Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > State Regulation

State Farm Mines Their High Net Worth

Your article was successfully shared with the contacts you provided.

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.

“By teaming up with somebody like Phoenix,” he continues, “they are able to provide those products and services that better serve their high net worth clients.

“State Farm is very present in the general marketplace,” he says. “But products for the high net worth was not their business, it was our business.

“We are providing the products, we are also providing a very experienced group of both life and annuity wholesalers to work with State Farm agents,” says Zultowski.

A closer look at the product portfolios of both companies reveal that similar products are being offered by both carriers.

“There are some products that were bringing to the table that State Farm does not have, for example survivorship variable universal life,” says Zultowski.

Zultowski notes, “There are some other products that basically have the same product chassis, but our product and the State Farm product may have some little differences in product features.”

“We recognized that there would be this overlap situation and the decision was made on this end that clearly our agents will do whats best for the client. If that’s use the Phoenix product, then use the Phoenix product,” says Huff.

“The decision as to whether its the State Farm product or the Phoenix product that is sold is really based upon what’s the right product for the customer,” says Zultowski.

“In most of these situations,” he continues, “because of the fact that this has really been our business and our products are geared to the high net worth market, it’s generally our product [Phoenix] that’s sold in that situation.

“There can be situations where a State Farm product might be sold, but again it’s the decision as to whats best for the customer,” says Zultowski.

One issue State Farm agents facing this dilemma won’t have to consider is compensation. “We’ve taken compensation out of the equation in terms of the agent making the decision,” says Zultowski. “With some minor differences, the compensation on the two products is the same.”

Another important part of the alliance involves a certification process State Farm agents must go through prior to using the services provided by Phoenix.

“Obviously a big part of that is learning about our products,” says Zultowski.

“But in addition to that a big part of it is case studies, so that State Farm producers can begin to see where these different kinds of situations are,” he continues.

Zultowski describes the certification as “more than just learning product, it’s learning the specific situations where the products might apply.

“And it ends up with a prospect identification process where we work with them to identify people that they already have in their client base that might be candidates for these kinds of services,” he says.

State Farm has rolled the program out to about 500 agents in 3 states, including 25 of their top life insurance producers. “Not only are we early in the process, but these types of cases can take weeks, if not months to develop and propose,” says Zultowski.

“It’s still early but we’re encouraged by the business that’s being developed,” he says.

Reproduced from National Underwriter Life & Health/Financial Services Edition, November 19, 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.

Copyright 2001 by The National Underwriter Company. All rights reserved. Contact Webmaster


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.