The survey that Mathew Greenwald & Associates completed recently of 263 annuity producers from wirehouses, super-regional and regional brokerage firms “is a story of the limitations of the potential of stockbroker sales of variable life insurance.”
Speaking at the variable life conference of the National Association for Variable Annuities earlier this month, Mathew Greenwald, head of the Washington-based research firm, said there were a number of reasons why stockbrokers and financial advisors at these firms should be good targets for VL sales. They have good relationships with affluent clients, he said, and are familiar with equities. Also, he said, stockbrokers “should be responsive to new products.”
Nonetheless, life insurance sales are still far below their potential. Although about a third of the brokers surveyed recommend life insurance for estate planning and death benefit protection, only 9% recommend it for retirement planning and only 8% for tax-favored accumulation.
Among wirehouse brokers, in particular, Greenwald said, about a third of them sell no life policies but still say most of their clients have a death protection need. “This is an opportunity lying fallow.”
Of those brokers who have sold life insurance, the survey showed that about three-quarters sell term insurance and nearly half sell variable life. Universal life and whole life follow far behind.
The percent of time that a broker meets with a client himself when selling life insurance varies according to the type of firm he works for. Wirehouse brokers sell by themselves 63% of the time, the survey shows, while super-regional brokers do so 76% of the time, and regional brokers 85% of the time.
Greenwald said these results show that wirehouse brokers have someone else assisting them 37% of the time. Most often brought into sales presentations are life insurance specialists with the brokers company or broker/dealer. After these, those most often assisting are a life insurance wholesaler or advanced underwriter.
The survey also showed, however, that after a few sales, the brokers feel less of a need to bring in their firms life insurance specialist.
Almost 40% of the brokers strongly agreed with the statement that life insurance is an important part of most clients financial planning. “This shows it is not a product that is rejected,” Greenwald said.
Additionally, one-third of the brokers strongly agreed with the statement that “the complexity of life insurance products makes them difficult to sell.” Here, Greenwald pointed out that two-thirds dont agree strongly with this.
However, the statements that “tax advantages make life insurance a very competitive product” and “life insurance is an important part of most clients investment strategy” drew strong agreement from only 30% of the brokers. “These factors tell a less compelling story,” he said.