Valmark Financial Group, an innovator in the life insurance space, has updated its Life Assurance 360™ process to help insurance producers comply with the state of New York's Regulation 187 and the updated standards by the CFP Board, both of which require a best interest standard for life insurance transactions.
More importantly, use of the LA 360™ tools, notably the Life Insurance Design Questionnaire™, will facilitate better and more consistent results from advisors for clients on the policies they place and manage.
Regulation 187 is set to go into effect on August 1, 2019, for annuity transactions and February 1, 2020, for life insurance transactions in the state of New York. Industry observers suggest that additional states are quietly preparing to release a similar regulation this year.
The CFP Board also significantly revised its Code of Ethics and Standards of Conduct, noting an application of the fiduciary standard that requires CFP® professionals to "act in the best interest of the client at all times when providing financial advice".
This would apply to any situation where a person with a CFP® designation provides advice or recommends life insurance products. The revised rules, which go into effect October 1, 2019, no longer allow a CFP® to segregate life insurance transactions from financial planning services and the more rigorous best interest fiduciary standard.
After researching the regulation and having conversations with staff from the New York State Department of Financial Services and various carrier partners, Valmark concluded that it is ready to work with its advisors and carrier partners to build a solution for compliance that will be both prudent and efficient for all parties involved.
The company also believes there are some carriers and distributors who will be unable to adapt to these new higher standards and will likely withdraw from the New York market, rather than change their go-to-market strategy. Furthermore, the company feels that independent agents, who want to represent multiple companies, will find it extremely frustrating to deal with different supervisory and documentation requirements across carriers and, therefore, having a single system for compliance is a must.
"We believe the standards proposed by Regulation 187 and the revised standards for those with a CFP® designation will bring life insurance advice into the modern financial world, with criterion that is on par with standards for other financial products," said Larry J. Rybka, Chairman and CEO, Valmark Financial Group. "The best companies will adapt their products and sales materials so that they can better demonstrate recommendations that are aligned with clients' goals. Our LA 360™ process and principal review from our broker-dealer allows those advisors who have always wanted to put clients' best interests first to benefit from a single system that works across companies and products, while allowing them to consistently document their recommendations and provide ongoing monitoring services for their clients' in-force policies."
At AALU's annual meeting, TRANSFORM 2019, this month in Washington D.C., Rybka will be moderating a panel of experts from four major life insurance companies on the new regulation by the state of New York. The panel will seek to address who has responsibility for complying and what impact it will have on advisors providing insurance and annuity advice.
Valmark, in accordance with the meeting, just released a new white paper on the subject titled Life Insurance in the Client's Best Interest. The whitepaper addresses in great detail the impact Regulation 187 and the CFP Board's revised Code of Ethics and Standards of Conduct will have on how life insurance recommendations are provided.
For the past two decades, Valmark has created dozens of tools and processes in collaboration with its Member Firms to educate clients on their options and meet their best interest. In fact, a year and a half ago, Valmark released a book titled Life Insurance 10X, which cast a broader vision for offering life insurance based on a fiduciary standard and ongoing advice. Using best practices, processes and tools from over a dozen life insurance industry veterans across the country, the book outlines how systematic application of a number of practices can radically improve results for clients and make the life insurance buying and owning experience ten times (10X) better.
Valmark's Life Insurance Design Questionnaire™, created in collaboration with Member Firms and carriers as part of the Life Insurance 10X vision, reconciles illustrated benefits to contract features of the policy in order to educate clients and provide better recommendations. The tool was in place ahead of Regulation 187 and the revised CFP standards, and only required minor updates to comply with both. Valmark is currently working with its carrier partners so that advisors may use this single tool across all carriers and products to demonstrate and document compliance with Regulation 187 and the revised CFP standards.
Valmark has also capitalized a Policy Management Company which provides ongoing monitoring and management of clients' in-force policies to annually reconcile the initial design of a policy to its annual in-force policy illustration. Now in operation for five years, the Valmark Policy Management Company's services are utilized by several dozen Valmark Member Firms to support the needs of their clients. Active management of several thousand policies has demonstrated a success rate that is 64% better compared to policies that are serviced on a reactive basis.
"For years, we have been building tools with our advisors to better educate our clients on the tradeoffs that exist with different types of life insurance plan designs," said Rybka. "We've done this not because of a minimum regulatory requirement, but because we see it as both an ethical obligation and competitive advantage to make better recommendations and provide a service for monitoring polices after they are placed so clients can achieve their objectives and benefit from their policies."
About Valmark Financial Group, LLC
Valmark Financial Group is holding company of several subsidiaries, including: Executive Insurance Agency, Inc., a national producer group; Valmark Securities, Inc., a broker-dealer and member of both FINRA and SIPC; Valmark Advisers, Inc., a U.S. Securities and Exchange Commission registered investment adviser; and the Valmark Policy Management Company, LLC, which provides ongoing policy management and monitoring services for life insurance policyholders. With a proud history of working with independently-owned financial services firms committed to high ethical standards in over 30 states throughout the United States, Valmark offers a wide range of insurance and investment solutions for high net-worth clients. Headquartered in Akron, Ohio with operations in St. Paul, Minnesota, Valmark, through its affiliated entities, has helped its Member Firms place over $60 billion of life insurance death benefits and manage insurance policies with a cumulative cash value of over $8 billion dollars. Valmark's affiliated RIA, Valmark Advisers, has over $6 billion in assets under management, including approximately $3 billion in variable sub-account assets within its TOPS® funds.
To learn more about Valmark Financial Group, visit www.valmarkfg.com
Securities offered through Valmark Securities, Inc. Member FINRA/SIPC.
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