Consider this dichotomy: While the distribution of life insurance products has shifted from a once largely career/captive agent workforce to independent life insurance professionals, today’s producers depend more than ever for their success on an ability to (1) work collaboratively with other advisors possessing complementary skills; and (2) tap into a support network that can offer competitive products, technology, continuation education and support services.
The increasing interdependence of independent producers was a key theme of a general session of the LIMRA Advanced Sales Forum, held in Chicago, August 6-7. The gathering, “What is Working with Producer Groups,” fielded a panel of three: Bryan Schick, a senior vice president of advanced Sales at National Financial Partners; Matthew Pressler, an advanced sales manager at M Financial Group; and Jack Beatty, CEO of C.O.R.E. Group USA Inc.
That the speakers chose to highlight the collaborative character of producers’ work today is not surprising. The three companies represented on the panel aggregate the expertise and services of professionals in business “ecosystems” that operate more efficiently and cost effectively than can solo advisors who must build their own professional and carrier networks, IT systems and support services.
For example, National Financial Partners’ (NFP) Advisor Services Group, a broker-dealer and RIA, offers NFP member firms a diverse array of carrier products, operations, compliance and recruiting requirements. Insurance professionals can secure brokerage services through three partnering brokerage firms. Professionals specializing in corporate benefits also enjoy access to proprietary decision support tools, regulatory support and knowledge-sharing through advisor networks, conference calls, regional workshops, benefits gatherings and national conferences.
That’s an attractive package, and not only for the principals of member firms. As I noted in a 2008 feature on producer groups in NU, back-office staff at insurance financial planning practices also benefit from the sharing of intellectual capital.
For advisors, other competitive advantages include access to niche expertise that might not otherwise be easy to obtain. Example: advisors offering proficiency in employee stock ownership plans.
Yes, an advisor can ally with an Employee Stock Ownership Plan (ESOP) professional. But the partnering can happen a lot faster in a producer group because the ESOP advisor has already been vetted—and committed. An ESOP expert outside the group might give low priority to the planning engagement, or turn it down, if the client were deemed to be insufficiently profitable.
“The strength of professional relationships is a key competitive advantage for our members,” said NFP’s Schick at the LIMRA session. “It’s wonderful when various professionals are able to work closely together to address planning issues from all perspectives—cash flow, tax, accounting and legal.”
Another bonus for producer group members is the ability to engage in collective bargaining when sourcing products. M Financial Group’s 135 member firms can secure favorable rates on life insurance contracts in part because they help to finance new product development; and because their high net worth clients as a group are a lower mortality risk than are the carriers’ policyholders.
This collective bargaining power has been put to good use in recent years in the advanced planning arena. M Financial Group’s Pressler noted during the LIMRA session that the company has witnessed a 50% increase this year in sales of employer-owned life insurance for executive benefits, including non-qualified deferred comp arrangements and supplemental executive retirement plans.
To be sure, membership in a producer group comes at a cost. NFP applicants, for instance, pay an annual licensing fee and capital contributions. Advisors wanting to join a producer group also have to weigh whether: (1) the group has the track record, financial strength and expertise to carry out commitments; the (2) group’s ownership interests align with their own; and (3) they can meet group production requirements.
For a growing number of advisors, these caveats are far outweighed by the benefits of affiliating. And as more sign up for membership, the future of such producer groups looks increasingly bright.