State Farm Mines High Net Worth Clients
State Farm Life Insurance Company has its eye on the 1.8 million high net worth clients it already serves, looking to provide them with estate planning, business planning, charitable planning and other needs commonly found in this market.
“State Farm is in about 27 million households. We estimate that 1.8 million of those are high net worth households,” says Terry Huff, vice president of advanced products for State Farm Life, Bloomington, Ill.
Earlier this year, State Farm announced they were forming an alliance with Phoenix Life Insurance Company, Hartford, Conn., to offer advanced market products and services to their customers.
“This is not about looking for new clients,” says Huff. “This is about working with our existing State Farm households.”
Huff states that many of their current high net worth clients were not considered high net worth at the time they started a relationship with State Farm.
“Many times a long-term relationship exists and many times that relationship predates them being a high net worth household.”
Addressing the needs of this policyholder segment was a result of taking a close look at the current client base, says Curt Penrod, a spokesman for State Farm.
“Our surveys have told us that our current customers want a broader range of products and services from their agents with whom they’ve had a trusted relationship,” says Penrod.
“We’re working first and foremost with maintaining our focus on the middle market,” continues Penrod. “But we’re expanding our products and services to further serve the needs of our high net worth customers.”
In order to do this, State Farm had to make a decision as to partnering up with a company, or developing it themselves. “I think its the very typical ‘Do we build it or buy it?’” says Huff.
“To move over and develop the products and the support structure would have been very time consuming and very costly,” he says. “It would have taken our eye off the ball, off what is number 1 at State Farm Life — the middle market.”
“I think it was a relatively easy decision,” says Huff. “What was really important was that we do it right and we do it in a reasonable time frame, and that leads to doing the alliance.”
Huff states that an alliance with Phoenix gives State Farm agents access to 26 regional offices staffed with experts in the advanced markets.
“We’re clearly a wholesaler of products into the wealth management arena,” says Walter Zultowski, senior vice president marketing and market research for Phoenix Life, Hartford, Conn. “We want to partner with any advisor that has a retail relationship with the high net worth.”
Huff states that those State Farm agents who have been working in the advanced markets will have the full support of Phoenix Life behind them.
“Those agents that have wanted to be involved in this type of business have been somewhat frustrated by the fact that we [State Farm] didn’t have experts in the field that could assist them,” says Huff.
Zultowski agrees, “Because of their middle income market focus, State Farm didn’t have the products and services to fill out the needs of those clients.