If you are one of the many independent producers who has built a successful career selling the products of a number of fine companies, no doubt you understand the value that independence brings to your working life. You have the ability to earn higher commissions since you don’t have a primary carrier paying your rent. You have the ability to provide the best product to fit your client’s unique needs since you are not bound to sell only your primary company’s products. And you have a great relationship with a brokerage general agent should you run into difficulties with a hard-to-place case or need some advanced underwriting expertise.
But all is not perfect in the independent distribution system. Threats are looming in many areas of the business. Some directly threaten the continued success of even the most successful independent producers, and some threaten the independent system itself. In short, if you are an independent producer, this is not the time for complacency.
Instead, this is the time to assess the threats and consider ways to avert those challenges. This month, we’ve asked the following panelists to talk about the threats and how they see those threats affecting their business: Jennifer A. Borislow, CLU; Thomas F. Levasseur, CLU, CLTC, M.S. Ed.; and Michael L. Weintraub, CLU.
Jennifer A. Borislow, CLU, is the founder and principal of Borislow Insurance in Methuen, Mass., a benefits solutions firm. She is currently the president of the Million Dollar Round Table (MDRT) and a life member of the association. She has also achieved each of the organization’s top honors of Court of the Table and Top of the Table and is past chairman of the Top of the Table. She has spoken at numerous industry meetings including MDRT, NAIFA, LUTC, World Critical Illness Conference, Insurance Association of China and the Singapore Life Underwriters.
Thomas F. Levasseur, CLU, CLTC, M.S. Ed., has been a consultant and a registered representative since 1986. In 2001, he founded the Beacon Retirement Group, in Dover, N.H., as an independent firm specializing in retirement income and legacy planning. Levasseur developed his unique process structure by working with individuals, families and closely held businesses in Maine and New Hampshire for almost 25 years. He is a 23-year member of the MDRT with five Court of the Table and four Top of the Table qualifications.
Michael L. Weintraub, CLU, is a 37-year MDRT member with two Court of the Table and 16 Top of the Table qualifications. He is president of the retirement division of Ascension Benefits & Insurance Solutions, in Walnut Creek, Calif., and a past chair of the LIFE Foundation’s board of directors. He specializes in solutions to employee benefits matters and in providing tax savings by leveraging assets of individuals and businesses, with an emphasis on tax-qualified retirement and nonqualified executive compensation arrangements.
Where are the new independents?
Charles K. Hirsch, CLU: There’s a lot of talk these days about the perceived inability of the independent life insurance distribution system to sustain itself. For years, independent producers became independent after being trained within a more traditional career agent system. But as these independent agents retire, there appears to be a lack of well-trained producers to replace them. What are your thoughts on this issue, and what might the industry do to address the problem?
Jennifer A. Borislow, CLU: Colleges and universities now offer bachelor’s and master’s degree programs in the insurance and financial services field. Producers are entering our business through a number of different channels — everything from financial planning to risk management to the investment field. The MDRT has done extensive research on what it takes to attract young advisors to our industry and how to best train them. Our research shows that young advisors — under the age of 40 — don’t like to be labeled as life insurance agents. Actually, 32% of those surveyed are Certified Financial Planners, and a more compelling statistic is that women now represent 40% of the new advisors entering our business. One of the natural paths for advisors is following in the footsteps of a relative or a friend who is in this business. There are many second-generation producers who are being trained by mentors. The traditional insurance company training programs, a very expensive model, have been disappearing as insurance companies are more focused on investing in the experienced producers.
MDRT’s research shows that young advisors want to learn how to grow their businesses. They are continually searching for ideas and information that allow them to become more entrepreneurial, which translates into more results. What can the insurance industry do to help? Associations like MDRT, the National Association of Independent Life Brokerage Agencies (NAILBA), the Association for Advanced Life Underwriting (AALU), the National Association of Insurance and Financial Advisors (NAIFA), and the National Association of Health Underwriters (NAHU) are all committed to providing high-level education, networking opportunities and resources to help young advisors grow their businesses. At this year’s MDRT annual meeting, we had highly successful seasoned professionals offering sessions designed to provide best practice advice on how to grow and operate your business.
