In a wide-ranging interview with LifeHealthPro in advance of the 2015 annual conference of the National Association of Insurance and Financial Advisors, taking placing in New Orleans October 3-5, NAIFA’s new CEO Kevin Mayeux outlined advocacy and professional development initiatives underway at the 126-year-old organization.
Chief among them: NAIFA’s full-court press against the Department of Labor’s proposed fiduciary rule; a pilot project to let unaffiliated producers test-drive membership; and a study being spearheaded to identify to new professional development programs. Here’s a recap of the conversation with LifeHealthPro Senior Editor Warren S. Hersch.
Hersch: As NAIFA celebrates its 126th anniversary this year, how would you assess the state of NAIFA in terms of its financial health, standing in the industry and ability to advance advocacy and professional development objectives?
Mayeux: We’re doing our best to trim the fat out of NAIFA’s budget, control costs and reduce expenses. But we have a definite need to increase revenue.
To that end, we’re exploring new ways to grow membership so we can bring in revenue through member dues. In addition, we’re looking to expand program offerings by enhancing our training line and by seeking additional corporate partnerships and sponsorships.
Hersch: You’ve outlined several items. Can you provide more details on any?
Mayeux: Our membership target for the year is 43,000. We intend to reach this goal by signing up dues-paying paid members and through an introductory program we launched in the spring of this year. The initiative offers agents and advisors who have been in the business for one to three years the opportunity to try out NAIFA membership, see our value proposition and then join as full dues-paying members.
Since the launch, some 6,000 producers have signed on to participate; we believe we can convert a good percentage of them to dues-paying members. Also, some 44 states are now participating in the pilot program. We’re very pleased with these results.
In addition, we’ve done two things on the non-dues revenue front: First, we launched a study in conjunction with a Chicago-based organization, Association Laboratory, to do an in-depth analysis of the training needs of insurance and financial advisors; compare NAIFA’s offerings with those of others in the field; and then do a gap analysis.
So if there are needs that are not being met or not being met thoroughly, and if NAIFA can provide the additional skills training, the then the analysis, to be completed in December, will identify opportunities for us to add to professional development offerings and boost revenue.
In addition, we’ve repositioned our corporate outreach team, which used to reside in our membership department, to focus more on business development and strategic partnerships. In tandem with this change, we’ve hired a new vice president for business development and strategic partnerships.
He and his team will be reaching out to companies to make sure they clearly understand the value proposition of NAIFA, ascertain their needs, help to marry NAIFA’s existing products and services with those needs, and develop additional revenue-enhancing offerings that are high in demand among companies.
Hersch: Which regulatory issues are top of mind now for NAIFA’s leadership team?
Mayeux: The first one is the Department of Labor’s proposed fiduciary rule, which can have a hugely negative impact on NAIFA members and their clients in the retirement space. The rule is unworkable and cumbersome. And it will prevent many mainstream Americans from getting advice on our members’ products and services.
So we’ve been actively engaged in relaying our concerns to [DOL] Secretary Perez and his team and, on Capitol Hill, to members of Congress. I’m pleased to report that so far we’ve seen good bipartisan traction in getting members of both parties to write to the DOL and encourage them to either take all of the industry’s comments into account before they finalize that rule, and/or introduce legislation that will sidetrack the rule, either by requiring the SEC to issue a fiduciary standard or more draconian measures, such as not funding the DOL if they intend to enforce the rule.
We’re working on a number of fronts to ensure that, if a proposal is implemented, it will be workable and one that will address the industry’s bottom-line concerns. Let’s be clear: We do want our members to act in their clients’ best interests, but the DOL proposal as now drafted imposes an undue burden on insurance and financial professionals.
Hersch: Turning to Capitol Hill, what legislative issues is NAIFA focused on?
Mayeux: We do have concerns about tax reform proposals that might adversely impact the tax treatment of the industry’s products. We’re also advocating modifications to the Affordable Care Act to make the law less burdensome on our members and clients.
Hersch: In respect to the DOL rule, the Financial Planning Association, which held its annual meeting in Boston last month, voiced fewer objections than NAIFA to the proposal. Do you fear that the FPA’s position, and those other associations more favorable to the proposal, is harmful because the industry is not presenting a united front?
Mayeux: Different organizations are welcome to express their opinions on this issue. While the proposal may not directly impact many of the FPA’s members, the vast majority of our members give advice to their clients on a commission basis.
There are so many lower to middle income Americans who simply cannot afford to pay a fee up-front to get financial advice. The way NAIFA members sell products and give advice — high-quality advice from a learned professional — makes it affordable to them.
Yes, it’s a shame that the industry doesn’t have a unified voice on this issue, but I think that’s because of the varying remuneration agreements that advisors with different business models have in place.
Hersch: Do you share industry concerns that, if the DOL proposal is implemented, that we’ll see a reduction in the distribution channel of agents and advisors, as happened in 2013 after U.K.’s Financial Conduct Authority banned commissions under its Retail Distribution Review regulatory regime?
Mayeux: Yes, the proposal certainly could have a chilling effect on the number of people who decide to offer our products to clients. What I think we’ll wind up seeing is more advisors focusing on fee-based products and tailoring their practices to the high-end of the consumer spectrum. That will mean that a lot of folks in the lower to middle markets won’t have access to good quality advice.