ORLANDO, FLA. — As the National Association of Insurance and Financial Advisors battles legislative and regulatory challenges, it also is battling an operating deficit and a continuing drop in membership.
Executives from NAIFA, Falls Church, Val., delivered those sobering messages delivered here earlier this week at a general session of the 2009 NAIFA convention.
The 5-day event attracted 2,100 of NAIFA’s 50,000 members.
“As we work through the coming year, and deal with proposals on tax, regulation and health reform, it has never been as important as it is today for all of us at the local, state and national levels to band together as a team,” said NAIFA President Cliff Wilson. “Our clients and the industry need a proactive and strong NAIFA. I believe the progress of this past year positions us to lead with credibility as we move forward.”
The blueprint for this progress, he added, is the NAIFA 21 Strategic Plan.
Adopted in April 2007, the plan lists 5 strategic objectives:
1. Reconstituting and growing NAIFA political programs, including its political action committees.
2. Introducing legislation and regulation.
3. Working collaboratively with sister organizations.
4. Strengthening state legislative and regulatory activities.
5. Improving the speed and frequency of communication.
NAIFA has had successes on all 5 fronts, and most notable in respect to advocacy, Wilson said.
NAIFA’s federal relations staff attended or co-hosted more than 100 D.C. fundraisers for members on key committees of jurisdiction between January and July, Wilson said.
NAIFA was also one of two organizations invited to meet with high-level White House and Treasury officials to articulate insurance industry positions on regulatory reform.
Additionally, Wilson said, NAIFA crafted bills to streamline producer licensing and to give agents the ability to participate in a proposed federal health system “navigator” program. He said the organization also has expanded securities lobbying efforts and engaged directly with officials at the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority.
NAIFA also has worked with a dozen organizations on an effort to limit the authority of a proposed Consumer Financial Protection Agency.
The stakes in the legislative battles are high, and that is particularly true of the continuing congressional effort to remove or limit the tax-favored treatment of life insurance, said NAIFA Chief Executive Officer John Healy.
“Last year’s market meltdown, followed by the course-altering elections of 2008, has spawned a perfect legislative and regulatory storm that has already affected our profession and industry and will continue to do so in the future,” Healy said. “The franchise and foundation of our business are being challenged and will remain under relentless attack as Congress and the administration look for ways to pay all they want to do.”
Congress is working on health care reform, regulatory reform and the taxation of life insurance and annuities all at the same time, Healy added.
“Only NAIFA has the ability to stand guard on behalf of you and your clients,” Healy said. “We will fight for our industry.”
At the same time, Healy added, NAIFA will continue to expand educational and professional development initiatives that have long been a core competency of the organization.
The NAIFA Member Benefits Committee launched 10 new products at this year’s conference, including new online seminars, coaching programs, and sales, prospecting and marketing tools.
During the past year, NAIFA members have used NAIFA’s Web-based tools and other resources an “astounding 36,000 times” during the year past, Healy reported.
Despite NAIFA’s legislative and professional development achievements, the organization itself is facing challenges as a going concern, both financially and in terms of membership.
In the past, NAIFA has said it would like to have 100,000 members, to boost the strength of its advocacy programs and other efforts.
But boosting the organization’s membership could be a greater challenge in coming years, in part because of a membership dues increase approved at this year’s convention, NAIFA executives said.
“Let me put it to you bluntly: Without a dues increase, either we will have to deplete our reserves, which is unacceptable, leaving us with no cushion for emergencies, or we will have to drastically cut back advocacy activities and reduce member benefits,” said Peter Browne, the outgoing treasurer. “To continue our work of advocacy, government relations and political action, we need more support from each member.”
NAIFA’s capital reserve now stands at about $2.5 million, Browne said.
In fiscal year 2008, NAIFA had $16.1 million in expenses and $15.3 million in operating revenue, leaving it with an operating deficit of $863,000.
For the just completed 2009 fiscal year, NAIFA’s board has approved an operating budget deficit that reflects continuing investments in NAIFA 21 programs, including increased investments in advocacy efforts and member benefits, Browne said.
The recent recession led to a net decline in members and dues revenues that fell short of the amount budgeted, Browne said.
Additionally, the economy in Falls Church, Va., where the organization is headquartered, remains “depressed” frustrating NAIFA’s attempts to find new tenants for vacant space in the building, Browne said.
Browne noted that NAIFA cut operating expenses by about $1 million during the past year.
“In summary, our balance sheet has been weakened and our net assets eroded, indirectly through operating deficits and directly through a decline in reserve investments,” Browne said. “We need a sustainable financial model, one that will allow us to operate without a deficit, even in hard times and permit more long-term planning with more predictable revenues.”