Addressing the annual convention of the National Association of Insurance and Financial Advisors here, CEO David Woods had a grim message for the nearly 2000 attendees: After a restructuring several years ago that put NAIFA back in the black, the organization is once again facing the prospect of financial insolvency.
The problem: dwindling membership. During his keynote address, Woods said the 117-year-old organization’s rolls have declined by approximately 1,500 annually during the past five years. As of June 30, the end of NAIFA’s fiscal year, membership stood at 62,227. That’s substantially off the 100,000-member benchmark the group had hoped to attain during a 2005 membership drive, which Woods described as the most “dynamic, sophisticated and intense” in more than 40 years.
[Woods announced he will retire next year. See story on page 60.]
If membership numbers continue to drop at the present rate, and assuming costs increase at only 2% annually, then by 2011 expenditures will exceed revenues by $2 million. The red ink will leave NAIFA with some unhappy choices.
Woods said these include spending NAIFA’s $3 million to $4 million in net worth, which will still leave it financially insolvent within four years. Alternatively, NAIFA can cut programs, including between $125,000 and $500,000 from appropriations for political advocacy, membership, association services, education and professional development and communications budgets.
“In real terms, these numbers mean fewer if any lobbyists, no outside counsel, no national leadership conference, no PIC, no PAC, no LILI, no YAT, no LUTCF or FSS, no association execs conference, significant staff cuts–in short, no NAIFA,” said Woods. “We can raise dues. But every business person knows that raising prices when business is falling without improving the product is a recipe for bankruptcy.”
To reverse course, Woods said NAIFA’s board has unveiled a “strategic plan” that calls for a nationwide survey of NAIFA members, recently lapsed members and non-members. The study will aim to gauge the needs of advisors and identify shortcomings in NAIFA’s programs, structure, governance model and priorities.
Woods said he and the national board are convinced the survey will prove key to effectively reshaping NAIFA.
“With the right product and 250,000 [non-member] prospects, it is not unrealistic to think in terms of a 2,000-member annual growth rate over the next five years,” said Woods. “If we are willing to accept the challenge that our rich heritage deserves, then we must accept change, no matter how awkward or painful that change might be.”
In a speech on the convention’s closing day, newly elected NAIFA President John Davidson echoed this sentiment, observing that NAIFA’s leadership is “ready to make the difficult decisions and necessary changes.” He added the national board is also depending on state and local association leaders to “keep NAIFA relevant” by implementing plans formulated for the 2006-2007 fiscal year.
Amid its financial and membership woes, NAIFA continues to build on its outreach, consumer education and legislative initiatives. Scott Hamilton’s role as spokesperson for Life Insurance Awareness Month, which runs throughout September, is one of several initiatives that NAIFA is backing through the Life and Health Insurance Foundation for Education (LIFE), of which NAIFA is a founding member and contributor.
Hamilton–Olympic gold medalist, cancer survivor, NBC sports commentator–helped kick off the convention to a standing ovation.
“What you do is extraordinary,” Hamilton said. “You give a quality of life not just to this generation, but also generations to come by allowing people to continue life after the loss of a loved one. That’s why I’m going to do everything in my power to communicate the urgency and importance of this message: Life insurance is necessary.”
Woods said that LIFE’s Real Life Stories, the central focus of its consumer educational efforts, will appear this year in 9 national publications, including Newsweek and two Spanish language magazines–an endeavor aimed at connecting with the nation’s estimated 37 million Latinos.
As in 2005, LIFE will be sponsoring ESPN’s coverage of Major League Baseball’s pennant races, plus public service announcements on both TV and radio. In all, LIFE hopes to top the estimated 100 million consumers in 2005 who learned about life insurance through LIFE’s media campaign.
NAIFA’s Leadership in Life Institute (LILI), a six-month course that develops state and local association leaders, boosted the number of institutes nationwide to 35. Last year, 270 NAIFA members graduated from the program. And 44 moderators attended the annual LILI Moderator Training Conference in Chicago.
Also enjoying increased participation is NAIFA’s Young Advisors Teams program, which offers education, mentoring and resources to producers under age 40. Marc Bregman, the initiative’s outgoing national committee chairperson, said the number of state and local YAT groups grew to 94 from 40 during the 2005-2006 fiscal year.
“This remarkable increase did not happen by accident,” he said during a general session. “It was a direct result of our strategic initiatives.”
On the advocacy front, NAIFA’s Advisors Political Action Committee (IFAPAC) raised more than $114,000 from convention attendees at press time. The money will be used to fund, among other efforts, contributions to political candidates who support NAIFA’s legislative priorities; the training of local and regional IFAPAC chairs in fundraising; and NAIFA’s Advisors Political Involvement Committee, which organized a Spring Legislative Summit/Political Forum in April.
The cash infusion will be much needed for NAIFA coming legislative’s battles. Among the organization’s “external challenges,” said Davidson, are blocking “hostile” tax reform proposals, including a recommendation of the President’s Advisory Panel on Federal Tax Reform that aims to lump life insurance, annuities and other tax-preferred savings vehicles into “Save for Retirement Accounts.” The proposal also calls for taxing the inside build-up of life insurance and annuities outside these accounts or above contribution limits.
During the past year, NAIFA also revamped the member benefits portion of its website according to five areas of interest: business resources, data and knowledge management; education and training; practice resources; plus sales ideas and motivation. The Member Benefits Committee cross-referenced these five areas with each of four practice specialties: financial advising and investments; health insurance and employee benefits; life insurance and annuities; and multiline products.
Last March, NAIFA unveiled an online Speakers Bureau to connect state and local associations with individuals qualified to speak on insurance and financial services industry topics. The following month, NAIFA launched EduCalls, a series of educational conference calls that let NAIFA members stay current on timely topics and issues. And in June, NAIFA teamed with Horsemouth, which delivers to members an e-mail update on new ideas for business development, practice management and financial planning, among other topics.