The impact of the S&P down grades on five major life insurance companies

In what we can assume will be the first of several down grades for major life insurance companies in the structured settlement markets, S&P quickly down graded five premier life insurance companies yesterday from AAA to AA+.  The companies who were impacted by this are:

New York Life was dropped to a AA+

Northwestern Mutual Life Insurance was dropped to a AA+

USAA was dropped to a AA+.

Knights of Columbus was dropped to a AA+.

Teachers Insurance and Annuity. TIAA, was dropped to a AA+.

So what exactly does this mean and what are the implications for the life insurance industry and structured settlements in general? I address some of the concerns in this weeks video broadcast of Speaking of Settlements but in short the impact should be minimal other than to the pride of the companies listed above.

It is a sickening process in that each of those five firms went to great lengths over the last three years to do the things needed to retain a coveted AAA rating and in some cases make it a key element of their marketing campaigns, only to suffer this immediate down grade as a result of the fact that they hold a large portion of US government obligations precisely because they are so conservative and careful.

As I have been saying for years, our industry uses these ratings at our peril as the rating firms really could care less about the impact of their down grades on companies marketing and reputations and the idea of using S&P as a rating agency for life markets has been a bad idea for decades. I have always preferred AM Best as the best source of information on insurance company standards and solvency and they are not as reactive as the other firms.

Enjoy today’s video on the S&P down grade and it’s impact on the insurance and structured settlement profession, but it would be wise to stop using rating agency rankings as some sort of validation of safety and instead do your own research on markets and firm to match the right company to the right risk.

Micro broadcasting can transform your professional practice and marketing reach

I was talking to my son the other day, who is currently a junior in high school and is a serious football player, and who, as might be expected, spends a lot of time in the weight room. He was saying how his coach was showing him his lifting chart and his progress from this time last year when he was a sophomore on the amount of weight he can squat, one of the fundamental power lifts they do all year around. This time last year he could squat 270lbs, an impressive number for those of us long past our physical prime, but nothing compared to the 490lbs he can squat as of this weeks testing. As my son said, " I didn't realize how far I had come and how fast it has happened until I saw it on the chart. I just show up every day and lift and you just take the progress for granted."

While as a novice lifter he hadn't set out to hit specific targets or goals, his coach on the other hand had a program in place that he knew would get my son to that level, If he showed up every day and did the incremental work daily that built the foundation for powerful improvements and ultimately for success. Doing the hard work every day

I got to thinking about that afterwards and realized that the vast majority of professionals experience the evolution of their professional practices, regardless of whether that profession is in the legal arena, financial services, real estate, medicine or some other services, in a very similar fashion. They all tend to show up every day and just sort of do the things they have always done, plowing through their emails, phone calls, appointments and professional commitments and if they are really lucky, have a few spare moments to do a little marketing or PR work to fill the pipeline of cases and prospects needed to keep their business running and family out of the poor house.

Few, if any of them, have a "strength coach" to put them on a daily program to build them up to what they could ultimately become, instead relying on natural talent to build their professional practice, or more commonly, hiring consultants and "experts" of dubious value to waste huge sums in marketing their profession for them. Some day i'll tell the stories of the in house and out sourced consultants I have encountered to help firms market and the millions of dollars I have seen wasted in the pursuit of clients and cases that never show up.

Given that most profesions realize there are tons of time wasters out there, is is clear why most won't hire a professional trainer, i.e. Marketing guru, to help them design a program to build their practice and get them to another level professionally. It costs too much, there are ton's of frauds and bogus experts, you don't have the staff to implement the plan even if it is sound, or more commonly you are scared and you have no idea what is going on in the new media world so ignoring it or dismissing it as something you don't need to learn is easier then developing a new skill or a bigger set of muscles.

Well, I've got some good news for all of you timid, financially impaired, stubborn and overwhelmed professionals. While you were going to work every day, there has been a transformative shift in not just in technology but also human behavior related to how people get information and make buying decisions. This shift is about to put unprecedented power in the hands of solo practitioners, small firms and professionals who for decades now have been overwhelmed by companies with huge budgets, marketing scale or monopolistic marketing grips on certain professions.

In much the same way personal computing collapsed the power of centralized computing and liberated offices from the tryany of the main frame computer, in just the last three to five years there has been what will some day be recognized as an epocal change thanks to cloud computing, search engines and social networks.

