While serving as a student manager for the men’s basketball team at Indiana University, I learned a lot from Coach Bob Knight. Many of those lessons can be applied to the financial industry, and I’ve written about a few before. Today, as we’re on the cusp of what could be a game-changer for our industry, I wanted to share another.
Once, during a practice, a star player took an open three-point shot and missed. Like most long shots, it resulted in a long rebound and a fast break for the opponents. That’s embarrassing enough, but, to make matters worse, the player (like many college athletes) stopped and hung his head. His delayed reaction gave his opponents an advantage on the fast break, resulting in a layup.
Coach Knight immediately stopped practice. “What just happened?” he asked. Well first of all, the shot was missed for a variety of reasons. But, that was in the past – there was nothing the play could have done to change the shot after it left his hands. He could have reacted to the rebound, however.
You see, after a missed shot, the shooter actually has an advantage – more than anyone else on the court, he has the best feel for where the rebound is heading. If he’s paying attention, he can get in position to stop the ensuing fast break. Unfortunately, if he chooses to dwell on his missed shot, even for a second, it can result in an easy bucket for the other team. And we know one bucket can win or lose a game.
Today, our industry is in the same position as a player who misses a long shot. Over the last several years, we have successfully fought several pieces of legislation that would have affected the annuity industry. However, with the pending U.S. Department of Labor (DOL) ruling, it appears more likely than not that we will be required to maintain a fiduciary standard for every qualified client.
Sure, there will be litigation and other efforts to change the DOL’s proposed ruling, but it’s a long shot (pun intended). Regardless, it’s clear we will need to change in the annuity industry.
That’s OK. We can’t hang our heads for a split second, allowing litigators to attack our individual businesses under the fiduciary rule. Instead, we have to get back on defense and get ready for the next possession.
Defense means changing how we DOCUMENT business, not how we DO business. I’ve heard many financial planners planning to discontinue the use of certain financial vehicles because of the commission structure. But if a product or service is in the best interest of a client, we should be obligated implement the recommendation, regardless of our compensation structure.
We simply have to explain how the product works and how we get paid. Our clients want us to succeed as much as we do They will understand the need for compensation if they understand how the product benefits them and their financial situation. Once we document and explain, we can move toward implementation – which means we’re back on offense.
Don’t hang your head and let regulation and changes to the industry affect how you do business. Get to the next possession so you can continue to help your clients.
Annuities and Sports: What I learned from Coach Knight: http://www.ashbrokerage.com/blog/annuities/annuities-and-sports-what-i-learned-from-coach-knight/
Mike McGlothlin is the Executive Vice President of Annuities at Ash Brokerage. His strength is helping advisors become more efficient and effective in their businesses. He and his team provide income-planning solutions focused on longevity and tax efficiency, and they also assist advisors with entering defined-benefit termination planning and structured settlement markets.
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