A Perspective From the Top With the President of the American College

(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 George Nichols, President and CEO of The American College of Financial Services. George, can you tell us a little bit about yourself and American College?

George: Sure can. First of all, thank you very much for having me. Really appreciate you being here. I’ve been the president of The American College of Financial Services now for three years, which has probably been the best job I’ve ever had. Prior to that, I was with New York Life Insurance Company for almost 18 years. Prior to that, I was insurance commissioner in the state of Kentucky, president of the National Association of Insurance Commissioners in 2000, and been in healthcare and beyond that. When I came to the College, the exciting thing about this, we are a 95-year-old institution that has been focused on providing applied financial knowledge for financial advisors for the last 95 years. It’s pretty exciting, and I look forward to continuing our partnership with the insurance industry and the broader financial services industry, and even expanding that to consumers. 

Sandy: Thanks, George. While many organizations seem to be struggling to stay relevant, others are embracing new technology, reimagining distribution channels, and developing strategic partnerships. Based on your experience, what have you seen COVID-19 change for the insurance industry?

George: Sandy, that’s a great question. One of the most interesting things is that when we went into this, we expected that there would be an increased demand in education for advisors because we thought about, “They have downtime.” Actually, the opposite happened. We actually saw a decrease in the demand for education. And a lot of that was really around the fact that we were moving to this Zoom environment where they actually now could have multiple meetings during the course of the day versus having to travel, find out when someone’s available, and then they may have more downtime. But you could set up meetings back to back. I have a friend in Montana, because Montana is such a big state, she said she’d maybe do three or four meetings a week. Well, now, during the pandemic, she was actually, she said she can do six or seven meetings a day but it was really just because of the use of the technology that allowed us to do a little bit more. And so that’s one of the big things I think that happened. The other thing is that what we have heard from advisors is that their discussions have changed a little bit. I think when you look at the dynamics of people losing loved ones, whether it’s a friend or a family member, they’re thinking differently. They’re thinking about the why of life. And we’ve seen research that shows that when people lose loved ones, they think more about their mortality, they think more about how they’re saving, they think more about their relationships. And in that, what we’re seeing is advisors are having to move really away from a transactional discussion about, “Hey, here’s the product, here’s what it costs,” and so forth, to really more of a deep emotional and behavioral discussion because people wanna express that why and then say, “Well, what are the products and services you can deliver to me that helps me live that out going forward?”

Sandy: Great, so it sounds like you think that that’s going to be a continued change and not something that’s gonna go back now that the pandemic is kind of going away a little bit. 

George: Well, to some extent, I do think the emotional and the behavioral component of what we’re doing, I think that’s going to last quite a while so I see that moving out. Whether advisors will take to that or try to go back to transactional and just quick relationships and moving on to the next, I think that’s an issue. But I do believe that we have really seen a huge change and individuals thinking differently about it. And, you know, for us, it’s the why and the how. The why is what is it I’m trying to achieve in life? What’s the impact that I wanna have? What are the things that are important to me? And then that how is, okay, now, as an advisor, help me figure out, based on what I have, based on what I’ve shared with you that I wanna go, how do we put the right financial plan together, bring in the right products and services related to that. So I do think that part of it changes. I’m just hoping that the advisor doesn’t go back to more of what we have historically seen is really a transactional thing. On the educational side, I actually believe people are going to expect more. And, you know, it’s two things. One, I wanna know that you have a competency to help me and advise me. And also I found that for advisors, that competency gives them confidence. And so those two things, I think, will also be another help, that will lead to maybe an increase in more of wanting to get back to getting educated.

Sandy: Awesome. Can you tell us more about your Center for Economic Empowerment and Equality?

