For a generation that, for the most part, has trouble committing to what they are going to have for dinner on any given night, millennials display a remarkable dedication and interest in financial planning. Though they willingly shun some traditional sales tactics (the cold call or the knock on the door) they gravitate towards others (internet marketing, word-of-mouth referrals and casual face-to-face interactions). Many do not have their financial houses in order; due to stagnant wages as a residual result of the global financial crisis, student loan debt and a culture that facilitates reckless credit card use, most have a long way to go before they reach a point where they are comprehensively financially healthy.
The significant baggage attached to many millennials can be overlooked, however, because, as they enter into their prime earning years, they could be a lifeline to an industry that is perceived as antiquated, dull and increasingly marginalized and out of step with contemporary society. With some estimates placing them as high as 76 million — almost equal to the boomers that have been funding the life insurance industry for nearly half a century — millennials, with their enthusiasm and interest in financial planning, are a monumental opportunity for an industry that has been striving to stay relevant, prevalent and profitable.
Recent statistics from LIMRA have shown individual life insurance ownership has hit a 50-year low. While the industry struggles to gain traction, can the generation that grew up as latchkey kids, distrusting many conventional marketing methods and delaying marriage, purchasing homes and starting families really be the best hope for reinvigorating life sales? It would seem there is no other choice. If life insurance is going to remain as integral a part of Americans’ household finances as it has been historically, millennials appear to be the obvious and only place to start. They are engaged in financial planning; the industry just needs to get them to turn their heads in its direction. The question is, how much of this hinges on the degree to which insurers are building a millennial sales force that can sell to their own peers?
See also: 9 ways to sell to Gen Y
The graying of the workforce
As my colleague Brian Anderson so accurately put it, “Peer out at the audience from the main platform at just about any industry event and heads with gray hair, white hair or no hair will dominate your field of vision.” According to LIMRA, the median age for an independent life insurance agent is 51. The median age of the U.S. worker is 42.3 according to The Department of Labor. This is one statistic in a sea of data on the industry’s aging workforce that intensely illustrates the unfortunate position the life insurance industry is in. By 2030, how many of those agents will have retired? The problem is reaching disastrous proportions. LIMRA statistics show that independent life producers dropped from 163,409 in 2007 to 149,187 in 2010.
The decline has continued since then. Millennials often feel overlooked by the current workforce. As one within that generation candidly told me, “I feel a lot of these guys have their established book of business and are on cruise control until they retire.” If that sentiment becomes more widespread, the life insurance industry as we know it could wither on the vine right in front of our eyes, all while an engaged demographic some 70 million strong look at other options for protecting themselves and their budding families.
One of those options is purchasing life insurance policies directly from their bank. Millennials worship convenience as a value, and many appear to be content using their bank as a one-stop-shop for all of their planning needs. A LIMRA report from last year found that 7 in 10 consumers would consider buying life insurance from their bank. If the industry fails to revitalize its workforce and its methods, this could augur a bleak future for traditional life insurance and the families and individuals that rely on it.
Fresh out of graduate school with a Masters in Business Administration, Geoff immediately gravitated to the financial services industry. The 30-year-old former banker and current financial representative is studying for both his Series 7 and Certified Financial Planner exams. Geoff works for a large financial planning and services firm that operates throughout the Northeastern U.S. One of the reasons he wanted to get involved in the industry is because he saw firsthand the interest in financial planning his peers displayed and the lack of guidance they were offered.
“We grew up in an age of instant gratification,” Geoff said. “Millennials are interested in saving, but have no savings. They do not want to work as long as their parents, but they have no retirement plan in place. They are earning money, while at the same time driving themselves into debt. There is a lot of opportunity out there for someone my age. I have many friends, acquaintances and peers who are getting engaged, buying homes and having children. There are many more just behind them who will be doing all of those things within in the next five years. Many, if not all, want to deal with someone their own age [when it comes to planning]. All of the younger individuals in my workplace are ready to take advantage of their niche. We are in a unique position to speak to millennials as peers; there are definitely more millennial prospects out there than there are millennial producers to handle them.”
See also: The salesman who doesn’t sell
The advantage of millennial producers?
Patrick Leary, assistant vice president, distribution research with LIMRA is not sure guys like Geoff necessarily have a leg up, although he does admit that Millennial producers hold some cards that older sales professionals do not when it comes to reaching prospects their own age. “The younger agents and advisors out there are probably closer to and appreciate the value that new sales models have,” said Leary. “Naturally, I think they are going to be more apt to leverage technology in order to connect with their peers. When looking at Millennial producers, my guess is that they are ahead of the curve when compared to some older professionals as far as integrating technology into part of their business practice.”
Carriers are making progress when it comes to recruiting a younger workforce, but Leary maintains that many are recruiting with yesterday’s incentives when some of the industry’s basic structures are exactly what millennial job seekers want: Flexible hours, assisting other people, being part of a team and having a work/life balance. These are more of a priority for millennials than they have been to other generations, Leary believes. A revamping of the industry’s recruitment process could have huge payoffs. However, whatever efforts the industry is making, they are getting some return on their investments.
The fact that recruitment of millennial workers is on the upswing is undoubtedly a good sign for the long-term vitality and viability of the industry, but the question remains whether millennial producers have an advantage over older sales professionals when it comes to selling to millennial prospects. Leary says that LIMRA’s research has found that many young people want someone a few years older than themselves to assist with their financial planning — which means many will want a producer that is of their same generation. But are there enough millennial producers out there to handle the wave of millennial prospects rapidly heading toward life insurers’ shores? It doesn’t seem that way.
Hitting the street
Greg is a recently engaged 29-year-old consultant from Hoboken, N.J., who owns a small term life policy he purchased through his employer. His enthusiasm regarding his future is conveyed by his enthusiasm for a more comprehensive financial plan. “I am very interested in purchasing more life insurance. I will have a lot going on in the next five years or so,” Greg said. “I am getting married next year, will soon after look to purchase a home and then we will most likely think about having children. A life insurance product with some type of accumulation, I assume, would be a great fit.”