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.