Using Life Insurance for Retirement

(intro)

Beyond the Challenge is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts Kevin and Sandy Dougherty talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent.

Beyond the Challenge podcast is sponsored by Exactuals, perfecting payments and the data driving them; Techficient, transforming the protection journey with intelligent data and machine learning to drive better outcomes; and JourneyGuide, improving your clients’ retirement outcomes through interactive planning software.

Welcome to Beyond the Challenge. Here are your hosts, Kevin and Sandy.

(interview)

Kevin: Today, we’re talking with Andy Bucklee, Senior Vice President and Head of Life Insurance and Executive Benefit Distribution at Lincoln Financial Group, about the trends, challenges, and opportunities he sees for the insurance industry. Andy is responsible for spearheading all aspects of strategy, partnerships, client engagement, and overall distribution of Lincoln’s broad portfolio of wealth transfer offerings. Andy, can you tell us a little bit about yourself and how you got into the insurance industry?

Andy: Kevin, first, thanks for this opportunity and it’s a pleasure to host you here at Lincoln Financial, I married my college sweetheart 39 years ago so I better start the planning for next year, it’ll be 40 years, so Karen and I met at college and we have two children, got a daughter down in Atlanta, Georgia, and I’ve got a son in New York City, and my daughter just had our grandson Charlie about six months ago so we’re now starting the new phase of life with grandkids. I got in the business 37 years ago with a company called Cigna, which is now owned by Lincoln Financial Advisors, oddly enough, and it’s the Sagemark group inside Lincoln Financial Advisors. I did a stint there for about five, six years. And then I went over to Merrill Lynch and came up through the Merrill Lynch ranks in sales and then into the management part of Merrill and then came over here to Lincoln Financial in 2009 and had been running the life and executive benefit business for distribution and, as you stated in your opening, responsible for the strategy, client relationships, and the overall product portfolio that we have for our life and executive benefit business. So, again, thanks.

Kevin: Andy, all sectors face challenges. For the insurance industry, the list seems especially long. Many carriers seem to be struggling to stay relevant while others are embracing new technology, reimagining distribution channels, and developing strategic partnerships. How is Lincoln Financial helping Americans reduce their anxiety about retirement? 

Andy: Kevin, great question. We believe at Lincoln that our mission is to help Americans with their retirement and achieve their retirement goals and their financial goals. And we believe that we do good things for America and good things for Americans. And as an example, if you think about it at Lincoln, we’ve got a portfolio that’s over $300 billion dollars and we invest that portfolio in creating jobs in America, we buy businesses in America, we buy real estate in America, and so we invest back into the American economy. We also help Americans with their retirement goals through our annuity portfolio, our retirement portfolio, our protection group through employers, and obviously with life insurance paying death claims. Now when I think about COVID as an example, during COVID, we paid out over $27 billion in death benefit claims, which is actually about two and a half billion dollars higher than we had originally projected, which is a good thing. It means we came through with our promise to help Americans. We wrote our first policy 117 years ago and we’ve been insuring Americans with strong solutions ever since then and not just in life insurance but, as I mentioned, in annuity products, life products, long-term care products, our protection business as well as our retirement business.

Kevin: Andy, how important is it to bring life insurance and wealth decisions into retirement planning?

Andy: Well, Americans are concerned with having enough money in retirement, right? They want to make sure they’ve saved enough, and one of the things that we’ll talk about today during this interview is we’ve done a lot of research at Lincoln. Over the past 20 years, we’ve developed a very sophisticated research department where we have been modeling and listening to consumers over many different concerns that they have in personal finance and wealth management and retirement planning. Interestingly, when we look back through 2022, last year, two of the main things we saw and it’s probably no surprise was inflation was their top concern, right? How am I going to deal with inflation? And retirement income was their second concern. And so we saw that 59 percent of consumers say that the current market has made them more concerned about having enough money in retirement. Now, you take that and you tie in life insurance to it and consumers cite that they really don’t understand how life insurance works. They tend to think of it as a death benefit-oriented product and not that it also can supply a supplemental retirement income, if you will. And so we believe that, really, it comes down to consumer advice, consumer education and awareness, and understanding of how insurance products work. And if you really think about life insurance, life insurance is kind of the glue that can hold a financial plan together. It absorbs any shock that could happen to somebody in a retirement plan. By that, I really mean the unfortunate early passing of a retiree, the death benefit then would take care of a spouse and other loved ones.

Kevin: Andy, what is the biggest objection you get to using life insurance to save for retirement?

