This fall, the National Underwriter research team conducted a comprehensive research study of the independent producer population actively involved in the sale of life and health insurance products. The purpose of the study was two-fold. First, we wanted to gather deep insight into the professional practices of independent producers — exploring producer challenges and needs, current business practices, agency management and marketing efforts.
The second purpose of the study was to probe the relationship between producers and the wholesaler intermediaries they work with — the brokerage general agencies, managing general agencies, independent marketing organizations, field marketing organizations, etc. that comprise the middle segment of the brokerage distribution channel. The goal was to learn the expectations producers have of their wholesale distribution partners, as well as how well those partners were meeting the needs of producers. We believe this is a key issue for the industry. The strength and efficiency of the producer-wholesaler relationship contributes to the success and vitality of the sale and distribution of life and health insurance products via the brokerage distribution channel. The results from this part of the study can be found in the final section of this report.
As we embarked on the study, we would not have been surprised to find that producers are generally beleaguered and downbeat. Given the slow economic recovery, some of the struggles the industry is experiencing and the ostensible apathy many consumers have about financial planning and products, producers seemingly have some cause for cynicism. What we discovered, however, was quite the opposite.
Despite recent economic and industry challenges, 40 percent of respondents report that their income increased “somewhat” over the past 12 months, and another 14 percent report a substantial increase. Only 17 percent of respondents report a decrease in income in the past year, while 30 percent state that their income remained even with the prior year. Furthermore, producers are overwhelmingly optimistic about the coming year. More than 8 out of every 10 respondents (82 percent) expect their income to increase over the coming 12 months. Only 6 percent expect any kind of drop in income.
Interestingly, almost half (44 percent) of the insurance producers we surveyed also offer investment products and financial planning. Of those producers who only sell insurance currently, 30 percent plan to offer investments and financial planning at some point in the future.
Although the study findings do not attribute a cause to the apparent convergence between insurance and financial services, shifting demographics in the U.S. and the consequent evolution in consumer demand for financial planning may be contributing factors. Given the concentration of wealth in, and the longer life expectancies of, the Boomer generation, it is not surprising that the majority of producers are primarily focused on clients in their fifties and sixties. Further, the study finds that producers overwhelmingly recognize retirement income planning as a key opportunity for growth. Fifty-five percent already offer retirement income planning for their clients and another 23 percent plan to. Eighty-seven percent of producers who offer or plan to offer retirement income planning in their practice want additional training and education in this increasingly important discipline.
Another area where producers are eager to learn is social media. Seventy percent of producers are interested in learning more about how to use social media to grow their practice. Given that only 47 percent of producers report using social media, there may be significant opportunity for the industry in efforts to educate producers how to use social media to support the growth of their practice.
However, the findings reported above are not to suggest that producers are not contending with adversity. Despite the general levels of optimism among the producer population and the eagerness for additional training and education, producers report facing a number of significant challenges.
Methodology: This fall, the National Underwriter research team randomly surveyed nearly 3,000 financial sales professionals licensed to sell insurance products in the United States. Individuals were selected from a proprietary database of more than 1.2 million licensed professionals across the U.S. These financial professionals were invited by email and online promotions to participate in the survey, which was conducted online. The results represent the responses from financial professionals who have sold at least one insurance product in the past 12 months.
Note: For the purposes of reporting on this study, the financial sales professionals who responded to this survey will be referred to as “producers.”