Given all the seemingly bad news of recent months, you might rightly question whether you should remain in the insurance and finance business.
The U.S. Department of Labor’s fiduciary rule, record low interest rates, the rise of robo advisors, among other issues, are indeed causes for concern.
But these developments have to be put into broader perspective. Fact is, the market for insurance and financial services is growing as never before. Agents and advisors are uniquely positioned to fulfill Americans’ needs — for protection products, retirement and investment advice, legacy and long-term care planning, and more.
One touting the industry’s bright future is Joe Jordan. A 40-year industry veteran, author, ex-senior vice president of MetLife and self-styled “ambassador of significance,” Jordan presented an afternoon workshop at NAILBA 35, the National Association of Independent Life Brokerage Agencies’ annual meeting, held November 17-19 in Dallas.
The talk, about how to survive and thrive in a post-DOL environment, was also a celebration of your profession.
Jordan used the time to inspire advisors to realize their noble purpose: ensuring that clients are financially protected against the unexpected and can enjoy a dignified life in retirement.
“The value of the advice you provide and the products you sell are worth far more than what clients’ pay for them,” said Jordan. “Your intrinsic value is measured not by the money you make, but by the size of the problem you solve.”
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The largest inflow of U.S. immigrants, originating from China, will boost the nation’s Chinese-American population to 46 million in 2050 from 21 million today. (Photo: iStock)
The rise of robo
Among these are a perennial concern for Americans: building a retirement nest egg. Many believe that so-called “robo advisors” — automated digital advice tools being rolled out by Fidelity, Wealthfront, Vanguard and others — will increasingly dominate this space, displacing the need for human advisors.
Jordan said these tools will indeed have a place, but within a hybrid model: digital advice for certain components of a financial plan (one’s 401(k) or IRA); a live advisor for others (solutions that entail more complex planning, including protection products).
Why this split? Because, as Jordan noted, digital advice lacks one crucial element: the ability to create meaningful, personal relationships founded on trust. That’s an increasingly valued commodity in an economy where transactions are becoming more impersonal and automated.
And in an economy, too, where there will be more clients and prospects to serve. Whereas, Jordan noted, the population of other advanced economies will decline between now and 2050 — Japan’s by 28 percent, South Korea’s by 26 percent, China’s by 21 percent — the U.S. population will grow over the same period by 10 percent, thanks to immigration. The largest inflow, originating from China, will boost the nation’s Chinese-American population to 46 million in 2050 from 21 million today.
The new arrivals, not to mention second- and third-generation immigrants to follow, will fuel burgeoning demand for not only the industry’s products, but also agents and advisors who can serve a more diverse population.
The biggest cohort of this population is generation Y. Born between 1980 and 2000, U.S. millennials now number 75.4 million, surpassing (as of April 2016) the 74.9 million baby boomers (ages 51-69). As Jordan observed, many of them desire a career often the beaten path — meaningful, purposeful work that lifts the spirit.
“We own this space,” said Jordan. “We now have the greatest opportunity to make the insurance industry more attractive to millennials.”
More than half of this youthful demographic group comprise women, whom Jordan expects will “feminize” the industry by filling more advisor positions. Their growing ranks will be needed by an industry that places a premium on interpersonal skills, rapport-building and creating lasting professional relationships.
These skills will prove crucial when helping older clients with long-term care planning, legacy planning and retirement income planning. In respect to the last, Jordan noted, seniors will be looking to financial professionals to help them “pensionize” their assets — converting retirement accounts into a guaranteed lifetime income stream.
The distributions can also yield more money for retirees the longer they wait to start taking income. As with Social Security benefits, annuities accrue “mortality credits,” or gains paid to survivors in an annuity pool as others contributing to the pool die earlier than expected.
“Thanks to mortality credits, people with less capital can buy significantly more income than they otherwise would receive from a retirement account, said Jordan. “Annuities are unique in offering this benefit.”
Looking out on the horizon
The various trends Jordan flagged in his talk point, in sum, to an expanding market for advisors’ products and services. So take all the “bad news” with a grain of salt.
If you’re committed to achieving success in this business, there’s no limit to what you can accomplish. And when opportunities are unbounded, challenges that other, less dedicated advisors regard as insurmountable obstacles can be viewed instead as manageable.
As Jordan put it, “When you change the way you see things, the things you see change.”
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