The Data Possible Podcast

The Evolution and Importance of Insurance and Annuities in Client Portfolios

David Wright, Executive Director of Practice Development, M&O Marketing
Norman Bald, Director of Life Division, M&O Marketing

Summary: In this episode of The Data Possible Podcast, M&O Marketing’s executive director of practice development, David Wright, and director of their Life Division, Norman Bald, discuss the evolution and importance of insurance and annuities solutions and how advisors can incorporate them into their portfolios. In this episode, you will learn:

  • Tips for evaluating your current book of business for insurance & annuity opportunities
  • Who would benefit from an insurance review and how to understand their existing policies
  • How annuities can be leveraged as an alternative asset class
  • How advisors can be more informed so they can add value to their practice
  • What types of insurance solutions advisors should be prepared to discuss with clients

Resources: Discovery Data | M&O Marketing

The Data Possible Podcast is produced by our partner, Advisorpedia.

Podcast Transcription:

Doug: Hello, and welcome to The Data Possible Podcast presented by Discovery Data. This is your host, Doug Heikkinen. As advisors look to constantly meet the growing needs of their clients, and expand their value proposition, some are turning to offering insurance and annuity products. Others are interested but hesitant. We thought we’d turn to experts in this field to explore this evolution in the industry and enlighten our audience on how to think about adding these services into their practices. If you’re not meeting the needs of your client and prospect base, somebody else is. Today joining us is David Wright and Norm Bald from M&O Marketing. M&O is the oldest and longest-standing independent marketing organization in the fixed annuity and life insurance industry. David is the Executive Director of Practice Management at M&O, and Norm is the Director of the Life Division. Welcome.

David: Thanks for having us.

Norm: Yeah, thanks for having me.

Doug: Norm, let's start with you. And I'm going to jump right in. Where should advisors look within their existing books of business to find growth and offer insurance?

Norm: That's a great question. I get a lot of advisors today that have never sold insurance before just starting to get into it realize that it's an area of their financial planning that they're not touching right now, and also want to make sure that other advisors aren't coming in and talking to their clients about it. So it's been a hot topic recently. But what I tell these agents that are just starting out, or these advisors that are just starting out in the life insurance world is, the quickest, easiest, simplest way to address it is to talk to your clients about insurance. So when you're having that annual review, bring up insurance, ask them if they have a policy currently, ask them if it's been reviewed, most of the time people buy a policy, they throw it in their drawer, and they never look at it again. So ask them if it's been reviewed. And then if not, which is generally 99% of the time the answer, tell them you'd like to review it for them.

Doug: So who would benefit from an insurance review? And how can advisors understand existing policies?

David: So I would say that really, any client that has an existing policy would benefit from a review, as I said, they generally buy the policy, never look at it again, most clients don't understand what they have. So I think if we review the policy, I would say that with the 300-plus that I do per year 90% of the time I find a policy that either has issues that the client was unaware of, or we find that we can do much better for them, get them more coverage for less money, or save them money on the existing desk benefit, so 90% of the time, we find a better option. And for those 10% that we don't, we let them know, hey, your policy is good and maintain it. And at least it's a peace of mind for them. And also the advisor now has done a service for the client, which helps to solidify that relationship that he or she has with the client. As far as understanding the policies, some of these policies can get pretty complex. And that's where we're here to help. So especially for a new advisor that's just starting out in the insurance world, I would recommend that they call us. And we can certainly walk through any policy with them, help them explain it, show them what they're looking for. And that way they can go back to their clients and have those conversations. For those clients that happen to respond that they don't have insurance, then that's a great door opener to ask them. Why not? You know, most people that I talked to have a need for insurance. So it's really just figuring out what that need is. And we kind of do a lifecycle of insurance options. So what I usually add a lay out for those advisors new to insurance, is that, here's what to look for. If you've got somebody in their 20s or 30s starting out, probably term insurance is great for them. 30s or 40s, they're starting to make money, more established, maybe they're maxing out their qualified plans, we have options that can show them ways to put away more dollars for retirement tax deferred with tax free income in retirement. So that's a very popular thing that those executives like to do that are in that age group. The individuals that are 50s and 60s getting close to retirement, they're starting to think about long term care and how that could devastate their financial plan if they were to suffer an event. So that's an area we help. And then lastly, we have our retirees, the individuals that maybe they're taking RMDs but they don't need them and they're just saving them on just planning on passing on their assets to their beneficiary, so we can show ways to actually leverage that, get a tax free benefit to the heirs, and increase the amount that ultimately they receive.

