THE MODERN PRODUCER S BUSINESS

Transcription

1 INDEPENDENT BROKERAGE STUDY THE MODERN PRODUCER S BUSINESS This past summer, more than 1,000 producers nationwide let us in on their business practices, professional habits, client demographics, and sales activity. Most importantly, these producers shared with us how they interact with their brokerage agencies, and the challenges they face every day. You may find yourself identifying with much of what s to follow and you ll likely be able to learn a thing or two from those who have found success despite the struggling market. So here, then, are the results of the Independent Brokerage Study, conducted in partnership with the National Association of Independent Life Brokerage Agencies (NAILBA). SECTION 1 PRODUCER DEMOGRAPHICS, SALES HABITS, & ACTIVITY 2 SECTION 2 6 SECTION 3 8 PRODUCERS & THEIR BROKERAGE AGENCIES HIGHLY SUCCESSFUL PRODUCER HABITS

2 SECTION 1 PRODUCER DEMOGRAPHICS, SALES HABITS, & ACTIVITY 73% Term life 49% Individual health insurance 36% 35% 33% 30% Medicare supplement Universal life Whole life Group health insurance PRODUCTS SOLD IN THE PAST 12 MONTHS 27% 26% 25% 24% 24% 21% Long term care insurance Indexed annuity Traditional fixed annuity Disability income Medicare (Advantage and Part D) Final expense 16% 14% 12% 11% 11% Worksite/payroll deduction products Variable annuity Single premium immediate annuity Critical illness Indexed universal life 7% Variable universal life 2% Variable life 10% Other Product line that accounts for the majority of agents total annual commission HEALTH INSURANCE 28% LIFE INSURANCE 24% ANNUITIES 19% PROPERTY AND CASUALTY INSURANCE 13% GROUP/WORKSITE 6% SECURITIES 3% LONG TERM CARE INSURANCE 2% OTHER 4% 2 ASJonline.com // November

3 I live in a city that has experienced a large growth in retirees from all economic, sophistication, educational, and computer skills strata. They have become very suspicious of the stability of their insurance carriers. They know that as their needs and goals change, so do their companies and products. The common denominators are that they: 1. Have left behind the people who they have trusted with this and other aspects of their lives. 2. Have been bombarded with telephone solicitations, seminars, infomercials, and agents calling themselves experts, to alert them to whatever. 3. They want security, simplicity, and transparency. 4. Because it is private, they are increasingly using the Internet to gather information and possibly guidance. So I am searching in the direction of Internet lead generation in a relatively small geographic area; I feel that it will be the most efficient means of generating a motivated audience. - Independent producer, licensed 10 years Percentage of new insurance sales coming from clients who have purchased an insurance product from the same agent in the past 16% 51-75% 26% 26-50% 7% 4% % 0% 22% 1-10% 25% 11-25% Percentage of annual commission income coming from renewal commissions Percentage of insurance Age group most sold to sales made to female clients 1% 2% 1% % 0% 80s 7% % 6% 0% 5% 70s 7% 30s 9% 1-10% 17% 51-75% 31% 1-10% 25% 60s 35% 40s 22% 51-75% 19% 11-25% 15% 26-50% 24% 11-25% 28% 50s 46% 26-50% November // ASJonline.com 3

4 COMMISSION INCOME ACTIVITY OVER THE PAST 12 MONTHS ANTICIPATED OVER NEXT 12 MONTHS INCREASED 60% 59% INCREASE 53% 89% 87% 82% 76% 39% I have been working the 403(b) market in my town Increased, and I am anticipating another substantial increase this year, as well People are freaking out over the government health care proposal Became a non-captive agent Working smarter, better prospecting, rounding out accounts Working harder has positioned us to increase substantially when the economy turns around I hope they increase. So far, am running about 30 percent behind last year at this time. Picking up marketing activity. Working jointly with retirement plan advisors to market their services to my clients as they market my services to theirs. DECREASED 36% DECREASE 9% 24% 5% 16% 15% 3% 3% Business fell off a cliff in January due to economic downturn. It is slowly coming back. Since I cover small to mid-size business I have lost several accounts due to the recession Employers are going from paying 100 percent to only 50 percent of the employee health cost and some are dropping health period due to the cost One company has reduced our commission from 15 percent to 5 percent All depends on health care changes, of course Doing so intentionally because of new government administration Especially if Congress passes health care reform STAYED THE SAME STAY THE SAME 23% 26% 23% 26% 9% 10% 14% 15% Although it stayed about the same, we are working harder. Some companies have gone out of business; others raised deductibles or reduced benefi ts. We have added new business, but over last year with the losses, we are about even to maybe a 5 percent increase over the last year. Depends on Congress and their health care bill Actually, I have taken a position (1099 contracted) traveling for a company and enrolling the school systems in Tennessee (90 percent of them). I will not be getting commissions, but will be paid well to sell volunteer benefits. 4 ASJonline.com // November

