This month’s featured advisor knows specialization is the key to survival in the long term care insurance business. That’s why he exclusively sells LTCI and teaches others how to do the same. He doesn’t want to corner the market, he wants to make it stronger by including anyone who has the passion, drive and focus to succeed. Todd Grove thinks the system is headed for disaster. Talking to him, you get the idea he knows the U.S. long term care system is in trouble, at least without serious improvement in the numbers of people purchasing LTCI policies. Portland, Maine-based Grove says he’s hopeful the Deficit Reduction Act will help LTCI specialists sell more policies, because there shouldn’t be any more talk of spending down assets to qualify for Medicaid.
“My hope is that the debate is now dead,” says Grove, a partner in LTC Financial Partners, a national broker-owned organization seeking to sell more LTCI through alliances between LTCI specialists and financial planners. “It’s an integral part of the financial planning of the middle class. What I find is that it is not a question of whether coverage makes sense. It’s just how to design it properly.”
A 15-year veteran and family man, Grove is ranked in the top 1 percent of LTCI providers nationwide, selling between $450,000 and $460,000 in policies the past couple years, and he’s willing to share how he does it. When he’s not coaching soccer or baseball, he’s helping the industry grow. He designed the program for LTC Financial Partners that teaches specialists how to ally themselves with financial planners who don’t want to deal with LTCI.
He also knows that giving back is a big part of any advisor’s success. He’s also just sure things are looking up for the long term care advisor.
Senior Market Advisor: What got you into long term care insurance?
Todd Grove: That was back in 1990 and at the time, I had been involved in cellular communications when it had just started in Maine. I had done that a couple years and was getting really bored. I saw a blind ad for what was then AMEX Life in their long term care division. I saw the little blue box from American Express and thought it would be intriguing. I was interested in getting involved in training and development. Especially in sales training. I knew they had a great program. I had no clue that it was about long term care insurance. When I first went for an interview, I just about got on my feet and ran out the door. Luckily I didn’t. The guy who hired me is one of my closest friends, Bill Bosman. He used to be one of the senior vice presidents at GE Capital. I just started from there. I went into the field and sold a little bit and then moved into training and development for a company called LTC Inc. at that point, which was the organization that ran the career shop for AMEX, which is now Genworth.
SMA: Where will the impetus come from for an increased awareness and the jump that is needed in LTCI sales?
Todd Grove: My feeling is that we will see the strongest sales for long term care insurance since the mid-1990s. I think it will happen. The biggest year will be ?07. This year will be a ramp-up year. That has a lot to do with the Deficit Reduction Act that was just passed, the impact of that and the partnerships that will occur nationwide. Those two items, along with the direction that our partnership is taking, namely creating strategic partnerships with financial advisors to pair up and go after their clients in long term care. I think you will find that it is still going to be a specialized sales process. It’s still a complex product. That is not going to change overnight. Our approach nationwide is taking the specialists and partnering them with an advisor to help them solve the problems of clients. Partnering will do an awful lot to increase the level of penetration in the marketplace.
SMA: What about the Deficit Reduction Act specifically is going to help with LTCI?
TG: A couple of things. First of all, the eight planning options that attorneys used to have that allowed them to transfer money out of individuals, names to get them onto state aid are pretty much evaporated. I was with an elder law attorney last week and he said, “Todd, I have no options any more. My clients have got to get long term care insurance.” That’s a far cry from where we were a few years ago. So that’s part of it. The second part of it is obviously creating the recommendation that partnership plans are put in place in all 50 states. We have a deadline on that: January 1, 2007.
SMA: Partnership plans between who and who?
TG: The partnership plans are between the state and federal government and the consumer. These will be plans that are similar to those that exist right now in New York and California, for example, whereby if an individual buys a policy and it is a “partnership plan,” then the amount of money that is to be paid inside that contract will be the amount of money that is protected in their estate. For example, if an individual buys a contract that will pay out $500,000 for benefits, that amount of money in an individual’s estate is protected and shielded from access should the policy run out and they need care at a future date.