When I first launched Legal Broadcast Network as a live audio streaming weekly show six years ago, the cost, complexity and pain involved to just do a twice a week broadcast was overwhelming. Imagine being charged $30,000 per month for a weekly audio broadcast, web site and emailing program! However, that was the price you paid because there was no Ipod, few blogs, RSS feeds were arcane and something called YouTube had just started. This wasn't the dark ages, this was six years ago, and to get the tools to broadcast you had to pay fealty to the shysters who ran little broadcast operations and who needed to amortize their multi-million dollar investments in overhead and soon to be obsolete tools.

Only my conviction that we were on to something big kept me grinding along despite the best efforts of the old school tech types to guard their high cost communication franchises and prevent ordinary business people from using the rapidly evolving tools that would soon put most of them out of business. You see, that same audio broadcast today might cost a professional who engaged our studio about $1000 a month to produce, host, distribute and archive audio and only slightly more for full video broadcasts. The cost of promoting your business and developing content has plunged and will only go lower in the years ahead and the old school firms with high cost structures are dead in the water and their is no turning back. Virtually anyone with a web cam, blog, email address and 6th grade computer skills can create video broadcasts, post them, promote them and push them out into the internet for the world to discover, or increasingly, share among social networking friends and contacts.

However, the massive cost reduction, ease of broadcating and ability to distribute isn't the really important element of the sea change going on around us, it is just the most visible and measurable aspect of a fundamental societal change in buying behavior and the destruction of the old line marketing platforms. Old sales enterprises and monopolies like the Yellow Pages, as well as some of the transitional ones like Craigs List, which will someday be remembered in much the same way as Selectric Typewriters, Compuserve and AOL dial up service and chat rooms are now. Relics of a long ago time that were overwhelmed by change they couldn't see or control.

Google/YouTube and Bing, along with Facebook, Twitter, LinkedIn, Hulu and Apple, are moving full speed to set up powerful franchises in local search, local classifieds, narrow cast/special content broadcasting, professional networking and consumer information platforms that can be immediately searched, viewed on hand-helds and shared instantly with the consumers social circle. The impact on marketing for wide numbers of professions is so profound and powerful and is happening at such speed that the vast majority of those impacted have no idea what is facing them in the next five to ten years.

The good news in all of this, is that what it requires of you to take part in this change is simple, direct, low cost and incredibly powerful, but it requires you to "show up at the gym" five days a week and do the necessary work as part of your day in order to get the big time results that will bring amazing professional success, financial freedom and the ability to control your firms destiny.

In part Two of this look at transforming your professional practice and marketing reach, I'll go into the steps you need to be taking RIGHT NOW to prepare for this shift and to do the things daily to build yourself into a powerful, self contained and controlled marketing platform. Until you wake up, get to work and do certain things every day to handle the transition, you will be giving up ground you can't recover in the future to those who got started early.

Wahlstrom & Associates to co-host exclusive conference on taxable damage litigation

Thats the headline of this unique little conference Wahlstrom & Associates will be hosting, along with our friends at Brook Hollow Financial, on the sleeping giant of taxable damages litigation and settlement strategies.

Lets face it, how many settlement professionals and trial lawyers are tired of the same, old, dry, boring and pointless seminars that promise much and deliver little? Even more so they  are tired of having their time and money wasted, as well as going to hotels so big  they never get a chance to network with the people they went to meet. Plus, who wouldn't want to have some fun, get some sunshine, enjoy themselves and really learn how to launch  their professional practice into a powerful new area filled with amazing potential?

The area of taxable damage litigation, coupled with the topic of showing trial lawyers and their advisors how to structure their legal fees, is the sleeping giant in litigation and professional practice. In fact it is estimated the taxable damage litigation market dwarfs the non-taxable, personal injury market, yet only a tiny fraction of lawyers and settlement experts make any effort to understand it and learn how to work in this important arena.

That said, then I think it is clear that it is time for lawyers and settlement professinals alike to take a break from the usual and come to Scottsdale, Arizona on April 12th and 13th and join us for an exclusive, limited attendance event held at the hip, mid-century modern Hotel Valley Ho.

