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The many reasons millennials are
shunning cars – Washington Post
Young People are Buying Fewer
Cars – City Observatory
The Great Debate: Do Millennials
Really Want Cars, or Not? - Time
Why Don't Young Americans
Buy Cars? - The Atlantic
Nearly 1 in 3 Millennials have
used a ridesharing service
Source: On-demand: Ride-hailing Apps, Pew Research
GM invests $500 million in Lyft
Ford partners with
Getaround to launch
car-sharing program
Source: Chicago Tribune
8
2016 saw 36 companies investing $450 million in driverless cars
Source: CB Insights
There are 1.8 billion Millennials worldwide
Representing 26% of the world’s population
Source: Millennialweek.com
6 in 10 Millennials prefer to get their health care from
retail or urgent care clinics – twice as many as Boomers.
Source: 2015 Consumer Survey, PNC Healthcare
351
1914
2805
Source: Accenture, 2015
Number of health clinics in U.S.Health care clinics grow
nearly 500%
12 I
Millennials’ ownership of life insurance grows substantially
70%
• Millennial households who own life insurance.
• An increase of 10 percentage points.
43%
• Millennial households who own individual life.
• An increase of 48 percent.
49%
• Millennial households who own group life.
• Only age segment that increased.
Source: 2016 U.S. Life Insurance Ownership Study, LIMRA
13
Consumer Likelihood of Choosing Combination
Life/LTC Insurance
Extremely likely9%
Very likely15%
Somewhat likely34%
Slightly likely22%
Not at all likely20%
Extremely likely
Very likely
Somewhat likely
Slightly likely
Not at all likely
Source: 2016 Insurance Barometer Study, LIMRA/Life Happens
40 percent Millennials said they would be
interested in a combination
life/LTCI product!
Source: 2016 Insurance Barometer Study, LIMRA/Life Happens 14
Reasons Consumers Would Consider
Life/LTC Combos
36%
36%
35%
29%
28%
24%
7%
Benefits will be paid, even if I don't incur LTCexpenses
More economical use of my current assets
Concerned LTC costs may deplete/exceedsavings
LTC insurance (on its own) too expensive
Can't afford two separate policies
Will not receive sufficient support from publicprograms
Would not qualify for stand-alone LTC
Source: Bank of America Trends in Consumer Mobility Report, 2014
Millennials spend the equivalent of
47 days a year on their mobile phone
Source: Connected Life (2015), TNS.
Messaging overtook social media in 2015
2900
2400
0
500
1000
1500
2000
2500
3000
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
Big 4 Messaging Apps Big 4 Social Media Apps
In millions
Source: BI Intelligence
QQ Mobile
Whatsup
Facebook Messenger
Qzone
Seven ways insurers can use texting effectively
Source: Fast SMS
98% of texts are read…
90% are read
within 3 minutes
Source: 2014 Dynmark Report
Millennials rely more heavily on
word of mouth
82%
52%
Millennials Boomers
Source: Balancing Multi-generational Retail Strategies, Synchrony Financial
44% of millennials are willing to promote products and services
through social media in exchange for rewards
Source: Aimia Research
of underinsured households
are more likely to buy life
insurance if referred by
friend or family member.
45%
Source: Trillion Dollar Baby – Growing Up (2011), LIMRA
Source: The Minds of Millennials – Motivation, Mobility and Making Home,
REALTOR (2015) and 2015 MMGY Survey
Millennials are using real estate agents at a
higher rate than other generations
(90% vs. 84%)
Millennials are more likely to use travel
agents than the general population
(28% vs. 13%)
Source: The Minds of Millennials – Motivation, Mobility and Making Home,
REALTOR (2015) and 2015 MMGY Survey
4 in 10 Millennials still want to buy face-to-face
Most Preferred Way to Purchase Life Insurance by Age
Age Group
Total Millennials Gen X Boomers Seniors
In person (outside of the workplace) through a
financial advisor or agent 51% 42% 47% 55% 73%
Complete an online form21 22 24 22 11
Through my workplace 11 15 14 7 3
Complete application (offline) and email it to an
insurance company/professional 6 10 6 5 3
Complete an application and mail it to an
insurance company/professional 6 4 5 8 8
Over the phone 5 7 4 3 2
Source: 2016 Insurance Barometer Study
“No other force is likely to shape the future of national
economic health[…] as the aging of the world’s
population. The cost of caring for the elderly will
profoundly affect growth prospects and dominate
public finance policy debates worldwide.”
