In this special episode of our Shares podcast recorded on August 13 at The College’s 2024 Conference of African American Financial Professionals (CAAFP), senior reporter for ThinkAdvisor John Manganaro speaks with Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta. They discuss the importance of diverse representation in policy making, views on contemporary markets, and how to navigate making financial decisions that affect Americans’ lives.

Raphael Bostic took office June 5, 2017 as the 15th president and chief executive officer of the Federal Reserve Bank of Atlanta. He is responsible for all the Bank's activities, including monetary policy, bank supervision and regulation, and payment services. In addition, he serves on the Federal Reserve's chief monetary policy body, the Federal Open Market Committee (FOMC). The Federal Reserve Bank of Atlanta serves the Sixth Federal Reserve District, which covers Alabama, Florida, and Georgia, and parts of Louisiana, Mississippi, and Tennessee. The Bank has branches in Birmingham, Jacksonville, Miami, Nashville, and New Orleans.

This episode is a collaboration with ThinkAdvisor.

Any views or opinions expressed in this podcast are the hosts’ and guests' own and do not necessarily represent those of The American College of Financial Services.

More From The College:

Learn About CAAFP
Visit Our Center for Economic Empowerment and Equality
 

Listen as our thought leaders explore recent data on racial and gender wealth gaps, how financial crises disproportionately affect Black and Hispanic families, the critical role of financial education in building and sustaining wealth, and more.

CNN | Best Annuities for Retirement in 2024
August 15, 2024

James Karthaus, CFP®, CLU®, ChFC®, MA, assistant professor of financial planning, explores how annuities and guaranteed income can be leveraged in retirement planning – including adjusting strategies for inflation.

“I was the oldest grandchild on both sides of my family, and a lot of expectations fell on me to give good advice – and money was one of the most important parts of that,” he said.

Acting on that impetus, Williams started in financial services as an advisor, often going door to door to solicit new clients and work with existing ones. These days, he’s a vice president and regional practice management consultant within JPMorgan’s practice management division, consulting with financial advisors across the Southeast, Mid-Atlantic and New England regions. He says his career journey has been an evolutionary one in many ways.

“It’s given me a lot of insight into how to not just be a better advisor, but also how to run a successful business,” he said. “When you start out in this industry, you often have to wear a lot of different hats: sales, operations, compliance, managing and planning, and more. It can really weigh on you sometimes, but it teaches you a lot about who you are.”

“When you start out in this industry, you often have to wear a lot of different hats…it can really weigh on you sometimes, but it teaches you a lot about who you are.”

Sculpting Skills to Succeed

Williams says many elements of his more than 15 years of experience in wealth management and financial services made him aware of the power of knowledge and leadership – among them his stint in The College’s Black Executive Leadership Program.

“The College brings financial knowledge, education, and acumen to the table in a way that’s just phenomenal,” he said. “So, when my then-managing director reached out to tell me about this new program The College was starting up, it was kind of a no-brainer for me.”

The Black Executive Leadership Program offers high-potential Black and DEI-committed professionals ready to advance in corporate leadership the resources to power their next career steps. With its hybrid online and in-person program and its model of executive sponsors and student fellows collaborating in both settings, it’s helped set many rising leaders up for success, and Williams praised the culturally relevant insights of the curriculum.

“You can only learn so much in a textbook; it makes you aware of the issues, but not always how to navigate them,” he said.

When it comes to practice-building advice, Williams offered four key points for advisors to consider:

1. Look for people who are looking for you. “Many of us are looking to improve and advance ourselves in the business, and the Black Executive Leadership Program reminds us of a lot of cultural and social issues at play and business dynamics that can have an impact on growth,” Williams said. He further explained that it’s important to find a workplace where professionals believe they belong and will be heard.
2. Preparation is key. “You have to be detail-oriented, understanding the nuts and bolts of the business,” Williams said. Only then, he says, can professionals continue moving in the direction they want successfully – and hopefully have fun while they’re doing it.
3. Develop your emotional intelligence. Often in business and in life, things won’t turn out the way you want them to; the defining factor is how you respond to it. Williams emphasized that it’s important to separate the ego from the professional workplace. “If a client or potential client says no, that’s okay, and there’s usually a reason for it,” he said. “Instead of getting offended, take a minute to ask them questions and try to find that reason. They may respond with something you hadn’t considered that can help you get them to yes.”
4. Understand how your business model operates. “Before we even sit down with clients to have investment or other conversations, we have to understand exactly how our business is set up so we can help our clients understand, too,” Williams said. He says programs like the Black Executive Leadership Program and other learning opportunities exist to assist professionals in crafting these business models and developing their communication skills.