5 Producers biggest challenges with selling insurance PROSPECTING FOR NEW BUSINESS 69% CLIENTS DON T RECOGNIZE NEED FOR INSURANCE PRODUCTS 27% GETTING A PRODUCT THROUGH UNDERWRITING TO ISSUANCE 21% GETTING PRODUCTS ISSUED FOR CLIENTS WITH SUBSTANDARD HEALTH 20% CONSUMERS HAVE NEGATIVE OPINIONS OF INSURANCE INDUSTRY 19% ADMINISTRATIVE DEMANDS OF RUNNING A BUSINESS 13% SUCCESSFULLY MAKING THE SALES CLOSE 13% COMPETING WITH OTHER INSURANCE PROFESSIONALS IN MY AREA 12% APPLICATIONS ARE TOO LONG/CONFUSING 11% LACK OF SUPPORT FROM WHOLESALER/MARKETING ORGANIZATIONS 6% CLIENTS PREFER OTHER FINANCIAL PRODUCTS 6% LACK OF SUPPORT FROM INSURER 5% UNDERSTANDING INSURANCE PRODUCTS 5% MAKING A CLIENT SALES PRESENTATION 4% OTHER CHALLENGES NAMED BY PRODUCERS Marketing for new clients Federal government Insurance companies doing their own marketing in direct competition with their representatives on a direct or upline schedule. Also, multistate Internet bait-and-switch; price quotes. Compliance issues and increasing paperwork burden from regulatory agencies, which is likely to increase The uncertainty in the current economy and the resulting concern clients have about affording longterm commitments Do-not-call list The service we provide our clients Adjudicating claims Competition Cost of premiums Finding time to get to everyone asking for my help High unemployment in our states Markets changing appetites Finding fixed indexed annuities with high bonuses and decent agent comps OBTAINING THE RIGHT RATING FOR THE CONSUMER 4% OTHER 6% 60% of agents say referrals are the most effective method of prospecting November // ASJonline.com 5

6 SECTION 2 PRODUCERS & THEIR BROKERAGE AGENCIES The most important services brokerage agencies provide to support producers insurance sales Live telephone support 49% Wider access to multiple carriers/product lines 41% Internet access to forms, licensing, case status, commission tracking, etc. 41% Sales training 31% Product training 29% Assistance getting cases issued through underwriting 23% Marketing/point-of-sale material 16% Leads 15% Able to advocate on my behalf to carriers 14% Errors and omissions insurance 10% CE credits 8% Large case design 6% Other 3% Factors most likely to influence agents to write business through a BGA they ve never worked with in the past Lead offer 49% Higher commission offer 48% New product offering 35% Referral from another agent 30% Access to more/better sales training 24% Back-office services that reduce agent overhead 23% Decrease in quality of support from current BGA 21% Offer involving production incentives (e.g., trip, bonus, etc.) 13% Other 7% Factor most likely to cause agents to stop working with primary brokerage agencies They no longer work with the carriers the agent s customers need 35% Better financial opportunities with another BGA 27% Customer service challenges 22% No longer offer training, E&O, CE, or the like 5% Scrubbing of applications has become too demanding 3% Other 7% Factors most likely to get agents interested in a brokerage agency they ve never worked with before Referral by another agent 55% Attending a seminar sponsored by the brokerage agency 36% Recommended by a carrier 31% Meeting someone from the brokerage agency at an industry event 25% Advertisement in an insurance magazine or journal 24% advertisement 24% Advertisement you receive via postal mail 15% Cold call from someone at the brokerage agency 7% Other 4% Ways agents make their initial inquiry when interested in writing business with a new brokerage agency Visit company s Web site 44% Call company s toll-free number 26% Talk to another agent doing business with that company 21% company 6% Other 2% LOOKING FOR A BGA? Check out NAILBA s directory of member companies at of agents write % of their total 26% insurance business through their primary brokerage agency 6 ASJonline.com // November