We’ve been waiting for this for a long time. The state I live in has already passed an act that will allow the partnership plan to go into effect 90 days from the point when we have reciprocity. Reciprocity might mean that all 50 states are in agreement on the fundamental elements of a qualified partnership plan and that if an individual moves from one state that has a partnership plan and retires in another, that state honors the contract. This is one of the flaws that existed and still exists today. What happens is the individual that purchases a partnership plan in New York has to receive the care in New York. So if he retires to Florida he has to come back to New York for care. So this issue of reciprocity is huge. Once it is established, it is as solid an endorsement and recommendation of purchase as you can get from the state and federal governments.
SMA: Talk about the strategic partnering program you designed for LTC Financial Partners.
TG: My objective when designing that program was to create a systematic approach to developing a relationship between a long term care insurance specialist and a financial advisor. It’s based on a three-interview process where the advisor is in essence interviewed by the specialist so it can be determined whether long term care insurance is something the advisor believes in. If so, whether or not it is being presently offered effectively to their client base; and if not, whether they really feel it is appropriate to partner and market long term care insurance to their clients and have passive revenue coming back to them as a result of that. In that case, we literally go with a step-by-step plan to design a tailored marketing strategy.
Some advisors like putting on seminars and workshops. So we have a whole track we can take them down with all the materials to create a series of workshops. They may want to do a letter-writing campaign. We have a whole series of compliant-friendly materials that can be submitted to their brokerage firms so they can get letters out to their clients. They may decide they want to make calls to their clients. We have a series of scripts that they can choose to use, again compliance – friendly, to contact their clients and make introductions. Then [there is] a step-by-step follow-up approach that [makes sure] an effective job is done marketing to their clients. It is a total win-win. This helps the advisor fulfill fiduciary responsibility with the client while at the same time generating revenue that he would never seek on his own.
SMA: It sounds like this goes well beyond training.
TG: You bet. Lots and lots and lots of materials are specifically designed and tailored … [by our] marketing department in Seattle headed up by Jonas Roeser. The response has been overwhelmingly positive nationwide.
SMA: Is this a way for LTCI specialists to say, “Hey, if you think selling LTCI isn’t worth it, then send it our way?”
TG: Exactly, because they aren’t going to do it. The accountants, attorneys, the financial advisors are not going to spend the hour-and-a-half or more it takes on the initial interview, plus all the follow-up work – the understanding and the underwriting issues, determining which issues, etc. They are not going to get into it. If they are not going to do it, but they know that long term care insurance is more important than ever, how do they bridge that gap? The way they bridge that gap is by partnering with a specialist who can do it with them. That’s what we do across the country.
SMA: When an advisor has a client come in for an appointment, is it when the long term care discussion comes up that your name gets mentioned?
TG: The objective of our job is to help make sure that conversation happens for all the clients. Sometimes it works more effectively than others. The key is to get the advisor comfortable with bringing it up. That’s the biggest problem. They have been reluctant to bring it up because they haven’t wanted to deal with it. Now it is just a matter of getting them comfortable with us as individuals, making sure there is a level of trust, and that they do bring it up with their clients.
SMA: The need for these alliances means some people are better at selling LTCI than others are. What does it take to be a good LTCI salesperson?
TG: You’ve got to love it and you have to want to live and eat and breathe it. I don’t believe that you can be effective selling long term care insurance and lots of other insurance products and other investments. I’ve trained over the years more than 2,000 agents nationwide. I’ve got to tell you, those that dabble fall away. They don’t make it. They know enough to be really dangerous.
I teach continuing ed here in the state for the insurance department. When I see agents, they don’t have a clue. It doesn’t matter if they’ve got a life and health license or not. If you are not staying really focused on the products and the underwriting guidelines and the way to design coverage, you can’t do good service, you just can’t.
SMA: It sounds like specialization is the key.
TG: Focus, specialization. Passionate belief in what I do and working every day. That’s sort of a key element. I’m not a workaholic. I don’t work 75 hours a week. I work 40 hours a week, but when I work, I work. I find that sometimes, whether it is an advisor or an insurance agent, that doesn’t necessarily happen. I think it is important that you treat an insurance practice like a full-time job and work at it every day.
SMA: What’s the difference between a lead from an alliance partner and a lead off the street?