Doug: That's great. David, let's turn to annuities. Why should a annuities be considered and how they're used as an alternative asset class?

David: Yeah, that's a great question, Doug. And the key there is alternative asset class. So we're not looking at this as a full part of the portfolio, but I interact with advisors, hundreds of advisors all across the country, and every advisor that you talk to today, they have some concern about their existing fixed income options. Whether that's the fed’s involvement in credit markets, or potential ratings downgrades, or if it's just, we're in record low interest rate environment. So there's not enough yield to get out of those conservative investments. So the great thing about a fixed indexed annuity, using it properly within that portfolio mix is you can provide stable returns of 3-7% lock in the growth as you go, take that money off of the table, protect that principle. And it's just like, if you've ever taken your kids bowling, you go bowling, you get that lane with the bumpers on it, you know you can't get a gutter ball. So what happens inevitably, everybody gets going, you're having fun, and someone says, let me go ahead and launch this bowling ball down that lane as fast as I can. Or let me bounce it off of those bumpers. And you're able to do that you can get aggressive and confident because you know you have those guards there. That's what a fixed indexed annuity does for a portfolio. You reduce the beta overall on the portfolio, which allows you to get more aggressive and capture more alpha. And you can provide a better withdrawal rate during those retirement income years. And it's not something that you really have to take from me as an advisor. But look at all of the industry-leading experts. Joe Zidle, Chief Investment Officer of Blackstone, Roger Ibbotson, one of the co-founders of the Efficient Frontier, President of Zebra Cap, and then Nobel Prize winning economist Robert Shiller, you know, him Jeremy Siegel, of Wisdom Tree, all of these people have all come out academically, written white papers publicly, stating that this is something that you can do to improve overall portfolio performance going forward.

Doug: So annuities were something that were very in vogue a while ago. And then they were frowned upon. And now they're coming back. So how can advisors be more informed so they can add value to their practice?

David: There really is a lot of contradictory information out there, I just gave a lot of really valid credible third-party resources that you can look at. But I would say, take the time to research it, if you don't have a back office that supplies you with those products, or actually specializes in those product offerings, find somebody that does, take the time to study the different product offerings that are out there. Fixed indexed annuities is a relatively new financial tool, compared to the rest of the marketing mix. You know, they were just invented in 1995. So if you haven't looked at annuities in the past five years, there's been a ton of product innovation in those lines. So I would say, feel free to reach out to me, even if we're not working together, I wake up every day with the mentality that, I want to help as many people as I can. So I'm always here just to provide educational resources as well.

Doug: Well, that's a great attitude. Let's get a little broader. How has marketing and messaging changed for M&O during the pandemic?

David: Yeah, so, every industry had a major disruption with this pandemic. And it's been unfortunate and tragic. But especially financial services, which has always traditionally been a face-to-face business. So what we saw in this past year and a half is really the rise of tech and consumer information. So M&O marketing as the back office and running marketing support, we really had to pivot very quickly, to start doing tech support, giving our advisors the best practices so that they can go back, reach out to their existing clientele, and say, hey, I'm still here, and I'm still available to meet with you using this technology. And I can walk you through how to use it. But at the end of the day, I just want to call and check on you and see how everything's going. And we saw the advisors that made those touches, they were really able to continue adding value to their existing clientele. So we started to do a lot of in terms of marketing, client outreach, or educational outreach, based upon virtual presentations. So we developed turnkey presentations around different topics that were relevant at the time, whether that was the Cares Act, or black swan events. And traditionally how they've affected markets, or the new administration coming on and what their proposed laws and regulations were.

Doug: What are some of the challenges and issues that clients are coming to M&O marketing with?