“The College brings financial knowledge, education, and acumen to the table in a way that’s just phenomenal…it was kind of a no-brainer for me.”

Building Client Relationships

Financial professionals are often told about the need for building strong client relationships – but Williams says his experience shows it’s even more important than some may think.

“Financial advice often has very little to do with finance,” he said. “It’s been a long time since I’ve had a Series 7-related question. Alpha, asset management strategies – these are table stakes. Relationships are the selling point of your business.”

Williams emphasized that his interactions with clients often border on life counseling in addition to financial planning and investment management – and it’s important advisors get comfortable with and be prepared to take on that role.

“Personal finance truly is personal: you’ll find yourself talking to your clients about things that have nothing to do with money. When feelings are tied into money, it becomes a highly emotional situation. It’s a sensitive subject, and you’ll become part of all kinds of conversations you never expected.”

So, how does an advisor build the kind of trust-based relationships it takes to make these connections possible? Williams advises a sound knowledge of yourself, your business, and your values – which, in turn, will give you confidence.

“There are a lot of options out there for financial planning these days, and people are often hesitant. You have to make them believers in what you’re offering,” he said. “Clients pay close attention to your attitude and your process while working with them – so you need to focus on strong communication and adding value in each interaction you have with them.”

“Financial advice often has very little to do with finance…relationships are the selling point of your business.”

It’s also often cited that financial services is a high turnover industry, with many new advisors lasting less than five years before transferring out of the business: according to Advisorpedia, 90% of advisors quit the profession within three years. Williams, however, says the ingredients for success are there as long as professionals are willing to look for them – and prepare themselves for the long haul.

“My father used to tell me about how his experience with success in law happened almost overnight. It’s not that way for most business owners, including those in financial services,” he said. “Stamina is critical. Discipline, emotional intelligence, and consistency are all things I learned along the way. The key to making it is modeling your business to run efficiently and give your clients confidence. That way, you have the confidence you need to sleep at night and spend time with your family.”
 

Learn More From The College

Meet Our FinServe Network.
CFP® Certification Education Program.
 

Join The College’s Chartered Advisor in Philanthropy® (CAP®) Program Director and Assistant Professor of Philanthropy Jennifer Lehman PhD, JD, CFP®, CAP®, as she discusses how to account for tax consequences when assisting clients in making charitable contributions and other forms of planned giving in this new continuing education (CE) opportunity available on Knowledge Hub+!

Whether you’re a financial advisor or a professional representing any other area of the philanthropic advising ecosystem, you should be familiar with tax regulations in order to assist clients as they devise their strategies for planned giving. The College and charitable giving expert, Jennifer Lehman provide key details in Planned Giving: Fun with Taxes and Probate.

What is Probate?

Lehman begins this discussion by explaining the concept of probate to listeners. “Probate is a legal process … that transfers property after somebody’s passing.” Probate is meant to re-title assets that are not already re-titled through some other method (such as a valid beneficiary or automatic survivorship).

However, not all cases in which the transfer of property occurs involve the process of probate. Some smaller families without significant assets may simply agree on how to divide an individual member’s wealth after their passing.
Probate can also differ on a case-by-case basis. Lehman goes on to discuss how probate looks when an individual dies with a will in place and compares the differences in the process when an individual dies without one. She also describes what parts make up this process and what participants can expect.

Lehman goes on to share her major takeaway that provides a high-level understanding of people’s relationship with probate. According to Lehman, probate is an expensive and onerous process. “It is a process that people like to avoid. So, the way to avoid probate is to plan during life for what will happen to your things when you pass.”

