Take a look around at almost any producer meeting these days, and you'll no doubt see the problem -- not a lot of young people. Larry Barton, president and CEO of The American College, says the current median age of a producer is 54 and trending up. For an institution like The American College and the life insurance business as a whole, that is a serious problem.
In addition to finding ways to attract smart, young people to the business, there is also the problem of properly educating and training those new hires. Just whose responsibility is it? Does it make good sense to expect a carrier to invest a lot of money in educating and training a producer, only to find that producer exercising his independence and writing business for a lot of different carriers? Or is training the responsibility of the general agent, who often serves as a recruiter/mentor and builds a personal relationship with a new producer that can be the key to success or failure? These are not easy questions to answer.
But we're turning this month to three of the brightest producers in the business today to give us their opinions on those topics and more. Participating in this month's panel are Brad Elman, CLU; Brian D. Heckert, CLU, ChFC, AIF, QPFC; and Michael J. McNeil, CLU, ChFC.
Brad Elman, CLU, specializes in employee and executive benefits for high-end, closely held companies. He is a 19-year MDRT member with nine Court of the Table qualifications and is a Gold Knight of the MDRT Foundation. Brad is an active community volunteer and spends the majority of his time working with special-needs children.
Brian D. Heckert, CLU, ChFC, AIF, QPFC, is president of PENFlex Services, a retirement plan administration firm in southern Illinois, and is the managing member of financial planning firm Financial Solutions Midwest. Since 1985, he has focused his practice on retirement plan administration and using life insurance inside of qualified plans. Brian has been an active MDRT member for 22 years. He has earned two Top of the Table and nine Court of the Table qualifications.
Michael J. McNeil, CLU, ChFC, is a financial advisor with the Northwestern Mutual Financial Network in Fairfield, Conn. In practice for the last 34 years, he focuses on retirement income strategies, long-term care planning and the estate market. He is a life and qualifying member of MDRT for 32 years, including four Court of the Table and two Top of the Table qualifications. He is a 33-year member of NAIFA and is a past president of Northwestern Mutual's Financial Representatives Association. In addition to his previously earned designations, Michael is working toward his CASL.
Question 1. Charles K. Hirsch, CLU: A number of recent industry studies have pointed to the increasing median age of life insurance producers. There seems little doubt that the business is challenged in attracting young people. As an experienced producer who obviously loves doing what you do, do you have concerns about the future of the business from the standpoint of the next generation? Why or why not?
Brad Elman, CLU: I'm not concerned about the future of the life insurance business. However, I do think the distribution channels will evolve in response to advances in technology and changes in society's purchasing habits. Insurance legends of the future will need different skills than the legends of the past, much in the same way that game makers today require different skills as a result of technology than game makers of the last generation. What won't change is the end goal: the future agent will still be fundamentally committed to mitigating the impact of dying too soon, living too long, or getting sick or injured along the way.
Brian D. Heckert, CLU, ChFC, AIF, QPEC: I am concerned about the future, but it is not because people are not coming into the business. Rather, I'm concerned about why they are not coming in. Our regulatory environment and legal exposure have driven many companies to hire only experienced producers versus training new recruits. Life insurance business is being written, but not by the traditional agent. It is being written through term insurance websites and other non-traditional means. I think the opportunity will come to those still around to see the term insurance rates increase or the term insurance expire, and the need will still be there.
The next generation will come into this business when the remaining providers, life insurance companies and broker dealers start to invest in their new business pipelines. Companies have mistaken the difference between investing in hiring and training new recruits with buying a new producer. The cost is the same, but one has immediate results initially, and the other has long-term rewards.
Michael J. McNeil, CLU, ChFC: There are certain things that raise concern for me about the next generation of the business. I began my career at age 23, as a contracted agent with Northwestern Mutual, and was fortunate to have a supportive district manager and general agent who encouraged me to do whatever it takes to see people, ask questions and provide appropriate solutions to their problems.
