I’ve never been much of an “I remember when … ” person, but occasionally I’m persuaded by how much things have changed as I sit here typing this on a flight to Florida while listening to a shuffle of my iTunes, reviewing 44-meg worksheets.
I remember in the late 80s doing evaluations of insurance company blocks of business on an IBM PC, in 1-2-3, on monochrome displays, and limited file size with seven-character file names. I remember the first truly mobile telephones, well over a foot long from bottom to tip of antenna, weighing four pounds. You could get your gym workout in on a long conversation. I remember the ol’ fixed annuities before I and a handful of others thinking outside the box developed the first fixed indexed annuities.
I’ve mentioned Moore’s Law many times: computing power since inception has doubled and its price halved approximately every 18 months; an exponential growth, seemingly without end, resulting in many of the marvels of today’s technology we take for granted. Businesses have taken advantage of this “law” by innovating these marvels, often in the end to their own destruction at the hands of the next innovator, a necessary facet of our capitalistic system, one that serves the consumer well.
On the flip side, Veronique de Rugy observed in a recent Reason magazine article, “… while virtually all industries are engaged in a constant race to meet consumer needs, there’s one sector where no such impetus is present.” It’s the government via its laws, regulatory agencies and programs. Rarely is one of these rescinded. Instead, they add one upon another, much like a dogpile after an exciting soccer match win.
Education: K-12 spending at all governmental levels has tripled in real dollars over the past 41 years while student test scores remain stagnant. The FDA’s glacial approval process routinely denies us promising therapies or drugs via its fear for safety-induced timidity. The U.S. Post Office would be shuttered almost immediately if subjected to a competitive market. I call this bureaucrats’ law; government-initiated stagnation at a spiraling cost for the product or service. Research has been done showing the more government grows, the more an economy shrinks. Where are the forces that should be improving government service while reducing its cost?
At CreativeOne, we like you—the agent, rep and advisor—must improve our offering every year, generating more results at lower cost. This is the driving force behind our recent initiatives, like:
- The “team-izing” of our sales support and business consulting for you.
- The staffing of an entire digital and social media marketing team that uses the latest techniques to promote you to your community and drive leads for your business.
- The addition of new carriers limiting distribution to only a handful of the highest-quality IMOs.
- The introduction of ChangePath, a unique, groundbreaking turnkey asset management platform for advisors that incorporates fixed indexed annuities as an asset class seamlessly into a client’s portfolio from risk profiling all the way through backend reporting.
Standing still will not allow an IMO to thrive today. In fact, it will be destined for destruction.
Meanwhile, government regulation continues to pile up on our industry in the name of safety and protection of the American consumer. The latest example is the Department of Labor fiduciary rule for all U.S. tax-qualified product sales, which will probably be finalized next month. It’s an edict on disclosure, conflicts of interest and effective government price controls via “reasonable compensation” requirements. There are significant changes in how you approach and sell to clients, in products and compensation. The price of industry compliance will increase, ultimately passed on to all consumers.
Of course, there is some role for lawmakers, regulators and judiciary to assist in a well-functioning market. However, it strikes me a never-ending governmental drive for safety and security is an indiscriminate and market-contorting substitute for basic consumer economics education, the responsibility of each of us individually. It infantilizes all of us. What is it that stops a consumer currently from finding a trusted advisor who makes a living by being a fiduciary, asking for disclosure of all fees and compensation they get, or doing online research on companies and products? Nothing. But Bureaucrats’ law is at work.
Nevertheless, it is coming. DOL’s efforts, even if derailed via litigation, will probably be trailed by SEC under its Dodd-Frank responsibilities, with regulation in a similar direction but for all funds. To survive and thrive we all must adapt. CreativeOne is an agent development organization (ADO) that has an RIA with experience getting producers investment advisor licensed and has exclusive insurance distribution relationships with numerous RIAs implementing an integrated securities/annuities/life insurance philosophy. We have owned and operated an FIA-friendly BD for a decade. We helped lead the successful regulatory battle over 151(a). We run an actuarial product development and consulting department, resulting in double-digit billions of insurance company AUM.
CreativeOne is best equipped to serve you as you adapt to changing contingencies. It will be an exciting year.