NAIFA Blog

January 24, 2011

NAIFA Releases Statement on SEC Study on Standard of Care

NAIFA President Terry Headley, LUTCF, LIC, FSS, issued the following statement on the Securities and Exchange Commission study recommending creation of a common fiduciary standard of care for broker-dealers and investment advisers:

“NAIFA is concerned about the possible adverse impact on middle- and lower-market investors if recommendations in the SEC study are carried out.

“NAIFA has previously expressed concerns similar to those raised by Commissioners Casey and Paredes in their January 21 statement that the SEC study does not ‘adequately recognize the risk that its recommendations could adversely impact investors.’

“NAIFA shares the commissioners' concerns that ‘the Study...does not appropriately account for the potential overall cost of the recommended regulatory actions for broker-dealers, investment advisers, and retail investors. The Study unduly discounts the risk that, as a result of the regulatory burdens imposed by the recommendations on financial professionals, investors may have fewer broker-dealers and investment advisers to choose from, may have access to fewer products and services, and may have to pay more for the services and advice they do receive. Any such results are not in the best interests of investors; nor do they serve to protect them.’

“NAIFA’s fundamental concern is that the potential additional costs and increased potential for liability of applying a ‘one size fits all’ fiduciary standard of care to the broker-dealer business model could result in middle- and lower-market investors having less access to the account services and investment advice that are currently being delivered by registered representatives of broker-dealers.

“NAIFA also agrees with comments made by Commissioners Casey and Paredes in their January 21 statement indicating that the study fails to adequately justify or support the SEC staff recommendation that the SEC propose the adoption of a ‘new uniform fiduciary duty standard and harmonization of two disparate regulatory regimes.’“

More Information:

National Underwriter's article on the SEC study quotes NAIFA President Terry K. Headley.

Posted at 12:32 PM in Compliance, Fiduciary Standard, Regulation, Securities | Permalink | Comments (0) | TrackBack (0)

January 19, 2011

The President Promises Regulatory Relief

But Maybe We Shouldn't Hold Our Breath

Wow! The NAIFA Blog has even more influence than we realized. Just a few days after our post on the rising tide of regulation and how it’s affecting advisors, President Obama admitted in a Wall Street Journal op-ed that overregulation places “unreasonable burdens on business” and ordered a federal review of regulations to ensure that they actually protect the public and don’t harm the economy. Coincidence?

Well, yes, probably. But still, NAIFA applauds the president on his change in tone on the regulatory front and for pledging to “do more to account for—and reduce—the burdens regulations may place on small businesses” while getting “rid of absurd and unnecessary paperwork requirements that waste time and money.”

The words sound good, but actions matter. And many people are understandably skeptical that the federal government’s regulatory machine will be able to reign itself in. We're not so naive as to expect the president to come out against his own health care overhaul or financial reform any time soon (and the Journal reports it won't happen), but it would be nice to see action that really does reduce the regulatory burdens endured by small business owners, including insurance and financial advisors.

Posted at 07:04 AM in Compliance, Health Care Reform, Regulation | Permalink | Comments (0) | TrackBack (0)

January 18, 2011

NAIFA Applauds GAO Approach: No Additional Layer of Regulation for Financial Planners is Warranted

The National Association of Insurance and Financial Advisors’ President Terry Headley, LUTCF, LIC, FSS, issued the following statement on the GAO report that examined oversight of financial planners. The report was mandated by The Dodd-Frank Wall Street Reform and Consumer Protection Act:

“NAIFA agrees with the main conclusion of the Government Accountability Office’s Consumer Finance Report that no additional layers of regulation for financial planning are required.

“We agree with the GAO’s findings that existing state and federal regulations already cover the vast majority of the services provided by financial planners, which include preparing financial plans and providing insurance products, securities, and other investments. Compliance with these regulations takes a large portion of insurance and financial advisors’ time and resources. Any additional layers of regulation would not only be unnecessary, but could also hinder the ability of advisors to effectively serve consumers.”

The GAO also found that consumers may not understand the significance of many titles and professional designations that financial planners hold, and asked the Securities and Exchange Commission to study the matter further.