George: Yes, I’d love to. You know, so go back, pandemic, May 25, 2020, George Floyd is killed and everybody in the country saw that and was trying to think about, you know, we gotta do things different. What can I do? What difference can I make? How can I improve the lives of others? And I did a lot of soul searching, thinking about, given the platform that we have, with our relationships with insurance companies and banks and investment firms and brokers and others, like how do we leverage that platform to not just address black America but any underserved community that exists? Everybody should have the benefits of the great economic opportunities that our country has. And so our view was, let’s start with black America. So we created this Center of Economic Empowerment and Equality. The objective was not to create a center that was on social justice. The focus was on creating a center that was focused on economic justice. Economic justice for every American, no matter where you are, who you are, but, again, really focused on these underserved communities. Obviously, as the nation was focused on black America, that’s where we started. We did four things. We said we wanted to — how do we help society narrow the wealth gap but really give people an opportunity to move on an upward mobility path that they’re on, so we wanted four things that we wanted to advance. One was, starting in the black community, how do we do a better job of educating black women? The reason we chose black women is they really are the gatekeepers. If you look at graduation rate, you look at college rates, you look at who’s leading the family, you look at who’s making decisions about the key financial matters of a family, in the black community, it’s usually — percentage leads over to black women. So we thought if we could impact them, we can impact the generation today, generations in the future. The second thing is, in our research, we did research of 3,500 black women, they told us, “I’d rather work with an advisor that looks like me.” So then how do we help companies recruit and retain black advisors, Hispanic advisors, Asian advisors in terms of broadening out the impact? That was the second. The third thing is what we call collective impact. This was how would we create a program for financial education directly to consumers? And the real question is, could we develop a program that actually democratized financial information for all Americans, and we created a program called Know Yourself, Grow Your Wealth, in partnership with the Society for Financial Education and Professional Development based out of Maryland and we’re working with about 20 historically black colleges and universities to sort of palette this program and then try to roll it out. The last piece is a black executive leadership development program where the aspiring black executives in corporate America, how can we help them with soft and hard skills for them to advance their careers in the companies that they work for, very unique approach of we launched a program about two weeks ago in Charlotte, North Carolina, in partnership with Choice Bank and we had about 23 aspiring black executives and we’re asking for their sponsors or their mentors to join them and we had about 13 of those, it was really a great experience, but we want to take that program and then once we work out the bugs of all that, how can we apply that to women? How can we apply that to veterans? How can we apply that to Asians, Hispanics? That’s really what the Center is all about, is how do we play a role to empower those communities to lift themselves up? We’re not trying to do it, it’s really a partnership.

Sandy: That sounds really exciting so I hope that goes extremely well. What is the next big thing for the American College?

George: There’s two things. One I’d say that we started about two years ago that’s still in process and then one that we’re really looking to. The first one is creating modularization of our content. When I joined the College three years ago, I would say that most people would say our value proposition was our professional designations. But what’s happened over the last several years is people are thinking differently about how they learn and they want things in small bites. “I just want to go to that one subject matter that I wanna deal with,” “I really don’t have the time or whatever it is to get the designation,” “I can’t spend a year on doing this.” So if you think about taking the content that is within our designations, that’s really the value proposition we have, and then put it in modular format where it’s in small chunks and bites and that they can come in and get what they want. They can customize it based on whatever their needs. That has been a huge, huge change for us, and really has opened the door to new audiences and interaction with I think people that, again, are not looking for a designation but really want that applied financial knowledge. So that’s the first thing, started a couple of years ago, and really, we’re seeing it tick off and get better and better and stronger as a part of our offering. The second thing, which is the most exciting thing is, for 95 years, we really focused on just the financial advisor. We are now moving how can we build a relationship with consumers. Now, I don’t have a lot of money to go out and do a great marketing campaign to say, “Hey, we’re the American College of Financial Services, and as consumers, you should come to us to get your financial knowledge.” We actually believe that if we can make this program around financial education and literacy, and partner at the community level where people are at the most appropriate time when it’s relevant and partnering with financial services firms, we think that we can actually get our name and be a part of the community and a part of consumers that way. The value that brings is when we get that information, we’re looking at how do we apply that to what we teach advisors, so they can better serve their customers and clients and future clients. So reaching out to consumers, I’ve heard a lot of financial advisors are thrilled that we’re doing this and I think that’s been the part that’s missing. It doesn’t take away from our mission. How do we benefit society? We’re just saying now we’re gonna do it more than just advisors, we’re gonna do that with consumers as well.

