Women, Money and Power. This is the title of an article recently published by Aimee Johnson, who is the women’s program manager for Allianz Life. According to Johnson, the women’s market is still viewed by some as a niche market, but she goes on to set the record straight.
Nearly a third of women serve as the sole or main breadwinner of their household, according to a 2009 report on women in the labor force by the U.S. Bureau of Labor Statistics. A more recent study from Women and Company also notes that 66 percent of affluent women designate themselves as the chief financial officer (CFO) of their family. Women also control 60 percent of the wealth in the United States and are involved in 90 percent of the family’s financial decisions.
Simply put, the women’s market is significant. What is just as significant is that women are still not getting the attention they deserve from the financial services industry, so gentlemen, pay attention. The LIFE Foundation hopes to change this lack of attention.
The 2007 Allianz Women, Money and Power study indicated that only 29 percent of women are working with a financial professional. The study revealed that this was mainly because of a lack of comfort and confidence with financial planning, despite the fact that these same women are well educated, have successful careers and are managing their daily household finances.
So, she asks, where is the disconnect?
(more…)
Bloomberg, The Wall Street Journal and others have recently published articles saying how terrible it is that insurance companies are putting death benefits payable to beneficiaries into interest-bearing checking accounts as opposed to paying out the proceeds. This is a terrible misrepresentation of what actually happens and how this works.
Yes, for many companies the automatic settlement is to put the money in an interest-bearing checking account, but if the beneficiaries select a check for the proceeds, it is paid out as soon as the paperwork is processed and approved, sometimes in a matter of days. And in fact, most beneficiaries do request a lump-sum payout. According to Genworth, this number is as high as 90% of the beneficiaries.
As my friend David Woods, former CEO of NAIFA and the LIFE Foundation, states, “These articles charge that the companies are paying 1% and earning 5%. But the reality is that the money is available just as it is in a checking or savings account, right now. There is no checking or savings account in the world paying 5%. Even five-year CDs are in the 2% to 3% range.”
Most beneficiaries, if they take the death-benefit proceeds in a lump-sum check, will deposit them into a checking, money market or savings account, or CD, which at today’s rates, pays very little. Why are they going to do this? Because they need time to heal and make the proper financial decisions. Keeping the funds liquid and available is a most appropriate decision.
To the best of my knowledge, no beneficiaries have lost any of these death-benefit proceeds to financial mismanagement in one of the insurance-company checking accounts, and the beneficiaries can take the money out at any time by writing a check, no strings attached, no surrender charges and no fees. And this is a bad deal?
What do the banks do with the money they hold in deposits? They lend it out or invest it at much higher rates than they pay to their customers on their checking, savings or money market accounts and CDs.
The insurance industry is looking out for the best interests of its clients.
I spend time visiting and reading other finance-related websites and blogs to see what is up in the world of personal finance. While The Insurance Word blog mainly offers information on how insurance, life, health, disability and long-term care, helps you form a smart and solid financial foundation, we do know that there is a lot more that goes into building a healthy financial life.
Most of the time I see good advice being offered on these sites and blogs, although from time to time I do run across bits of “wisdom” that make me raise an eyebrow. But on the whole, I think they serve an important service: They get people to think about their finances and financial lives in a way they might not have done before.
LearnVest is new to the scene, launched just last November (and is still in beta), but it has made an impression on me. It was started by Alexa von Tobel, who took a leave of absence from Harvard Business School, to address this specific problem:
“There is no formal education for personal finance. Barring the extremely rare exception, personal finance is not taught in high schools, colleges, or even by most parents. How do we typically learn about our finances? Unfortunately, through our own financial mistakes and blunders, which have the potential to set us back before we even had a chance to get started.”
And while most of the information on the site is targeted at women half my age, I do subscribe to their daily email: LearnVest Daily, which I have found engaging and on point, addressing concerns large and small that young people have as they navigate their financial lives. I’ve even benefited occasionally from money-saving (or generating) tips.
I know many of our blog readers are like me, regular people trying to get and keep a handle on what can be an overwhelming topic at times, their personal finances. But I also know we have financial advisors and insurance agents who read this blog.
So, I’d like to do a soft-turn and appeal to you, the professionals out there, to help out with this important task of educating young people about their finances. While websites and blogs are an important avenue to learning, nothing can replace the personal touch, a “teacher” leading the way. And if you are an advisor or agent, you need to start seeing yourself as a personal finance teacher to the upcoming generations.