Giving During Life vs. After Death

Lehman discusses several methods of planned giving that clients may want to consider, starting with giving to individuals, such as a family member, and the differences between giving during life and giving after death. She emphasizes several important factors to consider, including step-s up in basis, long-term holdings, and annual gift tax exclusions, among others.

However, one key factor cannot be optimized for the best tax situation. Lehman reminds  advisors, “The downside in waiting until death is you don’t get to see the benefit to the individuals or the charity as far as how they use the money and what they do with it.” This can be a major deciding factor for some clients, as they may like to see the benefits of their giving before passing away.

Gifts Your Clients May Want to Consider

Lehman highlights several forms a client’s gift may take, including gifts that can take effect during life such as cash, donor advised funds (DAFs), stocks and bonds, real estate, and qualified charitable distributions (QCDs). She continues by comparing these types of gifts to  gifts that can be planned in life, but do not take effect until death, such as retirement assets, life insurance, life estate, DAFs, and individual retirement accounts (IRAs).

For continued giving, clients may also want to consider gifts that generate income such as annuities, remainder trusts, and lead trusts. These allow clients to impact their recipient of choice for years to come rather than as a single transaction.

All of these gifts have various factors to consider, and the best choice may not be the same from one client to another. By mastering the principles Lehman shares in this discussion and following her guidance when offering clients recommendations, advisors can help their clients achieve all of their gift-giving goals and more. She elaborates on these in greater detail in Planned Giving: Fun with Taxes and Probate on Knowledge Hub+.

To access this learning opportunity and other valuable CE, visit Knowledge Hub+.

More From The College

Gain philanthropic and legacy planning knowledge with our CAP® Program.
Learn about the American College Center for Philanthropy and Social Impact.
Join the waitlist to be notified when enrollment opens for the TPCP™ Program.
 

In this episode of our Shares podcast, host Eric Ludwig, PhD, CFP® joins Denise Appleby, MJ, APA, AKS, CISP, CRC, CRPS, CRSP – creator and CEO of Appleby Retirement Consulting and a preeminent retirement planning thought leader featured on The College’s Knowledge Hub+ platform – for an in-depth look at new RMD regulations and what they mean for retirement planning. Specifically, Appleby explains how rules surrounding the choosing and managing of beneficiaries for retirement accounts have changed thanks to the SECURE 2.0 updates, and what that means for your practice moving forward.

Denise Appleby, MJ, APA, AKS, CISP, CRC, CRPS, CRSP is a nationally recognized IRA expert and author of several books on IRAs. She is an IRA trainer, speaker, and consultant on IRAs and employer plans for small businesses. She has trained thousands of financial, tax, and legal professionals and helps them avoid mistakes with their clients’ retirement accounts and, where possible, fix mistakes. Due to her knack for working with IRA custodians to correct IRA mistakes and resolve other complex IRA-related issues, Appleby has earned the reputation of “The IRA Whisperer.” She graduated from John Marshall Law School, where she obtained a master of jurisprudence in employee benefits and has earned several professional designations for IRAs and employer plans.

Any views or opinions expressed in this podcast are the hosts’ and guests' own and do not necessarily represent those of The American College of Financial Services.

More from The College:

Learn about our RICP® Program.

Visit the Center for Retirement Income.

Rethinking65 | The Crisis in LTC Coverage
August 12, 2024

Members of The College’s 2023 Retirement Income Literacy Study research team including Kaylee Ranck, PhD, James Karthaus, CFP®, CLU®, ChFC®, MA, and Joellen Meckley, JD, MHS, ChSNC® discuss one of the study’s most important takeaways – a lack of long-term care knowledge among aging Americans – and how the industry can move to address this need.

For three days from August 12-14, 2024, attendees of the 18th annual event focused on empowering, educating, and advocating for the role of Black, African American, and DEI-committed professionals in the financial services industry experienced informative and inspirational workshops and coaching sessions plus invaluable networking opportunities.

The conference was truly transformational for all involved as it focused on the theme of Expanding Our Collective Impact: building solutions to the racial opportunity and wealth gaps that still persist in America today.

