For decades, Americans’ financial lives have long been connected with government programs, whether to achieve the dreams of home ownership and a college education, or to protect against illness, disability or old age. But the growing deficit, changing demographics and uncertain economy make it highly unlikely that our social safety net will continue to exist in its current form – and we all need to do something about it.
The long-term math is inescapable.
In 2011, $2.4 trillion of spending supported entitlements, an amount that dwarfs defense spending and exceeds all federal taxes collected in 2010. Meanwhile, 40 million Americans are over age 65, with 10,000 more joining their ranks daily.
Most experts agree that the government will have to reduce entitlement spending in coming years, which will cause a significant shift in how individuals, families and businesses plan for their financial futures. Because the financial services industry specializes in providing the guidance and solutions for exactly these kinds of situations, companies like MassMutual have a special responsibility in helping all Americans confront the reality of the current situation, and understand what they need to do.
First, the financial services industry needs to build a workforce that reflects the changing demographic face of America.
Our nation is vastly more diverse than ever and we are on track to be a majority-minority country by 2040. Women also play a greater financial role – in many cases, they are the key driver of family financial decisions, they earn more than $1 trillion a yearand own almost a third of privately held businesses. Americans’ attitudes toward financial risk are as diverse as our country and we need to relate to them on their own terms. At MassMutual, we’ve made a strong commitment to diversity and inclusion in the market and in our workforce; for example, in the past three years, we have doubled the number of financial professionals from our company who come from multicultural backgrounds.
Second, we also need to evolve from asking customers and clients to think in terms of products to providing them with tools and information about financial risks and how to plan for them.
"Americans’ attitudes toward financial risk are as diverse as our country and we need to relate to them on their own terms."
Part of doing this effectively is recognizing that the ways people like to receive information have changed – and therefore we need to change how we provide it. While the role of the trusted financial professional will never disappear, consumers nowadays expect to find information online and to engage in a dialogue with businesses through social media channels. We recognize this at MassMutual, which is why we’re constantly developing new tools and programs for social media platforms like Facebook and Twitter that go beyond presenting an online brochure and actually create engagement and conversation around important financial topics.
Third and finally, we need to manage our businesses sustainably and for the long-term.
Maximizing short-term profits rarely builds long-term business value or loyalty. People want to feel comfortable that the company they’re buying a product from today will be there when they need it – whether that’s tomorrow or decades from now. Concerns over entitlement programs mean that the desire for safety will only grow in coming years. Put simply, we must operate our businesses in the best interest of our customers and clients. Our structure as a mutual company places our policyholders at the center of everything we do, and it’s a clear advantage in today’s world. Granted, not every company is a mutual, but whether your business is financial services, retail or any other industry, operating for the long-term best interest of your customers is a wise strategy.
It’s a daunting “to do” list, but one that will benefit all Americans in the long run. Consumers who are empowered to create their own financial safety nets will be better protected against the challenges life brings, lessen demands on government programs, and be better positioned to turn their financial dreams into reality.
Roger W. Crandall is Chairman, President and CEO of Massachusetts Mutual Life Insurance Company. Founded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyholders. Under Mr. Crandall’s leadership, MassMutual has achieved record levels of financial strength – including surplus and total adjusted capital – and record sales in its key product lines, including its core product, whole life insurance.