7 BGA Shopping? Here s Your Checklist.» BGAs SPEAK: HOW TO EFFECTIVELY COMMUNICATE WITH YOUR WHOLESALER» BY HEATHER TRESE, ASSOCIATE EDITOR Selection of carriers and product lines. Choosing a BGA with relevant carriers is essential; all you have to do is look at our current situation, where one carrier after another has been falling by the wayside. Your prospective BGA s choice of carriers speaks volumes about its credibility. Is the BGA chasing the best commission and/or product du jour, or is it looking for a highly rated carrier that truly has the clients best long-term interests in mind? Availability of training and support (advanced sales, administrative, underwriting, etc.). A relevant BGA should provide you with the tools that are necessary to grow your practice, as well as helping to educate you and your staff. Continuing education not just in regard to products, but in all aspects of the insurance business is the cornerstone of any successful agency. Expertise and backgrounds of the agency principals (advanced sales, estate planning, impaired risk underwriting, etc.). A relevant BGA has the experience to make a difference for its agents; without expertise, a BGA can offer its agents nothing more than a commodity of products. All BGAs have products; what differentiates one from the other is the value brought to the table. Number of available resources (marketing representative, internal and field sales support, software and illustration support, training, etc.). The ideal BGA size depends on you and your support needs. Smaller BGAs can offer more hands-on experience than shops with 20+ employees. Good BGAs typically have a specifi c niche that makes them unique and relevant. Functionality and support of Web site and other technology-based services. A BGA s job is to provide value-added service to you and to help you turn a proposal into an application, and an application into an issued policy. Pay attention to the BGA s service the more easily you can run quotes, obtain forms and product information, and check case statuses, the more time you can spend in front of clients. Length of time in business and association memberships (e.g., NAILBA, AALU, NAIFA, SFSP, etc.). The insurance business is in a constant state of fl ux. If your BGA is not a part of one or more meaningful associations, it cannot provide the guidance and support its producers need. Compensation, incentives, awards, travel/conferences, sales meetings, and other networking opportunities. You need to be aware of how you are compensated but you also need to be aware that often, you get what you pay for. Some agents chase the best payout without regard for extra support and exposure to new markets, education, products, and a commitment to the agent s professional growth. If incentives and awards are important to you, then you should look for those things, as well. It s also important to realize, however, that such perks may ultimately come at a cost to you after all, the money has to come from somewhere, right? That being said, educational conferences and networking opportunities are among the best ways for you to stay educated and current. Source: The National Association of Life Brokerage Agencies As the gateway between the carrier and the agent, the brokerage general agency should be every producer s ally in troubleshooting problems. But for many agents, communicating with their BGA can be one of their biggest obstacles. In fact, when we asked agents in our Independent Brokerage Study, What can your primary brokerage agency do to improve the support they provide you with? one agent from Cincinnati, OH simply said, Better phone response time. And another producer, from Sacramento, CA, said he wished his brokerage agency was better at communicating with him. Dex Umekubo, managing partner at the BGA Producers XL, said that his company recognizes the challenge, and the company puts a priority on agent communication. We make a personal effort to try to know the agents that do a consistent amount of business with us through personal phone calls and visits, Umekubo said. People want to do things electronically and anonymously, and I think actually going out and spending time with someone who does business with you is a good thing. Michael Tessler, president of Brokerage Unlimited Inc., said that his company uses technology to ensure that agents have constant access to needed information. The advisors that do work with our firm have access to status on their transaction 24/7 via the Web, he said. They also get status reports pushed out to them via every Monday. Tessler added that his agency puts a priority on same-day call-backs. But what if your brokerage agency isn t as responsive? Umekubo said the best way to work out any issues you have with your BGA is to simply pick up the phone. I always say that the telephone works two ways, he said. If an agent s got troubles, he needs to call the principal of the agency. Tessler agrees that agents should be proactive, but he emphasizes that opening the lines of communication with clients will ultimately improve the BGA relationship. I would encourage any agent who s struggling with communication to be very prepared to give information and/or get information that they don t already have, Tessler said. Many advisors are frustrated because the BGA is looking for information that the advisor may not have obtained. Ultimately, Umekubo said, agents should choose a BGA that meets their needs. While some agents might like to have constant interaction with their wholesaler, others might prefer to be left alone. It depends on how you design your organization, he said. We d rather do more business with fewer people, but that s us. Everything is dictated by your business philosophy. of agents have written a 24% policy through just one brokerage agency in the past 12 months have written policies 28% through two BGAs have written policies 41% through three or more BGAs Heather Trese is the associate editor of the Agent s Sales Journal. She can be reached at HTrese@AgentMedia.com or ext November // ASJonline.com 7

