Its always been part of the life insurance industry model that agency managers were expected to recruit new agents into the business, and train and nurture them for a few years to become Top of the Table producers. Yes, selling to friends and family was always the way new agents began their careers, in all companies (which is proper and correct, by the way), and that’s not so different from how MLM companies pitch to their new recruits. The difference, of course, is that the income made from selling products is eventually how agents become top producers in the insurance industry, whereas having an enormous ‘downstream’ line (like a pyramid) is the ultimate goal of a top producer in the MLM industry.

What seems to have changed now in the life insurance industry is that sales managers are now being told by corporate that their *exclusive* role is to recruit and grow the organization, with product sales and training being of secondary importance. See this excellent link to a primer on the legal definition of illegal pyramid schemes. On the whole, the life insurance industry does not come close to being a pyramid scheme, although certainly aspects of how its products are sold does have similarities to multi-level marketing organizations which are borderline illegal. The main point, I suppose, is that it wasn’t so many years ago that my buddy and I had a lot of fun ‘talking shop’ while cruising New York for wine, women and song. Now we go out and my buddy is just glad to have some respite from the enormous pressure he’s under to “grow his organization,” which as Penn Jillette says, is just bullshit.

Don’t misunderstand: it’s still my opinion that a career as a financial advisor, a Certified Financial Planner ™, and a traditional life insurance agent, is one of the most rewarding careers available in the US. But at the sales agency management level, it seems like the game has changed recently, and not for the better in my view. When the agency management’s focus changes from having the most sophisticated and quality organization to having the largest organization, something is going askew with the industry.

RSVP’s to Marie.Eckert@Earthlink.net are appreciated, but not required. CC me on your rsvp, please: RBryan@RickBryan.com

See you there!

Lora and others practicing in this field have demonstrated that the same counseling techniques which help people overcome eating issues can be transferred to help people with financial management issues. Lora’s work has nothing to do with life insurance or annuities or mutual funds, but financial planners know that an awareness of budgeting and the emotional aspects of saving and investing are more important than effective yields on investments. Here’s Lora’s press release from her Financial Wellness Coaching website. I think it’s a great and non-competitive seminar to refer your clients to, and I’ll be there as an added bonus!

FOR IMMEDIATE RELEASE
PRLog (Press Release) – Apr 09, 2009 – WHAT: An innovative financial wellness seminar for those looking to learn powerful tools to eliminate current money anxieties in addition to developing effective strategies to manage one’s own “personal economy” during these turbulent economic times.

WHY: 80% of Americans are reported to be stressed out about money right now. The key techniques given by Lora Sasiela can break the cycle and create a powerful financial transformation.

WHERE: 1133 Broadway, at 26th Street
New York City, New York
Pre-Registration Required: http://www.financialwellnesscoaching.com/

WHEN: Saturday, April 25th
10am-12 noon

HOW: In this comprehensive two hour seminar attendees receive the following: Easy-to-use techniques for making peace with money, freedom from the isolation surrounding money struggles, 5 daily disciplines to prevent money anxiety, an understanding of the importance of money being “just money,” simply a tool, identification of unique limiting money beliefs and how to get rid of them, how to cultivate an attitude of gratitude – which will attract more abundance into your life, a take-home booklet of beneficial tools to continue developing ease in your relationship with money.

WHO: Lora Sasiela, founder of Financial Wellness Coaching, is a psychotherapist and money coach, guiding clients in the powerful transformation of limiting money beliefs that prevent them from enjoying full and rich lives. She has trained at the Financial Recovery Institute and the Women’s Earning Institute.

Financial Wellness Coaching
80 East 11th Street
New York, NY 10003
917.673.3867
Website and Event Registration: http://www.financialwellnesscoaching.com/

The financial advisor (somewhat new to the business, but very successful in a short period of time) was aggressive during the client meetings regarding her role: “I am the quarterback,” came out of her month every ten minutes. Unfortunately, to me at least, she didn’t actually understand an important aspect of that position. Which is (at least it used to be before headsets), to setup the offensive formation and assign the routes for the wide receivers and backs, and watch the defense setup and call an audible where necessary. And then the ball is snapped and the quarterback’s plan is set in motion. The point now though is once the quarterback hands the ball off to the running back, the back gets to carry the ball according to how he does his job; cut left or right and juke and sidestep; whatever. Once the quarterback hands the ball off, it’s no longer his job to follow the back down the field and direct where he goes to gain yardage. The QB steps back and watches the play unfold, unless he’s blocking, of course.

