The blockbuster February 29 announcement about MassMutual’s $300 million purchase of the MetLife Premier Client Group and related assets from the New York-based behemoth set the industry abuzz. The acquisition of the group — a major retail distribution channel for MetLife — brought into stark relief regulators’ growing impact on insurers.
Both MetLife and American International Group (AIG) are notably concerned about increased compliance costs in connection with: (1) being tagged systematically important financial institutions or SIFIs; and (2) the Department of Labor’s proposed fiduciary regulations for retirement advisors, which market-watchers expect to go into effect this month.
AIG CEO Peter Hancock cited the DOL rule in in a January conference call with investors expanding the carrier’s plans to sell its broker-dealer unit. MetLife CEO Steven Kandarian echoed Hancock’s comments in a press statement about the Premier Client Group sale.
“By decoupling manufacturing from distribution, our U.S. retail business will be more agile, and both MetLife and the U.S. retail business can achieve significant cost savings,” he said. “This transaction will enable our U.S. retail business to sharpen its focus on its core strength in product manufacturing while also providing a broader distribution network through the partnership with MassMutual.”
That network — a retail distribution channel comprising more than 40 local sales and advisory operations and approximately 4,000 advisors nationwide — promises to transform MassMutual into a “distribution powerhouse,” as MassMutual Chairman, President and CEO Roger Crandall asserted in the joint February 29 press statement.
Whether MetLife will similarly benefit from the transaction — Kandarian claimed the sale will enable MetLife to “sharpen its focus on its core strength in product manufacturing while also providing a broader distribution network through the partnership” — remains to be seen.
This much is clear: MetLife is divesting itself of a major distribution asset, one that has grown in value since the insurer renamed its individual distribution organization MetLife Premier Client Group in October 2013. As part of the rebranding, MetLife has standardized the consultative sales process used in client engagements. The insurer also revamped its “Regional Organizational Model” to enable the group’s insurance and financial service professionals to work together in teams.
To learn more about the initiative, LifeHealthPro Senior Editor Warren S. Hersch interviewed (prior to the February 29 announcement) MetLife Premier Client Group Executive Vice President Paul LaPiana; and Bellaria Jimenez, a managing partner of MetLife Solutions Group, whose advisors are participating in the teaming program. The following are excerpts.
Hersch: What prompted MetLife to bring advisors together in teams? What does the company hope to achieve?
LaPiana (pictured at right): It’s very difficult to be successful as a solo advisor today because there’s so much you need to know, both in respect to wealth and risk management. So we’re partnering agents and advisors with other financial professionals that have complementary skills.
For example, I might specialize in insurance and risk management. A second advisor would focus on wealth management and investments, whereas a third would do financial planning. We might also have a CPA and attorney on the team to handle accounting and estate planning issues.
Hersch: Are all team members MetLife employees? What products can they sell?
LaPiana: They’re all company employees and will recommend MetLife solutions where appropriate. But they’re free to sell third-party protection products — life, disability income, auto and home insurance, plus annuities and investments. Our open-architecture platform lets them offer clients unbiased solutions.
Also available to the teams is a group that can offer guidance and solutions in cases requiring advanced planning, such as the establishment of a trust for a disabled child or an incapacitated spouse. The advanced planning group will typically coordinate with the client’s attorney and tax professional.
Hersch: How many advisors in the Premier Client Group are part of a team?
LaPiana: Of the group’s 4,000 advisors, about 1,000 — roughly 25 percent of our advisor force — participate in 300 formal teams. We’re formalizing 170 emerging teams for another 400 advisors, or about 10 percent of our advisor force. The majority of advisors are still solo practitioners, either because they’re just starting in their careers or because a team isn’t right for them.
But it’s safe to say that about 50 to 55 percent of our group will be part of a team within the next three years. We truly believe this is the way to be successful — to bring the right amount of value to clients.
Hersch: How do you determine whether someone is appropriate for a team?
LaPiana: We have a group of 12 to 14 home office people who educate advisors on why teaming is appropriate for growing their practices and bringing more value to clients. Those advisors who express interest are connected with a national team that does an analysis of their strengths and weaknesses.
They then look for other advisors, both internally and outside the company, who might offer complementary skills on a team. Thereafter, we bring team members together to do joint work and see if there is good chemistry — trust, values and a work ethic that will allow the team members to work together productively.
Hersch: How does the MetLife Premier Client Group differ from the advisor network the company had in place previously?
LaPiana: Four years ago, we had three businesses: (1) MetLife Career Channel; (2) New England Financial Channel; and (3) MetLife Resources. In 2013, we merged the businesses — rebranding the combined unit as MetLife Premier Client Group — and placed advisors on a common broker-dealer platform, compensation plan and recognition program.
Along the way, we made structural changes to focus our resources on the right management teams and advisors. The great news is that we’re doing more business today — with less management and fewer advisors — than when we started on this journey. Our team advisors typically generate from 1.5 to 2 times the revenue of solo practitioners in the company.
They’re also doing more comprehensive planning for clients. That leads to greater share of wallet and more product sales. So teaming has been a big part of our growth and gains in advisor productivity.
I should add that teams also permit greater continuity. When an advisor retires, other team members can step into service the client. So it’s not as big an event.
From a headcount perspective, the plan is to continue to grow the group by 50 to 100 advisors annually, the increase taking into account advisors who retire, move to another firm or who decide that teaming isn’t right for them.
Hersch: Point noted. But given that advisors are all employees of MetLife, have clients voiced concerns about their ability to offer objective advice?
LaPiana: It hasn’t been a big concern of clients because, again, we’re on an open architecture platform. We offer products from all the major carriers on the annuity side, both fixed and variable, plus major life insurance products. On our broker-dealer platform, asset managers can recommend third-party mutual funds.
Our advisors will tell you they always strive to ensure the clients’ goals and objectives are met. Yes, MetLife manufactures really good products; and if they’re suitable for the client, then we’re proud to recommend them. But we have a very good mix of proprietary and non-proprietary solutions. So questions about objectivity aren’t surfacing a lot.