Growing the Primary Market - 3

To help its members reverse declining growth of primary market annuity premium, the National Structured Settlement Trade Association (NSSTA) has transfigured it annual Fall Educational Conference into a members-only "Marketing Boot Camp" scheduled for November 5-6 in Dallas, Texas.

NSSTA's boot camp training agenda, "designed to help every member who attends learn how to increase the number of referrals they get from their clients and how to develop new clients", is featured on the NSSTA website as well as this prior S2KM blog post. 

NSSTA should be congratulated for prioritizing marketing as a critical business skill set for its members. The announced agenda, however, omits the most fundamental marketing issue every professional association should ask itself: "what business are we in?", or, stated somewhat differently, "in what markets do we participate?" 

By failing to address these fundamental questions, NSSTA's marketing conference appears to perpetuate "inside-the-box" strategic thinking responsible, in part, for recent sales declines of the structured settlement product which benefits from public policy endorsement, multiple tax preferences and statutory consumer protection.

NSSTA's strategic failure to understand and expand its own business results, in part, from NSSTA's poorly conceived effort to stiff-arm two legislative and regulatory developments which should improve the structured settlement product:

• Qualified Settlement Funds (QSFs) - Defined in Regs. 1.468B and made applicable to structured settlements by Rev. Proc. 93-34, QSFs provide benefits for both plaintiffs and defendants. They also provide an ideal funding mechanism to strategically position structured settlements within the $170 billion annual U.S. personal injury settlement planning market. Instead of embracing and marketing QSFs, however, NSSTA and its members have created and promoted a "single claimant" roadblock because they are unable to solve their own compensation issues. As a result, NSSTA has prevented its members, and its structured settlement product, from effectively competing in the dynamic personal injury settlement planning market.
• Structured Settlement Transfers - IRC 5891 and the state structured settlement protection statutes have solidified structured settlement transfers (i.e. factoring transactions) into a growing market that complements and potentially expands the traditional primary market. The ability of structured settlement recipients to sell their payment rights subject to judicial oversight and approval arguably improves the structured settlement product by adding a liquidity feature in the event of "over structuring" or unanticipated cash requirements. Instead of capitalizing on settlement transfers to improve and expand its market, NSSTA (through bylaw amendments) has threatened its members with suspension or expulsion if they sollicit or promote secondary market transactions. By continuing to criticize "structured settlement factoring", without participating in the secondary market, NSSTA and its members undermine their own product.

In addition to these missed opportunities, NSSTA and its members have failed to fully analyze and adapt their products to the expanding special needs planning market.

When NSSTA thinks "strategically" about "special needs", they focus narrowly and inwardly on a single product application (i.e. structured settlement funding for special needs trusts) instead of expansively and proactively about the special needs community within which annuities (not just structured settlement annuities) and life insurance represent critical financial products. 

Except for one settlement trust company, not a single NSSTA member attended this year's Academy of Special Needs Planners (ASNP) annual meeting or National Academy of Elder Law Attorneys (NAELA) annual meeting - both of which featured presentations about structured settlements. 

Since hosting its first "Special Needs Summit" in 2010, NAELA (with more than 4000 members) has substantially expanded its focus on the special needs market - including structured settlements. Beginning this year, NAELA has designated October as "National Special Needs Law Month" during which NAELA's members are providing (marketing) free education about special needs legal issues to the special needs community. 

Despite NSSTA's past mistakes, its first-ever marketing boot camp represents a step in the right direction - especially if the boot camp encourages NSSTA and its members to more closely examine their own changing marketplace. 

In a current Washington Post article titled "Can the Military Learn from its Mistakes?", Thomas Ricks offers two observations about the U.S. military which appear equally applicable to NSSTA as it prepares for its "boot camp" and could provide a strategic focus for improving and growing the structured settlement market:

• Quoting James Dobbin: "our military shows 'continued inability to come to closure' on some controversial issues".
• The military "doesn't encourage adaptive leaders to rise to the top, as they find and implement changes in response to the failures of the past decade."

For additional S2KM blog posts discussing how to grow the structured settlement primary market, see the structured settlement wiki. 

For an informative financial perspective about special needs planning, see the M&L Special Needs Planning website.