Mike Gorlick seems optimistic about the state of the industry. The president and CEO of Zenith Marketing Group, an independent wholesale distributor based in Freehold, N.J., acknowledges the challenges associated with the current environment yet moves on in stride, maintaining an upbeat manner that is refreshing, especially when you consider some of the more formidable hills many in the industry have to climb on a daily basis.
They range from the crawling implementation of the Patient Protection and Affordable Care Act (PPACA) and the prolonged low interest rate environment to the concurrent graying of America and the aging of the financial services workforce. If one were so inclined, there would be a lot to sit around and gripe about.
During our conversation Gorlick did not seem inclined and although he did not downplay some of the more volatile aspects of today’s industry you could tell this was a man that believes in the realm where he operates, believes in the products and solutions it offers and believes in a bright future for his company and the wider insurance world.
Gorlick formed Zenith Marketing Group in 1995 after spending years with John Alden Life Insurance. Working on the distribution of fixed annuity products, he found himself presented with a unique opportunity when John Alden sold their fixed annuity book of business to Sun America. It was then that Gorlick and another former John Alden employee, Barbara Seidel, started thinking about what they would do next. “We knew we were good at brokerage and we knew there was a need for brokerage, especially with fixed annuities back in the mid ‘90s. Interest rates were a little more enjoyable than they are today,” said Gorlick. Zenith originally operated as a consulting and brokerage operation but they ultimately decided that brokerage was where they excelled.
Eighteen years later, Zenith, with offices in six states, provides life, annuities, long-term care (LTC) and disability solutions as well as Medicare Supplement insurance to insurance professionals, including banks, broker-dealers and independent advisors. Operating as a wholesaler, they are in a unique position — when compared with other facets of the industry — to view certain trends. When Gorlick is queried as to what trend he views as most disconcerting he gives a response that is not unique to wholesale distribution, but rather has been monitored and anguished over by those in the industry for years: The graying of the workforce coupled with the dearth of new insurance professionals coming in to take their place. “A very concerning trend to me is who is going to sell insurance? Who is going to provide the value of the products that we sell to this growing population of ours?”
Gorlick is obviously bothered and perplexed by the prospect that younger generations dismiss a career in insurance so quickly. He offers up a quick anecdote about a meeting he held with young people where he asked them a series of questions illustrating the flexibility, unlimited income and nobility of the profession. The group was captivated until the point where Gorlick told them he was talking about life insurance and their knee-jerk reaction was an aversion to getting involved in the industry.
A second troubling trend that Gorlick sees is also well-documented — although no less distressing — and that is the amount of people who are under or uninsured in the country. “Life insurance is needed more than ever and it is at historic lows in terms of sales…people know they need it, they know they should have it and they are not buying it,” Gorlick said. He believes the underinsured and uninsured epidemic could be a confluence of things, namely, ineffective sales, lack of education and individuals who simply need to spend their money on more pressing and immediate needs. When asked as to whether another reason could be the manner in which incentives are built for producers, which renders selling to the middle market less lucrative, Gorlick says, “I think part of the problem of the underserved middle market goes back to my first concern that there are not enough people selling life insurance and I think the glamour of the stock brokerage is such that people want to make a lot of money. When you think about financial advisors, a lot of what they do is selling stocks and bonds,” Gorlick said. “We want to make sure the advisor has all the tools necessary to succeed.”
While some in the industry — and out of the industry for that matter — are dedicated to fighting the implementation of PPACA, the legislation is the law of the land and its application will continue. No matter what your politics, it appears it is here to stay, for better or worse and Gorlick says Zenith’s business model has been adjusted to accommodate and profit from it. “We don’t know all of the nuances hidden in the law but, especially when you consider the graying of America, we believe that the act does provide a huge opportunity for our producers and our business model. Specifically, I am talking about the cost of health care. It is going to spiral. Within the lines of PPACA it is going to cost more, not less for basic coverages that are included in the act. This is a great opportunity to educate the public about what it really means to pay more because you earn more. We all understand the fact that if you earn more you are going to pay more in taxes but I don’t think many people recognize that if you earn more in retirement you are going to pay more for the same basic expenses that others are perhaps paying less for. So, I think that PPACA is a huge educational opportunity to educate not only the general public but also our producers.”
Zenith also operates in the linked benefit market, offering Annuity/LTC; Life/LTC and LTC Riders. LTC (long-term care) insurance may be one of the most warranted products yet it remains naggingly difficult to sell. Gorlick feels that the linked products’ area is one where Zenith can do more to educate advisors on how to position this important product concept. Their distribution model for linked products is within the life insurance agent community as opposed to the stock brokerage community where Gorlick feels linked products are having a greater impact. “I would say that the linked benefit products are showing tremendous sales strength over the last few years with no end in sight.”
Gorlick rattles off a stat that linked life and LTC sales encompass 95 percent of linked sales. One of the main and constant challenges to selling LTC products is that as the product grows in price, the thought process for the consumer becomes “I don’t want to pay a whole lot of money for something that I may never use so, either I will self-insure or hope it doesn’t happen to me.” Linked products offer the consumer guaranteed utilization. “There is a leverage for money on life insurance. You are going to die and you are going to get money. Linked Life/LTC products give consumers more of a return on their investment,” Gorlick said.
With Zenith’s Annuity/LTC linked products, which some in the industry would maintain are tough to sell, it’s not necessarily that difficult, Gorlick maintains. He feels that now is as good a time as any to purchase an annuity and LTC insurance so a linked product is an easy fit for today’s money conscious consumer.
Zenith, like any company in any industry these days, realizes that maintaining an innovative and unique technological footprint is crucial to consumer satisfaction and in turn, profitability. Over the past few years, Zenith has focused their efforts on building technology that makes them stand out from their peers, although Gorlick is quick to caution that they still believe this is a people business. “It is a very competitive world that we live in in brokerage and we have invested very heavily in technology to set us apart,” Gorlick said. Two of their proudest achievements: a sales tool for people in the annuity business that offers them an unbiased approach for comparing annuities with income riders. “It cuts through all the noise,” Gorlick said.
Another tool is the HOPE Analysis that helps producers calculate the out-of-pocket health-care expenses needed in retirement. “At Zenith our goal is to try and help the insurance professional understand the needs and the pitfalls and the perils that are facing their clients. We have invested a lot of energy and a lot of time to educate the broker community and the public that here are the issues you need to mindful of and here are the products that can help protect you from them.”