Source: Aging 2010: An Irreversible Truth, Standard & Poor’s
37 million Boomers
will have one or more
chronic illnesses
Source: American Hospital Association
According to World Health Organization estimates, there are
47 million people living with dementia today.
Source: World Alzheimer's Report 2015: The Global Impact of Dementia, WHO
By 2050, there will be 132 million people
with dementia…
…this will almost double every 20 years.
Source: World Alzheimer's Report 2015: The Global Impact of Dementia, WHO
2015
2030
2050
47 million 75 million 132 million
Average health care costs for people with dementia
in their last 5 years is
$250,000
Source: NIH study (Annals of Internal Medicine), Oct. 27, 2015
57% greater than costs associated with other diseases
$183 billion in 2011
Cost of long term care and hospice care will
multiply10-fold by 2030 worldwide
$2 trillion in 2030
Source: World Alzheimer's Report 2015: The Global Impact of Dementia, WHO
Source: Ward, B.W. et al. (2014). Multiple Chronic Conditions Among US Adults: A
2012 Update. Preventing Chronic Disease. 11.
Majority of Americans believe
Alzheimer’s is the scariest
disabling condition in later life
Alzheimer’s/ dementia
53%Cancer
26%
Stroke:10%
Heart disease:
6%
Diabetes:3%
2%
Arthritis:2%
Source: Ward, B.W. et al. (2014). Multiple Chronic Conditions Among US
Adults: A 2012 Update. Preventing Chronic Disease. 11.
Individual LTCI Sales Trends
372342
307 303277
213236 232 233
172131
104
$716$678
$625$645
$603
$465
$527$550
$580
$406
$316
$261
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Buyers (thousands) Premium (millions)
Source: LIMRA Long Term Care Sales Survey
Individual long-term care new premium drops more than
50 percent in 3 years
Americans have
Source: LIMRA estimate
U.S. Department of Health & Human Services predicts
that 70 percent of seniors will need long term care
45 million
Americans
by 2025
Source: Department of Health and Human Services; U.S. Census Bureau
42%
44%
45%
47%
47%
56%
58%
58%
66%
Paying off or reducing credit card debt
Paying my mortgage or rent
Burdening dependents if I die prematurely
Losing money on investment
Paying monthly bills
Supporting myself if disabled and unable to work
Paying for medical expenses
Paying for long-term care services
Money for a comfortable retirement
Americans’ Top
Financial Concerns
58%
66%
Paying for long term care services
Money for a comfortable retirement
Source: 2016 Insurance Barometer
Study, LIMRA/Life Happens
Thirty states have laws that would hold family members responsible for long term care bills
States that have filial responsibility laws
Source: AARP, 2011
63 A.3d 1248 (2013)
HEALTH CARE & RETIREMENT CORP. OF AMERICA
v.
PITTAS.No. 636 MAL (2012).
Supreme Court of Pennsylvania.March 27, 2013.
Judgement against the son for $93,000 to pay for
parents’ long term care bill.
Source: Longtermcareplannngnews.com
Source: 2016 Insurance Barometer Study, LIMRA/Life Happens 38
67%
Everyone needs it!
52%
I need it.
Consumers believe long term care insurance is important…
16%
I own it.
…but don’t act
39
$0.6 $0.6 $0.8
$1.5
$2.2 $2.4
$2.6 $2.4
$3.1
15 16 18
60
72
86 98 100
220
$-
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
-
50
100
150
200
250
300
07 08 09 10* 11 12 13 14 15**
New Premium New Policies
Premium shown is Total Premium (Recurring + Single Premium).* 2010 First year to include Life-Chronic Illness riders. ** 2015 New participants into survey.Source: LIMRA’s 2013 Life-Combination Sales Survey
Life-combination product sales increase
five-fold in 8 years Policies (1,000s) Premium ($billions)
Total Investable Assets in the U.S.
$ 31.0 Trillion
Source: LIMRA Secure Retirement Institute analysis of the 2013 Survey of
Consumer Finances, Federal Reserve Board, 2014.
