AGITATE…AGITATE…AGITATE – PART II
April 27, 2011If you read Monday’s blog posting, you might think that my confidence in the fraternal system’s ability to survive in a radically different environment from the one in which it was created was … shaken. Let me assure you that I absolutely believe that the concept of fraternal societies – people joining together to secure their financial futures and, in the process, to support causes and organizations that they collectively believe in – can be restored, rejuvenated, and made relevant to today’s consumers. As former Alliance Board Chair Terry Rasmussen has often said, “fraternals have the coolest charter on the planet.” But if that’s going to happen, fraternals are going to have to be willing to strip their organizations down to the floorboards and studs and build new societies on the foundations. That means major changes are going to have to happen in a big hurry. And change – especially rapid change – is not exactly a common characteristic of the fraternal culture. Here are some tough questions to consider: Is our mission clear – to members, to prospective members, to agents, to everyone? Every fraternal has a common bond, but do you have a clear and compelling mission and values that are understood by everyone in the organization? I think it’s those values that provide the “stickiness” to attract and retain members – to get them to join and to buy. Is it enough that a society has a religious common bond? Maybe for the IRS it is, but what about for members and prospects? A society with a religious bond that also has a mission to support schools affiliated with that religion has a much clearer sense of purpose – and, at least in my opinion, a much better chance of having that purpose understood and bought into by its members, potential members, and its sales force. A society that allows its members to direct corporate contributions to groups that the members have identified as important to them is much more likely to create a sense of ownership or belonging – even if those members never swing a hammer during a community service project. Volunteerism is “voluntary,” but understanding the mission shouldn’t be. Having a well-defined mission (or values), a clear plan for accomplishing it, and an effective way to communicate this to members, prospects, agents, the news media, and public policymakers is essential to the success of every fraternal. What is a fraternal – an insurance company … a community service organization … a charity? The answer is probably “yes and no.” In my mind we’re membership organizations whose primary purpose is providing an array of benefits to our members. Chief among those benefits is financial security. And the most practical way that we can help members secure their financial future is through life insurance and annuities. Of all the benefits fraternals provide, insurance is the one that the overwhelming majority of members – in many societies 100% – utilize. Moreover, the proceeds from the sale of those products provide the fiscal fuel for all other activities of the society. So I think it’s fair to say that providing quality financial services is an integral part of being a fraternal. As such, our survival is based largely on our ability to compete – on price, on product quality, and the professionalism of our sales force – in the financial services arena. It’s no longer reasonable to expect that people will choose to purchase fraternal insurance products simply because of their ethnicity, religion, gender or occupation. What other benefits can we offer that fit logically under the financial security banner? How about financial literacy education (especially for those young people we all want as members of our societies); health and wellness programs (seems to make sense that if we’re insuring members’ lives we should do everything possible to make those lives as happy and productive as possible); financial or debt counseling; legal assistance? I think it’s a misnomer to characterize fraternals as community service organizations, and while we make major cash contributions to charitable organizations each year, we’re certainly not charities. Be honest, what percentage of your members actually participate in community service activities? What percentage of your members are even aware of these activities? If you suspended these activities would you still have members? Don’t get me wrong, I’m proud to represent organizations that have such a strong social mission. But to put it in context, I think “the opportunity to participate in service projects” should be among the many benefits fraternals provide their members. What other benefits can we provide that fit logically under the community service banner? How about training members (again, targeting younger folks) to be effective volunteers? Can you imagine the impact we’d have if we were responsible for training thousands of “do-it-yourself” service providers? Since church affiliations are still the primary centers of volunteer activity and since many fraternals have close affiliations with churches, how about partnering with parishes, dioceses, and synods to expand our pool of volunteers and gain exposure to prospective members who share the same values as the fraternal? Won’t this hurt our tax-exempt status? At this point in time, the political threat to our tax-exempt status is minimal. No one – at the state or federal level – is out to get us. This tax exemption issue is and always will be on the table because we sell a commercial product on a tax-exempt basis. And the Alliance will always defend the exemption to the last man or woman. But frankly, as long as we represent less than 2% of the life insurance marketplace and don’t pose a threat to consumers or our commercial colleagues, we’ll be viewed as a quaint anomaly – a dowdy reflection of the past that no one’s going to overtly attack. I don’t know about you, but I don’t want to be viewed as quaint or dowdy. I want fraternals to be considered respected players in the financial-services marketplace and relevant contributors to healthy communities across the country. If we can successfully reinvent ourselves, attract new members, and expand our market share, we may have a tougher time defending the tax exemption. I relish that challenge because success will create more opportunities to tell our story to public policymakers and the American public. What are the keys to the future of the fraternal system? For most fraternals, growth – both financial growth and membership growth – means sales of insurance products. In order to successfully compete in this arena, societies must develop the economies of scale to provide the financial strength needed to fulfill the promises they make to members and to make more of those promises to future members. In addition, societies need the resources and skills to comply with an increasingly more complex regulatory environment. Finally, societies need to invest in new technologies that can reduce their expenses, broaden their appeal and awareness to younger consumers, and boost their bottom line. No easy task.