Yet, as I struggled through my early years, I did so in a world absent of fax machines, cell phones, voicemail, do-not-call lists and the Internet. Entering our business today is considerably more challenging due to advancing technologies, and the role of the producer has also expanded. We now operate in a much more consumer-driven marketplace, with clients who have access to significant product information and choices.
In addition, compliance and government regulations now provide the consumer with greater transparency of fees and commissions and a much more robust and enforceable compliance process. Because of this, I believe it necessary for all who enter this career to become -- and to strive to remain -- knowledgeable and informed in order to keep up with the ever-evolving products and planning tools. How this is done today varies widely among financial services companies, and it's clear that a lack of company-sponsored professional training in financial planning skills contributes to high turnover in the early years of many careers.
I believe the industry should refocus on the fundamentals of financial planning and, at the same time, embrace changes in technology for the good of this career and the needs of our clients.
Question 2. Hirsch: A related concern lays not so much with the quantity of young people entering the business, but with the quality of their training and education. Some critics in the industry have been vocal in pointing out that, although a number of home offices continue to place a high value on agent education, many other home offices have done the industry -- themselves included -- a disservice by cutting way back on support for agent education, leaving that responsibility to general agents and marketing organizations. In your opinion, is that a fair criticism?
Heckert: Absolutely, it is a fair criticism. As I mentioned earlier, the past few years have seen a significant amount of investing in large producers and their client base instead of building strong young agents. I think the blame can be placed squarely on the demutualization of the life insurance industry. Once a company goes public, their interests shorten significantly, down to a quarterly time frame. Unfortunately, training an agent successfully requires years of investment.
However, I never felt the company should be responsible for the day-to-day training, but that it is best left to the general agent or the manager in the field. Most of the company training programs were not relevant to the market and were produced by people who train for a living and do not sell. The best sales programs come from face-to-face meetings and from seeing the process two or three times a day.
In my opinion, the best program a company can provide is investing capital in a way to quickly underwrite business. A new agent needs success quickly when they write business and can't afford to wait through today's underwriting cycle. The companies could also partner on the salary and local costs associated with training to help the local agencies afford to invest their own capital.
McNeil: I am fortunate to work with a company that is committed to providing ongoing education and the attainment of professional designations. Yet even that level of commitment, I find, is only as strong as the examples set by those who recruit, train and develop new people in this career. I believe that a general agent or managing partner must lead by example by obtaining those professional designations appropriate in our career themselves.
The American College is an excellent institution from which one can build a foundation of knowledge and skills that can supplement any company's in-house resources. Whether it is the CLU, the ChFC or the CASL, each one can add considerable value to an advisor's role, regardless of what a company or broker-dealer provides. Another resource is the Million Dollar Round Table -- the MDRT. This elite group of successful producers provides valuable educational resources for the entire international financial services industry, including annual MDRT meetings, webinars and considerable resources for qualifying members on its website.
I believe in today's competitive world, with a public in need of genuine professional guidance, our industry must strive to continue to be relevant. Part of that task includes embracing the need to educate our producers appropriately, with independent and non-biased learning tools and continuing education.
Elman: I think any person or organization that stands to make more money by helping an insurance agent get better educated should be willing to invest in that agent's education. That responsibility starts with the agent and is borne by all parties in the "food chain," including general agents and home offices.
I am a career agent of a large mutual company and have been my entire career -- almost 25 years -- so I have had access to exceptional training, both in the beginning of my career and on an ongoing basis. There are still companies out there that train and educate their agents. All prospective agents have the choice to affiliate with a company that has outstanding training if that is important to him or her. Additionally, it's worth pointing out that there is training provided by trainers, and then there is training provided by people actually doing the job.
I have found that the training I have received from those actually doing the job, like other insurance agents, has had the highest impact. That type of training occurs at meetings like MDRT and often comes from sharing ideas while chatting in line for coffee or volunteering with other members -- we call it "the meeting within the meeting."
Question 3. Hirsch: You are undoubtedly committed to your own education, and your designations reflect that. Could you share a little bit about what your designation or designations have meant to your business and to your personal development within your career?
