NAIFA National&

Town Hall Q&A

NAIFANAIFA Helps You Grow Your BusinessNAIFA offers more than 50 professional programs and products to enhance skills and provide value-added business services.

NAIFA Protects Your BusinessYour products and your business are at risk now more than ever.NAIFA membership is the best insurance you can buy to protect your business.

NAIFA Promotes the Ethical Conduct of Our MembersConsumers know working with a NAIFA member means working with professionals who adhere to the highest standards in the industry.

At the federal level• NAIFA’s government relations staff monitors federal

legislation and regulations and mobilizes resources to achieve the most favorable outcome for the industry.

At the state level• NAIFA’s state associations work with NAIFA’s national

government relations department to positively impact state legislation and regulation.

NAIFA Protects Your Business

1612 bills of interest to NAIFA members introduced in the 113th Congress:

• 267 financial services bills• 674 health insurance bills• 329 retirement and employee benefits bills• 150 long-term care bills• 68 life insurance bills• 55 property & casualty bills• 13 estate tax bills• 56 annuity bills

Regulation of Investment Advice• Department of Labor regulatory efforts

– Would like to re-define who is a fiduciary in providing education, information and advice to retirement account holders

– This includes all 401(k) type plans & IRAs

DOL Concern• The DOL is convinced that advisors

compensated by a third-party – including all registered representatives paid through their broker/dealer – are conflicted and will always provide adverse advice

DOL April 14th ProposalThe current Department of Labor (DOL) Fiduciary proposal, as written, would limit the ability of lower and mid-market retirement savers to access advice, service and retirement products.

Problematic Provisions

• Limits education to participants• Limits advice to employer plan sponsors• Limits advice on distributions and rollovers• Vague re: proprietary products

• Compensation via commissions, trailing commissions, 12b-1 fees, fee-sharing, etc. allowed under a new set of rules

• The “best interest contract” class exemption, for individuals and small (fewer than 100 participants) plans/plan participants

Compensation - Class Exemption

Best Interest Contract• Explicitly state that the adviser is operating under a

fiduciary duty • Warranties that the advisers will be acting in

compliance with all relevant rules and laws• Specific disclosures about fees and expenses• Plan participants/beneficiaries and IRA owners will

have a right to sue the advisers (companies offering the investment options and individuals giving the advice)

DOL vs. SEC • SEC has jurisdiction over all securities

transactions, including those involving retirement accounts

• DOL has jurisdiction over only those transactions involving retirement accounts

NAIFA’s Strategy• Regulatory

– White House meeting with NEC & DOL on May 4– DOL technical meeting on May 20– DOL follow-up on June 3– Formal comments (outline is 11 pages)

• Legislative – Education & Workforce – Health, Education, Labor & Pensions– Appropriations

Agent Action• Join NAIFA or renew your NAIFA memberships• Educate your clients and colleagues • Share how the DOL rule will impact your practice

and clients. These stories may be used in discussions with legislators, regulators, or the media, and they may be useful as we prepare our comments on the rule.

Tax Reform

Capital gains/carryover basis on giftsSelf-employed pension plans (Keogh’s)

Traditional IRAsLife insurance and annuity inside buildup

Exclusion of capital gains at deathCafeteria plans including FSAs

Defined benefit plansHealth insurance exchange subsidies

401(k)/other DC plans Capital gains/long-term dividends

Employer health and LTC premiums

$36.10$52.10

$69.50$158.10

$174.80$193.00

$248.30$318.10

$399.00$632.80

$785.10

JCT Tax Expenditure Estimates2014-2018

Billions of Dollars

$3.2 Trillion from Industry

$3.2 Trillion from Industry (Continued)