I still believe this is a great business. It’s much tougher than when I started 30 years ago, but it can be very rewarding for young professionals looking for a rewarding career that allows them to make a difference in the lives of many people. We need to remain diligent in our efforts to recruit younger advisors.
Thomas F. Levasseur, CLU, CLTC, M.S. Ed: I began my career in the general agency system in the mid ’80s and learned the life insurance business from some of the best trainers and home office schools the industry had to offer. I was very lucky to have worked in this environment and culture, but it gradually became unsustainable.
I was fortunate to have an early introduction to the MDRT. My general agency had many MDRT members, including past President Paul Buckley Sr., who inspired and encouraged me. Regardless of how much opportunity there was to learn and grow within this system, there were agents who didn’t succeed. In the late ’90s, a combination of economic pressures and poor decisions by management led to the demise of this nurturing approach of bringing agents in and retaining their loyalty.
I have been independent of a primary company affiliation for more than 10 years. I find the opportunities for training and benefits are fewer than they were in the past general agency days, but the compensation is far greater. It’s important to find ongoing training and do due diligence on products and companies. As an independent agent, you have a wider range of product offerings available and discerning consumers who are looking for independent and broad-based approaches to their financial needs.
The general agency was effective with back-office policyholder support and underwriting. These areas for the untrained or unskilled independent agent can be real stumbling blocks, but there is help available for agents who want to become independent. A field marketing organization (FMO) has been an invaluable resource for all of these areas. The FMO, if structured properly, can provide support, training, lists of well-rounded and quality product offerings, and act as a “virtual” general agency. Personalized Brokerage Services (PBS), the FMO with which I have been fortunate to be affiliated, is located in Topeka, Kan., and I am on the East Coast in Dover, N.H. Regardless of time and distance, the quality and depth of service is as good, if not better, than a general agency near my office.
I also developed many wonderful relationships with fellow independent agents and PBS specialists whom I work with on a daily basis. This organization allows me to not only prosper but grow as an independent agent. I have taken on a protégé under the MDRT mentor program, and PBS is helping with training and assisting us to craft a long-term business continuity plan.
Michael L. Weintraub, CLU: Last year, as chair of the LIFE Foundation, I was privileged to attend industry trade association meetings. The attendees of the General Agents and Managers Association (GAMA) meetings have not given up their role of recruiting and training life insurance agents. I was impressed with not only the number of agencies and people involved, but the quality of those doing the work. There are mentoring opportunities available through GAMA and the MDRT. NAILBA also retains members by providing workshops and webinars to help improve product and sales skills.
Hirsch: Some say an even more significant threat comes from other non-traditional distribution channels, like the bank channel, investment advisors, wirehouses, etc. Do you see those channels posing a threat to your own business? Do they pose a significant threat to the broader independent distribution system? Why or why not?
Levasseur: I don’t see any distribution channels posing a threat to me or my business as an independent agent. If anything, I may pose a threat to them. The only competition I have is myself. As long as I approach every day with the intention to help clients with integrity and purpose, I will prosper regardless of what the industry or economy brings.
As an independent agent, you truly are an entrepreneur. I have taken Dan Sullivan’s Entrepreneurial Pledge: “I am 100% responsible for the financial well-being of myself and my family. I will earn no compensation until I first create value for someone else.”
Life was not designed to give us what we want or even need. Life was created to give us what we deserve. It makes no sense to me or to someone who wishes to be an independent agent to rail against the wind of competition. Rather, you must learn to set a better sail.
Weintraub: While these channels are becoming more significant, they tend to primarily commoditize life insurance and use the term “insurance” as an appropriate solution for family coverage and non-complex financial needs. There is typically a team approach, with a relationship manager and experts in areas of concern when engaged in more complicated estate liquidity and business insurance projects. This method is effective and many advisors are learning this process. Non-traditional distribution channels are not a threat to advisors who understand the need to work with others to benefit the client. They are helpful when competing with large non-traditional channels. It’s much more refreshing for the client to deal with a creative and engaged advisor, with all the needed resources, except a bureaucracy. Sometimes it is better to be a big fish in a little pond.
