The opportunity before us has never, ever been greater. We all know the economic reality imbedded in the 78 million baby boomers – the group that has set cultural, societal and financial patterns since they “burst” upon the scene in the 1950s. And, while the competition for a piece of that business may be more crowded today than it was a half century ago (at least in terms of overlapping professions and providers of products, services, and advice), the potential is virtually limitless.
At the forefront of this potential is the need to help plan the retirement of an increasing number of boomers, who, for the first time in our modern day post World War II society, enter retirement without the safety and security of a defined benefit pension plan. When we couple that with:
• life expectancy reaching unprecedented lengths,
• the potential erosion of standard of living from even modest inflation,
• and the ever-increasing volatility of the equity markets,we face the “perfect
storm” of risk.
And, thus — truly producing the greatest degree of uncertainty around the simple concept of “will I have enough money to stay retired in dignity for as long as I live”.
All of the financial institutions (banks, credit unions, wirehouses, mutual fund companies, insurers) are designing, developing and creating their own version of a solution to income distribution planning. However, the insurance industry, and the life insurance companies, specifically, are uniquely positioned to meet this need. Mortality and longevity risk is our business – it’s what we do. It is our Sweet Spot!
We have not been so well positioned to serve our customers and win in the marketplace since we protected the basic death and savings needs of millions and millions of post World War II families in the 1950’s and 1960’s – (remember, it’s all about the baby boomers).
You see – annuities can be today’s protection. And just like in the ’50s and ’60s, when we helped educate young families about the risk of dying too soon, we now have to help our clients (aging boomers) understand their risk of living too long. We have to show them how a well-designed annuity may fit as one of their strategies to help insure against outliving their assets.
Again, this product maybe better suited to protect the majority of people from the risk of outliving their savings and investments than any other. Our job, and our potential incredible opportunity, lies in our ability to precisely, yet simply, tell this story. Yet, we must employ the rigor to tell the story directly and factually – without unnecessary embellishment or color –(it doesn’t need it).
In my opinion, we are on the verge of a second “golden era” in our business, of which the economics dwarf that of the life insurance age in the 1950s – 1960s. But along with this, we face challenges and make no mistake about it – the risks are real!
Our deepest threat stems not from our competitors (there is enough business for all), but from the institutions who regulate our products and activities, and from the ultimate judge of our value – our customers. The good news is we have it within our power to influence the perception of who we are and what we do by educating those around us (regulators, customers, etc) and vigilant self-governing and self-control of our practices and products.
The vast majority of us who have invested our life’s work to the betterment of our client’s financial well being, and to our industry, are honest, hardworking, professionals who conduct themselves every day in the most ethical manner. We have a small portion of our brethren who do not. And it is that group, with their suspect sales practices, and less than ethical behavior, who put us all in jeopardy.
Again, the risk is clear and it is upon us. However, it is in our control to rise above this threat to our destiny. How do we do it? We start “at home” in our own “family”, by conducting ourselves in the manner that belies the profession we are a part of. We choose to not tolerate inappropriate sales practices and marketing programs used by the few bad apples among us. We resist the temptation of an inappropriate level of commissions available in improperly designed products. We take every opportunity to tell the story of how our products work in concert with other financial vehicles within a client’s portfolio to solve the risk of outliving ones means. AND, we choose to embrace the efforts of forward-thinking carriers, FMO’s and producers who are creating processes, guidelines and structure to help us evaluate and document suitability at the point of sale.
Our partnership in this process may be the single most effective means to insure that the opportunity before us does not go unlived and unrealized.
As a fellow colleague in our great business, I ask you to join me and our team at The Annuity Store to work together to achieve our destiny in what could be the finest era our industry has even seen.
Again, it is terrific to “meet” you and I look forward to working with you.
Richard J. Marasco, CLU, ChFC
President