Similarly, once I am handed the role of advising and drafting on the proper construction of a Grantor Retained Annuity Trust, for example, the financial advisor no longer has a role in watching over my shoulder to opine on the clauses I decide to use and how I word various provisions of the document. This advisor simply couldn’t understand that trust construction can be accomplished in a variety of ways, and that I was not going to let her nitpick and comment and have me explain the use and available alternatives of every sentence in my documents. Despite the fact that it was her client and her relationship, the financial advisor just couldn’t get over her need to control those aspects of the game plan which properly fell under my purview as the attorney on the team. Unfortunate; one meeting ended acrimoniously and I doubt the clients are going forward with their estate plan, or with the purchase of the insurance and annuities which were on the table. Most unfortunately, I had about $7,000.00 of billable time on this case, and I’m certain that’s money lost, along with a potentially good client relationship, and a relationship with the financial advisor. Fortunately, I was able to discuss what happened with the advisor’s managing partner, whom I’ve known for a long time, and who was aware of the advisor’s controlling nature. So at least referrals will still be coming from that agency, if not from that particular advisor. Oh well; we’ve all got to live and learn.

Here’s a clip from a 2005 New York Life press release announcing Mark’s promotion to Senior Vice President:

NEW YORK, N.Y., December 14, 2005 — New York Life Insurance Company announced today that Mark W. Pfaff has been named senior vice president in charge of the Agency Department. Mr. Pfaff, who is currently senior vice president of the company’s agency field force in the Northeast Zone, will lead the Agency Department in the Manhattan-based Home Office, replacing Paul B. Morris who will be retiring in January.

Mr. Pfaff joined New York Life in 1985 as an agent. In 1988 he became a sales manager and in 1994 was promoted to managing partner for the Vermont General Office. In 1997 Mr. Pfaff transferred as managing partner to the Park Avenue General Office; later that year he was promoted to agency vice president of Northeastern Agencies. In 1999, he became the zone vice president of Northeastern Agencies, and in the fall was asked to take over the Manhattan General Office as managing partner. In April 2004, he was named senior vice president of Northeastern Agencies overseeing the recruitment, training and development of managing partners and partners, and made responsible for the sales production and overall supervision of the zone office and general offices within the Northeastern Zone. He won the prestigious President’s Trophy and scored a perfect 4.0 rating on the Company’s GPA system.

Mr. Pfaff holds a bachelor’s degree from Manhattan College and an associate’s degree from Westchester Community College. A native of Pearl River, N.Y., Mr. Pfaff and his wife, Claudia, reside in Charlotte, Vermont with their three children.

So here’s a guy who started as a sales rep, like most of the readers of this blog, and 24 years later is in the inner circle of one of America’s most prominent and well respected corporations. Congratulations Mark!

IRS Commissioner Doug Shulman has announced what is in effect a settlement offer for those that voluntarily and timely disclose unreported offshore income. Those meeting the terms of the offer will have to pay back-taxes and interest for six years, and pay either an accuracy or delinquency penalty on all six years. They will also pay a penalty of 20% of the amount in the foreign bank accounts in the year with the highest aggregate account or asset value. In other words, 20% of the highest asset value of an account anytime in the past six years. However, those who come forward on a timely basis will not face criminal prosecution.

Penalties and interest will be painful, no question about it. However it seems like a prudent move insofar as the Service has (or is in the process of) receiving data from foreign banks and financial institutions on US citizens which had been protected under foreign government secrecy laws.

Hospice is a program of care for persons in the last phases of an incurable disease and their families or caregivers. Eligibility for this benefit is predicated on a physician’s estimate of prognosis of 6 months or less and the presence of one or more progressive illnesses. The goal of hospice is to manage the physical, psychological, spiritual, social, and practical issues that present as a result of the dying process and continue for the family in the yearlong bereavement period that follows death. Hospice is provided in both home and facility-based settings by an interdisciplinary team of professionals—physicians, nurses, medical social workers, therapists, counselors, and volunteers—who coordinate an individualized plan of care for each patient and family.

An excellent summary of the program is provided by the Elder Law Answers website:

What the Hospice Benefit Covers

Medicare will cover any care that is reasonable and necessary for easing the course of a terminal illness. The Medicare Hospice Benefit provides for:
* Physician services
* Nursing care
* Medical appliances and supplies
* Drugs for symptom management and pain relief
* Short-term inpatient and respite care
* Homemaker and home health aide services
* Counseling
* Social work service
* Spiritual care
* Volunteer participation
* Bereavement services

Services are considered appropriate if they are aimed at improving the patient’s life and making her more comfortable. Physical, occupational and speech therapy, and even chemotherapy, may be covered if they are for comfort, not cure.

Checkout the pamphlet and give it a casual read. Very few advisors are aware of this important program; you’ll be doing a great service by passing this information along to your clients and colleagues.

