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More companies are hiring ‘career switchers’ to sell life insurance

Picture this prospective agent walking into your offices: a male, about age 30, who has enjoyed a highly successful career working as a real estate broker. Impacted by the premature death of a close colleague, he now wants to explore a career selling life insurance, leveraging his finely honed sales skills. And he has his Rolodex of real estate clients that makes your jaw drop.

Sounds like a promising candidate? If so, you’re in good company. Increasingly, experts say, life insurance manufacturers and their distribution channels favor “career switchers,” individuals with several years of professional experience and proven business acumen. A growing number of them hail from professions with whom advisors work closely on client cases: people in law, banking and accounting. Many, too, have done successful stints as salespeople in other industries.

“In years past, you would hire as many licensed college grads as you could, throw them against the wall and see how many stick,” says Paul Reavis, a registered representative for Lincoln Financial Advisors, Gaithersburg, Md. “Now, with the focus on financial planning, greater care in hiring has to be exercised because there’s a bigger investment outlay to put a producer on the street.

“If you don’t start with the right raw material,” he adds, “all of the training in the world will not serve you well. So, rigorous screening is critical.”

Because of some high profile scandals involving financial services companies in recent years, and ever-stiffer disclosure and compliance requirements, agencies also are redoubling efforts to ensure they’re getting people of unquestionable integrity. Hence, the need for background checks that might point up troubling histories.

“Most firms have gotten better in recent years screening for fraud, undisclosed criminal activity, excessive spending habits and bankruptcy,” says Jeff Carleton, a senior vice president of life sales distribution at Hartford Life, Hartford, Conn. “Carriers and broker-dealers are concerned about the horrible publicity that might result from putting the wrong person in the wrong position.”

Given, too, the still high attrition rates in the business–an estimated 80% to 90% of new hires won’t make it past their fourth year–agencies increasingly put a premium on other desired qualities: the ability to take rejection; tenacity in pursuing objectives; emotional and financial stability; and, a capacity to grasp complex subject matter.

“We don’t want people giving financial advice who can’t handle their own financial affairs well,” says Chip Crews, a senior vice president of career agency distribution systems at Penn Mutual, Horsham, Pa. “Beyond that, we want to be sure they have the intellectual capacity to handle the intricacies of tax laws, financial markets and product design.”

Among the best candidates, say experts, are people who can hit the ground running: individuals with an established book of business; and, those with educational designations–CFP, ChFC, CLU, among others–that will give them immediate credibility with clients.

The increasingly selective nature of the hiring process has contributed to a general decline in recruits, especially at career agencies. LIMRA International, the Windsor-Conn.-based research and consulting firm, revealed in a February 2005 report that 33 companies hired 25,600 agents last year, a 10% drop compared with 2003.

Large companies accounted for 82% of the total, followed by mid-size companies at 17%. An additional 1% of new hires came from small companies. The top 5 recruiting companies nabbed 60% of the total.

Reflecting the firms’ heightened focus on hiring individuals with a track record, LIMRA found the number of inexperienced recruits decreased 19%, while experienced hires rose 8%. Large companies contracted 86% of inexperienced recruits, a 2% dip from 2003.

Despite the falling numbers, 64% of firms surveyed are committed to boosting their recruitment rates in 2005. Indeed, seven companies are targeting growth rates of 20% or greater this year.

Among those planning on double-digit expansions is New York Life. Paul Morris, a senior vice president of the company’s agency department, says New York Life increased its field force to 7,700 agents from 6,600 during the past four years. That figure is expected to rise to 8,500 by 2008.

Morris credits the company’s rigorous screening and training programs for the steady increases and for the third-year agent retention rates of over 20%. Among the initiatives: a pre-hire process that puts candidates through a personality test and multiple interviews in both office and social settings; and, a weekly minimum of three days of instruction for new agents at the company’s educational campus in Dallas.

The training doesn’t stop after year one. Morris says instruction continues for established agents as part of a 20-year program. The company’s 220 top producers also enjoy membership in The Nautilus Group, which helps agents create financial plans leveraging techniques for estate conservation, business continuity, executive benefits, charitable giving and retirement income planning. Last year, New York Life also invested $120 million in a Web site, Agency Portal, that avails its field force of product information and applications.