“NAIFA strongly opposes anyone using professional designations or certifications in a manner that would mislead investors. Should the SEC heed the advice of the GAO report to look into this matter further, we hope the commission will consider an approach consistent with the NAIC and NASAA model regulations on the use of senior-specific certifications and professional designations. These models expressly prohibit the use of any designation or certification that is nonexistent, has not been earned or misleadingly inflates the knowledge or expertise of the person holding it.”

Posted at 01:25 PM in Business Practices, Regulation, Securities, The Role of the Agent | Permalink | Comments (1) | TrackBack (0)

January 14, 2011

Too Much of a Good Thing

Regulations are a fact of life in the insurance and financial services industries. And that’s not a bad thing. We need rules to protect consumers from the bad apples who make up a portion (however small it may be) of any profession. We need rules to ensure a level playing field and define some of the gray areas for honest advisors. We need rules to protect the integrity of our industry and provide peace of mind to clients, who in some cases entrust their life savings to our care.

Then again, we need water to survive, but give us too much of it and we’ll drown.

Man in Life Preserver copySo it is with regulation. As it stands, insurance and financial advisors are struggling to keep their heads above the surface in a sea of regulations. A 2010 survey of NAIFA members found that they and their staffs spend an average of 514 hours each year working on compliance, plus 12 additional hours that go toward preparing for regulatory exams. They spend an average of nearly $9,000 per year to comply with state and federal rules.

About 20% of those who at some point in their careers have been licensed for securities gave up their licenses, often citing the regulatory burden. One in five of currently licensed NAIFA members said that if compliance costs were to increase 15% they would likewise stop offering securities.

Yet increasing rules and regulations seems to be the wave of the future. U.S. Chamber of Commerce President and CEO Thomas J. Donohue recently cited a “regulatory tsunami” that threatens “the future of American enterprise.” He notes that the healthcare reform law “creates 159 new agencies, commissions, panels, and other bodies.” Meanwhile, the Dodd-Frank financial services act mandates 259 rulemakings by regulatory agencies and suggests 188 more. It also requires 63 reports and 59 studies, Donohue says.

Insurance and financial advisors provide crucial services for American consumers of nearly every income bracket. However, their job is getting tougher. Most NAIFA members are small business owners who work with clients from their own communities. It’s hard for them to run a stable business with regulations in constant flux and when a new wave of rules seems to hit every few months. The time and resources advisors spend on compliance cuts deeply into the time they can spend developing relationships and helping clients secure their financial futures. It also increases costs. In the end, overregulation hurts not only advisors, but also the very people the regulations are intended to protect — the American public.

Posted at 09:43 AM in Compliance, Health Care Reform, Regulation, Securities | Permalink | Comments (0) | TrackBack (0)

January 12, 2011

Financial Advisors Are in Demand

Fistfull of Dollars 1 Americans want help with their finances but are not sure where to turn, a recent survey by Allianz Life suggests. When the company asked consumers which type of professional service provider they would most like to use in 2011, the largest portion (44 percent) chose a financial professional. The next most popular answer — a personal trainer — received only 26 percent of the vote. In spite of this, a smaller number (33 percent) said they are actually likely to follow through and develop a financial plan during the year. The most common reason given by those who would like help but won’t seek it is that they don’t believe they make enough money to work with an advisor.

Fortunately, this is often not the case. A recent survey of NAIFA members found that main street investors — those with household incomes of less than $100,000 — form a solid core of these advisors’ clients. In fact, 58 percent of NAIFA members’ clients fall into this income group and 77 percent have household incomes of $149,000 or less.

We certainly hope Americans at all income levels are able to find the financial help they want and deserve in 2011. A searchable database of qualified agents is available on the NAIFA website.