Kevin: Sounds great. Sounds very exciting. From your perspective, what do carriers need to do to stay relevant?

George: Well, you know, Kevin, that’s a loaded question. It’s a great question, it’s just a loaded one. Because, you know, I think every company has its own business model and what we think we can do to be successful, but here’s the things that I think we’re seeing. One is I really believe that we’ve gotta move and embrace focus on consumers. A lot of times, what I find is I’m trying to figure out how I sell to you what I sell as opposed to really understanding what it is that you need and then how does my products and my services deliver that for you and that’s a much stronger relationship. So I think that we have to rethink that paradigm of like it really starts with consumers and there’s a lot of great examples about how that’s working. So I think that’s one of them. I also think that, and I’ve seen this happen over the last several years in the life insurance industry. I mean, if you think about selling a life insurance product you probably don’t need until you die and if you can pass on to someone, but life insurance actually is, I mean, if you think of whole life and you think of some of the more creative products that have been out there, I mean, these are products for life. And so how do we really begin to promote that we’re delivering something that there’s real value but how does it serve you, and I really use that word “serve you,” along the course of your life and then you get the added benefit of how you’re leaving it to your loved ones. So I think that that’s another important component about it that I think comes through. And then, again, this last thing is, you know, they’ve gotta embrace technology. They’ve gotta embrace technology, digital, the whole data analytics thing, because that is really what’s driving the new age that we’re going to in the future.

Kevin: George, from your experience, how can organizations embrace innovation and transformation to improve performance and drive long-term growth?

George: Well, Kevin, if you think about some of the part we’ve discussed here today about the embrace of technology and the digital component, big data, just one example I think is technology and digital is going to give a great deal of efficiencies for how companies operate. And I think that is so important because there is a cost issue here. So I think that the technology and the digital component creates the efficiency. A great example is artificial intelligence, AI. When I think about the impact that AI can have on the underwriting process, unbelievable. Could, one, reduce the amount of time, which is really, really important when you think about how long it takes to get a life insurance policy written and placed. But it also will give them much more valuable information and I think the industry is being honest when it says it will allow them to reduce costs. And so if that cost is passed on where that products are even more affordable for consumers, all of that, to me, it’s a win-win on both sides of it. So it’s really embracing it and then looking at where they can use technology and digital to really create this efficiency. Now, there is a downside of that and, obviously, one of the things that the American College has been involved with related to the insurance regulatory community and with the industry itself is there are some downsides of artificial intelligence because it’s really based on the information you put in. So if there’s bad information that goes in, then you’re gonna have a problem what actually you get out. And there was a big concern among regulators around this disparate impact. One example was, is there a way that if you looked at your vehicle records, there were some minority groups that were actually pulled over more than others so they would have a record, a law enforcement record, yet there was no adjudication of whether they were innocent or guilty. Well, all that went in was they have a record. And so like how do you solve for that? And you can solve for those things. And so it was things like that that I think that they really have to do but AI I think is a perfect example of where they’ve gotta embrace technology. The second thing I think is really important is that a lot of companies have created these venture capital funds within their organizations to go buy, to partner, to invest in insurtech and fintech firms. And I think that the insurtech and fintech firms actually were starting out as disruptors until they realized the barriers of entry into the life insurance industry and then they’re like, “Okay, how do we partner and be a solution?” And so I think companies are really gonna need to look at that partnership. And not just a partnership but also taking some of that learning and applying it within their organization so that they can become just as nimble, just as curious about how do we do this better? How do we understand the consumer? I think if they embrace AI, how do we help drive down costs? How do we do efficiencies? And then, actually, not just partner and not just go to for solutions, but embrace the concepts around thinking differently as an organization. I think they’ve got a great opportunity to take all the innovation that’s going on, you know, in so many other areas and then being smart enough to apply that to our business.

