In reading the reports coming out of the recently concluded annual meeting of the American Council of Life Insurers, three issues caught my eye. The issues were: 1) the low level of agent recruitment, 2) the lack of proper attention to and serving of the middle income market, and 3) the continued low savings rate in the United States. Despite the number of references to those problems, I do not recall reading about any proposed solutions to any of them.
I believe these are all major issues that our business can and should address on a high-priority basis. Moreover, I also believe the three issues are interrelated and can be solved by a unified approach. Such an approach directed initially at better serving the middle market also may bring about a solution to the other two problems.
Traditionally, the middle market was the starting ground for new agents in our business. Problems to be solved were relatively simple and it was easy to fit our most basic core products into their financial capabilities. Today, it seems to me the emphasis is to move new people into the most esoteric areas of our business as quickly as possible. Im told by seasoned managers that their role as compliance managers for the most sophisticated products has reduced their time for sales training to virtually nil.
The problem is further exacerbated by the requirement of a host of licenses not formerly required by agents working in the middle market. I am also told that new people with potential for future growth are being lost in their introductory phases by being expected to move too quickly into a broad product environment requiring difficult licensing and compliance regulations.
Perhaps the industry should ask itself if this is realistic. Perhaps the former system, allowing agents to grow and graduate into more sophisticated markets at their own pace, and to move up the economic ladder with their own clientele, still has merit. Since retiring, I have served on a number of cases as an expert witness in a variety of lawsuits. In almost every case, problems that created the lawsuit were the result of a poorly trained agent working in an area way above his or her head.
The middle market is very important if for no other reason than it is the largest. Additionally, these are the people who need us most and often lead lives in hock with consumer debt. They pay the high interest rates levied on credit cards and often are trapped in dead-end jobs because they cannot afford to take a chance on a new opportunity.
Savings and the ability to save too often have the wrong focus. Competition centered around rates of return and the growth potential of savings sometimes obscures the most important element in a savings program. I will use my own experience to illustrate the point.