Published in Insurance & Financial Insurance Management Magazine – November 1, 2016 **
As we bid farewell to 2016 and look around the corner to 2017, the financial and Insurance meetings industry will continue to tread cautiously among economic pressures as well as domestic and global uncertainties. Event planners in the marketplace are experiencing unique challenges based on their company’s business product and services portfolio, and ownership position.
According to Jeff Montgomery, president of Austin-based TCG Group Holdings, “Never before have the market drivers been as strong and diverse as they are now in financial services. Corporation executives will continue assessing product lines and services to determine opportunities for possible acquisitions, mergers, internal consolidation and ‘right-sizing’ to increase market share. Traditional methods don’t work as well as they used to. Redefining product design and placement, regulatory requirements and the need for scale are forces that influence boardrooms around the country.” With these influencers, along with low interest rates stunting organizational growth opportunities, event planning teams will continue to remain nimble with expenses and creative with program design to ensure high-touch attendee engagement experiences are not compromised.
Department of Labor ‘Doubling Down’
The Department of Labor (DOL) has become a household name in the financial and insurance industry especially with organizations selling IRAs and retirement products within their product portfolio. The DOL Fiduciary Ruling has generated tremendous attention and is taxing internal resources within organizations to evaluate the full scope and implications of the ruling. Companies are assessing retirement product design, selling practices, commission models and recognition programs, which include meetings and incentive trips for 2017 and beyond.
Furthermore, as the new president and his administration ramp up to take office January 20, the industry will need to wait and see if a position shift is on the horizon.
Meanwhile, the financial and insurance companies with non-retirement specific products are keeping a close eye on the DOL Fiduciary Ruling due to the possibility of a ripple effect impacting other product lines. The Life Insurance and Market Research Association (LIMRA) and the Association of Advanced Life Underwriters (AALU) are two organizations advocating on behalf of the financial and insurance industry including lobbying on the hill, speaking at industry conferences, surveying members and distributing case studies.
The DOL also issued a final rule governing overtime, which becomes effective December 1, 2016. (As of press time, U.S. District Court Judge Amos Mazzant granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule on December 1, 2016.)The rule’s intention is to put “more money in the pockets of middle class workers — or give them more free time.”
The final rule will:
Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
Strengthen overtime protections for salaried workers already entitled to overtime.
Provide greater clarity for workers and employers.
However, business owners and other critics say the rule won’t necessarily work out this way, and that there will be unintended consequences that will be damaging to the economy. The threshold increase will specifically have a direct impact on several realms related to travel and meetings. For example, if a non-exempt employee attends an offsite training meeting requiring weekend travel and evening business activities or dinners, overtime pay will come into play. Therefore, conferences and meetings may see a drop in attendance due to companies not wanting to pay time and a half for non-exempt employees to attend.
On the flipside, travel industry suppliers with non-exempt employees will need to assess program scheduling strategies to minimize overtime costs or risk reducing profit margins. Laurie Sprouse, CITE, CMP, DMCP, president of Dallas-based Ultimate Ventures, a DMC Network Company stated, “Like all businesses dealing with this change, DMCs are particularly focused on how to manage the increased labor expenses without having to simply pass those costs on to our clients. We are particularly perplexed because all of the compensation strategies that we already employ — bonuses, incentives, profit sharing, benefits and even additional time off/comp time — do not count, according to the DOL’s rule towards the required time and a half compensation for exceeding 40 hours in a week.”
As the Department of Labor rules are rolled out and fully adopted, the financial and insurance industry along with the hospitality community will continue assessing, reinventing and evaluating opportunities to deliver stellar products and services, while managing regulator expectations and remaining profitable.
Plan for the Unexpected
In 2016, the industry witnessed an escalated threat to meetings and events with a rise in violent protest demonstrations and lone-wolf terrorists infiltrating popular meeting destinations around the United States and Europe. Unfortunately, these incidents will likely continue, and without having a crystal ball indicating where and when these incidents will occur, being vigilant and prepared will need to be “top of mind” for organizations and their event planning teams.
Financial and Insurance companies and hospitality suppliers alike have evolved their contingency planning strategies based on firsthand experiences including onsite accidents, unpredictable health issues and large-scale catastrophic events such as New York’s 9/11. These events have sparked companies to develop well-designed contingency and emergency plans, employing a thoughtful communication hierarchy based on “what if” situational events.
Although having a plan is important, acting on the plan at a time of crisis is equally important and demands effective leadership, confidence and communication.
Planners beware, if an incident or crisis occurs, and there is no emergency response plan in place, the safety of participants may be at risk, the organization’s brand could be exposed, and unfortunately, the event planner’s credibility may go down the drain, too. Reviewing an existing plan regularly is extremely important, and for those organizations lacking a plan, start the conversation today with your risk management team and executive stakeholders. Taking a proactive role with this critical planning element will ensure confidence, provide direction in a crisis situation and avoid potential repercussions.
