Feature: Agents becoming more assertive about settlement market

Agents are starting to become more assertive in their efforts to learn about life settlements and to enter the market, according to industry professionals.

Rather than waiting for settlement brokers to come around, some agents are actively seeking out information and connections in the settlement market, says Roy Shellhammer, managing partner with RTG Consultants, a Longwood, Fla. firm that owns Life Settlement Pro.

They are also finding plenty of resources to help them, adds Bill Boersma, owner and president of Opportunity Concepts LLC, a Grand Rapids, Mich., consulting company serving advisors.

For many years, the main business model for the settlement business was for settlement brokers to call on established agents, advisors, planners, attorneys and certified public accountants, recalls Shellhammer. The brokers did this to find prospects for settlement sales, he says.

Many agents knew little or nothing about settlements at the time, so that’s how they learned–from the broker visits and the seminars some brokers put on.

But since then, settlement volume has increased, there has been more press about settlements, more states have adopted settlement regulations, and professionalism has grown in the industry, Shellhammer says. All those changes have contributed to greater advisor awareness–and consumer awareness too, he adds.

As a result, in the past year or so, Shellhammer says he has noticed increased appetite for settlement information among both advisors and consumers.

Now, agents “are starting to contact the brokers, instead of the other way around,” Shellhammer says.

In addition, more agents–and consumers–are visiting his website, and more are responding to his firm’s e-mail blasts about settlements, even as his firm steps up its internet profile and marketing campaign.

The agents are asking questions and learning what they need to know so they can turn around and do their own e-mail blasts to clients about settlements, put on settlement seminars and do mailings, he continues.

“We are helping them with that as much as we can, because the broker benefits from building strong relationships with agents,” he says. “We want the relationships, the prospects and the follow-up.”

The year 2009 was a challenging year for the settlement business, due to capital crunch and also the expanded life expectancies (LEs) that have come out, Shellhammer allows. But “the market is more neutral now, and agents are starting to show more interest.”

Jonathan Reilly has also seen more people checking his settlement firm’s website. He is president and chief operating officer of Life Distributors of America, LLC, Westlake Village, Calif.

“We’re getting more inbound phone calls too, especially from agents west of the Mississippi. They are seeking information on where the settlement market is going and they are looking for materials.”

Whether they need webinars, conference calls or general overviews, “we help them,” he says.

The uptick in calls was particularly noticeable in the first quarter of 2010, Reilly says. “The advisors have noticed the reports that the settlement market has been improving in recent months (after the difficult market of 2009), so they are asking how to get started, what to do about licensing, and whether more buyers are really coming into the market.”

Boersma points out that this learning is important, even for agents who think settlements are not beneficial for consumers.

The agent has a “duty to learn” enough about industry developments and trends in order to advise clients, he explains, noting that he himself worked many years as a life insurance agent before going into consulting.

If the agent does not want to recommend settlements, the agent should still be able to discuss them and explain the recommendation, he indicates.

“Agents always need to look for what solution is best for the client,” Boersma points out. “They also have to follow the rules of their own insurance company,” many of which still strongly oppose life settlements. So agents need to learn as much as they can about settlements in order to be able to approach their clients fully informed, he says.

Generally speaking, he notes, “the agent has more at risk by not offering a life settlement than by offering one–if, say, the client could get $70,000 for selling the policy versus only $13,000 from surrendering the same policy.”