The two day meeting will allow attorneys to receive up to 8 hours of CLE  and financial professionals up to 10 hours of CE credit, all while networking with and learning from top professionals, staying at a 5 star  boutique hotel and even, do we dare say it, attending a cocktail party at the classic Trader Vic's, all for far less then you would pay for your standard Gulag type convention and meeting elsewhere. Meeting people face to face, having fun, learning something that puts rocket fuel in your practice, all at prices that don't make you weep when the credit card bill arrives; what could be more old school than that?

As I mentioned, the hosts for this event will be Wahlstrom & Associates, the nations leading experts in managing taxable damage litigation, and Brook Hollow Financial, the industry innovators in structured legal fees and sophisticated solutions for trial lawyer financial strategies. Together they we will be bringing the top legal, tax, trial and management experts from around the country to discuss the amazing practice building opportunities for trial lawyers, as well as the settlement and tax experts that work with them,. We intend to cover the areas of taxable damage litigation such as employment law, discrimination cases, wrongful imprisonment, environmental claims, property loss on the Gulf Coast and Qui Tam/Whistleblower cases.

However, more than just a conference on what this area of law is all about, we will also have segments designed to show lawyers how to start KEEPING the money and fees you make through the use of structured legal fees. I mean what lawyer wouldn't  like to learn how to make fully taxable fees either be taxed at lower rates, or even some cases, tax deductible using conservative, insured strategies offered by the largest financial providers in the US?

Featured speakers and topic areas include:

"The tax and legal foundation for taxable damage cases and claims",presented by the man who literally wrote the book, Attorney Robert Wood.

"Employment, discrimination and wrongful termination litigation", presented by the NYC powerhouse firm of Outten and Golden.

"Environmental and contamination cases", presented by the Civil Action Attorney, Jan Schlichtmann.

"A timely insiders look at the Gulf Coast claims process and litigation ",presented by Frederick T. "Rick" Kuykendall III of the Murphy Law Firm.

"How to structure a legal fee on a taxable damage case and build a financially strong practice", presented by Brook Hollow Financial of Chicago, IL, one of the nations leaders in innovative solutions for trial lawyers.

"Managing a multi-claimant case using 468B trusts and protecting the rights of your clients", presented by Mark Wahlstrom, President of Wahlstrom Associates, experts in taxable damage litigation management.

"Using new media to build, promote and grow your practice", presented by Scott Drake, host and producer for The Legal Broadcast Network.

"Allstate Financial, Dan Durbin, Senior Manager of Allstate Structured Settlements, speaking on the types of non-qualified annuity cases Allstate will accept and the expansion into additional areas such as celebrity endorsement fees."

" What happens when you need to liquidate or unwind a taxable case" presented by Attorney Matt Bracy of Settlement Capital.

Plus many more speakers from companies such as Kenmare Assignment Company,  First Capital, Liberty Mutual, Synergy Settlement Services, Sequence Media Group and others.

Again, attendance is going to be VERY LIMITED and the room block at Hotel Valley Ho is tight as well. So register now and then CLICK HERE TO RESERVE YOUR ROOM AT HOTEL VALLEY HO and be sure to ask for your convention rate as part of the Wahlstrom Associates/Brook Hollow event.

CLICK HERE TO GO TO THE EVENT PAGE BLOG AND TO SEE THE FULL AGENDA  and watch for updates on speakers, room blocks and when we are sold out. This will be the first conference of its kind in over 10 years and you need to be there.

"Please note this event is designed for trial lawyers, tax accountants, CPA's, primary market structured settlement professionals and invited speakers. Given the very limited size of this event we reserve the right to limit attendance to those who actively work in those professions and or those companies whose business model does not conflict with or compete with those of the event sponsors. If you have a question regarding the suitability for attendance please contact us by email and check with us prior to registration."

Mad Men and The Structured Settlement profession, it’s all about the secrets

As anyone who watches the AMC drama, “ Mad Men” knows, the award winning show is focused around the creation of images and sales campaigns on Madison Avenue back in the early 1960’s featuring a group of characters whose lives are riddled with secrets and lies. The primary character is that of the suave, gifted ad man Don Draper, who carries the foundational secret of the show, which is that he stole the identity of a dying soldier in Korea, Don Draper, so that he, Dick Whitman, could avoid going to war and possibly dying himself. The resulting secret of this stolen identity eventually cuts a path of destruction as he needs to go to increasingly great lengths to cover up the secret, but the destruction is greatest in his own soul and mind as he knows his outer life, image and success are all a lie, despite his considerable gifts and talents.