There are several risk management articles available online to enable you to start the process. In addition, the International Congress and Convention Association (ICCA) published an extensive white paper in cooperation with Safehotels Alliance designed for association executives and meeting management companies to plan, prepare, manage and recover from crisis situations. Go to www.iccaworld.org for more information.
The Outlook for Contract Negotiations
There has been an uptick with organizations and event planners reviewing existing contract clauses particularly involving force majeure and duty of care due to recent protestor movements, terrorism and Zika virus in areas where events are scheduled. Understanding contract language is especially important as the interpretation of some clauses is occasionally viewed as subjective when problems arise and each side defines the clause differently.
Rick Bissonett, CMP, CEM, CMM, director of business development with Austin-based Infinity Events Group, says, “Legal clauses continue to evolve based on the changing world we live in. All clauses, specifically force majeure or rights of termination for cause, claims and disputes, and contingency clauses need to be discussed with the venue so both sides truly understand the intent of the written clause. Event planners should always document the intent of a clause with a follow-up email and ask the venue to offer language that matches the planner’s intent. Relationships with the venues are key, always be 100 percent transparent regarding the clause’s objective, and understand no matter how memorable the site visit was, the salesperson has a responsibility to the property ownership to look out for their interests. If things do go south, the planner needs an understanding of the contractual financial liability based on the change action as a baseline in order to negotiate opportunities to resolve the issue.”
The bottom-line — there always will be a “destination risk” once a contract is signed, however, having an understanding of contract clauses based on different scenarios will allow for an assessment of viable options and solutions if a situation arises.
The Outlook for Budgets
Hotel performance is projected to grow through 2017, and with supplier costs increasing including goods and services, financial and insurance planners’ 2017 budgets are growing as well. Or are they? Unfortunately, planners across the financial and insurance industry have indicated their 2017 budgets will vary by +/- 10 percent depending on their organization. The news should come as no surprise since organizations are reacting to internal and external economic conditions based on their market position.
The meetings and events budget line item will remain under the corporate microscope, and event departments will continue to be asked to “do more with less.” This is not a new concept — planners always are tasked with streamlining event costs especially during challenging economic times. However, event organizers continue to be resilient and are determined to identify creative ideas to ensure their events deliver on the vision and objectives within budget parameters.
Event planners are becoming more resourceful by collaborating with preferred supplier partners, such as destination management companies (DMC) to determine where budget dollars will have the greatest impact during a program.
According to Jeff Nelke, a destination management professional leading the Access Florida team in the South Florida region of the United States, “Planners are offering budget transparency and including past event successes in their request for proposals. Having this information has enabled our creative team to develop and streamline proposals that align with the program vision, goals and budget, and without repeating concepts. Collaboration has been a key driver to our business success.”
Vendor partnerships and alliances are more important today than ever before driving experience consistency and service performance, along with cost savings due to leveraging preferred pricing agreements.
CSR With a Twist
Corporate Social Responsibility (CSR) is alive and well with meetings and events. The industry has seen new twists on the traditional CSR engagement activities including amenity experiences that align with sustainability or betterment of life initiatives such as Toms One for One project. Every time a Toms product is purchased, a person in need is helped. Toms helps provide shoes, sight, water, safe birth and bullying prevention services to people in need in more than 70 countries.
Along these lines, the wet paint group (wpg) based in Centennial, Colorado, has launched the Revo Sunglass amenity experience, which has aligned with Bono’s Charity “Buy Vision, Give Sight” to help eliminate preventable blindness. Doug Chorpenning, CEO of the wet paint group, puts it this way: “wpg makes gifting with giveback a breeze and purposeful. When you bring the Revo Experience to your events as an onsite gift experience, $10 per pair is automatically donated to Bono’s Vision Charity. Not only are you giving your guests a unique high-quality amenity, but also supporting a great cause with turnkey fulfillment.” The company also provides a pajama bar amenity experience featuring the Punjammies Loungewear collection. Manufactured by Sudara, an India-based company, the loungewear is made with hope by women who have escaped human trafficking.
FICP (Financial and Insurance Conference Planners) recently wrapped its 2016 Annual Conference in Nashville with record attendance — a solid indicator of continued success in 2017.
Once again, Junior Achievement was the recipient of FICP’s 15th Silent Auction. FICP supports local chapters to introduce students to the meeting planning and hospitality industries and provides volunteer opportunities for FICP members and hospitality partners.
As FICP’s dedicated philanthropic partner, all Silent Auction proceeds benefited JA National as well as the JA of Middle Tennessee. This year, a grand total of $51,616 was raised for JA through the Silent Auction. For more information, go to www.ficpnet.com.