Despite all the uncertainties surrounding the coronavirus and its impact on the global economy, one thing is crystal clear: now is the time to demonstrate to clients your value as an insurance and financial planning professional.
The key is to prepare clients for volatility, help them keep a level head during the crisis and provide whatever useful information you can.
If you’re a licensed agent who specializes in Medicare, this can mean letting existing clients know that telemedicine allows them to see a doctor from home. Medicare Advantage plus Part D (MA-PD) carriers are waiving co-pays for diagnostic tests related to the coronavirus disease 2019 (COVID-19), and you have tools to allow your clients to complete their enrollment online.
“For the time being, you may have a number of seniors who are worried to go out,” said Dwane McFerrin, Vice President of Medicare Solutions at Senior Market Sales® (SMS). “It is important as an agent and a professional that you don’t resort to scare tactics that stoke these fears. This is not a marketing opportunity. It’s best to provide good information and advice to your clients. As their agent, you can arm them with information and tools that empower them to engage with their providers while minimizing their risk of coming in contact with COVID-19.”
Medicare Advantage (MA) and Medicare Supplement carriers are issuing coronavirus-related bulletins to clients. It’s important that you read bulletins from the carriers you represent so that you’re informed, McFerrin said.
Most Medicare Advantage carriers have a telemedicine option that allows clients to see an in-network, board-certified physician without having to leave their home. Most MA carriers are waiving co-pays for diagnostic testing and for telemedicine visits.
Medicare Supplement plans typically do not yet offer any specific telemedicine solution, but if the telemedicine provider accepts Medicare and Medicare pays the claim, you can expect the Medicare Supplement plan to pay too, depending on the plan type. Again, read your MA and Med Supp carrier bulletins for details.
Also, there are stand-alone telemedicine programs that consumers can buy for a monthly subscription fee.
While telemedicine cannot take the place of a throat swab to collect a sample for scientific testing, it can help doctors make special arrangements to safely receive a patient who is sick and suspects the virus may be involved.
“We anticipate an increased usage of telemedicine until this dies down,” McFerrin said.
“For that consumer who is reluctant to go out and schedule an appointment to enroll, AICOE and Medicare Insurance Direct may be solutions,” he said. “It’s important that whatever the agent does, it’s probably better to address one-on-one rather than in mass communication.”
Using social media, email or mailers could be interpreted as scare tactics and send the wrong message. This is a time to take care of clients, not prospect, McFerrin said.
Anxiety in the stock market has been swelling since at least February when fears of the coronavirus began to show. Just a few weeks later, as COVID-19 cases surged and the coronavirus spread in the United States, panicky investors abandoned risky assets like stocks and headed to safer ones like bonds, causing the 10-Year U.S. Treasury bond to plummet to less than 0.4% on Monday, March 9, 2020. At least one annuity company acted swiftly, cutting rates and pulling a product.
Chris McDonald, Managing Director of Annuity and Institutional Sales at SMS, said advisors should expect to see more rate and product adjustments by insurance companies and to see interest rates remain low. But advisors can help calm client fears by reminding them that the coronavirus’ impact on the market is only one factor of many, and the advisor likely has already mitigated the client’s risk.
“The reason you put someone in a fixed indexed annuity (FIA) or life insurance or long-term care insurance is because you are trying to mitigate risk. The risk is loss, and you want to get bond-like gains,” McDonald said. “The need for protection from loss is not going away.”
McDonald and Bill Kauffman, Vice President of Financial Solutions at SMS, urge advisors to avoid limiting advice to a singular product to protect clients, however.
“The immediate reaction of most consumers is to move to safer investments. MYGAs and FIAs will fill that need, but more importantly, how is the client’s retirement plan positioned for volatility?” Kauffman said. “Does it include too much market risk? At the same time, if we eliminate all risk by only using guaranteed instruments, what will be lost to interest rate risk? Diversification is the true answer.”
But even clients with balanced portfolios can panic, as the markets have shown recently with the worst drops since the 2008 recession.
“A lot of the market activity today relates to short-term projections specific to supply disruption,” said Mike Chochon, Vice President of Sequent Planning, the Registered Investment Adviser owned by SMS. “As we know, the markets’ ‘reaction’ time continues to get reduced through technology, so the move down is not a surprise, and we expect the move up will also not be a surprise. Remind your clients to stay calm. Their time horizon is longer than one quarter and most likely much longer than one year. Overall, the U.S. economy is very strong.”
A retirement portfolio should have the right mix of guarantees and investments to yield the income and the growth that an individual needs to have a long and worry-free retirement. Consumers should seek professional advice from an agent or advisor who is looking at their entire retirement picture, not just focused on one particular aspect. For example, an advisor should make sure that the client’s retirement plan will survive not only a major market downturn, but also what would happen if the retiree dies too soon or lives too long. Is there a possibility that the individual could outlive their portfolio? What about the devastating effect of a chronic illness that leads to an extended-care event? Would that be the ruin of their retirement portfolio and cause a major failure for the survival of a loved one?
“Proper planning, proper diversification is key,” Kauffman said. “Having a planning tool that can stress-test a wide variety of scenarios is critical for any advisor who wants to prepare clients for the type of market volatility we’re now seeing with the coronavirus outbreak.”
SMS support is available to help you show your value to clients at critical times like these.
If you need any assistance as you are helping clients in the coming months, contact a marketing consultant at SMS by calling 1.800.786.5566.