2% -Millennials 14% -
Gen X
43% - Fully or partially retired
41% -Boomers, not retired
Genworth debuts SPIA for long-term-care coverage
LTC insurer is offering a medically
underwritten annuity as an
alternative for older Americans
- Investment News, Feb. 22, 2016
In the UK, seniors or their families prepay for care.
Taikang Life expanding their business –
buying/ building:
Source: Shanghai Daily, March 30, 2016
Hospitals Elder care facilities Funeral services units
Elder financial abuse affects us all
• Older Americans lose $3 billion
a year because of financial
exploitation
• Average victim loses $120,000
• Banks lose $1 billion a year
Source: AARP BankSafe Initiative 2016
90% of elder financial abuse is
perpetrated by family members
Source: National Committee for the Prevention of Elder Abuse
Glenn Neasham was ultimately exonerated by the California Supreme
Court.
Last month, Glenn Neasham, an independent insurance agent, was ordered to
spend 90 days in jail on felony theft conviction for selling a complex annuity to
an 83-year old woman who prosecutors allege had shown signs of dementia.
The agent’s conviction, by a state-court jury in Lake County, Calif., is sending
shivers down the spines of Mr. Neasham’s peers across the country.
BUSINESS
Annuity Case Chills Insurance Agents
More states are requiring advisor training to detect
and report elder financial abuse.States that have proposed legislation requiring training for advisors to detect and report elder financial abuse
Connecticut and Nevada passed laws requiring training
for advisors
Source: National Conference for State Legislatures
Anti Money
Laundering
Fid Ed for
Sales &
Service ProfDetecting
Elder
Financial
Abuse
Fluid intelligence: the ability to learn and adapt
Crystalized intelligence: wisdom learned from experience
Source: Harvard Professor David Laibson, Ph.D.
Academics Agree – Annuities Make Sense!
As a nation, we must devote more attention to ways that help us avoid running out of money in later life.
Taking the time to research and buy a payout annuitycan bring you peace of mind for yourself and for your children who won’t need to support you when you outlive your assets!
“
”Olivia Mitchell, Ph.D., executive director of the Pension Research Council and director of the Boettner Center on Pensions and Retirement Research, Wharton School of the University of Pennsylvania.
52
M&A Increases
Less choiceRobo-advice
increases
Less adviceCosts
increaseLess income
There are many consequences to the DOL Fiduciary Rule…
…let’s look at six.
Insurance M&A Quadruples in 2015
$4 billion
$20 billion
2014 2015
Source: Conning Global Insurance Distribution& Services Sector Mergers and Acquisitions
“The continued low-cost debt financing
and desire of strategic buyers to gain
scale and diversification contributed to
strong M&A activity.”-excerpt from report
Distribution-Focused M&A
increases
sells premier agency group to
buys
MetLife sells agency to MassMutual
Nationwide buy Jefferson National
AIG sells B-D to Lightyear Capital
AIG CEO Blames Obama Retirement Rule for
Broker-Dealer Exit
“It’s a business we are not the best owner
of, particularly in the light of potential
Department of Labor rules. With the new
DOL rules, that was a big factor in thinking
whether this was better owned by
somebody independent of us.”
Source: Bloomberg Business, Jan. 27, 2016
- Peter Hancock, President & CEO, AIG
Source: Bloomberg, Jan. 27, 2016
"The regulatory environment will
likely lead to consolidation within the
industry … Independent advisers or
independent broker-dealers may
lack the resources or the scale to
navigate the changes required, and
seek a strong partner like
Ameriprise.”
- Ameriprise CEO Jim Cracchiolo
B-Ds will merge or be acquired
Source: Bloomberg, April 28, 2016
Everyone is looking for a
dance partner…
Strategic Goals/Scale
PennMutual- Vantis Life
Pan American
Life - Mutual Trust
TIAA buys Everbank
M&A
increases
• Dai-ichi Life bought Protective Life for $5.7 billion
• Sumitomo Life bought Symetra for $3.8 billion
• Meiji Yasuda Life bought StanCorp for $5 billion
• Tokio Marine Holdings bought HCC Insurance Holdings for $7.5 billion
But the dance started years ago..