At an insurance conference sponsored by JP Morgan last week, few of the speakers were positive on the industry, although there were some notable exceptions. One of the fellows running the meeting; I didn’t catch his full name (he’s referred to as “Jimmy”, I believe), did distinguish MetLife as one of the bright spots in the industry. I’ve excerpted a short segment of the conference call, FYI:

At the conference, MetLife executives Eric Steigerwalt and John Rosenthal presented a nice powerpoint showing in great detail why the company is so well positioned, and the analysts and ratings agencies are just missing the boat when it comes to rating their company. Listen to this short clip from Eric Steigerwalt; of course he’s in a room full of friends and colleagues so must be cordial, but I think the undertone is “hey guys, you just don’t have a clue!”:

The most stunning aspect of MetLife’s presentation I think was that the internal analysts and systems at the company are so strong, MetLife recognized the current economic collapse well in advance and took proactive steps to position itself defensively. Listen to these two comments by John Rosenthal: Also regarding the subprime mess:

Here’s one more slide (the complete powerpoint was filed with the SEC and is available via EDGAR), which illustrates MetLife’s Commercial Mortgage Backed Securities (CMBS) portfolio well positioned to withstand a deep decline in commercial real estate prices:

MetLife CMBS Defensifely Positioned

One last item: someone asked the question about MetLife asking for a piece of the TARP (Troubled Asset Recovery Program) money, or more commonly the “bailout” funds. I thought it was an interesting question and more interesting answer, because the speaker had just spent thirty minutes explaining why MetLife was in such great capital shape and had hedged and/or foresaw and prepared for the collapse of the residential and commercial real estate markets, but now the answer is “we have consistently not commented.” Bizarre. Secondly, no one even remotely familiar with the insurance industry would believe for one minute that MetLife’s Board of Directors would voluntarily put the Company in a position where their executives would be called to sit at those long tables in front of the House or Senate Committees and potentially take a public pummeling, deserved or otherwise. Not in a million years. Of course, it’s part of the job to ask the question anyway.

In any event, the point is that the analysts and market-drivers continue to miss the boat when it come to the insurance industry. And, MetLife outclasses the rest of the field so dramatically it’s not even a competition. *That being said*, as an insurance professional and financial advisor, this only means so much to you and your business and your clients. Explaining to your clients about a company’s Commercial Mortgage Backed Securities position is not worth a hill of beans if your applications aren’t processed and underwritten properly and timely, or a call center rep wasn’t as polite as your client expected, or account statements are confusing, or sales literature isn’t available, or advanced markets support is missing. A company’s capital position is usually an insignificant factor when it comes to the point when the client signs the application. Penn Mutual and John Hancock and Guardian Life and New York Life and AXA/Equitable and Northwestern Mutual and Hartford and Lincoln and MassMutual and Prudential and on and on and on; all quality companies themselves with both positive and negative aspects. *Your career* and your clients’ interests are much more dependent on the local sales and support structure available to you as a financial advisor. As diligently as MetLife investigates its collateralized mortgage obligations is how diligent you need to be when choosing whose logo will appear above your name on your business card. Choose wisely.

UPDATE: 3/26/09
Here’s a filing which was made today by MetLife with the SEC regarding the Temporary Liquidity Guarantee Program (TLGP), which is related to the TARP program, but not exactly.

On March 26, 2009, MetLife, Inc. (the “Company”) issued $397,436,000 of Floating Rate Senior Notes due 2012 (the “Notes”) in a transaction exempt from registration pursuant to Section 3(a)(2) of the Securities Act of 1933, as amended. The Notes are guaranteed by the Federal Deposit Insurance Corporation under its Temporary Liquidity Guarantee Program. The sale of the Notes was made pursuant to the terms of a purchase agreement (the “Purchase Agreement”) dated as of March 23, 2009 among the Company and Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., as representatives of the several purchasers named in the Purchase Agreement. The Notes bear interest at a rate equal to three-month LIBOR, reset quarterly, plus 32 basis points. Interest on the Notes is payable from March 26, 2009 to maturity on June 29, 2012 on each March 29, June 29, September 29 and December 29, commencing June 29, 2009. The Notes are not subject to redemption prior to maturity. The Company expects to use the net proceeds from the sale of the Notes for general corporate purposes.
The Notes were issued pursuant to a fiscal agency agreement dated as of March 26, 2009 between the Company and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the “Fiscal Agency Agreement”). The Company agrees to furnish a copy of the Fiscal Agency Agreement to the Securities and Exchange Commission upon request.

Frankly, analyzing and understanding what this is about is quite a few steps above my pay grade, and I’ve got an Order to Show Cause which needs to be drafted and submitted tomorrow, and three dozen other cases in various stages of progress, so I won’t be (I don’t think) looking into this; it’s beyond the scope of the purpose of this blog. Here’s a link to a Wikipedia article regarding the TLGP program. If someone could explain what’s going on, we’d all appreciate it.