This month, we’re evaluating various types of professionals you could potentially benefit from forming an alliance with as an annuity producer. This week, we’re going to look at the property and casualty (P&C) agent. As we discussed last week in looking at estate planning attorneys, the central issues always comes down to trust and the quality of the relationship. What level of connection does a typical P&C agent have with their clients? In my experience, not much. Without a strong bond of trust, the P&C agent’s referral won’t carry much weight with their clients.

That being said, should you ignore the P&C agent completely? In my opinion, probably. While you may find that you could benefit by receiving a referral or two per year, I believe you’d be hard pressed to really tap into a large base of high-net-worth clients through P&C agents. The only exception would be a P&C agent who works primarily with commercial clients and business owners. If that’s a market you want to focus on, then it could possibly be a good fit.

However, the two main reasons I would encourage you to shy away from partnering with P&C agents are:

  1. The lack of relationship P&C agents tend to have with their clients
  2. The types of advice and service clients expect from P&C agents

P&C agent and client relationships

The truth of the matter is the P&C industry is one that has become very commoditized. There are only so many ways to try and differentiate yourself when selling auto, home and liability insurance. As a result, it often comes down to price for clients “shopping” their coverage. The reason this is important is that you need to understand client turnover within a P&C practice is oftentimes much higher than that of other professionals. As an example, stop and look sometime at many of the commercials and advertisements you see by P&C companies. They almost always revolve around the value proposition of “saving you more money.” Because the industry has chosen primarily to compete based on price, it makes it much more difficult to hold onto clients.

As annuity producers, our client process is more consultative in nature. Thus, you will have more traction working with other professionals who also utilize this approach, and their clients will be much more receptive to your services as well.

The types of services clients are looking for

With regards to P&C clients, it may be better said to address the types of services their clients are not looking for. Clients do not typically look to their P&C agent for advice regarding retirement and financial planning. Therefore, even if you were to form an alliance with them, it’s unlikely the clients would pay much attention, since they do not associate their P&C agent as someone to help them make these types of plans and decisions.

In summary, it’s not that there are no opportunities in working with P&C agents, but because your time is limited and you can only successfully work with a handful of other professionals, you’d be better served to invest that time in relationships that more closely compliment the services you specialize in. Not only will there be more opportunities to help the other professionals, but also their clients.

For more information on successfully forming strategic alliances with other professionals, check out our website at www.WinningWithCPAs.com.