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Life Health > Life Insurance

Captive agent vs. independent advisor: The unlocked truth

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“The chains that bind us the most closely are the ones we have broken,” wrote Argentinian poet Antonio Porchia. This is especially true for captive agents, who often believe their business model imposes conflicts of interest. Some look enviously at independent advisors who they believe can sell whatever they want.

However, as the poet suggests, the chains that bind are mainly in our minds. Captive status is not nearly as restrictive as it appears. For one thing, captive insurers know they can’t survive with outdated products. When product innovation occurs (e.g., annuity living benefit riders), they must react quickly or fall behind. So a captive agent usually has more than enough good products available.

For another thing, captive agents typically have a base-plus-incentive compensation model. This means they can afford to research product options more thoroughly instead of moving quickly to the close. Sure, independents can theoretically search the known universe for the perfect client solution. But in practice can they afford to? A 100 percent commission model imposes chains of its own.

Another virtue of so-called captivity: the ability to offer optimized product packages that save clients time and money. Think about multiple-line agents offering homeowners, life, and umbrella liability, along with life insurance, annuities and other products, all readily available without doing extra research or having to get appointed with different companies.

The client experience

Finally, captive agents often excel at delivering “the client experience.” They typically can spend more time on relationship building, fact-finding and customer service — the things clients are sorely missing in today’s make-the-sale-at-any-cost business world.

Now, I’m not saying being a captive agent is perfect. Some carriers still impose quotas for selling lousy products. And some compliance departments wrap too many chains around their agents instead of freeing them to sell. What I am saying is that captive agents can create their own freedom by (1) allowing their ethical values to guide their decisions within the captive system and (2) leveraging the advantages of captivity to benefit themselves and their clients.

So if you’re a captive agent, the best solution isn’t always bursting your “chains.” It might be framing your situation more positively. Try these pointers: 

  • Make full use of company reimbursement for professional education. The smarter you can get — at your company’s expense — the sooner you’ll break free of your constraints.
  • Master your company’s product portfolio. Most are broad and deep enough to cover most needs. But you have to know your options.
  • Don’t skimp on fact-finding early in the sales process. As a captive, you can really get to know your clients. Don’t squander it!

Finally, always remember this. It’s not your business model that holds you back. It’s your self-imposed perceptions and values. If the chains that bind are in your mind, then the only person who can break them is YOU.

Note: In part II of this series, we’ll unlock the truth regarding independent advisors.

For more from Steven McCarty, see:


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