8 SECTION 3 HIGHLY SUCCESSFUL PRODUCER HABITS Habits of highly successful producers A look inside the businesses of those earning $100,000 or more in annual commission income Licenses and designations held (in addition to life and/or health licenses) Series 6 33% P&C 31% Series 7 26% LUTC 17% CLU 16% CSA 10% Most valuable sources of training Insurance company-sponsored seminars 45% Continuing education courses 35% Company-sponsored training 33% Brokerage agency (e.g., BGA, wholesaler, marketing organization, etc.) 29% Webcasts 28% Trade publications 24% Mentor (someone you do not pay) 22% Training materials you purchased 11% Personal coach (someone you pay) 4% ChFC 9% IAR 9% RIA 8% CFP 6% RHU 5% CLTC 5% RFC 2% LTCP 1% Other 3% Most helpful source of relevant information about the insurance industry Insurance industry publications (includes print magazines, magazine Web sites, and e-newsletters) 43% Wholesaler/marketing organization 16% Professional associations 14% Insurance company home office 7% Other agents 6% Continuing education 6% Industry trade shows and conferences 5% Popular news media 1% Other 2% of high-producing agents dedicate 41% between 11 and 25 percent of their work time to prospecting for new business of high-producing 66% agents find referrals to be their most effective method of prospecting 31% of high-producing agents dedicate between 41 and 50 hours per week to their insurance/financial services profession 8 ASJonline.com // November

9 Membership in professional organizations National Association of Insurance and Financial Advisors 34% Independent Insurance Agents and Brokers of America 14% Million Dollar Round Table 12% Financial Planning Association 10% Society of Certified Senior Advisors 9% In the past 12 months, have you logged onto an insurance-related online event (Web conference, Webinar, etc.)? American Association for Long-Term Care Insurance 6% Benefits Marketing Association 5% International Association of Registered Financial Consultants 5% Association for Advanced Life Underwriting 3% 14% NO GAMA International 3% Other 39% How they use the Internet in their day-to-day business Submit client applications to insurers 35% 86% YES Follow industry news 34% Market agency with own Web site 14% Network with other insurance professionals using methods other than (e.g., social networking sites, discussion forums, etc.) 10% Research companies they re interested in doing business with 9% The technologies upon which they rely professionally 95% Cell phone 92% Fax machine 88% Personal desktop computer 79% Laptop with wireless capabilities 70% Company Web site 66% PDAs (BlackBerry or some other handheld computing device) 41% Laptop without wireless capabilities 11%» METHODOLOGY In August, Agent Media (publisher of the Agent s Sales Journal) partnered with the National Association of Life Brokerage Agencies to survey more than 1,050 licensed life, health, and annuity agents across the country. The names were selected from Agent Media s proprietary database of licensed life and health agents.* Producers were invited by to take the survey. Unless otherwise indicated, the survey results reflect answers from personal producing independent agents who have sold at least one insurance policy in the past 12 months. * Editor s note: Agent Media is the owner of Target Agent Lists, a proprietary database of fi nancial services professionals that includes 1.2 million licensed life, health, and annuity agents. November // ASJonline.com 9