Over the last year, more Americans turned 65-years-old than at any other point in history, with roughly 12,000 people a day reaching retirement age — including financial advisors.
According to a report from Cerulli Associates, 38% of advisors plan to retire within the next 10 years.
What's more, the "rookie failure rate" is nearly double that at 72% — meaning advisors are retiring faster than they can be replaced.
Additionally, Cerulli reports only 13% of newer advisors start their career in the financial advice industry, putting complex segments like business life insurance at risk due to the expertise, credibility and technical education needed to succeed in this business.
I've noticed that many of the top advisors we partner with are approaching the end of their careers, causing me to reflect on the knowledge gap that will be left behind when they retire.
This represents a golden opportunity for younger advisors looking to grow their practice. Not only does business life insurance provide a meaningful career path, but it also helps grow your book of business for the long term, as these types of policies require ongoing servicing and monitoring.
Getting involved in the business life insurance industry serves as an investment now and for years to come.
Here are three steps younger advisors can take to break into the business life insurance market.
1. Get education and certification.
Do your homework on why business life insurance policies like corporate-owned life insurance exist and why they are beneficial to the industry.
COLI is a lesser-known type of life insurance policy taken out on critical employees, with companies paying the insurance premiums and receiving the death benefit if a covered employee passes away.
COLI policies can help businesses meet obligations from non-qualified deferred compensation, or NDQC, plans — an offering that can help attract and retain employees.
However, when businesses promise future compensation to their employees, this can create a liability that can grow over time.
While some companies set aside cash, securities or hard assets to meet promised payments, the most tax-efficient informal funding tool is cash-value life insurance policies like COLI.
Obtaining licenses and certifications can give you credibility and show you've made an investment in the industry.
The chartered financial analyst designation is the most prevalent among the advisors we work with and a good one to start with. Not only does having the CFA designation show you're committed, but it's also going to help give you the knowledge needed to succeed in the industry.
It's also important to stay updated on industry trends and regulatory changes. There are several proposed regulations circulating right now that could have a significant impact on businesses and the business life insurance industry.
Take advantage of online resources, like webinars and podcasts, to learn more and understand what is happening in the regulatory environment.
This knowledge will help you provide the best advice and solutions to your clients.
2. Find a COLI mentor.
There's a lot you can learn about business life insurance on your own, but seeking out an industry expert and asking them to share their knowledge is what will set you apart from other advisors.
If you're not sure where to start when it comes to making those connections, reach out to insurers' COLI teams.
Our team frequently talks with advisors who are new to the industry and can help answer product questions, as well as offer direction on industry events and conferences where you can network with COLI specialists.
Most importantly, be persistent. Connect with key people in the industry and get on their calendars. Seek out established advisors and ask to partner with them.
For example, three of our former employees at Nationwide recently started their own firm together after having met while working in our COLI department.
After going their separate ways, learning even more about the industry and developing strong connections, they reconnected, combined their strengths and are partnering to help even more clients.
3. Network and build relationships.
Attend industry conferences, community events and seminars focused on financial planning and retirement.
These events provide opportunities to meet other advisors and potential clients and establish personal connections.
A good place to start is with Finseca. Finseca hosts multiple conferences throughout the year where you can learn more about COLI, network with those who specialize in it and even potentially find a mentor.
It's also important to develop strong relationships with business owners and decision-makers so you can better understand their needs. For example, according to a recent survey, mid-market business owners said they want to talk with an advisor about employee benefits (72%) and succession planning (67%).
Offering tailored business life insurance solutions that can help address these needs can build trust and long-term partnerships.
Helping business owner clients incorporate business life insurance into their financial planning can protect their companies and ensure smooth leadership transitions, but we need new advisors to embrace this product to continue to make this happen.
By becoming an expert in lesser-known solutions, like COLI, you'll solidify yourself as an indispensable partner with current and prospective business owner clients, enhancing your value to them while also growing your own practice in a meaningful way.
Jessica Dowdy is the head of institutional insurance at Nationwide Financial.
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