Kevin: Sounds excellent. What do you see as some of the main barriers to growth and innovation?

George: Well, you know, there’s a couple of things that I think really jump out at me when I think about these barriers. There’s a regulatory barrier. As I mentioned, the fintech and insurtech firms thought they were just gonna swoop in, everything’s gonna be great, and then they were like, “Got all these rules and policies and laws and stuff,” and that changed. So I still think that there are some limitations from our regulatory perspective that prevent some of the innovation because the regulatory structure is not set up yet. The reason that we got involved in discussion on AI was because there are no rules. So they haven’t set up a regulatory process or structure because, one, it’s still evolving, and, two, I think that for a lot of states, really, especially small states, they don’t have the resources to hire the people that have the knowledge. So, I think that we’ve gotta figure out how we bring the regulatory community up to speed so that they can partner and, in some ways, lead how we’re gonna set up the guardrails of how we’ll use technology, big data, and all the other efficiencies that I think will come. So I think that is one of them. Now, you know, we’re going through inflation right now and the rates are going up and I looked at the 10-year Treasury the other day and I was blown away because I don’t think I’ve seen that in several years where the rate is getting, but, you know, we’ve come out of a long period of time of a low interest rate environment which has put additional financial pressures on companies in terms of their investment in the things that they can do new, where then I’m concerned about what inflation and some of the other economic factors out there are going to do to consumers and actually, I think, will be a benefit to companies in terms of how they deploy capital, where they can deploy that capital, and the ability to invest in innovation and grow their business. So I think that’s another opportunity for them that I think is coming down the pike. So they’ve got some things here. You know, the other thing I would close with is that I am watching a transition of new leaders. Lincoln just got a new CEO, New York Life just got a new CEO, TIA just got a new CEO, so we’re getting ready to see the shift I have a new wave of CEOs and they have interesting backgrounds. Some of them are on investment side, some of them still come with a risk perspective, some of them come from banking. So it’d be interesting that when those new perspectives come in or running a life insurance company, how they too will get that innovation and that different thought process of going forward. 

Sandy: What do you see as the biggest opportunity for the insurance and financial services industry over the next few years?

George: The fact is, the products and services that the life insurance industry delivers are needed more now than they ever have and how we are able to tell that story around the importance of it, again, where I talked about how you can use it through your life in addition to transferring that at the end of life, I think we’re needed more than ever and I think that the industry has an opportunity and that should be around how do we tell that story about how important we’ve been, and even more importantly, how important it is for us to be with you going forward in the future? The pandemic, again, has made us question our mortality. It’s made us question our relationships. That’s what we do. This is what the life insurance business is all about. It’s like, you know, I love the promotions that say like, you know, “If you love someone, buy life insurance policy so you can take care of them even when you’re gone,” and so I think we’ve gotta figure out how to tell that story about how important we are. And in addition to that, I mean, just think about that, when you think about investments in infrastructure, that’s the life insurance industry. So we’re already making investments in communities about how we deploy capital, but now we’ve gotta tell that story to the consumer about how we can be a part of how you live, how you die, and how you take care of the loved ones you have even when you’re gone. And they’ve gotta do a better job. I just think that’s a huge opportunity that really sits with the insurance industry. I do know that the industry is talking about how they can do more in these underserved markets in their communities and stuff and they’re, again, because we’re a long-term investor, that gives us an opportunity to make long-term decisions and build long-term relationships in these underserved communities. That’s another opportunity that I think the industry will be stepping up to pretty soon. So, yeah, there’s some great things here but it really does come down to the very core of what we’ve always been to people. And we really need to go back and figure out a new way, a more modern way to tell that great story.

