NAILBA Perspectives - October 2016 - 9

chairman's corner Diversification is the Key GEORGE C. VAN DUSEN IV NAILBA CHAIRMAN OF THE BOARD T echnology and other advancements have created an ever-changing world, which makes planning for the future more important than ever in business, particularly in the insurance industry. Change is inevitable, but with some strategic initiatives and thorough preparation, we can position ourselves and our agencies to take advantage of these changes and turn challenges into opportunities. As I look toward the future and where I believe opportunities exist for NAILBA members in the independent distribution space, I think it's critical for us to be well diversified so that we can continue to be relevant to the industry, our carrier partners, the producers we serve, and the end consumer. There are four main areas of diversification that I have found to be helpful in taking advantage of the opportunities in the marketplace. The first has to do with diversity of product sales. For a very long time, the typical BGA focused primarily on term insurance and GUL, and we've done a lot of spread sheeting of that business, almost turning these types of sales into commodities for ourselves, the manufacturer, and the producer. However, it's essential for us to continue to educate ourselves and our producers on the importance of branching out, whether to Indexed Universal Life, Variable Universal Life, or Survivorship products. Obviously GUL and term are core products for us to offer, but there are a multitude of long-term care and chronic and critical illness riders available, along with single premium and standalone LTC products. An agency that's found themselves with a very narrow product offering needs to take a look at diversifying and becoming subject matter experts on more of the many products available in the market today so they're able to offer them confidently. A second area where diversification is important, maybe now more than ever, is with the carriers with which we choose to partner. In light of the many challenges that all of us have faced in the industry-the low interest rate environment, additional regulation, and added legislative oversight-doing business today is a lot harder than it was two decades ago. Because of the ever changing landscape we're in, it's hard to know where to draw your allegiances or who's going to be the one you need the most. If we're too limited in our focus, we run the risk of eliminating ourselves from competition. We need to protect ourselves and remain open to taking advantage of the resources that are available; instead of partnering with two or three carriers, it's important to branch out, dig deeper, and be strategic with five or six. We all know what can happen when we put all our eggs in one basket, and something that has helped our agency grow is being diversified in our strategy from a carrier partner standpoint. Another example of a diversification strategy for an agency has to do with the diversity of employees. When people think of diversity, they typically think of ethnic- ity, and that's certainly important when you look at the demographics of our country and the producers that we deal with, particularly in the non-traditional life insurance space. But it goes beyond that. It's important to understand the dynamics of a diverse agency workforce from many perspectives: gender, age, ethnicity, sexual orientation, and social status. This cultural diversity is important because our industry increasingly consists of various cultural, racial and ethnic groups, and we can learn a tremendous amount from each other in order to facilitate collaboration and cooperation. Perhaps most interesting is the generational perspective. Many of us are Baby Boomers or Gen X'ers, but we now have Gen Y or millennials forming our workforce. In our agency, this group makes up just over 20% of our workforce and it's growing. Because of that, we are learning to understand different perspectives on life and the many talents and strengths they bring to the organization. This enables us to help all of our staff work together to make a good, cohesive team and build a positive culture within our agency. The most important part of a diversity strategy is the diversification of your distribution: you must diversify who you distribute your products and services to. That's where the biggest opportunity lies, and the impact of the DOL's fiduciary rule has created an even greater opportunity for more life insurance sales. As the effects of this rule begin to come to light, I think we'll see a number of producers naturally migrate back into the life insurance space. When reevaluating their business and looking at the who, what, and why related to their existing customer offerings, I think they'll consider supplementing potential revenue loss with life insurance sales. Many advisors grew up in the life insurance business, so it's not that unfamiliar to them, yet the process today is, and they need access. This is where the NAILBA member agency can add value: by understanding what their needs and wants are. Financial advisors and registered reps at independent Broker Dealers have been an important growth area, but just focusing on that area can be short sighted. It's important to have deep relationships with P&C firms, CPA firms, and perhaps even a strategy to provide some point of sale whether that's in a financial institution, wirehouse, or bank on a local basis. When I look at the NAILBA membership spectrum, I see a lot of organizations that have been working with traditional life insurance agents for many, many years and though it's important to continue to work with these agents and serve their needs, there's a whole host of other producers that we need to be serving in order to really meet the needs and wants of the general consumers. If we only work with the traditional agents, we're not going to achieve our ultimate goal of writing more policies and keeping the life insurance industry relevant. As I look toward the future, I would urge all NAILBA members to have some foresight and consider, "What am I doing around a diversification strategy as I plan for the future to take advantage of the opportunities and continue to be relevant in the industry, relevant to the distribution that we're serving, and relevant to the carrier partners we're working with?" There's a lot that's going on in the world as technology changes, and if we're not careful, we could be technologically pushed out of the chain. It's critical for us to maintain relevance. Having a really solid diversification strategy in your plan for the future is an important step toward that. www.nailba.org 9 http://www.nailba.org

Table of Contents for the Digital Edition of NAILBA Perspectives - October 2016