David: So a lot of advisors reach out to us, because really what they're looking for, is a one-stop shop resource. They want tech support, they want marketing support. They want branding and media plans, they need training and education. We help with recruiting centers of influence, we help with the marketing mix, developing a real business plan, we help with office operations. On the wealth management side, we're seeing growing M&A activity over the past few years. So that's something that we can help with as well, if an advisor is looking to acquire an existing book of business, or maybe they're looking at expanding and bringing on new advisors. And we do all of that, in addition to our core functions of being the middle and back office. So we're doing all the back office for all the middle office functions. But we're really a hybrid firm at the end of the day, because we recognize that there was a gap that needed to be filled in terms of training and education for the advisors, and then actually how to run a successful business wearing that CEO hat, not just wearing that hat of, hey, I'm a financial advisor, and I gather the assets. So that's where we really facilitate the need to fill that gap.

Doug: Have you found the pandemic change the way advisors do business?

David: Absolutely. You know, like I said, traditionally, our industry has always been a face-to-face business. And that's what people are comfortable with. Obviously, you're not going to work 40, 50 years of your life accumulating all this wealth, and turn it over to someone that you don't feel is trustworthy or credible. And being able to meet with that person in person and see their office and meet with their staff and develop that rapport is really important to that relationship. While we've seen where technology has played a larger role on that going forward. And the great thing about the technology piece of that is it's sort of a silver lining with this pandemic, everybody, including the clientele has simultaneously been trained on how to use these new platforms, because they're using it to connect with their family members. They're using it for their church groups, they're using it for doctor's visits. So I think we're still in the early adoption phase. But virtual planning is probably here to stay forever, simply based off the fact that it's really convenient to the client, convenient to the advisor, and it allows the advisor to reach new markets.

Doug: So let's close with a summary from each of you. And I'd like to hear what types of insurance solutions should advisors be ready to discuss.

Norm: Sure, I'll take that one. So I kind of ran through at the beginning of our discussion, just real quick that there's four basic types of insurance that we could get started with, depending on our age group that we're talking to. So I think talking about those four more in depth with an advisor would be a good place to start learning those, that would be a good door opener. However, really what I find is that if you want to get into the insurance area of the market, just being all in is really what's important. The guys that really want to talk about insurance with every client, that's really going to get them much further than the ones that are just talking about it occasionally. So what I would say is just basically having that willingness, that desire to talk about the insurance, and then knowing that you've got us to support you, that we will help you every step of the way in the process. We will even have conversations with you and your client if you would like that. So you don't have to be the expert on day one because quite frankly, you won't be. So just being able to say, hey, I have a team behind me, I'm your investment guy. I know that real well. But I've got these guys that know the insurance industry. So let me bring them in. And I think that's going to get these advisors much further ahead than trying to go it alone and, because for example, we didn't even talk about business planning. And what if the client owns a business, there's a whole other lifecycle of the business that requires different insurance needs. So there's so much to know that just knowing you have that back office that will help you. I think that that's the key.

Doug: David, anything to add?

David: Well, just to piggyback off of Norm’s point, we've been discussing the pandemic a lot. And one of the things that we did see, in terms of the advisors that had a lot of success, going through this pandemic was that they were reaching out to that existing clientele. And they were starting to do more generational planning, they were starting to do beneficiary reviews, they were starting to review existing life policies, existing annuity policies. One of the things we have here at M&O Marketing is a proprietary tool, where we've teamed up with Morningstar and Beacon Research to be able to do a review on any enforce annuity policy. So it doesn't matter if it's a variable, buffered, fixed annuity, all we need is an annual statement, we can tell the client exactly how that policy works from the internal fees to sub account performance to the features and benefits of that rider. And that was a really powerful tool for our advisors just to be able to put that third party source in front of their clientele and say, hey, you know, maybe this policy doesn't work exactly the way that you thought it did. And we might be able to replace that with something that better meets your needs going forward. So we did a lot of that in 2020. And we were actually named IMO of the Year for 2020 by Insurance News Net, because of all the tools that we were able to develop to keep our advisors in those conversations.

Doug: It sounds like advisors should really get in touch with you. So if they want to get in touch with you, how do they do it?

David: So I'm pretty easy to find. I have all the social channels, you can call me at my office at 248-784-1213. On Instagram, I'm Team David at momarketing. On Facebook I'm David Wright of M&O Marketing. And you can always find me on LinkedIn as well. David Wright, WMS. So I’m always here to take your call. I'm always here to provide resources. And we can always do a complimentary just business review of where your practices today, what gaps we might be able to identify, and where we could help you going forward.