Bits & Bytes

Life Agents Have Trust Problem
Only 25% of the populace view life insurance agents as “trustworthy” according to a study by LIMRA, the industry’s market research arm. Indeed, when insurance advice is sought, only 15% turn to their life agent or broker while 34% look to another type of financial advisor, such as an investment person, CPA or attorney. Three fourths of consumers are more likely to buy from someone referred by a friend of family member and 90% of these will, in turn, give a referral.

The Two Worst States For Business
Surprise, surprise – they’re New Jersey and New York in that order, according to the 2010 State Business Tax Climate Index published by the Tax Foundation, which monitors federal, state and local fiscal policy. The index measures how well a state’s tax system encourages investment by maintaining a broad tax base and low rates.

Growth In Life Settlements
Life Settlement transactions will grow from 2009’s $8 billion in face value to $13 billion over the next three years, according to Aite Group, a research firm. Industry optimists believe the number could be as high as $40 billion as aging baby boomers sell their policies to pay for long-term care. In 2009, policyholders received $1.1 billion in payouts, representing, typically, 18-20% of their death benefits. Insurance agents or other financial advisors involved in the deals made $96 million.

(More than 85% of all in-force life insurance policies never mature into a claim as they are surrendered or lapse, according to the Life Insurance Settlement Association. It says most consumers don’t realize there are options to giving up a life insurance policy or getting only the cash value.)

SEC Criticized For Global Warming ‘Guidance’
The Securities and Exchange Commission (SEC) and its chair Mary Schapiro are under fire for their “guidance” to public companies to disclose the risks global warming on their businesses – in the name of providing investors with “material information.” The two Republican commissioners voted against the guidance, which they said “places the imprimatur of the commission. . . on an agenda outside our expertise. Other critics say it harasses energy-intensive industries by making them publish negative information about themselves and creates litigation material for lawyers. The Wall Street Journal lamented:

“The agency that spent more than a decade ignoring evidence of Bernard Madoff’s $50 billion fraud. . . spent even longer constructing a credit ratings oligopoly that still threatens investors and then failed to monitor them. . . now has spare time to meditate on climate science.”

Are You In A ‘Transactional Rut’?
It happens to all professional advisors – financial planners, insurance agents, CPAs and attorneys. It’s what Ryan Poterack, CEO of PCA Advisor Network, marketing and practice management coaches, calls a transactional rut.

Poterack says it “occurs when your practice is growing and generating fees with reasonable overhead and your clients aren’t complaining. The risk is that your clients will start viewing you as a vendor and your service as a commodity they can obtain anywhere. The paradigm shift can occur subtly; you may not even realize it until times get tough and clients leave you for a cheaper vendor.

“So how can you avoid this rut? Innovate. Change when you don’t have to. The proven, time-honored path to business success as a professional advisor is in developing unique, meaningful relationships with clients whereby you provide real value. Quality relationships take effort, but they are also enduring through good times and bad,” said Poterack.

Gov’s Financial Meddling Causes U.S. To Lose Ground
The United States is losing ground in the global marketplace, the Heritage Foundation’s 2010 Index of Economic Freedom suggests. The U.S. dropped from 6th to 8th this past year and suffered the largest drop in overall economic freedom of any of the world’s 20 largest economies. “Freer” than the U.S. are Hong Kong (#1) followed by Singapore, Australia, New Zealand, Ireland, Switzerland and Canada.

U.S. losses were particularly significant in financial and monetary freedom and property rights, according to Terry Miller, director of the Foundation’s Center for International Trade and Economics.

“Driving it all were the federal government’s interventionist responses to the financial and economic crises of the last two years, which have included politically influenced regulatory changes, protectionist trade restrictions, massive stimulus spending and bailouts of financial and automotive firms. These policies have resulted in job losses, discouraged entrepreneurship and saddled America with unprecedented government deficits,” Miller wrote in the Wall Street Journal.

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