Sandy: George, you mentioned some of the regulations and that type of thing going around with AI. What other concerns do you have with regulation and compliance that you see coming up?

George: Well, there are two things that I would elaborate on related to that question. First of all, you know, we’ve always dealt with the politics of regulation that we’ve had different political parties that lead different states and regulation may be more strict or less strict based on the philosophy. Obviously, in this current environment, it’s becoming even more polarizing. And one of the things that has happened, you know, historically has always been this regulatory arbitrage. “Well, let me see which state I can go to get done what I want to get done.” And that’s a dangerous game and I think the regulators have done a pretty decent job of trying to tamp that down, but it still happens. But now in this more polarizing environment, I’m really concerned that we may get to a point where regulators are, say, going along with, you know, if they’re appointed by a governor or they may have other ambitions, that they’re saying, like, you know, “We can make it easy for you to do business in our state.” The worst thing that could ever happen is your regulators are competing for economic development in their given state as opposed to doing effective regulation that keeps the market fair and safe for everyone involved. So that’s the first thing. The second thing that I think is going to be a challenge on the regulatory side is the entrance of private equity firms buying companies or buying blocks of business and then having a different philosophy around the investment strategy. Now, PE firms have been around for years so that’s not new. PE firms were there, you know, 20 plus years ago when I was a regulator. But what has happened is there’s more proliferation of those firms coming in because they’re looking for assets and they’re taking those assets and they have a different philosophy, even though they’re staying within the rules of what the basket requirements are for a regulator, they have a different philosophy and a different risk appetite for their investments. And that’s concerning, and it’s concerning to the industry, the traditional life insurance industry, it’s concerning to regulators that I talked to, and so I think we have to worry about PE firms and what they’re gonna do both to how the business looks in the structure today and the response that traditional companies will do when they’re competing differently because there’s a different investment strategy.

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

George: Well, just in case my wife’s listening, I’ll say it was marrying my wife, okay? And I appreciate you letting me slip that in and I’m gonna carve that one out so I can share it with her when I’m in trouble. But when I think about my professional career, it was actually back when I was 28 years old, I worked in the Department of Mental Health and Mental Retardation Services and I was involved with a team of people who went out and did management audits of state psychiatric hospitals. And about four years into the job, they asked me to run a hospital. Now, I’m 28, I’ve never run anything, and only thing I’ve ever done is four years of being a part of a team that does management audits, but the best decision was willing to take that risk. I knew going in that — and they were very clear, you know, “You screw up, we’re gonna fire you.” I’m like, “Okay, great. Sounds like a great deal. Great.” But it was really taking the risk and saying I’m gonna step out on this one and see if I can do it. And I remember asking the question of my sponsor, my mentor at that time who was my boss, Wani, and he said, “You don’t know it can’t be done and what we’ve watched you do over the years is take any problem we give you and figure out how to solve for it.” And that was really valuable for me to hear that from him so every job I’ve ever had going forward, it doesn’t matter what you put in front of me, I will figure it out. And part of it is knowing the right people, knowing the right questions, but having that attitude of like I can figure this out, there is an answer here, I just have to figure out what are the resources, the people that I need in order to do that, and I’ll tell you, I learned that when I took that risk and knowing that I was gonna have to go in depending on a lot of other people to help us be successful, and we were successful.

Kevin: Great story. Thanks for sharing it with us. What advice would you give to someone looking to get into the insurance industry?