Andy: I think the biggest objection you might get is that people think about life insurance one dimensionally and as I talked about just a moment ago, they think about it from a death benefit perspective only. And they miss the key benefit of an insurance policy and that’s the tax advantage nature of the buildup inside the policy. And if I go back and cite some of that Lincoln research, only 37 percent of US adults say they’re aware and understand how life insurance works and how that cash value buildup grows on a tax-favored basis. I think people also think of life insurance as too expensive and so, again, our research shows that 29 percent of Americans really don’t understand the life insurance product and that the expense isn’t as high as many people seem to think. So, at Lincoln, we believe, as I said, it kind of comes down to consumer advice and education.

Kevin: Andy, what do you see as the future of distribution in the insurance industry?

Andy: That’s a great question. I know you’ve done this a lot on your podcast, asking other folks about it. I really think a lot of it is going to come down to how the pandemic has accelerated a lot of the changes in our industry, and in many industries, if you will. Lincoln’s increased demand for more digitization of insurance products, if you will, in the buying experience and so I look at that across all touchpoints, whether it’s our wholesalers, our agents that we call on, or the end consumer, they’re all expecting more from a digitization perspective. And what I mean by that is really mobile first applications and consumers are looking at it across all of their daily life aspects, if you will, and the expectations that agents are putting on us to be able to do more via a digital experience. And so distribution organizations, like Lincoln Financial Distributors, we’ve really made a lot of significant investments in our wholesalers to help them better be able to engage with their agents and with their advisors virtually as well as the ability to meet them where they are and how they want to be met. We’ve also seen a trend with our clients, our strategic partners, in the technology that they’re introducing into the marketplace to improve the purchasing experience. And, lastly, Lincoln has really embraced that virtual first approach, I kind of mentioned it a second ago, and what we’re seeing is if you’re a financial adviser meeting with a client and you need a product expert or how does this work, a technician, if you will, very easily you can bring somebody up on the screen and there can be one of my wholesalers that can help that agent with a client in understanding a financial plan or a life insurance product, if you will.

Kevin: Very impressive. What do you think about the potential of Google or Amazon to enter the insurance marketplace and how could that impact the industry?

Andy: I think that’s a great question. When I think about it from an industry perspective, we’re a state-regulated industry so I think it would be very hard for a Google or an Amazon to get into our industry. I think the barriers might be too high. But what you do see and I kind of touched on it just a moment ago is when you think about Amazon, Google, Uber, and how they’re changing the customer expectation. I’m sure when you came into Philadelphia, you probably took an Uber from the airport to your hotel, right? Seamless experience, right? You do it on your app, on your iPhone, your Google phone, and it pays for it and it’s, again, seamless. So, you now have an expectation of the insurance industry to be able to deliver the same to you so that gap that we used to have is now coming together rapidly in a new customer experience. And so from a customer experience standpoint, I’m not competing against my traditional competitors, I’m competing against Uber, I’m competing against Starbucks for that experience that you had today when you had your Uber ride or your Starbucks coffee and so the industry is focusing on that. So, at Lincoln, what are we doing about it? We’ve really focused on improving the front-end experience for consumers and how they engage with us through new products and processes. And as the world becomes more digitally focused, consumers are going to expect that ease and accessibility, if you will. And so we’ve changed our products, our processes to meet this change that we see in the industry. We’re changing how they come in through streamlined products, fully engaged electronic applications. We’ve created what we call visualizers that they can use on their iPad or their iPhone. It starts to replace an illustration, if you will. And so clients can diversify their retirement portfolio on a tax-advantaged solution basis with us and, again, do all that on an iPad or an iPhone. And so this allows advisors and clients to better engage we feel with Lincoln Financial.

Kevin: Very impressive. What do you see as the next thing or the best opportunity coming to the retirement and insurance marketplace?

Andy: Man, that’s a loaded question. right? I recently saw a stat by Vanguard that they said the median 401(k) balance is $35,000, and so a lot of the opportunity I think exists in helping to educate the consumer out there as to why they want to save for retirement. And it’s not only financial service companies that are getting in on that, it’s the federal government is getting in on that. So if you think about our need to educate Americans and to help them save more, Congress just recently passed the SECURE Act 2.0, and so the original SECURE Act was passed in, what, December of 2019, and I think legislators really took notice of that and realized they needed to do more. They had to help Americans save more. And so this latest 2.0 reboot is designed to help them save for retirement through IRA incentives, small business steps, 401(k)s, simple IRAs, I mean, you name the gamut of tax-advantaged savings vehicles, the federal government is saying, “Here, do this.” Well, at Lincoln, we’re saying, “But don’t forget about life insurance. It’s another tax-advantaged vehicle that you can use to save for retirement.” And so as we talked about just a moment ago, we’re building products that make it easier for consumers to buy life insurance and save for retirement because, as the federal government’s helping, we believe the private industry can also help and we’re trying to do our part to help Americans save.

