Of particular interest to carriers and product wholesalers is the evolution of independent financial professionals’ practices over time. The joint LIMRA-NUL IFP study offers key insights into this question — including some intriguing findings.
Interestingly, advisory services account for a smaller percentage of revenue as advisors get older. For those blow age 50, advisory services make up 14 percent of their sales or revenue. Thereafter, the share of revenue diminishes to 12 percent (ages 50-59), 9 percent (ages 60-69) and just 3 percent for advisors age 70 or older.
Given that advisors tend to serve clients in the same age bracket as they, it’s perhaps not surprising that health insurance sales rise in tandem with the IFP’s age. Starting at an average of 12 percent for independent advisors under age 50, revenue from health insurance sales increases to 14 percent, 18 percent and 24 percent, respectively, for those ages 50 to 59, 60 to 69 and 70-plus.
Sales of two product categories that are comparatively steady over time are life insurance and annuities. The LIMRA-NUL survey pegs life sales at 14 percent for all but one IFP age group: those between ages 60 and 69 garner on average 11 percent of their revenue from life sales.
In respect to annuities, sales as a percentage of revenue are flat for IFPs ages 50 to 59 (19 percent) and 60-plus (20 percent). Annuity sales nab a smaller share (16 percent) of revenue for IFPs under age 50.
The survey also finds that the preferences of independent advisors in respect to product sourcing correlate with the maturity and fortunes of their practices. Most IFPs who are still establishing themselves (53 percent) and those who are established but have experienced some years of negative growth (55 percent) prefer to place their life insurance and/or fixed annuity business directly with insurance company.
In contrast, fewer than half of IFPs (49 percent) who are established and have a stable client base and revenue stream favor placing life/fixed annuity business directly. Still fewer IFPs do so who are established, have a stable base and are eyeing opportunities to expand their businesses.
Much of the rest of the business among these four IFP types is going through intermediaries, such brokerage-general agencies (BGAs) and independent market organizations (IMOs). The survey notes that IFPs aiming to grow their practices look to intermediaries to “drive efficiency and achieve scale.”
The break-down among IFPs who favor sourcing through an intermediary is as follows:
Still establishing the practice (39 percent)
Established with a stable client base and revenue stream (48 percent)
Established with a stable base and looking for growth opportunities (55 percent)
Established but have had some years of negative growth (42 percent).