McNeil: I recall deciding early in my career that in order to gain credibility with centers of influence, attorneys and those who might refer me to others, I needed to demonstrate a commitment to learning. While I had graduated with both a Bachelor of Science and an M.B.A. in finance, I felt I needed to continue the process of improving my capabilities for the work I was doing.
Believe me, working full time in our business and doing the work necessary to obtain my credentials was sometimes challenging. Yet, once I had completed the work, I was much more confident about the value I brought to my clients. It also taught me learning shouldn't stop with simply getting the designations. We need to continue to learn and keep up to date on those things in our business that our clients rely on us to communicate to them.
Elman: I have always had a risk-based product practice. Traditional life, disability, long-term care and employee benefits products make up my practice, so it was important for me to get my CLU -- versus the ChFC or CFP. I began my CLU studies early in my career, because it allowed me to become a student member of the Society of CLU and ChFC [now the Society of Financial Service Professionals]. This gave me instant credibility in addition to teaching me about advanced business and estate markets.
My educational pursuits allowed me to do more work in the business market, which meant more daytime work, easier referrals and larger cases. It also put me in a position to sell more products, as business insurance offers more opportunities to help a client. The credibility piece is also important; most life agents do not have the CLU designation, so this was another way to stand out from the crowd.
Heckert: My career was influenced significantly by early education, starting with LUTC and then the CLU and ChFC studies. I felt a need to seek education since I started in the business having never attended college. The designations gave me instant credibility in my own mind, very early in my career, allowing me to project confidence in dealing with clients who were highly educated. They were also done in a group setting at the time, allowing me to interact with other high-level producers.
Most recently, I have been invested in specific designations related to the markets I work, from providers like ASPPA [American Society of Pension Professionals and Actuaries] and Fiduciary Analytics. Attending the MDRT annual meeting has been the one constant source of education throughout my career, and it has perfectly blended technical and sales-related education into one meeting. This is rare in the industry since many of the other options focus only on the technical side of education, forgetting we are all in sales, no matter how we run our practices.
Question 4. Hirsch: Do you believe a top producer like yourself has a role in attracting good young producers to the business and helping ensure that they get the same kind of high-quality training you received? If so, what would that role be? And if you see that role being better handled by others in the business, who would that be and why?
Elman: Like all insurance agents who survived their early years, I understand the importance of being a mentor and giving back to the industry to help others survive and ultimately succeed. To that end, I mentor young agents, and I share my practice management and sales skills through magazine articles and as a speaker at industry meetings. That said, I believe that insurance companies and insurance agencies should be focused on recruiting new agents to the career, and I should continue to focus on delivering the best solutions for my clients' needs.
Heckert: It is a rare top producer who also makes a great trainer. Too often, the habits and styles of a top producer can be misinterpreted by the newer agent and can actually do damage. However, they should absolutely work together on the newer agent's larger clients, so the new agent can observe how to handle a larger case and adapt his or her own style. My best experience came from splitting the early large cases with a senior agent and just watching how things were done. I have witnessed the bad things that happen when a new agent tries to take on too large of a case too early. That is why physicians serve a residency term for so long prior to practicing solo!
McNeil: I think most general agents and managing partners appreciate the value of a veteran producer as an example for younger producers. Yet unless the general agent or managing partner also buys into the value of continuing education, promotes and significantly recognizes those who obtain their designations, and obtains credentials personally, the impact or value of the veteran producer is limited.
It is critical, I believe, for management to encourage those veteran producers with credentials to work with and/or mentor younger producers in the pursuit of their own credentials and, at the same time, explore doing joint work together. This arrangement can potentially generate revenue for the two and instill a desire to attain the important credentials. In fact, such a relationship could lead to a possible exit strategy partner for the veteran producer in the future.
Charles K. Hirsch, CLU, is a contributing editor to Life Insurance Selling. He is the president of Hirsch Communications Consulting LLC in Florissant, Mo.