by John Darer CLU ChFC MSSC RSP CeFT CLTC
Single product "structured settlement agents" are under attack in Patrick Hindert's latest diatribe.
Is there really such a thing as a "single product agent", or it just the matter of "sticking to your knitting"? Can a company that offers a single product be successful? Can it be successful in the future?
"It’s best to do one thing really, really well"-Google on Search
Case study One: Colony Grill Stamford, Connecticut. The phenomenally successful Colony Grill has been in operation since 1935 (its walls are adorned with photos from "the old days") and for as long as I can remember it has only offered a single product. Drinks and...
Pizza – $8.50
The only variation
Toppings – $1.50 each
(Sausage, Pepperoni, Meatball, Mushroom, Onions, Black Olives, Cherry Peppers, Stingers, Hot Oil, Anchovies, Peppers, Bacon)
Stamford, and the surrounding Fairfield County area have a large number of restaurants that serve pizza, from the traditional pizza shop to designer pizzas to brick pizza, Greek PIzza, Dominos Pizza, California Pizza Kitchen. If you want salad, spaghetti, rolls, dessert, or want to use your credit card (there is an ATM on premises)**, you go somewhere other than The Colony. The Colony Grill is singularly focused. It does only pizza and it does it very very well. You could call it a "pizza expert".
This February 2, 2011 review from Yelp says it all:
"Let's just pause for a second to talk about the alleged "crappy" economy and hard times we're currently experiencing.
Now let's take a look at exhibit A: Colony Grill. A restaurant that does business so balls-to-the-wall, they can afford to take their phone off the hook during dinner hour. Their steez is so insane, they don't give a sh*t about your takeout order! And if you do come in, you'll have to wait for a table, the waitresses will treat you like garbage and you'll love it. And I'll bet down the road is a pizzeria where the staff is watching houseflies mate.
Colony Grill is the true American dream!"
The Other Extreme
Case Study Two: America Restaurant New York City
New York magazine said this "This quintessential family restaurant is a sprawling, noisy Union Square institution with a Statue of Liberty motif and kiddie favorites like sliders and macaroni and cheese. Adults can sample the USA’s finest: spicy buffalo-chicken sandwiches from New York, poached-pear-and-blue-cheese salads from Illinois, mixed seafood gumbo from the Deep South, or grilled-vegetable enchiladas from out west. Weekend brunches are especially fun, with a magician and a balloon artist.
When it first opened in the go-go 1980s the restaurant had what seemed like 100 items on its menu. In a addition to what is described above, I recall seeing such items on menu as peanut butter and jelly sandwiches, fluffer nutter, alligator fritters. It was novel, it attracted a good looking crowd and it lasted for almost 20 years before closing in 2005 wth an average rating of 4 out of 10.
How is it that a restaurant that served something to appease virtually every palate in a city with 8.4 million mouths, or 69,000 per square mile, could not outlast a restaurant in a city with 115,000 that has serves one basic product?
Flawed assumptions on Single Product
Despite some valid points, Hindert's argument is based on the flawed assumption that structured settlement agents offer a single product. There are actually a variety of products on offer with a common chassis (kind of like Charles Darwin's Finches-left)
- A structured settlement annuity is type of qualified funding asset that has many types of structured benefit payments. But for the fact that some ingenious actuary figured how to do it all in one contract and medical underwriting, you'd be looking at the need to purchase multiple products in an attempt to approximate the same cash flows. For example you might need a SPIA and multiple SPDAs in an attempt to approach what a structure can (without the income tax benefits).
- By definition a variable structured annuity such as MetLife's Settlement Plus is a separate product that comes under additional and different regulatory oversight than fixed annuities.
- By definition periodic payment reinsurance contracts are different products providing a different solution to different exposures.
- By definition a non qualified structured settlement or non qualified assignment is another product offering a variety of different solutions to aspects of cases in the personal injury area, but mostly outside of the personal injury area. Hindert never seems to address non qualified assignments in his writing about settlement planning, even though it is very possible that even a personal injury case could have taxable elements to it (e.g. punitives, taxable interest). Why?
