Farmers P-C Agents Now Selling Variable Products

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Agents who represent the Farmers Insurance Group, Simi Valley, Calif., have traditionally focused on marketing property-casualty coverage to the middle market. Now, a Farmers subsidiary, called Farmers Financial Solutions, is capitalizing on those middle market p-c relationships to sell variable products, including life insurance, annuities and mutual funds.

Farmers formed the subsidiary in 2000 to give its 14,000 career agents an opportunity to branch out. “The big question has always been Can the property-casualty agent really become more of a full financial services provider?” says Brian S. Cohen, president of Farmers Financial Solutions.

The company started with 500 agents signing up to be licensed. Today that number has now grown to about 6,000.

“I always felt that we could offer more to people someday,” says Joe Wimpee, a Farmers agent from Rockwell, Tex.

When Wimpee started out in the business, he felt he would need to be in the investment and life insurance business “so we can offer all those things to our customers.”

Cohen explains that since Farmers has a customer base of about 10 million and good relationships are already in place, the next logical step was to offer investment and insurance services to this market. “We saw an opportunity to broaden what we do for that customer,” he says.

“Everyone thinks a property-casualty agent cant make the transition,” Cohen adds. “But you dont have to be a financial genius to do this for the middle market, you just have to have a relationship and understand the fundamentalsthats really all the middle market is looking for.”

“I already have the relationship with these people so I felt it would be a pretty easy transition,” adds Wimpee.

This has been a natural transition for Wimpee, in part due to the process he follows when assessing risk for a client. For example, when meeting with clients to write a homeowners or auto policy, he gathers asset information in addition to finding out information about the home, the cars and their driving records. “If youve got $500,000 in the bank, Im going to try to protect it with liability coverage,” he says.

Now, Wimpee takes his fact finding a step further by asking who manages that money and whether the client is pleased with the service from his broker or asset manager.

But for Farmers agent Michael Blau, Kansas City, Mo., it wasnt just a natural transition, it was one the key reasons he joined Farmers four-and-a-half years ago. Blau had prior experience in the investment industry, coming from American Centurys corporate offices, and when deciding on Farmers, “one of the key things was the ability to sell mutual funds with Farmers Insurance.”

When Blau started building his p-c book of business, he positioned himself so that his clients understood his background experience in the investment world, and that he would soon be able to offer variable life, variable annuities and mutual funds to them.

As to why Blau didnt just go to an insurance company or an investment company that already offered these products, he explains, “I liked the opportunity with Farmers to have the ability to go in with multiple products, products you have to have–your auto and homeowners coverage–and get my foot in the door that way.”

Before selling any of these products, agents are required to go through an extensive training program, which combines online tutorials with classroom instruction. Since many of these agents have never worked with these types of products, Cohen explains, the training program focuses on the fundamentals of risk management and investing.

But training for a veteran in the business with a successful p-c practice can be quite an obstacle to face.

“A lot of people dont want to go through the hassle and headache to do it,” says Wimpee.

For that matter, Wimpee didnt want to do it either, but after a year-and-a-half of pushing himself through the licensing process, he is now up and running and trying to help newer Farmers agents make the transition to selling variable products to their clients.

“For young guys starting out, the biggest challenge is building their confidence level,” he explains. “Being in the insurance world, we always want to do everything perfect and guarantee people their safety. In the investment world there isnt any guaranteed safety; its been a little harder to swallow that.”

“I think theres a fear factor there,” adds Blau. “Theyre not comfortable sitting down with people when theyre afraid someone might ask them a question they dont know the answer to.”

David Bryant, a Farmers agent from Tulsa, Okla., agrees. He feels “the initial trepidation agents face is that they are going to make a mistake.”

Bryant, who was in the first wave of agents to start marketing variable products, is also helping new agents get a better grasp on the products and procedures. “They come back from their first product training and theyre panicked,” he says.

So Bryant shares with them some stories of mistakes hes made, problems hes had, and success stories as well. “Once they get over that hurdle, theyre full steam ahead.”

While Cohen was unable to give an exact number of sales made to date, he estimates the growth in assets under management to be about $2 million every business day.

While this rate of growth may seem miniscule in the eyes of a large investment firm, Cohen notes that it is significant given Farmers target market–middle income America. “Our average transaction size is under $1,000.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 6, 2003. Copyright 2003 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.