With apologies to the late Hunter S. Thompson's classic "Fear and loathing on the campaign trail" I felt like it was a appropriate analogy to the mood and tone at the recently completed NSSTA regional in San Francisco, CA.
First the good news. The weather was outstanding, the city was cleaner and more dynamic then I remember it and I found a really nice little hotel two blocks from the regional for $115 a night instead of the $300 late decider price being charged by the generally unimpressive Grand Hyatt where the meeting was being held. Attendance was decent, but not what I would have expected for a good location with easy air travel and connections like SF. I'd estimate both days had 125 people there, but once again the majority of the attendee's were officers, committee members and life markets, with "the average broker" attendance being pretty slim.
Now to the fear part.
We are living in the most challenging financial market for life insurance companies since the early 1980's, when exploding interest rates, rampant inflation, a national recession coupled with bond market deterioration and a stagnant stock market are conspired to shake traditional life companies to the core. Today we face the consequences of the massive real estate and debt speculation that fueled most of the economic growth and wealth creation in America for the last ten years. The price is a frozen credit market, risky real estate and mortgage portfolios and a crisis of confidence about the future that is causing banks and insurance companies to hoard cash assets and search for additional sources of capital or partners to shore up balance sheets.
The fear of the unknown, coupled with the trauma of the AIG meltdown and rumors about other life markets financial health or business prospects, has created an incredible amount of fear in the insurance and settlement community about "what is the next shoe" to drop. In summary form here is what I was getting from attendees:
1. The credit rating agencies are going to be getting grilled and much like the pounding they took after Executive Life got a AAA just before melting down, the agencies are going to have to answer to customers, investors, etc, for being asleep at the switch once again. Therefore, the over reaction in blanket condemnation and reduction of ratings on life markets is one of the biggest fears everyone is looking at right now. A lot of the talk was about how to handle the looming over reaction by rating agencies in a world where an A rating can take you off a ton of approved lists and prevent you from writing a lot of business.
2. Fear of other bad news that has yet to surface. I won't traffic in rumors, I'll leave that to Senate Presidents, but people are spooked by the sudden nature of this melt down and what happened to AIG. There are those that feel we shouldn't trumpet the financial record of the US life industry too loudly out of fear that we will be embarrassed if another life company were to fail. It's a position I disagree strongly with and i'll explain why shortly.
3. Fear as an association about budgets, costs of business and getting stuck in neutral just as we need to be accelerating with a positive message to our end users. Again, I keep hearing about budget constraints, tough business models and lean years for brokers. This is self defeating behavior much like a "prevent defense" in football usually prevents the team that uses it from winning. This is exactly the time to spend money and invest in our business, not retreat.
4. Fear of telling our story of financial integrity and safety. Structured settlements remain one of the safest financial options on the planet, with 98.8% of all structures having paid every penny they promised over the 30 years since they were first sold. However, our association remains terrified to trumpet that fact because it's not a 100% number! Just for the record, the only people who have ever "lost" money in a structure were people who foolishly opted out of the Executive Life rehabilitation plan and decided to take their funds and forfeit their interest earnings. If they had stayed in the rehab plan they would have received 100% of their principal and promised benefits. If the "bad news" of our industry is that a tiny fraction of people in the worst insolvency in the last 50 years didn't get paid their promised interest but got all their money back, I'm thinking thats awfully good news. You think there aren't a lot of mutual fund investors who would opt for that deal right now if it was offered to them? The point is a lot of our old guard leaders and grumblers want to continue to hide our story, fly under the radar and hope we can hang on to our little market share. It's cowardly, it's defensive and it only insures your defeat in the end if we can't honestly talk about the amazing record our industry has in providing safe, guaranteed, tax free income to injured people for 30 years.
Now lets get to loathing, both self loathing and loathing of others.
1. The ongoing and gratuitous bashing of AIG is counter productive and needs to stop. Sure they created the mess and certainly there was a degree of arrogance about the company over the last 20 years that was hard to take at times. However, the vast majority of employees who work for AIG had nothing at all to do with the melt down in the financial products division. To unfairly attack them when the finger should be pointed at London and the Board of Directors of AIG is both unfair and unproductive. Our tight little profession of settlement professionals tends to enjoy a bit too much the travails of certain firms, as if seeing someone else laid low will somehow elevate themselves. No business gets stronger when it's market leader is under attack, but that fact escapes a lot of peoples notice. We need to start focusing on what the impact and outcome of the government intervention into AIG will be and how it will effect our profession and economy going forward. When our clients ask " What about AIG's safety and my structured settlement?" we need to have a credible answer other then, oh they were bad guys and deserve what they got. You don't sell a lot of premium with those kind of answers.
