The next few years will be transformational for our industry. The responsibilities and requirements of an insurance and financial professional will change dramatically.
Benefits afforded to insurance products will change. Investing will become more challenging as we face increasing volatility. Americans' dependence on government, corporations and unions will become increasingly tenuous.
This situation sounds bad, but it doesn't have to be. Change always involves "doom and gloom" pronouncements. But change is only difficult for those who refuse to adjust. Change is only painful if you lack knowledge about how to prepare for its consequences.
Here are some questions and comments about the issues our industry will face:
1. Our industry just completed years of debate about who would supervise the sale of fixed index annuities. Would it be the insurance governing bodies of the states or would it be the SEC through your broker-dealer? The insurance industry prevailed; however, other issues were raised.
2. The source-of-funds debate has begun. Are you licensed to make recommendations about money you are reallocating? Who will supervise these transfers?
3. Discussions are beginning between regulators and our industry concerning standard of care. Should insurance and financial professionals be held to a "suitability" level of care or a "fiduciary" level of care? The really difficult question is: Who will define and then supervise a fiduciary level of care for the American financial consumer?
4. Compensation is another important issue facing our industry. Should compensation be disclosed? Do fee-based advisors give better advice than ones who receive commission?
5. What about the products? Will insurance products continue to provide tax deferral as a benefit? Will the tax-free benefits provided by life and health insurance survive a revenue-starved Congress?
These are only a few of the challenges our industry will face in the future. I have one clear statement to make concerning these challenges: Government and regulatory officials who decide these things must stay focused on making sure that these changes will truly benefit consumers.
There is already evidence that Americans are confused by these complex and contentious discussions. Americans own less life insurance than ever before. They save less in 401(k)s and are even withdrawing money before retirement. Because they are overwhelmed by choices and don't want to make mistakes, they do nothing. That is the most dangerous choice of all.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.