Did I promise that I wouldn't write another column about life insurance for the rest of the year? I meant to, but fortunately I didn't, because the column I wrote in our April issue has stirred up so much response-and new information-that I'm obligated to return to it.
So I apologize. But I must talk about a new life product that at least one financial advisor claims will solve all his client's insurance problems. A product he will be able to use and still be a member of the National Association of Personal Financial Advisors (NAPFA)-which means, of course, that there are no commissions for the product. If what he claims is true, we may be looking at the revolution in life insurance that we've been waiting decades to see.
The April column focused on "blended policies," which are offered by many agents and consultants to cut costs to the consumer by cutting commissions for the agent. Because the bulk of what critics consider excess cost in policies comes in commissions, trimming them back naturally saves money for the consumer.
Several of the two dozen readers who sent me e-mails about that column agreed with me about the need to reduce distribution costs in life insurance. ("Too many agents put the product, not their client, first," one agent wrote. "They are coached to do so by the insurance company.") Many pointed out that blending is only one of many ways to reduce commissions. Some said they'd never written to the author of an article before. But my column was so outrageous that they simply couldn't hold themselves back. These were people who didn't agree with me.
But whether they agreed with me or not, nearly every e-mail touched on one thing: my treatment of Northwestern Mutual Life Insurance Co. of Milwaukee. In short, they all suggested that I was being paid by NWM to write a column praising that company. "Your article actually sounded like a commercial for Northwestern Mutual," wrote Michael L. Millman, managing director of the Nutmeg Benefit Group in Fairfield, Conn. "I doubt very much they really need your endorsement."
This is the most distressing accusation for a reporter. I am supposed to dig around and report things that people need to know. I believed I was doing that. For anyone who felt the column did otherwise, I apologize. I'm sure Northwestern Mutual was as surprised by the column as the rest of you.
Here's what another reader said: "I can tell you that the average NWM agent isn't quite the angel you seem to think he is. They go around company-bashing and trying to intimidate their clients and prospects into doing what's good for the agent and NWM," he wrote, adding that "you seem to have drunk the same Kool-Aid NWM feeds to their agents."
Keith Singer of Keith Singer Wealth Management in Boca Raton, Fla., was also trained by NWM. He wrote to say that most agents learn that blended products are better for the consumer even though the company does not tell them and does not train them in blending. For that reason, "every case became an ethical dilemma," he wrote about his experience there. "Clients never [realized] how much discretion the agent actually had in the policy design." Other agents' complaints: Salespeople sold whole life to customers even though the client couldn't afford as much whole life as he needed; as a result, these clients were drastically underinsured.
My intention was not to promote NWM. Here's how my (admittedly flawed) thinking went: The thrust of the article was critical of all life insurers inasmuch as they give consumers a raw deal by charging too much in distribution costs. I didn't mention any except NWM by name. I did that because most of the consultants I spoke with had once worked for NWM and I felt that this "coincidence" deserved some comment. I could have called the company and asked for a response to the claim by former employees that NWM does not teach its agents to blend policies and, therefore, the consumer gets ripped off. That is really not a question that anyone will respond to. And I didn't mean the article to criticize only NWM.
I didn't want to suggest that NWM was alone in its position on blending. So I said that it wasn't surprising that so many good consultants had once worked at NMW, which is considered "the gold standard of life insurance companies." Those were the words that I should now eat. Again, I apologize. I couldn't think of another way to handle it at the moment. I should have done better. I will keep trying if you promise to keep complaining when I miss the mark. Perhaps I should have avoided mention of a particular company.