The offers are ready to present, and Jim Schubert’s plan is to deliver them to the two prospective new members of his producer force as soon as he gets off the phone.
For the moment, however, Schubert, president of Southern States Insurance, an independent agency with offices in Georgia and Florida, is animatedly discussing how his courtship of the two potential new hires underscores the plight firms like his, and the financial and insurance segments as a whole, face as a result of the aging of the advisor and agent workforce, and the dearth of younger producers ready to step in to replace them.
Particularly revealing are the similarities between the two producers Schubert is seeking to hire. Both are young, successful insurance agents. Yet as well as they are doing at their respective firms, both have told Schubert they are clamoring to leave for one reason: “The owner is elderly and we have no idea what his plan is for keeping the agency viable when he retires.” What’s more, once they resolved to look for another firm, both were recruited via social media, with LinkedIn providing the conduit for initial contact between them and Schubert.
The reality in financial and insurance circles today is that while demand for advisory services is rising, driven largely by baby boomers grappling with retirement and pre-retirement issues, the ranks of advisors are shrinking, as advisors themselves retire in increasing numbers without younger advisors filling their shoes.
“With 50 percent or more of successful advisors across nearly all channels over age 50, the industry needs to find ways to bring more young people into the industry,” asserts Eric Sondergeld, corporate vice president and director, strategic initiatives, at LIMRA, the life insurance industry trade group.
While progressive firms such as Schubert’s actively seek out young advisors and agents, and embrace tools such as social media to attract them, the many that aren’t heeding the warning bells about aging and attrition within the advisory ranks risk watching their young talent walk and their biggest assets — people and relationships — evaporate.
Those warming bells are growing louder largely as a result of sobering data documenting the extent of contraction within the advisory ranks, from insurance to financial services, along with projections that the attrition will continue. Finance and life insurance groups are responding with initiatives such as the LIFE Foundation’s LIFE Lessons Scholarship program, which is designed to draw college students to the life insurance business, and TD Ameritrade Institutional’s recently unveiled scholarship program, which aims to attract college students to the investment advisory profession.
Need and opportunity
The growth rate — that is, the public’s need — for financial advisors in the decade ending 2020 is projected to be 32 percent, compared with 14 percent for all occupations, according to TD Ameritrade, citing figures from the latest Occupational Outlook Handbook from the U.S. Bureau of Labor Statistics. That translates to 66,000 new financial advisor jobs.
While job opportunities abound in the advisory field, the insurance and finance segments are struggling to attract young salespeople to industries that some view in an unflattering light. Lingering memories of insurance companies and investment banks performing or behaving badly during the recent financial crisis only reinforce that negative perception.
“I think there’s a negative stigma [attached to the insurance business] because there is a lack of understanding of the business, that it’s just about selling products, when what it’s really about is being a trusted advisor for your clients,” observes Brian McNeely, senior vice president and partner at Reagan Consulting, an insurance-focused consulting firm based in Atlanta. “That’s a tough one to overcome.”
In the years ahead, an advisory firm’s survival may well ride on its ability to recruit and retain young producers to replace retiring advisors, McNeely says. “Ultimately, the ability to remain profitable hangs in the balance. People (advisors and producers) are the business. People are the industry. Without them, the assets are gone.”
Trouble is, the people who run insurance and advisory firms aren’t necessarily dedicating enough time, energy and resources to creating and retaining their most vital assets. “I think they just don’t have the time, or aren’t willing to take the time it takes, to bring in younger people,” observes Schubert.
Nor do younger people appear to be flocking to the industry, which, according to McNeely, “is a little bit of a mystery,” given the opportunities it offers agents/producers. “I think it’s one of the world’s greatest-kept secrets,” he says. “It’s a phenomenal business opportunity. It gives a person a lot of flexibility with their lifestyle. It gives them a chance to partner with and help people, and it gives them a chance to create wealth for their clients and themselves.”
Filling the void