Kevin: How does Lincoln continue to innovate and overcome challenges to make the most of this opportunity?

Andy: Well, Lincoln’s been an innovator in the industry for years. I mean, we came out with the i4LIFE program. We created MoneyGuard 30 something years ago, that’s been a great product for us. We created VUL-1, which was a guaranteed death benefit product. So we continue to look to lead with new product and we use our research that I’ve quoted a few times to help understand the changing needs of consumers and that helps guide our strategy and our product design. So, we’ve got new products that are coming out, we’ve got a product that’s been about three years in development in close partnership with our product manufacturing team, our underwriting team, and then the distribution team, and through customer feedback along the way and doing a test and learn environment, we believe this new product is going to, as I’ve mentioned a few times, it’s done away with illustrations, it’s done away with the front-end process, it can be issued in 30 minutes, and so we’re looking for products like that to help Americans save more for retirement.

Kevin: Andy, what is one of the best decisions you made that had a positive impact on your career?

Andy: Interesting. I don’t know that there’s one decision that I could say that was the moment that changed my career. I think a lot of it has just been purposeful along the way, if you will, and so at breakfast, we were talking about our careers and so forth. When I first got in the business, I really believed because I was young that I needed to be a student of the business and so I started work immediately on my CLU, then I got my ChFC and then I got my CFP. And so I tell folks you really need to be a student of the business. If you want to be in the business, be a student of it. I think as the career develops, you want to stay a lifetime learner so read, put yourself out there, become a member of some of the organizations. We got a lot of great organizations. So I joined Finseca, back in the days it was AALU. You nurture relationships in this industry, as you know so well, right? Put good mentors around you and put great people around you. And I’m fortunate where I am in my career now, if I try and stay a lifetime learner, I’m now a mentor to people. I continue to learn and grow in the industry. I’m fortunate I got a great team around me that allows me to do that. You try and give back. I served on the board of the American College and I’m currently involved with an internal group called the Lincoln Business Resource Group. So, if I look over my career, it’s just a lot of purposeful things along the way that helped me get to where I am today.

Kevin: What advice would you give to someone looking to get into the financial services or insurance industry?

Andy: Boy. Well, we’ve both been in the business a while and it’s changed a lot, right? And that’s a good thing. Change brings opportunity. And so I tell people that are thinking about the insurance industry or the financial service industry, in general, people always think, “Oh, I don’t wanna be a salesperson,” that’s okay. Get in the industry. There are so many different things you can do in this industry. I often talk about it like take a taster tour. And at Lincoln, we purposefully work on that. We sit there and we’ll bring somebody in and they’ll become an inbound on our sales desk and they discover, “Sales isn’t where I want to go,” well, maybe they want to move into our finance department, maybe the analytical department, maybe they want to go into the marketing or relationship management. And so we purposely try and move people into other areas of the company as they mature.

Kevin: That’s great, Andy. As you mentioned at breakfast, there’s been a lot of change. What else is Lincoln doing?

Andy: Well, we’re doing a lot to impact the future of distribution and ensure representation in the industry. So, we’re working with early career talent, if you will. We talked a little bit about the sales desk and bringing folks in. We’re now moving past that inbound sales desk and going out to universities, especially like historical black colleges and universities, HBCUs. and bringing awareness of our industry and career opportunities to those colleges. We’ve got a lot of grass root groups that help develop internal talent and provide career pathing opportunities. One that I’ve always enjoyed being a part of is our women in sales network, it’s part of Lincoln Financial Distributors. Women have a unique difference if you’re a wholesaler than a male wholesaler in many cases, right? Have children, be a mother, family members, and so forth, so that’s an organization that is very purposeful and was started by women that wholesale for us. I mentioned earlier part of the business resource group. In particular, I’m a senior sponsor on our veterans group and I believe in helping veterans with career and industry and providing advice for them so very engaged with veterans. And then I think, in general, the financial service industry is just a tremendous industry. I’ve been very fortunate to be a part of it. My daughter’s in the financial service industry. I love to bring people into this industry because I think it’s a very noble industry where you help people solve their problems, whether it’s their financial problems, budgeting problems, estate planning problems, life insurance planning, long-term care planning, there are so many things you can do to help Americans and so a very good industry to be a part of.

Kevin: Andy, thank you for your time today. It’s been great to hear your insights on how carriers can stay relevant and the opportunities you see for the industry over the next few years.

Andy: It’s been a pleasure, Kevin. Thank you for this opportunity.

(outro)

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