You can do something about this. LIFE’s NextGen3 is multimedia insurance education program to help educate high-school students about the basics of life, health and disability insurance, as well as financial planning fundamentals. The program has already reached 23 million high schoolers, and this new edition is aimed at raising that number much higher, but we need your help. You can be the conduit to bringing this free program into your local schools, and to your next generation of clients. For more information, you can contact Julie Lattanzi at the LIFE Foudation at jlattanzi@lifehappens.org.
Friday, February 26th, 2010 | Brian H. Ashe | |
Do you know that your life insurance agent gets paid when she helps you purchase a life insurance policy? And so does a financial planner, if you’ve chosen to go that route, instead. Sounds fair: professionals being paid for offering their expertise to help you shape a better future. It happens all the time across many professions from real estate to medicine.
That may be set to change, at least for life insurance agents.
Recently, Rep. Barney Frank (D-Mass.) and Sen. Chris Dodd (D-Conn.) introduced financial-services reform legislation in Congress. Both the House and Senate bills refer to the “harmonization” of financial advice under something called the fiduciary standard. This “fiduciary” standard has largely been pushed by certified financial planners as the only standard that can ensure the American public is receiving objective advice under a “duty to act, primarily for the client’s benefit in matters connected with the undertaking and not for the fiduciary’s own personal gain.”
The logical extension of this change could result in the SEC outlawing commissions as an acceptable form of compensation. The assumption would be that commission motivation is, de facto, proof of the agent not acting “primarily for the client’s benefit.” That means if a life insurance agent helped you buy your policy, he would not be able to get paid the way he’s been paid in the past, as his means of payment is a commission on the sale of the policy.
Is this really in the best interest of the American public? Well, the Association for Advanced Life Underwriting tells us that studies show that less than 17% of fee-based plans are ever implemented. Fee-based planners get their fee for a plan, but they are not obligated to make sure it’s put into action. Is that in the client’s best interest?
If a fee-based planner charged $150 an hour for three hours to analyze a client’s life-insurance needs and suggested a $500,000 term insurance policy that has a $300 annual premium, is the client better served by paying $750 in fees and premiums instead of just the $300 premium that he would pay if he got that advice from an agent?
Why is a life insurance agent, who may devote hours of work with no assurance of compensation, automatically assumed to be less faithful in his “duty to act primarily for the client’s benefit” than the fee-based planner who won’t begin work until the client has signed an agreement and paid a fee?
John F. Kennedy once said: “In a very real sense, insurance sets standards of performance and responsibility for all American business. Surely Americans derive their image of business most often from the relationships they establish with their insurance agents. The varied services performed by American insurance can do much to carry forward our traditions of freedom.”
Most insurance professionals I know have no problem with the idea of fee-based planners getting paid by fees. But fee-based planners, evidently, want to eliminate the practice of insurance professionals being paid by commissions.
Maybe Rep. Frank and Sen. Teddy Kennedy’s best friend in the Senate, Sen. Dodd, should look again at what President Kennedy said before they hit the wrong notes on “harmonization.”
Where are people getting their information on health-care reform? MetLife, through the MetLife Study of Employer/Consumer Attitudes on Health Care, states that both consumers and businesses are turning to traditional media outlets. The vast majority of individuals (85%) and more than half of employers (56%) say they look to TV, radio, newspapers and magazines to stay informed about health-care reform.
However, more than half of larger employers, those with 500 or more employees, are also turning to their benefits brokers or consultants for information, more so than they use business (42%) or consumer media (37%) outlets, and much more often than they look to industry publications (32%).
And the survey shows that how satisfied people are with their current medical benefits affects how they view health-care reform: 62% of Americans without any medical insurance feel that reform will be “good for America,” compared with 42% of those with medical insurance. A majority of Gen-Yers (65%) believe that health-care reform will impact them favorably, with only 44% saying are satisfied with their current medical insurance. On the other hand, only a third of Boomers (34%) believe that reform will have a positive impact on them personally, with 63% saying they are satisfied with their current medical coverage.
Attitudes toward reform also correspond to how healthy a person is. According to the MetLife study, 65% of consumers who view their health as “fair” or “poor” say that health-care reform will have a positive impact on them and their families, compared with 28% for those who say their health is “very good” or “excellent.”
Many of today’s employers, 41%, aren’t sure what they will do regarding medical benefits if legislation passes. While 36% of employers are unsure about what they will do regarding non-medical benefits like life insurance, disability income protection, and dental benefits should legislation pass, 44% of those who offer these benefits anticipate that they will make no changes to them. Only 5% of employers who offer these benefits say they would consider reducing them.
To sum this all up, business and consumers are confused as to how the proposed legislation will affect them. The solution is to keep in touch with your agent or financial professional. Once reform is final, they will have access to the answers.
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