How One Agency Wins The Retention Battle
One of the biggest problems the life insurance industry wrestles with is its failure to grow the career sales force. A recent LIMRA study confirms this, with four-year agent retention at a dismal 14%–the lowest it’s been since 1981.
Furthermore, of those agents who were terminated in the year 2000, 82% were in their first four years in the business. Experts say that these types of statistics can influence even the lowest quality recruit to search for a career in a different field.
Breaking this trend is a task that may take years for the industry as a whole to achieve. However, there are agencies that have exceptional track records in recruiting and retaining agents. One of them is Savage and Associates of Toledo, Ohio.
Just over two-thirds of Savage’s agents joined the firm right out of college and the average length of employment is 18 years, says Bob Savage, CEO of the agency.
“I think where we have a real advantage is that we have a system we’ve developed over a very long period of time,” says Savage.
That system has evolved to include a comprehensive screening process, a two-year training program, and a formalized mentoring program.
“What’s different about us is our retention and the longevity of our people, and I think that can be attributed to our screening process,” says Tim Toland, senior vice president of Savage.
A very selective screening process is one way the firm increases the chances for an agent’s success. “I talk to 20 people before we hire one,” says Margo Maxwell, director of recruiting for Savage.
Maxwell primarily targets college seniors as recruits and puts them through an extensive screening before making a recommendation for hire.
“The interview process is the screening interview, the LIMRA test, the management interviews, and the last official step is a packet of marketing surveys we have them do–40 individual surveys and 10 business owner surveys,” she says.
Probably the most in-depth part of the process is the completion of this series of marketing surveys. “They aren’t selling anything with these surveys,” she says. “It’s like a practice run.”
Dan Steinberg, senior vice president of Savage, feels that these surveys are the most important part of the screening process. “Its a good tool to give them an idea whether or not they’re comfortable meeting with people on a one-on-one basis, talking about their finances,” he says.
When completing the surveys, the candidate begins by explaining that he or she is considering going into the financial services business, says Steinberg.
“And at the end of the survey, they ask for referrals of who else they can ask the survey questions, and that gets them used to asking for referrals,” he says.
“They also ask that if they do come into the business, would the person mind if they called on them in the next 3-6 months,” continues Steinberg. “Its a great tool for the prospect, and its a great tool for us to evaluate the prospect.”
Toland adds, “Another thing that comes out of that, is if we do say that its a good fit, they’ve got about 150 prospects coming out of the chute, so they hit the ground running.”
“The whole process is long and involved,” says Maxwell. “We want them to be as sure as we are that they’re right for this place,” she says.
“We make a very clear investment to keep people out,” says Bob Savage. “We always need to bring in a few people, but you need to bring in a few that are going to be successful.”
Savage notes that the annual goal is to bring in 10 recruits every year, but to never deviate from the quality they are looking for.
“If you keep those kind of standards, you end up with the kind of people you enjoy being with, and people who have a much better potential of being successful in the business,” says Savage.
In addition to drawing on college seniors, Toland explains that through their new college intern program, they are able to get an even closer look at a candidate. “We’ve had this internship program for 2 years. This gives us an opportunity for 12 weeks to take a good look at the candidate–and the same for them. They get a taste of the business and they get a look at Savage and Associates,” says Toland.
“We’ve picked up about 50-60% of those interns as associates,” he says.
Maxwell notes that the screening for interns is just as selective. “In a 3-month period, I reviewed 126 resum?s, interviewed 67 candidates, and out of all those, there were 5 intern hires,” she says.
Toland believes that retention levels can eventually go to 85-90%, because of that 12-week look at the candidate by the management team and other associates.
But a thorough screening process is only the first step in successful retention at Savage and Associates.
“As soon as a person comes here, they are given somebody to be their mentor–not somebody in management, but somebody who is a major producer,” says Bob Savage.
“It gives them someone who will tuck them under their wing and meet with them on a regular basis,” he says.
New associates work with their mentor developing a budget worksheet, a balance sheet, and a marketing plan–all of which they are held accountable to on a weekly basis by their mentor, says Toland.
“We think that’s crucial to getting off to a good start and crucial to becoming financially independent, like they’re trying to counsel their clients to do,” says Toland.
Steinberg says that one of the differences at Savage and Associates is that there is a lot of attention placed on helping out new associates. “You hear about a lot of other bigger shops where it’s more focused on the senior agents, and the junior agents try to help out–maybe they survive and become a senior agent,” he says.
“That seems to be a different culture than what we do,” he continues. “I think the way we nurture and coddle our young people is probably a big part of why they have a very good chance of succeeding over time.”
This culture of helping the new associates has created a fairly uncommon practice at Savage and Associates. New associates do not split their commissions on joint business done with any senior producers during their first 2 years with the firm.
“Just by nature we thought we should help,” says Savage. “Usually the senior person’s income is far better than the neophyte, therefore we let them have the advantage of the income–that has just developed into our way of doing business,” he says.
Toland explains that if you’re in a mentor role, you should have your own business going on, you shouldn’t be splitting hairs with a new associate. “These guys don’t forget where they came from, they were helped on their way into the business,” he says.
The first two years for a new agent at Savage and Associates is spent in the bullpen doing on-the-job training, says Toland. “That’s training at its best, when you take somebody and make sales with them–you help put money in their pocket,” he says.
“Our goal is that by their second full year they should grow out of the bullpen,” says Toland.
Last year’s average income for the bullpen was around $45,000, says Toland. But new associates in their first year should only expect to earn about $15,000.
“We tell a young person coming out of school if they make $15,000 their first year and they do the things that we tell them to do from an activity standpoint, that’s excellent,” says Steinberg.
“If they make $25,000 but they do it all on one case, then we’re still going to be very worried about them,” he says.
Asked how a college graduate can settle for such a low first-year income, when corporate America will likely pay more than twice that in their first year, Toland admits, “We did lose some good prospects to corporate America.”
But Steinberg explains that candidates need to take a different perspective on this type of career. “For someone coming out of school we tell them that their first 2-5 years is their internship or apprenticeship–like going to medical school or law school, and you’re going to be underpaid for a college graduate degree,” he says. “But by the time you’re 30 you’re going to be making 2 or 3 times what your peers are making in the regular corporate world.”
“We just want to be realistic,” says Toland. “We don’t put any ceiling on it, but 30 years of experience tells us that if you make $15,000 to $20,000 you’re doing a good job. We try to shorten that curve as much as possible,” he says.
Reflecting on his agency’s formula, Bob Savage says, “We’ve been able to help big percentages of them make it, and that’s from the collective environment here.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, March 18, 2002. Copyright 2002 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.