As I watch this drama, I am repeatedly stuck by the similarities between the structured settlement profession and Don Draper, as each is outwardly successful, but at it’s core is harboring a secret that eats away at it’s life and threatens to eventually bring them to either ruin or a diminished state. As I outlined in part one of this commentary, the structured settlement market has two pillars that drove the growth of the profession, one is that the basic product solves a critical planning and financial problem for the vast majority of personal injury victims. The second is that the product also provided a savings off the cost of a claim through the use of present value of money, by bridging the difference between what the victim needs and what the company wants to pay. It was a product and process that worked for both sides.

However, somewhere along the way, and I was there in the middle of it when it occurred in the early to mid 1980’s, the present value edge that provided a benefit to the casualty companies morphed into something more sinister and began the process of rotting that second pillar.

What started as a “win/win” deal for both sides, in what is and will always be a fundamentally adversarial transaction, became a means of hiding the true cost of the annuity through keeping secret the cost, a tool in far too many cases for cheating uninformed, unrepresented plaintiffs out of the fair value of the claim. This lie went so far that structured settlement professionals working for casualty companies would refuse to verify the cost of the annuity that funded the plaintiffs benefits on the grounds that, “ If we tell you the cost the IRS might say you are on constructive receipt of the money and take away your tax benefit.” The fact is there was never any such ruling or legitimate premise to this statement, but this lie permeated the profession so that casualty companies could keep an even larger discount on the settlement then the interest rate spread already created.

Once this first lie was debunked, we then were treated to other fundamentally flawed secrets such as rebating programs on the annuity commissions ( Think Spencer vs. Hartford which just settled for $74 million),  as well as internal “approved lists” which essentially steered money to in house life markets or to select annuity companies, which then steered money back to their partners.

We can endlessly debate who did what over the past and I have no desire to revisit who was to blame. However, the facts are that these programs were established and run so that the casualty company had an additional economic benefit beyond the present value spread, and their economic incentive in continuing to promote structured settlements through their claims process hinged in many cases on these programs. We can argue if these programs are good, bad or indifferent, we all have our opinions, but the fact remains that much of our markets growth was fostered by these fundamentally flawed concepts, many of which are now being revealed in court cases that will in all likelihood further curtail the economic incentive of casualty companies to include structures in their claims process.

I feel the course of history and legal actions that have occurred, and continue to wind through the courts, will eventually end any program that has as it’s foundation the premise that it offers an undisclosed edge over the plaintiff and limits their financial their options in choosing a structured settlement.

So the question now is, once these programs are ended, will the newly transparent process that allows the injury victim and their lawyer greater transparency, continue to provide sufficient economic benefit to casualty companies to promote structured settlements?

I’ll address that in part three of this series next week, but until then it is my belief that the first step in getting healthy is admitting the secrets, dealing with the consequences and then rebuilding on what is honest, strong and good about our profession. We have a lot to offer just using our talents, products and skills, but staying in a perpetual state of denial and living in fear of discovery of the truth is no way to live.

Just ask Don Draper and the staff at Sterling, Cooper, Draper and Price.

Don Draper and his secrets, its time to come clean.

(Watch for part three of this commentary on The Settlement Channel, offered by Mark Wahlstrom, one of the nations leading experts in structured settlements, structured legal fees and settlement planning.)

Social media compliance inhibits financial advisors use with clients

Brokerage firms continue to talk a good game when it comes to social media, but few are actually doing anything about it, and that may turn out to be a mistake, this according to recent surveys of major brokerage and financial planning firms.

According to a report by Corporate Insight, almost all full-service brokerage firms expect the quality and content of social media outreach to improve, but James McGovern, the firm’s vice president of consulting services in New York, says few are willing to make the first move.

“There’s a lot of intent,” he says, citing 2008 data. “But there hasn’t been much by way of an embrace.”

Ironically, mutual funds, which were by far the most conservative of the financial services firms when it came to social media two years ago, have picked up the ball and run with it. Vanguard, for instance, has a corporate blog through which is offers commentary on various subjects and it has its own Facebook page.

This video first broadcast on Annuity News Now, features Mark Wahlstrom, Chairman of Sequence Media Group, and a 30 veteran of the insurance and financial advisory world. He comments on the article, the conclusions about issues facing financial planners and registered reps and offers some insight on how advisors can get ahead of the game by working closely with their compliance departments.