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Advisors Invade D.C. In Stealthy Springtime Strike

When an organization or interest group goes to Congress, the group members often do it with a lot of noise. Banners, bullhorns and slogan-chanting all contribute to an emotion-charged atmosphere.

But often a quieter, more positive approach is the way to deliver your message more effectively, a group of industry advocates discovered.

More than 1,000 advisors from every state in the nation visited Congress in April to tell the story of how life insurance products provide financial security for their clients. It was the highlight of the two-day Congressional Conference held by the National Association of Insurance and Financial Advisors (NAIFA).

This group of industry warriors launched a pre-emptive strike in the century-old battle to protect the tax-favored treatment of life insurance.

When the words “comprehensive tax reform” began to hit the headlines and the halls of Congress yet again, it was time for the advisors who represent “Main Street” to mobilize.

NAIFA teamed up with five other insurance associations to form, a coalition with the goal of highlighting the facts about life insurance products and their importance to the financial and retirement security of American families. The coalition is making a special push this year to educate lawmakers and the public on the vital role played by the products its members sell.

The fight over life insurance is nothing new. In fact, it goes back 100 years, when insurance agents with what was then known as the National Association of Life Underwriters (NALU) appealed personally to President Woodrow Wilson in 1913 to extend special status to life insurance as the federal income tax system was being established.

But, as the saying goes, that was then and this is now. President Obama’s recently proposed $3.77 trillion 2014 federal budget calls for tax increases on high-income households and corporations. Meanwhile, the national debt is creeping toward $17 trillion and increasing by about $1 trillion a year. Calls for tax reform are coming anew from members of Congress who are feeling the pressure to find new sources of revenue. Insurance industry advocates are fearing once again that Congress may be looking at the billions of dollars locked up in the inside buildup of life insurance products as a fresh source of funds.

So far, a specific bill that targets life insurance has not been proposed, said the chief of staff to a Pennsylvania congressman. But, advisors are taking no chances this year. They did what they do best: mobilized and told a story. And those who participated in the Congressional Conference said they found a receptive audience, thanks to the efforts of and its member organizations in promoting the message of life insurance in recent months.

Tom Michel of Pacific Palisades, Calif., is a veteran of several NAIFA trips to Washington. But he said that the congressmen and aides he visited during the recent conference “were as receptive as I’ve ever seen.” “I could tell they were cognizant of the importance of our business. They understand that there are other areas where they can improve our government’s bottom line without touching the products we sell,” said the NAIFA-California president-elect.

Michel said he believed one reason for the positive reception is what he called “the great groundswell effort” made by all the organizations making up “They have been working so hard to get out a positive message,” he said.

Another reason, he said, is that almost everyone can relate to the need for financial security. “They understand what (taxation of life insurance) would mean for them. What it would mean for their retirement, what annuities would mean to their own retirement,” he said.

Michel said he believed the fact that there is no specific bill targeting life insurance under consideration actually worked in the NAIFA group’s favor. “I really think that the message we were able to give is a more wholesome message than what they usually hear,” he said. “Usually, the message is more like, ‘Don’t vote for this bill.’ Instead, we told a story and let them put a face on the good work we do. We told the story of how we deliver peace of mind, we deliver security. We told how much money we put into the economy on a daily basis. These messages are important for us to tell, and they are something that everyone can relate to.”

Another message that NAIFA members told frequently was the story of how NALU members appealed to President Wilson in 1913. “The legislative aides we met with found that interesting – that the president thought it was so important for the financial health of our country for people to invest in our products that he intervened with Congress to give our products special treatment,” said Lou Pettinato of Old Forge, Pa., NAIFA-Pennsylvania’s political involvement chairman.

“We’re in on the ground floor of this issue right now,” said Brian Worrell of Wernersville, Pa., another NAIFA member. “There has been no legislation on this issue crafted yet, so our timing was good.”

“The staffers we met with said a lot of people come to Congress and say ‘Don’t touch our stuff, touch someone else’s stuff.’ We’re not saying don’t touch someone else’s stuff. We said, if you tax our products, then people will be less likely to take responsibility for their financial future and the government will end up having to take care of more of us. We’re not asking Congress to change anything, we just want it to keep everything the way it is.”

In their meeting with an aide to Sen. Robert Casey, D-Pa., each of the 15 NAIFA members in the room took a turn telling him how many clients he or she represents. “It was amazing to realize the sheer number of people whose interests were represented by the members in the meeting,” said Kent Bennett of Montoursville, Pa., a member of NAIFA’s national Advisors Political Action Committee.

“The message that we are conveying is that our industry is part of the solution, not part of the problem. If we’re going to reduce the deficit and decrease the dependence on government, then we need to be promoting these products, not taxing them.”

Bennett described the Congressional Conference as “a pre-emptive strike.”

“(Congress) knows how much money is sitting in qualified plans and they would love to get their grubby little hands on it,” he said. “If you get inside everybody’s head before all the steps are made to enact a piece of legislation, that’s when you want to talk to Congress. Not after a bill has been written, not after something has been brought to committee, not when it’s on the House floor for a vote. You need to stop it before it gets to first base, not when it’s heading for home.”

William Tighe, chief of staff to Congressman Tom Marino, R-Pa., met with three NAIFA members from his boss’ district and described the group as “highly focused.”

“The message they brought to us was tax reform and the need to have policies in place to encourage people to plan for the future and save for retirement,” he said.

One NAIFA-California member credits his association’s long-running relationship with their elected representatives as the reason he came away from the Capitol confident that the group’s mission was a success. “All three of the people I met with said that they believe no changes (regarding life insurance taxation) are the best position to take,” said Shane Westhoelter of Dublin, Calif. “All three told us that if they made changes, the American public would be in an uproar because they purchased these products with their financial security in mind.”

Westhoelter said he believes that older lawmakers may look more favorably on the tax treatment of life insurance because they are more likely to have been a beneficiary of a life policy or because they are more likely to be considering a financial product such as an annuity. “It’s the younger legislator – the one age 50 or younger – who may not have had any experience with the products we sell. Those are the lawmakers who have me concerned.”

Political advocacy and education don’t end when the last plane leaves D.C. for home. All of the NAIFA members interviewed emphasized that the real work of educating lawmakers continues back in their home districts, whether it’s by holding legislative events in the local association or by keeping in touch throughout the year. NAIFA also maintains a network of “key contacts” who have relationships with lawmakers and who are in contact with them regularly.

“We can multiply our efforts by getting our members to meet with their representatives back in the districts,” Worrell said. “Not every member can go to Washington but they all can see their representatives in their home districts. We can’t ever tell them our story too often.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Follow her on Twitter @INNsusan. Contact her at [email protected].

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