Fidelity Investments Acquires E-Money Advisor
– Feb. 2, 2015
Northwestern Mutual purchases LearnVest– March 25, 2015
BlackRock Buys FutureAdvisor– Aug 26, 2015
Buying technological capabilities… M&A
increases
Costs increase
Costs will increase…
Merrill Lynch eliminates commission IRA
business in response to DOL fiduciary rule
Source: Investment News, Oct. 6, 2016
Less choice
55 percent of retail advisors believe they will have to drop or turn away small investors when DOL fiduciary rule is implemented.
Source: LIMRA Secure Retirement Institute Advisor Survey, 2016
Less advice
63
UK implemented a fiduciary rule in 2006RESULTS:
The number of advisors has shrunk by a quarter
(around 40K to 30K)
7 in 10 advisors have turned away clients – more
than half citing the business was not economically
viable.
The proportion of advisors who require a minimum
portfolio of £100,000 (about $142,000) has more
than doubled (13% in 2013 to 32% in 2015)
Advice matters: 50% of people who have an advisor
were very confident after purchasing an investment
products vs. 35% of those who didn’t use an advisor.
Less advice
Source: Financial Advice Market Review (2016),Financial Conduct Authority
15%
Americans are willing to
pay more than
$100 for advice on financial risks
and insurance products
Source: LIMRA 2011 eNation surevy
Only Less advice
65*In a recent SRI retail advisor survey, one half of advisors reported that the rule will discourage them from handling small IRA rollover amounts.
28%
18%
54%
Disagree
Neutral/Unsure
Agree
“A certain percentage of our advisors will retire or leave the business rather than sell under the new rules.”
Disagree Neutral/Unsure Agree
More than half of brokers believe some advisors
will retire rather than sell under new rulesLess advice
282 309 321 336 363
3430
2928
26
0
5
10
15
20
25
30
35
40
0
50
100
150
200
250
300
350
400
2000 2010 2015 2020 2030
U.S. population (millions) Recruits (thousands)
Recruiting is not keeping up with population growth
U.S. Census Bureau and LIMRA’s U.S Recruiting Trends
Less advice
Secretary Perez thinks small savers would
be better off working with “robo
advisers”…than with human brokers who
get paid commissions by investment firms.
– Wall Street Journal, June 15, 2015
Robo-advice increases
Few Americans are aware of use robo-advice
20%
11%
13%
7%
2%1%
Familiar with robo-advisors(moderately to extremely familiar)
Currentlyusing a robo-advisor
Gen Y Gen X Boomers
Source: The Impact of Robo-Advisors: Consumer Views, LIMRA, 2015
Majority of Americans want to use technology in addition to a human advisor for financial guidance
2%
11%
33%
54%
Other
Can be fully automated (e.g. based onclient demographics, lifestage, etc.)
Requires a human relationship
A human relationship coupled withtechnology is ideal
Source: Northwestern Mutual's 2016 Planning & Progress Study
Others join…
Wells Fargo Plans Pilot Robo-Advisor
for Early 2017 Launch
Dimon Says JPMorgan Can Offer
Free Robo-Advice to Best Clients
LPL partners with BlackRock's FutureAdvisor,
paving way for robo-pilot program
Fidelity officially launches
retail robo-adviser
Personal Capital available to 200 community
banks through Alliance Partners
TIAA acquires business-to-
business robo-adviser MyVest
Bank of America Merrill Lynch
to build robo adviser
Robo-advice increases
Margin
compression
Less income
$80
$139
$138
$214
$256
($96)
$199 $177
$104
($102)
2011 2012 2013 2014 2015
Annual Net Flows
Vanguard Industry*$ in billions
Annual Net Flows: Vanguard & U.S. Industry
Source: Vanguard, Morningstar, January 2016; 2015 ICI Fact Book
*Industry figures only represent U.S. data
Insurer Plans Layoffs of 50 Workers By April
About 100 jobs affected in new
round of insurer layoffs
Insurer Shuttering 17 financial centers
Notice of 70 layoffs at Insurer’s Illinois facility
Financial Firm Planning Layoffs
A Harbinger of the Long-term Struggle
of our Industry…
Layoffs, restructuring coming for firm in Charlotte
Research R & A L & D Networking Consulting
“…your Valued Industry Partner”
LIMRA& LOMA Member Value Proposition