2. The self loathing and bitching about NSSTA, it's leadership and "whats wrong with NSSTA mindset." I am not taking any shots at the immediate past or current presidents as I think NSSTA has made huge strides in the last three years. It has become much more welcoming to plaintiff experts, worked to heal old wounds caused by past behaviors and pushed to modernize and upgrade the association in general. I think Jeff Bowers, Henry Strong and current President Chris Diamantis have pursued a vision to get our profession growing again, all under budget and business constraints that require a measured process of change. However, the rank and file, based on the grumbling and complaining I kept hearing, hasn't yet bought completely into the vision or refuse to commit the resources to make the push forward. The biggest complaints still lean toward failure to take on the factoring industry in the press and advertising, excessive reliance on regionals and annual meetings to educate and update members and an under funded effort to market our profession to the end users of structured settlements.
3. Loathing of factoring companies. I don't think the factoring industry completely comprehends the animosity toward them that the structured settlement profession has. It's hard to figure out what the membership resents more, the factoring business and it's take over of our trade name structured settlements, or the lack of fight our association puts into the battle to take that name back on the internet.
In summary, it was a decent meeting with decent speakers that was decently attended by decent and well intentioned people. In short we are no further ahead as a profession as a result of the meeting but we are no further behind. However, decent isn't going to get it done in the short or long haul for our profession. A few suggestions before I wrap up this review of the meeting.
1. The cost of regionals both to the association and members has created a situation where NSSTA loses money on the regionals and members spend well over $2000 just to attend. Between $300 a night hotels, flights, transportation, $500-$600 meeting fee's and other incidentals you can't get to and from a meeting to get your 8 CE hours for less then $2000 and probably closer to $2500 for a one and a half day meeting. That puts your CE cost at $250 to $300 per hour, which is nuts when you can do it online for free in some situations and $50 per hour in others. NSSTA needs to rethink and revamp the regional concept all while building a simple online CE program for it's members. Farm out CE to an online provider and then rework regionals into focused thematic venues that focus on networking, marketing and sales work shop events, and governmental and industry affairs at others. For instance hold a regional twice a year in Washington DC and focus on governmental affairs, tax law issues, lobbying, etc. Then hold a sales and marketing program twice a year in other cities. Save your big issues, speakers, elections, etc for the annual. Most committee work and CE should be done online in virtual meetings or classrooms at this point in time as flying anywhere to run a committee meeting or get CE is a huge waste of time, energy and money. Think smaller, more frequent, more focused regionals and move CE and committee work online.
2. I realize there are budget issues for 2008 and it's been a challenging year for the association but the web site and internet integration with and between members is 3 to 4 years behind industry standards. There is no reason NSSTA shouldn't have a live video, audio and blogging capacity run out of Washington, DC that provides for education, updates and starts the process of reclaiming our brand and relevance in search engines and with our end buyers. Look, the cost is minimal relative to the benefits, the opportunity is huge and the price we as an association pay by waiting gets more expensive by the day. Start with a website re-design that is "good enough", add on a simple blogging and podcasting capacity, commence reciprocal linking between members and the site and our association would be stunned at the results. It's incredibly short money relative to the pay off but people need to get around a common set of goals and then just do it. Too many personalities, issues and turf is getting in the way of a common sense solution that provides value to members.
3. Raise membership dues but provide greater value. I'd pay more for a really helpful, functional web site that drove traffic to my firm, provided resources to my office and kept me up to date on industry issues and offered discount priced CE online that related to my business. I'd also pay for access to video's of regional and national speakers after an event I didn't attend if I could view them online and have my account with NSSTA charged. None of what I am proposing is anything other then what standard web sites, associations and professional networks provide routinely. We don't have to invent the wheel here, it's already there for us to use.
In short, we have a long way to go to get to where we should be already. I just hope the will is there for membership to follow the vision and leadership of the association, despite the sometimes glacial pace of change. My fear is by the time we figure it out and spend the money, the lead of our competitors will be so profound we will need to spend years catching up.
