Is Working In A Bank-Owned Agency On Your Sales Horizon?
The repeal of decades-old legislation separating banks from the marketing of other financial services has seen traditional financial service corporations offering securities and, more recently, risk-management products—i.e., insurance.
Choice insurance agencies are now being swallowed whole, and top agents are being courted by banks as this industry races to gain a foothold in what they believe will be a promising new artery for profits.
Having spent almost two-and-a-half years in a bank-owned agency, I have concluded that the merging of banking and insurance offers both opportunity and risk to insurance producers contemplating careers within such institutions. The issues are quite complex.
If you are among those who are considering setting up a practice within a bank, here are some points to keep in mind.
First, come to terms with bank standards for agent productivity. This measurement is almost always significantly different in bank-owned agencies than in freestanding agencies, and is also perhaps the most distinguishing characteristic between the two types of distribution outlets.
In brief, banks operate on an unsentimental return-on-equity index. This approach makes little to no allowance for value-added or intangible services that cannot be absolutely quantified in terms of return on investment but that hold value in traditional agency settings.
Banks are no-nonsense environments. They manage by the numbers, within set time frames. Such measurement of productivity is tied to quarterly dividend reports. Dividends drive production goals. Production goals drive marketing strategy.
Therefore, a producer must produce at optimum levels, quarter to quarter, or he/she wont be there long. Indeed, good producers must become great producers in a bank-owned agency. And an average producer must become a good producer–pronto. Meanwhile, poor, marginal, or self-satisfied producers are never in a bank-owned system–at least not for long. Banks simply dont allow for it.
Second, many of the intangibles agents are accustomed to are simply displaced within a bank-owned system. By intangibles, I mean personal production goals, limited oversight by management, and flexibility in all its permutations.
These are things that attracted many agency practitioners to their profession. But, in a very practical sense, bank-owned agencies cant operate that way. When a producer works for a bank, he or she becomes an employee in every sense of the word. The agent becomes accountable to somebody who is accountable to somebody else who is accountable further to another somebody for the numbers.
In short, a producer in a bank-owned agency is quantified within an extensive vertical management structure.
This is a different sphere. Just as physicians had to rethink their place in the new reality brought about by managed care (docs became quantified by number of patients serviced in a day), agents electing to practice their profession in a bank are joining a system that functions on a bloodless cost/benefit ethos.
Third, what banks do offer is a fabulous environment for highly focused, high-producing agents. Opportunities within the bank are, in fact, almost endless for the producer who can get properly wired into the conduits of the various banking departments.
That, above all else, is the key to success within the bank-owned agency.
A colleague of mine rose to vice-president within a department of the bank due to sales productivity generated through careful cultivation of internal relationships. This says a loti.e., agents who are capable of connecting to sources of influence within the banks that can generate referrals will experience the best of all worlds.
For those who yearn to network with others who are extensively educated in other financial disciplines, banks provide a wonderfully stimulating, highly professional milieu.
Fourth, benefit packages for bank employees often include defined pension plans, stock purchase privileges, 401(k)s, generous group health, life, disability benefits, enhanced educational opportunities and more.
When you combine that with income stratums that make bank management envious, it is no wonder that many top agents and agencies are welcoming courtship with banks.
As you can see, banks embody the growing brave new financial service world. This world promises to change materially how the insurance industry and other financial service corporations structure themselves–and how many individual agents will produce now and in the future.
, of Financial Care Services, Grand Rapids, Mich., is a senior product specialist. You can reach him at Cbusher@aol.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.