The Power of Insurance Planning

The first day of CAAFP 2024 opened with an insightful conversation between two financial services industry leaders: Salene Hitchcock-Gear, president of individual life insurance at Prudential; and Kam Harris, vice president of actuarial and risk at Atlanta Life Insurance. In their discussion, they focused on their diverse roles within the insurance planning space – one of The College’s foundational pillars thanks to the Chartered Life Underwriter® (CLU®) designation program – and how insurance can shape the futures of diverse communities.

Hitchcock-Gear and Harris also talked about the relationship between insurance and legacy planning, and how Black and African Americans have been left out of conversations about building generational wealth.

Along with a welcome dinner filled with fun and fellowship, attendees went to bed excited for the next day’s main events.

Financial Services Policy and Prosperity

The second day of CAAFP 2024 kicked off with a keynote address from Donna Brazile, a veteran political strategist and author. Brazile drew on her extensive history with Washington, DC and legislating to examine the current state of the country – and what can be done to narrow wealth gaps between diverse communities.

“Leadership comes in all kinds of flavors, shapes, sizes and colors,” she said. “We are not going back. We are going to celebrate who we are, and we are not afraid to claim diversity, equity and inclusion.”

After getting a chance to attend a series of workshops and coaching sessions and check out The College’s Networking Lounge – filled with information booths and activities, as well as shopping opportunities from local merchants – attendees enjoyed  lunch and a conversation between two more industry movers: George Nichols III, CAP®, president and CEO of The College; and Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta.

In their discussion, Nichols and Bostic took a look at the role of the Federal Reserve, bankers, and the financial services industry in unlocking new opportunities for communities of color.

“Information is power, and we want to get that information into the hands of the public,” Bostic said. “Our job is to create certainty and an economy for everyone. If we’re doing our job, people will feel optimistic about the future.”

Finally, the evening was capped off with a celebratory White Party, where all attendees were invited to wear their best white outfits and dance to the beats of DJ Shakim and Dee-1. It was the perfect ending to an eventful day!

Empowering Future Generations Through Finance

While no one wanted CAAFP 2024 to end, day three of the event wasn’t short on excitement and insight. To kick off the day, Nichols hosted a fireside chat featuring Virgil Miller, president of insurance giant Aflac U.S.

Following that session, the CAAFP crowd heard a powerful address from Michelle Singletary, author and award-winning personal finance columnist for The Washington Post. Singletary stressed the importance of legacy-building for Black communities and families, returning to the themes of day one while adding her own ideas on how a change in mindset is necessary to close the racial wealth gap.

The College recognized the excellence of African American financial professionals with its annual presentation of the Lang Dixon Leadership and Excellence in Achieving Diversity (LEAD) Award. This year, two award recipients – Maceo A. Sloan, CLU® and Calvin F. Vismale, CLU® – were recognized posthumously as two of The College’s first Black alumni in the CLU® Program and among those who paved the way toward increasing diversity in the insurance business.

Finally, the entire event was capped off by a talk from Dawn Staley, a legendary figure in women's basketball. Staley is renowned both as a former player and as the current head coach of the South Carolina Gamecocks, leading the team to multiple national championships, SEC titles, and Final Four appearances. She played eight seasons in the WNBA as a stellar point guard for the University of Virginia, and was a three-time Olympic gold medalist with the U.S. women’s basketball team. In her address, Staley focused on critical elements of leadership needed to expand collective impact.

“I hope CAAFP attendees do three things after this great event: expand their knowledge, expand their network, and stay connected—both with The College and with each other. That’s how we’ll deliver on the promise of the conference and Expand Our Collective Impact.”

George Nichols III, CAP®
President and CEO 

Thanks to all who attended CAAFP 2024! We look forward to seeing even more financial professionals and continuing to expand our collective impact in 2025.

Get an inside look in this year’s recap video.

More From CAAFP:

Learn About the Event.

Visit the Center for Economic Empowerment and Equality.