George: Great question because every day, I’m out trying to get more people to look at the impact that they can have if they come to the insurance industry. The first thing I tell everybody is like be open minded. I know you have this perspective that, “Oh, it’s a life insurance agent, I don’t wanna be associated with that,” or it’s boring phase. I used to think that if you went to a life insurance company, you just sort of sit around and wait for people to die. And there’s a whole lot of stuff going on, a lot of sophisticated stuff, a lot of exciting stuff and so I asked them to keep an open mind. And there is nothing that I can imagine you wanna do that you can’t do in an insurance company. And, you know, we talked about this technology and digital. Well, you know what, I know you say you wanna go do that at Google or Apple but you can do that at a life insurance company. When you look at all of the data that we have access to, when we think about underwriting, when we think about claims experience and doing data analytics and creating new products and new services as a result of the insights that you learn from that, okay, you couldn’t get any better than that. So getting young people to realize that it’s more than just selling life insurance products, that there’s a lot of things behind the scenes that would fit any of their career aspirations. The pay is great. I think that, you know, you can do financially well in this. The exposure’s great. You know, the people that you get to interact with are some of the smartest people I’ve ever met. So, I just say keep an open mind and then come in and let us show you the variety of things that you can have access to from a career perspective in the life insurance. And the new thinking that you bring actually will allow you to create some real innovative things that maybe we haven’t thought about beforehand. That’s, you know, you really can make a difference. The last thing I think is, you know, I try not to be old school but I can’t miss the opportunity to say you want mission work, you really wanna do a job that is involved with an organization that’s making a difference in people’s lives? Well, I know a number of people who lost a loved one and thought they were losing everything they had and they didn’t, because a life insurance company paid off. And so I think it’s great mission work because if you think about the very premise of what life insurance is, it’s a promise that we’ll be there in the future when you need us the most. And so adding in the career opportunities and the whole mission value proposition that we do, I think it’s a great place to be.

Kevin: Excellent advice.

Sandy: George, with so many young people not getting into the industry, how can the industry attract more young college grads?

George: Great question. You know, when I think historically in the life insurance industry, everybody I started meeting when I first got in it was either the sister, brother, daughter, son of someone in the business, so it’s really been like a family approach of how we recruit, and we know our friends and we worked with those folks. And all of that’s changing, because now I talk to a lot of advisers who say, “Well, my kids have no interest in going into this,” so that dynamic is changing. So if we see that change, what do we have to do now? I think we have to reach out the demographic groups. See, I talked about our whole focus on our new Center for Economic Empowerment and Equality is like how do we address these underserved communities? How do we learn about them and then really get them to understand the great things that we do? I think it’s the same thing that we’re gonna have to do in terms of recruiting people to the industry and work in it. I think as long as the communities don’t know us, they don’t know what we have to offer and we’re not having opportunity to recruit them. So, how do we recruit more blacks? How do we recruit more Hispanics? How do we recruit more Asians? How do we recruit more LGBTQ? That’s what we’re gonna have to think about. And I have found that we’re gonna have to make adjustments because we need to better understand culturally where they’re at, but I think we have a great story to tell and we really are gonna have to move to those demographics. And, look, the numbers are working in that direction. If you look in, you know, 2030, 2040, you’re going to see a minority-majority society in America, and so start now. Build those relationships because that’s exactly where you’re going. I think the other part of this is in terms of how we recruit. I don’t think we’ve done an effective job recruiting women. Now, women are already a large demographic, but we’re gonna have to really think about that, especially I talk to advisers today, so many of them have recently their whole focus has been around to the husband, the husband dies and the wife gets another adviser, because you didn’t talk to her for all those years and she’s like, “Well, you’re not gonna talk to me now when I have all the resources,” and so I think that getting more women into the business, because I’m saying women want to do business with women, I think that if we understand and start focusing on those other demographics and women, I think we’ve got an opportunity to really flourish in terms of a place to work into the future.

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

George: Thank you all for having me. I’m honored.

(outro)

Thank you for listening. Please make sure to subscribe and share so we can stay in touch. If you would like to learn more about how Global Corporate Solutions and Global Corporate Leaders can help your organization recruit the best talent, increase your diversity, and save money, please visit our website at www.thegclgroup.com.