“The training is time-consuming and hugely expensive, but the end product is so much better,” says Morris. “We haven’t found a short cut to the training piece. When you cut corners, you create an issue.”

How costly is the training? Morris pegs the outlay at between $150,000 and $250,000 to get agents to their fourth year. (With this investment come sales quotas: Agents have to generate $18,000 and $21,000 in commissions during their first and second years, respectively; thereafter, the annual quota rises to $24,000.)

Fewer firms than in past years can afford such sizable training expenditures. Those that can, or desire to, increasingly are combining through mergers and acquisitions to achieve the economies of scale needed to make the investments cost-effective.

Or they’re side-stepping career development in favor of less costly channels. A burgeoning number of insurance manufacturers now market products through independent broker-dealers, general agencies and financial planning firms.

Example: Hartford Life, whose sales offices distribute solely through such independents. Hartford’s national accounts (wire houses and region firms) accounted for 47% of sales in 2004, according to a company spokesperson. Independent brokers constituted another 25%. The balance of sales went through independent life and p-c agents (17%) and banks (11%).

While foregoing the nuts-and-bolts sales training that producers need to kickstart their careers, Hartford Life does invest in education needed to keep advisors abreast of product and rider unveilings, changes to tax and estate laws, and new sales concepts.

Hartford account executives regularly conduct classroom instruction at branch offices. This past year the firm also adopted Brainshark, a Web-based software application that offers producers self-guided study using PowerPoint slides and an audio voice-over. Among other benefits, the tool lets Hartford reps know what instruction material producers are mastering with ease or difficulty.

“We use the Web portal for training on new products, riders and concepts,” says Carleton. “I see it as a growing part of our sales arsenal.”

Also marketing through independent channels is ING Financial Partners. Of the company’s three distribution arms–independent financial planners, general agencies and strategic distribution–the last most closely resembles a career agency system.

The channel’s producers are independent, but as in a traditional career system, have made ING their primary product provider, according to Marc Lieberman, who heads the Strategic Distribution unit. The producers–including approximately 2,500 registered reps and another 1,000 agents of fixed life products–enjoy training and support services offered by some 30 managing directors, or independent contractors, with whom ING has partnered.

Like Hartford Life, ING Financial Partners offers both online training and in-classroom instruction, including two- and three-day sales academies sponsored through ING Educational Services. The company additionally supports its Strategic Distribution producers through a Minneapolis-based national sales team.

The team’s 60 staff members keep field agents up-to-date on new product launches and concepts. An additional group of advanced case design attorneys assist in formulating financial plans.

Lieberman says many of the channel’s producers hail from insurance firms. But the company has had greater success tapping wire house brokers looking to become independent. The “linchpin” of ING’s efforts in recruiting from these two channels, Lieberman adds, is the support of the managing directors, which advisors view as especially attractive.

“From my perspective, our focus on independent producers is an outstanding strategy on which to build a business,” he says. “We can give traditional career agents and wire house reps the high quality, high touch service they require.”

Yet, the question remains: If, as Lieberman contends, the insurance community must increasingly redirect its recruiting and training efforts from career to independent channels, will the industry ever again enjoy the large agent workforce it fielded in past decades?

The consensus among market-watchers is ‘no.’ But that won’t necessarily be a bad thing.

“Recruiting and training is so dang expensive, placing huge demands on management’s time,” says Carleton. “So, I expect we’ll be working with a permanently smaller workforce, albeit one that is more experienced.”

Adds Crew: “I think we can still secure net increases in producers. The future is bright for the financial services industry. It represents a great opportunity for young people who are caring, talented, motivated and entrepreneurially inclined.”


? In 2004, 33 companies hired 25,600 agents, a 10% decline compared with 2003.

? The top five recruiting companies accounted for 60% of the total recruits in 2004.

? Large companies contracted 86% of the inexperienced recruits, a 2% dip from 2003.

? 72% of recruits had no prior insurance sales experience.

? Female recruiting was down 10%. The top five female recruiters hired 4,860 women, or 74% of all female recruits.

Source: LIMRA International, 2005.

‘The training is time-consuming and hugely expensive, but the end product is so much better’


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