The afternoon panel on unfair discrimination in insurance underwriting was a presentation by Azish Filabi, JD, MA, managing director of the Center for Ethics in Financial Services, and Sophia Duffy, JD, CPA, AEP®, associate professor of business planning at the American College of Financial Services, about the ethical and governance challenges of artificial intelligence (AI) in the life insurance industry.

The panel highlighted the ethical and regulatory challenges of AI in the life insurance industry, drawing insights from a 2022 academic paper with the National Association of Insurance Commissioners (NAIC), "AI-Enabled Underwriting Brings New Challenges for Life Insurance: Policy and Regulatory Considerations," and a 2021 white paper, "AI Ethics and Life Insurance: Balancing Innovation with Access."

The panelists emphasized that AI differs from traditional algorithms because complex machine learning systems can obscure the decision-making rationales in underwriting, which creates new legal and ethical challenges. Moreover, once AI systems are embedded within a process, their operations become difficult to disentangle. The opacity of these systems, often referred to as "black box" systems, poses significant technical challenges, necessitating increased technical literacy and education. The proprietary nature of many AI systems adds another layer of complexity. This opacity and complexity make it difficult to ensure that these systems comply with anti-discrimination laws, particularly those that prohibit discrimination based on legally protected characteristics, like race.

AI systems can inadvertently result in unfair discrimination by using data sources that have a historical bias or serve as proxies for protected characteristics, the panelists shared. This can lead to outcomes that are not just unfair, but also potentially illegal. However, determining who is responsible for these decisions is not straightforward. The chain of data ownership involves big data aggregators, algorithm developers, and insurers/lenders. While insurers are ultimately accountable for their products, they may lack the technical expertise to fully understand the intricacies of the AI systems they use. This creates a disconnect where insurers may not have the ability to shape or even fully comprehend the systems they deploy.

Another issue presented was the difficulty in defining and measuring proxy discrimination when it comes to AI-enabled underwriting. Insurers are permitted to use an underwriting factor if it’s related to actual or reasonably anticipated experience, but there’s no clear-cut standard for how effective that factor needs to be. This ambiguity means each insurer’s justification for using a particular factor can be unique, making regulation even more challenging.

Ensuring insurers' systems align with regulations while integrating various external consumer data points is crucial. A major concern is consumers may remain unaware of which data is used, such as credit scores, credit history, and social media data, raising questions about fairness and the ability to correct inaccuracies. The use of irrelevant and incorrect data can lead to mistakes that get embedded in data chains earlier in the process. Embedded mistakes could be particularly pernicious in complex AI systems that use proxy factors to render decisions. In such systems, it's possible the mistaken data input will render an answer false.

To mitigate these risks, researchers at The College recommend a three-part framework: establishing national standards to set boundaries for acceptable design and behavior, implementing a certification system to verify that systems are developed in accordance with these standards, and conducting periodic audits of system outputs to ensure ongoing compliance.

Developing nationally accepted standards would involve the creation of guidelines to ensure AI systems adhere to best practices in system design and actuarial principles. This process requires collaborative research and careful consideration of who should define these standards. Key areas to address include: behavioral validity, or ensuring that data accurately reflects the behavior of interest; actuarial significance, assessing how inputs contribute to risk evaluation; and social welfare outcomes, defining a financially inclusive marketplace.  

As the panel discussion ended, the conversation turned to the importance of testing for unfair discrimination in AI-enabled underwriting. Emerging rules suggest both objective and subjective approaches. For instance, an objective method might involve a 5% threshold for evaluating disparate impact on race, while a subjective approach would permit insurers to develop their own AI testing methodologies.

Critical questions remain. Should there be a unified approach to testing for unfair discrimination resulting from insurance underwriting? Who should have the authority to determine this approach? And how transparent should insurers be with consumers about data usage and privacy rights? These considerations are essential as we navigate the complexities of AI-enabled underwriting and strive for a fair and equitable system.

The future of insurance underwriting is undoubtedly tied to AI, and regulators and industry can together make sure that future is fair and equitable. We hope our study sparks a necessary conversation within the industry and among regulators.

To learn more about AI in financial services, you can explore further with research from the Center for Ethics in Financial Services.