Dec 9, 2022
In part 2 of 2 Michelle lays out her proposal for revamping the web of state and federals rules and laws to make in-plan annuities a vibrant market in the future.
Here's the full text of her discussion:
Heads up to SOA, NAIFA, IRI, any other industry group- mark this moment as the point where contacts you have at these organizations should start listening.
Big bold assertion #1: Non-codification of verb sales in insurance means that intellectual property (inventions) can’t have value in insurance
Why is this true?
Assertion 2. The above-mentioned fact (Ip can’t have value in insurance) is true because of the intersection between how products sell and how trademark law works. I will explain further in a moment.
Assertion 3. IP having value is fundamental to the functioning of capitalism.
Assertion 4. In a demutualized world where insurance manufacturing is now entirely vertically disintegrated from distribution, IP can only come to have value by codifying insurance advisement as a scalable, oversee-able, nationally regulated discipline
So we are proving assertion 1- IP has no value in my domain- by proving assertions 2-4
So let’s start with assertion 2 part 1: how do products sell. To understand this, we need first to define both the word “product” and then the word “sell.” Products are nouns. In the context of insurance and financial services, products are issuable containers, and their distribution is highly regulated. Products are issuable legal contracts within which IP can be embedded, and in exchange for the distribution of which compensation can be paid to an FP in respect of either, but never concurrently, a or b. A is from inside the noun in direct respect to sale thereof (this refers to agency and brokerage) whereas b is charged upon the AUA/AUM thereformed following a product’s intro into an advised portfolio (b refers to RIA channel).
Now that we know what product means, we move on to sell. Sell means
the exchange of remuneration in direct respect to [x- x is a verb
in the RIA channel and it’s a noun in the agent/broker channels].
Wholesalers are people who so routinely sell wholes that we can
describe their identity by putting an r at the end of the verb that
they routinely perform. (By analogy, runners routinely run, we
don’t call someone a runner who once ran across the street) All
wholes are nouns. The human mind cannot conceive of a whole verb.
So wholesalers sell nouns, and nouns sell when they have
wholesalers selling them. Wholesalers work for either a noun
manufacturer, or a noun seller. An organization that sells nouns
will not switch which noun it has its wholesalers focused on
selling unless the new noun is more profitable than is the
incumbent noun portfolio. A product concept thus cannot have value,
because what is valuable about the product/noun is the seller’s
prior investment in manufacturing and/or wholesaling
infrastructure., not clever IP that does not have higher profit
margins than does the incumbent product set.
Now we define the second half of assertion 2, which is about
trademarking. Trademark (the application of which differs for IP
protection relative to much easier to defend in court brand/name
protection)- in this case I’m talking IP protection- requires that
the IP be noun-embeddable, whereas servicemarked requires the IP to
be verb embedable. If you google “trademark definition”, when
applied to IP defense as opposed to brand defense, you too will
become aware that the definition of this word requires the IP owner
to be able to either manufacture or to sell (remember what sell
means from above!) the noun.
Insurance provides for minimization of liabilities (or
contra-assets). Insurance advisor is not a defined term. Financial
advisor is defined, and it means person who holds the authority to
sell verbs (person who has an RIA affiliation, which means they can
sell verbs. RIAs sell verbs only. Agents and brokers sell nouns
only.) Financial advisors provide ongoing asset maximization
advising and they frequently receive their compensation by advising
upon, and thus billing upon, AUM accordingly. This asset max
advising is a service. IP embedded in Services, for example, the
managed account services provided by Morningstar Inc, are
servicemarkable, thus they have been servicemarked, not
trademarkable, because they’re verbs (services), not nouns.
Absent codifying insurance advisement so that insurance professionals can also sell verbs, by which i am saying: Absent popularizing a billing approach like benefits under advisement or income under advisement, there can’t be value to intellectual property in our field, because you can’t defend it via servicemark (because there’s no framework for scalably selling services in our domain) and you can’t sell it as a noun because an organization can only monetize a trademark in insurance from previous investment in manufacturing and distribution. an incumbent will only do this if the new product has higher expected profit margins than does its existing portfolio. Not likely in today’s fee conscious environment)
So again, because my prior words are true, Not having a scalable
advisement frame for liability reduction means intellectual
property that is servicemarked in our field also cannot have value,
because it can’t be sold (to sell again means to exchange
remuneration in direct respect to x. Non-codification of insurance
advisement means we can’t scalably sell verbs in insurance). So
concludes my proof of assertion #2, that IP can’t have value in my
field.
Assertion 3: The impossibility of IP having value in my field is an
offense about which utter outrage is merited. It is a direct
affront to the very principles of capitalism. Capitalism as a
governing frame relies heavily upon IP being protectable and
monetizable so as to encourage invention.
Thus I question: Why is mine the sole field in this country to which capitalism is not permitted to apply, and why are other members of my community not apoplectic about my potentially true words?
Consider the implications that not codifying verb sales in my domain has now that post-SECURE, annuities are permitted in plans. Plan advisors, like all other fiduciaries in America, are inherently taught that asset maximization is the only valid lens through which financial advisement can occur. Yet i believe that consumer financials occur not only on the left side of the consumer balance sheet, but also on their income statement, their statement of net worth, their cash flow statement, and the right side of balance sheet, which is where insurance plays. Plan advisors don’t know annuities and vice versa. Advisers can’t begin to imagine why we insurance people believe our solutions have value, because they are taught to see the world through the lens of asset maximization and are not taught about liability minimization as a valid entry point to a consumer finance worldview.
Annuities in DC will only take off if we band together to fight for
their place. Actuaries used to have a role in asset liability
matching when we as a society had DB plans. There isn’t a natural
spot for an actuary in DC plans because liability consideration is
not yet required so as to advise in DC, because DC, which relies on
AUM as a billing base, even though ERISA includes the words
“Retirement Income” in the acronym, naturally emphasizes asset
maximization.
Why not IUA?
The Society of Actuaries, NAIFA and IRI must all strongly consider the possibility that my words might be true, and if they feel they might be, they need to begin acting yesterday.
Representatives of any of these industry organizations, or other
industry organizations that can help change what I believe to be
the true circumstances that i have just described to you are
invited to email me at mrichterfis@gmail.com and request a deck
that further explains my perspective and the dangers to both our
industry and our society more broadly that follow logically
therefrom.
Lastly for this diatribe, I hold that Insurance advisement should
be a National field (since it is not about noun placement but about
contextual advisement, it is not per se corollated to an individual
contract the way some state insurance law allows annuity consulting
to occur, thus the field would not make sense to be state
regulated) it should be policed similarly to how RIAs are
overseen.
To achieve this framework is my career goal.
27 years remain until I begin taking social security at age 70. It thus follows logically that I will not stop truthfully communicating my concerns on these matters for at least 27 more years (unless they’re resolved in less time than that).
Thank you for your patience both in allowing me to read that today, and in helping me along in my communicative journey towards hopefully making this point understandable to at least a few people!