Posted at 12:50 PM in Consumer Information, The Role of the Agent | Permalink | Comments (0) | TrackBack (0)

January 06, 2011

Insurance agents' service: Beyond transactional

Today’s Politico article focuses on the shrinking commissions for insurance agents under federal health care reform, and quotes NAIC consumer advocate Tim Jost. Jost compares the role of health insurance brokers to that of travel agents 10 years ago, and implies that –- just like consumers’ dwindling need to purchase airline tickets from travel agents -- consumers no longer will need insurance agents to sell them policies when state exchanges come online in 2014.

We don’t buy this argument. For one thing, it assumes that agents are merely sales associates, which we know is not the case. Consider this: The purchase of an airline ticket to visit the NAIC Central Office in Kansas City involves a fairly simple transaction that provides you with a one-time benefit: to reach your destination. On the other hand, if - after purchasing a health plan -- you develop a serious medical condition (or even require routine medical care, for that matter), then you will require contact with multiple parties: care providers, billing agents, an insurer and perhaps government bureaucracies for weeks, months or even years.

The role of the agent isn’t just to help with the selection of a policy to cover the cost of care, it includes serving as the consumers’ advocate when problems arise, identifying cost-saving opportunities and keeping consumers apprised of new changes to the industry that may impact them.

A 2010 survey of NAIFA members who handle health policies found that they receive an average of 223 requests for assistance each year from clients who are having difficulty resolving health insurance claims. And our survey just dealt with claims issues. Members have told us they spend countless hours providing customer service in other areas, such as explaining coverage options and navigating government benefits. The agents are experts on the health insurance industry and its products; they are well educated, highly trained, and tightly regulated. They develop personal relationships with their clients and become familiar with clients’ individual needs. Consumers simply cannot get anywhere close to the same level of service from a government or insurance company 800 number.

As NAIFA President Terry Headley told Politico, “The unintended consequences [of marginalizing healthcare agents] will be less competition, a disrupted service industry and significantly reduced customer service.”

The health care system is getting ever more complex with new levels of government involvement. And anyone who has suffered an illness or injury knows that you can’t get proper medical coverage or care simply by purchasing a ticket. Sometimes the assistance of a professional agent can make all the difference.

Posted at 10:37 AM | Permalink | Comments (0) | TrackBack (0)

January 04, 2011

A Message from NAIFA President Terry Headley

Dear NAIFA Members,

Welcome to 2011! I hope each of you enjoyed a wonderful and memorable holiday season with family and friends.

I would like to take this opportunity to thank you for supporting NAIFA over the past year, and special thanks to our NAIFA volunteer leaders for your quality and dedicated service to NAIFA. Our members’ commitment to our profession, our clients, and our association is a great source of inspiration and makes me extremely proud and honored to serve as your president.

I’d also like to provide you with a brief overview of some of the ways in which our NAIFA Board has been working with our national, state, and local volunteer leaders and professional staff to protect your business and the essential role of our industry, in serving the financial security needs of 75 million American families who depend upon us.

In December a NAIFA contingent of myself as President, President-elect Robert Miller and members of NAIFA’s Government Relations team met with all five SEC commissioners, including Chairman Mary Shapiro and her staff. We shared with the commissioners the results of recent surveys showing that NAIFA members fulfill a valuable role in providing needed financial services, products, and incidental advice for the vastly underserved middle market. We also discussed how added regulatory burdens, and particularly a mandated and imposed fiduciary standard of care, may threaten the business models of NAIFA members and hurt this core client base of middle-income investors. We intend to continue our dialog with them as the Commission continues its work to strengthen investor protection regulations.

We also were able to speak with several reporters during our trip to Washington DC in an ongoing effort to spread NAIFA’s message.

I interviewed with Reuters for a story on our meetings with the SEC and the results of the NAIFA member and consumer surveys commissioned through LIMRA.

I told InvestmentNews that NAIFA is working to ensure that an imposed fiduciary standard doesn’t undermine our members’ ability to continue serving our middle-income clients and disenfranchise this market segment from access to financial services and products.

I sat for interviews with reporters from Bloomberg, Dow Jones Newswire, National Underwriter and InsuranceNewsNet to brief them on the fiduciary issue and other items on our agenda, including health care reform implementation, upcoming income tax reform (commenting on the Deficit Reduction Commission Report), and the new estate tax system rules.