There are many threats to independent agents. We must remain vigilant, educated and politically connected. It’s important to be an active member of trade associations, such as MDRT, AALU, and NAIFA, to survive and thrive. Companies should support the LIFE Foundation so it can continue educating the public about life insurance as part of a sound financial plan.
Borislow: There will always be people who purchase insurance and financial services products through non-traditional channels. Personally, I do not see this as a threat, as most people prefer to work with a trusted advisor when it comes to managing and discussing financial issues. Life insurance is purchased because the buyer either loves someone or is indebted to someone. Whether one buys life insurance over the Internet or through an advisor, the most important thing is that an individual owns an adequate amount. We have found that people prefer the personal touch and would rather call and speak to an advisor who knows them and will be there at times they are needed. Non-traditional distribution channels serve a population that the traditional advisor does not cover today.
Hirsch: Do you see emerging technologies as a threat to the independent distribution system? For example, there are plenty of websites now where consumers can search for and buy coverage without interacting face to face with a producer, and these sites seem to be growing more and more user friendly and efficient. But are they effective, and do they threaten your business?
Weintraub: At one time, I thought we were all doomed to extinction because everyone would find the best deals on the Internet, including car dealers. But I realized people search the Web for their dream car, but go to a local dealer to actually buy the car. Life insurance consumers are very similar. They research rates, try to understand policy terms and then buy from an agent. The LIFE Foundation website (www.lifehappens.org) is designed to teach people about life insurance — what it does, how much to have and how to engage an agent. Life insurance companies are finding that even when they try to sell to a consumer directly, they are often reluctant to purchase the product without talking to an agent face to face.
Borislow: Embracing emerging technology can help a producer become more effective in serving their clients. In today’s competitive environment, client behavior and expectations coupled with the pressure of conducting business more efficiently is highlighting the need for the producer to adopt several forms of technology — from iPhones to iPads to laptops. The challenge is how to use the multiple technologies to enhance productivity and stay connected with the clients.
Levasseur: Life insurance and other protection vehicles offered by insurance companies will never be effectively sold by technology. By effectively, I mean, not only do people purchase them initially, but they continue to own them as premium-paying revenue streams for companies. The life insurance agent, independent or otherwise, does not sell life insurance. He or she makes the opportunity available to people of character to live up to their responsibilities as a parent, spouse or business owner. A website, no matter how user friendly, will never replace the conversation about values that is integral to the placement of life insurance or protection products.
The role of the BGA
Hirsch: A huge factor in the independent distribution system is the independent brokerage general agency. How do you view its role in the future, and do BGAs have a role or responsibility in helping to counter some of the emerging threats to the independent producers?
Borislow: Independent brokerage agencies are not only a resource to help advisors grow their businesses, but they also keep you updated on the latest trends, regulations, newest technologies and issues that impact your business. NAILBA, one of the largest associations for independent brokerage agencies, provides training, advocacy, networking and valuable resources to keep its members aware of issues that are important. NAILBA and MDRT have combined to research ways to bring new advisors into the industry while, at the same time, providing the current advisors with the resources necessary to meet today’s business challenges.
Levasseur: The well-designed and positively intentioned FMO organizations are doing so with all of the powers of new technologies but with a value set that comes from the old general agency system.
Weintraub: Independent brokerage general agencies are a rapidly growing channel — perhaps the fastest in the industry. The agency leaders are often great professionals who understand more about managing a business, marketing and insurance products than most salespeople. Successful life insurance producers know how to find a lot of prospects. This is important, especially when you first begin your career, because an agent typically needs 10 prospects to make one sale. The people who fail just don’t have enough prospects in their pipeline, even though they might be great sales people. Finding large numbers of prospects is marketing. It takes many forms, from doing targeted seminars to direct mail to a well thought-out system to get referrals from other clients, CPAs, lawyers and other industry professionals. Selling is the art of convincing a prospect to take action by purchasing a policy, going through underwriting and paying the premium.