- By definition a funding agreement is yet another product solution
- By definition a United States Treasury Bond Trust is another structured settlement product offering.
- If you check you will find that some of these products require separate filings with state insurance commissioners. In the case of variable products there are additional filings and licenses require.
Let's Take A Break in the "Action"
“There are worse things in life than death. Have you ever spent an evening with an insurance salesman?” – Woody Allen
A. Yes Woody, but have YOU spent an hour with Patrick Hindert discussing chaotic concept maps?
When asked how he could sell such an intangible product as life insurance, the late Ben Feldman of New York Life responded "I do not sell life insurance. I sell money. I sell dollars for pennies apiece. My dollars cost 3 cents per dollar per year." Ben Feldman sold alot of one product, more than $1 billion of it from 1942 to 1993.
His obituary that appeared in the New York TImes November 10, 1993 stated
"While some agents would appeal to fear or shame in pushing a policy to a reluctant buyer, industry experts said Mr. Feldman would somehow discover a more positive approach that would harness a buyer's best instincts".
Those elements of the structured settlement industry who use fear and shame armed with antique "smoking guns" as business motivators could well learn from the lessons of Ben Feldman.
The point, however long winded and entertaining...
Pat, take your foot off the gas and let's try to be a little more positive.
As a Registered Settlement Planner. I am a big believer in settlement planning but I don't believe that you can "cookie-cutter" a settlement plan. Your citing Meligan's settlement plan as "the industry standard" shows disrespect to the profession, to Meligan, and to many others , including this author, who have earned the Registered Settlement Planner designation, one prerequisite to earning which was to submit a settlement plan to the RSP Board for vetting. At least 3 members of the RSP Board, essentially your peers, had to agree that the settlement planning presentation met the standard. There are countless others, including this author, who come from financial planning backgrounds who have done settlement plans before they were labeled settlement plans. Although we don't always see eye to eye, I respect Jack Meligan as a dedicated knowledgeable settlement planner who cares about his clients and furthering the settlement planning profession. I believe however, that as a member of the RSP Board, the humble Meligan would have the integrity not to use the position for his personal gain by citing his own work as the standard.
I agree that for intellectual purposes, it WOULD be valuable for a study group to study and compare settlement plans developed by different professionals (trustees, special needs attorneys, and financial planners) for different case examples.
You might be interested to know that one of my far from standard "settlement plans" involved, among other things
- Meeting with social workers
- The first blush need for a Supplemental Need Trust, with a parent and guardian reluctant to agree to the restrictions, necessitating a complex work around involving a relocation
- Addressing immediate and potential future family needs, identifying conflicts with the plaintiff/beneficiary's needs and how to best protect the minor immediately and going forward
- Helping plaintiff determine best place to live- 4 months of research on quality of life factors in 3 different locations
- The purchase of a home and special purpose vehicle
- A qualified settlement fund
- A structured settlement
- A settlement preservation trust
- An irrevocable life insurance trust
- Recommending and then Implementing the purchase of a large amount of life insurance from a A++ AAA rated life insurer known for very conservative underwriting , on the life of an insured with little to no income. Integral to the implementation was pre-underwriting the case with a senior underwriter and convincing the insurer, via its underwriting committee (not quite "Leland Van Lew"), to take the risk. This was no small task as financial underwriting is a component of large life insurance purchases.
- Addressing multiple possibilities affecting the disposition of life insurance, dependent on if the insured or trust beneficiary died first. The innovative solution, perhaps the first of its kind at the time, was crafted in collaboration with the head of the Elder Law Section at a State Bar Association, who we retained.
- Bringing in tax and legal experts to assist in drafting relevant documents
- Selling the concepts to the plaintiff and the plaintiff attorney
- Assisting the plaintiff attorney with his affirmation and answering the questions of the judge overseeing the minor's compromise so that the settlement (and the planning recommendations embodied therein) could be approved.
Yet when it comes to settlement planning, sometimes someone is not interested in a heavy meal (like the one below). They just want a half a sandwich and a cup of soup. Who is selling the soup?
And doing it really really well!
**2017 update Colony Grill now accepts credit cards!
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