Finally, I had the unique experience of being interviewed on a segment on the new estate tax rules on Fox Business News' "Varney & Co."

But this was not an ending—it was plain and simple just a starting point. We face numerous challenges in the coming year, but you can count on NAIFA’s leadership, professional staff, and myself to be unrelenting and unwavering, as we continue to work on your behalf – to keep you in business, to help you grow your business, and to promote the ethical business practices of our members.

On behalf of the NAIFA Board, our officers, our NAIFA professional staff, and our national volunteer leadership, I want to thank you for your vote of confidence, active involvement, and level of commitment to our association and our profession—together, we will write the next chapter in NAIFA’s rich history—thanks again for doing your part. I wish you every success great health, happiness, and prosperity in the coming year and beyond.

Warmest regards,

Terry K. Headley, LUTCF, LIC, FSS
NAIFA President

Posted at 01:39 PM in Advocacy, Fiduciary Standard | Permalink | Comments (0) | TrackBack (0)

January 03, 2011

2010 Was an Amazing Year for Insurance, Life & Social Media

One of our favorite insurance bloggers is Ryan Hanely, whose Albany Insurance Professional Blog is "Dropping Insurance Knowledge on Upstate New York and the World!" The following is his end-of-year post and highlights a number of his articles.

GUEST BLOGGER Ryan Hanley is a New York State licensed life, health and property/casualty insurance broker.

2010 was an amazing year for me and that I truly hope that you can say the same thing.

The reason 2010 was an amazing year is very simple, in both my personal and professional life (which when you work in a family owned insurance agency are essentially the same thing), I dedicated myself to building meaningful relationships with as many people as I could and learning something new every single day.

Relationships

Many of the new relationships I formed this year started in Social Media but all of them started by being social in life. Besides my online activities I try to attend at least one networking function (i.e. Chamber of Commerce, Professional Groups), and get coffee with two to three people a week. Always remember, no matter how interactive the Internet gets, nothing beats a face-to-face meeting for developing a relationship.

Learning

I dedicated myself in 2010 to learning something new every single day. I focus on Insurance, Marketing, and Investing (investing to personal use, I’m not a financial advisor). By signing up for RSS Feeds, Email Newsletters, Twitter Lists, The Albany Business Review, The Times Union, and a few Insurance trade magazines I was able to inundate myself with sources of information. I also bought a Kindle 3 which has drastically increased my book reading. I’m very passionate about learning because it leads to personal and professional growth.

10 Most Popular Posts of 2010

Without further ado here are the top 10 Most Viewed Post that were written in 2010:

My Favorites That Didn’t Make The List

These posts did not make the Top 10 Most Viewed List but I personally think are pretty cool:

The Rub

I hope everyone has a very Happy New Year and Successful 2011! I look forward to connecting and discussing insurance and digging deeper into how we all can become more informed insurance consumers.

Disclaimer: This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions take or not taken by the readers based upon such information.

Ryan Hanley, a New York State licensed life, health and property/casualty insurance broker, writes the Albany Insurance Professional Blog. Follow him on Twitter at @AlbanyInsurance

Posted at 08:56 AM in Business Practices, Guest Blogger, Social Media | Permalink | Comments (0) | TrackBack (0)

Five Benefits Resolutions For Businesses In 2011 | Hartford Business

Five Benefits Resolutions For Businesses In 2011 | Hartford Business.

Posted at 08:29 AM | Permalink | Comments (0) | TrackBack (0)

December 23, 2010

Fair and Balanced

Reblogged from "Fair and Balanced," LIFE Foundation The Insurance Word Blog

We can spend a lot of ink in this blog correcting misinformation that appears in the popular press about life insurance, why it’s important and who needs it. So it’s refreshing to be able to link to an article that provides a load of great information for navigating a topic that can, admittedly, be complex.

Read the full post: LIFE Foundation - The Insurance Word Blog - Fair and Balanced

Posted at 07:22 AM in Consumer Information, Life Insurance, The Role of the Agent | Permalink | Comments (0) | TrackBack (0)