April 1, 2013
Shop Talk
Q&A With Michael Hanley of FMG Financial Services
Michael E. Hanley, President & CEO, FMG Financial Services Inc., Worcester
By Rick Saia
One day in the 1980s, when he was running a benefits planning firm in Boston, Mike Hanley took a class on insurance that was taught by Bob Evans. As they got to know each other, Evans invited Hanley to come out to Worcester and in 1988, they formed their own company, which is marking its silver anniversary this year. FMG "has been built on communication. I've seen a lot of partnerships fall apart" without that, he said.
What is the biggest concern among companies regarding employee benefits?
It's become more complicated, (with) more regulation, and it's become the second largest business expense after salaries. Maneuvering through the maze of the health care delivery system has become virtually impossible to do on your own. You really need a professional.
I thought you'd mention health insurance. In the many years you have been working in the area of benefit planning, how hard is it for you and FMG to get a handle on the changes in the health benefits arena?
We've been on the forefront of it. I served as past president of the Massachusetts Insurance and Financial Advisors and was very involved with their (legislative agenda). We've treated it like a triage. When health care reform took place here in Massachusetts, it was really the forefront of the country in health care reform. We were one of the first to embrace it, read the act, read the bill, create a plan of action, get out to every one of our (clients) and say "Here's what you need to worry about first, second and third." Now with Obamacare, it's been a lot easier for us to work with our customers.
There are many small businesses in Central Massachusetts. Will employee benefits take up more of their time over the next few years, enough to divert some attention from increasing sales and providing a superior service or product?
It will strangle them and destroy them if they do not outsource the research, implementation and the compliance area. Every business out there has a human resource professional in one way or another. Some are trained, some aren't so trained. But if they are trained, they're usually trained in a discipline and the amount of disciplines needed in human resources is tremendous. So to be able to keep up on hiring, wages, compensation, benefits ... (it's) impossible for a business with 50 employees to go out and even hire one HR person.
At this point in time in the United States, families are still trying to recover from the Great Recession with one eye on today and another on tomorrow. What's the most comforting advice someone like you can offer them today?
We have registered investment advisors here who work with the executives and the employees and particularly people that are retiring. People that have saved their entire life to retire with dignity, and then in the last five years, saw the stock market just go crazy. What I think everyone has chased is … the magic bullet. No one has really done a proper job in terms of risk assessment. And risk assessment isn't how much risk you're willing to take, it's how much of your principal are you willing to lose. And they weren't diversified.
They should be seeing a professional … (who can walk) them through a risk tolerance test to see where their stomach is. If you're going after a 20-percent rate of return — which is unrealistic — you have to have the stomach to lose 40 or 60 percent. And if you don't, we need to have a conversation around it.
What's the most important lesson in financial literacy most adults need today?
How to save. When we get a paycheck, we spend what we earn and then we try to save what's left over — and there's nothing left over. Why is it that employees leave one place of employment and go to another? It's usually for more money. But do they actually end up with more money? If you looked at what they saved, do they actually save more money? The answer is no. So what did they move for? More lifestyle, and they consumed it.
The goal in life is to buy our way out of slavery by savings. By having our money and putting our money to work.
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This interview was conducted and edited for length by Rick Saia, Worcester Business Journal staff writer.
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Shop Talk - Michael Hanley, FMG Financial Services
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