TG: You do not have any issues with regard to credibility. So the skepticism, the distrust of an insurance agent are gone. If I sit down with a client of an advisor, I write them. I’m not there to do anything but that. So the closing rates are significantly higher. The placed rates are significantly higher. Therefore, from my perspective, even if I am giving up half the commission on the sale, it’s still a much better sale. It’s a much stronger relationship right from the get-go with the client. I’m more likely to receive referrals and so, overall, I end up earning more income off that individual sale than I would if I dropped a direct mail lead. I’ve done the analysis. We as an organization, nationwide, did an analysis. We looked at the business generated from direct mail and we looked at the business generated from partnering with advisors. The members of our organization earned on average more commission by partnering even if they gave up half the commission initially.
SMA: What are the things you do outside of work that help solidify you as the go-to guy for long term care?
TG: I do a lot of article writing. Through our partnership, we have a public relations firm that gets out press releases at least once a month in our communities. I’m very active supporting the Alzheimer’s Association.
SMA: What does taking part and giving back get you?
TG: I think it is very important to give back. If I looked at it from a mercenary perspective – how many leads I got from being involved for eight, nine, 10 years in the Alzheimer’s Association – I can count them on one hand. So that’s never a reason to do it. You do it because it is the right thing to do and you feel that it is important. I never tell anybody that they should get involved in an organization if they don’t believe in what the organization is trying to accomplish. If you believe in what they do, then just give and don’t worry about it.
SMA: Do people see through superficial efforts to use giving to others as a way to gain referrals?
TG: I think so. You know, it’s all about living a principle-centered life. Part of that is giving back to your community. I am a huge believer in the work of Steven Covey and the “Seven Habits of Highly Effective People.” That’s definitely part of what a balanced life is about – determining what your role is. You’ve got roles. Then you have goals in each of those areas each year. It helps keep you balanced and not overly focused on your work. You end up feeling a true sense of fulfillment at the end of the year. You can have a great year professionally and crank out a whole bunch of sales, but sometimes that is kind of hollow.
SMA: What would you say are the biggest reasons that those people are now realizing the importance of long term care insurance?
TG: I think it is a combination of things. We’re all getting hit from all sides. If you look at the demographics at our country, there is no question about it. The majority of the baby boomers are dealing with their parents. They’re seeing it. The gentleman that just left my office. He cared for his mother for 10 years with dementia. Do you think he understands the importance of long term care insurance? That is part of it. You’ve got the Internet. There’s a lot more data out on the Internet now than there was even two years ago on the importance of long term care insurance. Financial planning magazines. You can’t pick up one without an article on long term care insurance.
I can’t count the number of times I see in the Wall Street Journal, New York Times, Business Week, Money, all these magazines, all these articles on long term care insurance. It’s just part of the financial planning of the middle class. I think that part of it is definitely experience-driven. Part of it is definitely when individuals have family members who need care. They understand the impact. I just think part of it is a better educated work force that understands the importance of this.
SMA: What is the biggest long term care blunder anyone can make?
TG: Waiting until they have a significant health problem to buy a policy, because the carriers are much, much tougher than they have ever been. That is going to continue.
SMA: Is that so you don’t have to adjust rates?
TG: That’s right. They are getting tougher and tougher. That is not going to turn around. It has been a work in progress. What you are seeing now is a much clearer sense of what the risks are. You are seeing some of the guidelines loosening on diabetes. But still, the better carriers with a competitive premium are going to be tougher on underwriting. That’s just what you are going to see. That’s going to continue on and on. The thing that just drives me up a wall is when financial advisors tell their clients, “Don’t worry about that until you are 60″ or “Don’t worry about that until you are 55.”
SMA: How bad can things get if LTCI doesn’t find its proper place in the U.S. long term care program?
TG: They will get very bad because the Medicare and Medicaid systems are in big, big financial trouble, so within the next 20 years, those programs have a strong likelihood of going insolvent. Social Security is fine. Social Security is not a problem. Medicare and Medicaid are really in trouble.
When you look at over 6,000 people turning 65 every day, where is the money going to come from to pay for their care? It’s not going to come from the government. It’s going to come from their estates. So all these trillions of dollars we’re looking at transferring hands are at risk unless they are protected by long term care insurance. When we look at the biggest [wealth] transfer in the history of the world, remember, a large portion of that is earmarked for long term care unless people own the coverage.
SMA: What are your thoughts on the future of the industry?
TG: I’m a little more hopeful than the last few years. I really am. I think the government now is getting it. It’s taking a long time. You know how reactive the government is. I feel that finally there are signs that this is going to be part of the standard process of planning. It is not a fringe boutique product anymore.