A multi-faceted approach is the best way to enhance advisor performance, according to a new study of distribution in the life insurance industry.
Life insurance companies can significantly improve advisor productivity by recruiting well-educated advisors, launching them into team-based practices, tailoring support to maximize advisors’ value, realigning the role of sales managers to better meet advisor needs, and moving experienced advisors to multiple-advisor teams, according to the report by LIMRA International, Windsor, Conn., and McKinsey & Company, New York.
Advisors with at least a Bachelor’s degree earn about 40% more than those without it, according to the report. In addition, advisors with previous experience earn 40% more than those without experience in the first 7 years of tenure. After 7 years, however, those without previous experience (i.e. hired right from college) close that gap and earn a comparable amount. Junior agents with previous sales experience on average underperform their peers, the report says.
The study reveals that advisors placed in team-based practices are 10 times as likely to succeed than those who are not placed in teams. This factor was the most important predictor of advisor success, eclipsing even the impact of the individual’s attitudes, according to the report.
Tailoring the services they offer advisors can help home offices enhance productivity and retention, according to the study. Carriers should strengthen their services associated with ease of doing business and continue to offer specialist support free-of-charge. Adequate training and realigning field management support will help companies capture important savings, the report concludes.
Ensuring that field managers provide the support services that advisors value most improves a carrier’s offering. The study found that field managers are often investing their time in support services that advisors value least. In addition, field managers are often underused, providing support to at most 40% of the advisors they serve. Carriers can improve the effectiveness of field managers and improve advisor retention by helping the managers set priorities on their time, drop undervalued services and stress high-value services.
The study shows that top-quartile producers earn 2 to 3 times their peers’ income. In addition, multiple-advisor practices are 3 to 4 times more likely to succeed than are solo practices.
The study, conducted in the fall of 2008, surveyed more than 1,200 advisors across various distribution channels.