It's a good bet that when the Insurance Conference Planners Association was launched in 1958, there wasn't much discussion about whether or not using the term incentive was a good idea, or even whether the whole concept of an annual incentive conference for top producers made sense.

But, times change

Today, responding to regulatory concerns and worries about the public's perception of industry sales practices, even the term incentive appears to be out of fashion, replaced by recognition. In some companies, the annual incentive conference has morphed into an education meeting. And in at least one instance, a financial services company completely retired its traditional travel incentive for independent reps after being slapped with legal action for not complying with noncash-compensation guidelines.

Walking the Straight and Narrow

But stricter regulatory scrutiny — from the former NASD (now the Financial Industry Regulatory Authority, or FINRA), Securities and Exchange Commission, and Internal Revenue Service — is not always a bad thing, says Koleen Roach, director, recognition and conference planning, Securian Financial Group, St. Paul, Minn. “Companies need rules and regulations,” she says. “It keeps them walking the straight and narrow. And when you see people break those rules, get caught, and get fined, that says to me that the rules are working.”

Roach manages about 50 meetings annually, including Securian's National Sales Convention, which is held in even-numbered years and typically has 1,000 to 1,200 attendees. Securian prides itself on the company's focus on ethical behavior — a few years ago, during former New York Attorney General (now Governor) Eliot Spitzer's investigations into insurance industry sales practices, Spitzer praised Securian for its refusal to do business with certain brokers because of concerns about undisclosed compensation. (To learn more, go to and search “Model Citizens.”)

Yet, operating ethically can be frustrating when the rules keep changing, Roach says. She believes regulators sometimes don't recognize that the rules in place actually are effective. “Every time someone breaks a rule, there's a call to create more. The regulators never seem comfortable simply saying, ‘Hey, what we have is working.’ They cause problems by making us change a process that we've successfully implemented and followed according to guidelines. If the rules are doing their job, you shouldn't have to go back and reinvent the wheel.”

Otherwise, notes Roach, you end up with an even more frustrating situation, like an IRS manual “where there are rules on top of rules that nobody understands. It's nearly impossible to determine whether or not you are interpreting most IRS rules correctly. Everything is shaded gray. I would hate to see FINRA go down the same path.”

Increasing Scrutiny?

Meanwhile, financial and insurance companies continue to get their knuckles rapped (and worse) for violations relating to meetings and travel. New gift and entertainment guidelines have been proposed by FINRA and are expected to be approved by the SEC. Whether they will lead to greater or lesser regulatory scrutiny of incentive conferences is an open question.

Some experts believe that compliance investigations regarding gifts and entertainment have peaked and should moderate over the next few years. But, Christopher Myers, an attorney with Holland + Knight LLP in Washington, D.C., whose practice specializes in corporate compliance and ethics, says regulatory enforcement activity could in fact increase if, and when, companies start testing the limits of the soon-to-be-approved regulations. (See page 9 for an interview with Myers.)

Recognition Critical

Fortunately, Roach points out, FINRA is a member organization that always allows its companies to weigh in on the benefits or drawbacks of proposed rules. When it comes to meetings, Roach believes “companies will work proactively to keep governing bodies from putting such a stranglehold on recognition programs that we won't be able to do them anymore. Companies would loudly oppose any such changes.

“Whether you call them recognition or incentive programs, they're going to be part of the total package that financial institutions use for recruiting and retention purposes,” she continues. “You always have to keep your advisors motivated if you want to keep them satisfied — and recognition programs are just as important as benefits and compensation when it comes to retaining your top performers.”

Insurance and financial services companies will “always be doing this group business,” agrees Jennifer Squeglia, CMP, a former planner with John Hancock and Fidelity, who recently launched her own company, RLC Events in Marlborough, Mass. “I don't see that ever changing significantly — particularly not for high-end incentives. Bringing top-level producers together is vital to any organization.”

Richard Franchella, senior managing director at RBC Dain Rauscher in New York, has predicted that recognition models could change in the future. For example, companies might start rewarding financial advisors for more than pure production, such as recognizing them for how they've performed on behalf of their clients.

Roach is unconvinced. “I struggle with the idea of including a measurement requirement for recognition that would further reward advisors for good behavior, because they should be engaging in that as a matter of course,” she says. “Every company should have a management culture that embraces ethics and that resonates throughout the organization as a standard business practice. Calling the practice out individually and awarding incentives based on an ethics measurement is too subjective. How do you define and quantify ‘ethical behavior’?”

In and Out

Regulatory compliance has changed incentive conference priorities, says Jennifer Squeglia, CMP, RLC Events in Marlborough, Mass.. Here are some of her ins and outs:

  • Fam Trips are Out

    But, says Squeglia, if a hotel chain held an overnight event showcasing its properties, or hosted planners at an educational event, “that would clearly be business,” and therefore acceptable.

  • Casinos are a Hard Sell

    “Very few of my clients can hold meetings at casinos,” says Squeglia, “It just doesn't look right from a perception standpoint.“

  • Golf is in, Spa is Out

    Networking on the golf course still counts as business, but trying to argue that attendees can discuss business while undergoing spa treatments probably won't wash with the regulators.

  • Recognition is in, Incentive is Out

    “At most companies, the name of a meeting never has the term ‘incentive’ in it,” says Squeglia. “It is President's Club or something similar, which everyone knows has been set up in recognition of performance.”

  • Record-keeping is in, Pricey Gifts are Out

    When it comes to gifts, documenting what's been imprinted with a logo — as well as documenting price — is important. NASD (now FINRA) Gift and Entertainment Rule 3060 does not apply to items such as shirts or tote bags that display a logo, as long as the items are valued below $100.