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October 06, 2002 at 08:00 PM
How Producers Can Succeed In These Turbulent Times
Russ Alan Prince & Arthur A. Bavelas
As producers know, it can often feel as if the life insurance industry is under siege. Not only are clients increasingly gun-shy about making any financial decisions because of the stock market, questions about the estate tax and the like, but regulators, legislators and the media appear to be on the offensive.
With an article appearing in the Wall Street Journal denigrating corporate owned life insurance as “janitor insurance” and one in the New York Times prompting the Treasury to issue regulations concerning split-dollar, there is clear justification for concern among producers.
From the producers perspective it feels as though the life insurance industry is undergoing yet another significant transition. Across the life insurance industry there is a great deal of attention to these changes: trade publications, newsletters and producer meetings are all discussing these turbulent times.
In order to get a clearer perspective on this matter we conducted a national survey of 483 producers. The majority of the sample (48.4%) had annual incomes of less than $100,000. Another 34.2% had incomes of $100,000 to $300,000. The remaining 17.4% had annual incomes of greater than $300,000 (Exhibit 1).
According to the producers surveyed, the current and proposed legislative changes will negatively affect their production and their income. The most financially successful producersthose making $300,000 or more annuallyare the most alarmed about the negative effect on their production (Exhibit 2) and their income (Exhibit 3).
The regulatory and legislative changes being talked about will be detrimental to the most financially successful producers. The reason the changes will impact the most successful producers is that they are working in the advanced markets. They are serving corporate, high-net-worth and successful business owner clients. The new legal and regulatory changes are directly impacting the products and strategies they employ with these clients.
Although they are not directly affected yet, all producers are concerned. Even though those earning less than $300,000 a year do not expect to feel the effect directly, they agree that these changes are very bad for producers overall (Exhibit 4).
In fact, there is a solid consensus (92.8%) that the current and proposed changes are very bad for producers. This sentiment is pervasive irrespective of income. While the practices of the most successful producers are being hurt today, all producers feel that the changes will be detrimental to the life insurance business.
However, there are still ways for producersat all levelsto continue to excel.
Looking forward, the most financially successful producers are going to employ the following business development approaches. They will:
Systematically source large cases by creating strategic partnerships with centers of influence.
Employ a consultative approach in contrast to a product-oriented approach.
Creatively identify monies to pay premiums.
A strategic partnership is one in which the trusts and estates lawyer or the accountant provides a steady stream of wealthy clients who could benefit from the producers expertise. Today, very few producers have taken the steps to create strategic partnerships even though there exists a proven methodology for doing so.
There is a powerful belief among producers that the life insurance industry is under attack. And, even if one argues that it is not an attack so much as a housecleaning, the siege mentality would be the same.