads and talk shows nationwide throughout September.

The public relations effort is needed to reverse an alarming trend: the growing number of uninsured and underinsured households. Citing “alarming” statistics from market research and consulting firm LIMRA International, Woods noted that in 2004 the industry sold 10.5 million policies to 110 million households. That compares to 17.1 million policies sold to 97 million households in 1984.

Over the same 20-year period, the industry suffered a 29% real dollar decline in new annual premiums. And during the prior 30 years, the business sustained a 31% decrease in the number of career agents, dropping to 170,000 from 250,000.

“The fabric of America is strong, but it’s beginning to fray and show signs of wear,” said Woods. “Unless something is done, the financial security industry in this country will become a relic of the past. The American people will have to look to neighbors, relatives, friends and the federal government to provide for their families and small businesses at their premature death, disability or retirement.”

Woods attributed these downward trends in part to “massive demographic and economic changes” that have lowered profits margins for insurance manufacturers and producers; and that have made risk-based insurance products more difficult to sell than alternative capital accumulation vehicles.

Woods also flagged the “demutualization” of insurance companies, which has forced CEOs of life insurance companies to shift their planning horizon from long-term to short investing and the quarterly results that Wall Street demands. Result: cuts in expenditures on things that manufacturers’ marketing reps most value– recruiting, training and the support of career and independent producers.

To address the challenges, NAIFA’s Task Force for the Future is exploring “mechanisms” that will permit improved coordination among NAIFA and sister organizations, including the Association for Advanced Life Underwriting, Falls Church, Va.; the Association of Healthcare Internal Auditors, Onsted, Mich.; GAMA International, Falls Church, Va.; the National Association of Independent Life Brokerage Agencies, Fairfax, Va.; and, The American College, Bryn Mawr, Pa. Woods compared such coordination to a pinwheel, with the insurance manufacturer positioned at the center of the wheel and the various industry bodies occupying the spokes.

“These organizations can do what individual member companies cannot do alone,” said Woods. “The challenge is to synergistically bring together the resources of all the organizations to help marketing folks and CEOs build a bridge across the expense chasm.”

Among other recent initiatives, such coordination has produced a new management training program from GAMA International and a financial services specialist program, unveiled by the American College earlier this year. Combining financial planning and sales training in multiple risk-based products (including annuities, long term care, disability income insurance), the FSS program encompasses three required courses and 14 electives.

Apart from broadening insurance professionals’ expertise to meet clients’ diverse financial needs, the FSS designation also serves NAIFA’s recruiting efforts. Woods noted during a question and answer period with American College President and CEO Larry Barton that the coursework will be offered through NAIFA’s state associations, and that FSS graduates have to be NAIFA members to keep the designation. The program, added Barton, is expected to appeal to both new and experienced advisors with other designations.

“This [program] offers an opportunity to reengage and understand the essentials of so many new products, requirements and compliance issues,” said Barton. “We also have high confidence that companies that already support and reimburse LUTC, ChFC and CLU [tuition expenses] will also do so for FSS.”

Aiding NAIFA in its membership drive is the organization’s Leadership in Life Institute, a 6-month leadership development course that nurtures members’ personal and business skills. LILI Chairman Steve Thomas said that 168 participants graduated from the program in 2005, bringing the total of LILI graduates to nearly 500.

NAIFA’s Young Advisors Team, a subcommittee of the Committee on Associations, also grew during the 2004-2005 period to 40 chapters nationwide. Led by Jeff Fleming, YAT caters to under-40 NAIFA members through, among other media, YAT Chat, an electronic newsletter.

Despite these and other developments (NAIFA hired this past year a member benefits vice president, and the organization boasted legislative victories limiting the spread of investor-owned life insurance and demand for greater disclosure of producer commissions), NAIFA fell short of its goal of recruiting 100,000 members. The organization currently has about 63,000.

But in a videotaped interview broadcasted to NAIFA members during the conference, NAIFA’s Brown insisted the objective is realistic.

“When the deliverables of member benefits and advocacy are brought to every one of our local associations–and there is evidence of this already–then we’ll get north of 100,000 members,” he said. “I absolutely believe we’ll achieve this by the end of our membership drive.”

Securing this benchmark, NAIFA executives said, will yield improved access to the congressional representatives and senators that NAIFA hopes to sway for the legislative battles ahead. But the organization is already making its presence felt. At the close of the conference’s fourth day, some 1,000 NAIFA members traveled by bus to Capitol Hill to air issues of concern with elected officials.

NAIFA’s top priorities in 2005-2006 include passing the COLI Best Practices Act of 2005 (S. 219 and H.R. 2251); modifying House and Senate bills (H.R. 525 and S. 406) that would establish federal association health plan (AHP) insurance; and enacting investment advice provisions in the Pension Protection Act (H.R. 2830) that would allow employers sponsoring 401(k) plans to engage investment advisors to offer recommendations to employees participating in these plans.

NAIFA additionally supports the Retirement Security for Life Act (H.R. 819 and S. 381), which will encourage individuals to invest in lifetime annuities; backs bills (S. 1244, H.R. 2682, H.R. 1150, S. 602 and H.R. 1262) that promote stronger incentives to purchase long term care insurance; and embraces taxes incentives that encourage individuals to save for retirement through long-term saving vehicles, including life insurance, annuities and qualified retirement plans.

NAIFA President David Smithkey, who will direct NAIFA’s lobbying efforts and other initiatives in the year ahead, said the organization’s progress will be maintained under his stewardship.

“From a leadership standpoint, my responsibility will be to keep the momentum going,” said Smithkey. “I don’t see us, coming out of this convention, changing our format or objectives.”

‘From a leadership standpoint, my responsibility will be to keep the momentum going….I don’t see us, coming out of this convention, changing our format or objectives.’


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