ACA small business tax credit ESOPs

Health Savings AccountsLife insurance company reserves

VEBAs Group term life insurance

Section 179 expensingAccident/disability income insurance

Self-employed health insuranceRoth IRAs

$4.50$4.60

$11.50$15.40

$16.10$16.80

$17.60$21.30

$29.40$30.20

JCT Tax Expenditure Estimates2014-2018

Billions of Dollars

Nearly 45% of all expenditures are

NAIFA related

NAIFAAll other

1. Employer health and LTC premiums $785.1 billion

2. Capital gains/long term dividends $632.8 billion

3. Foreign corporations income $418 billion

4. Mortgage interest deduction $405.2 billion

5. Defined contribution plans $399 billion

6. Earned income credit $352.8 billion

7. Health exchange subsidies $318.1 billion

8. State and local tax deduction $316.4 billion

9. Child and dependent care credit $285.5 billion

10. Defined benefit plans $248.3 billion

Top Ten Expenditures

• Secure Family Coalition Fly-in – March 4, 2015

• NAIFA’s Strength – Members in every Congressional district

Industry Unity

90% of Congress covered with constituents from all 50 states and DC. Nearly 40% with lawmakers.

• 100% Senate Leadership• 100% House Leadership• 100% Senate Finance• 100% Senate Banking• 89% House Ways & Means• 88% House Financial Services

• NAIFA supports bi-partisan efforts to improve affordability and sustainability of private insurance choices.

• We want to ensure that consumers have access to professional services provided by licensed and regulated insurance agents.

Affordable Care Act

What will the Supreme Court do? • King v. Burwell: challenges legality of subsidies to

federal exchange states• Controversial IRS Rule to apply ACA credits to

federal and state exchanges• Plaintiffs argue ACA text limits tax credits to state

exchanges• Case will be decided in June

NARAB EnactedNational Association of Registered Agents and Brokers

NAIFA Member? Lobby on your own?

Political Mathematics• Show me the numbers• Mathematics is the practical implication of a

democracy• Coalitions are more effective than flying solo • Policymakers intuitively lean towards policy

positions that have broad support

Free One-Year MembershipNew in the business (less than 3 years)?

Join online at www.NAIFA.organd use promo code

NAIFANYFREE

Melissa McGrath845-298-2561 or naifanys@gmail.com

NAIFA Key Contact Coverage

• 1,770 documented relationships – average of 3 NAIFA members per Member of Congress

• 100% of tax-writing committees • 98% of Congress has a NAIFA constituent member ��

active in NAIFA's political involvement program

Average Amount Raised by Winners Over $1.5 Million

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

$359,577 $400,386 $423,245 $556,475 $541,121

$686,198 $677,807

$845,907 $911,644

$1,038,391

$1,259,791 $1,362,239

$1,434,760

$1,596,953

Yikes!

Source: Norm Ornstein and Thomas Mann, Brookings/AEI Vital Statistics on Congress, Chapter 3.

NAIFA’s PAC StrengthInsurance PACs

1. National Assn of Insurance & Financial Advisors2. New York Life Insurance

3. AFLAC Inc

4. Independent Insurance Agents & Brokers/America

5. USAA

6. Massachusetts Mutual Life Insurance

7. Council of Insurance Agents & Brokers

8. Association for Advanced Life Underwriting

9. Metlife Inc

10. Liberty Mutual Insurance

Top PACs1. National Assn of Realtors2. National Beer Wholesalers Assn3. National Auto Dealers Assn4. Honeywell International5. Lockheed Martin6. American Bankers Assn7. AT&T Inc8. Intl Brotherhood of Electrical Workers9. Credit Union National Assn10. Operating Engineers Union11. Northrop Grumman12. National Assn of Insurance & Financial Advisors

Largest Insurance Industry and 12th Largest in U.S.

NY Steady Decline in Participation

New Yorkers on Key CommitteesSenateCharles Schumer – Finance, Banking

HouseSteve Israel – Asst. Democratic WhipTom Reed – Ways & MeansCharlie Rangel – Ways & MeansJoe Crowley – Ways & Means

Elise Stefanik – Ed & WorkforceHakeem Jeffries – Ed & WorkforcePeter King – Financial ServicesCarolyn Maloney – Financial ServicesNydia Velazquez – Financial ServicesGreg Meeks – Financial Services

2014 Election Cycle$111,000 Contributed to New York Federal Candidates

$121,943 Raised -$48,168 State PAC $73,775 Federal CandidatesNew York Underfunded by $37,225

Growth Potential

NAIFA member participation rate is 23.6%NAIFA staff participation rate is 39%

NAIFA-NYS participation rate is 7.3%

Target Market – Over 92% of New York Members Do Not Contribute to IFAPAC

Stay Involved!